Setting appropriate goals is just as important as analysing the market
After a long break it always takes a few days to get yourself back in the groove with the currencies, so it’s not a good idea to rush in and start trading in the first few minutes of day 1.
A lack of a plan at the start of the year can really see things drift off track very quickly and have you on the back foot chasing your cash, and that’s not a good position to be in, in January!
So take your time and relax….. let the market ‘talk to you’ before you trade.
Let me give you a few pointers on what I do at the start of the year to get myself set up mentally and physically.
Physical set up – Trade Station & Resources
The first thing you need to do is make sure you have all the necessary resources that will allow you to analyse the market accurately and efficiently, and the tools to execute your trade plan professionally and effortlessly.
So there’s three major components to my physical set up:
- Trade Station – I have 3 x 27 inch screens which enable me to see all aspects of the market at once, plus my trading platform. Now three screens may not be essential but I’d say at least 2 is worthwhile. When you’re trading you need to see the market (Reuters) and your positions (MT4) at the same time. That way you can manage your positions and quickly ‘read’ the market when your trading live and/or analysing the market.
- Reuters Xenith – this is my connection to the market and is the single most important component of my physical set up. Without it I’d be guessing. With it I can analyse all aspects of the market (short & long term) and follow the major fundamental drivers in real time. This is the lifeline for every trader at the banks and I can’t recommend it enough. For $99 a month it’s a steal!
- Trading Software – T-Rex/Trendline Trader – If you’re using MT4 like me then you really need to invest in some professional software. I built T-Rex (live trader) and Trendline Trader (technical trader) a number of years ago to accomodate my needs. They allow me to set up my complete trade plan and take advantage of all trading opportunities whilst managing my capital the whole time. They make trading easy and FUN! Check them out or get yourself something else….because MT4 is way to slow and clumsy to use on it’s own.
Once you have your trade station and all toolds and resources set up you can really relax and start looking for the next best trade.
If you cut corners here you’ll be surprised at how much harder your making it for yourself. Don’t forget trading is a business so ‘invest in your business’ and get yourself set up properly from the start.
Mental set up – Setting appropriate Goals
At the start of every new year the traders at the banks are presented with their annual ‘budgets’. This is done in the first day or two of the new year. These are the amounts they need to make for their bonuses to kick in, so it’s very important to break them down and get yourself mentally focused and prepared.
Now before you start making up random numbers think methodically about what is appropriate for you.
Your ‘profit target’ should be hard to achieve whilst not putting you off.
For some weird reason people just think of ‘how much they would like to make’, instead of realistic expectations, and also don’t have the capital to make the numbers work.
Your starting capital is the best starting point.
You should be thinking ‘minimum’ profit targets of 100% but most of you who have been trading for awhile know this is easily achieved with good trending markets so maybe something like 300% is more appropriate.
I’ll give you an example so you can work this out yourself.
Let’s say you start with $10,000 in your account.
100% is $10,000 …. now that’s not really going to get you that excited is it!
Especially when you consider if you have 1 good trade per week that nets you a 7.5% return.
7.5% x 40 weeks (let’s leave out 12 weeks for holidays and the like) = 300%
300% is $30,000 profit. Not bad for a $10K outlay!
But the problem is most people struggle to stay on the plan. Once they start making cash they go AWOL and start aiming for 3000%. So stay on the plan and remain calm!
Once you have a realistic goal for the year it’s time to break it down into weeks and months.
Weekly = $750
Monthly = $3,000
Now don’t forget if you hit your targets in the first 2-3 months you can quickly reassess and re-evaluate your goals. But make sure you go through the same process.
Setting weekly and monthly goals is critical to keeping you focused on the job at hand.
When you are totally prepared, that’s the time to let the magic happen!
You’ll be surprised at how relaxed you will become when you are in complete control of your destiny.
Especially when you have a solid trade & capital management plan and the resources to get you there.
Then all you need to do is concentrate on your daily routine and follow the markets. It really is as simple as that.
Of course you have to have the knowledge and understanding of the market….. and that’s where we come in!
So before you start trading in 2018 take a few minutes out of your day and give it some thought.
If you’re having trouble drop us a line and we’ll steer you in the right direction.
Don’t forget trading is all about Patients, Discipline & Control.
Patient to wait for the best trading opportunities, Disciplined to stick to the plan, and always in Control of your emotions.
If you can master these three components you will be a very successful trader in 2018.
I look forward to working with you to help you achieve your goals.