Goals For beginner Traders

With all the information out there it can be hard to filter through and decide where to start. Setting goals can help, but often novice traders set the wrong type of goals when they decide to start trading. With this is in mind, as a novice trader your initial goals should help you to eventually make money, but making money should not be your goal. Instead, opt to make your initial goals about process and emulating traits of professional traders. By plunging into the market and expecting to make a certain amount of money, the goal becomes almost impossible to reach over the long-term. These types of goals require that the trader actually know the capabilities of the trading plan they are employing.

One must know the potential and pitfalls of the strategy they are employing. Based on the method being used, it may be impossible to reach a dollar or percentage goal, but it still could be valid and provide a good return; therefore, the trader must either abandon the strategy or deviate from it in an attempt to find more yields. For many traders this becomes an endless cycle of abandoning strategy after strategy or never being able to adhere to a plan. Greenhorn traders must not only become knowledgeable about the markets, but also about themselves. Focus on the process and attempt to perfect that, and results happen on their own. Attempting to achieve results without perfecting the process the markets will likely continually take your money.

Most businesses take quite a bit of time before profits come, and many, many more businesses fail completely. Trading is no different. Results will not come instantly, and if they do it is likely due to luck. Without understanding how the markets truly work and developing a winning process, the results are based on chance, not skill. In order to build a winning process for trading the markets, try using these three goals. Focus on mastering these areas from the very beginning, and positive results are more likely to ensue.

Have a Plan

The plan should include how trades will be entered, exited (profits and losses) and how money will be managed. The plan should be very detailed, outlining the markets that will be traded, risk parameters, if filters will be used on trade signals, what constitutes a trade and exit signal, position size and what market environments will be traded. Therefore, the goal here is to create a complete plan for trading the markets before making another trade.

What not to Trade

Beginners will push to achieve that goal even when opportunities are not present. The market does not present statistically probable trading opportunities at all times. In the markets this can erode profits that came during good trading times. When, and when not, to trade should be covered in detail in the trading plan. Make one of your goals to be as disciplined as possible, only making trades that are outlined in the plan.

Keep it Simple

A complex strategy can be very appealing. Many people believe that because something is complex it is more likely to work than something that is simple. Avoid getting too complicated with your analysis and trading strategies. Avoid the desire to make a winning trading plan more complex, usually this only results in destroying the profitability. If you like the stock market, stick with trading stocks. If you like commodities, then trade Futures. Focus on only one market and a couple of simple strategies when starting out. The goal here is to avoid constant tinkering in order to improve performance, or continually switching markets, strategies or analysis methods. Stick to the plan. If it occasionally needs to be reworked a bit that is fine, but keep the revisions simple.