Setting realistic goals for trading is essential if you want to stay motivated and focused. Most traders set themselves too high when they start out and then get frustrated six months or a year down the line. To keep your instincts on track, you must set a goal that you can reach within six months. Here are some examples of realistic goals for forex traders:
Process-based goals
While it’s easy to focus on the money, it’s not necessary to achieve everything with monetary motives. Setting process-based goals will allow you to focus on the details and follow your trading plan with utmost efficiency. To achieve a process-based goal, set small chunks of progress and stick to them. Moreover, process-oriented goals can be more effective in trading since they’re measurable and specific.
Most new forex traders choose to set profit-oriented goals in their trading, especially if they’re trying to surpass a certain threshold. However, this approach can be dangerous. Focusing too much on profit-making can lead you to make poor decisions and miss opportunities. By contrast, a process-based goal is an excellent strategy to follow if you want to succeed consistently in your trading.
Trading is a relative art. Success is achieved gradually.
Sudden leaps in profit aren’t indicative of progress; they are the result of luck and good trading practices. Instead, set progress-based goals to measure your trading progress. Setting goals can assist you in staying motivated and learning more about trading.
Review markets at least three times a week.
By reviewing markets for at least 30 minutes each day, you can spot trade opportunities and set monetary or pip targets. This time spent can be counted towards your defined trading goals. Keeping track of your trades will help you make informed decisions when evaluating the markets. Also, a trading journal will help you identify areas where you’re weakest. If you’re weak in one area, set another goal for yourself.
Taking half of the setups and trades you took in the previous month
Whether you trade a day, hour, or minute chart, setting a realistic trading goal can help you stay focused and motivated. Aiming to take half of the setups you took in the previous month is a good way to achieve this. A more aggressive goal might be to take one-third of the trades you made the previous month. Setting a realistic trading goal is also useful if you want to increase your profit potential.
In order to reach this kind of realistic goal, you need to focus on your trading plan and method. Focus on managing risk and preserving capital. Profit will follow. Instead of trying to trade for a large number of trades, you should focus on trading a limited number of high-probability trades. You should practice what you preach. Crocodile trading, or sniper trading, is a great way to make money from forex.
You might get tempted to set a high bar for yourself when you first start trading in the forex market. However, it is extremely important to set attainable goals that are both challenging and realistic. A realistic goal should be about 3% of the size of your account, which is roughly $300 on a $10,000 account. If you can manage to make this amount of trades in a month, you will have made approximately $1,500 in that time.
Setting financial goals is not advisable for beginners. Though you might get lucky for a few months, the laws of the market will catch up with you. This is because most forex traders are not consistently profitable. The best goals for traders are sequential. They begin with process-oriented goals and then move on to measurable goals. If you’re looking to increase your trading profits, setting a realistic goal will make you more likely to meet them.
The most crucial attribute to remember when setting a trading goal is to be realistic. No one can make money in the forex market if they take 50% of all trades. However, that is not the case. Even if you make 50% of all trades, you will still need to do some basic groundwork to identify profitable trades. You should review the markets at least every three days to find opportunities. This time can be part of your trading goal strategy.
Most new traders set the bar way too high and often get discouraged six months or a year down the road. This happens because they haven’t set realistic goals. Having a realistic trading goal will keep you motivated, focused, and on track. This is the best way to improve your trading performance. By setting a realistic trading goal, you’ll see your progress.
Protecting your trading capital
Managing risk is a critical aspect of forex trading. Traders use limit orders and stop orders to reduce risk and protect profits. Trailing stops following the position as it moves in the market, protecting profits when the market reverses. Contingent orders, such as a stop loss order, may not limit your risk but allow you to protect profits. If you’re not finding yourself comfortable with this level of risk, try using a stop order instead.
The most obvious risk in trading is market risk. A trader who believes the US dollar will increase will lose money if the EURUSD falls. Traders who use leverage, which involves opening trades of larger value than deposit size, are also exposed to this risk. This can lead to greater losses than the deposit. Therefore, traders should carefully manage their trading capital. By following these tips, they can minimize their risk and increase their profits.