How to Set Realistic Goals for your Active Trading

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Each month new traders open accounts with aspirations of earning princely sums of money from their computer.

Some even have the dream of quitting their job.

What makes rational people believe they can enjoy the life of the four hour work week? Why do so many chase the illusion with single minded purpose?

The easy answer is financial security but the real answer is freedom. Deep down we want to be in control of our choices. For many, those choices are limited by money.

Why the Odds Are Stacked Against You

It takes time to develop the skills to earn money. Most people enter the markets with a desire to earn money from the start. This can be tough because you are competing against the top money managers, computers, your resources and your ego.

Yes your ego.

You will be your greatest threat to your swing trading success. Most new traders can’t handle being wrong.

When a trade doesn’t make money, many new traders hold losers too long and this creates a wall of denial. This is when the hope strategy comes into play. They hope the market does them a favor.

What to Do When This Happens To You

First start out with goals that match your resources. Your resources include your experience. You need “screen time” to learn how to trade. This comes in the form of:

  • Learning a strategy
  • Following professional stock picks and learning from them.
  • Scanning for new ideas.
  • Learn money management to ensure you earn as you learn.
  • Be focused on probability, stop loss and profit targets.
  • Place trades and keep a detailed journal

How to Eliminate the Problem Before It Happens

The solution is a time-tested method of choosing a dollar amount to risk. You must choose a dollar amount you are comfortable risking on an idea. If the trade happens to not earn money. Prior to the trade you will accept a potential loss.

This means you will treat the losing trade as nothing more than the cost of doing business. No ego protection involved.

 

About the Author

Pete is a full-time trader and mentor since 2000. Author of Equity Trader 101 and the Order Flow Method. He is dedicated to help self-directed traders to bust through the six-figure level.

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