We’re Back!

Last week we talked about the big goal, the vision, the dream!   Did you take it seriously?  Did you give it a lot of thought and complete your homework?  This week we will look at what it actually takes to achieve the big goal. This is where the rubber meets the road.  This is where the work begins.  This is where the transformation begins. Work? Transformation?  I know what you’re thinking….what the heck is he talking about?  Please allow me to explain.  Have you ever set a goal or wished that you could do something different and then as time passed it just didn’t materialize?  I’ll bet most of you have.  The rare thing is when people actually sit back and reflect on why that goal or wish didn’t work out.  Would you like me to tell you why it didn’t happen?  Do you want to know the big secret?  Do you want to know the key to a happy and successful life?  Well, Read On!

Now, let me first say, I don’t know the secret to the meaning of life.  I am not as enlightened as Gandi or Mother Teresa or Bobby Mcferrin (he is the don’t worry be happy guy). However, I have done some reflection on my life and tried to figure out why things sometimes work out and sometimes they don’t.   This is what I have learned.  To do something you have never done before and be successful at it you need to become the kind of person that is successful in that endeavor.  You need to transform into a different, and dare I say, better and more enlightened person.  That is the transformation I spoke about, this is the work that I spoke about.  You are going to transform yourself into a successful trader.  That is why you have come to this place, that’s why you have put your faith in Tackle Trading.  The only question left is how do we make that transformation?

This brings us back to the concept of goal setting.  Last week I said that after we have the BIG GOAL locked into our subconscious,  then we need to break it down into both activity goals and measurement goals.  From a trading perspective, those are learning goals and money goals.   To reiterate, we need activity goals to begin our transformation and money goals to gauge our progress.

First, let’s talk money goals because they are relatively easy and fun to think about.  With our money goals, we need to take the big amount and break it down into smaller, more manageable amounts.  Now, we need to remember that even when we are breaking down the bigger goals we need to make them SMART goals.  They have to be specific, as, in a dollar amount, they have to be measurable, also contained in the dollar amount.  They have to be attainable, this is where people, by human nature, can have a little trouble.  Most folks, myself included, have trouble being patient.  We want that house on the lake and we want it now!  This is where the transformation begins.  To be a successful trader you need to learn patience.  One of the biggest concepts for a new trader to learn is that you have to be patient enough to let the market come to you.  If you try to force a trade in the market, you will lose money.  You may not lose every time but let me tell you from experience you will lose by trying to force trades.

So for your goals to be attainable they need to be realistic in nature.  This means if you have starting capital of 10k and you are expecting to turn that into a million dollars by next Thursday then you may have a problem.  With this portion of goal setting, we need to think about what a realistic return might be and work from there.  Let’s ask ourselves a few questions.  Is 100% per year a reasonable rate of return?  Is it possible but not reasonable for someone that is new to trading or investing.  How about 50%? How about 20%?  Do you see where I am going with this?   If you think about reasonable rates of return you also need to consider the experience of the trader.  It has been said in trading circles that good, experienced traders can reasonably do 3-5% per month, brand new traders should shoot for approximately 1% per month or just over 10% per year.

So, if you have starting capital of 10k and then for five years you compounded your returns you should be at just over 16k.  This assumes you don’t evolve as a trader which we know that with hard work you will so you can work this into your calculation.  Again the key here is to be reasonable with you estimate.  An extra little tip is that when you have your goal set from your estimate then stretch it just a little bit more so that it becomes a motivator.  For example, if your estimate came out at 55k in five years depending on your starting capital and experience then maybe stretch that to 60 or 65k.

The relevant part is also tied into the aforementioned paragraph.  Relevant and Attainable can be rolled into reasonable.  All I am saying here is that your goals should be large enough to motivate you to get outside your comfort zone but not so large that they seem unreachable.  The last part of the goals is time bound.  We must attach a date to these goals otherwise they have no energy behind them and how would you know that you are making progress towards your goals?

To summarize the money goal portion of your destiny,  break down your BIG GOAL into steps that are achievable, relevant and dated so that we can revisit these goals to know if we are actually making the transformation that we need to, to become the person that is a successful trader.  So this weeks homework is to get your money goals broken down and written down and imprinted into your mind.

Next week we are going to go through the activity goals.  These are the changes in mindset that we need to achieve to bring us to our ultimate success and complete our transformation from Rookie to Seasoned Trader.  Our activity goals are going to center around the four parts of a trading foundation.  The four parts that any successful trader needs to become proficient at are Fundamental Analysis, Technical Analysis, Cashflow, and Risk Management.  Next week we will break down our activity goals and set objectives on learning these four subjects and setting aside time to practice and perfect their execution.