Sometimes I know exactly how I feel about a topic. The die is cast before I sit down to share it with others. Ask me to pen a piece on iron condors, and I know the blueprint before I begin. Other times I haven’t entirely thought through where I stand on a concept. Today is one of those instances. I’m writing to discover how I feel.

Here’s the topic. And, quite honestly, I don’t even have a concise phrase to encapsulate it. Suppose you have a monthly $400 car payment. And because trading offers the potential to generate profits, you decide you want to learn a strategy or, better yet, a system designed to pay your bill.

Since you want to link the system’s profits to your automobile payment, you name it your “Pay My Car System.”

Here’s my question. Is it smart to start with a goal of what you want to do with your gains, and then work backward into a trading system that can generate said desired profits?

Or, would it be better first to learn how to make money, and then identify what you want to do with the gains?

I prefer the latter approach. Here’s why.

Pay My Car System Forte

The one aspect of the first approach I like is it causes you to keep your “Why” front and center. Traders who maintain the vision of where they want to go, what they want to do with their success, will have a higher commitment level, more sticktoitiveness, than the rando who forgets why he started down the investing path.

To the extent that method one helps you do that, it’s a good thing.

Pay My Car System Flaw

And yet, in my experience, traders who focus too much on the first approach take more risk than they should and force trades.

Hey! I have to make $400 for my car payment. If I buy a few calls and win then bada bing bada boom! I’m good to go!

What’s that? I lost? Yikes! Now I need to make $800? No sweat, I’ll buy more contracts. Fast-like. That payment is due on Friday.

The Pressure Cooker

To me, appropriate goals arise organically as you build systems. First, learn how to make money. Then you can assign the profits from each one to a particular bill or venture.

This method focuses on process over outcome. It puts you in a position to create a realistic goal after you discover which systems you have the skills and temperament to deploy.

The goals-based strategy selection is allowing the tail to wag the dog.

If you come to me during a mentorship and ask which strategy I suggest so you can make a car payment each month here will be my response:

Me: Which strategies do you know how to make money with? Which ones have you built a system around that matches your risk tolerance, personality, and skill set?

You: I don’t know.

Me: Then how can we set a realistic goal? Let’s first build a system you are comfortable with and consistent with. Then you’ll have a better idea of whether that system has can generate a car payment worth of gains.

If it does, then you’re set. If it doesn’t, then maybe you need a more aggressive system or a larger account.

Or maybe, it goes like this:

Me: Which strategies do you know how to make money with? Which ones have you built a system around that matches your risk tolerance, personality, and skill set?

You: Cash Flow Condors!

Me: Great. How much of your account are you allocating to the system? And based on the typical result, what is a realistic goal we could set?

Ok. I think I’ve made up my mind. Want to change it? Think I’m off base? Let me know in the comment section or in the clubhouse.

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