One theme I've been stressing with traders early in this new year is that having goals isn't enough to ensure success. It's what you do with those goals that counts.
Too often trading goals are like the resolutions at the start of the year: good intentions that never see concrete follow-through.
The best goals are ones that drive incremental performance improvements. How do they do this? Here's a rundown of what makes goals work:
1) The best goals translate into daily activities that move you forward. When a person joins AA, they work the steps--and their recovery--every day of the week. "One day at a time" is more than a motto, and there's good reason for attending 90 meetings in 90 days: when goals are pursued daily, they are more readily internalized. Like they say in AA, "Bring the body and the mind will come." Do something often enough and it starts to become part of you.
2) The best goals build on strengths. It's not enough to do less of the negative things in life and trading; goals must also identify what you do at your best, so that you can be more consistent with that. Goals that capture the best within us are most likely to be motivating and become a part of daily life.
3) The best goals are specific and action oriented. Goals that are vague and general (I'll show better discipline in my trading) don't get at the concrete actions that you'll take to move your trading forward. Good goals are ones that can be measured, so that you'll know each day whether you're on track or off. That means that, every day, you'll be getting feedback about your success--and can use that feedback to generate new, refined goals.
Every single trading day and week, you should be able to answer the questions, "What are you working on in your trading? How will you be working on it? How will you know whether or not you're successful?"
If you have specific answers to those questions, you've gone a long way toward transforming trading into a performance activity.