Trading Question: What if I lose because I get too eager to reach my goals?

In response to my previous series on improving trading performance (check out part 1 and part 2 of that series), a trader and blog reader emailed me a great trading question.

Trading Question

I have been grinding out small profits lately by telling myself that I am willing to not take any trades on a given day.  It seems to be working as I am taking most of the good trades I see and avoiding eagerness and bad trades. The problem is when I set monetary goals or how many points I could make I tend to be too eager and typically lose money or breakeven.  I wish I could set goals of beating my best like you said to get better faster but I dont want to become overeager and take poor trades when I am now finally starting to get good. Can you provide some advice on this?

Performance Insight

This is a great trading question, and I wanted to highlight it in this post because it will allow me to clarify my previous posts while serving to help others who may have the same issue.

To put it briefly, traders need to focus on process even when they have quantitative goals. When I talked about always setting new goals to beat your best, I wasn’t referring to coming into the day with a specific goal of beating your best point or dollar total that day. Rather, the goal should be a general motivational tool that serves to accelerate your learning and improve your focus. The goal is what gets you to work harder, study the markets more, and dig deeper. Because of the goal, you’ll be more prepared on any given day to beat your best. But you shouldn’t come into the day trying to force it.

You see, there’s a difference between forcing it by becoming too eager, and focusing on process while taking what the market gives you. This trader is doing the exact correct thing in being willing to not take trades on any given day if the opportunities aren’t there. He’s not forcing it, and because of that he’s doing well. Having a goal to beat his best doesn’t have to make him force it and get into bad trades. That’s not what it’s about. He shouldn’t come into the day trying to beat his best by enforcing his will on the market. Rather, he’ll already be in a position to beat his best because of all the work he’s putting in as a result of his goal. The goal is pushing him to learn to read the markets better and to execute better. This growth in skill will allow him to eventually beat his best, and to continually achieve new bests. But these new bests will happen naturally on their own when conditions happen to be right, and he trades correctly. They won’t be forced with artificial points targets and over-eagerness on a specific day before it can really be known what that day will provide.

My Advice

To this trader I say to keep doing what you’re doing, but create the goals as general signposts to make you work harder and accelerate your learning rather than making them specific goals for any particular day. Then, when the right conditions are there all the hard work will pay off and you’ll naturally beat your previous best. You won’t know which day that will be and you won’t try to force it ahead of time. You’ll focus on the process and let it take care of itself.

So model the top golfers. They’re always trying to beat their best and score the lowest round they can, but their mind isn’t on a specific number when they’re out there on the course. Instead, on the course they’re thinking about one thing and one thing only: correct process. And they know that if they do everything correctly in terms of process, when conditions suit their style and things click, they’ll post that great round. So emulate that in your trading, and you’ll do great.

Do you have any problem areas that you have questions about? If so, feel free to ask any trading question you’d like in the comments section below.

  • Emini wizard

    nice blog/post article. Any forum that allows traders to interact and learn from each other is welcome. Low volatility lately has been the norm, but over time markets tend to reverse to the mean. Remember vix 90? Many of our traders want more action and have tried to migrate to other vehicles. I have suggested to them THE GOAL is survive this period, dont force trades, and when we see traders trapped, join the winning team. Today that idea played out in spades for the emini sp.Hard enough being proficient in one or two vehicles, why re invent the wheel?
    Well done Ziad/ Awais

    • Thanks Emini wizard! I absolutely agree with what you’re saying…. as traders we often have to survive tough periods. This isn’t a 9 till 5 job where we get paid consistently by the hour. The majority of our profits come from a minority of days, and one of the key things all traders must learn to is how to survive the lean periods when the market is slow. It takes a certain understanding of the volatility cycle to be able to do that. But holding on to your money during this un-conducive periods is truly key. I think this warrants a blog post! Thanks for the insightful comment, and glad to have your participation on the blog.

  • That´s really good completion of preceding topic Ziad, thank you.
    For me it´s absolutely crucial to focus on process, that is what really matters. Once trader accept it,he´s much closer to succeed. It also removes lots of negative emotions, such as frustration, demotivation, etc.
    And beating my best is now exactly what I need to do.

    • Absolutely Petr, focusing on process allows you to decrease a lot of the negative emotions that are tied to $ and points. Glad you liked the posts.

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