Thanks Sanju for sharing this structured approach of setting goal. It very well addresses the HOW part of setting goal. We should keep SMART parameter in defining the goal..
But it does not address WHAT part of my question.
I have seen majority of trader (including me in my early days) start with "I want to make X amt of profit in Trading". Without knowing what trading is, what are the core pillers of trading, without having any strategy etc.. this goal most of the time goes in dust bin. In my view, Profit is by-product of trading. If we perfect the art of trading, then profit is guranteed, it is just matter of time.. But I think, it doesn't work in other oppsite direction.
So, according to me.. if I have to set the goal addressing the foundation of trading.. then it would "Learn to keep my losses small".
Loss means accepting that I am wrong. It is difficult cause we are hard wired in outside world to be RIGHT always. In that world, being wrong has -ive consequnces.. and hence we can't react in the same mindset here too.
Out of 4 outcomes in trading (big profit, small profit, small loss, big loss), only thing that needs to be avoided is 4th outcome. And hence most challenging part is our hesitation in accepting small loss.. which finally turns in to big loss.
Some people might say that if we focus on loss, then we will attract only loss.. which might be true.. hence we have to keep our goal clear. And once we have achieved some level of perfection in keeping our losses small, we have to move our focus to profits.
Now coming to how part
- Define your per trade/ per day/ per week/ per month loss limits
- develop yr approach for how u are going to implement it
- Select instrument where u can trade your strategy with these limits
- Paper trade / market reply in amiborker and take trades meeting these criteria, put stoploss and let your eyes and body see those stops getting hit
- come to real market and trade with such small loss limit (It can be as low as 10 rs per trade risk.. where u just buy 1 qty of stock and put 10 points stoploss as per your trading approach). Ofcourse need to watch the brokerage part..hence find suitable brokerage
"Idea here is not to make killing money.. but to learn to keep losses small".
- Track your performance at the end of month and rate your performance and see if things have improved or not.
Benefit -(1) your mind will start accepting that a loosing trade is not bad. You will have to keep passing that msg to yourself.
(2) You start seeing stops and do background calculation quickly and improve yr skills to keep losses small.
(3) You would know when to slow-down and apply break on yr trading.
This will be my approach.. but I am sure, people might have different opinion.
And nothing wrong in that.. cause we all are individual and have our own preference. I would be happy to get feedback on this.
Hope this helps
Have enjoyable trading
