If you want a million Dollars trading,

don’t focus on the money. Do this

instead….
When people get interested in trading, there is usually only one reason behind it:
money. And there is nothing wrong with it. Trading is a great opportunity to generate
an income where you are not paid by the hour and you can even set up your trading in
a way that it generates a more passive income stream where you make some money on
the side.

This is all good and being motivated by money can be a great driver. However, this can
quickly change into the contrary when a trader approaches his monetary goals from a
wrong perspective. In this article we want to highlight some research findings that
show that when people view money in the wrong context it can actually harm their
trading and, then, we want to help you adopt a healthier relationship with it to set
yourself up for success.

If you need money, you won’t get it – research confirmed

When it comes to being driven by money, there are usually two things that happen
when a trader has a wrong perception:

#1 Unrealistic expectations

We are all guilty of that to some degree: when starting out as new traders, we projected
that it would only take a few years to turn a few hundred or thousand Dollars into a
huge pile of cash and quit our day jobs. Having unrealistic goals quickly leads to
frustration when those expectations aren’t met. The quitting rate for new traders is
astronomical (40% quit within 1 month) and one of the main reasons are probably
wrong ideas and expectations.
 Source and references here

Once a trader sees that trading isn’t going to be the easy and fast way out, there are
usually three things that happen: he either quits, he takes a riskier approach to trading
(larger positions, more trades, gambling mentality), or he starts system-hopping if he
still believes that there must be a trading method out there that can generate those
returns.

Investors with a large differential between their existing economic conditions and
their aspiration levels hold riskier stocks in their portfolios.

– Kumar: Who Gambles In The Stock Market? – Accessed through: econ.yale.edu

#2 The need to trade

High expectations, as we said, can lead to taking more trades and increasing risk to
meet return goals. As we will see shortly, setting yourself goals for X amount of money
is the surest way to trading failure.

Especially traders with small accounts struggle with that because they soon realize that
a small account will not get them to where they want to be. Although you can read that
trading a small account is no different, it’s just not true. Trading with less capital is
definitely harder – much harder. With a small trading account, your wins are often
close to meaningless which then creates the need to trade more and introduce more risk
in your trading.

High net worth investors are likely to have lower turnover.

– Anderson, Stranaham: Account Turnover and Demographic Profiles: Which Investors

Trade Too Much? – Accessed through: Bradley.edu

What not do when it comes to trading goals

When it comes to setting goals, there are a few don’ts and I will explain why you have
to avoid them at all costs if you want to become a better trader.

#1 Daily/weekly return goals

I see so many traders say that they want to generate 3%, 4% or 5% per week because
they have calculated that this will help them achieve their goals in a certain amount of
time.

Monetary goals are the worst of all because it creates the need to trade and it puts the
traders in a constant state of hunting for signals. 99% of the time, such traders will
never meet their goals and they end up losing money because they take mediocre
trades, hoping to realize their target.

You can’t control how much you can take out of the market. The only thing you can
control is the risk of your trade and the types of trades you take. The outcome is not in
your hands. Some weeks, you will get more and better trades and sometimes you just
have to sit it out. You have to eliminate the need to trade as much as you can.

#2 Capturing x points per week

Go to any trading forum and you’ll see people looking for methods that give them 20
pips per day or 100 pips per week. Again, those traders tackle the problem from the
wrong side and measuring performance in pips is meaningless because you neglect the
risk-aspect of your trades.
Traders who set themselves points/pips related goals are more likely to close winning
trades too early when they hit their goal and rob themselves from making larger gains.
Or, they desperately try to ride trades too long and then end up with nothing. Always
stay open-minded and take what is available.

Characteristics of good goals

When it comes to goal-setting, whether it’s trading related or in your regular life, you
have to set goals that can be achieved through your own actions. Often, people set goals
that they have no control over and then they are frustrated when they don’t reach them.

This becomes obvious when we come back to our two anti-examples. Setting yourself
the goal of achieving a certain amount of %-return is not going to work because you
have no control over it and no matter how hard you try, your actions don’t control the
outcome. You can’t control if the market gives you enough signals, if the signals lead
into profitable trades and how long you can ride your trades.

The graphic below compares the things that we as traders can’t control and the things
we can control in our trading. At first glance it is obvious that 90% of all traders focus
exclusively on the left side and they try to control the uncontrollable. They are even
often completely blind to the fact that as traders we have so much things we can
influence and then see themselves as victims.
By the way, there is a great non-trading related TED talk about setting goals, being your
own coach and think in terms of the process: Building your inner coach by Brett
Ledbetter

The right goals

Now let’s explore how goal setting is really done in trading and what you should be
focusing on if you want to become a better trader. Here are 4 things that will almost
guarantee trading success:

#1 Execution

This is also the so-called process-oriented mindset where you detach yourself from the
outcome of a trade and only focus on making the best trades possible and follow your
rules as closely as possible. It sounds cliché, but it’s the so important if you want to
improve as a trader.
Even with a good system, you will often have losing trades and there is nothing wrong
with that. You only have to control your reaction to those losses. Thus, you should
accept that as long as you follow your rules, you have done your job as a trader and that
it’s not your job to force trades into winners.

#2 Routine

Many (or most) losing traders don’t follow a routine and their trading is all over the
place. A good routine will help improve your trading A LOT because it adds structure
and a new level of professionalism. I love and honor my routine and it gives me
structure and certainty. I know that as long as I follow my routine and do my work, I
have done everything I was supposed to do.

My edge is directly related to the quality of the work I put into my trading.

#3 Habits to form a routine

This ties in with the previous point. We have all heard the quote below so many times
that it has lost its meaning, but it so true. A professional trader is a structured and
organized trader who has adopted good and helpful habits.

We are what we repeatedly do. Excellence, then, is not an act, but a habit. Aristotle

Here are some of my personal habits that I connect with successful trading:

� Setting a few hours aside every Sunday to recap my last trading week and create
extensive trading plans for the upcoming week.
� Using a physical checklist before entering trades to make sure I avoid
unnecessary mistakes.
� Journaling all my trades after I have taken them.
� Performing a detailed performance review each Saturday and going over all my
past trades once again to find weaknesses and analyze trading behavior.

You can see, there is no secret or something earthshattering new here. Successful
trading is the sum of repeating good habits that form your routine.

A personal tip: create an environment where you enjoy the process. Each Sunday, I start
with a gym workout, I go for a swim and have a good breakfast at my favorite
restaurant. Then, I head to my favorite coffee shop and do my Sunday prep for the next
4/5 hours while enjoying amazing coffee, nice company and some good music. I
wouldn’t miss this routine for the world and for me this does not have anything to do
with work.
#4 Recognize and focus on progress

This is especially important for new traders or people who trade with small trading
accounts. It’s very easy to get demotivated and frustrated if you are not seeing the level
of success you were hoping for. However, to make sure that you are growing, focus on
how far you have come already. Remind yourself of where you are coming from and
how you started and how much progress you have made already. It’s unrealistic to
believe that you can become a professional trader within 1 or 2 years, but by making
constant improvements week after week, succeeding is not an accident but it’s
plannable.

“You don’t try to build a wall. You don’t set out to build a wall. You don’t say ‘I’m
going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start
there. You say ‘I’m gonna lay this brick as perfectly as a brick can be laid,’ and you do
that every single day, and soon you have a wall.” – Will Smith