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Thursday
Oct112012

4 Critical Goal Setting Tips For Emini Traders

(QQQ)(DIA)(SPY)(GLD)(JPM)

 

"People with goals succeed because they know where they are going. It's as simple as that." Earl Nightingale

 

4 Critical Goal Setting Tips For Emini Futures Trading

 

One of the most common characteristics you will find among highly successful traders is they are extremely goal-oriented. In all walks of life, people are the most effective, happy and not surprisingly the most healthy both physically and mentally, when they have clearly established goals. From the small and mundane tasks such as cleaning your desk, to more important life issues ranging from child rearing to estate planning, knowing that you not only have a goal but that you are making steady progress towards that goal, creates a state of mental clarity, a sense of purpose and destiny, and is reported to even put a spring in your step and a kind word on your lips.

That's the good news. The flip side of the coin is that poorly planned goals can have the complete opposite effect. Once we firmly establish a specific goal our subconscious kicks in gear to get 'er done. This has nothing to do with will power it's simply the way we are wired. While establishing and pursuing goals can lead to a higher quality of life, unless they are structured properly they can also lead to depression and an overwhelming sense of failure. So before we start flipping those switches and the synapses start firing let's clarify some sound and solid principles that will become the foundational structure of every goal we set both in our Emini Trading business and other areas of our life as well.

#1) Goals Must Be Clearly Defined

In order to be realistic it must also be clearly defined. When I ask new traders what financial goals they have for their trading business, I often get answers like -

"We'll you know, I just want to make some money." 

I inform them that's not an acceptable goal. The second try usually sounds more like -

"Well, you know, what I mean is I want to make a lot of money."

Nope that still doesn't cut it. At this point I see the true frustration on their face and I hear it in their voice. More than anything they just want to give me the right answer but it's about more than that. Once they get to the third try in an effort to please me they go the opposite direction and explain how what they really want is just to be able to provide for their families, give money to charity and do good works. I really hate hitting the game show "no" buzzer on this heartfelt response but I'm forced to do it. They just went from being Gordon Gekko to Charles Ingalls. Truth is you can be either one you want, but not without a clearly defined goal.

In complete exasperation they blurt out "What is it you want me to say?"

What I'm chasing here and the point I'm trying to drive home is that a true goal can have no ambiguity attached to it whatsoever. You're about to throw a very important switch in the back of your brain and your subconscious is going to labor 24/7 to make it a reality. You better make sure it has the proper instructions. Haphazard directions will not only stand in the way of success but it can make you feel a little bit frustrated, angry and eventually crazy. Sometimes paranoia shows up just to keep the others company.

As with any business plan you need an earnings projection. Of course your business plan will cover many other things such as capital expenditures, recurring fixed expenses, initial investment, the legal structure of your trading entity, etc...  Those items are more along the lines of factual fill in the blank type answers. What I want here is your earnings projection. What I want to hear is a hard dollar amount. You can project it daily, weekly, monthly, quarterly, anyway you want because it's your plan and your goal. As we work through the next 2 steps you will better understand why it is absolutely that your goals be well defined.

#2) Goals Must Be Realistic

This means your goal must actually be within your capabilities. Is it possible to make $50k your first year a a trader? Yes. Is it possible to make $500k? Yes.

"Can I make a million dollars?"

Again the answer is yes because with trading literally anything is possible. A realistic goal is just as important as a clearly defined one. If your goal is not realistic you will fail to achieve it. If you fail to achieve it you run the risk of beginning a downward spiral. That's not to say you can't or won't pick yourself up and take another run at it, but after a successful string of failures it can be difficult for even the strongest to bounce back. Keep in mind, you're entering an arena where some make 8 figures a year and 90% fail to last a year. Don't be discouraged, I'm just being brutally honest about how important the goal setting process really is.

So what is realistic for a new trader? Initially you will spend 1-3 months in training (possibly longer) before you begin trading real money. Once you begin trading live we teach you to strive for 2 points a day net. You will only be trading 1 contract so that works out to be $100 dollars a day. I will encourage you to pursue this course of action for 2 weeks. If you are successful on this mission at the end of 10 days you will have earned $1,000.00. Intraday margins for the S&P 500 Emini Futures are $600 per day. After completing your first goal of earning $1,000.00 I will suggest that you increase your number of contracts traded to 2. You've proven yourself pretty effective at this point when it comes to capturing 2 points a day net. It's a clearly defined goal and it is also realistic. Let's not tinker with success just yet. There will be plenty of time for that later.

What happens if at the end of 10 days you haven't netted 20 points (2 points per day average)?

We figure out why. During your training period you established in the simulator your ability to capture 2 points a day net. That's how you graduated to Live Trading. Before you ever put 1 dime of your risk capital to work, you have already established that 2 points per day net is realistic. At this juncture we can return to the simulator for a few days, a week or however long it takes to isolate the issue that is hampering your performance. It's a fairly simple process of elimination and once we nail it you move back into the live account. We know the 2 points per day net is realistic, now we just need to reach our goal of doing it 10 days in a row. Perhaps this time it goes off without a hitch or maybe we encounter a new issue. No problem. We move back into the simulator, isolate the issue, resolve it, and move back into the live account. 

You will repeat the process as many times as it takes until by your own hand, with your own skill, you prove your ability to net 2 points a day for 10 consecutive days. You have removed any element of luck, good or bad, you have proven to yourself that this has nothing to do with gambling and everything to do with learning to put the odds in your favor as you pursue only high probability trade setups.

At this point we have

  • A clearly defined goal
  • A realistic goal

We have succeeded. We're healthy, happy, we even have a spring in our step. I want you to step back at this point and understand what an important milestone you have reached and the full scope of your achievement. The amount of time it has taken you to reach this point is not important. You are building life skills that will serve you for the rest of your career and if managed properly will serve generations to come. In an industry where some traders earn 8 figures and 90% of those who want to become traders fail, you have made the cut. You've crossed the line. You are no longer just some guy or gal with money in an account somewhere, you are a Trader. Smile, take a deep breath, walk in humility.

Now we have to make a very important decision. Where do we go from here? Remember we upped our number of contracts to 2. This means that every 5 days we net 2 points we make $1,000.00. After 15 consecutive days of netting 2 points per day you have now earned $2,000.00 from the market. At this point I will suggest that you add a 3rd contract. You began with no experience or very little. You defined a goal of 2 points per day and you've proven it to be realistic. With the addition of the 3rd contract, every 5 days that you net 2 points will bring you $1,500.00. With holidays factored in have you created a job in a bad economy that pays approximately $75,000.00 per year?

Did you earn $75k at your last job? Whether you did or not that figure puts you in the top 25% of all wage earners in America. Let's look at the next step. 

#3) Goals Must Be Attainable

This is very similar to #2, your goal being realistic. For the goal to be attainable it must be in your wheelhouse. (to use a little pop vernacular) In other words the goal is only attainable if it falls within your scope of capabilities. The good news? Based on how we train you and based on how firm we were with you about insuring your goal was clearly defined and realistic, step #3 is practically already in place. 

Your clearly defined goal was simply to net 2 points a day. Correct?

Your clearly defined goal was also a realistic goal. Correct?

Had you stepped in with some of the half-hearted well meaning goals we discussed earlier you would probably still be struggling or out of the game by now. Had I allowed or encouraged you to pursue an unrealistic goal of a million dollars your first year you would have probably spun out of control and blown up your account. 

At this point you're almost on cruise control. You defined a realistic goal and attained it.

There is a 4th and final step to successful goal setting. Please keep in mind that just as we walked through these steps as they apply to Emini Futures Trading, this structural foundation will work in every area of your life from being a better steward of your resources to running a marathon.

#4) Goals Must Be Measurable

Unless you can measure your progress, how will you ever know when you arrive? It's that feeling of accomplishment I'm talking about that comes when you plan your work and work your plan. Did we not measure each and every step of our progress on this journey to the top 25%? And when things didn't measure up we knew exactly what to do. We did not get discouraged, we did not get depressed and no computer monitors were harmed in this goal setting exercise.

Now that we're here, not only will you continue to measure your success, but over time using the exact same method that got you to this point, you will probably choose to raise the bar. If there's a setback you will know exactly how to handle it and how to get right back on track. 

After a year or two you might find that you've earned your way up to trading 6 contracts at a time. You may want to sit down...  that will put you in the top 5% of all wage earners in America.

 

Definable - Realistic - Attainable - Measurable

 

Trading is not without risk. You should only trade with money that you could afford to lose. You should always consult with a licensed investment professional before making any investment decision. Our training embraces aggressive risk management practices. You are invited to spend a week with us at no charge. We will work to identify your strengths and help you set personal goals as you chart your course to becoming a Professional Emini Futures Trader.

 

As opportunities unfold we will keep you posted.

 


 

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Emini Podcast for Wednesday 10/10/12

Reader Comments (1)

I enjoyed this article. I am a goal oriented person and 2 points a day is a great goal that I myself am trying to achieve, consistently. In the above example, the assumption is that you make the two points every single day. let us say your first two trades have produced a 4 point loss, now with this goal, I have to recover 4 points and then make two more points, to make my daily goal. This puts so much pressure on the trading that I find that I make mistakes and get into a worse hole. Because making 6 points in the remaining part of the day may violate being a realistic goal?

Can we address this and address losing days and how to handle them ?

Thank you,

Kailash

Oct 13, 2013 at 7:23 | Unregistered CommenterKailash

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