When it comes to improving trader performance, many people think in terms of goals:
- I want to make a Million Dollars
- I want to obtain a 65% win rate
- I want to find 4 trades each day
And things get even worse when people use the goal of “being a trader” to solve their day to day problems:
- I hate my boss, so I want to become a trader and be my own boss;
- I want to make more money, so I want to become a trader and make millions;
- I want to be mobile, so I want to become a trader and trade from anywhere.
Sadly, thinking this way usually gets people into more trouble. Let’s see how we can get from point A to point B in a safer and much more reliable way. It all starts by transforming your goals into habits.
Thinking in Terms of Habits
New Years’ resolutions usually dissipate within a few weeks – or sooner. “I want to lose 30 pounds”; “I want to build a six-pack”; “I want to make twice as much as last year”….whatever the goal, most people fail.
I believe that goals can hurt us more than help us. A static goal like “I want to be a trader so I can make more money” does nothing to actually move us in the desired direction. What’s worse is that we may start chasing vague concepts like wealth, success, happiness without even knowing what we really need. We might be pursuing goals that are not possible, regardless of the amount of effort we put into it.
Furthermore, goals are static. Once you reach a goal, you will need another to keep going. And another. And another. There really is no satisfaction when your life starts to look like a never-ending sequence of checkpoints. After reaching a goal, many people actually mean-revert and fall back into old habits.
Goals can get derailed by life’s curve-balls. An unexpected medical emergency might impede a financial goal or a health goal. In trading, the learning curve or market conditions can derail a performance goal. These things cannot always be avoided or controlled.
Finally, without having a deep understanding of yourself, the goals you choose might take you further from your real strengths.
The solution? Think in terms of habits!
The Power of Habits
Habit is the intersection of knowledge (what to do), skill (how to do) and desire (want to do) – Stephen Covey
Habits are dependable. Habits will keep you focused. Habits form our character. Habits generate consistency.
Here is the difference between habits and goals:
you want to spend more time with your family. You could plan to spend more time with them each week (goal) or you could start by sitting down with them for 1 hour each afternoon before or after dinner (habit).
you want to lose weight. You could plan to lose 30 pounds in 6 months (goal) or you could start by enrolling in a gym and going there for 1 hour, 3 days a week (habit).
The key is: take your goal and break it down into actions that must be taken. Then commit to doing the 1st and most important of those actions.
Over to You
Habits help brew consistency. Habits shape us. With effective habits, you can overshoot your goals. Habits can compound.
As Gandhi said: Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.
So start small. Start with things that seem almost insignificant. Then build momentum if you start to enjoy the process and the new habit.
I promise you, your trading (and your life) will never be the same, for the better.
About the Author
Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals and Education from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.
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