Setting Trading Goals for 2024

Jan 08, 2024


First of all, Happy New Year! 

               2024 has begun, 
and as much disrespect as New Year resolutions get, mostly warranted, using the crossover into a New Year as a catalyst to make major life shifts should not be overlooked.

                 It has become obvious to me that many traders are unclear on how to formulate goals that are anything more than "how much profit should I predicate I will make this year?". The question below was sent to my DMs by a member of Edge, and I know many of you will relate.

Why Results-Based Goals Can Be Misleading

    It's a New Year, and as a trader, you've set a goal to double your account balance by the end of the year - an ambitious but motivating challenge. Sounds motivating, right? But here's the catch - aiming for such outcomes will crank up external pressure like nothing else. Focusing solely on results in trading can throw you off course faster than a crypto bull market turns bear.

It starts with deviating from your tried-and-true trading plan because that profit target looms large in your mind. Suddenly, those solid risk management strategies seem flexible when they shouldn't be; before long, taking risks feels like playing blackjack blindfolded—exciting but reckless. What happens next? Short-term thinking takes the driver’s seat over rational decision-making.

Understanding What You Can Control 

Laying all cards on the table—it’s crucial to grasp what parts of trading are within our control: making decisions and executing trades precisely as planned. And guess what? It’s these daily actions we take responsibility for that create our outcomes—not some lofty dollar amount dreamt up one afternoon while sipping coffee.

Think about it: daily processes and decisions craft those long-term gains (or pains). By focusing here, rather than only dreaming of dollar signs, you're building a foundation for consistent performance without getting impuslive by every market fluctuation.


The Pitfalls of Outcome-Based Goals 

Traders typically base their outcome goals on historical data. Unfortunately, this is unrealistic as you have little idea of how your strategy will perform in market conditions this year will deliver. When setting these goals, there's a degree of hope, and we don't want our behaviours to be fuelled by hope.

The obvious pitfalls when creating goals based on outcome:

❗️Creates unnecessary pressure

                     ❗️Cause you to deviate from your trading plan

                   ❗️Encourages bad risk practices and management of trades 

                    ❗️Forces trading in the attempt to hit a goal in periods where patience is necessary 

❗️Encourages short-term thinking


Measuring Performance in Trading 

If you apply logical thinking to your outcome-based goals, they are unclear, not based in reality, give you no direction, and expose no tangible measurable data. Yes, you have a goal, but how can you get there based on what you can control? How would you measure your performance other than a pass or fail.

           Let's say you've set yourself a goal of a +6% pm return. You finished January up +3.5%, made zero mistakes, followed your trading plan to the tee, and executed flawlessly. Is this a failure? How do you now measure the quality of your performance based on the "failed" outcome? What adjustments/changes must you make next month to hit your +6% pm goal?

                Measuring success accurately means looking beyond balance sheets toward whether we’re managing trades properly and adhering religiously (yes, religiously) to our personal rulebook, no matter how tempting straying may look.

Setting Clear and Measurable Action-Based Goals 

           Rather than hanging
hopes on shaky ladders like end-of-quarter profits alone, focus instead on setting clear action-based milestones—the kind that offer insight when things go south so you can course-correct before hitting an iceberg head-on. It's about crafting measurable objectives around decision-making prowess—not just green lines going up charts—which helps highlight where adjustments need making?

             Remember this: In 
trading waters teeming with unpredictability, clinging too tightly onto outcome-based buoys might sink ships quicker than any storm.


                    ✅ ✅ 
Sharpen your trading skills by setting goals focused on actions, not just profits. Think of it as honing your swing for those home run decisions.

                  ✅ ✅ Take control of what you can in trades—your moves make outcomes. Forget predicting markets; focus on making the best decisions every day.

                   ✅ Aim for high-quality decisions over a flurry of trades. Stick to your plan like glue and let consistency guide you to a profitable 2024.

                  ✅ In decision-making, value quality and be selective—I'm sure your data from 2023 proves to you a lot of trades you take aren't worth taking, nor do they meet your plan.

Your trading plan is your compass in turbulent markets. Stay true to it without wavering.

                    ✅ Avoid the trap of outcome-based goals that ramp up pressure and risk management slips through the cracks.

                  ✅ Setting clear, actionable targets helps eliminate confusion and pinpoint areas for improvement. They provide measurable data. Think of them as beacons that guide you toward refining your actions in the months ahead. 

                     It would be unrealistic for me to tell you to have zero outcome-based goals in trading; we're all here to make money, right? The key is not to be attached to them or hold them as an expectation. What can we control in trading? Our actions and behaviours. This is why I cement in Edge member's minds, that performance, as a measurable metric, should be based on the quality of decisions you make, actions you take, how closely you follow your trading plan, your management of trades and following your non-negotiables you have detailed out.


          Your actions as
a trader are your output, and your output creates the outcome/result. If you have a strategy with a technical edge and execute the correct actions, the desired result/outcome over a longer period will be obtained. Focus on what you can control, your output, and have a general result-based goal, but don’t let it become the driving force of your behaviours. 

                     All the best,

                     Jonny - Founder

Inside Mental Edge, we are focused on removing the bullshit fluff, discussing topics in depth that other mentors won't touch and pride ourselves on giving actionable advice vs one-liners like "just stick to your plan". We are dedicated to positively impacting your trading results.

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