– Revised by James Stanley, November 24, 2021
Business Objectives – Main Talks:
- Why set business goals?
- What your business goals should not be
- The effectiveness of process-oriented goals
- Targeting and measuring your progress
- Business Objectives: Summary
Setting business goals can be a worthwhile endeavor to help you navigate the markets, but some goals are more useful to set than others. In this piece, we will look at the right and wrong type of forex trading goals to target, why the right goals make sense in context with your trading plan, and how to track the progress of your goals.
Watch the video above for our analyst Paul Robinson’s account of best practice for goal setting. He discusses why making money may not be everything, the danger of meaningless goals in a cyclical market, and how to use goals to refine discipline and consistency.
Why Set Business Goals?
It’s important to set business goals for two main reasons – to help you adhere to your business plan and allow you to trade more consistently. For those new to business, this will mean setting a process-oriented goal rather than one focused on results. For example, targets based on strict following risk management and sound technical analysis, and even a daily routine involving exercise and a balanced diet will encourage a more consistent business.
What Your Business Goals Should Not Be
On the contrary, setting a monetary goal is not a useful business goal. This is because markets are dynamic and do not provide opportunities in a linear fashion; some periods of trading are good and will suit your trading style while other periods are not. Protecting the commercial capital you have is more valuable than setting arbitrary financial targets, because traders have no control over the timing of favorable market conditions.
Other common targets that are hollow are those that are not specific enough or cannot be easily measured. Examples include ‘be more disciplined’, ‘be more consistent’, ‘trade this or that strategy better’ and so on. How exactly do you reach or measure those? OVerarching goals like these are better broken down into smaller, more process-oriented goals that are more affordable.
The Effectiveness of Process-Oriented Goals
How opposed to result-oriented goals, process-oriented goals can be helpful in helping you follow your business plan. Creating goals that support your plan can help you focus on the details that lead to good businesses.
One way to do this is to think of following the process as’ If, then … ‘statements -‘Yes this [event] happens then I will do this. ‘ For example – ‘YesEUR / USD retreats to a certain price level and posts a key-reverse bar, then I’ll be in for a long time. It could be any number of criteria depending on your business style, but the point is to pay attention to doing the right thing according to your plan.
If you follow your rules, then regardless of the outcome – win or lose – it was a successful trade. If you have an edge with appropriate rules on risk management (another set of rules / objectives), then you are giving yourself a chance at profitability over time.
One should not think of profitable trading as “good” trading, and non-profit as “bad” trading. You can take a “good” trade and it will still be a loser (as many will be), and a “bad” trade and make money. Remember that bad behavior that leads to a lucrative outcome is a negative reinforcement, and the opposite can be said of good behavior being a positive reinforcement. You want to make sure you focus on the latter.
Targeting and Measuring Your Progress
Tracking and measuring your progress is key to making sure your strategy works and to holding you accountable. One powerful way to make sure you trade according to your plan is to use a business checklist and a business newspaper. This not only keeps you focused on making proper trades, but also highlights your weakness, areas you need to work on. Those areas that you need to be worked on can become new goals to focus on.
For example, you may have difficulty with sticking to your stop loss or target goals. This often comes from being too aggressive by position size. The simple solution here is to reduce the risk-per-trade so that you don’t make emotional decisions because your P&L swings are too big.
One idea is to create a scorecard for each trade, where you assign a certain number of points per aspect of the trade and run a calculation to see how effectively you adhere to the plan. This will highlight areas of weakness and give clarity on what you need to work on.
Overall, by emphasizing goals aimed at “doing the right thing”, you will best set yourself up to achieve long-term profit. There are certainly no guarantees, but if you just ‘swing it’ without structure and proper goals, any short-term success achieved will not be sustainable.
Business Objectives: Summary
In summary, process-oriented goals will be more effective than result-oriented goals. Setting such goals can help put you in the right mindset to trade according to your ability, rather than setting a monetary goal for example that would only serve to pressure you to trade too often or trade recklessly. Underlining a process over outcome gives you the best chance for financial success in the long run.
You should always have abusiness planthat covers how you get in and out exit trades, how your money will be managed, the markets traded, and your risk parameters.
And keep it simple. For example, choosing a few effective trading indicators rather than trying to apply all of them will result in a better focus. Simplifying your technical analysis approach can cut out a lot of noise and contribute to to become a better businessman.
Having business goals that compliment a solid strategy will help you build trust in your business. Download our free guide for more information on how build confidence in your business, and be sure to check out our range of additional guides to help you on your business trip, whatever your skill set.