All new forex traders need to set goals for their forex trading. The problem is that new forex traders often set goals incorrectly based on the ideas they have about the market. It is important that you understand what should be going into your goals and the process of setting them. You should not only think about what you want from the forex market, but also how you are going to get there.
Forex Profit Goals
Most new traders set their goals based on the profits they are looking to make from the market. This can actually be a counter-productive thing to do because of the risks it presents. When you have a set monetary target you may start taking unnecessary risks in order to meet this goal. This often leads to emotional trades, diversions from trading plans and greater losses.
New traders should look at their trading process when they set their forex trading goals. Your long-term goal should be to trade with a level of consistency which will bring profits. More experienced traders say that once you are trading consistently with a trading strategy and a plan that is effective, the profits are sure to follow.
Weak Aspect Goals
There are some traders who find certain aspects of the market harder to work with than others. These traders often create weak area specific goals to help them overcome their issues. When you set these goals you need to be realistic about what you can do. If you have problems with a certain type of technical analysis you first have to consider whether or not you actually have to use it. If you do not, you may not need to set a goal for it. However, if you do need to use this you should consider why you have problems and what could be done to remedy them. These areas are what your goals should relate to.
Set Simple Goals
Another mistake many new and experienced traders make is setting complicated goals. Complicated goals are any goals that cannot be explained in a single sentence. If you need a paragraph to explain what your goal is, it is too complex. By keeping your goals simple, you are able to easily remember them and see how close you are.
Of course, you also have to be realistic about your goals. If you set unrealistic goals then you are not going to be able to reach them. Traders with unrealistic goals often make trading mistakes in an effort to reach their goals. If you have process related goals you may start under or overtrading in order to reach the goals you have set.
Both of these routes lead to a loss in profits and increased risks. When you overtrade you are increasing your risk exposure and the stress of trading. However, when you under trade you are also increasing the risks because you are neglecting a number of trading opportunities. You also increase the stress of trading because you worry about every trade that you do not put through.