| What You Need To Know When Setting Your Trading And Investing Goals |
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| Written by Sam McNeill |
| Friday, 20 November 2009 22:36 |
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"Is there a particularly good way to set your trading and investment goals?" For trading and indeed for all areas of your life, there are two crucial elements in goal setting and attainment. First the perceived difficulty of the goal and secondly how specifically you state the goal. These two elements will play a large part in determining whether you will achieve the goal.
"Is there a particularly good way to set your trading and investment goals?" For trading and indeed for all areas of your life, there are two crucial elements in goal setting and attainment. First the perceived difficulty of the goal and secondly how specifically you state the goal. These two elements will play a large part in determining whether you will achieve the goal. The more perceived difficulty in the goal and more specific the goal is, the more likely you will raise your level of performance to achieve your goal. This is because with these two elements of challenge and focus, people are more likely to try harder, achieving a higher performance which produces better overall results. In a trading example a goal to earn $50,000 next year through your trading activity is good. However, a goal to achieve, say $51,600 will likely produce better performance as it is perceived by your brain as more specific. A lot of people think you should set easy goals. Not so. The best goals are difficult goals that are specific. Goals should be difficult and specific. So if you believe that your trading goal of $51,600 is easily achievable then raise it to a level that you believe will be more challenging, perhaps $72,400. But your goal has to be realistic to be achievable. You need to believe your goal is attainable through your past experience, knowledge, training and/or skills that you can make it happen. So to perform against your goal make it realistic. So that is the setting of your trading goal. What about along the way...on the journey to achieving the goal? You will be most committed to achieving a goal when you believe that achieving the goal is important. Also when you can see that progress is being made towards achieving the goal, you get the best results. Seeing progress in share trading can be from something as straight forward as a running tally of your earnings year to date. You want to earn $72,400 from your trading this year. You see yourself at $38,100 in July and you know you are well on your way based upon simple arithmetic. Most people who start trading shares or investing in shares do not have goals. When asked about what their trading goals are, they don't know and they don't worry about it. The most common response is "to make some money". This is neither specific nor difficult nor does it have a big "Why is this goal important" nor is it measurable. So, why not think through your trading or investing goals. Set yourself an attainable, but difficult specific challenge and measure your progress. You will be amazed how you feel about your results. Kevin Hogan discusses in his textbook "The Psychology of Persuasion", the idea of "the least acceptable result" and how this is the goal that most people will achieve from any activity. What is your trading or investing least acceptable result? Don't let this be your goal, set your trading/investing goal today and raise your performance and watch the results. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Want to find out more about share trading education then visit Just Shares' site on how to trade shares successfully with Just Shares Share Trading Course. |