Earl just quit his job. He’s going to trade full time. But his wife is sceptical. “How are we going to survive? We need to have $100,000 a year to maintain our standard of living,” she argues. Earl replies confidently, “I have it all worked out. I will make $400 a day, and that’s how we will have $100,000 a year.” Where’s the flaw in his thinking? Setting a high-performance goal based on a specific objective per day puts too much pressure on him to perform.

Sure, Earl may make $400 on some days, but can he realistically achieve his $400 a day, $100K a year objective. What if the markets don’t move at all on a given day? What if the markets are quiet ahead of an important economic or earnings announcement (such as an interest rate hike, which seems inevitable these days)?

It is not a good idea to believe that you can trade every day or every week. Sometimes market conditions are not ideal. On some days it is better to stay out of the markets completely, rather than fail at trading the low probability setups available on a given trading day.


Even if one has the skills to make $400 a day, when opportunities are available, it may not be a good idea to conceptualize your goals in this way. Consider the consequences of requiring yourself to meet a $400 a day objective. What happens if the first two days of the week yielded only a $300 profit? By mid-week, there’s strong psychological pressure to make up the money you have not made. 

How might you react? You may overtrade and end up taking poor setups, which may lead to losses rather than gains. The added stress can make matters worse. As your stress level elevates, you will potentially enter a never-ending cycle of frustration, losses, and further disappointment.

Setting more appropriate goals will relieve frustration. It’s useful to have a rough idea of how much money you want to make on a given day, but setting a specific dollar amount that you must achieve on any given day will often throw you off track. Psychologists have found that pushing yourself to achieve an unrealistic goal rarely works. Giving yourself some leeway relieves pressure and helps you keep your spirits up. And when your spirits are up, you are more likely to trade freely and creatively.

You may not make a specific dollar amount every single day, but over time, your good days will make up for your bad days, and overall, you will reach your objectives. Seasoned professionals suggest taking it one day at a time. They know that on any given day, opportunities may be limited. They know that it is vital to patiently wait for the opportunities to come to them.

They don’t impose their will on the market. They understand that forcing the markets to respond to their expectations is not a blueprint for success. They know that all that really matters is performance across a series of trades. Many traders can lose 60% of the time, four days a week, but on that fifth day, a huge winner offsets nominal losses accrued across a series of trades.

Setting goals is vital for achieving success, but goals are useful only when set correctly. It is necessary to set goals that match your skill level. Shooting for goals that are beyond your skills will frustrate and stifle you, but realistic goals will motivate you to strive for higher levels of performance. So don’t despair, you may not profit on every single day, but over the long run, if you persist and trade with a positive attitude, you will trade like a winner.

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