How You Should Set Goals when Trading Binary Options

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How You Should Set Goals when Trading Binary Options

If you are reading this articles, you most likely want to learn more about binary options. And you want to learn more about this subject because you want to make money. That is the ultimate goal of trading, no matter what market you are involved and it should be yours as well.

However, just saying “I want to make money” won’t get you there and also, this is not the most exact finish line you can have.

S.M.A.R.T strategy

Planning is a critical aspect, but before we dig into the actual process of making a plan, let’s first focus on the objectives of a plan: goals. And more specifically, let’s see how you should set them effectively.

As George T. Doran said “There’s a SMART way to write goals and objectives” so let’s see how his method works.

From his point of view, a goal or objective should have 5 basic characteristics:

S – Specific: it should be clear and define exactly what you want to achieve;

M – Measurable: you should quantify it with at least a progress indicator;

A – Achievable: specific to those you want them to become real;

R – Realistic: you should set goals that can be achieved, in an objective way (becoming a billionaire out of binary options trading in less than a year is not one of those).
T- Time: you should also set a deadline for the goal that you’ve set.

By taking into account the aspects described above, you can effectively set your own goals and set them in a way that you could accomplish them.

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Knowing exactly what you want and having it all written somewhere, is one of the factors that make a difference between those who are making money when trading binary options and those who don’t.

With that being said, think about what you have done wrong in the past when setting your goals and see what you can improve from now on, in order to be able to achieve great success when trading binary options. In a future articles we’ll discuss in greater detail the planning process, but until then, we hope you enjoyed this one.

Learn to Set Useful Trading Goals

In trading, as in any pursuit that involves personal growth and education, you would want to set goals in order to evaluate your progress. The thing is, goals help us do better in many professional fields — and trading is not an exception. However, in order to start moving in the right direction, you have to set your goals in a proper way. Learn how to do that by reading this article.

Good goals vs. bad goals

What kind of goals are the best for someone looking to improve his trading skills? How much money should you be making in a day or a week? How many deals do you have to complete during the same period? Turns out, these are not the best metrics when evaluating your progress. Focus on the process, not the outcome.

Your goals might be formulated such as following: “Open a trade only when the market conditions meet the criteria stated in your trading strategy”. You, therefore, will develop discipline, necessary to every trader, and at the same time make a step towards becoming a more professional trader.

If there is no trading strategy you are currently using, your number one goal should be to develop one. Otherwise you will fall victim to irrational trading and your decisions will be dictated by emotions rather than reason. In this regard, reading professional literature (books, articles and this blog) can help a lot. By the way, reading a set number of educational materials is a good enough goal for every novice trader.

Limits of control

In trading, there are certain things that you can control: the amount of money you invest in each particular deal, entry and exit points, assets you chose to work with. There are also things that you cannot control, and it is the market itself. Do not set your goals from a market perspective, set goals based on the factors that you, as a trader, can control.

Examples of bad goals:

  • Make $100 a day / $1 000 a week,
  • Earn at least 50% payouts in one deal.

Examples of good goals:

  • Use no more than 2% of your entire capital per trade,
  • Read at least 1 book about trading a fortnight.

One more thing to keep in mind is that most traders want defensive goals that prioritize the existing capital, as opposed to offensive goals that focus on acquiring more money. In other words, in order to improve your trading skills you should forget about the money and focus on things that can help you improve instead.

Conclusion

Trading is as much about human psychology as it is about skill and knowledge. Being able to tell where you are heading is a valuable part of your trading practice. Goals are an important part of your overall trading strategy. Have you already set trading goals for an upcoming week or a month?

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Goals for New Binary Traders

When starting out, and throughout a career of trading, goals have been of great value. Yet when goal setting people typically make several mistakes which can lead them astray. Here we’ll look at a couple goals new binary traders should set out to achieve, and why these goals (compared to what most people strive for) are so important.

Learning Goals vs. Performance Goals

There needs to be a differentiation between learning and performance goals. Learning goals are about ultimately being able to take action, or more accurately, learning when to take action and not take action. On the other hand, performance goals measure the success of such actions. For new traders especially, focusing on learning goals should be the priority before assessing performance.

Making performance goals–such as “I will make $1000 trading today” can often lead to poorer performance than if the learning goal (action based) such as “Take every valid trade signal I get and manage it according to my guidelines” is strived for.

Being able to stick to a strategy, all the time, is key to fostering good trading habits. Therefore, it is far better to focus on simply implementing a strategy than worrying about performance. If you follow the plan performance actually takes care of its self.

Make one of your goals to stick to you trading plan. At first try to it just for one day (or even one trade, then two and so on)–“My goal today is to trade every valid signal I get, and only those signals.” Then expand it out to try to do it for two days in a row, then three, and so on. Set up little rewards and punishments for following through or not following through on your goal, if you think this will help you.

The above goals are designed to build consistency. Consistency is of paramount importance to anyone who wants a long prosperous life in trading.

Consistency comes from having a good trading method, and then being able to implement that method day in and day out.

Since trading conditions are a bit different every day, this is tough to do.

To implement consistency, set the goals mentioned in the section above. But sometimes your mind won’t seem to let you…you keep making mistakes!

Therefore, another goal is to instill some new beliefs in your mind which will help you stay on track. Create these new beliefs by constantly reminding yourself of them, convincing yourself they are true, and stopping thoughts that run counter to these beliefs.

Here are a couple beliefs you should try to instill:

-If I follow a plan, it is not me who determines how much money I make each day. The strategy and market conditions determine how much I make. Therefore, I can let go and trust the back-tested profitability of my system…because results are actually out of my hands anyway.

-I only judge myself on whether I follow my plan, not how much I make. Some days making $10,000 is actually a “bad” if by following your plan you would have made $30,000. Other days making $1 is a great day when conditions are tough, and you followed your strategy to the letter.

-I do not know what is going happen, and convincing myself otherwise is sabotaging my success. Anything can happen in the market at any given time. That is why I must follow my plan, because over a great many trades it has been proven to work.

-Based on the above principle, I realize I don’t need to know what is going happen next in order to make money. I just need to follow my system.

-Since I don’t know what is going happen, I have to set a maximum loss for each trade, and also only risk a small percentage of my account on each trade.

Tying it Together

Performance becomes a by-product of trading consistently according a plan. Therefore, your goals as a new trader are to simply find a trading plan or strategy and follow it–you can buy a strategy, get one from a book, or create your own. Just make sure there is validity to the strategy and that it has worked over the course of time.

Then try to follow the plan for one trade, then two, then a whole day, then a whole week. Don’t worry about performance, you’re goal is to build consistency in how you act. If the strategy does end up being a loser, you can always change it down the road. If the strategy works, but you can’t seem to follow it, work rigorously on instilling the above mentioned beliefs. Think about then constantly, and slowly they will become personal beliefs, helping you stick to your primary goal of consistently following your plan.

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