As many of our traders know, the key to successful Forex trading is being able to consistently bring home profits. Setting a goal and knowing what you are working towards is important to a trader. However, the way we set our trading goals will also affect us.
Let us learn from the story of the watch and the watchmaker:
One day, a watchmaker sat working on a watch in his workroom,
“Hello, watch. Could you tick at least 31,536,000 times in a year for me? “.
“WHAT?!” the watch freaks out, “31,536,000 times? How is it possible for me to tick that many? I’m going to be broken into pieces in no time”.
“Okay, how about 86,400 ticks in a day?” asks the watchmaker.
“86,400 times with this tiny hour hand and parts?!” the watch replies.
“Could you do 3,600 ticks in an hour then?” asks the watchmaker, patiently.
“3,600 in an hour? Still kind a lot for a small piece like me,” answers the watch.
“If I ask you to do 1 tick for every second, could you do that?” the watchmaker asks again.
“One tick for every second? That’s easy” answers the watch.
After the watchmaker finished the tiny watch, it starts ticking every second. From that point, the tiny watch does 3,600 ticks in an hour, and does 86,400 ticks in a day, and makes 31,536,000 ticks in a year….Easily.
Sometimes, we set a target that looks so huge and places us under stress. For example, I have to make $5,000 in a week or I need to grow my investment 10% in a month. It burdens us psychologically , even before we start trading. It is not a good starting point. Rather then set a ‘huge’ target, it is better to set a rational target. A rational trading target is different for every person. Split your target into smaller piece to reduce your stress level.
How I set my target
I ask myself, "How much do I need to support my daily lifestyle?" After I determine that, I chop it into smaller pieces. Then, I work on how to set up my next trade and how much risk I can carry. Trading is business, so I have to prepare for the worst. However, I also want to get the most out of it too. With good plan, I can prepare my trade without being stressed out. Below is an example, please adjust to your own comfortable conditions.
Let’s say my wage is $9/hour; that is equal to $1440/month. I'll take $1440 and divided it by 20 (the number of open market days in a month) to give me $72/day. Then, look for good setups and trade 3 or 4 pairs per day. With a standard account (1 pip = $1) and starting my lot size at 0.1, I need to gain 72 pips a day. From here, I break it up even smaller; Per pair, I aim for 20 pips--which is a reasonable range for a pair to move in a day. I can increase the potential income by placing higher lots size or increasing the trading frequency. By breaking down my target into smaller pieces, my goal seems achievable, realistic, and it gives peace of mind.
Start trading with a good plan, enjoy it (no matter profit or loss), learn from mistakes, watch market behavior, and repeat the same steps each and every day. That is how I enjoy my trading days.
About Apiary Fund
Located in Orem, Utah, Apiary Fund is a crowd sourced fund management company that develops successful investors and gives them the opportunity to create flexible income by managing a small portfolio of company money. Through technology and education, Apiary empowers traders to work toward their path to success in the financial markets.