22 Jan New Years Resolution for 2013
The new years is upon us and if you haven’t done so already, it’s time to put to paper your goals for 2013. Whether it’s a financial goal that you want to achieve this year or a personal goal, it’s so important to know what direction you are heading towards so you can put a plan together to reach your goals. I ask so many traders what their goals are for the year and they say they want to make a lot of money in the markets. My next question is what is a lot of money. Then they tell me they want to make $X this year. The goals obviously need to be realistic rather than a big dream. Then my next follow up question is how do they plan to make $X. Then they tell me they are going to trade stocks or whatever trading instrument to achieve that. Then my next question is how do they plan to trade to achieve their goals. Then they tell me the details of their trading strategy etc… You get the point that I am trying to get across… Here’s an example:
Say you want to be able to make enough money for a large purchase such as a car, boat or vacation property this year and you need to make X dollars. Determine how much capital you have to trade or invest with and you’ll be able to figure out how much % return you need to generate. Once you determined this X%, ask yourself if this is achievable. If your expected % return is over 1000% return then maybe you need to get a reality check or start with a more realistic % return. Once you’ve determined your desired % return then you need to figure out what trading instrument gives you the best chance to achieve your desired return. It could be stocks, options, forex or futures. Once you’ve decided on your trading instrument then you need to decide on the trading strategy that complements your risk tolerance, personality and lifestyle AND gives you the best chance to achieve your desired % return. For example, if your goal is to make over 100% return then you might need to utilize a leveraged trading instrument like futures or options OR utilize a much more aggressive trading strategy. It doesn’t make sense for you to adopt a very conservative strategy or buy a stable moving stock if your goal is to make over 100% return. You just won’t be able to achieve your financial goal. So my point is you gotta know what your desired financial goal is and then put together a plan to achieve that. If you find out that you’re not comfortable with the risk you may be taking to achieve that desired goal then you need to rethink that goal or be more realistic in terms of your financial goals. Put together a well thought plan and you’ll be on your way to achieving all your goals this year. Good luck!