The M in S.M.A.R.T. stands for Measurable.
Goals must be measurable. If one can experience success in reaching a stated goal, it will lead to further motivation and determination to do more or better. Most traders have set the following goals at one time or another- "I will trade with more discipline" or "I will trade well". These cannot be tracked with metrics and will not result in anything substantial.
My overall goals are to generate enough profits to match/exceed my present income.
My daily goals are to trade Trader X setups exclusively. Examples of these can be found in my previous post here. I will start adding a portion of my grading criteria to include similarity to X setups. This will really help me to drill down on trading X setups exclusively.
Showing posts with label goals. Show all posts
Showing posts with label goals. Show all posts
Thursday, January 4, 2007
Saturday, December 16, 2006
SMART Goal Setting
Dr. Brett Steenbarger's new book (Enhancing Trader Performance) has a section on goal setting. A PDF of Chapter 1 can be found here on his blog.
The acronym SMART is used to summarize features of effective goal performance. Goals must be
1. Specific
2. Measurable
3. Action Oriented
4. Realistic
5. Timely
In this post, I will identify Specific goals.
As in my previous posts, I have stated that my goals are
1. FIND the perfect setups
2. Enter with the right size
3. Manage the trade to maximize gains and minimize losses
but these goals are a bit vague, so they "cannot guide specific actions and facilitate the development of positive habit patterns."
Newly revised trading goals-
1. Find X / Dummy setups . Charts must have the following patterns- 1. 2. 3.
2. Enter with the correct size. The correct size is deteremined by my R value, which is currently at $150.00 or ~0.5% of my portfolio. From the previous bar or in some cases the current bar, I use the following formula to calculate position size:
Long position
R/(High of bar - Low of Bar)
Ex: R = $150.00 (max loss on current position)
Bar High $150.00
Bar Low $149.75
150/(150-149.75) = 600 shares
Most of these have been memorized ($0.25 stop = 600 shares, $.50 stop = 300 shares, $.75 stop = 200 shares), so this should step should be the least of my worries.
3. Manage the trade to maximize gains and minimize losses
This is achieved by initially setting a hard stop that is far away enough to give the stock some wiggle room. The hard stop (actual order that is placed to exit the trade at specified price) is used in case of a freak emergency, i.e. internet outage, power outage, or if i get called into a meeting. This locks off my downside, so all I have to do is watch for continued price movement in my direction.
Profit targets are taken at various fib extension lines, but half the position will always be taken at 1 point of profit.
Fairly specific and simple rules. Now it's time to apply them.
The acronym SMART is used to summarize features of effective goal performance. Goals must be
1. Specific
2. Measurable
3. Action Oriented
4. Realistic
5. Timely
In this post, I will identify Specific goals.
As in my previous posts, I have stated that my goals are
1. FIND the perfect setups
2. Enter with the right size
3. Manage the trade to maximize gains and minimize losses
but these goals are a bit vague, so they "cannot guide specific actions and facilitate the development of positive habit patterns."
Newly revised trading goals-
1. Find X / Dummy setups . Charts must have the following patterns- 1. 2. 3.
2. Enter with the correct size. The correct size is deteremined by my R value, which is currently at $150.00 or ~0.5% of my portfolio. From the previous bar or in some cases the current bar, I use the following formula to calculate position size:
Long position
R/(High of bar - Low of Bar)
Ex: R = $150.00 (max loss on current position)
Bar High $150.00
Bar Low $149.75
150/(150-149.75) = 600 shares
Most of these have been memorized ($0.25 stop = 600 shares, $.50 stop = 300 shares, $.75 stop = 200 shares), so this should step should be the least of my worries.
3. Manage the trade to maximize gains and minimize losses
This is achieved by initially setting a hard stop that is far away enough to give the stock some wiggle room. The hard stop (actual order that is placed to exit the trade at specified price) is used in case of a freak emergency, i.e. internet outage, power outage, or if i get called into a meeting. This locks off my downside, so all I have to do is watch for continued price movement in my direction.
Profit targets are taken at various fib extension lines, but half the position will always be taken at 1 point of profit.
Fairly specific and simple rules. Now it's time to apply them.
Thursday, December 14, 2006
Watchlist for 12/15/06
Pre-market earnings: None
S&P 500 ATL Stocks: GS, ATI, SHLD, BSC
Nasdaq 100 ATL Stocks: RIMM, SHLD, WYNN, AAPL
Going to try and cut my watch list down. Currently have charts up for different sectors and about 12 charts for gappers.
My job is to
1. FIND the perfect setups
2. Enter with the right size
3. Manage the trade to maximize gains and minimize losses
S&P 500 ATL Stocks: GS, ATI, SHLD, BSC
Nasdaq 100 ATL Stocks: RIMM, SHLD, WYNN, AAPL
Going to try and cut my watch list down. Currently have charts up for different sectors and about 12 charts for gappers.
My job is to
1. FIND the perfect setups
2. Enter with the right size
3. Manage the trade to maximize gains and minimize losses
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