goal setting.

Discussions about personal psychology for the individual trader.
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Roundtable Knight
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goal setting.

Post by Nathan » Tue Aug 24, 2004 1:14 am

I feel that goal setting is important to trading psychology and performance. So, those of you who set goals and use them, how do you make them relevent to your trading?

Of course, the specifics of any outcome based goal must be based partly on the system or method the trader is using, and the range of expected outcomes. for example, as ksberg insinuated in another post, a short term goal of profit may not be a good goal for a long term trend trader.

I have found that my favorite method of goal setting is a stairstep: a large number of small, EASY goals that give quick feedback. Break the big picture into little bites.

Since the goal of my trading is profit, I look to make stairstep goals in that direction. each one, not being such a stretch, but leading to bigger things. Part of my plan also involves how I buy the T bills, using that as a way to psychologically "create" the step.

I have found this approach reinforced in other areas of my life. for example, i thought of this when paddling my sea kayak up a deep water channel with a very fast moving current. I have heard it said many times, that the current in the channel it too fast to make it all the way up. Yet, i do it all the time!! I have found a bunch of small goals in the channel: little inlets that I can see with my eyes, aim for, and paddle like hell till i reach them. I rest up, then do it again. climbing the stair step..

Occasionally, I miss my mark and with 100% effort, I have to let the current take me back. At this point, the goal is to get back in the original cove, look up the bend for a "smaller" step, then go for it again. The most i have had to repeat this process was 4 times. And, it feels damn good when you get it!!

IN the end, I make it all the way up. Yet, i never focused on the long term objective. only what i could accomplish that was right in front of me.

Possibly a silly story yet, I love to see when the same principles apply through all of life.

anyone else have approaches or expereinces with goal setting, and how to make them relevent in life and in trading???

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Post by richard » Tue Aug 24, 2004 8:11 am

Thanks for a great thread topic.

I no longer set what I call destination goals. I don't say "I'll get to this particular place by x date" in other words, the specific type of written goals that some advocate. I found that much too painful.

I do have what I call process goals. My process goals are to stay in the game and keep getting better.

You have your kayak story and I have a similar story, except mine is in weightlifting. When I started weightlifting I was the biggest weakling. Since I knew I was very bad and unathletic, I made no attempt to compare myself to others and I also didn't try to get anywhere in particular. I only tried to continue weightlifting without getting hurt and keep increasing my poundages when possible. This approach eventually has led me to some decent personal records that most people haven't reached (they are very modest records, I am still not athlete and never will be).

I used to have financial goals but since I stopped that several years ago I have been at least as successful if not more so than ever before financially. My only goal is to have a good time with work and play (is there a difference?) and that I do very well, so I am achieving my goals every day.

When I started trading, I started with the vision that I have every day that I will be trading for the next 50 years, into my 90s. I do meditation and visualization excercises where I see various scenarios play out but I try to always keep the long long term in mind.

My goal remains to work my plan and continue to improve in trading just like I did/do in weightlifting. In weightlifting, I sometimes stand still and sometimes go backwards, and so it is in trading, but it all adds up to more cumulative experience, so I am meeting my process goals.

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Post by William » Tue Aug 24, 2004 8:45 am

Good advice.

When i used to play competitive sports, i remember i made a goal to be considered among the top 10 players by my junior year in high school. Once i did that, i lost my motivation and it become much more difficult to get remotivated to find new goals. (And reality at that age i wasnt that educated on the "science of goal setting.) I felt like i had arrived, when in reality i had barely done anything yet. So i think its good to set process goals and let the results flow naturally from a great set of process actions.

Or you can be like Michael Jordan and be a complete competition compulsive and find never ending new ways to find a way to spark your fire. My personal feeling is that leads to burn out and a feeling that you've done everything you set out to do at a much earlier age.

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Post by Nathan » Thu Aug 26, 2004 2:37 pm

I have heard of process oriented goals. They make sense in theory, but for me, they have never worked.

I can't get motivated if i am focused on processes as a primary. I get motivated to do the process by aiming at a target. I then do/create the process because i know that will get me from point A to point B.

I had another analogy with kayaking that seems to be opposite of my last post.

When out to sea in choppy or somewhat big waves, it can be dangerous to focus on what is right in front of you, ie the waves, especially the waves to the side or right in front. What happens is your ballance is focused on something that is moving, and you loose rythm and and become unsettled. It is odd how fast it happens, like losing ballance on a ballance beam. I have found the best way to stay upright is to focus on something unmoving on the horizon, yet keep very aware of what is happening in the periferial vision. YOur ballance automatically then starts to compensate and ajust to the movement of the waves, perhaps because it has a reference point to right itself by.

the analogy to goalsetting for me is, to keep the now moments directed by a longer term vision. This creates a referencepoint for decisionmaking that keeps you on track. Different from my last idea but i think they apply in a different way.

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yes. Goal setting does enhance P/L.

Post by PTCM » Sat Oct 09, 2004 11:25 am

yes. Goal setting does enhance P/L. It has happened to me.

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Post by Roscoe » Sat Oct 09, 2004 8:46 pm

Great thread, highly relevant IMHO.

I can only agree with Nathan and Richard, however my approach I liken to flying, in particular a gusty crosswind approach and landing (any pilots on the list will know what I mean). In this situation there is only one certainty: that everything will change all of the time – wind direction will change from moment to moment, wind strength will change from moment to moment (and your pulse rate will change from moment to moment too!). The trick is to attend to each change/challenge as it occurs while all the while keeping an eye focused on the bigger goal, that of completing the approach and landing safely. This is same way that I approach trading – attending to the many smaller challenges (system design, indicator design, system testing, placement of trades, etc.) while all the while keeping an eye focused on the bigger goal, which for me is consistency of profit. I guess my approach is really a sort of non-linear stair-step – I still work on the smaller pieces but the order is not entirely fixed. Perhaps I could augment this by breaking my current steps into smaller pieces and using Nathan’s more linear stair step approach to order them.

To stretch the flying metaphor a little further, the consequences of failure are not that far removed from those that exist in trading – the overall aim is to not crash and burn in either situation.

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