2010 Trading Goals – When goals can actually hurt your performance

I bet you never thought that you’d hear a Coach say that Goals can hurt performance?  Well it’s true.

You will have all read about how goals can focus your attention, provide direction, deliver encouragment and develop persistence amongst other attributes. And that’s all very true.

However if goals are pitched at the wrong level of difficulty they can actually hinder as opposed to enhance performance.  This is something that happens a great deal with Traders.

In trading, like sports, if goals are set too low they can be unmotivating. On the flip side if they are set to high they can be disheartenting when it feels like we’re making no progress towards them and that they’re slipping beyond our reach.

Most Traders I’ve met (including myself) have usually set themselves very high, very demanding goals with regards to outcome and performance.  Something along the lines of earning a million bucks a year and delivering a thousand pips of profit every single week.  All very ambitous I hear you say, but are they really realistic?  If you’re averaging 50 pips a week and you’re now aiming for a thousand pips a week what do you really think the chances are of you hitting such a target?

Furthermore when you fall woefully short of achieving such a goal how is that likely to make you feel? Do you think you’ll be filled with thoughts and feelings of confidence, belief, success, achievement etc?  Or will you be full of feelings of failure, inadequacy, giving-in etc.  I would suggest it’s more likely to be the latter than the former.

Whilst these ‘Absolute’ goals provide some inspiration, some clarity and some motivation I have always found the use of ‘Relative’ goals to be a good deal more effective when setting goals, be they my own or my clients.  I usually look to set my goals relative to my own performance.

In the example above we might have an absolute goal of one day hitting 1,000 pips of profit every week but at present we are achieving an average of 50 pips a week.  I would look to raise the bar by setting a goal relative to that performance.  I may look to set a goal of achieving 60 pips a week for the next quarter.  That way the target is very specific, very measurable, very achievable and very realistic.  It also has a deadline which narrows my focus and instills some motivation.

What do you think the probability of me achieving 60 pips a week are as opposed to 1000 pips a week based upon my previous performance?  Pretty high I would suggest!

What many trading books fail to cover is the impact of a Traders confidence.  Whilst over-confidence is a killer as a trader you do need a modicum of confidence to be able to trade consistently well.  Achieving a target of 60 pips a week over a quarter is likely to build belief and confidence in the trader.  This will flow through into his/her trading and will help carry them forward to greater trading success.  Think of confidence like a bank account.  Do your goals help you make a deposit in your confidence bank account or do they look to make a withdrawl?

Relative goals ensure that learning is challenging without being over-whelming.

So are your goals setting you up for success or failure?  Are you using  Absolute Goals or are you using a mix of both Absolute and Relative goals?

Trade well.