In order to accomplish anything of meaning, you must first define what you are trying to accomplish and then identify the path you will attempt to take to get there.
For example, suppose your goal is $500 per day. There are several different ways that you can go about trying to achieve this:
- (10 contracts x$ 50 per contract = $500 per point) 1 point=daily goal met
- ( 5 contracts x$50 per contract = $250 per point) 2 points= daily goal met
- ( 1 contract x$50 per contract = $50 per point) 10 points= daily goal met
(Commissions not included)
In my experience it is much easier to make 1 point then it is to make 2 points, 2 points than 4 points, and 4 points than 10 points. I have found that 2 points per day is a very attainable goal and that is including commissions, draw down etc. but trying to make 10 points per day is very difficult on a consistent basis.
The following sample performance plans (click each to enlarge) show the power of simply being able to achieve 2 points a day.
The point of showing these charts is not to imply that trading is easy and that you will be living a life of leisure after your first few weeks trading. The point is simply to highlight that very modest and realistic targets can lead to great abundance if an aspiring trader learns how to execute according to a solid trading plan.
Having a Plan
It is extremely important to have a plan as well as a daily routine. To be human is to be emotional. On the one hand, to try to deny this or trade “without emotion” is absurd and not realistic. On the other hand, however, our trading desk is one of the worst places to let our emotions impact our behavior and get the better of us. It has happened even to the best traders at some point or another and it has probably cost money, stress and aggravation, just to name a few. I know it has happened to me and I can tell you first hand that it is the number one thing to address as a trader. Having a daily routine is one thing that can help immeasurably. Whether it is exercise, meditation, watching your favorite cartoon, reading your rules, walking the dog on a treadmill, etc. The key is to find something that you can do to help put your mind at ease prior to each trading day. If you had a bad night’s sleep, if you are fighting with your spouse, or if you are overly hungry etc., you’re not ready to trade. Keep hydrated, and make sure that you take breaks. There are many seemingly little things a trader can do to help give him/her an edge or at least help even the odds a bit. Professional athletes practice (or prepare) for something on the order of 100 hours for every minute of competitive play. Similarly, most traders should spend far more time preparing and planning than buying and selling.
You can find different types of trading plans all over the internet but you need to have something that fits your personality and your account size. Part of every plan should be the acceptance of being wrong. As much as we all want to be right on every trade it’s not going to happen. Even having a very high win/loss ratio (90%+) is not the norm and worrying too much about that is only setting yourself up for failure. Accept losses as part of doing business and don’t let them compound. If you are wrong or feel you are wrong on a trade, just exit and wait for the next setup.