The Thanksgiving and Christmas season puts retailers like Walmart, Target, and Macy’s in a frenzy. Many retailers must hit their holiday sales goals or they’ll miss out on 40% of their annual revenue.
They plan ahead all year to ensure they’ll capture holiday traffic. While you and I were enjoying spring break earlier this year, these retailers were already thinking about the fourth quarter.
As traders, we can take a lesson from these big retailers. We don’t have to start planning in the spring, but it’s a good idea to start looking ahead to next year’s trading before next year is upon us. And even before the holiday busyness goes into high gear.
The holidays can be a great time to take a break from the intense, peak-performance activities of trading. I definitely look forward to my year-end break. I travel to a tropical climate at the end of every year.
But to truly enjoy my break time and my family, I like to get my goal setting out of the way early.
In fact, I strongly recommend setting goals for the next year before Thanksgiving. The best opportunity to grow your trading business will happen while everyone else is distracted by the festivities.
Why do I bother setting goals? I’ve seen over and over again that setting clear goals makes the difference between one-hit wonders and traders who are consistently successful.
What are you doing with your time away from the market? Are you mentally checked out, or are you preparing for what’s to come?
It turns out you can do both. In a 2007 survey of small-business owners, American Express reported:
are using their personal time, when they are not thinking about business, to let creative juices flow. More than one-third of entrepreneurs (35%) report coming up with their best ideas during “down-time”.
So maybe you won’t have your goals done before the turkey, but while you’re hanging out and relaxing, you can also be thinking in the back of your mind about your plans for next year.
To help you out, I’ve developed a simple 3-step system to set your trading goals, aimed at improving your trading in three areas: outcomes, performance, and processes.
Goal setting doesn’t have to be complicated. Spending even 30 to 60 minutes to put your goals in writing can make a huge difference in your future trading.
Before you put pen to paper, however, just look over the questions. Then go relax a bit and let the questions percolate in your sub-conscious while you’re enjoying the festivities.
When you’re ready to sit down and write, you’ll find the answers will start coming easily.
Step One – Review Your Year
Do a quick review of the last year. Answer the following questions.
- Did I follow my trading plan? Regardless of profits and losses, what percentage of your trades followed your trading plan? Do you have a plan? Is there anything you need to tweak about your process?
- What did I learn this year? Were there any major lessons you learned from the outcomes you achieved? Is there something you need to do to optimize your performance? To improve your mental focus, for example, you could make changes to your diet and exercise more often.
- What should I do less of? If a high percentage of trades you’re taking aren’t profitable, consider taking fewer trades (i.e., be more selective). If you are involved in too many activities during the day to focus 3-4 hours on trading, consider cutting back.
- Have my Goals Shifted? What has changed about your circumstances or motivation this past year? Assess whether your goals still make sense.
Step Two – Set Goals
Next, write down a list of goals. Goals are simply statements about what you want to happen.
- Get specific. Create a basic list of goals you want to achieve.
- Write down the ‘why’. Make sure you know the reasons and motivations behind your goals. Without a proper ‘why’ for each goal, you’ll find yourself losing interest or stopping short within six months.
- Make them SMART goals (Specific, Measurable, Attainable, Relevant, Time Bound). Experts tell us goals that don’t fit the SMART criteria are just wishes. Use the SMART criteria as a checklist. For each goal, answer these questions: Is it specific (i.e., ‘increase profits x%’, rather than ‘make more money’)? Can you measure it? Is the goal too big? Are your goals tightly knitted to your definition of success in life? Have you assigned a time for achievement to each goal?
- Identify the tasks you need to do to accomplish each goal. Ask yourself, “what would have to be true to achieve this goal?” This will help you to quickly break down each goal into six to twelve action steps.
- Decide how and when you will measure progress. To see improvement in anything, it must be measured. Decide in advance how often you will review your progress. Daily? Weekly? Monthly? In carpentry, they say “measure twice, cut once.” That rule applies here, too. Measure your progress often so you can correct your course of action along the way.
Step Three – Create an Action Plan
Write out a basic plan for the actions you will take to make your goals happen. Decide right now what you will do in the short term, as well as the medium term, so you can start seeing progress right away.
- What can you do today? When I say ‘short term’, I mean TODAY. Never leave the site of your decision making without taking immediate action. Take some action today to put one of your goals in motion. Purchase a book or a course you need. Make a quick phone call. The specific action doesn’t matter. Building immediate momentum is the key.
- What can you do within the next two weeks? Make a commitment to complete one task toward your goal within two weeks or less. I consider this the ‘medium term’. We are terrible at estimating time as humans, so set your first deadlines for just one or two weeks out.
- What can you do within the next month? Don’t worry about 3 to 6 months out. That will overwhelm your brain. Create deadlines that are no longer than one month ahead. And think of this like two deadlines of two weeks done back-to-back.
Conclusion
Achieving your goals happens twice: First, you’ve got to imagine it and plan it in your mind. Second, you’ve got to make it happen in the real world. But nothing happens without the plan.
Average traders wait until January to make a plan. Successful traders plan ahead and start implementing long before the opening bell rings on January 2nd.
Don’t wait until January to make plans to improve your trading. Do it now, before the holiday busyness saps all your energy, focus, and time. And then have your trading best year ever.
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