No, not profit targets, although that could be part of it. I’m talking about things we aim at. Could be paper. Could be goals. Could be profits. Whats the old saying? We never hit what we don’t aim at? Shooters use paper targets. Bowlers use pins. Hockey players have a net. Football players have an end zone. Everybody, everywhere, in every pursuit and profession has a target to aim at, something to measure the success of the endeavor by. If your a shooter, you want the holes to be in the bulls eye. If your a hockey player, the measurement is how many goals you scored that game or that period or that season.
Everyone that has ever been successful at anything has had targets, or goals as we sometimes say. I was recently forwarded a video of what appears to be Denzel Washington speaking to some acting students. It looked impromptu and off the cuff but what he said fit perfectly with what I was trying get out of my head. He said “Dreams without goals often remain dreams, and often fuel disappointment.” Wow. Another way to say it is dreams with out targets….
So what does this have to do with trading? We could simply discuss profit targets and leave it at that. “You should put a line here at former resistance because that is most likely where this trade will end” said every guru in Forex land 1000 times yesterday. That’s a target. great. Shoot at it. How much money did that make you? Maybe that is another type of target? How much money do you need this week to pay the bills? Can you aim and hit that target? Are you a grazer or a hunter? Do you play for pips and not money? Do you want to have the appearance of a trader without the substance?
Whats your target?
Because here is what happens if you don’t have a target. You shoot at everything and hit nothing. That old saying again, we miss 100% of the shoots we never take or something. I don’t remember exactly how it goes and its probably different than what I said before but whatever. You get the point. I think its a little different. You miss 100% of the shoots you don’t aim at the target on. Guaranteed you will miss most of the shots you don’t aim at. You can get lucky once in a while, but that’s it.
The currency markets are enormous. Trillions of dollars finding a way to exchange hands every day. Here is something I have thought about for a long time. Unlimited opportunity actually equals unlimited risk. That’s how I sum up the Forex market. Sure when we first set out its starry eyes and $$ sign glasses but over time, after you’ve been punched in the face and the market bully stepped on your $$ sign glasses, we realize that this is just one big risk, disguised as opportunity. How we approach it, learning to make targets, is how we make it. Not every trade needs to be the retirement trade. It needs to pay $100 or $50. How do I get to that target.
Cinderella Man, a fantastic movie about being a fighter, captures the why better than anything else that comes to my mind. When asked about his previous lack of success as a fighter, he proceeds to give some excuses about injuries and bad luck. But he pauses for a minute and realizes that he has something he didn’t have before, something no one could ever force on him. His why. After a brief pause, he says “this time around, I know what I’m fighting for… milk…”. If you haven’t seen it, watch the whole thing. Great movie.
So let my try and tie these two things together. Targets are only hit when we have our why. Let me describe two trading day scenarios to you and see if you can catch the difference.
I wake up. Its 5:27 a.m. I flip on the computer in the same shorts and shirt I went to bed in last night. I fumble around for 15 mins trolling the internet to see if there are any news stories that I find interesting and I proceed to distract myself with those stories for another 15 minutes while somewhere in the back of my mind, I know I should be paying attention to the charts so I can be prepared for the day. My mind wanders to what should get done that day, I check Twitter, and I realize I haven’t paid a bill that needs paid so I do that before I start trading. It’s now 6:18. I need some coffee and maybe some breakfast. Back. Ok. Set. I’m a trader now. Charts are open. No prep work needed here folks. Its 6:30 am, news is about to come out, and I am going to sling ’em….
I wake up an hour and a half before news. 5 am sharp. I shower and put on the clothes a professional wears. Not a suit, that’s uncomfortable and unnecessary. I am not trying to impress anyone. I grab a coffee and head down to do my daily analysis and try to find areas of anticipation. Decision points as I like to call them. Places that my FX wooden practice dummy has shown me many times and I know how to treat those areas to harvest some money from the markets. I know what I need to make today. I know how I am going to go about taking it.
See the difference? I can only describe from my own life the difference in those two scenarios. Maybe yours is different. For me it comes down to simple decision, it’s the why. If I take the Cinderella man example from above and apply it to this, it’s simple. In the first one, the milk (trading profits) is taken for granted. “well if i can’t get milk from trading today, I can get it from my other job. Its all good. It’s an infinite loop that I will have a chance to play tomorrow and who knows, maybe something good will happen. That’s all we can ask for right? To have a chance?”. But in the second scenario, “I need milk today or my family won’t have any”…
Amateur vs. Professional. Want vs. Need. Splattered actions of the uncommitted vs. focused movement of someone who knows what needs to be done and can execute on it.
Shooting vs. Aiming
One has a chance to hit the target, the other WILL hit the target.
“Stop reciting theory and just hit your target” – Ip Man