Goals are like leaders. Everyone knows they can be powerful parts of success, but because the term is used in such broad ways, vagueness can surround the term. Have you ever heard a one word definition of leader? John Maxwell says leadership is simply “influence.” This may not be a sufficient definition for some, but for me it was very clarifying. I’d like to share a similar epiphany I had when I thought deeply about goals.
Let’s start with a few semantics. To become financially free is what many people would consider to be a “goal” in life. It’s not mine. I want to become financially free so that my wife can stay at home with the kids, I can pursue my desire to coach full-time, and we can live a lifestyle that supports health, happiness and peace. These are huge motivating forces in my life. They are what get me excited and help me persevere through hard times. But they describe my dream… not my goal.
What is the difference?
I want my goals to be something over which I have complete control. So my one word definition for goals is “steps.” Maybe it’s my competitive nature or my competitive nurture growing up in sports, but I like there to be a winner and a loser…a yes or a no…did I accomplish the goal or didn’t I? I typically ask my teams, “What are your goals for the season?” Many times they’ll say, “To go undefeated.” Then they lose the first game. Does that make them failures? Should they quit improving and stop trying because their goal can’t be realized? Sounds preposterous, but I’ve seen it happen all too often.
So their understanding of goals (or lack of understanding) actually prevented growth. They didn’t have complete control over their goal. They had no idea if the goal was attainable because they couldn’t control how good their opponents were that season, who was going to get a season ending injury, etc. So why not call it a dream, not a goal, so it still has the purpose of motivation but doesn’t make you a failure if you don’t reach it? And here it is…the “certain aspect” that was so helpful to me in having goals play a meaningful part of success in my life: It is the fact that my goals are process oriented and not outcome oriented. Processes are actions by me that I can control.
The processes may be difficult for me to accomplish, but that is OK because they are completely within my control. Outcomes are not always in my control. For example: My goal is NOT 50 pips a week. That is where I want to be, but right now I don’t have the skill to accomplish it. So my goal for the week is to make all of my entries with a physical risk out. Because I don’t always recognize good entries or exits, because I don’t always measure from the right spot, because I trade emotionally, I don’t have 50 pips a week as my goal. But 50 pips will be an outcome of my behavior.
So if I’m going to improve my outcomes, I must improve my behavior as a trader. I must do things (take actions) that will improve my chances of positive outcomes. A high level trader, Billy Himan, looked at my screenshots and made the recommendation “never take a trade without a physical risk out.” So that has been my goal in the last 4 weeks. My trading has improved vastly. Only one of those weeks did I reach 50 pips, but I felt successful every week because I reached my goal and saw improvement. I am closer to my dream which is a great feeling! An addicting feeling actually.
And it was that simple goal or “step” that caused growth.
If you’re a new student don’t make your goal to get 10 pips this week. That is an outcome that you don’t have complete control over. You don’t have the skill to do that yet. You may get lucky and get 50 pips, but that doesn’t make you a better trader or get you closer to your dream. Instead, make your goal, “I’m going to ask two questions of the instructor every day this week.” Or, “I’m going to see if I can sit and watch the market for one whole session and NOT make a single trade.” Or, “I’m going to get to the classroom three times this week.” These were all goals for me because even though they were difficult for me as a new student they were completely within my control.
For some of you more experienced traders you know that 50 pips a week is a great goal for you because you know the process you need to follow to get that goal. I would still make the case that you should make other goals that focus on the process itself. My guarantee is not that you will gain more pips this month but that you will learn and grow – so that dream of yours will become a reality much sooner.
Having goals in life and in trading improves your chances of success by creating direction, motivation and focus. However, goals can be ineffective or even hurtful if made carelessly. We students all have the “goal” to be financially free. I would venture to say that most people want to be free but because each of us has made it our “goal”, we joined FX365I. Our goal gave us the mandate (direction) to find some way to gain more income than we currently do. Because of the possibilities that financial freedom can bring (travel, less stress, security, etc.) we are motivated to invest time and energy. Again, most people probably want financial freedom but if it’s not a goal they let the cares of life distract them; they lose focus and end up making no progress.
But can goals be ineffective or even worse, hurtful? Let’s take a hypothetical example of the average Joe who wants to get in shape. He begins by lifting dumbbells every day. After a while he looks in the mirror and isn’t happy with the results. So he adds some push-ups and sit-ups to his routine. A while later, he looks in the mirror and again is not happy. So he joins a gym and goes there when he can. Finally when he doesn’t see the results he was hoping for, he gives up. You can see that his goal of getting in shape was an ineffective goal. This experience could discourage him from ever trying to get in shape again.
Let’s take a look at the acronym SMART for some help.
Here are my goals for the next 3 weeks: 1) only trade if I have measured and believe that the “bus stop” is logical. 2) Make less than 10 trades a week 3) only enter a trade if I know my risk out. Are these smart goals?
Specific? – Very.
Measurable? – check.
Attainable? – Definitely.
Realistic? – If I’m disciplined.
Timely? – 3 weeks.
These 3 goals are based on advice from fellow students and instructors that I believe will help me achieve my goal of becoming a master trader.
In my next post I will share how I’ve used goals (and a more important aspect of goals) to achieve success in my life and how I have used the same system to improve my trading.
Fx 365i Student
In part one of this article, I wrote a tongue in cheek letter demonstrating some stinking thinking or what Carol Dweck calls a “fixed mindset.” In part two I want to share how a “growth mindset” can really help your trading. I’d also like you to analyze your beliefs about yourself and see if they are hindering your development.
Kobe Bryant is considered by many to be the best basketball player who ever played. While I don’t believe that, I have no problem saying he is better than 95% of those who ever played the game. Check out the comments below by his peers in the NBA. See if you can find the statement that separates bad thinking vs. good thinking – the fixed mindset vs. the growth mindset.
“He’s not great by accident is my point. He puts the work in. And I think what I learned about Kobe is he’s so hungry to be good, he puts the work in. I just think his hunger and his determination is what I was most impressed with.” – Carlos Boozer
“He’s one of the hardest workers I’ve ever seen… He always wanted the toughest assignment. That’s just his nature.” – Deron Williams
Did you see it? Deron Williams implies that Kobe’s dedication and work ethic are his “nature.” Many people limit their own potential by believing that their nature is fixed and can’t change. Deron Williams can limit his own potential as a player by believing his own work ethic is fixed…i.e. it’s just his nature. Because the growth mindset sees effort as the pathway to mastery, Kobe wakes up every day determined to work hard.
Review in your mind some of the things you’ve heard our instructors say since you’ve been a student. Remember LaCurtis’ story of how he told Rob, “As long as you don’t kick me out I will be here every day until I can do this.” Ira, along with being a relentless note taker, talks frequently about putting in “screen time, screen time, and more screen time.” Just last week I heard Shane say, “I’m not smarter than you people, I have just spent way more time looking at it than you.”
“We like to think of our champions and idols as superheroes who were born different from us. We don’t like to think of them as relatively ordinary people who made themselves extraordinary.”
― Carol S. Dweck, Mindset: The New Psychology of Success
I have to admit, my fixed mindset sees Shane, LaCurtis and Ira as smarter than me. But my growth mindset tells me it isn’t because they have more grey matter than me, but because they have worked harder than I have. They have each expressed the sentiment that they are “relatively ordinary” and will tell you that anyone with average intelligence can be better than 95% of the traders out there. So my belief, “I’ll never get this. I’m not as smart as those guys,” must change to, “I can (rather will) be as smart as those guys at trading if I put in the work.”
In conclusion, examine the chart below (or better yet, read Dweck’s book) and then examine your mindset. See if your beliefs about yourself are getting in the way of your growth as a trader. And by all means…TURN IN YOUR SCREENSHOTS!!!
Click on the image to expand.
“I don’t really need to do screenshots. Trading is for smart people. Because I am smart, I will become good at trading soon enough. It takes time to send in screenshots – time where I could be in the market looking for another trade. I view turning in screenshots as a waste of time. Besides I know what I did right or wrong in the trade. I don’t really need someone else telling me (and everyone else) what I did wrong. I don’t really need to spend 15 hours a week on the webinar because I pretty much get everything right now. Thanks for the software and indicators. They are pretty cool. Peace out.”
Signed….a card carrying member of the 95% club
The sentiments above represent the mindset of someone who will join 95% of the masses and lose money as a FOREX trader. Renowned Stanford psychology professor Carol Dweck describes such thinkers as people with a “fixed mindset.” They believe talent is inherent: you either have it or you don’t. They believe hard work is for people who aren’t talented. Individuals with a fixed mindset always have the excuse, “If I really tried, I could do it… but really trying is a sign of weakness.” Also, because hard work takes them out of their comfort zone, they’ll stop trying at the first sign of an obstacle. People with a fixed mindset are hyper-sensitive to criticism because in their minds they are rarely wrong. They also don’t like seeing others succeed because that only exposes their inadequacies. The reason people with fixed mindsets think the way they do is because their desire to look successful is greater than their desire to actually be successful.
The imaginary letter writer above wouldn’t be able to stand sending in his negative trades. He wouldn’t want anyone to know that he failed at something and then couldn’t bear the thought of actually being criticized in public. It is simply too much for his ego to handle. Because his image is the most important thing, he will give some credit to others but only if he can maintain an air of “coolness” while doing so. Eventually, he will give up on FOREX trading because he can’t stand the losing.
We see this frequently in the sports world. A kid will grow up with athletic skills superior to his peers. He wins at everything. People start calling him the next LeBron because he has never had to work to win, he develops a sense that he should win simply by showing up. He graduates high school (barely) and signs with a big time college program. At this point, everyone expects to see him in the Rose Bowl, the Final Four, or the World Series. Then… he is never heard from again. Why? Because he meets other athletes just as talented as he is but with a different mindset … a mindset that propels them to higher levels. Below is a quick synopsis of the Fixed vs. Growth mindsets from Dweck’s book entitled, “Mindset” (you can click on the image for a larger view). In the next blog we’ll take a look at the Growth mindset and how it affects trading.
At the FX365 Institute, we are taught to “trade with indifference.” By trading at indifference, we prevent emotions and unnecessary worrying from influencing our decision making process. Indifference can be accomplished by having a solid trading strategy (good entry, two exits). Have you ever taken three excellent entries in a row and had all three go against you? I have. However, this doesn’t discourage me. I know that if I trust the process taught by the institute, I will become financially free – even if I have losing trades from time to time.
Sports psychologist Ken Ravizza teaches athletes to eliminate unnecessary stresses, or in essence, “Play with indifference.” Ken emphasizes that his pupils must control the controllable rather than spending precious emotional energy worrying about things they can’t control. In baseball, a hitter can’t control:
However, hitters can control two things: their preparation and how they choose to respond to each situation that is out of their control. As a hitter, I use the following solid strategy shared by many successful players. With no strikes, I’m looking for a specific pitch that I can drive to the gap or hit out of the park. With one strike, I’m looking for something I can hit hard. Although a curveball at the knees is a strike, I can’t hit it hard, so I won’t swing. Once there are two strikes against me, I’m looking to hit anything that is close to the plate so I don’t get out called on strike three. That is how I practice. That is how I prepare.
Here is a scenario: with the winning run on second, I’m at the plate with my hitting plan. As I step into the batters box for the first pitch, I’m looking for a pitch on the inside part of the plate that I can drive deep in the left field gap to win the game. However, the first pitch is a fast ball on the outside part of the plate. I take the pitch (i.e. don’t swing) for strike one. With one strike, I’m now looking for any pitch I can hit hard. The pitcher throws me a curve ball that is out of the strike zone. However, the umpire calls a strike. Now the count is 0-2. I’m looking to hit anything close to the plate because I don’t want to give the pitcher an easy strike out. The 0-2 pitch appears to be an inch off the plate and I hit a ground ball to the second baseman. He throws me out, and we lose the game. Of course I will be upset that we lose the game. However I can be satisfied with my at-bat because I know if I execute that strategy every time I’m in that situation, I will win more than my share of games. I know I won’t be able to win every game, but I will win enough to be successful. It is an emotionally intelligent response to not get discouraged after that at-bat.
What if the umpire had called the second pitch a ball (umpires will not make that mistake most times)? I would have taken the third pitch because it was off the plate. The chances I’m going to get a pitch I can hit hard and win the game go way up. True, that is not what happened. But those pitches are like my three good entries in trading. If I see those entries again, I will take them because I believe in my strategy. If I’m in that game situation again, I’m going to take the same approach… for the same reason. I have a proven successful strategy. Worrying about things I can’t control just throws me off my game, makes me lose focus, and keeps me from peak performance.
In trading, have faith in your preparation and don’t stress out when your trade goes against you. Trust the process.