{"id":21948,"date":"2024-07-08T07:30:04","date_gmt":"2024-07-08T11:30:04","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21948"},"modified":"2024-07-08T07:30:04","modified_gmt":"2024-07-08T11:30:04","slug":"why-setting-goals-can-be-dangerous-to-your-portfolio","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/why-setting-goals-can-be-dangerous-to-your-portfolio\/","title":{"rendered":"Why Setting Goals Can Be Dangerous to Your Portfolio"},"content":{"rendered":"

Managing Editor’s Note: <\/strong>Today, we’re handing it over to colleague Larry Benedict – a market wizard and legendary hedge fund manager.<\/p>\n

In this essay, Larry shares why making big goals for the year as a trader may be more counterproductive than you think…<\/p>\n

Here’s Larry with the insights…<\/p>\n

\n

Why Setting Goals Can Be Dangerous to Your Portfolio<\/h1>\n

By Larry Benedict, editor, Trading With Larry Benedict<\/em> <\/strong><\/p>\n

<\/p>\n\n\n
\"Larry<\/td>\n<\/tr>\n<\/table>\n

<\/p>\n

Goals…<\/p>\n

We’ve all heard how important they are a million times since we were kids… and how we should set them to achieve what we want out of life.<\/p>\n

But it’s not always the best advice when it comes to the markets.<\/p>\n

In fact, setting goals can actually be dangerous<\/em>.<\/p>\n

Today, I want to explain why… and share a far better and more realistic approach.<\/p>\n

It’s something I still use to this day…<\/p>\n

Unrealistic Goals<\/strong><\/h2>\n

I started my career in the trading pits of the Chicago Board Options Exchange almost 40 years ago. There, I saw a lot of people come and go from the market.<\/p>\n

And I mean a lot<\/em>…<\/p>\n

Some couldn’t cope with all the pressure.<\/p>\n

Simply trying to get their trades filled was too overwhelming, with hundreds of people screaming at each other at the same time.<\/p>\n

I don’t mean that as any criticism…<\/p>\n

Until you’ve stood there with your pen (to physically write out the old trade confirmation dockets) and your wits, it’s hard to appreciate how competitive it was.<\/p>\n

But the one characteristic that undid most new traders was something beyond the sheer energy of the trading floor.<\/p>\n

And it applies as much today as it did then…<\/p>\n

Most newcomers (and sometimes even old hands) set far too unrealistic goals.<\/p>\n

They simply wanted to make more money than the market would allow them.<\/p>\n

<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/p>\n

Playing Catch-Up<\/strong><\/h2>\n

One of the key parts of goal setting is a fixed end date.<\/p>\n

That way, you can break the goal into a series of what should<\/em> be steady, achievable targets.<\/p>\n

And I say “should” for a reason. This is where so many traders come undone…<\/p>\n

Take, for example, a trader who sets themselves a goal of making $100,000 in their first year.<\/p>\n

Their daily goal becomes a piece of basic mathematics…<\/p>\n

Divide that $100,000 by roughly 50 weeks in the year. That breaks down to $400 a day.<\/p>\n

The problem arises when that trader misses the daily target… and decides to double the size of their trades the next day.<\/p>\n

Or if they have a rough few weeks, they go in big the following month trying to play catch-up.<\/p>\n

But overtrading, trading too big positions, or taking low-probability trades will almost certainly make matters worse…<\/p>\n

Another losing month followed by even bigger catch-up bets sets off an inevitable downward spiral that eventually puts them out of the game.<\/p>\n

Different Approach<\/strong><\/h2>\n

That’s why I learned from blowing up my own trading accounts multiple times over that you need a different approach if you’re going to survive.<\/p>\n

If I have a rough trading period, I don’t<\/em> double up the size of my trades.<\/p>\n

Instead, I do the opposite.<\/p>\n

I halve the size of my trades until I get things back on track. And if that doesn’t work, I halve that size again.<\/p>\n

All the while I still steadily bank any profits I can…<\/p>\n

I don’t hang on to a winning trade longer than I should in the hope of making more money to catch up my account. Doing so will often turn a winning trade into a loser.<\/p>\n

And the biggest change I made was to switch my overall approach…<\/p>\n

Rather than focusing on an ambitious profit target, I judged my performance based on the available opportunities.<\/p>\n

If the market was flat and quiet one day, I wouldn’t be too hard on myself if I didn’t make a whole lot of money.<\/p>\n

But if the market was busy the next day and I missed a lot of opportunities, I’d push myself to try to do better.<\/p>\n

I learned to only trade what was in front of me and not chase some far-flung goal.<\/p>\n

It’s also when my career really started to take off.<\/p>\n

And if you too change your focus like I did, your trading can take off, too.<\/p>\n

Regards,<\/p>\n

Larry Benedict
Editor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Making big goals for the year as a trader may be more counterproductive than you think\u2026<\/p>\n","protected":false},"author":64,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[58],"newsletter-type":[],"ticker":[],"class_list":["post-21948","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-larry-benedict"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21948"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21948\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21948"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21948"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21948"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21948"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}