You have probably come across the term SMART goals before, it is used all over the world in pretty much every profession that you can think of. Why is it used so much? Simply because it works. SMART goals are a way of creating targets in a way that ensures that you will be able to achieve them and that you will be able to monitor them along the way. These sorts of goals can also be used when trading in order to plan and achieve your trading targets.
So what exactly are SMART goals and what does it stand for?
SMART is an acronym for setting goals it stands for :
S – Specific
M – Measurable
A – Achievable
R – Relevant
T – Time-bound
So now we know what the letters stand for, let’s look at what they mean.
The goal that you set needs to be both clear and specific, this enables you to focus on it fully and you will know exactly what you are aiming for, this can help to promote motivation towards achieving it. There area few questions that you can ask yourself in order to work out what your specific goal should be:
- What do we want to achieve?
- Why is this goal important?
- Who will be involved?
- What resources or limits are there?
In relation to forex, this could be a specific goal aimed at achieving certain profits or profit levels, or to achieve the completion of a trading strategy with a certain win percentage.
The goal needs to be measurable, this will enable you to monitor and track the progress that you are making towards the target. Being able to monitor and assess the goal and your progress towards it will help keep you motivated towards achieving it. You can work out what your measurable goal would be by asking a few questions:
- How much?
- How many?
- How will I know when I have achieved it?
In relation to reading, this could be related to the goal that we thought about above, if we are looking to achieve a certain percentage of profit or monetary value, then this is a measurable target, as we are able to measure our progress by looking at the current profit levels.
The goal that you set needs to be achievable, this basically means that it needs to be realistic, it needs to be something that you have the ability and the capacity to achieve, there is no point in setting a goal that is way too high, as you will never actually be able to achieve it. You can work out this section of the goal by thinking about:
- How can I accomplish the goal?
- How realistic is the goal based on my circumstances?
If we take the same example that we have been looking at, we want to achieve a certain profit percentage or monetary value. So what would we set this at If we have a starting balance of $1,000, there is no point setting a target of $1,000,000. While that would be very nice, it would be more realistic to set your initial goal as $2,000 or $5,000 at a push. Remember this needs to be something that you are able to achieve.
The goals that you set need to be relevant, they actually need to be related to what you are doing. It needs to be relevant to you, it needs to be of interest to you, there is no point having a goal that you aren’t interested in, or that won’t actually help you achieve anything in relation to the activity. You need to ask yourself a few questions:
- Is it worthwhile?
- Is this the right time for the target?
- Am I the right person for this target?
Once again when we look at this in relation to trading, the target of gaining a monetary value is very relevant to the task and also our overall interests, wheat would not be relevant is something like gaining muscle mass while trading. That is a little extreme of an example, but you get the idea.
You can probably guess what this is referring to, it is all about having a timeline and an ending point at which point you wish to have achieved the goal, this could be a few days for a small target, or it could be a year away for a long term goal. What is important is that it remains realistic. You should ask yourself a few different questions:
- When do I want it done?
- What can I achieve in 6 months?
- What can I achieve in 12 months?
- What can I do today?
Looking at the same example that we have been using throughout, we want to gain a 100% profit on our account, $1,000 to $2,000. Is it realistic that we can do that by next week? It is possible, but not very lightly. What is more likely is that we can do it in 1 year, 12 months to achieve this goal. That seems realistic, so let’s put it down.
So as we went through the meaning, we kind of set out a SMART goal of our own, we want to double our account and go from $1,000 to $2,000 within a year. Is this goal specific? Yes, we know exactly what the target is. Is it measurable? Yes, we are able to see our account balance increase as it goes. Is it achievable? Certainly, we have a good strategy and it can definitely be done. Is it relevant? Yes, it is part of both trading and it is of interest to us. Finally, is it time-bound? Yes, we want to achieve it within 1 year.
Now that we have a goal, we can write it down, set up the method of measuring, and set ourselves on a path to achieving it.
SMART goals are a fantastic thing to set, both in trading and in pretty much everything that you do in life. It is certainly worth sitting down and setting some of these goals yourself, it will give you a lot of motivation seeing that progress is being made as you go along.