Your Trading Mission 

One of the things we have done recently here at Stock Course, is gained intense clarity around our mission statement. This has had a huge impact on aligning our values and vision and as a team.

In doing this process, it occurred to me, as traders, how often do we think about what our mission is? When it comes to setting a Mission, I believe the same principles apply in trading as they do in life. Having your purpose and intent clearly defined will really set the benchmark for your results and propel you to where you want to be.

Unfortunately, when I talk to traders about what they want to achieve, often they are not clear on what it is they want to get out of trading, and how they are going to get there. How can you get where you want to be, if you have never stopped to decide where that really is? In the words of a great mentor of mine, Dr John Demartini, “If you don’t decide the things you want to achieve, the universe will decide for you”.

Having an overall idea of where you are going as a trader clarifies and shapes your goals for each month, each week, even down to each day. Depending on what kind of trader you are, these goals are very powerful and important.

There are a few key questions to ask yourself when setting your mission. The first is, Why is my intention for trading? If you can identify exactly what it is that is driving you, and what you hope to achieve, this will underpin everything you do.

The next question to ask is, what is my trading profile? eg. Do you want to trade Fulltime, part time for extra cash, or are you working on building a retirement portfolio. Ask yourself what kind of trader you would like to be, including how many hours a day you wish to spend on it. (Remember you need to be realistic, if you are just starting out day trading for example, chances are you need to spend a lot more time on it while you are still learning. Anything you want to excel at, whether it be trading, playing an instrument or dancing- requires skill, and that requires practice.)

The first step is know what you need to earn. How much money do I need bring in each month, that will cover my expenses and savings? And then break this down, if you work out what you need each month, how much will you need, on average, each week, and each day?

What kind of methodology must I use?

Answer these questions to get a sense of your planning. Do you have a methodology, or system that you can use over and over again?

If you have more than one trading system or strategy, it is best to repeat the questions separately for each one.

Then we need to ask ourselves, how well does my methodology perform?

  • Out of the past 20 trades how many were winners?
  • How many were losers?
  • What was the average win (total profits for the winning trades divided by the number of winning trades)?
  • What was the average loss (total losses for the losing trades divided by the number of losing trades)?
  • What is the average profit made per trade? How much trading do I need to do each day?

How much can I risk per trade?  (no more than 2% of your Trading Portfolio per trade if often suggested)

How much capital do I need? Again this will depend on your Trading Profile and the amount of capital you have, make sure your goal are aligned and realistic.

Which market could provide the opportunity to realize my goals?

Once you go through these questions, you will begin to treat trading like a business. You will have targets that you must reach, and you will have expenses such as transaction costs to take into account. It is critically important that you know how to execute your strategy to consistently give you a profit.

You will need to keep impeccable records so you can refine your trading skills and develop positive feedback loops. You need to reflect to make sure you are on track and should review this at least once or twice a fortnight.

By applying your mind to the design of a mission statement for your trading business, you will be building a professional trader’s mindset, which is the only way to become successful. Planning and preparation are important steps in becoming a trader, both for the short term trade, as well as the long term goals of your trading business.