Realistic Trading Aims
One of the issues that many beginning traders struggle with is the matter of setting trading goals. Perhaps someone has been attracted to trading by tales of fortunes to be made, and has unrealistic expectations. On the other hand, some traders have no idea just how much they should expect to make each day.
Any good trading course will allow the beginner to put together a trading plan which will set out what to look for, and when to enter and exit the market. Relating this to expected cash flows takes more application. A trading education must include detailed money management techniques, otherwise the trader is doomed to fail, and it is necessary to build on these concepts to see what is realistic.
There are two aspects to what makes a realistic goal. The first is an assessment of the trading strategy, including back testing, from which the expected drawdowns and returns can be determined. The second and major factor in determining realistic trading goals is the amount of capitalization available. Too many beginners think that they can double their money in a short time, and start trading with the expectation of replacing their salary income in a few months without ever considering the basic mathematics. [Read the rest of this entry...]
