How to Set Trading Goals

Many traders make the mistake of using profits or results as a trading goal. However, goals should centre on skill-building and process rather than profit. This focus helps maintain motivation and reduces the frustration that markets may not always work in your favour.

Long-term goals, or "The Mountain," give purpose without the pressure of profit targets. Breaking down this goal into medium-term Milestones makes it achievable, while small daily Stepping Stones build momentum.

Why Set Goals?

There are several important reasons we should be setting goals with our trading, especially while we are learning:

• Making progress on meaningful work is a strong motivator, while lack of progress can drain energy and motivation.
• They activate brain circuits that define and prioritise actions, focusing attention and blocking out distractions.
• Goal-setting spikes dopamine at the start and as we approach completion, reinforcing motivation to act and creating a reward feedback loop.
• Research by psychologists Latham and Locke shows that setting clear goals can enhance productivity by 11-25%, showing that goals can directly improve performance.

However, to achieve these benefits, we need to have certain types of goals. 

The Three Types of Goals

The Mountain

This is your big, long-term goal. It’s the ambitious target you’re climbing toward.

Ask yourself: What is your ultimate goal in learning to trade? 

While it’s great to have a passion for trading, there needs to be a deeper purpose driving you. Consider a goal that inspires you, as that tends to have neurobiological benefits. Think big and bold for this goal, it should be challenging but attainable.

This goal should also be completely within your control. Avoid targets based on external factors like monthly profit percentages, as these are affected by the markets. 

As for timing, ambitious goals don’t need deadlines. Deadlines can lead to disappointment if they're unrealistic. Instead, approach this goal with the mindset of the Stockdale Paradox: maintain faith that you’ll achieve it while staying grounded in reality. The idea here is to keep progressing without arbitrary time pressure.

The Milestones

These medium-term goals are the steps along the way, often taking months or years. To make an ambitious goal actionable, start by using your “mountain” and focus on steps that lead you towards it.

Often, people reach a stage where they're "good enough" at a skill but stop progressing. They learn the basics, start analysing the markets, then plateau, repeating the same actions without advancing. This is because they lack a structured progression path.

The solution? Work towards your goal in stages by identifying where you are, defining the next stage, and determining measurable outcomes. Breaking it down into smaller parts helps avoid becoming overwhelmed by the mountain goal.

For these, we’d recommend using SMART goals. This means you’re milestones should be:

• Specific
• Measurable
• Achievable
• Realistic
• Time-bound

You should also write down your goals as studies show that writing them down increases the likelihood of achieving them by 50%. But avoid sharing them with other people too early, as this can lower success rates by giving a false sense of accomplishment.

The Stepping Stones

These are the small, daily actions that build momentum toward each milestone.

Now that you have your mountain (long-term goal) and milestones (key stages), it’s time to set your daily stepping stones, your daily to-do list. Achieving any goal is just about consistently completing daily tasks.

Research shows that aligning these tasks with bigger goals can also boost motivation. Each completed task gives a dopamine reward, which fuels momentum for the next, stacking small wins into bigger achievements.

Commit to completing what you put on your list. Start with a test period to find the number of tasks you can realistically finish each day, adjusting as needed until you find your "sweet spot."

We’d also recommend setting your to-do list the night before to avoid procrastination, but keep your planning flexible enough to maintain a sense of autonomy (giving some choice over what you do or when you do it).

Next Steps

Achieving your goals isn’t just about knowing what you need to do; it’s also about knowing who you need to become. Many people have goals and understand the actions required but still fail to take action consistently.

Think of “who you need to be” as the first step. For example, if you plan to practice trading each evening, yet find yourself exhausted after work and opting for Netflix over training, the problem isn’t knowing what to do but shifting into the mindset needed. The goal, then, is to become someone who meditates to unwind instead of zoning out with TV.

Your outcomes reflect your habits and daily actions. Focus not just on end results but on daily progress through small, consistent choices. These small changes compound into major outcomes over time.

Along with planning your milestones and steps, ask yourself what habits you need to adopt and which ones to leave behind.