successAnytime you venture out into a new business undertaking, you have to pave a road for yourself which is going to lead you to where you want to be. Your goals help you to mark that pathway and navigate the rocky terrain between where you are standing now and the eventual destination you hope to reach. But that is only true if you set goals that make sense.

In trading, we talk a lot about the importance of setting realistic goals. Realistic goals differ from unrealistic goals in a number of ways. These are best summed up through the S.M.A.R.T. goal system.

S.M.A.R.T. goals are:

Specific
Measurable
Attainable
Relevant
Timely

Most binary options traders who have unrealistic goals are failing one or more of these criteria.

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A common example of an unrealistic goal is this:

“I want to make a million dollars inside of three years!”

That sounds great! But aside from being highly specific, measurable, and timely, it fails to be attainable or relevant. Yes, it may be possible, but possible is not the same thing as attainable. That is a common misapprehension beginners have in all fields, but especially in trading. Just because you ran the numbers and found out you could potentially do it in a perfect world, that does not mean that you live in one, especially if your small bankroll attests to that.

Another problem with this type of goal is that it is not particularly relevant. Of course you want to be rich; who doesn’t? But wanting to be rich will not by itself make you a better or more successful trader. Your goals need to actually concern how you trade, and not just how much you hope to make.

Finally, you could argue either way about the timeliness of this goal. Yes, three years is a clearly marked out span of time, and that is a good thing. But it is actually quite far in the future, and there are so many steps you need to take to get there! What about your goals for the next month? The next week? Even the next day? It is so easy to set your sights on the hopeful future, and forget all about setting goals for the present.

The Dangers of Not Setting Realistic Goals

Failing to set realistic goals is damaging in a number of ways. In fact, it can be outright detrimental over time. Why?

When you do not set realistic goals, you have no guidelines for moving forward.

Think about marking a pathway through the woods. For the sake of argument, let us say you were somehow able to do this yourself before actually hiking the path. If you only marked the last tree, how would you possibly expect to get to it when you start hiking from the beginning of the path? You need to mark trees at regular visual intervals so you can find your way. Setting realistic goals is like marking those trees. Each goal should take you from one to the next. One big goal at the end provides you with no sense of direction and no route to success.

You open yourself up to getting scammed.

Nobody is easier to victimize than someone who does not have realistic goals and expectations. Scams are a serious problem in the trading world, where everyone wants easy money. If you do not have realistic goals, someone else can prey on your naiveté. If you want to make a million dollars by the end of the year, you can bet that there are a hundred different system and signal sellers who will swear they can get you there. If those unrealistic goals are all you have, you are probably going to be prone to believing them.

You may make other stupid decisions.

For example, you might think a great goal is, “I want to quit my day job this year.” Even though you are not actually ready to do it, you may fool yourself into thinking that you are. So as the year is winding to a close, you take stock of your situation and you think, “Well, I could be doing worse, and if I don’t make the leap, I will not be achieving my goal!”

So you quit your day job, thinking that means you are somehow “committed.” All it really means is you screwed yourself. You are now down a stream of revenue, and you are stuck pulling funds from your trading account to pay the bills. Your account is no longer growing, and you are totally stuck.

Another example of a foolish decision which can stem from poor goal-setting is when you decide to overtrade because you are in a hurry. You are not closing in fast enough on your hugely lofty income milestone for the year, so you take a lot of desperate trades at the end of the time period to try and catch up. Of course you end up losing most of them, because they do not conform to your trading rules. Now you are even further from achieving your goals.

You will feel like a failure by your own unreachable standards, and you may give up.

Maybe the greatest danger of setting unrealistic goals is that it puts you in the position of perpetually struggling to reach an unattainable level of performance. Every time you fail to meet a goal which was unreachable in the first place, you blame yourself. If you cannot reach your goals, that makes you a failure after all, right? It will certainly feel that way. The desperation and self-contempt that this results in is enough for many traders to quit outright. The worst part? Many of them were promising traders, and might eventually have succeeded if they had only evaluated themselves by a more realistic measuring stick.

Setting Realistic Goals and Expectations

So now you know why you need to avoid setting unrealistic goals in trader. But what are some realistic goals you can use? What should you expect from your first year of trading? Here are some more sedate, realistic, and achievable expectations to give you a little perspective.

Making a living trading is an awesome goal, but it probably will not happen in your first year.

“I want to make a living as a binary options trader” is a far better goal than, “I want to make (some arbitrary sum of money).” Again, we all want to be rich, but making a living trading is somewhat more concrete and specific, and in its own way, potentially more motivating. The problem with, “I want to make a zillion dollars” goes beyond the unrealistic amount. If you are thinking like this, there is a good chance you really just want to trade so you can quit again.

Planning your escape at the start of a business venture is really no way to get off to a good start! If you do not at least on some level really love trading, you are not going to do too well. There is nothing wrong with planning a retirement, but first you should plan for a career!

It is also important to understand that it is not going to happen overnight. Again, your math may show you it is possible, but almost all traders have a rocky start, and will trip more than a few times before they manage to start making enough money to actually trade for a living. Plus, odds are, if you are like the average trader, you are starting out with less than $5,000 in your account. A single winning trade is probably going to give you no more than a couple hundred dollars starting out! That would be pretty tough to make a living on.

You will probably be a part-time trader for a while, and that is not necessarily a bad thing.

In fact, you know what the best approach is? First set the goal of becoming a successful part-time trader, and then you can set the goal of becoming a successful full-time trader. Juggling two jobs is tough, but there are actually a lot of benefits to part-time trading.

You still have the safety net of your day job plus you are making extra income. You can keep all of your trading profits in your account, growing it more quickly than you would trading full-time. You also may actually benefit from the balance of working on two different things for a while. Sometimes it actually is a good thing to pull yourself away from the charts for part of the day.

You will be watching the charts passively a lot more than you will be actively trading.

When you first start getting into trading, you may romanticize the occupation, and imagine yourself constantly scalping the market and raking in huge piles of cash each day. An astounding percentage of the time you spend as a trader is actually spent not trading, however, and you should thoroughly expect to spend hours just watching and waiting. Make it your goal not to trade a lot, but to trade well.

Things will go wrong.

Now and again, things are going to go exactly the way you do not want them to. You are going to have a losing streak, or you are going to find yourself hitting “early close” way more times than you want to, and it is going to reflect in a lower profit margin.

Worse, you are going to encounter problems with your trading system. Things are not always going to work according to plan. You will constantly have to read, test, learn, and revise. The adjustments and adaptations never end.

Being a trader is an ongoing journey, not one with a clear start and finish. There is no “set and forget” perfect system. So don’t freak out too much when things go wrong! Every trader goes through these challenges. You can get through them.

Your number one goal should always be to become a better trader.

At all times, you should be focusing on your performance as a binary trader, and not only your income. There are so many factors that are out of your control, including your starting bankroll. But one factor you can control is your own trading decisions. That is why the best trading goals focus on how you trade. Good goals might include:

I want to tweak my system to increase my win percentage by a few points while holding my other statistics strong.

My goal for this month is to learn how to spot a trade that is turning against me early so that I can get out in time to minimize my losses.

This week I will find a strategy for dealing with retracements so that I do not find myself out at a loss on a trade I should have won.

I will not break my money management rules again. If I do, I will take a timeout from trading for a week, and then I will try again. I do not expect myself to be perfect, but I do expect myself to improve.

… And so forth. Notice that these goals are specific and attainable. They are measurable, relevant to becoming a better trader, and can be accomplished within a finite amount of time. You are not focusing on the amount of money you are making, but if you succeed at these goals, you will automatically start making more.

Learning to set realistic goals and expectations is a major challenge, especially for brand new traders who are embarking with wide-eyed naiveté into a brand new world. You may have been pulled in by unrealistic promises of overnight wealth, and that is okay. Many of us were! But to actually attain wealth through trading, you have to be willing to give up some of those lofty, unlikely goals, and replace them with smaller, concrete, achievable milestones.