Wednesday, January 13, 2010

The Kirk Report

The Kirk Report

Goals For 2010

Posted: 13 Jan 2010 07:55 AM PST

Since the start of the year, I have shared several reports that focus primarily on looking back for perspective and for help as we start the new year. But from now on, we will shift our focus where it really needs to be - the future and what it is really going to take for us to reach the goals we've set for ourselves.

In the membership survey I asked the following: "What are three of your most important goals for 2010?" I received hundreds of ideas many of them were truly inspiring. But, unfortunately not all. In fact, some of the goals I think required a bit more thought. Some examples include:

  • Eliminate emotion: Markets are emotional and so are you when you have your money on the line. The good news is that you can train yourself to use your emotions as an asset. Skilled traders and investors learn to recognize when and how their decisions are dominated by fear and greed and adjust accordingly. You will never get rid of emotion and your goal should not be to remove it. Instead, learn to recognize when you're making emotional-based decisions AND then take steps to control and modify the behavior.

  • Not lose money: Losing money is not the issue. When taking risk, you are going to lose sometimes. In fact, you may even lose frequently. The key, however, is to win more than you lose and to lose less when you're wrong. At the same time you must learn how to make more money when you're right. Money management skills such as proper position sizing, only trading low/risk high/reward setups per your strategy, and utilizing preset stops based on ATR to prevent large-scale losses will help you achieve more success.

  • Work harder: For some of you, this is a big issue. You spend your time looking for hot tips and easy answers without putting any concentrated effort into your trading and investing. But, for many who read The Kirk Report, this is not always the problem. Instead, it is being focused enough to develop a strategy that suits your personality which takes full advantage of your skills is not to be underestimated. If you're going to work harder, that's where you need to devote your time and energy in 2010.

  • Be patient: Your personality simply may prevent this no matter how you may want to change it. Some people are more patient than others by design. The important thing is to structure your strategy according and adopt a method that take this into account. Some trading and investing methods require more patience than others. That said, if you desire more patience, a goal to perhaps set for yourself is to design a set of rules and checklists that will help you approach your strategy in a more consistent manner. People become more impatient when they don't have rules to follow and are simply trading and investing with no plan. In addition, I've personally found that incorporating daily meditation and intense physical exercise in the daily routine helps me be much more patient than others as unhelpful uncontrolled energy is spent in a more productive manner that helps me focus and think more clearly.

  • Consistent positive returns: The market is inconsistent and your returns will be inconsistent. Unless you are Goldman Sachs or have an edge no one else on Earth has been able to discover yet, your returns will be correlated to market conditions and that means there will be some level of inconsistency. Expect that, prepare for it, and trade accordingly. Our goals should never be tied to seeking "the holy grail" but simply producing above average market performance as consistently as possible within the risks that we find acceptable and within the time frame that is appropriate for us.

  • Make 5% a day irrespective to market conditions: Good luck! We are all subject to market conditions and the best traders will understand that you will often make 90% of your money in 10% of the time you spend. The market will go through periods of not offering many good setups and you've got to be patient when that happens. At the same time, preparation and being ready for opportunity is equally important. In my experience, the trader that will be wiped out the fastest is one that will set daily goals so high that requires such risk and leverage that they blow themselves up in the process. Setting a goal to make 5% of a day is a good way to go down that well-traveled road to failure. Resist the urge to structure your goal system to performance goals that require super human behavior because you're not super human.

Remember, your goals need to be as specific as possible with a detailed plan of action to achieve them shared with someone who will hold you accountable. Do that, and you'll provide yourself a good chance of reaching whatever it is you wish to accomplish this year.

Also, in addition to creating flow charts as I have talked about before, you may find these free goals tracker worksheets quite helpful in 2010. I use these same worksheets in my mentorship program and you'll may find it helpful as well to manage and track your progress this year. We also use a nifty service called Toodledo.

Good luck to everyone and their goals whatever they may be in 2010!