There seems to be 2 very distinct schools of thought on the subject of whether setting yourself monetary targets is beneficial to your trading success.
Having come from a sales and sporting background it has always been drummed into me that you need to set yourself challenging yet achievable targets so that you have something to aim for but also something to measure yourself against so when I started trading I used to give myself a daily goal of what profit I needed to make that day.
So what are the pros and cons of doing this?
Well the pros are:
1. It gives you a focus - at the start of each day I would plan my days trading with my profit figure in mind. For example, I would say I'm going to do these 10 horse races and my average profit per race should be £3 plus I'm going to trade these 3 tennis matches and my average profit per match should be £20 so this would make a profit figure of £90 - £10 above my target figure.
2. It gives you something to measure yourself against - if I wasn't hitting my daily target I would obsessively analyse why I didn't and what I would do better the next day.
3. You quickly realise which markets you are successful in and those you are not.
4. It makes you have a professional approach towards your trading.
and the cons:
1. A day's trading never ends up being the way you had planned and focussing too much on how much profit you will make per event/race is not a good thing.
2. You end up focussing on the money too much rather than implementing your strategies - this is detrimental to your trading.
3. You have to accept that you are only partly responsible for your success/failure in trading - the market delivers opportunities and is completely unpredictable and you have to learn to accept this.
4. You can end up overtrading if you haven't hit your daily target or missing opportunities if you hit your target early in the day.
So whats the conclusion? Well, there is no right or wrong and everyone has a different approach but the key is that if you are going to set yourself targets, make sure they are achievable but also make sure that they are set over a decent time period. What I mean by this is set yourself a monthly target rather than a daily target as you will have good and bad days but as long as over the long term you are having more good days than bad, this is what matters. Also, if you have daily targets and you don't hit them then this can put you in a negative mood which is not a good thing for a trader - you need to try and wipe all emotion from your trading activities.
Also, focus on the strategy and the trading plan you have set out for yourself as if you do this the money will take care of itself!
For more information on Sports Trading visit www.interactivesportsinvestor.com