6 Quantifiable Trading Goals to KnowThere is one thing that will separate the winners from the losers.
Knowing your numerical trading goals.
When you have a back-tested and solid strategy, everything else becomes easier.
You have the past and the potential future in your vision.
And all you need to do is follow the rules and then keep them in check.
To do this, you need to have written down your goals, drawn from your trading statistics and back-tested journals.
This will give you the spine of your trading strategy and ultimately guide you on the path to sustainable profitability.
There are many numbers to take in but I’m going to kickstart you with probably six of the most critical trading goals.
This will help you set your own milestones for success.
Number of Trades to Take in a Year (e.g., 120)
You need to have some type of idea of the number of trades, you’ll execute in a year.
This number can be derived from your trading strategy, time frame choice, risk tolerance, and market analysis.
For instance, if you’re a swing trader focusing on weekly chart patterns and SMC, you might aim for 120 trades in a year.
This equates to 10 trades per month.
Maybe you want to take 60 trades with stocks, indices and commodities.
Maybe you want to take another 60 trades between Forex and crypto.
Make sure you have a rough number according to your stats, so you can keep on track.
Number of Winners
Winners and losers come with the game.
So you need to identify the number of winning trades you intend to achieve in a year.
Let’s say you’re aiming for a win rate of 62.5%.
With the earlier goal of 120 trades in a year, you’re targeting approximately 75 winning trades (120 * 0.625).
Number of Losers
Losing trades are an inherent part of trading.
You need to have an acceptable number of losing trades in mind.
This will help you to manage risk effectively and maintain emotional equilibrium.
In our example, if you’re aiming for 120 trades a year, you should look at taking around 45 losing trades.
If 62.5% is your win rate then 37.5% is your losing rate (100% – 62.5%).
Win Rate
Your win rate represents the percentage of trades that yield profits.
With a target win rate of 62.5%, this means you aim to close over half of your trades with a profit.
Sure, you’re not going to bank 62.5% every week, month and year.
You might have a 70% win rate one year.
You might have a 55% win rate the next year.
Remember, consistency is key here.
But with consistency, you’ll find it’ll balance to around 62.5% win rate per year.
Percentage Return
Trading is relative.
Doesn’t matter if you have a $10,000 (R200,000) or a $300,000 (R6,000,000) account.
You need to think in percentages and not dollars.
For example, if your starting capital is $10,000 and your goal is a 32% annual return, you’re targeting a profit of $3,200 (R64,000) by year-end (0.32 * $10,000).
Expected Drawdown %
Then we need to prepare for the drops.
Drawdown refers to the reduction in your trading capital after a series of losing trades. When your portfolio goes from an all time high and takes a dip, that’s a drawdown.
An expected drawdown of 20% means that you should be prepared for a decrease of up to $2,000 (R40,000) in your starting capital of $10,000 (R200,000) during the course of the year.
It might come in May. It might last ‘till August.
This will enable you to track your performance, manage risk effectively, and maintain focus on what truly matters.
Remember consistency leads to long-term profitability.
