5 Important Ingredients required for an Effective Trading Plan: Part 3 – Motivator

motivationThis is Part 3 of a Special 5 Part series on how to write an effective trading plan. If you haven’t done so, please go through the Glossary at the bottom of the page. For related articles, please see:

Ingredient #2 – Genuine Motivator

Let’s face it, trading the financial markets is really just another means to an end. Trading is very often only a Tool and since Trading is not the ultimate goal, the motivation for success can easily be short-lived.

Very often, people struggle to achieve consistency because, apart from money, they don’t have a genuine reason to trade. Amateur Traders want or think that trading is their goal but yet, when the going gets tough, they can’t handle the pressure and they quit. There is not enough motivation to keep them going.

Of course, there are many traders who love the adrenaline rush and have a true passion for trading the market. Guess what? We’re not all “Warren Buffet” material and many of us really just want the financial reward to fulfil personal goals in life.

Well, that’s exactly what we need to pinpoint in our Trading Plan. We need to identify Ingredient #2 in our trading plan – the Motivator. If trading is not your passion, then what is? Why are you trading and what makes you want it that much?

If Resource was Unlimited

Similar to Ingredient #1, in order to identify your Motivator, you need to invest in some personal time to find out what you really want in life? You need to answer the simple question of:

If resource was unlimited, what do you really want in life?

It’s a simple question but it may not be the easiest answer. Spend some quality time asking this question repeatedly. Some traders already have clear directions and know the answer at the back of their mind, while some may take forever to find out. Either way, do not rush into it but don’t stop until you find the answer.

Here an example:

To make sure you understand this clearly, I’ll use an example to illustrate this point.

Say you have 3 daughters and you love them dearly. Unfortunately, you’re struggling to make ends meet as your financial position isn’t great at the moment. Since they were babies, all you ever wanted was to be able to finance them to study in good university (and so on) in the hope that a good education will lead them to a better life with little or no financial worries. Giving your daughters the best is NOT an option, it might be a dream but you really want to make it a reality.

After doing your homework and you’ve concluded that Trading the Financial Market is the only way to achieve that goal.

In this example, your 3 daughters are, without a doubt, your Motivator. If you are writing your trading plan, make sure to put make a clear statement about this in the plan.

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How do I know for certain that is what I really want?

Of course, the above example may not apply to everyone. And some may not even know it even if you have the answer in front of you. If you’re one of them, you could try the following exercise.

Answer the questions. And when you answer these questions, take note of your mental and emotional state.

What is your favourite colour?

Or

Where do you want to go on the next holiday? 

The chances are, you’ll know the answer as it comes with little or no hesitation, it carries weight (logic), confidence and you’ll also get a positive vibe inside you. You’ll know for certain that it’s the CORRECT answer because you won’t doubt for a second even if you repeat the same question several times.

That should be the feeling of Certainty.

 

That’s all for Part 3 of this series. Please subscribe to my newsletters for the next few parts of this series.

Glossary

  • Trading Plan – a detail plan of one’s trading career. This is essentially a business plan which includes a trading objectives, financial/non-financial goals, implementation and etc.
  • System Rules – A simply a group of specific rules, or parameters, that determine entry and exit points for a given equity. Sometimes also known as Trading Strategy.
  • System Components – different parts of a System which contributes to the main system. For example, Exit Rules/Strategy is a system component.

 

 

Thank you and happy trading!

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