When you go on a long trip in your car, do you have a map or global positioning system to guide you? Or do you just “wing it” and hope to find your destination by reading signs and going on instinct? Most people, of course, would have a map. It makes the journey so much easier. And it is the same with developing a trading system. You should know where you want to end up before you even start. It all starts with goals.
You’ve probably heard it a million times during your life: if you want to accomplish something, you must have goals. Unfortunately, after hearing it so many times, many people just list goals to say they did it, or list vague goals that have no way of being measured or realized.
To develop a good trading system, you absolutely need goals. To do that, I employ the SMART technique (Figure 9.1). SMART is a little mnemonic trick to assist in remembering all the important parts of a goal. Here is how I apply it to trading: