Want To Be a Millionaire? Start Using Benchmarks!

When I first started to mentor a few years ago, I realized that I was spending a lot of time teaching people the technical aspects of trading.  However, I quickly realized that all of the technical knowledge in the world wouldn't lead to financial success without a goal oriented trading approach underneath it all.  

In July, I'm going to talk a lot about the importance of effective time management and goal oriented benchmarks.  In this post, I'll highlight what I see as the first steps and give you some actionable tips to help get you started down the right path!

Start Using Benchmarks

The easiest way to get my students pointed in the right direction was to get them thinking about their long term goals.  In one case, I was working with someone who wanted to grow his $200K portfolio into a $1M portfolio within 10 years so that he could retire and start enjoying the fruits of his labor.  

When you drill further into that, finding reasonable ways to make $800K in just 10 years can be pretty daunting.  My initial fear was that he would get caught up taking positions with a high risk/reward ratio or that he would convince himself that his goals were not achievable.  

As we continued to talk through it, I could tell that he was discouraged and was questioning if he should even bother trying.  If nothing else, I wanted to keep him from making these two big mistakes so we started by breaking his $800K goal into more manageable chunks.  

How We Solved His Problem

I let him keep that $800K number at the back of his mind but I really wanted him to focus his efforts on what he could achieve by December 31st.  We combed through his portfolio and had an honest discussion about his risk tolerance.  In the end, we came up with a plan designed to grow his portfolio by $65K before December 31st and, voila, we had our first benchmark in place!

We continued to break things down into quarterly and monthly benchmarks to keep him focused on what was directly ahead.  I wanted him focused on what was right in front of him versus that big number looming far off in the distance.

I'm happy to help you to pin point your goals and get your own benchmarks in place.  Just click here to sign up a free consultation!  

Time Management

How many times has your boss given you a project along with a budget and a deadline to go with it?  Your first step is to craft a plan that work backs from that deadline, right?  Then, you work out how much time each task will take, and allocate budget accordingly.  Treat your trades no differently and you're well on your way to making your first million.

There's no doubt that you will run into snags and set backs but stay goal oriented with every hour of your time.  One thing that helps is to measure your progress towards your benchmarks.  Also, when you run into trouble, figure out the underlying reason and come up with a solution.  Make sure that you pivot quickly to avoid spinning your wheels.  Maybe even consider tracking costs in a spreadsheet, just like you would for that work project. 

Theory Only Goes So Far

I also want to give you something actionable that you can use to start better managing your time right away.  For starters, set aside 30 minutes with every trade to plan for a profit exit, a loss exit, and a timing exit.

Not sure how to plan those exits with only 30 minutes?  Begin with these 9 Simple Steps:

1. Review the most recent chart for buying signals - 10 minutes
2. Only use data from the past 30 days in your decision making process 
3. Determine the Ideal Buy Point - 5 minutes
4. Annotate your charts with an eye on momentum. Measure the historical performance of the stock - 5 minutes
5. Focus on the 8 day EMA and examine volume - 5 minutes
6. Take a snapshot of Market Pulse on the day you place your trade.  Keep this handy for your post mortem with this trade - 5 minutes
7. Act Immediately - Don’t spend additional time 2nd guessing the data 
8. Only trade during uptrends. When market conditions aren’t ideal, switch your focus to updating your watch list and spend less time trade planning
9. Once you take a position, immediately shift your attention to looking for the next opportunity. This will get you out of the habit of throwing more time at your existing position. 

Time yourself and work hard at getting it done in that 30 minutes time frame.  It may take you longer at first but don't let that dissuade you, keep at it!

I can show you ways to manage your time that help you get the most from your strengths while limiting the impact of your weak points.  Just click here to sign up a free consultation!   


Happy Trading!