New Year, Old Goals

Without fail, January-March each year (pre-COVID) would drive me insane.

Why?

People in the gym - a LOT of them.

Why?

New Year resolutions.

The vicious cycle of gaining far too much weight over the festive period, leading to some misconstrued thoughts that tell them "this is the year!".

You'll see them doing so well with their routine but by the magic 3 month mark, they've all but disappeared.

It's a shame really, as their intentions were great. I just wish it would carry further than three months.

It's for this reason I'm not basing my trading ambitions on any fresh desires: I've always wanted to be free from the 9-5 and it is ALWAYS on my mind. Publishing my goals for accountability is one step I've never really committed to though, so without further ado I shall set the goal for the coming year...

The Framework

Over time, I've tried so many different goal setting frameworks. The ones that suit me best, I've learnt, are the simplest ones.

Sahil Bloom has provided an excellent simple structure to use:

LFGGGGGGGGGGGGGGGG (do yours at the same time if you want or come back to it later)!

Step 1 - Set the Stage

Establish the categories that you'll be building goals around.

The examples Sahil provides are personal, professional and health.

I'm going to keep this goal of mine simple - it's professional..

Step 2 - Identify BHAG

"WTF is BHAG?!"

Yeah, I had the same thought too - it stands for Big Hairy Audacious Goal.

It should be big and ambitious—but not ridiculous. Think of this as your North Star. It's the poster on your wall—motivating in an abstract sense, but perhaps not on a daily basis.

The best bit? Only ONE is needed per Step 1 category. This is to keep the focus...too many big goals get you nowhere, fast.

Mine?

Hand in my job resignation before 31st January 2023, by becoming a sufficiently profitable [$5k/month] day trader.

Step 3 - Work Backwards

BHAGs are great for vision, but they are TERRIBLE for guiding short and medium-term actions. Work backwards to identify one medium-term goal that is connected to your BHAG. If the summit is the BHAG, the connected medium-term goal is a mid-climb camp.

It's easy to link goals to strictly financial performance measures in dollar terms. Experience tells me, time and time again, this is usually an unhealthy approach when *starting* work on a goal. As a result, I'm choosing something process orientated.

Choosing something such as 1,000 trades is a better idea but still fundamentally flawed. For example, I could open and close a large number of small trades and hit that benchmark in no time at all.

Hopefully you can see that picking a suitable goal takes more thought than it first appears. Behavioral tendencies and biases need to be taken into account so that the goal leads you in the way it should i.e. encouraging positive actions.

So, to get a better medium term goal, I'll use a tool that incorporates other key aspects of performance. It's called 'the balanced scorecard' and is traditionally used in companies for pretty much the same reasons I'm using it for i.e. looking beyond the financial measures.

If you want to learn more about the balanced scorecard, here's the original article introducing it from 1992: The Balanced Scorecard - Measures that Drive Performance.

***I wanted to cover this area in more detail so to avoid this post becoming too long, I've expanded Step 3 in this post: New Year, Old Goals - The Balanced Scorecard***

Step 4: Establish Process Goals

Process goals are the key to the entire framework. What are the 2-3 daily actions that you would need to take to create tangible, compounding progress?

To keep this short, I'll list the goal from step 3 and identify a couple of process goals.

Customer Perspective

Goal: Select TWO exchanges that represent best value for fees and security of funds.

• Process Goal 1: Research exchanges each weekday after a workout for 30 mins to ensure a suitable exchange is selected ASAP.

As of a few days ago, Binance are increasing the amount of information required to trade with them and locking down trading capabilities until that information is provided. That to me represents a risk in security of funds but I'll look into it further and see exactly what the reasons are for it before jumping to any conclusions.

This goal is therefore a priority and I would expect to have this goal closed off within a week.

Internal Business Perspective

Goal: Purchase and install custom build PC suitable for trading and other intensive activities.

• Process Goal 1: Use downtime to research computer builds.

Innovation and Learning Perspective

Goal: Complete study of Technical Analysis Explained by Martin J Pring.

• Process Goal 1: 30 mins study each morning before breakfast. After each chapter, move on to Process Goal 2.

Financial Perspective

Goal: Survive - by the end [30th April 2022] of this period [Q1] of trading, initial investment should still exist in it's majority [90%+] and no further capital should have been added.

• Process Goal 1: 30 mins analysis each evening after dinner on potential trades, placing orders where necessary with a max drawdown of 1% of total capital and a minimum of 3% profit potential. Risk/Reward ratio of 1:3. Noting these trades should be closed by the end of the day.

Step 5: Track & Adjust

Same setup as previously but with how I'm going to log and monitor the process goal.

Customer Perspective

Sometimes burdening oneself with admin takes away from the value-adding activities. This is one of those times.

As this is a high-priority goal, no monitoring/reporting will be needed. I expect to have this completed very soon.

Internal Business Perspective

There will be no reporting/monitoring for this and I have changed the process goal to reflect this. I will likely go for a pre-built PC than a custom one, a) to save time and b) because I haven't got a clue what to do and don't want to learn.

Innovation and Learning Perspective

Monitoring will be done through a habits spreadsheet stored on Drive. Link is here. Aiming for 90% compliance - feel free to hold me accountable.

Financial Perspective

This is the critical element where I believe monitoring performance will reap the most benefit. Tracking will be done using two tools:

1. The habit tracker I mentioned previously, found here.

2. I'll use Edgesheet to track my trades automatically, allowing for basic performance measures to be used. What are those measures? I'm yet to decide but they'll include win rate and max drawdown, among others.

Summary

I've laid out the focus of the year i.e. handing in my notice to go full-time self-employed, and how what steps will be done during the first three months.

There hasn't been a HUGE amount of detail but that's been done on purpose. It's easy to get bogged down in the details, which ends up paralyzing you in pursuit of any meaningful action to the desired outcome.

Processes have been mentioned as a minimum - there will be so much more that goes on outside of what I've mentioned above. It wouldn't be possible to reach the BHAG otherwise!

Anyway, I hope you've found something useful in reading this post. If you have any comments and/or suggestions, please let me know!

V