Question 5: For every $1 you risk, what is your expected reward?

This is probably one of the most important questions of all and it’s not something you should only ask once a year, but continually throughout your trading career. Calculate the amount of reward you expect for every $1 you put at risk in any trade you’re looking to enter. Knowing what your risk to reward standard is, you are better prepared to weed out riskier trading opportunities, so your account funds are tied up in less risky trades that aren’t worth the chance that you could lose those funds. Without setting this goal up-front, before you trade in 2015, finding a risk-reward pattern for your trades is nearly impossible. You have to take a hard look at what your track record is before you can use this wise trading mentality to guide your decisions in the new year. This is the key difference between disciplined trading that leads to scalable and consistent results versus trading for the sake of trading to the point where you’re more of a gambler than a trader.

Question 6: What’s the growth plan and milestones?

I’ve been doing this for years and it makes all of the difference. Have you heard that those who write down their goals are more likely to achieve them and they’re more likely to see greater returns because of it? Studies say it’s true! I firmly believe that any trader who wants to see improvement must write down specific goals and milestones for the coming year. Specifically, I’ve started to break my goals out into a couple of areas including growth in emotional intelligence in the market, patience, trading wisdom in general and spatial intelligence. When you answer this question, sit down and outline each area and write down specific steps you’ll take to improve in this area and how. For example, I know that patience will come for me throughout time as I train my adorable, but impressingly hard-headed Bassett hound and raise my first child to be a great man in this world. On top of that, I know that my emotional intelligence can be improved through reading certain books that have been recommended to me. You know the ones where someone is reading something, raves about it and you say, I want to read that, then you never think about it again? Don’t feel bad. We all do it. But, for the books that you know you really are going to read, go ahead and buy them right then, set them aside, and then make a plan for what you’re going to read by when. I already have six books, one book for each of the first six months of the year in the order that I want to read them to improve my emotional intelligence. My first book that I’ll read in January: The 4 Agreements by Don Miguel Ruiz.

Besides setting aside books and making a plan, you have to set deadlines and milestone for this growth plan. I’ve found that setting hard dates on your goals brings that sense of accountability and gives your goals more weight in your mind so that you can track your progress. Most importantly, your growth plan should be a good thing. Celebrate the little victories and don’t worry when something doesn’t turn out exactly as planned -- that’s life.

Together, these six questions could help you win trades before you ever place them because you’re more prepared to decide which trading opportunities are coming up next, what successful trading looks like to you, and how you’re going to make measurable progress by this time next year.

It’s not always easy to plan ahead and answer the tough questions, but from experience, I can say that it’s worth it.

Joshua Martinez
Expert Forex Analysts
Market Traders Institute