Should You Develop Process AND Performance Goals for 2014?

BellaGeneral CommentsLeave a Comment

Hello Mike,

I hope you have had a happy holiday and great end of the year since last time I saw you in Phoenix earlier this year.

I have been working on creating 2014 goals for my portfolio but I ran into a problem that maybe you can advise on.

The main goals consist of having certain % returns or improving my winning-to-losing trades ratio from last year. The problem I have is I don’t know how to improve my results, i.e., I will have gains on 50% of my trades by doing X. What is the X? Or is it just keep reading and studying as much as you can? My main goal is to improve my portfolio and stock picking every year but having tangible ways to do that is the tough part for me to figure out. I know you have been doing this for a long time so any help would be great. Do you set up goals at the end of each year or is the market too unpredictable to do that?

Thank you for your help.


You are conflating the issues here, so let’s get you organized and on the right track.

1) You have to know what X is to expect trading improvement. X is your PlayBook. You may have heard I wrote a book about how to build one :). You must archive a series of setups that make the most sense to you and be trading them with the most size. These setups must be written down, with detail, specific variables, and a trading system for execution. You first goal is to build a trading PlayBook. Don’t worry about results until you have built your PlayBook.

2) After you have built your PlayBook, an excellent question can be debated: Should you have only process goals or process AND performance goals? I lean toward process AND performance goals. With performance goals subconsciously and consciously you do all the things you must do to hit your numbers. This means doing all of the process minutia to hit your numerical goals. Ironically, having performance goals helps you improve your process.

Having said all of that I have to add a caveat based on how you trade. You are more of an investor than trader. Thus, your results will vary more than a day trader. There will be markets where your strategies will underperform if you are an investor. And even the results of some investors will vary based upon activity. Remember the big kerfuffle over long-term investing (they call it “Buy and Hold”) versus active investing after the market crash in 2008? And now from CNBC we offer two years of propaganda on why you should never Buy and Hold to be followed with five years of why you should never Actively Manage…  And now that kerfuffle is back with passive investing, Buy and Hold, dominating active management in this market.

Plan of Action:

a) Build your PlayBook

b) Keep working to expand your PlayBook

c) Set performance and process goals

d) Understand that your performance may not be controlled based upon your investing style during some market periods

I hope that helps.

Related blog posts:
Sizing and Entries in This Volatile Market
Do This Every Day to Become a Consistent Trader

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade
The PlayBook

No relevant positions

Leave a Reply