Approach your goal setting the right way

In 2012, Allyson Felix stepped up to the Olympic starting blocks. In the previous two Olympics Felix had earned a silver medal at each, coming up short in her mind. At this elite level, a gold medal represents the ultimate achievement, and it can seem like nothing else matters.

She felt the immense pressure and thought to herself “I can’t lose again”. Just under 21 seconds later, the gold medal was hers. Yet as the victory washed over her, Felix didn’t feel the way she had expected. She felt relieved, but she didn’t feel elated. She realised that she had been fuelled more by the desire to ‘not lose’, than she was by the goal ‘to win’.

Science shows the way you frame your goals can determine whether you achieve them. However, it can also determine how you will feel after you have achieved them.

Motivation researchers are often involved in studying two types of goals - approach goals and avoidance goals. Winning the 200-metre race is an approach goal. ‘Not losing’ is an avoidance goal.

Approach Goals vs Avoidance Goals

Research shows that if we only set avoidance goals, we feel less enthusiastic once we have achieved that goal. This is a problem, because for habit formation to truly cement, a perceived reward is of paramount importance.

When you focus mainly on avoidance goals, you can emotively feel less positive affect when you succeed. Positive affect means the emotional boost you feel from experiencing a dopamine release when you have achieved a goal. You get less out of the experience and could even feel depleted. For Felix, because she had focused on an avoidance goal in the 200-metre race in 2012, she didn’t experience true satisfaction when she won the gold.

It all came down to what drove her and how she framed her goal.

In some ways, the results might be the same, and not dependent on whether you set an approach goal or an avoidance goal. However, when you lean into an approach goal, the rewards you experience will feel richer.

So, should you run towards the goal of financial independence, or, away from the possibility of financial need? Well, actually, there is another definition that is more likely to provide a framework for an appropriate goal for traders.

Mastery Goals

Many consider the ultimate form of an approach goal is a mastery goal. A mastery goal is where you aim to understand and apply the material and develop a deep understanding of the content. Dweck and Leggett reveal that “Mastery goals reflect an individual’s aim to learn as much as possible in achievement situations.”

Students who sit exams with the aims of mastering the material, as opposed to not failing the test, ultimately understand and retain more of the material. Plus, when students are motivated by the concept of mastering the material, rather than garnering the appreciation of their teachers (or aiming for some other form of extrinsic reward), they are more likely to accomplish their aims.

Extrinsic rewards in the markets could include trading so you’ll achieve a particular percentage return, or a certain level of profit. Intrinsic rewards in the markets may include the positive feelings of accomplishment you receive when you make your first trade, follow your trading plan to the letter, or finally complete the online course for your charting package.

What sort of goals should you set for yourself as a trader?

It’s likely that the accomplishment of a mastery goal involves a high degree of intrinsic motivation. Intrinsic motivation is most commonly defined as “doing something for its own sake,”. For example, when you learn about trading for no reason other than because you want to. There isn’t a driving force of financial need making you want to be a trader. You’re just curious and fascinated by the entire field and you want to learn as much as you can about it.

Tom Basso, an exceptional trader written about by Jack Schwager in his New Market Wizards book, once described this as “an insatiable need to learn about the markets”.

Intrinsic motivation in the trading arena occurs when you’re fascinated by the markets and want to immerse yourself in learning about every aspect. There’s no person you want to please by pursuing this endeavour. You’re not learning about the markets because your parent expects you to, or your spouse thinks it’s a good idea. You’re doing this for yourself and to achieve your own personal goals.

If you’re motivated intrinsically, you want to become an expert in the core principles of trading. Some of those core principles involve using a checklist or a trading plan that details your entry, exit and position sizing. You’ll also want to develop prowess with your trading platform and your charting package. Plus, you’ll be motivated to learn how to diagnose and trade using your chosen discipline – technical analysis or fundamental analysis.

If you’re intrinsically motivated, you’ll want to become an expert in the specifics of trading and develop your mindset so you can weather the struggles and the victories of the market. You won’t be solely emotionally reliant on the rewards the market can bring you, or the returns of your most recent trade. You’ll be trading for multi-faceted reasons, and not just the pursuit of profit.

The old adage of ‘money flees need’ is most likely integrally woven into the importance of setting intrinsic goals. If you only set extrinsic goals related to your trading performance, then you’re less likely to go the distance and experience satisfaction in your results.

Allyson Felix’s story

So, what happened with Allyson Felix?

Did she learn from her realisations about disadvantages of the avoidant goal method?

Yes she did. She went on to become a six-time Olympic Champion, a 16-time world champion and a world record holder. She harnessed the power of goal setting and visualisation. She states:

“… so it’s just really about quieting my mind, closing my eyes, and really going through the motions of what the perfect race looks like,” said Felix.

“I ask myself, ‘What is the perfect race? How did things come together?’ Every four years, I have this opportunity—for only about 21 seconds—to get it right.”

Felix was used to intense training 6 days a week, 5 hours a day. However, one of her biggest fears came true in 2018. She remembers training in the dark at 6 months pregnant, worried that her sponsor would find out about her pregnancy.

So many athletes are forced to choose between her running career and motherhood. Getting pregnant as a competitor in the track and field arena has even been called the ‘Kiss of Death’ and considered to be a career ending move.

Even though many sponsorship brands were encouraging women to have it all, apparently, in contracts with their athletes - that ‘all’ did not include motherhood. In a very public way, Allyson Felix called out the difficulties for female athletes aiming to have a family.

Felix went on to publicly call out Nike’s maternity policy and succeeded in changing the way sponsors contract their talent. Now Nike offers 18 months maternity protection. Other sponsors also followed suit and protect their athletes by covering many matters related to pregnancy and child raising.

Felix went back to the field one year after giving birth and won a gold and a bronze medal, and ultimately became the most decorated woman in Olympic track and field history – all while her daughter was watching. She was running for different reasons – to support women in their choices in life and to encourage them that they could achieve at a world class level after having a child.

She says: “We have got to stop making people choose between parenting and doing the work that they love”.

“You don’t have to be an Olympian to create change for yourself and others," she says. "Each of us can bet on ourselves."

So the next time you set goals for yourself in the market, consider how you frame these goals. As you learn to fly in the markets, don’t try to avoid the ground, or reach for the stars. Aim to master the task at hand by setting mastery goals. That’s where the true rewards lie.

Louise Bedford is a full-time private trader and author of The Secret of Writing Options, The Secret of Candlestick Charting, Charting Secrets, Trading Secrets and Let The Trade Wins Flow.