The Danger of Goals

I went long on the Nifty day before yesterday when it went above 5278. I will cut my long positions and go short only below 5164. The market has opened up therefore I can relax a bit and write about things that I am interested in writing. Like do you remember the questions asked during typical job interviews? "Where do you see yourself 5 years from now"? was a standard question. "Sitting on the other side of the table and asking stupid questions like you are currently doing" should have been the real answer. Instead we have all fumbled through inane replies to questions like these. "Why did you as an engineer choose to take up Marketing Management" was another one of those standard questions. "Have you seen what they pay an engineer these days? I want to make tons of money" should have been the real reply. Instead we have all given some answer that we believe would satisfy the a**hole asking those questions.

I can now understand what the interviewers were really trying to achieve. Other than the fact, that they wanted to check whether the interviewee had a working voicebox and an ability to use it when required, they were also hoping against hope that would be able to hire that one person who, unlike them, knew what he wanted to do in life. A person who had a goal for himself. However the point of this note is NOT that everybody should have a Goal in life. Instead I want to write about how the interviewers were wrong and how focussing on the goal is detrimental in most areas in life and specially in trading.

You do not believe me? Then let me explain. Take the case of a batsman in cricket. His primary goal is to not get out. The secondary goal could be to score as many runs as possible. But focussing on them is a sure way to make mistakes. The only goal a batsman should really have is to focus on the moment and play every ball on its merit. If, unfortunately, a good ball happens to come upfront and get him out then he need not kick himself as long as he has done the right things. His focus should only be on doing the right things and not on the goal of making lots of runs. The achievement of a century or not losing his wicket should only be a result of doing the right things.

Similarly the goal for a trader is to make money. But focusing on that is a sure way to lose it. The moment a trade is put on, if the focus is to make money, then the trader is likely to succumb to the fear of the market reversing and taking away his paper profits and therefore most likely to book his profits too early. It is also likely that the fear of losing money might actually stop him from taking a trade when his system dictates it or double guessing his system. The moment the focus on the goal takes away attention from the process, then the trader is on a slippery slope to doom.

The ideal balance would be to know your overall goals but focus entirely on the process. This is true for a batsman, a trader or for any other area in life.