When people start trading, many of them wonder, “How much can I make in a month?”
Then, as the end of the month approaches and they are still just short of their target, they begin to think this.
“One more winning trade and I will get there.”
“If I increase my position size just a little, I can make up the difference.”
They do not think they are doing anything reckless.
They are simply trying to reach their goal.
But once monthly profit becomes a target, even the same rules can produce different decisions at the beginning and end of the month, causing the execution of the system you tested in advance to break down.
This article explains why monthly targets change the way you trade and where living expenses and income goals should be handled instead.
■ The Goal Is Not the Problem. Where You Place It Is
Having a monthly financial goal is not itself the mistake.
The mistake is using that amount as a standard for your trading decisions.
When the amount you still need this month makes you accept conditions you would normally reject, fear opportunities you should take, or change your position size, your standard moves from your system to the calendar.
Monthly profit is a result you record after the month has ended.
It is not a quota you demand from the market by month-end.
You may want money.
But you must not convert that amount into trading conditions, trade frequency, or position size.
Do not give probability a calendar deadline.
■ The System Does Not Look at the Calendar
A trading system responds only when its defined conditions appear.
How many days are left until the end of the month.
How much money is still missing from your target.
Neither has anything to do with the system.
A month is nothing more than a calendar cut through an ongoing sequence of trades.
The same system can produce a profitable month, a flat month, or a losing month.
Whether that system has positive expectancy should have been established before live trading through testing over a large sample size.
Live trading is where you execute those rules exactly as defined.
But once a monthly target becomes your standard for making decisions, you begin searching for reasons to enter when the conditions are absent, loosening your conditions, increasing your position size, and even passing on opportunities you should take.
At that point, you are no longer executing the system you tested.
You are executing a different, untested system altered by the monthly target.
Even if the original system had an edge, that edge cannot emerge in your results when you are no longer repeating its original conditions.
A monthly target changes neither the expectancy of the system nor the number of valid opportunities.
It changes your behavior, and that change separates your actual trading from the edge you confirmed in advance.
■ But Do You Not Need a Monthly Target If You Have Living Expenses?
Some people will think this.
“Full-time traders have living expenses.”
“You cannot make a plan without deciding how much money you need each month.”
Calculating your living expenses and income goals is necessary.
The problem is turning that required amount into “money I must make from trading this month.”
And now I will say the most important thing, which is also what many people do not want to hear.
Trading is not an easy way for amateurs to make money.
Nor is becoming a professional trader easy.
If you do not yet have a system with an edge, and you have not completed testing over a large sample size or practiced through your own hands, stop trying to make trading pay your living expenses from the start.
When your life depends on this month’s P&L, you can no longer wait for the conditions to appear.
Your need for living expenses does not create more opportunities, but you begin to feel that you must manufacture trades.
You loosen the conditions.
You search for reasons to enter.
You increase your position size to match the shortfall.
At that point, you are no longer using the system you tested in advance.
You are using a different, untested system altered to pay your living expenses.
Plan the money you need to live through income outside trading, a reserve for living expenses, trading capital, fixed costs, and withdrawal rules.
Even after accounting for the expectancy and variance confirmed over a large sample size, if your current capital and preparation cannot support your living expenses, what you need to review is your life planning and capital planning.
It is not the conditions or risk of your system.
Needing money for living expenses and being able to obtain that amount from the market this month are two different things.
The moment you make trading carry the shortfall, you bring a life-planning problem into untested execution.
■ Monthly Profit Is Something You Record, Not Something You Demand
Having a financial goal is not the mistake.
Using that goal as a standard for your trading decisions is.
The market knows nothing about your living expenses or the end of the month.
If you change your conditions or risk to match the shortfall, the system you tested becomes a different, untested system.
Life planning and capital planning belong outside trading.
In live trading, execute the rules you tested and practiced through your own hands exactly as they are.
Monthly profit is not something you demand from the market by the end of the month.
It is a result you record after the month has ended.
If you still do not have a system with an edge, build one first.
That is where everything begins.
I hope you will put my 【manual for building a trading system】 to good use.