One of my favourite personal development books (or in this case, two very large books!) is Napoleon Hill’s The Law of Success in 16 Lessons. While most entrepreneurs are familiar with Hill’s later work Think and Grow Rich, I have to admit I always preferred The Law of Success, which was initially released one lesson at a time. Although some of the ideas appear fairly obvious at first glance and some of the language is a little bit dated, I always found myself refreshed and thinking positively after reading it, even if only for ten or fifteen minutes. For that reason alone, I think it is an excellent book.

Hill lists 15 laws in total (the first lesson is an overview of all of the laws), in the following order:

1. A Definite Chief Aim
2. Self-Confidence
3. Habit of Saving
4. Initiative and Leadership
5. Imagination
6. Enthusiasm
7. Self-Control
8. The Habit of Doing More Than Paid For
9. Pleasing Personality
10. Accurate Thinking
11. Concentration
12. Cooperation
13. Profiting by Failure
14. Tolerance
15. Practising the Golden Rule

I’ll be exploring these laws from the point of view of success in the field of trading in a series of posts. We’ll start with the first law, A Definite Chief Aim.

A Definite Chief Aim

In this Lesson, Napoleon Hill is actually talking about a Definite Chief Aim for your entire life, rather than just your Definite Chief Aim for a particular undertaking like trading. Some people baulk at the idea of summing up their life into a single aim while others love the clarity it can provide. If you have a Definite Chief Aim in life and can link it to your trading, it will provide you with both clarity and energy to undertake your trading studies and to find and take trades. I see that as a massive positive!

But for now, we will focus on the idea of a Definite Chief Aim for just our trading. I think we would all agree that we need to have a clear idea of where we are going if we want to make sure we get there! Many people come into trading with the vague notion that they’d like to have more money than they currently do, but they’re not sure how much they would like or by when. Financial markets provide us with endless opportunities for making money, which is fantastic, but sometimes having too many options available can make it hard to make decisions, particularly when you start trading and your emotions come into play.

Let’s say your goal is to make $30 million from trading over a period of time. You won’t get there very quickly if you are constantly banking $50 to $100 profits because you’re afraid of losing the money. At some point, you’re going to need to let the market run and let your profits build. Similarly, I remember a trader once told me that they came to trading thinking it would be nice to have a bit of extra income, maybe an extra $1,000 or so a month. Later, they told me of a trade they took that was showing a profit of over $30,000, but they didn’t bank the profit! That was potentially 30 months worth of extra income, in one trade! But as their profits grew, so did their goals. Why settle for $1,000 a month, they thought, when I can have $10,000. When the position got to $10,000 they thought “Why settle for $10,000 when I can have $30,000?” Then at $30,000 – you get the idea. If they had been clearer and more DEFINITE with their trading goals, they could have locked in a handy sum of money.

In trading, my experience has taught me that it is always best to enter a trade with a Definite Chief Aim in mind. When you reach the aim, close the trade and bank the profit, no questions asked and no regrets. If the market keeps going, it doesn’t matter – you made your profit! But just remember that markets don’t run on forever, in either direction. They go up and they come down. Every rise is followed by a fall, and most falls are followed by a rise. So make sure that your Definite Chief Aim is clear, so that when you achieve it, you will recognise it and can act swiftly to secure it!

Action item: So before you begin a career as a trader, write down, as clearly and succinctly as possible, exactly what you want to achieve and the time frame you will allow yourself for achieving it. Your goal should be slightly aggressive, but you should be convinced that you’ll be able to achieve it. Write it down and look at it daily to remind yourself of exactly why you are learning to trade, or trading.

As a final thought, Hill recommends that once you have your Definite Chief Aim, you should form an alliance with a person or persons who will help you “transform your Definite Chief Aim into reality”. This is where it is helpful to have your partner or family on board with you. Explain to them that you will need some time to learn how to trade, and you will also need to put time aside for finding and managing trades. If it’s your family, help them to understand that your success is their success, and that the whole family will benefit from your trading profits.

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