Obligatory London update
First of all, I want to thank everyone for the kind words and congratulations after my announcement last week. I arrived safely in London (after 30 hours of travel) and began the way-too-long walk to my hotel (poor directions were given) when disaster nearly struck.
London is a city of eight million people. As I’m carrying my bags through town and trying to find my way on a map, I glanced up and saw the one person in the entire country who I needed to avoid for a few more hours. Yes, out of the millions of people in London I managed to run into my girlfriend Marianne (now my fiancé).
Luckily, her friends spotted me before I saw them and were able to direct Marianne’s attention away from me before she realized what was going on. Talk about a close call.
I’m writing this as my trip here is coming to a close. It’s been an incredible experience, but I won’t be disappointed to be home. I don’t know if it’s the five-plus miles of walking a day or the complete absence of American food, but I’m not sure that life in London is for me. The one upside to London is the weather, which, while rainy, is a comfortable 60 degrees nearly every day. Oklahoma is now on its 29th straight day of 100+ degree highs, with no end in sight. Yup, can’t wait to return home to that.
Onto the topic of today’s column, why is setting goals important to your development as a trader? I’m going to focus on the benefits to your trading and speculating portfolio rather than your development as a player, though obviously this applies there as well.
Why set a goal?
“The trouble with not having a goal is that you can spend your life running up and down the field and never score.” – Bill Copeland
We’ve all had to sit through boring presentations about goal-setting in high school or college. While I’ve never enjoyed such experiences (since writing my goals in colored marker on a big sheet isn’t really my style), there is an important takeaway from such lessons.
The lifestyle of a Magic grinder, either a player or trader, is full of ups and downs. If you don’t have a destination in sight, it’s very easy to become discouraged by the grind and give it up. Getting burned on a trade, failing to sell off your Stoneforge Mystics in time, or speculating on the wrong card can be harsh experiences. Without concrete goals to work toward, overcoming these experiences gets harder every time.
While a few people can use trading and speculating as a full-time source of income, many of us don’t. I use it to supplement my playing collection and use it as a source of discretionary income, something I imagine most of you do as well. I’ve been lucky enough to effectively nullify the costs of my playing Magic at home, and my only Magic-related expenses come in the form of out-of-state trips, which I’ve never failed to cover in either winnings or trade profits. As such, trading income is nearly entirely profit for me, and that’s a pretty good feeling.
But, even though I’m making money trading, it’s hard to see that when that money is immediately flowed into my bank account and spent on things like car repairs. This is where goal-setting comes in, and the benefits become more apparent.
Setting goals for yourself also makes you accountable for those goals. This is good because you have no one but yourself to blame if things go wrong. Every goal you meet gives you a feeling of satisfaction, but, more importantly, every missed goal is a learning opportunity, much the way losing a match of Magic presents an opportunity to analyze your mistakes.
Applying Goals to Trading
For example, as I mentioned last week, one goal I set for myself was to raise enough money trading to buy an engagement ring. Once I made this goal and began making some tangible progress toward it, grinding away value at FNM became much more bearable, and those trades with the guy desperate to squeeze every last penny out of his cards became much less frustrating. The psychological benefit of having a tangible goal is a major reason I’m able to “keep my head in the game,” so to speak, when trading.
Another successful goal I set was to buy a TV last year with money made from Magic. After enough work, not only was I able to watch ESPN on a fancy new television, I was able to do so without impacting my bank account at all! I can tell you there is no better feeling than to walk out of Best Buy with a TV that you paid for while at Friday Night Magic.
For the engagement ring, I ultimately decided I didn’t want to drain my “Magic account” (a concept I’ll get to a minute) to buy it, but I was able to pay for a sizeable amount of the ring with money made from Magic. Also, it turns out I lied in that last paragraph. Walking out of a jewelry store with a ring you paid for at Friday Night Magic beats walking out with a TV.
Another benefit that not everyone immediately thinks about (but is very important to those in relationships), is that purchases like this become infinitely easier to justify when you can say that you’ve paid for it with Magic cards.
Another type of goal to set in trading is that of price. On the Prediction Tracker we call this the target price. It means that when your cards hit a certain price point you are willing to sell them. This is an important goal to set, because without something external telling you "sell now" it can become too easy to sit on certain cards while hoping that they continue to go up. What inevitably happens is that they reach a tipping point and head back down, and you're left a week behind on a card that is already dropping. While the specifics of this are enough for the subject of an entire article (and Ryan Bushard has written about this), the easiest way to communicate this principle in short is for me to quote Doug Linn:
Let me take you on a zoological tour of the galaxy.
This is Greedo:
Greedo is a Rodian Bounty Hunter who set out to find Han Solo and bring him to Jabba.
Unfortunately, Greedo decided that the best way to get Han was to find him in a seedy bar and take him right there. Greedo got greedy and this happened:
"Don't be a Greedo. Greedo gets shot by Han Solo."
In other words, don't be afraid of pinching every penny from your cards. Sell when you're going to safely profit. Oftentimes, you'll lose more than you'll gain by waiting to squeeze out the very best possible margin.
Due to store credit for FNM and card borrowing, I’m in a situation where I can use my trading money entirely on “real-life” purchases like these, but many people want to reinvest that money to help pay for their Magic habit. Just because you aren’t buying a TV or a diamond with your trading money doesn’t mean you won’t benefit from setting a goal for yourself.
For example, many people use their trading money to play FNM. This is a worthwhile and easily attainable goal. If your local store buys cards, you should be able to keep a steady flow of store credit coming and pay for your drafts. If you and the store owner extend this concept to accepting store credit instead of prize packs, then you can easily “go infinite” at FNM.
Meeting goals takes patience
Supposing this isn’t an option for you, either because of store policies or preference, then another option is to spend your trading money on new cards. Need that new Jace or want to foil out your cube? Set a goal to do it with money made from trading.
The caveat here is that in order to successfully do this, you need to have patience. Building a bankroll doesn’t happen overnight, and “borrowing” from your regular funds to purchase something with the intention of paying it back later from your “trading funds” defeats the purpose.
Instead, what I propose is this – Set up a separate bank account (I use a Paypal account) and run all of your trading money through there. There is no simpler way to see the benefit of your labors than to see the cash in a bank account. I run all my Magic-related income into my Paypal account, and pull it out when I want to use it for a special purchase.
If you take this route and start the account at $0, you likely won’t be able to immediately begin buying cards. Rather than start a new account immediately, I suggest doing so the next time you sell cards. PayPal accounts are very easy to create and maintain, and you can use them for all your internet-based purchases.
Setting a goal
With all this in mind, I’ve set my mind toward my next personal goal. As I said, I like to use my Magic funds for selfish goals that I would otherwise have a hard time justifying spending money on. In my opinion, this is one of the best uses of your trading money, since it’s a lot more satisfying to buy yourself a TV with your trading money than it is to fix your car. The net effect is the same, since you’re spending the same amount of money either way, but it just feels better to indulge yourself with this secondary income.
So my new goal is this: To raise an additional $750 in my Magic account by the end of November to buy myself a new personal desktop computer. I do a lot of gaming, and my current desktop is ancient and my Mac laptop isn’t ideal for gaming. By giving myself about four months to meet this goal, I’m able to easily break it down month-by-month and see that I need to raise about $200 a month to meet my goal.
This is ambitious but attainable with hard work and commitment. I’ll be revisiting this goal when November comes around, and using that opportunity to look back at what I did well and not so well between now and then.
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That’s all I have for this week, and I hope you’ll find something useful from the system I use. Do you have any other ways or tips for tracking your Magic finance-related goals? Let me know in the comments.
@Chosler88 on Twitter