Thursday, August 14, 2014

How to Create New Habits to Become a Better Trader

When I want to create a new habit, I take a 30 day challenge in order to ingrain the new action into my daily routine. I pick an action and set a time and place to repeat that action every day for 30 straight days. I call this the 30 day challenge. Why the 30 day challenge?

A simple neurological loop is at the core of every habit. If you want to create change, you must create a new habit loop. Once the habit loop is created, the action you are trying to create becomes ingrained into your daily routine.  You don't even have to think about doing it.

I create the habit loop  by forcing myself to start doing the same thing every day for 30 days.  In the morning, in front of my computer I place a large post it with the time, place and action I must complete. No matter how badly I want to do something else, I do what I have told myself to do.  If I can do this for 30 days, without fail the action becomes so ingrained in me that I feel like something is wrong if I don't do it.

So what is my new action?

One of the most important factors in my market analysis is using underlying breadth indicators to confirm my chart analysis of the market. For years, the first thing I would do within the first 15 minutes of market open is gauge the TICK, watch the number of breakouts and breakdowns and compare my own focus list gains to that of SPY.  Doing this for a few days always gets me "in tune" with the market. Lately however, I've been going straight to my swing trading focus list, my day trading setups and even monitoring what my friends and Trade Report members are doing instead of following the breadth indicators.  Even if I tell myself to ignore the other stuff and follow breadth the night before, in the morning I tend to follow my new pattern.  I am not happy about this and am looking to change this bad habit.

On a post it note I have written the following:

Action: Breadth Analysis
Time: 6:35 am
Place: Family Room

I will do this every day for the next 30 days.  If I get through it, this new action will become an ingrained part of my daily routine, a new habit.

Our actions become our habits - Mahatma Gandhi
We become what we repeatedly do - Sean Covey
The chains of habits are too weak to be felt, until they are to strong to be broken - Samuel Johnson
What new action would you like to turn into a habit?


1 comment:

Johnny Wood said...

Hey Paul,

Can you detail a little more how you gauge the TICK?

Thanks