Lessons from the Pros

Specialty Skills

Humans Are Creatures of Habit

Several months ago I wrote an article featuring my friend Harvey.  Now Harvey only lives in my head, I made him up to illustrate my story.  By the way, those voices in my head…well, sometimes they have good ideas!  Anyway, Harvey found himself losing consistently in the morning; and, he felt pretty bad about it.  When this happened Harvey would swear that the markets knew exactly what he was doing and to spite him they would go in the other direction as soon as he entered the trade.  He would begin to get frustrated, fragmented and frazzled.  Harvey was not a bad trader, on the contrary, he had a morning routine that included looking over his watch list, checking the morning broad market news, looking at yesterday’s levels and beginning to draw new supply and demand zones.  But, despite his routine, his choice set-ups often came from one or more of the financial news talking heads; and invariably he would trade against his own best interests.  This morning was no different, he lost again and he felt angry, tense and dejected.

Harvey was doing many of the same things over and over and expecting a different result.  This was not working for him.  He would think to himself, “Why is this continuing to happen?”  How do I turn this craziness around?”


Harvey had some bad habits and these habits were getting between him and the results he so badly wanted.  Is this beginning to sound familiar?  Are you caught in a rut that seems like you’ll never break away out of it?  Then you must identify “new” routines in order to start building good habits.  Stephen Covey wrote the best seller, “The 7 Habits of Highly Effective People.”  The first habit that he writes about is “begin with the end in mind.”  This is so important.  Many of you have not established a compelling reason why you are trading…your purpose.  The strength of your purpose will not only establish a focus for your trading efforts, it will connect the what-matters-most in your life to the what-matters-most in the trade.  Doing this takes something as precious and passionate as your family and helps you to take that vision and apply it to support your ability to remain fiercely focused and trading with your highest and best trader.

The other thing that you must do is to “rethink” your routine.  A routine that has attached to it a “checklist” is going to help you stay on target on task and on purpose when you start your trading day.  You simply go down your checklist doing one item and then the next until you are finished.  Routines are what build habits.  A routine is something that you have determined is important for you to do in order to accomplish your objectives.  It is not yet a habit.  A habit is a routine that has been used so many times that it has been assimilated into your core.  It is emblazoned like a tattoo on your forehead and it has become a good default mechanism.  You start doing it automatically.  Dr. Maxwell Maltz in his book “Psycho-Cybernetics” says that in order to create a habit you must do it every day for 21 days.  Actually, my bias is that a new routine in your trading needs a minimum of 60 to 90 days to have sufficient strength to drive you through the mind-fields of distraction that trading can cause.

The other point to be made here is that you’ll want to adhere to the “skill building” formula as you are thinking about and constructing your routines.  Skill building is one of the few processes that should “always” be at utilized in your trading.  If you focus on constantly and continually building your skills that is what will take place and you are going to expand your competency, self-esteem and ability to follow-through on your trade plan and rules.  Any endeavor that is valuable and complex where you want to excel falls in the purview of the Skill Building formula.  Here it is: P + ER + FL + H = SB.  Let’s look more closely at it.  P stands for Protocols.  A protocol is a series of sequentially ordered steps toward an aim or a goal.  A protocol is comprised of your strategies, procedures, rules and set-ups.  Protocols are throughout our culture in medicine, law, accounting, etc.

After you have established your trading protocols then put together your Effective Routines or ER.  Effective routines are the prioritized ways that you will execute your protocols.  For example, a supply zone/demand zone strategy might be one of your protocols.  After you have determined how you would draw your levels and established a set-up that would trigger a trade you would determine the routine you would follow entailing the checklist of things you would do to implement the protocol.  For instance, you might look at the broad markets, larger time frames to smaller time frames, trends, news, indicators, and odds enhancers etc.; in other words those supporting items to ensure that your strategies would be high probability.

Next, the FL stands for Feedback Loop.  Anything that you do where you want to get better you must measure, verify and document whether or not the protocols and effective routines are providing the hit rates that work for you.  This is where you are using a Trade Log and a Thought Journal to track your mechanical data (everything that has to do with the mechanics of the trade) and your internal data (thoughts, emotions and behaviors) in order to identify and document what is not working.  In this way you can address your “issues” as they present themselves.

The H is for Habituation.  After you have established the protocols, determined an effective routine, begun documenting results then you must continue to do these processes over and over making them habits.  If you do this you “will” build your skill levels.  You will establish your A-Game.

Habits are at play throughout your life in all manner of endeavors to include, sports, business, personal life, etc.  We are all creatures of habit.  What is critical is to become aware of both your bad habits so that you can rectify them and your good habits so that you can embellish them.  Trading with your best interests in mind and with your highest and best trader is crucial to getting consistently profitable results.  Let’s face it, profitable results are what you want.  You must do what it takes to increase the probability of getting those results and that comes through a systematic and consistent application of the formulas that are going to make those results a reality. We teach you ways to get those results.  Ask your Online Trading Academy representative for more information on the Mastering the Mental Game Online and On-location courses.  Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.”

Happy Trading

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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