As we have explored throughout this month’s articles on the theme of “Trading Routines”, trading routines and rituals are constructs we can use to cue attention, mobilize motivation, increase confidence, improve focus and situational awareness, and prime performance.
Given how powerful routines can be let’s take a second to consider how best to construct them.
Routines are essentially a set of habits. Whereas habits are a conditioned set of behaviors that have developed over the repeated reaction to a particular cue.
It’s important to note that habits in themselves are neither inherently positive or negative.
For instance, it’s just as easy to develop good habits as it is to develop bad habits.
So what’s the key to developing good trading habits?
“Excellence is an art won by training and habituation: we do not act rightly because we have virtue or excellence, but rather have these because we have acted rightly; these virtues are formed in man by doing his actions; we are we repeatedly do. Excellence, then, is not an act but a habit.” – Will Durant, The Story of Philosophy (1926)
Purposefully building good habits is a matter of setting out clear intentions around our desired behaviors.
One extremely effective method to coordinate a desired set of behaviors is through the use of a checklist.
As many have written before, including often quoted author Atul Gawande of the Checklist Manifesto, checklists can help us manage the extreme complexity of the modern world. In medicine, he writes, the problem is “making sure we apply the knowledge we have consistently and correctly.” Failure, he argues, results not so much from ignorance (not knowing enough about what works) as from ineptitude (not properly applying what we know works).
Checklists are hence a foundational tool to begin to organize your intentions, focus your attention, structure the habit creation process, and reinforce the desired actions.
Here’s an example of a checklist for an intraday trader going from preparation, execution, and review.
Trader’s Daily Checklist (Download HERE)
So whether you’re an intraday, swing, or position trader, what does your trading checklist look like?
What areas in your trading do you need to better apply attention and detail?