You should keep a trading journal of every trade you make! Backtest every system for at least 1,000 trades! Brush your teeth before bed!
All of this is sound advice. However, how many traders actuallyfollow this advice? Do you? I would bet that less then a third of you reading this article keep a trading journal. Don’t get me wrong, I’m not special. I didn’t keep a record of my trades during the first few years of my trading career. This changed one year ago. Here are the tips that helped me to finally create this habit. These rules are not specific to trading and can be used to build any habit in any area of your life!
The 1 Minute Rule
How do we get on the path of building a habit? This is where the 1 minute rule comes in! If your goal is to keep a trading journal, at
the end of every trading day, take one minute and write down your trades. Even simpler, at the close of trading just write down 1 sentence. This could be your best or worst trade of the day, your trading mood, or a combination of both. Here’s an example:
‘’May22nd: I took a signal where there wasn’t any and I proceeded to lose 4000 as the Nifty moved against my position’’
Based on a true story. Okay it IS a true story. But as I started to write this down in my journal, I found myself needing to explain why the trade was a mistake. And I wrote more then one sentence, a lot more.
I tried to ‘’anticipate’’ a signal in the Nifty that never materialized. If I just waited for a proper signal, I would’ve saved myself a lot of grief. So why did I take the trade? The Nifty wasn’t moving and I had literally zero signals for the past few days so I basically created one out of thin air. Classic trading mistake.
Day one to create any new habit is to just take the first step! I use the one minute rule for my writing as well. I open a new Word Document. I change the font from the default Calibri to Arial and the size of the font from 11 to 12. Then I write down just the title of my article. Most often then not, just doing this will lead me to writing for the next hour and on the next step!
An object in motion stays in motion!
Newton’s first law of motion states that object in motion stays in motion. I’ve found that this rule applies to human action as well. Want to go for a run? Just put on your sneakers and get out of the door. Soon you’ll find yourself jogging around the block. Want to wash the dishes? Just say: ‘’I will only wash two dishes, the ones I need the most.’’ After you start to do any task, two things will happen.
First, you will realize that the tedious task you wanted to accomplish but always put off is not as bad as you thought. Doing 2 Push Up is easy !! The second thing that will happen is that you are now invested in the process. You start to think: ‘’Now I just have seven more push up to go and I’m done!’’ Or ‘’I can’t stop now, I’m already in mometum might as well finish all the 10 push up and get this exercise done . And after all, it’s not as bad I thought!’’
Don’t break the chain!
After you’ve used the 1 minute rule to cheat your brain into action and you’ve let inertia take care of the rest, it’s now time for the third and final step. Don’t break the chain!
My Trading Guru told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker. He said for each day that I do my task of writing, I get to put a big red X over that day.
After a few days you’ll have a chain. Just keep at it and the chain will grow longer every day. You’ll like seeing that chain, especially when you get a few weeks under your belt. Your only job is to not break the chain.’’
Can’t get a big calendar? Nowadays there are special apps you can download that will perform the same function.
‘’The way to be a better trader is write down all your trades at the end of the day.
Get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step is to get a big red magic marker. For each day that you do your task of writing in the trading journal, you get to put a big red X over that day.
After a few days you’ll have a chain. Just keep at it and the chain will grow longer every day. You’ll like seeing that chain, especially when you get a few weeks under your belt. Your only job is to not break the chain.’’
The goal was to just write! And as a trader you write , you will get better every day!