Random Thoughts
Smaller Is Better
If you want to make a big change in your life, make a small change.
Homeostasis is "the body's automatic process to keep a stable, steady, internal environment" (Scientific American). It's what keeps us alive. A few degrees of variation in our body temperature can be deadly. Homeostasis is necessary for survival, but it is your worst enemy when it comes to making long-lasting changes. We have to make gradual changes to trick our brains.
Marcy and I have some friends who go on a tri-annual fad diet. We invite them over, and they turn up peckish, crotchety, and not much fun. Like clockwork, a few weeks later, we'll see pics on Facebook of them partying like rock stars (we now ask if they are dieting before we invite them over). And, also like clockwork, they end up fatter than before.
The Biggest Gainer
In "The Biggest Loser," the contest was to lose as much weight as quickly as possible. The methods employed created drastic results. The fat melted away. Unfortunately, the change was only temporary. According to a study in Obesity Journal (my favorite journal to curl up with on a Saturday night), 93% of the participants regained a major portion (70%) of the weight they lost. 30% ended up fatter than before.
So why did they fail spectacularly? The techniques used were cruel and unusual, especially given the contestants' extreme girth. A few were a biscuit shy of 500 lbs (and one just over, well, 26lbs over). The extreme measures toward the contestants included "severe calorie restriction and hours of grueling daily exercise.*"
From The Couch To A Marathon
On the flip side, Dr. Robert Maurer** tells the story of a chubby lady who tried everything to lose weight, including many therapists. Nothing worked. Maurer discovered that she liked to watch TV, so he devised a plan. He told her to watch as much TV as she wanted. The only thing she had to do differently was to stand for just one commercial each night.
She soon began standing for every commercial. At that point, she decided to add marching in place to her routine. Her newfound gradual movement led to going for long walks outdoors. Her walks turned into runs, which eventually led her to run a marathon.
Her gradual journey led to her long-term success.
And Your Point Is?
Okay, Big Dave, what does all this have to do with trading? Well, dieting, or any positive lifestyle change, has to be small and gradual. Trading is no different. You have to make small changes.
Novice traders think that someday, a magical switch will "flip" and BAM! they're a trader. The bad news is that's not how it works. The good news is that trading really is a "Million Little Things," hence the title of my ongoing series on YouTube.
Inspired by Brett Steenbarger, Linda Raschke, and others, in the Week In Charts, I covered two simple questions that you must ask yourself at the end of every trading day:
1. What ONE thing did I do really well today?
(even if your PNL is negative from it)
And the follow-up question: How do I do that again tomorrow?
2. What ONE thing did I do poorly today?
(even if your PNL is positive from it)
And the follow-up question: How do I avoid doing that again tomorrow?
Slow And Gradual
Again, change must be slow and gradual. You may have done a dozen bad things today. Document that, but focus on not doing one of those things tomorrow. On a similar vein, focus on doing one good thing that you did today tomorrow.
And, of course, do your morning pages! Write three handwritten pages as soon as you wake up. Stay analog and let your brain wake up slowly. You'll unearth a lot. You'll discover if you're Einstein's definition of insanity: doing the same thing over and over and expecting a different outcome. Paradoxically, you'll also learn when you're doing the right thing, but just need to keep doing it. Channeling Churchill, you'll learn to go from one failure to the next without any loss in enthusiasm (BTW, that’s my second favorite “asm.” My first? Sarcasm!).
“When you improve a little each day, eventually big things occur.”
John Wooden
“We will never be perfect as traders. That’s what keeps us ever-learning, ever-growing. Our challenge is to use our shortcomings as inspirations, fueling continued improvement."
Brett Steenbarger
Take a small step daily toward your trading success. Start with the aforementioned two questions.
May the trend be with you!
Dave Landry
*Dr. Robert Maurer: The Kaizen Way, One Small Step Can Change Your Life.
**Fit for TV: The Reality of The Biggest Loser