Habits That Compound Growth
To paraphrase Dr Brett Steenbarger, the dual focus of a successful trader is that of constantly working on yourself while simultaneously working on your trading. In my estimation, trading performance is more correlated to our overall well being than most would like to admit. By first becoming aware of this, we can then take the steps to implement best practices that substantially improve quality of life- which in turn will drastically improve our baseline performance in trading.
“Once you build the right habits, there is no self-division, no need for disciplining yourself to do the right thing”
Dr. Steenbarger
Baseline Performance
Baseline performance is a concept I first thought of in terms of relationships in life. If we value a relationship, and want to foster it and see it grow, then it is required of us to put in time and effort into caring for whomever is on the other side of the relationship. It is no different in our trading. We can think of trading in terms of a relationship if you can imagine. We, the trader, are at one end of the relationship spectrum, and our baseline performance the other (one could argue that the market itself is on the other end of the spectrum, not an individual’s performance. To me, the market is an intermediary between the trader and the trader’s baseline performance). The more time and effort we put into implementing best practices into our relationship, the more abundant it will be. For example, if we were to neglect our significant other on a day to day basis, I can’t imagine that is a very ideal relationship (for either party involved). But say we were to take time daily to deliberately improve and strengthen our relationship with our partner, our relationship would be much stronger, as a consequence of us engaging in a best practice of spending quality time with our partner. Now imagine you were to spend that cherished quality time with him or her daily, your relationship would continue to grow and compound as time passes by. In trading it is much the same. If we as traders take the time daily to decisively integrate our own best practices into our trading relationship, then our growth as traders would compound exponentially.
Consistency
How strong can a relationship possibly be if you do not spend time with him or her daily? The answer lies in the struggling underperforming trader. The market demands concentrated effort in order to improve. If you fail to realize this, likely your relationship with the market is weak, and you are distant from market reality. We can only see results and elevation of our baseline performance if we show up daily, expectant, and ready to improve.
“… develop good habits, learn a ton, develop parts of your Playbook, gain screen time such that your tape reading skills improve, learn which stocks are not for you, find those whom you can learn from.”
Mike Bellafiore
Efficiency
While showing up daily with a mindset fixed on improving is essential to develop as a trader, we must also ensure that we are using our time efficiently as possible. If we are spending too much time on a meticulous task that doesn’t align with our overall goal of improving our baseline performance, then we need to re-evaluate our objectives. We need to be doing the work that generates the highest return on our valued time. Decide upon a few best practices to implement in a state of relaxation, not during market hours. Setting goals or objectives mindfully, ensures that we are not wasting away our time with “busy work” and are actually taking the steps towards improving our baseline performance.