Thursday Trader's Tip: Breaking Habits
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Welcome to Thursday Trader's Tip - the free edition of The High-Performing Trader newsletter. Each issue presents to-the-point trading psychology advice that can be read in under 5 min.
This week's post is about the four-step process to break a habit.
Many preconceived notions that control our lives have taken root since infancy. Much effort is needed to 'undo' these core limiting beliefs. The good news is that our brains have the ability to adapt to new situations quickly, thanks to their remarkable neuroplasticity.
When you hit the gym and lift weights, your muscles grow to handle the load. Our brains are muscles, too, and work in a similar way. However, we often underestimate their capacity to adapt compared to our body muscles.
Here are three steps to break a habit:
Recognition - Identify problematic triggers in real-time.
Interruption - Disrupt the autopilot mode.
Replacement - Swap the old behavior with a new one. This is where you step out of your comfort zone and create a fresh connection in your brain.
Repetition - Consciously repeat the new behavior under the same trigger until it becomes autopilot.
Consider what happens when you stop exercising for a month - you lose a good chunk of the muscle you built and have to start over. It's the same when you're trying to break a bad trading habit or form a new one and are not consistent about it.
The key to changing habits is *staying consistent*.
I'm sure you'd agree it's better to hit the gym for 30 minutes five days a week than go for three hours once a week. Similarly, if you respond well to a market trigger one day but then slack off the next, your brain will struggle to get the message. Your brain needs consistency to understand what you want, so you must show it! When you stick to your new responses, your brain catches on quickly and adapts, but you must go through the initial phase that demands the highest energy.
Picture it like pushing a ball uphill at first – it requires effort. Once you reach the top, the mountain levels out, and keeping the ball rolling becomes much easier. Eventually, you hit the downhill slope, and your new habit becomes fully ingrained and automatic. Read “The 3 Stages for Transforming Your Response to Triggers” for more on this.
Don't make it tough on yourself. If you're serious about starting 2024 with the right trading habits, show your brain your intentions through your actions, and it'll handle the rest.
Happy trading,
Sara
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I have some really bad habits