I have been slowly consuming James Clear’s Atomic Habits as bed time reading, and let me tell you - the hype is 100% justified. While this book is almost certainly life-changing in forming every day habits, I have also found some of the content extremely applicable to trading performance.
“You do not rise to the level of your goals. You fall to the level of your systems.”
I can’t think of a more applicable line for traders. So many of us come into the game with a goal of how much we need or want to be making daily/weekly/monthly. Yet I am sure so few of us came in with a well structured and thought out system. We tend to only concentrate on the system after realizing our goals are NOT being achieved. We may even be more inclined to adjust our goals accordingly before even giving actual thought into what may be wrong with our systems. This of course is counterintuitive.
“Fix the inputs and the outputs will fix themselves.”
I am not saying it is wrong to have a goal in mind, but did you ever think if you concentrated more on the system that the goal might just take care of itself? Possibly even surpass the goal you had in mind. Goals will help guide you, while the system is what gets you there. Spending too much time focusing on the goals and you are sure to struggle in actually reaching them.
“You should be far more concerned with your current trajectory than with your current results.”
I find myself falling victim to this concept often. It is easy to get caught up in the daily, hourly, sometimes even smaller time frames while sitting in front of our screens and forget about the big picture. If we enter a position with a time frame of a few weeks, but begin to panic about hourly fluctuations that are within our selected trading range, we have lost site of the trajectory.
Also, using current volatile market conditions as an example - it can be quite easy to get stopped out on well planned and executed trades. Many traders, even some of the best will find themselves experiencing drawdowns leaving them in the red on the short term. Although, it is always important to be reassessing strategies and market conditions it is just as important to remember the overall trajectory and not get too focused on the short term. This just as easily can be applied to “easy money” markets and fast achieved gains. Remember the course, do not get caught up in the short term numbers. They are often times deceiving.
“Breakthrough moments are often the result of many previous actions, which build up the potential required to unleash major change.”
Once we have solid systems in place and are concentrated on the trajectory rather than short term results we begin to experience small compounding successes. These can best be seen in the positive behavioral habits we are forming by sticking to our systems and the smaller losses and larger wins achieved by putting those positive behaviors into action. Notice breakthrough moments do not come over night. They do not come just because you set a goal for yourself.
“Every candidate wants to get the job. And if successful and unsuccessful people share the same goals, then the goal cannot be what differentiates the winners from the losers.”
Coming full circle here, I thought this quote was almost as impactful as the first. Lots of people set goals and fail to achieve them. Many desire the gold medal, the 6 figure salary, the available job but the truth is most of those trying will fail. The x-figure trade, the x% year, the consistent YoY gains can be achieved, but not by everyone, and certainly not by those without a concise process.