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Discipline and Relapse add to profits


Today's innerworth email called Don't Plan to Fail brought up a point about maintaining control and discipline in the following paragraph which I believe needs to be expanded on:

quote:
Dr. Alan Marlatt, a prominent psychologist at the University of Washington, has studied the reasons people fail to maintain self-control. Whether it is trying to quit smoking or losing weight, it's difficult for people to maintain discipline. Many times, people "relapse." They are successful for a while but soon return to older patterns of behavior. Trying to maintain control requires planning. People make a series of decisions when trying to maintain control. Many of these decisions are "apparently irrelevant," but they end up influencing what happens to us.


I added the bold emphasis in the quoted text.

What I believe a trader needs to strive for is to develop a pattern of behavior that is positive to their bottom line so that when they relapse the relapse to the good behavior and not the bad behavior.

Let's take the easiest example out there: A healthy/unhealthy lifestyle. Speaking from personal experience it is easy for me to maintain a healthy lifestyle because my older pattern of behavior to which I relapse is that of a healthy one. If I haven't done exercise for a couple of days or I haven't eaten fruit and fresh vegetables then I develop a craving for exercise and healthy food and I "relapse" to my good way of life. Likewise, if I binge drink (in the old days - I don't drink anymore) or eat a lot of candy or fatty foods I feel repulsed and quickly return to my good habits.

What I'm saying is that we need to develop methods of living and working that are beneficial to us and create patterns of behavior that we relapse to that are good.

In order to do this we need discipline in order to switch our patterns from bad to good. A lifestyle switch may take weeks to years depending on the person.

Let's get back to trading:

1. Identify what patterns of behavior are negative to your bottom line. They could be anything: Not holding on to a trade for long enough; Disruptions from the phone while trading.
2. Write up a training plan stating the pattern that you would like to have instead of the pattern you currently have. e.g. Hold all trades that are not stopped out and haven't reached their target for at least 2 hours. (You can write multiple "pattern plans" - one for each pattern you want to break/develop.)
3. Treat the pattern plan like an exercise routine. If you were jogging on a treadmill you might try and increase the distance you run by 0.5 miles each day or 2 miles a week. On the "pattern plan" state what is the current state-of-affairs and what the target is. e.g. Currently hold trades for 30 minutes and target is 2 hours.
4. Keep a daily/weekly record like you would do with your physical exercise plan. Pretend that you have a gym instructor watching over your shoulder and reviewing your progress.
5. Keep working at your plan until it become routine. Anybody who has worked up to a level of fitness knows how tough it is to get there but once you're there it's an absolute pleasure to maintain it. You will find that your new positive trading pattern is the same and when you deviate from it you will hopefully relapse to the positive state.