BarroMetrics Views: Journaling and Trading Success
One of the tools I rely on for my trading success is ‘journaling’. Yet as a coach, I find it a difficult task to persuade newbies to keep a journal. Part of the problem I believe is my failure to establish ‘why’ a journal needs to be kept. Why, then, do I believe that journaling is essential to a trader’s success - especially since journaling does take time?
And the answer is (DRUM ROLL): because the time spent is a small expense for the benefits it brings. In the next blog or two, I shall lay out the case for this practice and I’ll conclude the series by suggesting a template for the journal.
To understand why a journal is a mandatory requirement for success, we need to know that the journal is a tool for change. Neurology shows that to change a habit we need to:
- Be aware of what we are seeking to change.
- Observe the context and the results of the current behaviour (habit)
- Interrupt the habit.
- Repeat the new behaviour constantly and with full awareness.
The process can be easily stated but change will not come easily: the four steps will need our attention, commitment and energy (A.C.E.)
To understand why, we need to be aware of two key ideas of human nature:
* We act through the filters of pairs of aversion and attachment
* This process leads to patterns of thought and behaviours that over time become automatic and unconscious. In short, we start with actions that bring us what we want (this usually occurs at an early age). In time we rely on the patterns of thought and actions as our ‘normal’ response i.e. we acquire and internalize the patterns of thought and actions and turn them into habits.
I call this process our ‘default future’ because unless we become aware of them, we will continue to employ them and as a result, we shall continue to obtain the results we have always obtained. Change requires the four steps I outlined at the start of the blog. On Tuesday, I’ll show journaling facilitates implementing the four steps.