BarroMetrics Views: The Power of Internalised Habits

Over the past ten years, I have suffered a footnote ailment; by that I mean it is one of those conditions found in the footnote of medical texts. The condition is called ‘Transient Global Amnesia (TGA)”: I lose my short-term memory for about 24 hours.

Prior to Wednesday, I had two bouts spaced about 3.5 years apart. The first time it happened, I found the experience pretty scary - I knew I was in Happy Valley (a location in HK) but did not know why I was there or who I was. I somehow got home and my first words to Chrisy (my wife) were: “I think I live here. Do you know me?”.

The second time it happened I was in Singapore and I was lucky enough to have a friend who ensured I was admitted to hospital. I remember that as I was recovering I realized that I was in the process of recovering from TGA.

This time I went one step farther: I recognized that I was starting to suffer from TGA as it began. So while it was happening I remember thinking: ‘Damn TGA again!’.

Now the thing with TGA is while the event is happening, you remember occurrences before and after but retain only flitting images of matters that occurred during the episode. So when I came out of it, the first thing I checked was to ensure that my stops were in place for my open positions. (I do not use GTC stops unless absolutely necessary).

Here’s the thing: the stops were in.

So, notwithstanding the fact that I had ‘lost’ my short-term memory, the habit of protecting my positions was so ingrained that I had placed the stops. I have to tell you that I felt pretty good when I saw the stop orders on my platforms.

I believe that it is the consistent application of your Risk Management and Trading Rules that leads to long-term success.  If newbie traders accepted this intellectually and emotionally, and as a consequence, practised it consistently, we’d have a higher success rate in trading.

Like the US Postal Service saying goes: ‘neither rain, nor snow, nor sleet, nor hail shall’ prevent a successful trader from implementing his risk management strategies.

(PS if you want some interesting trivia about the saying quoted above go to: http://www.phrases.org.uk/bulletin_board/50/messages/270.html)

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