BarroMetrics Views: The Path To Success II
It’s now established that our conscious decision-making process is limited to 7 items +/- 2. It is also like a muscle:
- The more we use it, the more we need to take a rest to replenish
- The more we use it, the stronger it gets.
The subconscious, on the other hand, appears to have unlimited capacity. It is also highly energy efficient. Consequently, the more routine activities we can assign to it, the more energy we have it for our decision-making process.
It is for this reason that habits and routines are important.
What sort of activities can we assign to routine and habits?
- Our daily procedures e.g. checking our open positions, checking our GTC orders, ensuring initial stops are in, market preparation, etc.
- If we are discretionary traders, using a checklist for our analysis format.
- Daily routines that assist our decision-making process, e.g. exercise, eating and sleeping.
You get the idea.
How do we form good habits? One small step at a time. The initial step should be so easy we could do it in our sleep. We can then take progressively more difficult undertakings until the habit is installed.
How long will it take to install? Studies show a wide range, 21 to 224 days. The more complex, will take more time; the simpler will take less time. The mean time is 66 days.
The main barrier to forming a habit is to view the formation as one transformational event. We try to achieve the outcome as soon as possible rather than taking a series of moment to moment decisions.
“What you repeatedly do (i.e. What you spend time thinking about and doing each day) ultimately forms the person you are, the things you believe, and personality that you portray”. (James Clear)