BarroMetrics Views: The Power of Habit
Neurology has shown that conscious decision-making is energy depleting – the more we exercise our reason without a break, the more likely we are to make mistakes, breach discipline etc. Neurology has also shown that activities governed by our subconscious use little energy. It therefore makes sense to train ourselves in the power of habit. The more we can assign routine tasks to our subconscious, the more energy we have left for our important decisions.
For example there are trading activities that lend themselves to habit:
- Enter and place a stop
- Check open positions
- Check GTC orders
- Check fills etc
On the other hand, there are other activities that don’t lend themselves to habit. For example, deciding whether or not the current market conditions provide a buy or sell signal. That is an activity for the conscious mind. So, by assigning certain task to habit, we free ourselves to make better decisions.