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How Build Good Trading Habits

This post will be a little different and that is because it will require you to work a little harder and that is simply because trading habits (and habits in general) take time to build.

Now, you probably have a long list of things you know you should be doing in your trading regularly which will guarantee much better results… but for some reason you just blackout and continue doing the same old mistakes which only lead to losing in trading.

There is a really cool book which provides research backed hacks on changing habits, its called Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones.

In the book, the writer James, lays out 4 laws of behavior change that are so simple, even I can do them. (And that means you can, too.)

So what I've done is taken his 4 laws and converted them to the trading markets, and you too can improve them yourself as I didn't spend a hell of a lot of time on this.

Alrighty then, lets get to them!


The book explains that vague is the enemy, most people say “I want to exercise more” but this is usually another way of saying, “I want to continue disappointing myself.”

A better way to approach the situation is to say: “Every morning at 6AM I’m going to lift weights for an hour at the gym.”

If you said it that way, you’d be much more likely to believe that you are going to follow through on "working out". - And if you say it, studies show you’re more likely to actually do it.

It’s what researchers call an “implementation intention.” (People without a PhD call it a “plan.”)

From Atomic Habits:

Hundreds of studies have shown that implementation intentions are effective for sticking to our goals, whether it’s writing down the exact time and date of when you will get a flu shot or recording the time of your colonoscopy appointment. They increase the odds that people will stick with habits like recycling, studying, going to sleep early, and stopping smoking…

The formula for creating an implementation intention is pretty simple:

I will [BEHAVIOR] at [TIME] in [LOCATION].

Another way to get the same effect is by using “habit stacking.” Tie the new habit to an old habit.

From Atomic Habits:

Habit stacking is a special form of an implementation intention. Rather than pairing your new habit with a particular time and location, you pair it with a current habit.

And the formula for habit stacking is pretty simple too:


“After I wake up, I will do 20 push-ups.”

"After I close a trade, I will add the trade to my journal"

Chain together enough new habits and you’ll be in great shape, if you focus on exercise that is!

So your new habit plan is clear. But how do you get yourself to want to do it?


Fun gets done, its as simple as that.

If most good trading habits were fun, you’d already be doing them, but the reality is different, good trading habits are "boring" and trading should not be fun, rather it should be just as fun as any other job you do by yourself sitting in a room, like blogging...

But there’s still a valuable lesson here for traders and people in general: if we combine fun stuff with not-so-fun stuff, the latter is more likely to be completed.

So the answer is what researchers call “temptation bundling.”

From Atomic Habits:

Temptation bundling is one way to apply a psychology theory known as Premack’s Principle. Named after the work of professor David Premack, the principle states that “more probable behaviors will reinforce less probable behaviors.”

In other words, even if you don’t really want to process overdue work emails, you’ll become conditioned to do it if it means you get to do something you really want to do along the way.

James tells the story of a clever engineer who loved Netflix and hated exercising. So he wrote a computer program that would only allow Netflix to play if his stationary bike was cycling above a certain speed. Now that is one smart and determined man.

Combine something you love with a habit you want to build and you’ll find yourself doing it a lot more often.

If you love audiobooks but don’t like cleaning, you only get to listen to the book when you scrub the bathroom. - You'll get double done by doing 1 task, and thats always good.

You trade forex or other markets because you want to earn money and money provides freedom, so connect good trading habits to fun outcomes or actual things and you'll start seeing a big change in your trading results.

Another way to make new habits more attractive is to leverage our natural sheep-like tendencies. The people around you influence you a lot more than you think, so spend more time with those who have the habits you want and you’re more likely to follow through.

IDEA: More afternoons with friends who read a lot, fewer evenings with alcohol addicts.

From Atomic Habits:

When astronaut Mike Massimino was a graduate student at MIT, he took a small robotics class. Of the ten people in that class, four became astronauts.

If your goal was to make it into space, then that room was about the best culture you could ask for.

The point being is that we soak up the qualities and practices of those around us, so joining my trading room is a very good idea because you are "surrounding yourself with people who do what you do, there are a few guys in there, including myself, who make good money trading the markets. - So you should be here!

Ok, so we are done with point 2, but new habits can still be intimidating. Don’t worry; there’s a fix for that problem… and that is point 3!


If you make it harder to engage in bad habits and easier to engage in good habits, your inherent laziness can guide you toward better behavior.

From Atomic Habits:

The central idea is to create an environment where doing the right thing is as easy as possible. Much of the battle of building better habits comes down to finding ways to reduce the friction associated with our good habits and increase the friction associated with our bad ones.

If you want to exercise on Sunday morning instead of watching TV all day, put your workout clothes next to the bed before you go to sleep and put the TV remote control in the closet.

If you want to get healthier, put fruit on the kitchen countertop and put the snacks in a concrete bunker next to drums of nuclear waste.

If you want not to over trade the markets, put a note on your desk saying "One trade at a time, one day at a time." - Or whatever else might help you.

Another way to make new habits easier is to start as small as humanly possible. Stanford researcher BJ Fogg calls this “minimum viable effort.”

Want to start flossing? Commit to flossing just one tooth. Yes, it’s ridiculous but it’s so ridiculously simple you have no excuse not to do it. You can increase the amount of teeth you floss over time. First just focus on being consistent.

From Atomic Habits:

The idea is to make your habits as easy as possible to start. Anyone can meditate for one minute, read one page, or put one item of clothing away. And, as we have just discussed, this is a powerful strategy because once you’ve started doing the right thing, it is much easier to continue doing it.

A new habit should not feel like a challenge. The actions that follow can be challenging, but the first two minutes should be easy. - And two minutes a day, will kick the bad habits away!

The idea is simple... none starts by smoking a pack a day... they start with one cigarette, but then add time and effort and you go from merely smoking one to addiction.

Now how can we make sure to keep doing the good habits? - Point 4 explains!


James (the author of Atomic Habits) calls this “The Cardinal Rule of Behavior Change.”

From Atomic Habits:

What is immediately rewarded is repeated. What is immediately punished is avoided.

Reward yourself immediately after completing your new habit. “If the puppy does a trick, it gets a treat.” (Yes, you are the puppy in this metaphor.)

From Atomic Habits:

In the beginning, you need a reason to stay on track. This is why immediate rewards are essential. They keep you excited while the delayed rewards accumulate in the background.

What we’re really talking about here… is the ending of a behavior and there are many behaviours we need to end in trading, some of the worst ones are over-trading, over-exposing and no stop losses / no risk management.

The point being is that you want the ending of your habit to be satisfying.

Give any chore a satisfying ending and you’re more likely to do it.

Remember this? “Do your homework and you can watch television.” - Mom was on to something with that one.

Alright, thanks to James we’ve learned a lot. Let’s round it all up and find out how to maintain rock solid good life and trading habits over the long run…


  • Make It Obvious: Set a specific time and place. Or tie the new habit to an old habit.

  • Make It Attractive: Bundle fun stuff with new habits.

  • Make It Easy: Start with flossing just one tooth.

  • Make It Satisfying: Reward yourself after you finish.

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