It was like time travelling into the past…
One of my boys enrolled into the local Cub Scouts pack last night and I went to watch the ceremony.
The Cubs chanted as the flag was hoisted (“A-ke-la, we will-do-our-best”). And they made the same promise to do their duty to God and to the Queen I remember so well from years ago. The Scout hut even had the same dusty smell.
And why change a winning formula?
The thing is, as well as being great fun, all those meetings taking place in huts and church halls across the country are designed to generate specific results for the boys. It is hoped the Cubs will become keen to always to their best, to think of other people’s needs and feelings, and to create a feeling of camaraderie.
And it’s all about those little rituals: the parade drills they do, the badges to recognise their achievements, even the three-fingered salute all do their bit. It really is the shortcut to embedding new patterns of behaviour.
If you intentionally repeat the actions time after time, the end results are almost a certainty. So the Cub leaders don’t just stand there and talk about what the boys should be doing, they have them acting it all out, week after week until it becomes second nature.
How to create your own rituals for trading success
So when it comes to trading, let’s say you’ve got a new trading strategy you’re rolling out. How can you shake yourself free of any old patterns of thinking you might have?
How can you set yourself up so you get the best results out of your new techniques?
You could start off by building rituals around the key steps you’ll need to take so you keep moving in the right direction from day one.
And after 28 days of repeating the ritual, you’ll pretty much have turned it into a habit anyway. You’ll do it all without thinking.
So here’s how to design your new trading ritual:
1) Have a clearly stated goal for the new behaviour you’re trying to create. It might be something like: “Every weekday, after the NY close, I will scan the daily charts of all major Forex markets looking for potential reversal patterns. I will clearly write instructions to myself for any entry orders I need to place at the next day’s open and execute those orders without hesitation.”
2) Plan any ‘one-off’ steps you need to take in order to get your ritual in place and then take appropriate action. This might include things like:
a) Subscribe to new data feeds so I get real-time quotes on the markets
b) Set up a new page on my chart software so I can click through a list of relevant markets quickly and easily
c) Create and keep a document next to my computer that lists the criteria of the valid reversal pattern I’ll look for
d) Create a new spreadsheet to record my entry instructions
e) Create a new spreadsheet to record my trade records
3) Plan your pre-ritual actions steps. This could be something like: “At 22:00 every evening I’ll load up my charts, lay out a notepad and pens on the desk and put some relaxing music on. I’ll make a coffee, close the door to my study, and then sit down ready to work on my analysis uninterrupted for the next thirty minutes.”
4) Plan the ritual itself. This obviously depends on the particular method or strategy you’re using. For the example we’re using here (daily reversal patterns in commodities) it might be something like:
a) Load up a full-screen chart of the first market on the list
b) Look for proximity of price to existing support and resistance levels
c) If S&R is touched, check for presence of a valid reversal pattern
d) If S&R was touched, make sure potential risk to reward is at least 1:3
e) If criteria b, c and d are present, make a note of the intended entry price, target price and stop-loss price ready for trading tomorrow
f) Update any new support and resistance levels
g) Move onto next chart and repeat until all markets have been analysed. Aim for completion within 30 minutes.
5)Plan your post-ritual action steps. This is the winding-down, tidying up period. It might go something like:
a) At 22:30 take a ten-minute break to clear my thoughts
b) At 22:40, re-evaluate the intended trades I have made notes on. Do they all still look like valid opportunities?
c) Type all valid entry orders into my spreadsheet ready for trading at tomorrow’s European open
d) Save all spreadsheets and charts
e) File my paper notes in ring binder
f) Switch off computer
What do you think – does it all sound a bit OTT?
Yes, it might sound like a bit of extra work when you come to do all this planning, but remember it is destined to be your ultimate shortcut.
A small investment of time here at the implementation stage means big pay-offs further down the line as the results of your actions begin to bear fruit.
It’s the way to set off with laser-focus in the right direction from day one. You can of course change and adapt any part of your ritual if you’ve got something a bit back out of sequence, or if one of the action steps is completely unneeded. But by doing this you’re giving yourself the very best chance of success.
If you’re serious about trying something new with your trading, or even if you need to re-establish your existing approach, don’t wing it. It’s too important for that. Instead, plan it all out so you know exactly what you’ll need to do.
Do it like the Cub Scouts and ‘be prepared’.
Be Prepared: Market Moving Data Coming This Week (London Time)
Wednesday 7th December:
09:30 GBP Manufacturing Production
15:00 USD Job Openings
15:30 USD Crude Oil Inventories
23:50 JPY GDP
Thursday 8th December:
12:45 EUR Interest Rate Decision
13:30 EUR ECB Press Conference
Friday 9th December:
– no big reports
Monday 12th December:
– no big reports
Tuesday 14th December:
09:30 GBP Core Producer Index
10:00 EUR German ZEW Sentiment
Stay sharp on Thursday afternoon for the European Interest Rate decision and comments that follow in the press conference.
Trade safely and I’ll catch up with you again soon.