Personal Habits and the “Craft of Trading”

  “When a work lifts your spirits and inspires bold and noble thoughts in you, do not look for any other standard to judge by: the work is good, the product of a master craftsman.” – Jean de la Bruyere

“Craftsmanship names an enduring, basic human impulse, the desire to do a job well for its own sake.” ― Richard Sennett, The Craftsman

My belief is trading is a meaningful craft. We get an innate feeling of satisfaction from doing good work – like a wood carver does from creating a beautiful wood carving, or a master blacksmith does from moulding a lump of innate metal into an exquisite sword.

It’s striving for the sake of a more perfect craft that drives me – with money as the score. This, I suspect, is true of most traders. There are much easier ways to make money, after all. At what other business would you work for 7 years, running at a loss?

In the craft of Forex trading, YOU are the instrument. Not your charting package, or your Bloomberg terminal. Much of what many hold dear are simple crutches.

It is your grit, courage, self-awareness and ability to trade unencumbered by thoughts of past or future failure (or success) that determine your level of expertise.

This is why our personal habits are of such importance.

For evidence of this, we need look no further than the familiar masters.

Ed Seykota keeps his desk free of a trading terminal.  Paul Tudor jones “spends his time making himself as happy and relaxed as he can be”. Ray Dalio credits his success to the practice of daily meditation.

So here follow some personal habits that – from my direct experience – will help you to enhance your craft.

Strong Body, Strong Mind

“To keep the body in good health is a duty… otherwise we shall not be able to keep our mind strong and clear.” – Buddha

“So long as we are in conflict with our body, we cannot find peace of mind.” – Georg Feuerstein

I have written at length before about the usefulness of the peak performance mental strategies used by elite athletes, and how they relate to trading.

Equally important is the development of the physical habits of top sports people (even if not to the same extremes – we don’t all have the time to train like All Blacks).

There is huge value in physically pushing your limits. I credit much of my discipline to playing Rugby, and then my time in military. Mental toughness is hard-forged in the crucible of physical exhaustion.

Here are some things I highly recommend, and which are not too hard to do.

  • Get a personal trainer. A good trainer is the fulcrum of your physical efforts. The trainer provides you with clear cut directions, helps you to set meaningful goals, and provides the motivation to go above and beyond. This makes all of the below recommendations much easier to follow through on. Hiring a trainer is one of the best ways to invest your trading profits.
  • As well as providing a physical release, stretching helps align the body and mind. Tension is the enemy of the successful trader, and Yoga will help you to relax.
  • Foam rolling. Formally the “secret” technique of elite sportspeople, foam rolling will help you greatly to increase flexibility and power. It can easily be done at home while watching TV, and you can buy these for as little as $10.
  • As well as providing a relaxing fitness boost, you will find you have some of your best ideas when walking, as both your subconscious and conscious minds are given the opportunity to work through the data you have been absorbing.
  • Taking full deep breaths, with a full expansion of the stomach and chest will release tension and energise the body.
  • Avoid processed sugar. Sugar is white death. Harsh but true. It only takes a week for the body to lose its craving for sugar once you stop. Natural sugar from fruit will help ease the pain.
  • Rise early. Join the early risers club. It’s the distraction free time in the morning that is often the most productive (more below).
  • Will power reserves. Studies (which I don’t have on hand sorry) show that we maintain a limited amount of willpower reserves. The more they are depleted, the more likely we are to break our rules. This is why a cheat day where we can eat our favourite foods, and rest days from physical exercise are successful ways to maintain good habits for the long-term.

Live a deep, carefully constrained life

In the information age, having a disciplined mind is no easy feat.

We are faced with constant distraction. The pull of the social media, email, internet and television is strong. The trader also deals with the added lures of charts and non-stop news feeds.

For the unwary, this is an inescapable vortex. A chasm that swallows time and will never ever give it back.

To be successful, your time is best spent on what leadership expert Stephen Covey calls Quadrant 2 activities.

Urgent-vs-Important.indd

Quadrant 2 activities are high value pursuits that produce the majority of your results.

Don’t be deceived by busy-work and distractions. Build systems (and hire people if you can – freelancers are very accessible these days even if you are an employee yourself) to minimize time spent on repetitive tasks and fire-fighting.

Deep work

In his book, Deep Work, author Cal Newport tells how famous psychologist Carl Jung built a stone tower in the woods so that he could think deep thoughts.

While we don’t need to go that far (though, I will someday), spending several hours each day in a distraction-free state of focus and concentration (deep work) committed to Q2 activities will yield significant results.

Newport suggests that the average person has the capacity to spend up to 4 hours a day in this state of flow, but even 1 or 2 hours will yield substantial results.  Generally, the 4 hours should include at least one decent break.

Connect. Learn. Inspire

Going deep does not mean you need to live a monastic life.

There is great value in connecting and sharing ideas with others, be it in person or online. Set aside specific periods of time each day where you connect with others via email, in the chatroom etc.

Just don’t die the slow death of the distracted.

When you are connecting, give it your full attention. Be curious, open and inspiring.

Multi-taking in this context is a fallacy. Have you ever tried speaking to someone when they their attention is elsewhere? The half-baked responses you get are frustrating at best. You are doing this to your own mind if you divide your attention across multiple undertakings at once.

Commit fully to going deep. This is how you will produce your best work. Then commit fully to engaging with others.

Flick the recharge button

This is a tough one for traders.

We are constantly tempted to check our charts, positions and the news.

But all this does is keep our minds in a state of agitation. To fully relax and recharge, you need to switch off from your trading when you are not doing it.

Build processes into your trading routine so that you conduct your checks at meaningful times, when it might be appropriate to take action.

Anything beyond this is just busy-work and can only lead to more stress and tension.

How much is too much?

It is easy to get information overload when trading. There is a limitless amount of information for you to digest. So where do you stop?

This comes back to your trading processes. Set aside a period each day or week (or both) where you review available information, and read/watch what is of value to your trading performance, and then stop.

Here is a short video where I discuss my information review process, so you can see how I can absorb what I need to and then switch off.

 

Good is the enemy of great

One of my favourite business books is Good to Great by Jim Collins.

In the book, Collins discusses several concepts that are useful to traders, but one that sticks out is the idea that good is the enemy of great.

Often, the good ideas get in the way of our great ideas. They make us comfortable with the status quo, and they take our time and energy from our best ideas.

This is perhaps more insidious for traders, as we spread our attention across too many ideas.  Instead, we need to embrace the power of limitation, and focus on only the best ideas that we have.

Craft one trading system, and work on the idea with all your mental resources. By doing this, you can eliminate confusion and provide yourself with the best chance of producing a winning system.

Once that system is working well, you can then consider what to do next. Perhaps you’ll want to develop a new system that works in a different market type. Just don’t try and run too many approaches at one time.

Unleash the potent force of your personal habits in your trading

“At first, the drudgery of mastering your craft is a prison—boring, slow, and with an awareness of how much time you’ll have to put in. But somewhere along your prison sentence, you come to see the time you put into your work not as dull and meager, but as meaningful—and you realize that your prison has become your palace, your place of escape.”  ― Jarod Kintz

Becoming a master craftsman or craftswoman takes time.

There will be plenty of falling off the horse as you change your habits.

But there should be no self-recriminations. Dust yourself off, get back on, and go again. The only true failure is when you stop persisting.

Cultivate a strong body, avoid distractions during your “money hours”, and nurture a focused mind.

When you do, your trading craft will flourish.

About the Author

Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of  www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.

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