This was like time traveling into the past…

One of my boys enrolled into the local Cub Scouts pack last night and I went to watch the ceremony. They chanted as the flag was hoisted – “A-ke-la, we’ll-do-our-best”, they made the same promise to do their duty to God and to the Queen…

…the Scout hut even had the same dusty smell. I remember it all so well from years ago.

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: The desire 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 behavior.

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.

The key, of course, is to design rituals around the desired actions so in future they get carried out without needing any thought.

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, or a specific new way of analysing the movements of the market. 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 behavior you’re trying to create. It might be something like “Every weekday, after the NY close, I will scan the daily charts of all commodity 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 grain 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 were 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 vetted entry orders into my spreadsheet ready for trading at tomorrow’s NY open

d) Save all spreadsheets and charts

e) File my paper notes in ring binder

f) Switch off computer

What do you think – does that sound over-the-top?

Yes, it might sound like a bit of extra work when you come to do 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 laser-focused 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 to front, or if one of the action steps is completely redundant. 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, step-by-step.

Do it how the Cub Scouts do – “Be Prepared”.


Be Prepared: Market Moving Data Coming This Week (London Time – BST)

Wednesday 14th May 2014:
09:30 GBP Claimant Count Change
10:30 GBP BOE Gov. Carney Speaks
10:30 GBP BOE Inflation Report
13:30 USD Producer Price Index

Thursday 15th May 2014:
10:00 EUR Consumer Price Index
13:30 USD Consumer Price Index

Friday 16th May 2014:
00:00 USD Fed Chair Yellen Speaks
13:30 USD Building Permits

Monday 19th May 2014:
– no big reports scheduled

Tuesday 20th May 2014:
09:30 GBP Consumer Price Index

As always, shoot me an email with any questions or comments and I’ll catch up with you again next week.