With investors and traders, I’d add a sixth “P” for Patience that seems to be in particularly short supply within the stock market arena.
A recent study in the Wall Street Journal showed that 46% of individual investors pledge New Year’s resolutions. Their objectives are much like other resolvers who are trying to either stop smoking, lose weight or quit alcohol. They want to change their habits and form new habits that will last. But how does one increase one’s probabilities of success? I propose that you embrace the lessons of “successful resolvers”. There are many books on the subject and I’m certain that if you survey your successful friends, you’ll discover a number of closet resolvers.
My belief is there are far too many myths out there about personal change that in truth are simply excuses for failing to follow through on one or more of the P’s that I presented earlier. I’ve been writing New Year’s resolutions for myself for over 30 years. Here’s the 6-step approach that I’d recommend for most investors.
- Keep a journal. Chronicle your real life investing experiences over the past year.
- Do an honest Self-Assessment. Convince yourself that you’re ready for change and that you want to change. Be brutally frank with yourself about these necessary changes.
- Make a list. Clarify your goals. Announce your goals and discuss them in detail with a trading buddy. Going public so to speak adds a powerful element of accountability.
- Draw up a 2-month timeline action plan with achievable benchmarks and small rewards along the way. Review your progress every week. Don’t forget to reward yourself.
- Do reality checks. Accept the struggle. Accept occasional setbacks. When necessary, add a week or two to your implementation timeline, but build a daily productive habit of change.
- Monitor your achievements. Celebrate your persistence. Take your trading buddy out for a beer. Follow-up with regular monthly reinforcement celebrations.
Trade well; trade with discipline!
-- Gatis Roze
