Habits That Have Made Me A Better Trader – And Person

The habits we adopt have a tremendous impact on our long-term trajectory. This line of thinking has received growing attention over the last decade, most notably thanks to James Clear and his book ‘Atomic Habits.’ The reasoning for this should be intuitive to traders, as it harnesses the power of compounding. Small, incremental improvements each day, such as aiming to get even 1% better, compound over time, generating massive gains.

Graph courtesy of jamesclear.com

I personally really appreciate this concept, especially as a trader. Why? Because it directs your focus to the things you can control. You can control your trading process, but not what happens in the market. Trading, particularly quantitative trading, is all about having a robust process that harvests returns from the market without predicting what the market is doing and without worrying about the things outside of your control.

I think this is true of life also. You can control your own process – your daily routines and habits – but not what happens in life outside of that. My own habits and routine helped me become a multi-millionaire in my early 30s. In this blog post, I wanted to share the habits that have worked for me not just in trading, but also in life.

Create a Sustainable Routine

Sticking to a routine should not be difficult. Your routine should be organic and congruent to your lifestyle and goals in life. It should be designed to put processes in place that help you move closer to your goals. This brings us to an important point: a routine is really about your goals, what you want to achieve in life. Creating a routine with your goals in mind makes it sustainable, as it is a lot easier to follow a routine when you know why you are doing it. If your routine is defined by your goals, it is easier to get excited by it!

Sticking to a routine might sound boring to some people, but I personally find it liberating. My routine does the heavy lifting for me. I don’t have to worry about reaching my long-term goals, as I know that I will reach them by taking small, consistent steps each and every day in the direction of my goals.

Your routine won’t be unconstrained, however. Most of us have obligations in life. I personally have a wife, baby and toddler at home, so I have found the best way for me to focus on quality trading research (part of my routine), is to wake up between 4:30am-5:15am each day before my kids wake up. This is a quiet part of the day where distractions are minimized – no one is calling my phone, no one is emailing me. I get 2.5-3hrs of quality time during these precious hours of the day to focus on quality research.

By getting this out of the way early, I know I can spend some quality time with my kids when they wake up. This routine took time to implement, and it is really about being organized and going to bed early the night before, but 1) it works for me and my family and 2) brings me closer to my goal of being a world-class trader.

Give Yourself Some Space to Think

When do your best ideas come to you? For me, it’s often when I am away from the computer screen and in a neutral environment. This could be going for a walk or run through some scenic nature or heading to the gym. Sometimes I will be working on a complex programming or optimization task, or trying to wrap my head around the relationship between different variables, and inevitably get ‘stuck.’ When this happens, I often find the best thing to do is change my environment. Once you are in a new space, you have the opportunity to change the way that you engage with the issue. You may find that the move gives you a fresh perspective and increases your energy too.

When you are always in your workspace, it can be hard to think straight. Locking yourself in a cubicle for eight to twelve hours each day is unlikely to help you achieve the results that you seek. Think about the ways that you can change your environment. It may be a lunch-time walk or even simply getting up and away from your desk. Consider what options you have and how you can best utilize them.

I took this picture on a hike in Switzerland in 2007.

Work Out

I have always been a firm believer that exercising the body is as important as exercising the mind. There is a symbiotic relationship between your body and mind. If you spend too long at your desk, your body will get stiff and your mind will fatigue. The state your body is in influences how your mind operates and how much energy you have to sustain yourself throughout the working day. Working out limbers up the body, gets the blood pumping and generates lasting energy for the day.

I try to exercise at least four days a week, sometimes five to six if you count surfing and running after toddlers. I’ve found that during my working week, a large part of ensuring I actually make it to the gym is consistently scheduling it for the same time each day. Of course, life throws curve balls at you from time to time that can get in the way, but on average this will ensure you go more often than not.

I truly believe that regular exercise has boosted my productivity in recent years. It elevates my energy levels to be better able to deal with the stresses of trading and life. It also acts as a source of stress relief, making you better able to handle the inevitable unforeseen challenges that pop up. If you’re like me and get fidgety if you sit too long, it can also help calm your mind so you can better analyze new ideas and concepts.

Arnold pumping iron

Intentionally Limit Distractions

Emails, social media, smartphones — distractions are everywhere nowadays. When you’re trying to get things done, you can easily be pulled in the wrong direction. For that reason, it’s important that you limit your distractions when you are trying to work. You may find that working in small chunks is the right approach for you. For example, you could engage in productive activities for 30 minutes at a time. When your concentration is running thin, you can take a short five-minute break to recalibrate and refresh your mind.

If you tend to have your smartphone on while you are working, you may find that it distracts you during the day. One of the ways that I have overcome this is by turning notifications off or using the ‘Focus’ or ‘Flight’ settings strategically. This allows you to deal with SMS/messages/emails in batches, which is more efficient than getting constantly interrupted. Having things pop up on the screen at any given moment means that you will always be on edge and not able to do deep work. Generally, it ruins your ability to reach a ‘flow state,’ which is often where the magic happens! When you switch these off, you can make the entire process smoother.

Conduct A Time Audit

Be honest, are you really maximizing the time available to you? Do you sometimes find the hours of the day slipping by and at the end not knowing where they went? This is a common dilemma in our constantly ‘plugged-in’, inter-connected modern life. One clever yet simple technique I recommend to increase your productivity is to complete a time audit. What does that entail? Well, for one whole day – or if you can, one whole week – take a detailed and brutally honest log of exactly what you’re doing throughout the day. If you are honest with yourself, you will see how much time you waste that could otherwise be put to more productive uses.

For example, you will be surprised when you tally the hours dedicated to endlessly scrolling social media, surfing the internet, watching TV, reading ‘news’ sites, or things along those lines. What if you took those hours and did something productive or worthwhile with them? After conducting a time audit, you will see that ‘I don’t have time’ is nothing but an excuse! At the end of the day, it is all a matter of priorities. ‘I don’t have time’ really translates to ‘it is not a high enough priority.’

Time does not wait for you - it keeps on ticking.

Let’s face it, we all have the same 24 hours in a day, but it is how we use them that can set us apart. Conducting your own time audit is a simple yet powerful concept. It can bring huge benefits when you make those small shifts each day that compound over the long-run. As the saying goes “if you don’t measure it, you can’t manage it”, and at the end of the day, all we really have is our time! This doesn’t mean that you can’t have downtime, though, as it is important to find time to recharge your batteries, but you will be surprised how much time we can waste each week.

Remind Yourself Why You’re Doing What You’re Doing

Being a successful trader (and human) means you likely have a long to-do list. On top of this, the world is constantly changing and adapting to new challenges, meaning we often have to reprioritize. This makes it is easy to get lost in the day-to-day of trading.

At times, this can lead us to focus too much on minutiae and lose sight of the big picture. By only ever focusing on your ever-changing to-do list or the next trade, it is easy for your attention span to get frazzled or even become burnt out. That’s why it’s vital to take time out to clear your mind and also to exercise. But sometimes, even this doesn’t cut it.

It’s at those times that I recommend reminding yourself why you’re doing what you’re doing. Are you working hard to build a dream family home or go on vacation with the kids? Or is it for that lambo you’ve always dreamed of? Or is it for financial security? Or the enjoyment of the pursuit of excellence? Reminding yourself of your ‘why’ keeps you focused on the task at hand and where it fits into your big picture. You can remind yourself with something as simple as a photo on your desk or an image on your computer screen wallpaper or the background on your phone. Or it could be a slogan on your desk or wall. Whatever it is, have it nearby to help you keep focused and motivated at times when you’re in drawdown, need a break or feeling a burned out.

My ‘Why’