How a weight loss secret leads to trading consistency

How a weight loss secret leads to trading consistency

For most, stepping on a scale in the morning is akin to stepping barefoot onto a pile of Legos.

Your weight will fluctuate 3-4 pounds daily. For those that need to lose the most weight, it could be 6-8 pounds.

People are hard-wired to view negative information much stronger than positive, so the daily noise of the weight gain and loss yo-yo is almost as depressing as someone saying, “No, it’s not the jeans that make your ass look fat.”

Weight loss typically takes 2-3 weeks to really notice a difference, so why do you even need to step on the scale everyday?

Because the action of stepping on the scale in the morning brings being healthy to the forefront of your thoughts.

If you’re health conscious from the time you get out of bed, you’ll eat better, and maybe get your butt to the gym, or go on a walk, or dust off your old Suzanne Somers ThighMaster.

In a health study done by professor/author Dan Ariely, he found that most test subjects stopped weighing themselves because of the negative emotions it caused.

So what they tried was modifying a scale that doesn’t tell you your weight.

Instead, it takes a 3-week moving average (that should perk your trader ears), and then tells you if you’re doing a little better, a little worse, much better, much worse, or the same.

No more daily weigh-in anxiety!

Those that used the regular scale gained weight on average.

Those that used the modified scale all lost weight over a 12-week period, and lost 5.8 pounds on average.

Now I want you to think about other areas of your life where things fluctuate on a daily basis, and could be leading to negative emotions that act as roadblocks to your goals…

Of course the stock market!

It can be depressing watching your stocks and ETFs fluctuate everyday.

Even worse, you can constantly “weigh” your positions by watching your stocks in real-time.

The key to Dan Ariely’s scale was in establishing a baseline, and then cutting out the daily noise.

So step number one would be to stop watching your stocks and ETFs intraday. It’s a waste of your time.

The next step is to establish your baseline.

What I like to do is take the satellite view of my trading strategy’s equity curve over the course of 10 or more years.

Like this:

 


Value Swing Trade Strategy 1988-2018

If you can see all the bumps in the road your strategy has had over the years, then the daily fluctuations barely register on your screen.

Suddenly, the music you hear in your head goes from a horror movie soundtrack to a Disney film.

The darkness of your mood parts, and you can stop gobbling down Tums like they were candy.

– Establish a baseline.

– Eliminate the noise as much as possible.

– Track your progress from a longer-term perspective.

Hope that helps!

Here's Dan talking about his scale on Fox Business >>

Trade Smart,

Dan

PS. Dan has one of the best minds in behavioral psychology. He's also suffered like few have, spending three years in a hospital burn unit after an accident turned into tragedy.

I would wager that's why he hyper-focused on his work.