ASFX Insights

4 Laws to Follow When Implementing New Habits

By August 19, 2020September 11th, 2020No Comments

We’ve all heard the saying, “it takes 21 days to form a habit” but how? This blog is here to explain 4 laws to follow when implementing new habits.

Rylee and Austin sit down to discuss the amazing book Atomic Habits by James Clear and the 4 laws he writes about.

The essence of this book is why humans have such a hard time creating and sticking to habits and how they can succeed in doing so.

Austin’s favorite quote from the book is: “We don’t rise to the levels of our goals, we fall to the levels of our systems.”

In trading this is so applicable because you could have the biggest goals in the world but you will only reach the level of success that your system brings.

Everybody likes to set lofty goals but a lot of people don’t like to set the actual system or plan in place to achieve them. Even further, they don’t like being open to tweaking that plan in order to be more successful.

Rylee’s favorite quote from Atomic Habits: “To write a great book you must first become the book.”

Associating this with traders, to become a good trader you actually have to be a trader. It seems as if so many traders just look for the holy grail and have the mindset of, “Let me just find the secret. That one thing. That one indicator to get rich.” Trading does not work like that.

You need to become the trader first. You need to get your feet wet, make mistakes, tweak your plan and figure it out.

This book is life changing with regards to developing and implementing new habits in your life.

4 Laws

The book outlines 4 laws surrounding habits and they are noteworthy.

Habit 1: Make it obvious

This means bringing attention to awareness – take your mind and focus on something, whether it be a chart or a specific aspect within the charts or your mental state in front of the charts. Open the awareness in your mind as to where you are and things going on around you. This technique creates something called habit stacking

Habit stacking is much like the well known “feedback sandwich.” It starts with something good, followed by something bad and then finishes with something good. Let’s think of the good part of a sandwich (typically the meat or cheese, unless you’re a vegan then it’s the veggies or avocado). 

This is represented as something in your life that you’re already doing that is good. For example, making your bed every morning, which is something you enjoy doing and now you want to implement washing your face every morning. So you would begin introducing this habit into your day by habit stacking. You say, “I really enjoy making my bed” and then you put the thing you don’t really want to do but are trying to implement next (the mustard or mayo of the sandwich). 

Once that is done, you top it off with something else you like doing. For example, brushing your teeth. Now your morning routine looks like this: making your bed, washing your face, and brushing your teeth.

This is an example of habit stacking and now, the dreaded habit doesn’t seem like such a horrible experience. Creating and implementing this technique programs your brain to tell yourself it’s something positive that you want to do.

Habit 2: Make it attractive

Also referred to as “temptation bundling” in the Atomic Habits book. This means the thing you want to do vs. the thing you need to do. This method is closely related to the sandwiching tactic. An example of this is herd mentality. Sometimes people join in on groups or a movement because it seems attractive to join. For example, a facebook group. This means that humans are naturally pulled to what seems attractive, so if you’re trying to implement a habit, make it an attractive one.

Habit 3: Make it easy

This is used to combat the way that people are stuck between being in motion and being in action. Being in motion is when people think they are in action but they’re actually doing nothing. For example, they’re constantly reading, studying and researching about ways to improve their life but not actually doing anything to bring that to fruition. They are not implementing it in their day to day lives.

So how do you get unstuck?

James Clear’s law is, “make it easy.” This can mean making smaller goals to achieve your big goals. For example, buying a new house. Start with the smaller goals of applying for a mortgage, finding a realtor, getting the paperwork in place, etc. In other words, breaking a big goal down step by step.

In trading, if you’re doing too much and it’s not easy for you then it won’t be repeatable and if it’s not repeatable then it’s not an edge. Try breaking your big trading goals down into smaller more achievable goals and this will help you eventually obtain your big ones.

Habit 4: Make it satisfying

It’s all about understanding how our brain actually communicates feelings of satisfaction – much like a reward system. The subconscious is actually what communicates your feelings to you, so that feeling of pleasure that you get is actually in the subconscious. It’s training yourself with a reward system. 

In Atomic Habits, James Clear talks about how we live in a delayed return environment but our brains live in an immediate return environment. This means that our brains automatically recognize and store our reward but it takes a while for the human body to actually understand that that was a reward, so you have to be repetitive with it; it also has to be something that you will think of as a reward. 

Everyone wants a reward as a result of their actions. Clear talks about the opposite of that. What this means is if there is a really bad consequence your brain is also going to remember that so you’re going to steer away from those things. For example, if you don’t want to watch T.V. anymore, unplug your T.V. and put it in a closet so every time you want to watch T.V. you have to go through the effort of getting it out and plugging it in.

Clear calls these laws the conscious engineering of your life because everyday you should be making small tweaks within your habits so you’re fine tuning yourself to be more and more how you want to be.

This is similar to trading in a lot of ways because it breaks your habits and slowly builds you into the trader you want to be.

It seems like a daunting task, but the only way to internalize these 4 laws and make it applicable is to start small and apply the laws. 

Make your new habits attractive, easy, obvious and satisfying.

If you can apply all of that to a small step forward for whatever habit you want to implement and any goal you want to achieve, then you will be successful.

Austin asks Rylee: “what was something you wanted to change that you’ve applied these laws to within the last year?

Rylee answers: “My entire morning routine. How you start your day is so important. I journal every morning, before I even get out of bed. I write down three things I’m grateful for, three things I’m going to do to make it a great day and a little positive affirmation. It gets me in a good mindset. I started by literally putting it right next to my bed. I made it easy, I made it attractive. It satisfies me because I’m a very nostalgic person so knowing that I will always have that is just interesting to me.”

This book is an excellent way to learn how to implement new habits in your life and in your trading. Start small, make it obvious, attractive, easy and satisfying.

For those of you who haven’t read the book, head to the amazon store below. It’s $20 and you won’t regret it.