Show notes
Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we're going to be talking about why new habits are lost after only three days. And you heard me right. It only takes three days to lose a new habit which is incredible. Most research suggests that it takes maybe even a little bit less than that, but I'm being generous in saying – Look. It takes probably about three days for you to lose a new habit which means that you really have to fight, like you have to deliberately fight against a habit that you currently have that you want to change and remove the routine that you have and replace it with a new routine before that habit will start to become automatic. And the problem is that your brain has no idea how to differentiate between good and bad habits and that's really the most challenging part about the psychology of developing habits and even changing habits, is that your brain is not hardwired to make rational decisions like that. Your brain is put in place to streamline the cognitive load that it has. If you have a bad habit, but you're doing it and you're continuously doing it, like smoking, like drinking, like doing drugs, your brain has no way of knowing that that's actually bad for you. It's just used to something. You get stressed out, so immediately, you trigger a cigarette. Like that's how people start smoking maybe. I don't know. I don't smoke. I don't do any of that stuff. Maybe they get stressed and that triggers their brain to say, "Look. This is my trigger." The new routine is light up a cigarette and then the reward is "I feel better because I have nicotine." That habit loop has to be replaced by something else and you've got to deliberately fight it more than three days. In some cases, research has shown 45 days, 60, 90 days. It takes a long time, a lot of willpower to fight that habit.
And one of the great things that you can do is if you identify this loop and routine and reward cycle that you go through, you can actually change, change what the routine is in the middle and that's where you start to develop new habits. Again, let's say you get stressed out and your current routine is to light up a cigarette. Well, maybe when you get stressed out, you start to tie your shoes and go for a walk. And so, now, your new routine is not light up a cigarette. It's when I'm stressed, the brain knows that I need to tie up my shoes and I need to go for a walk which then gives you endorphins and again, gives you that reward, that stimulus in your brain that you want. That's a really easy way to just switch out and swap that routine that you have to then develop another habit. But look. It's going to be hard because you're going to want to light up a cigarette or do something else and that's not what you should be doing. When it comes to trading, I see this all the time. A very, very simple trading habit that people get into is "When I'm losing, I close." The trigger is losing trade. The routine is close the losing trade and then the end result, the reward is "I feel better because I don't have that trade on, like it's kind of off my plate." But that's the wrong thing to do. That's totally the wrong mentality to have. We all know from research that when you close losing trades and you use stop losses, whether they're automatic on your broker platform or whether you become your own stop loss because you close out a trade too early that it ends up leading to poor returns and definitely leading to sub performance compare to the market and other strategies. It's the same thing with I guess, cigarettes, like we all know cigarettes are bad, but still, people smoke them all the time. When it comes to trading, the new trigger is losing trade. You've got to replace the routine of trying to close the position with maybe re-watching our videos or our training or listening to a podcast on why stop losses are bad. Maybe that's the routine. And you listen to that 15 or 20 times and the reward becomes, "Hey, I know in the end, I'm actually making a smarter decision. I'm actually doing something that improves my long-term performance versus hurts it." And so, again, it's going to be hard because we're predisposed, we're prewired to want to avoid losses, to want to avoid a trade that's maybe challenging us initially, but we've got to replace that with a new habit look. It's got to replace it with a new routine that gets to the same reward which is feeling good and feeling like you've made a smart decision. Ultimately, I think your bank account will reward you in not using stop losses, so definitely check out the training that we've got on that.
Again, the key of talking about this today is I was reading this again just the other night and it's just totally what you're used to and when it comes to these habits, I mean, it's really, really hard. One more quick example which I think would help out is like a couple of months ago and I think I mentioned this on a podcast, I started to really notice that literally every night or every other night, like I was having some sort of sweet, like I'm definitely a sweet dude. And so, whether it was like some piece of candy or a chocolate or an ice cream, it was actually pretty bad, like I even think about it now, it sounds terrible to even say it and I'm just disgusted with myself that I kept doing that, but that was my habit at night. It was like at night, I wanted a sweet object. That was my routine, was to have something sweet and my reward was I felt great because I had something sweet, I had sugar. And so, now, I've replaced that with protein shakes at night. I have a protein shake that I make at night which has things that I like, like bananas and peanut butter and yogurt and a little bit of honey, so it satisfies that sweet thing that I'm going after, that's sweet tooth that I'm going after. And so, now, I don't even think and I don't even think it's been like maybe months and weeks and months that I've had it, but I literally have a protein shake every night. And so, like now at night when I have a craving for something sweet, I go make my protein shake which ends up getting me to the same goal. I've just replaced the routine in the middle that I wanted to change. It's really, really powerful. Like I geek out on this stuff so much because I think it's so important and whether it's trading or health or relationships, it's all just the same stuff, but it's really kind of fighting back against these habits. Do this. Let's do this. If you are listening to this right now and if you have a habit that you don't want to do anymore, you want to change, just let me know. Shoot me a tweet. Shoot me an email. Let me know. I'll try to help out and replace routines and try to figure it out with you. I definitely want to help you guys out and help us all develop better and more important habits that can really kind of move us forward. As always, if you guys have any questions, let us know. Until next time, happy trading.
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