If you’re like me and you love diving into self-help books, then you’ve likely come across “Atomic Habits” by James Clear. If not, or if you’re wondering how it ties into trading, I’ve gathered some insights that might help you out.
This book is basically a hands-on guide to sticking with small changes that eventually lead to big results. It’s all about how little habits can pile up to make a huge impact.
Here are some key ideas to mull over:
### 1. Small Habits, Big Change
We often obsess over the big moments that define success and overlook the small efforts that seem trivial but can really add up. The impact of these little habits consistently built over time can be mind-blowing. As the great Lionel Messi put it, “I start early and I stay late, day after day, year after year. It took me 17 years and 114 days to become an overnight success.”
In trading, it’s easy to miss the value of keeping a trading journal, reviewing both good and bad trades, noting price reactions, or tracking currency movements. But if you make these practices part of your routine, they’ll eventually feel instinctual. Over time, you’ll likely get a better read on market happenings, predicting how setups might play out. James Clear notes:
“Meaningful change doesn’t require radical change. Small habits can mark a big difference by showing off a new identity. If a change is meaningful, it’s big. That’s the paradox of small improvements.”
### 2. System Over Goals
Tied to the first idea, Clear suggests focusing more on creating systems than on the goals themselves. Instead of worrying about how far you are from your goals, build processes that create effortless habits. He says:
“The purpose of setting goals is to win the game. The purpose of building systems is to keep playing the game.”
Habit building can be seen in four steps: cue, craving, response, and reward. Make cues obvious—like bookmarking your trading journal. Crave the satisfaction of ticking tasks off—who doesn’t love checking off a list, right? Break tasks down with bullet points, and reward yourself (a snack or an episode of your favorite show can’t hurt) for completing your trading tasks.
This also helps break bad habits—like ignoring stop losses or procrastinating on your trade journal.
### 3. Identity-Based Habits
Finally, Clear highlights the significance of shaping your new “identity.” Your actions usually reflect who you think you are. To change your habits, look into the beliefs behind them. He explains:
“It’s hard to alter your habits without changing the beliefs leading to those behaviors. You might have a new goal and plan but haven’t shifted who you are.”
Keeping this “identity” in mind daily prevents repeated missteps. If your new identity is “consistently profitable trader,” then prove it with daily actions: following your trade plan, setting time aside to monitor and document your progress, and reviewing strategies. Changing behavior for good means believing in the new you. Remember:
“Every action is a vote for the type of person you wish to become.”
So, what kind of trader do you want to evolve into?
