A note to readers: While much of this article’s content is timeless, it is from a past publication and may contain outdated information, missing links or images.
My research suggests that the problems people have in developing a trading system fall into five different categories.
The first three areas prevent traders from ever starting (or finishing) the development of a trading system. These include computer/technology phobia, procrastination, and being overwhelmed by the whole process. The last two problems tend to prevent the trader from coming up with a workable system. These include perfectionism and judgmental biases in your thinking.
For this article, I’d like to focus on procrastination, which is a big hindrance for many traders who are developing systems.
What is Behind Procrastination Problems?
So many people have a hard time starting projects, especially traders when it comes to the task of developing a workable trading system. Yet, postponing a task creates even more problems. Sometimes people are aware of the reason(s) they procrastinate and other times they may not understand their delay tactics.
One major reason behind procrastination is the fear of failure, especially when the result of completing the task is an opportunity to play a risky game like trading. For example, if you tried trading without a plan and learned the hard way how risky that is, you may have a strong memory that is unpleasant to think about. Because of that experience, a part of you is afraid of similar consequences so you have difficulty starting to develop the plan, even though the plan will help you generate very different results. Or perhaps you’ve quit your job to start trading full time, but you’re so afraid of the possibility of not trading well that you cannot complete your system.
If you’re uncertain of your ability to perform, either based on past experience or a general lack of self-confidence, you’ll probably find it difficult to begin. And the greater your time pressure to perform, the more fear you will create about progress and completion.
Sometimes, even the fear of success will produce the same resistance to starting work on system development. People fear success because it will bring something new. Suppose you become “rich” and, based on your experience, you don’t like all the implications of what it means to be “rich.” Perhaps your friends will no longer want to be associated with you or perhaps they’ll try to take advantage of you when you have more than they do. Or perhaps you think wealthy people are stingy and narrow-minded. You think, “I don’t want to become stingy.”
Another reason you might procrastinate on developing a trading system is lack of interest in the overall task or in some portion of it. You might not like the idea of using computers, testing numbers or doing all of the grunt work associated with system development. Maybe it reminds you too much of school. Lack of interest, like a fast-growing weed sending out roots in all directions, can strangle motivation and make it impossible to start even a simple task. All you want to do is get about the business of trading. As a result, you just trade, but without ever having tested your system. You prefer to make mistakes the hard way, even if they are very expensive.
Perhaps the work involved in developing a trading system reminds you of someone you do not like. Someone you dislike told you to do it and you feel resentment. Or perhaps someone you dislike always used to do things like develop trading systems. You don’t want to be like that person, so even though you know you have to do the work, you tend to put it off.
The more you dislike the idea of developing a trading system, or even doing certain parts of the task, the more you will tend to push it away. This means you’ll leave the toughest part of the job for that portion of the day when your energy is lowest, and you are likely to make a lot of mistakes.
The most important part of developing a trading system is to develop the objectives for the system. Once you have the objectives down, then the task of developing a system is fairly simple. Getting your objectives down is 50% of the task. Until you have your objectives written down, you have no way of knowing what you want or of knowing when you’ve got it. How can you even monitor your progress – a major factor in ongoing procrastination – until you know exactly what you want? Once you know what you want, you can set deadlines for each phase of the project.
How to Overcome Procrastination
First, realize that you created your procrastination and you can take control of the situation. Will you choose to be fully responsible for creating the results you want rather than what you are getting now?
Make a commitment to get the job done. Concentrate on simply starting the project or the next phase right now rather than worrying about finishing it. Remember that Lao Tse, the great Taoist teacher, once said, “A journey of 1,000 miles begins with a single footstep.”
Next, write down all of your objectives for your trading system. Identify why you want this system and what you want it to do for you. When you know why you are working on your system and what it will generate for you when it’s complete, you can remember the benefits of your labor rather than just the work involved.
Divide the task of developing a trading system into steps. Rank the steps in terms of priority and in terms of your desire to do them. Which steps are you most resistant to? Do you know why? What resources can you call on to help you complete those steps? If you find that one portion of the job seems particularly onerous, break it into subtasks and give yourself a deadline for each subtask. For all of the steps, set deadlines for completing each one and announce those deadlines to the world. That not only helps you make the deadlines real but helps you stay accountable to them.
Take the next step. Commitment is not a once and done decision. It’s a choice each and every step along the way. Again and again, simply concentrate on taking the very next step. Take enough steps and you’ll find yourself at the end of a 1,000 mile journey . . . or with the great trading system that you wanted.