 Welcome back to the Trade Hacker Mindset. In this episode, we're gonna talk about why habits are the compound interest of self-improvement. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, so let's jump into this topic of why habits are the compound interest of self-improvement. Now, this topic comes from a book that I'm currently reading. It's called Atomic Habits by James Clear. I would highly recommend it to everyone. It is not a trading book, but some of the concepts in the book are really perceptive and really have been kind of enlightening to me. Some of the concepts in the book I'm already starting to implement. I'm only about a third of the way through the book and there are several topics that I wanna talk to you all about. And so I'm gonna actually be doing several podcast episodes on some of the concepts in this book. So I wanna start by talking about why small habits can make such a huge difference. I mean, that's the whole concept of this book, right? The word atomic means small, atoms, right? And so it's about how tiny, tiny little habits can create massive improvements over time. It's really easy for us to overestimate the importance of one little moment and underestimate the value of making small improvements on a daily basis. I think a lot of times we convince ourselves that massive success requires massive action. And this could be if you're trying to lose weight, build a business, write a book, build your trading account, win a sports championship or any other goal that you can think of. A lot of times we put like this heavy pressure on ourselves to make some kind of earth shattering improvement that everybody's going to see and notice and it's gonna propel us right away to where we wanna get to. But on the flip side, if you just improve in whatever it is that you're trying to get better at, if you just improve by 1% a day, sometimes it's not even noticeable. But over the long run, it can be actually a lot more meaningful. And so as options traders, we're all math geeks, right? We are statistical probability nerds. And so looking at the math of that 1% improvement, if you look at how the math works out, if you can get 1% better every day for one year, you're actually gonna end up over 37 times better by the end of that year. And conversely, if you get 1% worse each day for a year, you're going to decline almost down to zero. So what starts as kind of a small win or a minor setback actually accumulates into something much bigger. So I said at the beginning, habits are the compound interest of self-improvement. Think about compound interest when it just comes to money. The same way that money multiplies through compound interest, the effect of your habits multiply as you repeat them consistently. They don't seem to make any difference on any given day, yet the impact over months or years can be enormous. And a lot of times it's only when you look back a year, two years or five years or 10 years, that the value of these good habits and the cost of bad ones become very, very apparent. Now, as human beings, this can be very difficult to appreciate on a day-to-day basis. As humans, we are all about getting it now, especially Americans. We are all about instant gratification. Delayed gratification is not something that we're usually very good at. Not only do we want it now, we want it yesterday, right? So for example, if you start saving a little bit of money each day or each week or each month right now, you're still not a millionaire, right? Or if you go to the gym three days in a row, you're still not in shape, right? Or if you study Spanish for an hour, for a couple of nights, you still haven't learned the language, okay? We can make a few changes, but the results never seem to come quickly. And so what happens is we slide back into our previous routines. And unfortunately, this slow pace of transformation also makes it easy for us to let a bad habit slide. So if you eat an unhealthy meal, the scale doesn't move much, you didn't gain any weight. If you work late and ignore your family for a couple of nights, or if you procrastinate and putting off a project until tomorrow, you may still have time to finish it. A single decision, it's easy to dismiss. But when we start repeating these 1% errors day after day, making poor decisions a little bit more, a little bit more, duplicating these tiny mistakes, these small choices end up compounding into toxic results. In the book, he gives an example of think about an airplane flying from Los Angeles to New York City. If the pilot leaving LAX adjusts the heading of the plane, just three and a half degrees south, you'll end up landing in Washington DC instead of New York. So just this small change that's barely noticeable, just a few feet when you start, when it's magnified across the entire United States, you end up hundreds of miles away from where you intended to go. So your future success is a product of your daily habits. It's not a once in a lifetime transformation, which should be good news to you. Like it doesn't matter how successful or unsuccessful you are right now, what matters is whether your habits are putting you on the right path towards that success, towards that goal, towards whatever it is you're trying to achieve. So if you can concern yourself much more with your current trajectory, with your current habits, then with your current results, then you're gonna end up seeing those results over time and it may not come as quickly as you'd like, but if those habits are in place, that's what's gonna get you there. And the same thing on the negative side. I mean, let's say you are successful. If you have, let's say you are a millionaire, but you spend more than you earn each month, you're on a bad trajectory, okay? Eventually that is going to catch up with you in a negative way. Our outcomes are a lagging, there's a lag, it's a lagging measure of our habits. Your net worth is a lagging measure of your financial habits. Your weight is a lagging measure of your eating habits. Your knowledge is a lagging measure of your learning habits. Whatever you repeat is what you'll end up getting. In time, the amount of time that you do these different things, that magnifies the margin between your success and failure. Good habits make time your ally. Time is your friend if you have good habits. Bad habits makes time your enemy. All right, so I wanna give you one more example and I wanna tie this into your trading. Think about if you have an ice cube sitting on a table. The room is cold and you can see your breath. It's pretty cold in there. It's currently 25 degrees. So ever so slowly now, the room begins to heat up. By the way, 25 degrees Fahrenheit. First it goes to 26 degrees, then to 27, then to 28. The ice cube is still on that table. Okay, hasn't done anything. Then it gets to 29 degrees, 30, 31, and still nothing has happened. And then 32 degrees comes and the ice slowly starts to melt. That one degree shift, seemingly no different from the temperature increases before, has now unlocked a huge change in that ice cube. So sometimes breakthrough moments that we have are often the result of many previous actions, many previous habits that we've done over and over and over and never really start to see anything until we hit that breaking point and then things really start to snowball. So these habits that you're doing every day seem to make no difference a lot of times until you cross this critical threshold and then it really starts to explode. I know this has happened from personal experience in a lot of areas of my life and especially in trading. I mean, I've talked about this before, but my first 10 years of trading was very inconsistent. I'd make some money, I'd lose some money. I'd make some money, I'd lose some money. But it was somewhere between that year nine and 10 that I had that breakthrough, that I started having that consistency, that I really started creating this life for myself from trading, but had I given up in the first 10 years, I never would have experienced that. But all those habits and all those accumulation of knowledge and practice and screen time and everything else, all of a sudden accumulated and started to really have a major change just like that Ice Cube did when it finally hit that 32 degrees. So what happens, whenever we start some type of new, whatever it is, anything, we expect our progress. When we're trying something new and we're trying to achieve a goal or it doesn't even have to be trying something new, we're just, we have a new goal in mind. What we often expect is for that progress to be very linear. We expect that if we start working towards that goal, that our progress towards that goal is gonna be in a straight line. Or I see it all the time, new traders come into our community and they have this expectation that their profits are going to come extremely quickly and easily. But what happens is the reality is that the results of these efforts, they're delayed. And it's not until months or a lot of times years later that we realize that the true value of the previous habits and the previous work that we've put in is what helped us end up getting to that point where we wanna go. There's a, you know, I said as a kind of a progression as a straight line is what we expect, but the reality is, is that line dips down. If you kind of picture like an equity curve, if you've tracked your performance of your trading and, you know, we want that equity curve to start in the bottom left and really be as smooth and point up to the right as much as possible. But what happens, especially when we first start trading is it doesn't go in a straight line up to the right, right? It goes up and down, up and down. When you first start trading, a lot of times it goes down, it goes negative, then it might come back up, negative come back up. And it's a very, very zigzag type of a situation and it has more of a dip to it than a straight line up. But if you have the mindset that that's part of the learning process and, you know, that to me, that was actually, that can be detrimental as well. And in fact, that's why it took me so long. First of all, I did not have a navigation trading to guide me, like hopefully you guys are getting from me, but I kind of had the mindset of, I don't care if I lose money, this is a learning process for me. And so I was very careless. You know, we've talked so much about on this podcast about the two emotions of fear and greed. Fear was never an issue for me. My problem was always greed. I was always trying to, you know, make money quickly, position size too big, I was careless. I didn't care if I lost. I knew I'd just make some more money and I could put it in my trading account. And I knew I was learning the whole time, which can be a good thing if you are actually responsible, but I was not. So that was actually a detriment to me. So my challenge to you is a couple of things. Number one, if you are not having the consistency in your trading right now, don't give up. If you just remember all of the things that you're doing on a daily basis, if you're doing them right, if you're doing them the way that we teach you, those things are going to accumulate. If you're watching our courses, if you're learning our strategies, if you're starting to understand implied volatility, if you're starting to understand the strategies that we teach, all of that is accumulating into your mind. And at some point, you're going to hit that critical threshold where it all clicks and it all starts working much more consistently if it's not yet. So if you've taken losses that you know you shouldn't have by breaking your rules or whatever else it is. And in fact, the mental part is a big part of it. So not just learning the strategies, not just learning the mathematics and the probabilities, but working on yourself, working on your mental discipline and emotional control while you're trading is another habit that you've got to work on to become successful. But remember, you're working on it and it's a process and it takes time. It's not going to happen overnight. So if you're frustrated about your inconsistency, just know that all of that is accumulating and will help you long-term. Challenge number two is whether you already are consistently profitable, whether you already are successful, what can you be doing to get 1% better every day? Can you get more specific about your trading plan? Can you get 1% better on your discipline of following your rules? Can you get 1% better in journaling every single trade? Now, be careful, okay? Getting 1% better as a trader does not mean going to learn a new strategy. It does not mean analyzing fundamental analysis. It does not mean trying to learn a new technical analysis garbage technique. Okay, so be very, very careful. If I had to pick one thing, as long as you already kind of know a couple of strategies, my suggestion is to get better at those strategies only. My suggestion is to get better on yourself, on your discipline, on your mindset around trading, your emotional, your discipline, your emotional control and your discipline when it comes to following your rules. If you can continue to improve by 1% every time you trade, every day that you trade on those things, you are going to become successful much quicker than if you spend that time analyzing the markets, analyzing new strategies, analyzing new garbage that's out there on the internet. And I'm going to be doing the same thing right along with you. So even though as good as I think I am sometimes, we all have egos, right? As good as I think I am sometime, I can get better as well. And if I can make those 1% improvements and I can take my trading even to another level, that's what I want to do. I'm obsessed with becoming better than I am today. And so I'm going to be on this journey with you. I hope you liked this episode. If you did, please go to Apple Podcast and write a rating and review. Would love to hear your feedback. And of course, always feel free to drop into our community at community.navigatientrading.com. We look forward to seeing you on the inside and we'll see you in the next episode.