Singing your praises: The power of feedback

 Our first blog on habits looked at anchoring your new habit to an existing one. If you’ve done this, what else can you do to help your new habit stick?

Getting frequent feedback, both in what you are doing right and what you need to improve on, is a great way to accelerate your new habit becoming part of your routine.

If your new habit is based in eradicating a negative habit, getting feedback when you slip up and engage in the bad habit can help get back on track. This is because this type of feedback encourages you to learn from your mistakes.  It gives you the opportunity to learn from your behaviour in real time, and make changes to the behaviour if desired.

Getting positive feedback when you’ve carried out a good habit releases dopamine in the brain, giving you a good feeling, which you will associate with that good habit. It also accelerates the learning process, encouraging you to repeat the good habit that caused the positive feedback.  

For feedback to be successful in causing behaviour change it should be:

·      Fast

·      Specific 

·      External

 Fast

Feedback needs to be fast in order for it to take effect. This means that every time you execute the action that builds the habit, you receive positive feedback instantly. Ideally, it will be automatic, and triggered by your behaviour. 

For example, if you want to stop trading when in a losing streak, you will receive a thumbs up and a well done message on the screen when you log off after three losing trades. You are receiving positive feedback as soon as you’ve carried out the good behaviour, which accelerates your learning process and helps you repeat that good behaviour next time you are trading. 

Specific 

The feedback should be specific, so you can easily identify exactly what you did right or wrong. Instead of generic positive message when you close a winner, for example, you should be receiving feedback on the action behind it. It may be that the action is in fact a negative habit-you close winners too early. In this case, the positive feedback would come when you let your winning trades stay open until they hit your win guardrail, and then you are congratulated on  that action. 

External

The problem in trading is it often is an individual pursuit, so your feedback is primarily your own.  It’s hard to view yourself objectively and see where your positive and negative behaviour lies. It’s most effective when an outside party can enforce the feedback automatically.  We have seen this in action with our live discipline tool, which alerts traders when they break one of their rules, and gives a daily discipline score. Traders who improved their discipline then improved their returns. 

To summarise, feedback, both positive and negative, can accelerate the learning process and cause a habit to stick quickly. However, to be most effective the feedback needs to be given instantaneously, the feedback itself has to be specific to the behaviour carried out, and given by someone who isn’t you.