It is Friday evening and the week went badly. What happened?
Picture the bad week before it starts, then write the early warning signs and what you will do about each one. You finish with three if-then rules.
Free, takes about five minutes, and nothing you write leaves your device. Best done on a Sunday, before the week begins.
Start from the failure, then work backwards.
Imagining that something has already happened makes it easier to see how it came about (Mitchell, Russo and Pennington, 1989). So instead of asking what could go wrong, you assume it did and ask what it looked like on the way.
Pick up to three ways your week could go wrong. For each, choose the first sign you would notice and what you will do the moment you see it.
How did the week go wrong?
Pick up to three that feel most likely for you. Be honest, nobody sees this.
What is the first sign, and what will you do?
The sign has to be something you can notice in the moment. The action has to be something you can do straight away.
Your rules for the week
Saved rules stay on this device. You can see them all on the free tools page.
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Using it well
An if-then rule works because the decision is already made when the pressure arrives. Research on if-then plans finds they help people follow through (Gollwitzer and Sheeran, 2006).
Keep it to three
Three rules you remember beat ten you skim. If a fourth failure keeps coming to mind, it is probably one of the three in a different outfit.
Read them before the first window
Put them where you will see them before you trade, not where you will see them after. The Pre-session Check-in is a good place to read them.
Check them on Friday
Look back at the week. Which signs showed up, and did you do what the rule said? The Trade Review Scorecard turns that into a number.
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Continuum Community works through the week together: the market context, the process work, and exercises like this one. Continuum Education is the full process in one place, as a one-time purchase with lifetime access.
The research behind it
- Mitchell, D. J., Russo, J. E., and Pennington, N. (1989). Back to the future: temporal perspective in the explanation of events. Journal of Behavioral Decision Making, 2(1), 25-38.
- Klein, G. (2007). Performing a project premortem. Harvard Business Review, 85(9), 18-19.
- Gollwitzer, P. M., and Sheeran, P. (2006). Implementation intentions and goal achievement: a meta-analysis of effects and processes. Advances in Experimental Social Psychology, 38, 69-119.
The Pre-mortem is an exercise, not a test, and it is not a prediction of your week. The research supports the method: imagining a failure has already happened helps people find reasons for it, and if-then plans help people follow through. The failure stories, warning signs and actions offered are my own practical suggestions, not research findings, and you should change them to fit how you trade. Trading involves risk, and you should only trade with money you can afford to lose.
