What do you think is the third largest cause of death in the United States of America?
The third largest cause of death in America is medical errors.
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That’s an astounding fact because it means hundreds of thousands of people in America die needlessly.
The number would be even higher if it weren’t for Peter Pronovost a critical care specialist at Johns Hopkins Hospital who 2001 decided to make a checklist to tackle just one problem that killed many patients -- line infection. As detailed in the New Yorker article, “On a sheet of plain paper, he plotted out the steps to take in order to avoid infections when putting a line in. Doctors are supposed to (1) wash their hands with soap, (2) clean the patient’s skin with chlorhexidine antiseptic, (3) put sterile drapes over the entire patient, (4) wear a sterile mask, hat, gown, and gloves, and (5) put a sterile dressing over the catheter site once the line is in. Check, check, check, check, check. These steps are no-brainers; they have been known and taught for years. So it seemed silly to make a checklist just for them. Still, Pronovost asked the nurses in his I.C.U. to observe the doctors for a month as they put lines into patients, and record how often they completed each step. In more than a third of patients, they skipped at least one.
The next month, he and his team persuaded the hospital administration to authorize nurses to stop doctors if they saw them skipping a step on the checklist; nurses were also to ask them each day whether any lines ought to be removed, so as not to leave them in longer than necessary. This was revolutionary. Nurses have always had their ways of nudging a doctor into doing the right thing, ranging from the gentle reminder (“Um, did you forget to put on your mask, doctor?”) to more forceful methods (I’ve had a nurse body check me when she thought I hadn’t put enough drapes on a patient). But many nurses aren’t sure whether this is their place, or whether a given step is worth a confrontation. (Does it really matter whether a patient’s legs are draped for a line going into the chest?) The new rule made it clear: if doctors didn’t follow every step on the checklist, the nurses would have a backup from the administration to intervene.
Pronovost and his colleagues monitored what happened for a year afterward. The results were so dramatic that they weren’t sure whether to believe them: the ten-day line-infection rate went from eleven per cent to zero. So they followed patients for fifteen more months. Only two line infections occurred during the entire period. They calculated that, in this one hospital, the checklist had prevented forty-three infections and eight deaths, and saved two million dollars in costs.”
The checklist became standard operating procedure in many hospitals across the US and is probably responsible for saving countless lives. It is also an idea borrowed from the aviation industry which despite all of our complaints is the safest mode of transportation in the world precisely because of its near religious adherence to the checklist.
Over my more than twenty years in the business, I’ve met a lot of pilots who were also traders. The job, with its large layover times (pilots on average only work 10 days per month) lends itself to trading. Pilots were fascinating because generally, they were very good traders. This wasn’t because they were necessarily more creative or more knowledgeable about the markets, but because to the man (they were all men) they followed a checklist and only took trades that met all of the setup criteria.
Although trading problems are trivial in comparison to those of critical care professionals, the process of failure is the same in both disciplines. How many of our trades die an unnecessary “death” because we enter them by mistake -- i.e. when all of the rules of the setup have not been met?
About two weeks ago I forced both K and myself to write out a checklist for each one of our setups. It wasn’t a very complicated checklist, but it made us focus on trades that were truly legitimate rather than just “close enough”. Much like with Dr. Pronovost the BK results have been nothing short of remarkable. This week and last I have gone more than 20 straight trades without a loss and K has been profitable almost every single day since then. Furthermore, as I continued to focus on only taking the trades that checked every box, I was able to refine my exits strategies allowing me to reduce the risk even further. And best of all, I was able to program these tweaks into my EA so that now they are part of the overall trading structure.
At its most basic level, the checklist helps every trader to create best practices for each setup which ultimately creates sustainable, repeatable profit opportunities.
So, trader, get ready for takeoff with a checklist in hand -- otherwise, it’s going to be a bumpy ride.