Trading is mental
Having read and re-read Michael Martin's "The Inner Voice of Trading" over the past month, I am finding some relief when it comes to the self awareness necessary to be a successful trader.
I have taken to spending quiet time reflecting on the WHY that compels me to make bad trading decisions and where they truly originate. I reinstituted exercise into my day by walking about two to two and a half miles per day back in early November and moved to the treadmill in the cellar after the Maine winter arrived. With bad knees, I can no longer run, so I stick to walking and it gives me time to relax and think about the WHY. I've thrown in some strength training over the past two weeks and I feel better for it. Mostly, I am in this for mental dialysis and exercise second. Thirdly, my ability to stick to the regimen will reflect whether or not I have achieved the same discipline necessary to stick to proper trading fundamentals. Mrs. Bluecollar bought me two relaxation CD's that encorporate breathing exercises, muscle relaxation, positive affirmations, and calming music. I play them while I use the treadmill and am now in my second day of it. It is true that anxiety, stress, and fear are near the top of the list of reasons for trader failure.
As part of this whole thing, I am digging deep into my past and evaluating my life and the influence of those with whom I've encountered and the impressions that were left on me as a result.
I have also picked out some articles from Dr Andrew Menaker's blog at his website as part of my quest to become a trader: http://www.andrewmenaker.com/
I hope you get something from this one from March 29, 2011 entitled "Handling Uncertainty."
Handling Uncertainty
March 29th, 2011
Everyone talks about uncertainty, and many of you realize that the only thing that is certain in trading is uncertainty. The problem is that most people understand it on an intellectual level (“yeah, I think in probabilities”), but in reality, where the rubber meets the road, most traders don’t really accept uncertainty.
How do you know when you’ve truly accepted uncertainty? You’ll know, when you’ve embraced the randomness of probability (each trade or individual data point is a unique occurrence with a 50/50 chance, even in a skewed probability distribution). When you begin to truly embrace uncertainty you’ll notice one of or more of the following also occur; you won’t be thinking or worrying about it as much, you won’t be doing as much ‘mental P&L accounting’; and the symptoms of tick-itis will also remit.
I coach clients to not be attached to the outcome as one particular strategy to deal with uncertainty. And the good news is that when you begin to truly embrace uncertainty you also begin to create a positive feedback loop where realizing that its not worth being emotionally attached to any one trade, or even a series of trades; making it even easier to embrace the uncertainty. Non-attachment to outcomes helps one deal with uncertainty, and embracing uncertainty reinforces non-attachment to outcomes. That’s how it works, folks.
Think about this question for a moment:
When you put money in a slot machine and you lose, how do you feel? Most people don’t feel that bad. But when you bet your money on a trade and you lose, how do you feel? Most traders say they feel upset, angry, frustrated, ripped-off, even betrayed (betrayed by the market, betrayed by their method, or betrayed by the person who taught them the method).
So, what’s the difference between the slot machine and trading? In slots, there is no judgment or ego involved (the need to be right is greatly diminished). However, in trading it is 100% judgment (you might be ‘wrong’). In a trade, our ego, our judgment, our sense of self-worth and even our personal status in the eyes of others (e.g. trading partners, family, etc.) is susceptible to feeling assaulted for each tick away from our intended target. But in slots we become a robot. Go to a casino and walk by the slot machines; everyone is glazed over, practically in a hypnotic state as they automatically (brainlessly as my wife puts it) dump more coins into the machine, pressing the lever and not getting very upset for lack of a pay-out. No judgment is on the line, there is no possibility of being wrong….the slot player recognizes the situation for what it is, pure unadulterated randomness.
Trading is not random, but you must fully accept, beyond intellectual understanding, the randomness of probability.
I have taken to spending quiet time reflecting on the WHY that compels me to make bad trading decisions and where they truly originate. I reinstituted exercise into my day by walking about two to two and a half miles per day back in early November and moved to the treadmill in the cellar after the Maine winter arrived. With bad knees, I can no longer run, so I stick to walking and it gives me time to relax and think about the WHY. I've thrown in some strength training over the past two weeks and I feel better for it. Mostly, I am in this for mental dialysis and exercise second. Thirdly, my ability to stick to the regimen will reflect whether or not I have achieved the same discipline necessary to stick to proper trading fundamentals. Mrs. Bluecollar bought me two relaxation CD's that encorporate breathing exercises, muscle relaxation, positive affirmations, and calming music. I play them while I use the treadmill and am now in my second day of it. It is true that anxiety, stress, and fear are near the top of the list of reasons for trader failure.
As part of this whole thing, I am digging deep into my past and evaluating my life and the influence of those with whom I've encountered and the impressions that were left on me as a result.
I have also picked out some articles from Dr Andrew Menaker's blog at his website as part of my quest to become a trader: http://www.andrewmenaker.com/
I hope you get something from this one from March 29, 2011 entitled "Handling Uncertainty."
Handling Uncertainty
March 29th, 2011
Everyone talks about uncertainty, and many of you realize that the only thing that is certain in trading is uncertainty. The problem is that most people understand it on an intellectual level (“yeah, I think in probabilities”), but in reality, where the rubber meets the road, most traders don’t really accept uncertainty.
How do you know when you’ve truly accepted uncertainty? You’ll know, when you’ve embraced the randomness of probability (each trade or individual data point is a unique occurrence with a 50/50 chance, even in a skewed probability distribution). When you begin to truly embrace uncertainty you’ll notice one of or more of the following also occur; you won’t be thinking or worrying about it as much, you won’t be doing as much ‘mental P&L accounting’; and the symptoms of tick-itis will also remit.
I coach clients to not be attached to the outcome as one particular strategy to deal with uncertainty. And the good news is that when you begin to truly embrace uncertainty you also begin to create a positive feedback loop where realizing that its not worth being emotionally attached to any one trade, or even a series of trades; making it even easier to embrace the uncertainty. Non-attachment to outcomes helps one deal with uncertainty, and embracing uncertainty reinforces non-attachment to outcomes. That’s how it works, folks.
Think about this question for a moment:
When you put money in a slot machine and you lose, how do you feel? Most people don’t feel that bad. But when you bet your money on a trade and you lose, how do you feel? Most traders say they feel upset, angry, frustrated, ripped-off, even betrayed (betrayed by the market, betrayed by their method, or betrayed by the person who taught them the method).
So, what’s the difference between the slot machine and trading? In slots, there is no judgment or ego involved (the need to be right is greatly diminished). However, in trading it is 100% judgment (you might be ‘wrong’). In a trade, our ego, our judgment, our sense of self-worth and even our personal status in the eyes of others (e.g. trading partners, family, etc.) is susceptible to feeling assaulted for each tick away from our intended target. But in slots we become a robot. Go to a casino and walk by the slot machines; everyone is glazed over, practically in a hypnotic state as they automatically (brainlessly as my wife puts it) dump more coins into the machine, pressing the lever and not getting very upset for lack of a pay-out. No judgment is on the line, there is no possibility of being wrong….the slot player recognizes the situation for what it is, pure unadulterated randomness.
Trading is not random, but you must fully accept, beyond intellectual understanding, the randomness of probability.
