I am realising that, as a result of my decision to pursue a crash-course in applied psychology, I seem to have started a very mind-boggling (and mind-troubling) journey into understanding myself. It seems 100% true that trying to develop as a trader will also help you develop as a person, and vice versa.
My dreams are getting more and more intertwined with my feelings, emotions and fears. Where will this all lead?
Hence you are likely to see more and more psychology-related posts on the blog in the days/weeks to come.
How to trade under Pressure www.competitiveedge.com
On today’s earlier blog post, in which I reviewed my 4 trades on Tuesday from a psychological perspective, I said that i had found a page of sports coaching recommendations. I am going to work through this right now, because I believe it will help me along in my journey of trading and understanding myself. Just substitute “trader” for “athlete” in the caption below.
The main action points I take from this are:
1. Focus on my actions, not on the outcome. My actions are:
- designing and testing trading strategies
- monitoring the market
- monitoring myself
- looking for setups
- entering trades
- managing positions
- review completed trades from technical and psychological perspectives
My focus should be on carrying out my actions well, not on whether my completed trades are showing profits. If I carry out the actions well, then I can be confident that in the long-run I am likely to show consistently profitable trading results. See myself focused, especially when pressure increases – and the focus being on what i can control, in other words my actions – and to some extent my feelings and thoughts. (By the way, yes this is me – in the Paris 6h endurance race in 2013)
(**) I will make a conscious effort to spot-check myself throughout the trading session – to ensure that I am focusing on the right things.
2. Be aware of your level of nervousness/pressure – the more nervous I am the worse I am likely to perform. And until I have really learned how to “trade under pressure”, my performance will also be negatively correlated with stress/pressure too.
How can I judge myself – as to physical or mental well-being?
My mentor Paul Wallace introduced me to using Psychological Assessments at the beginning of trading sessions. (**) I will extend to completing the assessment several times throughout the day, because as yesterday’s trading session shows, my state can clearly change as the session progresses. (**) I will also review the components of the assessment form.
Examples when the trader is unlikely to be in a good state: Not having slept for 24 hours, fighting with your spouse, ill health of the trader, bad news in the family, financial mishappenings, alcohol hangovers, arguments with your trading colleagues that are sitting next to you
3. Learn relaxation techniques – no action yet. To be followed up. I think the Shaanberger Psychology book will also cover this.
4. Use humor – being able to laugh at myself and at my situation (e.g. a trade, or trading session) will immediately relax the me. Being overly serious will add to stress/nervousness. (**) Laugh at myself on a regular basis. Take things in stride. It’s not the end of the world.
(This is in the 2012 Le Mans 24hr skate – our 5-person team placed 2nd in the endurance category – here we are having a great laugh during the relay-changeover with about 30 minutes to go – what a day that was!!)
5. Don’t make the game too important. The game is the trading session. Placing too much emphasis on the result of the trading session is more likely to make me choke. I had a car accident when I was 5 years old – a really serious one – I was unconscious for several days and there was a good chance that i would be mentally handicapped if I ever woke up.
30 years later to the day, my sister sent me a text (in German), saying how glad she was that she still had a brother.
In 2006 I was recklessly rollerblading through some alleys in the City of London at irresponsible speed, and managed to collide with a moving taxi (no helmet, no pads). All that happened was that i needed some stitches on near my ankle. Three weeks later I was good enough to race in another competition.
(**) I think that all things considered, having a losing trading session is not a big deal. In fact, given my accident, pretty much anything for the last 34 years has effectively been one big bonus!! Start the day with this thought in mind.
6. Separate self-worth from performance. This is a really biggie for me – and I think this is one of the most critical weaknesses (or mistakes) that I have carried with me throughout my entire life. (**) Why do I do believe this? Where did this come from? How can I change it?
Don’t be afraid of losing. There is no punishment for a losing trade – other than losing a little bit of money.
Some of the 11 steps did not seem as critical to me as others – I will need to come back and revisit these later.