Is this true for me?

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Most of our social, economic, and political problems are rooted in the desire to get something for nothing, multiplied in intensity by the twin emotions of envy and resentment. Just as the lowest common denominators of human nature are greed and laziness, the fastest and easiest way to justify an attempt to get something for nothing is to proclaim that those who have what you want do not deserve it, and you do.

The Two Worldviews
There are two general ways of looking at the world. A person can have a benevolent worldview or a malevolent worldview. A person with a benevolent worldview looks at life and the world honestly and realistically, recognizing that there are many problems and deficiencies, but for the most part, it is a good place and definitely preferable to the alternatives. People who have a benevolent worldview create everything good and worthwhile in society.

Stinkin' Thinkin'
People with a malevolent worldview, on the other hand, are primarily negative and cynical in their outlooks. They look for the worst in people and situations. They are characterized by low self-esteem and self-worth. They don't like themselves, and as a result, they don't like many others. They see problems everywhere. They see injustice, oppression, unfairness, and inequalities of income and status. No solution is ever enough. No situation is every satisfactory. For these people, there is always something wrong.

Your Self-Esteem and Self-Image
The central role of self-esteem and self-image—how much you like yourself and how you see yourself—cannot be overemphasized. They constitute the person you are inside. These core elements of your personality have overwhelming affects on your worldview. Each person has a deep inner need to feel important and valuable, and be respected by others. Each person needs to believe in something bigger than himself.

Political Opportunism
At the political level, there will always be opportunistic people who will offer to represent those who do not want to work for what they get. These opportunistic politicians will create elaborate arguments to prove why these prospective voters should be given free money. As soon as the spectre of free money, of something for nothing or very little, raises its ugly head, more and more people will attempt to get it.

The Test for Truth
The two great questions you have to ponder when considering any personal and government action are these: First, “Is it true for me?” Is what you are saying or hearing true for you, or do you think it may be true for others, but not for yourself? Listen to your inner voice. Be perfectly honest with yourself. Trust your own instincts. Only accept the premise or promise that feels right and is consistent with your own personal knowledge and experience.

Action Exercise
Many of our most complex problems could be quickly relieved if each person were to ask themselves this question, “Is this true for me?”

Sustaining Self-Awareness During Trading

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One important element of working on trading performance is sustaining self-awareness during trading, so that you know which strategies (setups) and tactics (execution) you're using at the times you're trading. After all, if you're not fully aware of what you're doing when you're doing it, can you hold that in memory to reflect upon it later and learn from it?

Many traders think that more days, weeks, and years of trading will give them better skills. But that's not necessarily so. It's the awareness of performance that enables us to internalize it, adjust it, and learn from it. Performing on autopilot is a recipe for repeating a day's worth of experience 250 times, not achieving 250 days' worth of experience.

Consider this perspective from wrestling coach Nick Cipriano:

"The strategy and tactics that wrestlers employ in competition are conceived in the practice environment, but they are often perfected in competition under stressful conditions. Through experience, wrestlers learn to better track match developments, and they slowly learn to adjust strategy and tactics accordingly. In my experience, I have found that highly accomplished wrestlers (as compared with novice wrestlers) can recall explicit details of their matches.

I believe their recall ability is directly linked to their ability to process and interpret match developments, not only more readily, but also much more accurately. In my judgment, the coach facilitates development of this important psychological skill by integrating technical training with psychological training and by constantly reminding the wrestler during sparring sessions to monitor developments and adjust tactics accordingly. One specific strategy I use involves encouraging wrestlers to maintain a broad focus of attention during sparring and to visualize the actions of their opponent from a third-person perspective (as if watching the sparring from the sidelines). Being able to assess match developments from an external perspective allows a more accurate interpretation of strategic and tactical adjustments that must be made."

Excerpt from: Expert Performance in Sports by Starkes and Ericsson (Eds.) p. 165

Becoming Your Own Trading Coach

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In a recent post, we suggested that coaching for traders could be valuable if properly structured. But is it possible for traders to coach themselves for success? Can the process of expertise development be self-generated?

There is actually a fair amount of research on this topic. The general conclusion of this work, which Brett review in his upcoming book, is that the importance of mentoring to performance success is specific to each performance field. Team sports, for instance, universally rely upon coaching for expertise development. It is impossible, for instance, for an individual to become proficient at a game such as ice hockey without having a team to practice with.

Other sports and performance fields are more entrepreneurial. Chess, jazz music, and poker are examples of fields where high levels of attainment can be achieved through individual practice and a minimum of formal instruction. These are fields in which learners can execute performances on their own, obtain feedback, and steadily make improvements. Many of the jazz greats, for example, developed their talent by playing night after night in local clubs.

The research of Benjamin Bloom and his colleagues at the University of Chicago suggests that the role of mentors varies across the learning curve. Early in development, a coach teaches basics, as in the case of a Little League coach or a beginning piano teacher. Later, practice becomes more structured and extended as part of competence and expertise development. A coach at these later phases needs to have a solid mastery of the performance activity to structure practice properly and provide meaningful feedback.

Many of the highly successful traders I've known and worked with have acquired their skills through self-development and a relative minimum of guidance from senior traders. In these situations, we can break down their learning activities into four components that Brett calls P3R:

• Prepare
• Plan
• Perform
• Review

Prepare refers to activities that orient the performer to the upcoming challenge. Running drills helps prepare a football team for a game; reviewing charts and market data prepares a trader for the upcoming trading session.

Plan relies on an assessment of strengths and weaknesses to guide how the performance will be undertaken. A military leader develops a battle plan out of intelligence information about the enemy and an evaluation of his own troop strength and strategic position. A trader's plan includes the patterns he or she will trade, the capital to be allocated to trades, allowable risk, etc.

Perform is the execution of a plan, with mid-course correction as needed. A basketball team will call time out if the performance is not going according to plan. A trader may reassess a plan in light of unexpected economic news and a price breakout.

Review comes after a performance, as part of assessing what was done right and wrong. The military leader conducts an after-action review following a mission to tweak the overall battle plan and correct any weaknesses that might have emerged. A trader utilizes review to identify flaws in trading plans and the execution of those plans, using the feedback to begin a new cycle of Prepare.

Notice that, in good mentorship, Prepare-Plan-Perform-Review is a cycle, not a linear sequence. The idea is to create learning loops in which you the performer/student can also be the mentor/teacher. Incorporating structured feedback into future preparation and planning is key to self-coaching.

Trading journals are a time-honoured tool for self-mentoring, structuring and documenting the P3R process. Increasingly, we're seeing online tools for journaling that incorporate graphics and market data into the trading journal. Platforms such as MT4Stat mark charts with the points at which you made trades and worked orders in the book, allowing you to add your own comments. These can be readily printed out for future reference and review. Programs such as Trader DNA allow users to print out charts of trading results and tables of performance, summarizing a variety of performance metrics that highlight strengths and weaknesses.

I'm increasingly impressed with the MyFxBook, which now has a Pro version that integrates an online journal with charts of one's trades and statistics about trading results. Users of the program have the option to keep their journals private or share with others in the MyFxBook community. This latter option opens the door to peer mentorship and coaching.

The most valuable service I can perform for traders, I believe, is not to become their trading coach, but to help them mentor themselves. My visit to Malaysia at the Forex Trading Summit is largely devoted to this topic, stressing ways that traders can accelerate their own development. My hope is also that the morning market updates and trading Weblog can also help traders better Prepare, Plan, Perform, and Review their way to success. A list of additional resources to aid your mentorship is available on the Trader Development page of my personal site.

We welcome your thoughts and insights - post your comments at the end of each blog. Keep Chargin’ Be Awesome.

Brief Therapy for the Mentally Well: Programming Our Own Experience

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A bit over a week ago, I described short-term applications of psychology as "therapy for the mentally well". The goal of such work is to make positive changes, not necessarily eradicate pre-existing deficits. For that reason, the first step in the change process is having a vision of the changes you wish to make. By linking these positive changes to distinctive emotional, physical, and cognitive states, we are able to become the play-actors of our ideals.

Allow me to expand on a metaphor I used from the Psychology of Trading book. Consciousness is like a radio dial, and we operate on many frequencies. Each spot on the radio dial is a particular state: a blending of our experience of our bodies and minds. The test anxious student has a spot on their dial that combines negative thinking, increased arousal, shallow and rapid breathing, and diminished access to retained information. Other spots on the dial may combine much more positive thinking, alert concentration, erect posture, and fuller breathing. When operating at those frequencies, the student has full access to the information studied and performance on the test is excellent. What we know and who we are is relative to the frequencies of consciousness at which we're operating.

The problem is not that some of the spots on our personal radio dials are programmed with negativity. Rather, the problem is that we lack full, intentional control over the dial itself. We change stations, so to speak, without intending to. What the brief therapies accomplish is a greater control over selecting our own frequencies: they give us a hand to turn our dials. The idea, after all, is to become our own trading coach: to develop our own ability to reach our goals.

What creates the "radio stations" that make up our dial of consciousness? Two things: repeated experience that becomes habit patterns and powerful emotional experience that is processed as a trauma. Just as some radio stations on our car radio dials are faint and others generate a powerful signal, some of our states are weak and some dominate the dial. The more repeated the experience--and the more powerful the experience--the more it becomes part of your spectrum of consciousness.

As Brett emphasized in the Enhancing Trader Performance book, one reason so many traders fail is that they create repeated, negative emotional experiences for themselves. Indeed, this is why the author included self-help manuals for cognitive and behavioural change techniques as two chapters within the book. Quite simply, traders can find themselves operating on frequencies that they don't want to be experiencing: their dials change without their consent or control. And all it takes to shift our frequencies of consciousness, very often, is a simple shift in one element of our frequency: a few negative thoughts, a change in our patterns of posture or breathing, a fleeting emotion. Those become triggers that diminish our control over our own experience.

While the aforementioned cognitive and behavioural techniques are extremely valuable, it is also important to be able to program our own new, enhanced spots on our dials of consciousness. The way to do this is to rehearse positive patterns of thought and behaviour while you are in a distinctive emotional and physical state. This is one of the quickest and most reliable ways to generate change.

For instance, let's say your desired behaviour is to hold onto winning trades longer. You might mentally rehearse market scenarios of holding onto trades--emphasizing how excited, happy, and profitable you'll be by achieving this goal--while you are pushing yourself during a strenuous treadmill exercise. By setting the treadmill at an incline and a good speed, you will be jogging at a brisk pace and elevating your heart rate. With repetition, you will begin to associate the goal--and its emotional benefits--with your body's pumped up state. It will become an increasingly powerful signal on your radio dial. Then, before trading and during trading breaks, all you have to do is get back on the treadmill. Triggering your body's shift in state will trigger the desired shift on your dial of consciousness. You will access the behaviour you desire by intentionally triggering the cues associated with the behaviour.

Making changes entails far more than simply engaging in positive thinking or getting positive images in your head. If you don't change your state of consciousness--and your ability to shift your own consciousness--you'll be listening to the same programming day after day. Learning how to shift out of negative states is a huge achievement. Where dramatic growth occurs, however, is in learning how to create new, positive states: in becoming the programmers of our own experience.

Three Steps Toward Becoming Your Own Trading Coach

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A theme I emphasize in all my interactions with traders is that I don't want to be their trading coach. Rather, I want traders to learn skills that will enable them to coach themselves.

What steps can developing traders take to better coach themselves? Three come to mind immediately:

1) Create a Split - When you are serving as your own coach, you are both performer and evaluator of performance. You're both player and coach. That necessitates the creation of mechanisms to split the player from the coach and enter the mindset of evaluation, goal setting, and learning. The most basic way of creating such a split is to devote a set time each day for review of performance, journaling, and setting goals for near-term improvement. I've found that the time and effort devoted to these activities is positively correlated with a trader's success. Such traders have created an effective split that enables them to stand back and view themselves objectively.

2) Always Be Working on Something - I like to ask traders: What, specifically, are you working on today? The fuzzier the answer, the less likely it is that real learning and performance improvement will occur. It might be working to extend a strength or to correct a weakness; it might be work on one's trading or on one's mind set. Regardless, the idea is to make every trading session a learning session.

3) Make Yourself Earn Size - Don't trade larger until you have established success and confidence with smaller size over a period of different market conditions. When you've earned a bump up in size, make it gradual enough so that it doesn't take you out of your game. Conversely, if you're experiencing a slump due to personal reasons or shifting market conditions, be quick to pull your size back until you regain your feel. Consistency of returns--and achievement of good risk-adjusted returns--are the goals.

You can only be a good coach for yourself by practicing your self-coaching. I've met many traders who were drawn to trading because of a perceived easy lifestyle: ability to make lots of money with short working hours. Of all the traders I've known who were attracted to trading for those reasons, I've seen none succeed over the long haul. If you're spending screen time learning market patterns and then spending self-coaching time mastering yourself, honing your execution, and developing fresh strategies, you know the lifestyle associated with success!

RELEVANT POSTS:

Becoming Your Own Trading Coach

The Most Important Step in Self-Coaching

Trader as Trading Coach: Cultivating Self Awareness

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The new book Brett writing is designed, in part, to help traders coach themselves to improved performance. The idea is to periodically stand apart from our trading to evaluate what we’re doing, learn from our experience, add to strengths, and minimize the impact of weaknesses. The self-coaching of most traders, he finds, is limited at best to the keeping of a journal. Too often those journal entries are simple summaries of the last trading day, combined with statements of “what I should be doing”. Rarely do the journals identify and focus on strengths, and rarely do they set very specific goals that are systematically reviewed and refined.

Perhaps the hardest part of self-coaching is sustaining the stance of self-observation. To perform well, we need to be immersed in the doing; we can’t be observing and criticizing ourselves while we engage in performance. If we fail at such immersion and become overly self-aware, the result is an interference with performance. This is what creates writers’ block and a freezing up during public speaking engagements. In a very real sense, the master trader must minimize the coach inside his or her head during trading. The goal is to be completely market focused, not self-focused—and certainly not focused on Profit/Loss.

The natural tendency after a lengthy day of focused attention is to want to relax. As a result, little attention is paid to performance and reviewing the past day. That is the time when the coach inside the head needs to be maximized, with attention directed toward oneself. What did I learn about the market today? What did I do right? What do I need to correct? What is my game plan for tomorrow? All of these questions require a degree of reflection and self-directed attention.

Research in psychology initiated by Duval and Wicklund in 1972 suggests that self-directed attention can be an aversive state for many people. In a self-focused mode, we become more aware of the discrepancies between our real self—how we are currently performing—and our ideal. Not surprisingly as a result, people tend to avoid prolonged states of self-awareness.

Brett’s own research at Duke University found that self-awareness is particularly aversive when people feel that they are not capable of bridging their gaps between real and ideal in areas of life that matter to them. Ironically, then, we are most likely to avoid focusing and working on ourselves at those times when we most need it: times when we are self-doubting and feel furthest from our goals.

If, however, we are going to mentor ourselves and accelerate our development toward expertise, it means that we have to make friends with self-focused attention. We have to learn to love the look inside, even when the view is uncomfortable. By identifying with our learning processes rather than our day-to-day outcomes, we place the inward look into a different context: one in which self-focused attention is in the service of a higher ideal: shaping our selves.

RELEVANT POSTS:

Three Steps Toward Self-Coaching

Therapy for the Mentally Well