Psychological Self Help for the Budget-Challenged Trader

[Ingot54 13]

Most traders would agree that Psychology plays a fairly large part in how successfully they are able to approach and manage trades, and trading. If your parents were children in the years 1920 to 1940 then you will have your own set of mental demons to deal with concerning poverty, waste, being wealthy, austerity, being deserving of wealth and so on.

 

We all have baggage left over from well-meaning parents - particularly if our parents went through the Great Depression, whether as children or adults - does not matter!

 

So let's see what we can do to help ourselves, in a cost-effective way.

 

You won't have to purchase any books, and you won't have to visit the shrink. In fact, there is a great deal you can do to help yourself.

 

In this thread we can take a look at some basic truths about what we do, and what we can do about it.

 

Last time I looked, the professionals were charging $175 per hour for an assessment consult, then up to 10 follow-up sessions. Courses to effect these same changes were priced between $3,000 to $7,000 and the job was not finished then.

 

To cover any possible failure of the client to "break through", the consultants running the courses are giving up to 15 personal consults, free access to Live Trading Rooms, 15 DVD's "that can be watched in the comfort of your own home" and possibly a forum to discuss issues that were not dealt with in the 15 DVD's and the Course, and Trading Room, and of course the text-book, course notes and "frequently asked questions."

 

Look, let's face it - none of us are mad ... unless we are still bamboozled at the end of a $7,000 course - and only then for possibly taking such a course in the first place.

 

But there are MANY ways we can stop ourselves from getting into a fear-based bind in the first place - or if we have some residual fear, left over from too many blown-up accounts, then there are still inexpensive ways to deal with those.

 

I am NOT psychologically qualified to offer advice - so please don't accept advice in this thread as being authentic expert therapy.

 

Might I respectfully request any professionally qualified psychologist refrain from contributing in a professional capacity here. This is an attempt at self-help, and I hope members will not use it as a dumping ground for Mark Douglas stuff, Van K. Tharpe stuff, Brett Steenbarger stuff or any other famous trading name. We want this thread to be mainly contributions from ourselves - what works or worked, for us.

 

We can read the books for ourselves. We can take the courses and join the newsletters and forums. But we can not get into each others heads that way. Yet every one of us has grown over the time we have been trading, or overcome a mental obstacle and here is an opportunity to simply share "how" you did that.

 

You may have read a book - good - so how did you actually apply that learning? Where did the rubber really hit the road? To me, this would be an intelligent use of a trading forum.

 

So, can we begin with a light-hearted approach, led by our dear friend Bob Newheart, and later move on to some less serious approaches to this ingrained, but not-indelible problem of psychological issues in trading?

 

[ame=http://www.youtube.com/watch?v=T1g3ENYxg9k]YouTube - Bob Newhart-Stop It!![/ame]

[MightyMouse 12]

Ingot,

 

I do not know you and I can say with near certainty that there is not a thing wrong with you. So, a good way to start is to stop thinking that there is something wrong with you and seek solutions that will improve your trading.

 

MM

[Ingot54 13]

Ingot,

 

I do not know you and I can say with near certainty that there is not a thing wrong with you. So, a good way to start is to stop thinking that there is something wrong with you and seek solutions that will improve your trading.MM

 

Thank you for the compliment MM. We may have had our different opinions on another thread, but I have to say that I generally respect your posts, and insights.

 

I have to say that I didn't commence the thread for my own trading needs, but to create a resource that all traders are welcome to contribute to, in order to share our stories of breakthroughs and insights that led to changes in our thinking, and ultimately success.

 

The anecdotes and analogies we share are what is far more meaningful to each other than much of what one can derive from a text, though these have a place to be sure.

 

While I am generally free of the paralysing fear I once had, courtesy of blowing up accounts - I still am not at the place I want to be. I can not give up my main employment and rely on my trading income. All it will take now is for me to gradually increase my position size as my trading a/c grows. But I don't want to ignore the voice of sobriety on my shoulder either, that reminds me of how I blew up before. The difference is subtle.

 

I have to say that I am a rebel by nature. It does not come out in the form of aggression, but in unorthodoxy. Just as you can not be unorthodox in driving a vehicle in traffic, so you have to abide by basic principles in trading - money management, position sizing - following a written strategy and so on.

 

For me, what made the difference was that I simply got fed up. I became sick and tired of not making my trading pay. I became so aggrieved with myself, that I decided "enough!" I now abide by a written plan. I do this to avoid the subconscious desire to follow my personal bias of where the market is going. If the box is not checked on my list, then the trade does not happen - regardless of how juicy it may appear.

 

And I no longer risk 10% to 15% of my account on one trade - it is from 2% to 4% maximum - that is my rule, and that settles that! In short - my unorthodox approach - my rebellious nature - has been brought to heel by the market.

 

Anyway - as I tend to be long winded, I will close by sharing with you a video that describes EXACTLY what I felt the day I made the decision to do something about my trading.

 

In this video, the late wonderful Jim Rohn tells the story of people who had a wake-up call on "The Day That Turns Your Life Around." I would like to highlight the first 122 seconds of this video as being particularly relevant to my situation - at least as far as the decision went.

 

[ame=http://www.youtube.com/watch?v=AoW_jAzZKcs&feature=related]YouTube - The Day That Turns Your Life Around (Jim Rohn)[/ame]

[jackhammer 10]

Ingot54,

 

Enjoyed your posts immensely. Keep them coming. I have found myself having to have overcome many psychological issues I didn't even know I had until I started trading! Yes having parents that were born in the early 1920's that had to struggle through the depression has had an effect on the way I was raised. (Ultra conservative keep risk to a minimum). Having to overcome this way of thinking while attempting to be successful in a field that has tons of risk I found very difficult when I started out trading. The longer I have traded (going on 5 years) the more I have overcome these issues and the better I have traded. Same as you though not at a point "yet" to quit my day job.

Good luck with your trading success is right around the corner!

[FXGirl 10]

I watch my body. When it starts to feel uncomfortable, restless, breathing shortens, muscles tense, it shifts position, moves closer to the screen, shoulders move up, hand moves towards the mouse, (any or all of these) I ask myself out loud, “What are you feeling?”

 

Then I say EVERYTHING I’m feeling out loud. “I’m scared this trade isn’t working….I think I got in too soon….I may lose this one….I don’t think it’s going to come back….this makes me feel like a failure….when am I going to really get this….”

 

Next, I breathe. Then I breathe again….and again, and again until my shoulders come back down, my muscles relax, my heart and breathing rate slows.

 

Once my body is comfortable, I ask myself: Which part of this information (my feelings) is ABOUT ME…which part is ABOUT THE MARKET?

 

If I’m still feeling agitated, I know I have to deal with the feelings about me first. If I’m reasonably calm, I can deal with the information about the market.

 

I know that this sounds somewhat mechanical, and it is. But just as I use a trading plan and know exactly what market conditions mean I take a trade, I use an emotional plan to deal with the feelings. The key for me is becoming aware of what emotions are about me and what are about the market.

 

Full disclosure: I am a psychologist and I do work with traders, mostly in groups, some individual. This process doesn’t work for everyone. What I’m sharing here is what works for me, what I actually do when I’m trading.

[Ingot54 13]

I have found myself having to have overcome many psychological issues I didn't even know I had until I started trading! Yes having parents that were born in the early 1920's that had to struggle through the depression has had an effect on the way I was raised. (Ultra conservative keep risk to a minimum). Having to overcome this way of thinking while attempting to be successful in a field that has tons of risk I found very difficult when I started out trading. The longer I have traded (going on 5 years) the more I have overcome these issues and the better I have traded.

 

Thank you for your kind contribution Jackhammer.

 

I just Googled "Children of the Great Depression" and watched a couple of the YouTube videos that came up. They were too emotional to include here, but certainly worth a few minutes to catch up on that stuff.

 

I was born in 1950. We lived on a dairy farm that supplied cream to the local butter factory. My father had come home from New Guinea (WW2) and had annual bouts of Malaria until I was 8 yrs old, and later, the nightmares that came with depression and war neurosis. As children we lived with that, though Mum tried to shelter us from as much of it as she could. I rode a horse to school until I was 8 yrs old, and we used horses to plough the ground up until 1958. My father then was able to borrow one of his brothers' tractors to make the preparation easier, though he still used the horses to scuffle the weeds until 1960.

 

The block we farmed didn't get much rain, and the few pigs and cows we ran, plus the hit-and-miss cropping results, didn't do much for parents with 5 kids.

 

Included that to show that I grew up with the typical poverty mentality. Those kinds of memories taught me that is was wrong to try to get anything from anyone for yourself. Everyone shared what they could, and we looked on wealthy people as "lucky b's" and saw ourselves as undeserving of wealth. Only sweat and hard work brought money - "everyone knew that."

 

It was not good to be one of "the wealthy" because they didn't share, though we did see them in Church on Sundays, so obviously they thought God liked the way they dealt He probably did like the way they dealt ... must ask one day!

 

Contrast that with the Gen X/Y today, and you can easily see the over-compensation my generation makes to ensure they don't go without things. Like our generation did.

 

But let's get off that trip.

 

The point is that we bring what we are to trading, and the market then either brings US to conform to the kind of thinking that is required to successfully participate, or it spits us out.

 

Same with the rather spoiled Gen X/Y ... they either conform to the market, and give up their entitled attitude, or they too get spat out.

 

On the one hand we have a group who hardly believe they are worthy of what the market can deliver; and on the other hand, we have a group that believes they are entitled - that the market owes them success just because they participate. (Might be a bit unkind to both groups here, but the contrast is made.)

 

The market deals with us as we are on the day. It is up to us to learn to accept the market as always right, and that it is we who have to understand and be ready to take only what the market offers. We can not force the market to deliver more than it wants on a given day. And we can not get what is available without doing the required preparation.

 

So both groups have some big things to get over, or in a year they will be on the sidelines.

 

Fortunately for me, as a kid I developed an entrepreneurial streak, selling empty bottles to shopkeepers, and selling clean and rolled-up newsprint to the butchers. Later I got a job before school, rolling newspapers for delivery, and even later, jobs in the school holidays chipping weeds from crops.

 

No one really cares about that - we all had our stuff to get over - but I include it here, because those experiences laid some groundwork for me, which I was later able to carry on into trading. That, specifically was, that I CAN succeed, regardless of the impost. But only I can push through - no one is going to hand it to me on a plate. You have to go after it.

 

Even so, I didn't get a decent breakthrough until I hit the bottom hard enough to decide I have had enough. In that sense, I MADE my own breakthrough.

 

It was not enough to participate, to make fancy charts, to trade Forex CFD's, leveraged inappropriately and very poorly position-sized. I was forced to recognise that while I may have learned heaps - I had failed to learn to prepare myself to really trade competently. No one else's fault.

 

Once again the stories have run on a bit - in my usual long-winded way. But you may see something of yourself here - in that you too have learned that YOU CAN change. You CAN become the trader you aspire to be. But YOU have to do what it takes YOURSELF. Open your eyes - look at what you are doing, and respond.

 

I might at times think, that the damaged childhood I may (or may not) have had, led to some of the problems I had, with how I perceive the markets. But life IS fair, and along with that, I think I have shown you that life also delivered to me the skills I needed to compensate for some of the "damage."

 

And I believe that life has also equipped all of us with those kinds of survival skills - the drive to persevere; to search and learn; to overcome and break through; to unlock the doors and experience the taste of gaining the right to take those small steps forward that we can like to label as "success"; and above all - to behave with consistency and discipline in our approach to trading.

 

Instead of diving into the hottest or most popular book or course on Psychological Repair for Dummy Traders, why not simply learn to reflect. Try sitting down with computer turned off, and with no distractions, and quietly take your time to reflect on what you are doing. Visualise goals and begin to believe that you WILL attain them.

 

That little exercise in itself will do NOTHING for your immediate trading. But I am convinced that it WILL be the beginning of a subconscious kind of analysis that will eventually become the instinct, or gut feeling kind of action, that will lead to fewer errors, and more correct trading - all else being equal.

 

There is a place for meditation and self-talk - but keep it in perspective - it is not a panacaea for poor technique.

 

Anyway - we'll leave that form of self help right there, and if you will indulge, let's listen in for 6 or 7 minutes to Jim Rohn's different slant on self-help.

 

[ame=http://www.youtube.com/watch?v=b2AyudSJl_s&feature=related]YouTube - Jim Rohn - How to have Your Best Year Ever 2 of 3[/ame]

[Ingot54 13]

I watch my body. When it starts to feel uncomfortable, restless, breathing shortens, muscles tense, it shifts position, moves closer to the screen, shoulders move up, hand moves towards the mouse, (any or all of these) I ask myself out loud, “What are you feeling?”

 

Then I say EVERYTHING I’m feeling out loud. “I’m scared this trade isn’t working….I think I got in too soon….I may lose this one….I don’t think it’s going to come back….this makes me feel like a failure….when am I going to really get this….”

 

Next, I breathe. Then I breathe again….and again, and again until my shoulders come back down, my muscles relax, my heart and breathing rate slows.

 

Once my body is comfortable, I ask myself: Which part of this information (my feelings) is ABOUT ME…which part is ABOUT THE MARKET?

 

If I’m still feeling agitated, I know I have to deal with the feelings about me first. If I’m reasonably calm, I can deal with the information about the market.

 

I know that this sounds somewhat mechanical, and it is. But just as I use a trading plan and know exactly what market conditions mean I take a trade, I use an emotional plan to deal with the feelings. The key for me is becoming aware of what emotions are about me and what are about the market.

 

Full disclosure: I am a psychologist and I do work with traders, mostly in groups, some individual. This process doesn’t work for everyone. What I’m sharing here is what works for me, what I actually do when I’m trading.

 

Thank you FXGirl.

 

I think you are saying that by naming that fear - or those fears, you are actually recognising their presence, and de-fusing them. Hearing yourself acknowledge them right out loud, somehow limits their influence. And somehow identifies which of the fears are just the little girl's voice in your head, and which are the true warnings of the market.

 

Establishing awareness can be so settling, because it restores perspective between the real and the imagined.

 

Is that correct?

 

I am not trained in Psychology, but I AM a parent, and I recognise the things that make a difference when encouraging a child, and I know the things that help a child decide for himself what is just an imagination. As you mentioned - calming yourself has to be attended first. Then you can take on board the market information, and deal with that.

 

That is a great description of using a self-help method to make a difference - thank you.

[Gareth.Samuel 10]

For me I was only able to start to overcome this by creating a very mechanical system which left no margin for interpretation. Where I still come unstuck sometimes is pulling out too early as I "feel" the Market is going to move against. In the beginning I used to check my trades very often but I found that this worked against me so now I place my trade and forget about it until my next window ( I trade 4hourlies). I think that as with anything you need to be able to repeat the same actions many times before you become comfortable allowing things to play out by themselves and that the whole Market isn't going to turn against you.

[jackhammer 10]

Ingot54

 

I am posting a UTube link that I would like to share(one day you can teach me how to post the actual video) that should be helpful for all traders. It gets down to the very basic

requirements of a trader: determination & having confidence in yourself. Its short sweet but brutally honest. Best of luck in your trades

 

[ame=http://www.youtube.com/watch?v=uASVzkrEKgs]YouTube - Rocky Balboa Speech[/ame]

[jackhammer 10]

Ingot54

 

Tried to post a Utube URL but I guess it is unable to be copied. If your interested go to UTube and type in Rocky Balboa speech and it will come up. The movie wasn't good but the speech he gives is awesome and very true. Hope you take a look and also hope the weather is not severe in your neck of the woods

 

Jackhammer

[Ingot54 13]

The idea of this thread is to try to identify ways we can improve our success rate in trading, without going down the costly route of becoming involved in the world of psychological counseling and therapy.

 

I have no issues with it (psychological therapy for traders) in particular, except I have reservations about its effectiveness in producing an enduring positive outcome for the trader. In fact I think enough of a smattering of sound coaching/mentoring might be thrown in to some courses, to enable some kind of improvement, which can then be put down as successful "psychological" assistance.

 

I might be wrong, but in the absence of evidence to the contrary (eg a few traders who can stand up and say that the sessions with a psychologist turned their trading around) I am standing on the premise that seeking psychological remedies for failure to break through in trading is a waste of your time and resources.

 

In particular I would be very interested in how a 'diagnosis' of a psychological issue is formed. And at that point, I would like to see if there are other ways traders can take responsibility for themselves in working out the remedy.

 

My contention is that there is indeed quite a lot you can do to assist yourself, and it has to do more with sticking to a strategy until you nail it (master the strategy). Further, many traders have NEVER written out their rules (I was one of them) and thus exposed my trading to my personal bias, and subconsciously then overlooked meeting all the conditions and rules of my trading plan.

 

There is a very expensive industry built up around the notion that traders need to "deal with issues" such as pathological fear, greed, anxiety, inability to cut losses, or inability to pull the trigger on entries. In another thread http://traderslaboratory.com/forums/f37/your-mama-doesnt-trade-so-wise-9278.html there have already been suggestions of ways that traders can deal with many issues, and some great breakthrough ideas and experiences have been shared here: http://traderslaboratory.com/forums/f208/breakthroughs-led-trading-improvement-success-9057.html

 

I hope to add to the list of things we can do for self-help and self-improvement over time. So feel free to kick this can further down the road anytime you discover a gem that you think would make a difference if applied to trading strategy and management of trades.

 

I am a great believer in traders taking responsibility for themselves and in the way they conduct trading. It is not easy, no. But it is also not possible for you to fly while someone is holding on to you. Trading is a very personal and sometimes lonely pursuit. There is a wealth of information on this forum, plus some knowledgeable members who have shown an aptitude to help. Just ask, or start a thread.

 

The answers will come if you persist.