Facing our demons

[NZDSPeCIALISt]

Cutten,
Totally agree with what you said. People are born to do what they are doing - eventually they come back to it if they side track. I put my first trade on in High school - I still remember black Monday vividly. Got into sugar futures when I was 17 years old (doubled my margin then watched it go to zero - back in 1988). All through University I read books on Point and figure charting - used to draw them, by hand. This was back before the information revolution that the internet has heralded - info on technical analysis was rare back then.

To this day I have never worked a regular 9-5 job for more than a week. When about two years ago I re-discovered the markets it took hold of me and I havn't stopped being consumed by it since. Academics do there thing and traders do theres.

Actually this question reminds me of the preface inside one of Steve Nisons books on Candlesticks - regarded as a top researcher and academic in that field. In the preface he writes something to the effect that "I still have a mortgage living a very middle class life". This from an academic who knows possibly every candlestick pattern backwards.

 

[Banjo]

Good post Cutten, singers sing all the time, in the car, in the shower, some pro quarterbacks and receivers stay after a grueling practice for hours and work. Nobody's lofting a ball 60yds and having it appear in a 1 cu.ft. space it needs to be in without a hell of a lot of work.
Re: the lazy thing, the experience from my personal history was as follows. I would miss perfectly fine trades from being distracted, chat rooms, reading something etc. I would fail to concentrate on the market unfolding in front of me. I could see I was doing this and decided I was using lazyness/ lack of concentration as a tool to distance me, keep me uninvolved enough to have an excuse to not make a decision about entry. To avoid more risk even though risk was entered into on other occassions. I knew I was uncomfortable with risk and accepted just enough to survive on a certain level. Recognizing that fear was the seed and my lack of concentration was the tool I was using to implement the fear was easy for me because of my fear based backround/ childhood. Everybody is unique in personal experience and therefore filters applied to their perceptions. Only you know the answer for you.

 

[Old School]

Quote from Cutten:

My #1 demon is laziness. Out of every 5 moves I anticipate largely correctly, I maybe profit properly from 1 or 2, and let 3 slip by simply due to not working hard enough or properly preparing for them...

I estimate several million in missed opportunity over the last 5-6 years. And yes, I would donate my left nut to medical science if it enabled me to remove that thorn, if only I knew how. Unfortunately I haven't found a "silver bullet" that really works yet.

...and would be very interested to hear from anyone else who got over it successfully.

Hello Cutten and thanks for sharing,

If you don't mind, I'd like to use your demon as a focus for the time being.

I'll start by saying the problem many traders face is our old friend "fear". Fear of losses, fear of missing out, fear of not being involved, fear of making money(?), some derivative of fear is constantly lurking over us until we face them and come to peace with them.

Before I continue, let me not assume and simply ask you, does this sound at all like your situation?

Meaning, if you look in the mirror and ask, "why do I keep making the same mistake?"...
Is there some relative of fear that keeps showing its ugly head as the reason?
If not, a short description of your answer to the question would help a lot.

I'll be back after turkey.

Happy gobble gobble

 

[chrisofj]

This is a good thread.

Fear is a natural reaction, and it seems one can make money in the mass behavior of the market by being able to trade logically.

I'm struggling right now because I don't want to go through another cycle like I did recently. Right now my fear is of pulling the trigger but it's still part of the same cycle that leads me to trade like an idiot.

The only thing I've learned is after doing wrong things repeatedly I can start to see it as a game (like my blowout day after a string of nice trading game) and when trouble heads my way I can at least have a chance to change.

I didn't know what people meant about psychology of trading until I had a trading method I have proven to myself works decently. Every time I come against a wall I figure this is where others have quit, and because they quit here, I have a chance to be profitable if I persevere.

 

[Arnie]

Quote from Banjo:

Good post Cutten, singers sing all the time, in the car, in the shower, some pro quarterbacks and receivers stay after a grueling practice for hours and work. Nobody's lofting a ball 60yds and having it appear in a 1 cu.ft. space it needs to be in without a hell of a lot of work.
Re: the lazy thing, the experience from my personal history was as follows. I would miss perfectly fine trades from being distracted, chat rooms, reading something etc. I would fail to concentrate on the market unfolding in front of me. I could see I was doing this and decided I was using lazyness/ lack of concentration as a tool to distance me, keep me uninvolved enough to have an excuse to not make a decision about entry. To avoid more risk even though risk was entered into on other occassions. I knew I was uncomfortable with risk and accepted just enough to survive on a certain level. Recognizing that fear was the seed and my lack of concentration was the tool I was using to implement the fear was easy for me because of my fear based backround/ childhood. Everybody is unique in personal experience and therefore filters applied to their perceptions. Only you know the answer for you.

How did you deal with this? Was just the recognition of this enough for you the overcome it?

 

[Quiet1]

Banjo - your description of laziness-as-fear chimes with mine.

In the end we all only have so much risk-taking capacity at particular points in our development. I find that I get tighter or more distractable or lazier however you want to describe it after a good run of trades or near the end of the day, week or month.

On top of all that there's just risk fatigue. It can just get a little wearing to be exposed for a length of time or frequency beyond your comfort zone - how many times have you just closed a trade (winning, losing or breakeven) just because you couldn't tolerate the risk of holding it any more? This is one of my biggest faults.

I try and expand my risk tolerance by boxing myself in a little bit with rules and goals but like any lasting behaviour change its a slow process subject to backsliding and progress in fits and starts.

Although I'm not otherwise fond of his books Ari Kiev's Psychology of Risk is mostly about this topic - basically keeping yourself challenged to force you to expand your risk tolerance, perhaps worth a read even though he's incredibly waffly.

 

[OddTrader]

Quote from Old School:

As I sit here on a saturday night - very comfortably drunk , I thought I'd write my first post here in the psych room. As you can see from my join date, I am a ET newb, so first and foremost, greetings to my fellow traders who place an importance on the psychology of trading.

What I want to talk about tonight: Facing our demons

We all have 'em.

Can't pull the trigger, can't stick to my stops, averaging losers, getting out too soon, one bad loss ruins your day/wk/yr, you get the picture. Many traders suffer from it. Not much has changed over the last 2,000 years of trading. You can bet that traders back then also had similar demons. Why? Because human nature hasn't changed.

So what's the top ONE demon that keeps haunting you over and over?
If you got rid of that demon, how much would your P&L improve?
Would you give up your left nut to finally get over your demons?

Hmmm...I need another beer.

"So what's the top ONE demon that keeps haunting you over and over?"

Not knowing my biggest demon is my biggest demon.

 

[Cutten]

Quote from Old School:


Before I continue, let me not assume and simply ask you, does this sound at all like your situation?

Meaning, if you look in the mirror and ask, "why do I keep making the same mistake?"...
Is there some relative of fear that keeps showing its ugly head as the reason?
If not, a short description of your answer to the question would help a lot.

No. I have little fear, on an emotional level. I mean I went heavily long on 9/11 after the US market shut (the European stock indices went to huge discounts, before staging a massive rally, 10-15% in an hour or two). I nailed the exact bottom the week after 9/11, and went long on full margin the Monday after that low. So no, neither fear nor pulling the trigger has really been an issue for me. My main problem is getting motivated to do things I find unpleasant. Most people, if you said do something they really hate for a week, and we will pay you 500k, would go and do it. I would not only refuse, I would be literally unable to do it. If someone stuck a gun to my head, and said go file corporate accounts for 1 year, I would stand and tell them to pull the trigger. I could do it for a few days to avoid death, but not that much longer. I just cannot get emotionally motivated by the consequences of actions. The only thing that motivates me is the pleasure or stimulation of *doing*.

The advantage of thinking like this is that potential losses don't cripple you emotionally, risk is just something to consider in a detached fashion, there is no issue of pulling the trigger, you can drop a huge amount in one day and then carry on as normal. All the typical issues that cripple wannabe traders don't really apply to me.

The downside is that it doesn't matter how much money I could make by "working diligently" on boring aspects of my trading. It won't motivate me. I need another way to get the motivation to work on those areas.

There are two ways I've considered. One, trying to somehow get a link between long-term consequences and my short-term motivations. The other, is just to hire someone my exact opposite and pay them to work on those areas. The trouble is that I know no one who is into the markets and has that skillset. So, I just try to slowly improve on that weak spot, and thank my lucky stars that I have some strenghts in other areas to offset that glaring weakness.

 

[Old School]

Quote from Cutten:

No. I have little fear, on an emotional level.
My main problem is getting motivated to do things I find unpleasant...
it doesn't matter how much money I could make by "working diligently" on boring aspects of my trading.
It won't motivate me.
I need another way to get the motivation to work on those areas.

Hello Cutten,

First, I hope you don't mind the hack-editing of your post.

Second, I will start by saying the patient, uhmm..trader, must be a red zone case before attempting to change. Kinda like the smoker who says he wants to quit, but really doesn't. If the trader really doesn't want to change, then it'll be very difficult to face your demons.

Ok, here's the gist of it...

Behaviorial change is what we're talking about here.
How do we change behavior?
We're still cavemen in that regard.
Pleasure & Pain. Pleasure seeking pain avoiders...that's what humans still are. :eek:

Here's formula:

The pleasures we would derive from overcoming our demons
-Minus
The pain of continuing the cycle of "not again" (isn't that what we usually say when we make the same mistake over and over?)

If the difference is positive, then you could possibly overcome your demons.
If the difference is negative, then you better get used to where you are, because you're not ready to overcome your demons.
Somewhere supra, a member posted,

Ed Sekoyta's famous phrase "Everyone gets what they want"

and that's exactly right.

The question becomes:
What drives us into action and how do we master it?

More to come...

 

[acronym]

Quote from Old School:


How do we change behavior?
We're still cavemen in that regard.
Pleasure & Pain. Pleasure seeking pain avoiders...that's what humans still are. :eek:

Jeepers, your an anthony robbins disciple

Well, based on what Ive read here so far, im screwed.
The bonus is, already knew that.......

NEVER say die!!!!!