Trading Without Ego

dbphoenix

dbphoenix

Make no mistake about it. A trader's self concept has to be separate from the trading. Who you are as a person began before you ever thought of trading and who you will be as a person will extend beyond your trading. When personal self-worth entwines with trading, it not only damages self esteem, it sabotages the trading.

You hear about it. You read about it. Don't be misled. Traders tell stories. They write stories. They tell how great they are. Big trades. Big numbers. Big egos. Hubris. And sooner or later, big downfalls. It goes with the territory.

Consider the outsized egos of certain traders who brought themselves and those associated with them to ruin. Nicholas Leeson brought down the Barings Bank. Victor Niederhoffer ran his fund into deficit. John Merriweather threatened the health of our banking system by betting more than fifty times his capital that his strategies were certain to work, that he could forecast with impunity the direction of various bond markets. There's a pattern here of seeming or real success for a while and then collapse for themselves and for those caught up in blindly following them.

As Wayne Dyer said, Authentic freedom cannot be experienced until one learns to tame the ego and move out of self-absorption.

In his wonderful book, Pit Bull , Marty Schwartz tells several stories of the times he lost money because his ego got in the way. In the end he has this to say about ego:

I've said it before, and I'm going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. You have to stop trying to will things to happen in order to prove that you're right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're right, but to hear the cash register ring.​

Because trading is an uncertain game of probabilities filled with uncertain vagaries, an overly inflated ego or a fragile ego can easily get smashed. Defending the ego uses up unnecessary energy, distorts perception, and sooner or later, will destroy the trading. If your self esteem rises and falls with your trading results, you and your trading are in trouble. Self concept has to be strong and durable and not at the mercy of the current, last, or next trade.

We need to check our egos at the door when we start to trade. Uncertainty is central to trading. If we add the uncertainty of our own self image into the mix of the unknowable endemic to trading, we're in for certain trouble sooner or later.

Some typical symptoms of egotizing trading would be the following:

· Not putting in stops. The ego doesn't want to be proven wrong.
· Hesitating before putting on a trade. The ego wants reassurance before it begins.
· Overtrading. The ego wants to prove itself big time.
· Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for dear life. It cannot cut out. The ego doesn't want to be wrong.
· Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out.
· Grabbing a profit too soon. The ego wants a pat on the back.
​
(cont'd)
 
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How do we separate our ego from our trading? How do we keep from personalizing a trade? How do we avoid personalizing all of our trading?

One way to separate your ego from your trading is to build healthy boundaries between yourself and your trading. Not only do good fences make good neighbors, good boundaries make good traders.

A boundary sets limits, makes distinctions, informs you as to what is you and what is not you, makes clear the distinction between you and others, tells you where one thing ends and another begins. It distinguishes between past, present, and future. It lets you know that another's ideas, values, and feelings are not necessarily yours. A boundary is flexible and permeable. It lets information flow back and forth. It allows you to listen actively without having to take on someone else's opinions and without having to force your opinions on another person. In trading it draws a distinction between yourself and your trading, between one trade and another, between one trade and all of your trading.

One trader would see the signal to take a trade and before she could put the trade on, she'd hear a voice saying, "What if I'm wrong?" Immediately she'd feel small and diminished. The next step was simply to let the trade go by as she sat there stalled by her vulnerable ego. She needed a boundary between her self-esteem and the outcome of a trade. She needed a boundary between self worth and being wrong. With such a boundary she could give herself permission to not always have to be right.

Another trader had had nineteen winning trades in a row. The tension was building and he was strung tighter than a drum when he came to see me. I congratulated him on his recent success and asked him what would be so awful if the next trade was a loser. He said, "I'd lose my self-esteem, and without self-esteem you're nothing." What an untenable state of affairs! His self concept was riding on the results of the next trade. John needed a boundary between himself and his trading. He needed to know that his ego would be intact regardless of what happened to his trading.

A healthy boundary lets you know the difference between your business and yourself, between your trading and yourself. You are more than your business. You are more than your trading. A boundary also informs you that the results of one trade are not to be confused with the results of all of your trading. Boundaries guide you as to the difference between the past, the present, and the future.

Another way to get some distance between yourself and your trading is to look at it from different perspectives. This is also true in your relationships with other people. In most interactions with another person there are three different and separate perceptual positions.

The self position is looking through your own eyes, hearing what you hear, feeling your own feelings, holding your own beliefs, and making your own interpretations. Most of us live our lives in this position. This is the position that gives you passion. It's where the juice is. From this position we have access to some information, but not all of it.

The observer position is that of a neutral observer, a fair witness. This is a dissociated position. Here you watch yourself and the other person. Here you are in the role of a spectator as you listen to yourself and the other person. As an observer you'll have a third party's commentary. This gives you an impartial view, but if you stay here too long, you could end up playing the role of the cold fish.

The other position gives you the other person's point of view. Here you look at things through the eyes of the other, hold the other's feelings, walk and stand in the other's shoes. This position gives you the ability to identify with and through another person. Here you see the world through another person's eyes and get a sense of what they're feeling. If you live too much in this position, you could be in danger of living in the doormat position.

By going to the observer position, you can gain perspective and neutrality. Some successful traders move to the observer position when they put on a trade. If you're getting too involved in a trade, move to the observer position and look at it from that perspective. At the end of a given trade or at the end of a trading day, take a look at your trading from the fair witness position.

You can also look at your trading through the eyes of another person, for example, a trading buddy, a trading coach, or a trader you admire. What would this person say? What would they think? What, if any, advice would they give you?

--Ruth Barrons Roosevelt, J.D.
 
Great stuff by Ruth Barrons Roosevelt. I didn't know anything about her back in the day until I was hanging out at the office of an institutional firm after a friend had invited me to show me a typical trading day at their firm. The firm had a small library of books and they had about 15 copies of each of her books. They highly recommended her and it was a required read.

I went home and order online all of her books. Great stuff and extremely useful if you're a discretionary trader.

To be more specific, she helped me through psychological issue when I was increasing my position size (the fear) and to understand/manage the impact of past interactions with the markets as I was trading current markets. I also learned to not take my trading home when the markets closed for the day. Essentially I learned to relax and enjoy my personal life when the trading day completed. She also discussed topics that caused me to explore further outside the scope of her books that had nothing to do with trading until I realized later that our professional careers and our personal life has this interaction in which one impacts the other.There's a connection and we ourselves is the bridge for that connection.

Proper mindset and appropriate attitude...the only way to ensure its transferred into our trading...we need to consistently use it elsewhere outside of trading so that its part of our behavior before the next trade.
 
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Thanks. You're what prompted me to post this. I assume you saw what I borrowed of yours and posted to the Foresight thread. That's what made me think of it.

Something else of hers:

A good friend of mine, Julian Snyder, wrote a book for traders called The Way of the Hunter Warrior. Recently I asked him about the use of such a metaphor for trading, and he conceded that it's total nonsense in the light of what he now knows. "You have to trade without ego, and any contest elevates ego," he said.

I like to think of trading as sailing. Here you harness the forces that are there. You take into account the wind direction and velocity, the currents, and your destination. You've got your charts to guide you and you constantly adjust to nature's forces, sometimes pointing into the wind, sometimes running before the wind, sometimes tacking, but always in partnership with your boat, your crew, the wind, and the currents. Sure, storms can come up, but you can always let down the sail and anchor and wait out the storm. You work with the forces that are there, the forces that are much bigger than you, but you enjoy the journey, the day, the sport, and you're confident you can get to your destination, your port, your safe harbor.

--Ruth Barrons Roosevelt
 
There was a thread not long ago that I can't remember the title of that had something to do with turning points. For me it was when I was able to stop thinking about the money, to turn off anything on the platform that had to do with points gained and lost, money gained and lost, percentages of this or that: just price and nothing else.

Once I stopped thinking about the money, the next step was to stop thinking about my trade, which involved in part having no markings on the chart whatsoever that had anything at all to do with entries and exits. It was only then that I could focus on what price was doing and make decisions without hesitation that might/would otherwise get tangled in should I/shouldn't I.

Those who struggle, regardless of what plan they are following, if any, very likely cannot stop thinking about the money, and how much they've gained or lost, and where price is in relation to where they entered, and how much they have to make to get back what they've lost. And so on and so on and so on. Until they are able to flip that switch to Off, they will likely continue to struggle, oftentimes for years.

Of course, having a viable trading plan is also a help.:)
 
First, As most of you already know, nobody cares about what you do and if you tell them many have little sneers that you cause the market to do violent moves in one direction, if you did something incredible during the day your wife or girlfriend look at you like deer in headlights, if you tell close friends they ask if you will teach them or ask you to trade $500 bucks and don't lose it, and most anyone else ask you for loans. I stopped telling anyone long ago. I lost value of money long ago, trading became easier to understand, take a loaf of bread you buy on sale for a buck and yet if you go speciality store a loaf might be six bucks, anything can be bought low or high if you willing to wait. And age, never thought so in my youth, always thought elders just didn't have the tools that us young'ins had, often times less info better, slower indicators allows young'ins to take all the false signals, nothing wrong to take 50% of huge trend.

Education equals inverted Ego, more education of market charts/understanding=Ego declines, you discover that bragging works against you, you move over to using percentages, so when someone asks how ya doing, "well..last week I made 1%, so after all this time all you making is 1%? Yep". I guess Ego for me has become more of internal fun, go to Starbucks and watch other people work keeps me knowing that I worked long ago at min wage, wasn't fun.

dbphoenix
· Not putting in stops. The ego doesn't want to be proven wrong.
· Hesitating before putting on a trade. The ego wants reassurance before it begins.
· Overtrading. The ego wants to prove itself big time.
· Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for dear life. It cannot cut out. The ego doesn't want to be wrong.
· Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out.
· Grabbing a profit too soon. The ego wants a pat on the back.

ROFL, I think this is exactly how I trade now, but not cause of ego, as I have hard worked back tested and traded, methods where for me they work. And no, I never recommend to not use stops, matter of fact I stopped recommending to anyone to trade at all, you end up missing much of your life behind the screen to play the game, trade long term, learn options and have a different job with people, let your money earn when you can't mess with it during the day.



 
I may be in a very rare minority, as usuall...

but imho all in this life is about ego, especially trading

it is a man's ego (women do not play this game, sorry ladies) that pushes him to start this long journey , and only ego helping him to rise after each fall

looking at similar threats suggested below: trading without ego , trading without brains, trading without fear (thanks god nobody started the thread "trading without balls)....

of course there should be ego, of course you need brain, and surely the fear should be present..

but all should be there in moderation, appropriately applied to current situation
 
qxr1011 said:
I may be in a very rare minority, as usuall...

but imho all in this life is about ego, especially trading

it is a man's ego (women do not play this game, sorry ladies) that pushes him to start this long journey , and only ego helping him to rise after each fall

looking at similar threats suggested below: trading without ego , trading without brains, trading without fear (thanks god nobody started the thread "trading without balls)....

of course there should be ego, of course you need brain, and surely the fear should be present..

but all should be there in moderation, appropriately applied to current situation
More...



We are human

To say we have no ego..., or no emotion - is of course bullshit

We however do not need to allow these weaknesses to rule over us.. or dictate our actions

RN
 
forgot about "trading genius" topic

as Bobby Fisher once said: "Genius. It's a word. What does it really mean? If I win I'm a genius. If I don't, I'm not."

:)
 
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