T2W Trading Community

Psychology itself, like trading, is a speculative activity. It can only seek to persuade, to suggest. It is a commitment to understand things rather than an exact science. However, continued observation of our market behaviour can give us clues as to the repeating patterns of loss inducing behaviours that snare us. Given that the numbers on your screen become a significant part of the daily environment that you interact with it may be useful to be aware of the qualities and predispositions in yourself that you bring to this “relationship”.

Perhaps a psychoanalyst would view market behaviour that proves unrewarding in a regressive context ,pointing towards the unexpressed, hidden maelstrom of the unconscious as the money losing culprit. A more humanistically oriented psychologist would focus on what the market represents for you, what you need from it and what it offers you on a non financial level.

We are made of many parts, disparate energies that rub together all in search of recognition, approval, redemption. In my work as a trading coach I use several techniques to facilitate an understanding of the ways we can undermine our efforts to be successful. Sub personalities, from Psychosynthesis,  develop and crystallise around particular traits or predispositions that we have within and can act as energetic diversions from the whole self. They clamour for expression, for the daylight of awarenesss.

They are a model, a map, neither inherently good or bad, but in terms of the market we could define, for simplicity’s sake, the seven deadly sub personalities that will  inhibit our chances of success.

Trigger Happy Terry loves the process of trading but only in as much as it distracts him from the work he needs to do on himself. He convinces himself that by sitting in front of the screen all day long he will become a great trader. He’s a scalper, frightened to run his winners ,impatient, anxious and underconfident. He’s obsessive/compulsive, destined for a hard landing or at best a poor hourly rate of return for long, stress filled days.

Fatalistic Fred sometimes rationalises his poor trading results as being the will of God or a higher power that actually has a slightly more glorious destiny in wait for him. His fatalistic approach doesn’t permit him to ask any hard questions. He doesn’t take responsibility for himself and he doesn’t want to. He deludes himself into thinking he has learned to follow the market. His pseudo humility masks a frightened ego afraid of hard work.

Thrill seeker Phil is an adrenaline junkie who looks to the action of the market to fill a void in his life he dare not look at. He will trade bigger size than his account warrants and relish the addictive rush that accompanies this. Perhaps the market is his Mistress who always gives him what he needs .He probably doesn’t have much of a life outside trading.

Get even Steven brings a crowd of unresolved grudges to the market. He gets hurt and seeks retribution, believes in Old  Testament justice. He can’t/won’t admit defeat, he clings so tenaciously to his sense of personal woundedness. He makes a reasonably quick, undignified exit from the market and adds it to the long list of things that have betrayed him.

Kamikaze Kevin takes huge risks as a way of defining himself in the mould of the hero he considers himself to be. A double or quits swashbuckling romantic, he can’t be troubled to practice the pragmatism that may ensure his trading survival. The man/boy who refuses to be tamed, he is assisted by the market in his quest for a spectacular wipeout.

Paralysed Pete can’t get into good trades or out of bad ones. He sees plenty of good opportunities but can’t pull the trigger. Frozen, overwhelmed by doubt and a sense of his worthlessness he hasn’t made the big decisions about what he really wants from his life. Makes himself feel ok by rationalising that he has learned to be cautious .The market slowly grinds him down and spits him out in little pieces.

Histrionic Harry is the control freaks alter ego. When he is forced to relinquish his tight grip because” trading his plan” kickstarts a turbulence he is completely unprepared for he  becomes bewildered and throws  tantrums.

Cursing his misfortune, he sulks off. He returns until his quest for vindication becomes too expensive.

Perhaps some of these sub personalities are recognisable to you. Perhaps not. I ,myself, became unhappily familiar with most of the above on my own learning curve, gradually accepting the painful truth that their respective modus operandi did bring payoffs but not in the financial sense I had hoped for.  I began to understand some of the errors of my trading friends in this light. One guy, let’s call him Jeff, nurtured on the easy success of the turrn of the century runaway bull, became more and more of a  Kamikaze Kevin as the bull withdrew its horns. He finally came to ground courtesy of some very stubbornly held, long positions in a couple of former tech darlings, Baltimore and Dialog. He’d borrowed to fund his margin and suddenly was looking at a 60k loss and a crushing, almost fatal blow to his self belief.

In response to the imprecations and admonishments of his wife he finally gave up trading, remortgaged his house and retired to lick his wounds. You could almost hear the thud as he threw in the towel. He didn’t trade for two years, reflecting all the while on his previous [and apparently uncharacteristic] misdemeanours. He started again with a small pot, only 2k,and over two years earned his spurs by garnering this into 20k and is now a consistently net profitable trader on the up. What he understood, amongst other things ,is that trading is a game that is won or lost inside one’s own mind. Ultimately it is about studying oneself rather than the markets.

Many trading errors are ascribed to that all purpose baddie ”the ego”. I always chuckle when I read trading books that tell you to check your ego at the door. Oh yeah. If only it was that easy. Well it ain’t. The ego is a multifaceted entity that reserves its best performances for the times it can do the most damage.

It can camouflage and subdue itself and maintain a low profile until it is provoked into action whereupon it will demand instant gratification and brook no arguments in its quest for pre-dominance. The ego cannot be crushed, dismissed or shut away. It needs to be acknowledged and befriended, brought into your toolkit as a valuable ally. Take charge of it, feed it elsewhere in your life and your trading will improve.