T2W Trading Community

"You saw what happened yesterday," Jack raised his voice. "I was up in the morning, trading well, and then I just went nuts in the afternoon. I broke every one of my rules and ended up the day losing money. I don't know how many times I pull that s***. Just when I think I'm trading well and doing all the right things, I pull something like this. I have to be the world's biggest f*** up."

The average person listening to Jack would conclude that he has several problems: conflicts with his family, relationship problems, and lack of discipline in his trading. Indeed, the sense that every important part of his life is messed up is a big part of why Jack feels depressed. He feels out of control, unable to stop himself from self-destruction. In reality, however, he has one pattern that shows up in several spheres of life: he experiences expectations as limitations on his freedom and threats to his independence. He saw his parents' rules as punitive constraints, and he experienced commitment in a relationship similarly. And his trading rules? At an emotional level, they were no different from his parents' rules--which is why he periodically rebelled against them, to the detriment of his P/L.

Most of our themes, like Jack's, begin during an earlier period of life in which there was conflict. Indeed, the themes usually begin as attempted solutions to those conflicts. Jack's parents really did limit his freedom during his growing up years, and his rebellion was his way of trying to find a balance. Although it generated arguments at home, it worked for him: he made friends, broke away from his small community, and gained experience with a broader slice of life. The problem was that this strategy became overlearned, which made it automatic and patterned. His way of dealing with constraints at home, through rebellious assertions of independence, became his way of dealing with all constraints--even the ones that he knew were good for him, such as monogamy in a serious relationship. What he knew and how he told himself he should act--and what he experienced emotionally--were very different things. He thinks he has f****** up his life, but in fact he is simply repeating a pattern that had worked for him in the past.

The problem is that he has outgrown that pattern.  It no longer brings him freedom.

An Exercise for Finding Your Themes

It is very difficult to change your patterns if you don't know what they are. As we’ve seen, becoming aware of your patterns--and separating yourself from them--are essential first steps in the change process. But it can also be difficult to locate your themes when you are immersed in them. They occur so automatically--and feel so much like parts of ourselves--that we're generally oblivious to their existence, much like a fish must have little awareness of water.

One exercise I ask people to do is create a set of sine waves on a blank sheet of paper. The waves have multiple peaks and valleys. I then ask traders like Jack to write down on the peaks all the best experiences of their lives. On the valleys are written the worst life experiences. Afterward, as we look across the peaks and valleys, the themes jump out at us. Jack felt best when he felt free, when he was doing his own thing. He felt worst when he was tied down and after he unsuccessfully fought against the feeling of being tied down.

If Jack were to create separate sine wave charts for his family, relationship, and trading lives, the correlations would be enormous. The same feelings, the same situations recur. And recur. And recur.  Freedom and constraint…happiness and angry rebellion.

I invite you to try an exercise and create your own sine wave chart.  Include at least seven peaks and seven valleys.  Carefully go through your life and identify the best experiences you’ve had and the worst: the times you’ve been happiest and most fulfilled and the times you’ve been most miserable.  If there are very special happy times, draw those peaks higher; if you’ve had some real low periods in your life, make those valleys deep.  You don’t need to have one peak per valley and vice versa.  At good periods in your life there might be many peaks; at other times multiple valleys.

Once you’ve completed the chart, focus your attention horizontally.  Look across the peaks and across the valleys.  Try to find a single theme or common ingredient for most or all your entries.  You’ll notice that many of the manifestations of a theme appear different on the surface, but are united by the same feelings and similar behavior patterns. Someone who grew up feeling inferior as a child now compares himself to other traders and feels inadequate; a person who unsuccessfully tried everything to please an alcoholic parent now finds herself overwhelmed by perfectionistic expectations that can't be met in trading. To find your theme, look for a common emotional state and a characteristic way of handling that emotion.  Most of our themes are old, outmoded coping patterns.

Jack, I'm pleased to report, was able to extricate himself from his pattern. It actually happened in a funny way. During one meeting, he became convinced that the pattern was controlling him and he rebelled against it! By pretending that his pattern was a set of tyrannical parents, he found it easy to summon his motivation to not fall into the pattern. He followed his trading rules, not because he learned to love rules, but because he saw trading well as an exercise of choice and free will--and saw rule-breaking as a return to the control of his past.

His first step of change, however, was to understand himself and why he was doing what he was doing. He wasn't self-defeating. He was simply doing what he had (over)learned to do during a difficult developmental period. The good news from the sine wave chart exercise is that you have positive patterns as well as negative ones.  Our job is to tip that balance and create more peaks than valleys.