T2W Trading Community

Step Three: Accelerating The Change of Problem Patterns

Years ago, it was assumed that problem patterns would take a long time to change, given that they had formed over a period of years.  As I mentioned at the start of this article, a collection of methods known as brief therapies has shown that a wide range of patterns can be changed in a matter of days or weeks.  One element common to these therapies is that they rely on experience and learned skills rather than talk with a therapist in the creation of change.  Indeed, one reason that they can accelerate change is that they exploit hands-on techniques that can be practiced from day to day.

Several elements of brief therapies are helpful to traders seeking to change their cognitive, emotional, and behavioral patterns:

• Focus - Brief therapies seek change in one pattern at a time, rather than trying to make multiple changes or overhaul entire aspects of personality.  Very specific patterns are targeted for change; then the process moves to other patterns if needed.  Thus, for example, traders might work first on techniques for reducing anxiety and then later learn skills for changing negative thought patterns.
• Structured Learning - Change begins by learning and rehearsing skills away from problem situations and then progresses through gradual application to real-time stresses.  For instance, a trader might learn and rehearse a cognitive method for identifying unrealistic worries, challenging them, and replacing them with more realistic appraisals.  First this method would be applied to imagined situations through the use of guided imagery; then it would be applied to progressively more difficult situations at home and in trading.
• Use of Homework - Each skill learned is practiced between meetings until it becomes familiar and automatic.  This practice begins with imagined situations and progresses to challenges encountered in daily life.  Very often, as part of the focus and structured learning, homework assignments will target very specific aspects of patterns.  For instance, a person who is trying to stop smoking might work on not smoking after meals, using techniques to handle cravings that are unique to those situations.  
• Mastery -  Traders don't work on more difficult aspects of patterns until they have mastered simpler ones.  The idea is to create a sense of mastery, so that individuals can once again feel in control of their lives.  A skill is first practiced and mastered in the office before it is assigned as homework; it is first applied to situations in imagery before being applied to real life.

From the above, you can see that these are techniques for accelerated learning.  Brief therapies are effective because they create powerful learning experiences that are repeated until they are internalized.  By working on problem patterns day after day in a structured learning environment, people can change lifetime patterns with remarkable speed.

Bob, The Frustrated Trader

The beauty of these methods is that they readily lend themselves to direct applications to trading.  Let's take the example of Bob, a trader who has made little money in the past year after a profitable 2004.  As the market has become less volatile, he has found it difficult to adjust his expectations accordingly.  Consequently, he finds himself taking overly large risks, then becoming fearful and overly cautious.  By the time he sought help, he felt completely out of control, ready to give up entirely.

It turns out that Bob had a mixed relationship with his father, a highly achievement-oriented athlete who encouraged Bob to excel in sports.  Bob played a number of sports in high school, but never excelled.  He often felt that he did not meet his father's expectations, and he resented his father's efforts to motivate and improve him.  As a result, the latter part of Bob's high school career was marked by frequent arguments and one big blowup in which Bob left home and lived with relatives for several weeks.

When I suggested that Bob was still fighting his father--only now it was a "little father in your head"--my observation made sense to him.  He realized that he was driving himself in his trading the way his father drove him in sports.  His inability to meet his expectations in the past year led him to talk to himself the way his father talked to him.  "Do you really want to continue living out your problems with your father?" I asked Bob.  "You left home for a reason.  Maybe now it's time to leave that little father in your head."

We started with a simple exercise in which Bob simply identified all the times during the day when his internal father took over.  This was our focus.  It became clear that Bob's negative self talk occurred primarily when he was frustrated with his trading results.  As with sports, it occurred during competitive situations in which Bob failed to win.  Our structured learning began with mental rehearsals of frustrating situations in trading: missing out on profitable trades, having the market reverse against winning trades, taking losses, ending the day in the red, etc.  Each time we vividly imagined the negative scenarios, Bob imagined his father berating him--and then imagined himself refusing to accept the criticism and standing up for himself.  We did not assign the mental scenarios as homework until he mastered them in the meetings with me.  We also did not tackle visualizations of highly frustrating situations until Bob could keep his cool and control his negative thoughts while imagining less stressful events.  Every meeting and each homework assignment was structured to generate experiences of mastery.

Eventually, we took the techniques to real-time, when Bob used his methods for interrupting negative thoughts and challenging his internal father while trading.  Dozens of experiences with imagined situations and routine home frustrations helped prepare him for the inevitable frustrations of trading.  By the time he applied his new skills and outlook in real time, he had already had many success experiences from our earlier work.  This confidence was invaluable in tackling situations that formerly had seemed beyond control.