Your trading has a lot of nuances; those small or seemingly insignificant behaviors that in the final analysis make big differences. Consider the documentation process. Firstly, let’s acknowledge that it is critical to measure and keep a scorecard for your trades. If you are not measuring and memorializing your trades you’ve got some bigger issues; but if you are tracking your mechanical and internal data, then this missive is for you. Yes, recording your process is a critical cog to successful planning and follow-through; and you must consider many questions using the concept of appreciate inquiry to effect this progression. The topic of these questions revolve around the plan analysis, time frames, indicators, moving averages, strategies, odds enhancers, etc..
Questions that orbit around these chart components provide the information that is then reduced to its common denominator by drilling down and identifying the cause and any other variable that affected the outcome. This type of sifting through the trade to identify how the interplay between what you are doing and what the price action is doing brings to the surface how that relationship is either working for you, or not. But, it’s not just what you are asking; it is “how” you are asking as well. Too often traders will take the position of task master, cracking the whip like a Simon Legree (the main villain in the classic anti-slavery novel “Uncle Tom’s Cabin”). This approach uses language in talking to and about you that is often totally inappropriate, incendiary, highly offensive and quite hurtful. Actually, you may not be aware of using these self-hatred filled, vile spewing diatribes that if you used them in another context to anyone else might cause violence. Insults like stupid, idiot, loser, poor excuse for a human, unworthy, dumb as a rock, and these are some of the better ones, seep into your internal conversation like poisonous vapors through the cracks in a wall. Going further, there are accounts of traders that have gotten so angry with themselves that they have assaulted their person by slapping or hitting themselves in the head hard enough to leave marks. For some of you this may sound incredulous, but many of you are well aware of these behaviors and you have an idea of how debilitating they can be to your performance.
Effective ways to evaluate your trading performance.
So, this brings us to the more supportive and constructive way to use introspection and self-reflection while conducting an investigation into your performance, appreciative inquiry.
Firstly, you must treat yourself with the same respect that you would a revered person in your life. You are deserving of love, support and respect as all human beings are. Additionally, when you beat yourself up and create a caustic internal environment it serves to greatly increase your stress levels, increase your blood pressure, distract you from what is most important, introduce conflict, take you out of alignment and greatly deteriorate your performance. You may think that you deserve to be verbally, if not physically beaten; but this type of retribution is counteractive and spawns the very results that you are aiming to avoid.
Secondly, respectful investigation or appreciative inquiry is much more effective in uncovering the facts about your process. Not only is it gentler, which your system will respond to with an uptake in openness and consequently with greater information; this approach is also more effective because it fosters questions that are actually more incisive and probing. The questions tend to be well thought out and, accordingly, are likely to specifically address the issues at play, especially those with unconscious themes.
Thirdly, when you are frustrated, frazzled and fragmented with either your performance or the results that you’re getting, you are less likely to seek or accept the facts of the trade and subsequently you are less likely to resonate with reality. This means that rather than aiming to identify where and how you violated rules, you are more likely to place blame on other aspects of the trade; for example the strategy, the market, the broadcast talking heads, etc.. It is of utmost importance to gather “all” the facts and deal with each glitch, transgression or issue on the merits as they present themselves. You will not only get to the bottom of the problem faster but as well the resolution, which is ultimately what you want most.
Appreciative Inquiry as a term is used by, among others, David L. Cooperrider and Diana Whitney in their book A Positive Revolution in Change: Appreciative Inquiry. It involves the art and practice of asking questions that strengthen a system’s capacity to apprehend, anticipate, and heighten positive potential. In its inception, Appreciative Inquiry was initiated to address company systems with large numbers of people; but at its core the principles of imagination, innovation and the use of positive proactivity in relation to systemic issues are just as relevant when using them to address you and your trading system. It is about using questions to investigate, examine, consider and value your assets, unexplored potentials, elevated thoughts and uncharted unconscious resources to bear on supporting you in positive and effective change works.
So, when investigating your planning, rule maintenance and commitment keeping, do so in a way that honors, appreciates, values and respects your achievements, wisdom, insights, competencies and capacities as you look for ways to improve your trading process. Avoid the insidious seduction of hateful, angry outbursts directed at yourself by stopping as soon as the awareness hits that you are descending into this abyss and redirecting your thoughts and questions to a positive proactivity designed to bring out your best. This is what is taught in “Mastering the Mental Game” online and on-location courses and also in my book, From Pain to Profit: Secrets of the Peak Performance Trader.
Dr. Woody Johnson can be contacted by email on this link: Dr Woody Johnson