What helped you?

[grantx]

Paul,

Fear of losing money. Unlike any other trade or profession, mistakes can't be undone - once gone, it's gone; your means to existence diminish. Maybe that is the uniqueness of trading and why it is stressful for most people. And for the same reason, why there is also difficulty in executing a trade.

Youre military training is probably an asset here.

Grant.

 

[Paul71]

Paul,

Fear of losing money. Unlike any other trade or profession, mistakes can't be undone - once gone, it's gone; your means to existence diminish. Maybe that is the uniqueness of trading and why it is stressful for most people. And for the same reason, why there is also difficulty in executing a trade.

Youre military training is probably an asset here.

Grant.

No, Grant.

I find myself in a unique position here. Telling Grant X, NO.

Seriously though, it's nothing to do with telling yourself, no.

It's about realising what's right, and what isn't.

 

[tightstops]

whats right and whats not isnt always an easy decision when stress and emotions are involved

 

[Paul71]

whats right and whats not isnt always an easy decision when stress and emotions are involved

Don't involve them.

 

[Paul71]

Can you cope with reality? Can you cope with a wife? Can you cope with your present job?

What about kids?

What about your family?

What about your drinking habits?

What about drugs?

Do you think you can handle the markets?

 

[shadowninja]

This thread has got very interesting.

 

[grantx]

Paul,

Telling me “No”? I’ll overlook your impertinence this time but don’t push it.

“It's about realising what's right, and what isn't.” but “whats right and whats not isnt always an easy decision when stress and emotions are involved” (Tighstops), and therein lies the problem for some (most?).

Your examples re coping – wife, etc. These can be controlled to a degree. The market can’t.

Grant.

 

[Paul71]

Then cope you must, Grant.

Don't tell me the markets are uncontrollable, Grant.

 

[tightstops]

i dont think a single entity can control the liquid markets - are you saying someone can or have i misunderstood?

 

[Paul71]

What is your definition of single, TS?

 

[tightstops]

when i said it i was thinking individual traders and hedge funds but have now considered if a memo went through lehman brothers ordering all traders to buy this may be an exception but since this wouldnt happen i will include any single bank or institution (by the way im by no means claiming this as fact but am confident it is the case)

 

[nine]

Hi Grant,

Yes. Good analogy and issues. I erred on the side of conciseness in my post above and lost clarity.

The interesting thing is that you shouldn't even try to reduce the emotion. Trying is often going to be counterproductive.

I don't know if you are familiar with awareness mediation (vipassana etc) but recent research has shown some stuff thats quite useful to traders.

0. If you ignore or try to ignore emotions your level of awareness of the emotion may decline but the underlying impulse is still there. This is because our brain is comprised of different processing centres some of which we are conscious of and some of which we are not. The problem is that you may no longer be conscious of it (suppressed) but a suppressed emotion still creates impulses ... and the impulses may generate actions and the actions are what damages your trading. So suppression is bad.

1. If you focus on the emotion when you experience them and then NAME them your brain processing moves from the amygdala to the forebrain. In doing so the level of the emotion is reduced (and thus its ability to generate impulse and hence action). Not only is it reduced at that time but any primitive linkages with prior events (which may be amplifying the pressure/pain in trading) are reduced ... extinguishing in operant conditioning terms. This is one the big reasons why awareness meditation decreases negative emotions.

2. The problem for a trader isn't actually the emotion anyway (unless its suppressed and thus causes an impulsive explanation that they can't explain afterwards (the "why the fxxx did I do that" experience)). The problem is the action we take when an emotion occurs in the amygdala and generates impulse. So if you add a plan for what you are going to do when you feel the emotion you can do the right thing (more and more often) instead of the wrong thing. This extinguishes the bad behaviour.

Denise Shull proposes a 4 step strategy for dealing with emotions that fits the modern view of our brains. She calls it ANNA.

A Anticipate the emotions (know when you are likely to feel X and how much)
N Notice the emotion (you can't deal with what you didn't perceive)
N Name the emotion (and repeat the name - take advantage of your brain's neuroanatomy)
A Address the situation. Execute your new plan for when you feel fear, frustration, whatever.

So, we no longer try to reduce emotions. Instead we anticipate them so they don't surprise us, notice them when they happen because we expect them and focus on them, repeatedly name them so that they primitive brain loses control and there is extinction of some of the emotional linkages, and finally address the situation with a new behaviour which is productive and gradually extinguishes the old bad habit.

I have found this strategy effective for overcoming a couple of nagging issues in my trading.

So much for concise

Nine,

Interesting stuff (I had to read it a few times).

If I’m correct, the first paragraph seems to be saying that without the emotions, we cannot control our actions. I can’t accept this. Consider this: in dangerous situations you feel fear (presumably the adrenalin) and you deal with it the best way you can. If the fear is suppressed that doesn’t mean you won’t recognise the danger and fail to respond. I think this is what I was saying in my reply to Paul’s post.

Shull’s four step strategy seems the simplest. The stress caused by a position suddenly turning or worse, losing control of a losing position (holding on) can only be eliminated by self-discipline. However, self-discipline has to be developed - for most, it isn’t something that can be readily turned on or off.

In the context of trading, the simplest method is using automatic stops entered simultaneously on opening a position. A losing position, while undesirable, is less stressful when closed automatically. It may be countered this doesn’t address the underlying psychological “weakness” (“problem” may be an overstatement). So what? This is such a narrow context (albeit important), I don’t see broader ramifications. Then again, where one is doing badly, it could affect one’s family/social relationships; then I suppose it does become a “problem”. Maybe I’ve lost clarity, here.

Grant.

Thanks for reading it twice. Its really important to us because it is based on fairly recent neuroscience and it postdates NLP and Mark Douglas's books. The thing I found about Mark was that he identified fears and their results very well but his solution was (to me) a little "lacking."

I will try to address your points.

No, the first paragraph doesn't say that without emotions we can't control our actions. It should be saying that emotions drive actions and that if you suppress awareness of emotions (by tight discipline and ignoring them) then some of them will sometimes generate actions against our best interest. The more "baggage" from trading or earlier events you carry the more likely that suppression will result in faulty actions.

Brett Steenbarger in his latest book talks about two types of trading issues, ones where you can see the faulty thinking and ones where you can't - you see the behaviour but can't detect what was being thought before hand. If something is coming from emotional triggers without forebrain action then you can't see the "bad thinking" you just see the "bad action"

So ANNA is about dealing with emotions in a way that doesn't suppress them but reduces their negative impact on trading. If you combine discipline, plan and ANNA then you can achieve Douglas's goals without having to suppress your emotions (awareness and naming reduce them much much more effectively than suppression without the side effects).

As you can see, I don't disagree with the need for discipline (I am a big fan of Douglas) but the modern approach offers a better way of developing it. You may not feel it but a lot of traders (myself included) have felt the stress of having great discipline in other things but doing things during trading that simply do not make sense. There are lots of factors driving these "what the fxxx?" moments including no strategy, no testing, no plan, no discipline, but when you eliminate those problems there is still a potential issue with the wiring of your brain ... which can be resolved.

I totally agree with using devices to ease the process of converting "I know how to do this" to "I am doing this" including stops and targets. ANNA is another device that can make it much easier without chasing an unachievable robot. 1st suppressing emotions doesn't necessarily work and can generate undesirable actions. 2nd awareness of your emotions can help your discretionary trading by signaling a situation to you that you can trade.

Use the devices (stops, targets, automatic placement, a good plan, focus on disciplined execution, small trade sizes when in a bad streak) ...

but instead of trying to deny and push down emotion use awareness to deal most efficaciously with them and the actions they drive.

Enough on the subject ... I've put it out there. If it helps someone, good. If not, no problem and enough typing for a Sunday morning. Cheers everyone

 

[Paul71]

Thanks for reading it twice. Its really important to us because it is based on fairly recent neuroscience and it postdates NLP and Mark Douglas's books. The thing I found about Mark was that he identified fears and their results very well but his solution was (to me) a little "lacking."

I will try to address your points.

No, the first paragraph doesn't say that without emotions we can't control our actions. It should be saying that emotions drive actions and that if you suppress awareness of emotions (by tight discipline and ignoring them) then some of them will sometimes generate actions against our best interest. The more "baggage" from trading or earlier events you carry the more likely that suppression will result in faulty actions.

Brett Steenbarger in his latest book talks about two types of trading issues, ones where you can see the faulty thinking and ones where you can't - you see the behaviour but can't detect what was being thought before hand. If something is coming from emotional triggers without forebrain action then you can't see the "bad thinking" you just see the "bad action"

So ANNA is about dealing with emotions in a way that doesn't suppress them but reduces their negative impact on trading. If you combine discipline, plan and ANNA then you can achieve Douglas's goals without having to suppress your emotions (awareness and naming reduce them much much more effectively than suppression without the side effects).

As you can see, I don't disagree with the need for discipline (I am a big fan of Douglas) but the modern approach offers a better way of developing it. You may not feel it but a lot of traders (myself included) have felt the stress of having great discipline in other things but doing things during trading that simply do not make sense. There are lots of factors driving these "what the fxxx?" moments including no strategy, no testing, no plan, no discipline, but when you eliminate those problems there is still a potential issue with the wiring of your brain ... which can be resolved.

I totally agree with using devices to ease the process of converting "I know how to do this" to "I am doing this" including stops and targets. ANNA is another device that can make it much easier without chasing an unachievable robot. 1st suppressing emotions doesn't necessarily work and can generate undesirable actions. 2nd awareness of your emotions can help your discretionary trading by signaling a situation to you that you can trade.

Use the devices (stops, targets, automatic placement, a good plan, focus on disciplined execution, small trade sizes when in a bad streak) ...

but instead of trying to deny and push down emotion use awareness to deal most efficaciously with them and the actions they drive.

Enough on the subject ... I've put it out there. If it helps someone, good. If not, no problem and enough typing for a Sunday morning. Cheers everyone

Offerings?

Awareness?

Problems?

Subjects?

What exists within what you see? Very little? Or, very alot?

Price acts and reacts within a structure. On a daily basis, it breaks this structure, and reforms another. Can you conform to it's conjuncture, can you see into the future?

Or, do you rely on something else?

Are you self sufficient,...

Or do you just wish?