Repeating the same mistake(s) over and over strongly suggests that you’re managing a trade or managing your feelings in relation to your P&L, not in relation to the market.
There is a way to stop the madness! And it often involves that you do certain things that may initially feel awkward or seem to not be connected with trading performance. For example, learning about your inner state, or your emotions, either through tracking self-talk or inner dialogue, bio-feedback, journaling, audio and video recording, emotion analytics, and other ways.
The good news is that gaining increased internal awareness is more then half the battle in overcoming repeated self-sabotage.
Even mildly increased self-awareness gives you a better chance of succeeding. It means that at least you’re ‘clued in’ a bit to your internal process as it unfolds, indicating that at least you have the potential to not repeat the same mistake if you are aware of the thoughts and emotions that precede the sabotaging behavior.
Trust me, awareness is more then half the battle. As you continue to build internal awareness you also become more aware of the previously unknown gap between thought-emotion and the subsequent action or behavior that follows a thought-emotion. You gain a new sense of personal efficacy and a truly solid self-confidence (not elusive self-confidence that disappears as soon as the going gets tough, or a precariously inflated ego that masquerades as confidence).
Briefly, the process of increased awareness leading to change looks like this: First, you expand your awareness. Then you practice the desired alternative behavior you’re striving for; and the expanded awareness you’re developing makes room in your mind (or provides the right internal conditions) for the desired behavior to get a foothold, then with more practice the desired behavior gains traction, and eventually it becomes durable over time. This process is both psychological and neurological and takes place as the increasing awareness translates into a new internal emotional structure that becomes the basis or the new foundation (new neural pathway, or additional myelin sheath production in key areas of the brain) for the desired behavior to be repeated and sustained over time.
When trying to change a behavior, many traders have good intentions but lack the right solution. As traders struggle, the typical path most will follow is to spend lots of time trying to find some missing piece of market knowledge, or learn a new method or set-up. But often the missing piece is not market knowledge (there is always something more we can know anyway, its never ending), unless you’re new to trading, the critical missing piece is often either about you or how you interact with the knowledge you already have.
As I often say in my training presentations and in my work with clients, understanding what moves the market is not really the hardest part of trading, understanding what causes us to move is the hard part. It does take work, but it’s not as difficult as you might think, it’s just that most people are unprepared because they never anticipated this to be a part of trading. People often say that trading is 70% psychological, but most spend less then 10%, usually closer to about 0% of their time working on it.
Real, lasting strength comes from knowing you can be vulnerable. Never assume you are not vulnerable. Interestingly, I learned that from some of the toughest people I’ve ever met, when I worked with military special operations personnel. Admittedly, I taught other traders about this before I internalized it in my own trading.
Not wanting those moments where we’re we can see the truth about our own issues practically ensures they will return again. The sometimes unwanted and uncomfortable experience of realizing our limitations is the primary way life asks us if we wish to go beyond them. Are you ready to leave your comfort zone, albeit a dysfunctional one of repeated self-sabotage, and go beyond?
Lots of people talk about ‘consistency’, but the cold hard truth about consistency is that it occurs first in the mind, then in our actions, and finally it shows up in our P&L as traders. Either do the work on your own, or if needed, seek the right guidance. But if you do nothing, you’ll just end up consistently shooting yourself in the foot.
good article and i agree as i believe that mentally is where i struggle most of the time since i try to impose my will or belief on the market and see what i want to see. you say that people spend most of their time on learning more about the market and not enough on personal psychology. what would be ways or exercises to work on pshychology.
@james
Yes, many traders create a mental map of what they think the market ‘should do’ or what they want it to do, and when the market reality does not match up with the internal map, frustration increases. The typical trader will usually plow right back into the market without considering that the problem could be them, not the market. If they do recognize that the problem lies within, most ignore that because it can be a bit more challenging to address personal issues as opposed to simply studying the market.
There are many trading psychology techniques available. An excellent resource is Brett Steenbarger’s latest book, “The Daily Trading Coach”. If following techniques from a book does not prove to be helpful, then consider getting help from a qualified coach such as myself or someone else. Sometimes what is needed is more then a one-size fits all approach from a book.
Andrew
Andrew,
another great post of yours in which you point succinctly to the core challenge of trading: Understanding yourself, your anxieties, your hopes, your beliefs, your avoidance strategies etc.
That is also perhaps the main reason why I love trading: It makes me look insight who I am (former philosophy student).
Cheers,
Markus
@Markus
Thanks for your comment, Markus.
I agree 100%, I love trading for the same reason. it’s an excellent vehicle for self-growth. How we trade is a perfect mirror of who we are, or actually a magnifying mirror, because it tends to magnify our personal issues.
Andrew
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[…] does two things: 1) you learn what triggers those mistakes you so often repeat, allowing you to begin to work on having alternative behaviors; and 2) by learning what makes you […]