Successful self-coaching builds multiple corrective emotional experiences, so that new, constructive patterns can be internalized.
After all, this really is the essence of psychodynamic work: redefining the self by creating and absorbing so many impactful, constructive experiences that it becomes impossible to remain stuck in the past. I internalized the identity of an author not just by writing articles and books, but also by interacting with editors and readers over time. There was a time when I sat in front of a blank screen in writer’s block mode, concerned that what I wrote would not find a receptive audience. Following multiple positive experiences with writings and readers, that is no longer a concern. The writing flows as naturally as conversation.
Similarly, there may have been a time when you thought of yourself as a small, beginning trader. Over months and years of trading experience, making money and building your account, you no longer see yourself as a newbie. Through the positive experiences, you absorb the identity of an experienced, skilled trader. Think back to the process of expertise development from Enhancing Trader Performance: the steps that build skills are also the steps that construct identity. Working the learning curve, moving from novice trader to competent trader to expert trader is more than building knowledge and skills. It is a transformation of self as the result of repeated, positive experience.
Your training as a trader should provide ongoing corrective emotional experiences: training itself becomes a means of working through our shortcomings.
When you’re at the point of working through, you want to be an active experience generator and tackle your patterns in as many situations as possible, giving yourself the opportunity to enact new ones. As prior lessons have emphasized, and as you’ll detect from the advice of experienced traders in Chapter 9, this is particularly powerful if you’re working problems through with the support of trading peers. Their mirroring of your success, like the feedback that solidified my identity as an author, will enable you to literally take your changes to heart.
Your efforts at self-coaching in the psychodynamic mode will find their greatest success if you can disrupt old patterns and enact new ones on a daily basis, with the active feedback of those you’re working with. Many traders I’ve known have sought to keep their specific trading performance secret, obviously embarrassed that they’re not making more money. They freely talk about winning days, but remain strangely vague or silent following bad ones. This is exactly the opposite approach to the one that will work for you. You want to be visible, warts and all, because that will help you—emotionally—put those warts into perspective. If your flaws (or your concerns about others’ reactions to those flaws) are so threatening that you must hide them, then your defenses control you. When you can make yourself completely visible to others, you have nothing to hide. Their acceptance of you is complete and genuine, not a false reflection of a false self.
A while ago, when I was posting my trades live to the Web via the TraderFeed blog, I invited readers to join me and post their trades as well. The daily count of unique visitors at that time was around 2,000; I figured that, even if just one-half of 1 percent took me up on the offer, we could get 10 different models of trading to learn from. Well, out of 2,000 people, only one showed tentative interest. No one was willing to go public with his trading.
That, dear reader, is how losers react. If readers were taking a psychodynamic approach to change, they would freely share their trades in real time and make no effort whatsoever to maintain false selves. Over time, their progress would be evident and the massive positive feedback they would generate would cement a new identity, a deep sense of security, and an emotional fearlessness.
Accountability provides powerful opportunities to work through our greatest insecurities.
Your challenge for this lesson is to open the kimono and conduct your working-through socially, with the feedback of people you respect. This would be part of a daily trading plan, ensuring that you’re generating corrective emotional experiences every single day. Several traders I know have taken precisely that approach by starting their own blogs, posting their trades, and developing relationships with the traders who responded constructively to their ideas. Relationships are a powerful medium for change, perhaps the most powerful. If you harness the right relationships you will give your self-coaching a reality that transcends simple entries in a trading journal.
COACHING CUE
Find at least one person to whom you are accountable for your development as a trader. This should be someone you can trust in sharing your P/L, your trading journals, and your tracking ofpersonal goals. A major advantage enjoyed by traders at professional trading firms is that they are automatically accountable for performance and can thus openly discuss success and failure with mentors and risk managers. Accountability leaves no place to hide; it’s an excellent strategy for combating defensiveness and removing the threat behind setbacks.
RESOURCES
The Become Your Own Trading Coach blog is the primary supplemental resource for this book. You can find links and additional posts on the topic of coaching processes at the home page on the blog for Chapter 5: http://becomeyourowntradingcoach.blogspot.com/2008/08/daily-trading-coach-chapter-five-links.html
An excellent overview of psychodynamic approaches to brief therapy can be found in Hanna Levenson’s chapter “Time-Limited Dynamic Psychotherapy: Formulation and Intervention” in The Art and Science of Brief Psychotherapies, edited by Mantosh J. Dewan, Brett N. Steenbarger, and Roger P. Greenberg (American Psychiatric Publishing, 2004).
A worthwhile resource for building emotional self-awareness is Leslie S. Greenberg’s Emotion-Focused Therapy: Coaching Clients to Work Through Their Feelings (American Psychological Association, 2002). See also the classic text by Leslie S. Greenberg, Laura N. Rice, and Robert Elliott, Facilitating Emotional Change: The Moment-by-Moment Process (Guilford, 1993).
Articles relevant to psychodynamics and self-coaching can be found in the “Articles on Trading Psychology” section of my personal site: www.brettsteenbarger.com/articles.htm. These articles include “Behavioral Patterns That Sabotage Traders” and “Brief Therapy for Traders.”
It is rare to find trading coaches who know anything about psychodynamics; a notable exception is Denise Shull, who wrote the chapter, “What Would Freud Say: Stroll Down Freud’s Mental Path to Profits” in the book edited by Laura Sether, The Psychology of Trading (W&A Publishing, 2007).
CHAPTER 6
RemappingPsychodynamic Frameworks
for Self-Coaching
the Mind
Cognitive Approaches
to Self-Coaching
The greater danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low, and achieving our mark.
—Michaelangelo
In Chapter 5, we explored psychodynamic frameworks for self-coaching. These frameworks are especially relevant when we repeat unproductive patterns across a variety of situations over time. Fundamentally, the psychodynamic view is a historical one: it emphasizes linkages between how we coped in the past and how we now find ourselves responding to situations.
The cognitive framework, like the behavioral one that we’ll visit in Chapter 7, is less historical: it emphasizes how we process the world in the here and now. Change the viewing and you change the doing is the essential message of cognitive approaches. While the past is not irrelevant to this task, cognitive self-coaching stresses what we can do in the here and now to alter how we process the world around us.
Cognitive coaching is most relevant if you find yourself battling negative thought patterns that interfere with your motivation, concentration, and decision-making. Some of the most common cognitive patterns that traders target for change include:• Perfectionism
• Beating Up on Oneself After Losses
• Worry
• Taking Adverse Market Events Personally
• Overconfidence
Co
gnitive methods help us think about our thinking and restructure our perceptions of self and world . Let’s take a look how...
LESSON 51: SCHEMAS OF THE MIND
Chapter 5 outlined psychodynamic approaches to the change process. That framework makes use of powerful emotional relationship experiences to break patterns of behavior left over from prior life conflicts. When applied to self-coaching, the psychodynamic perspective requires a dual look at past and present, with an eye toward recognizing occasions when we repeat the past in our current responses to trading challenges. The cognitive framework, on the other hand, is more present-oriented. Its focus is on how we think and the relationship between our thinking and the ways in which we feel and behave.
The cognitive approach to change, like the behavioral methods described in Chapter 7, is grounded in learning theory. Instead of emphasizing the creation of relationship experiences, the focus is on skills building. For that reason, homework exercises play a prominent role in cognitive work, which makes the cognitive modality particularly useful for self-coaching. In cognitive coaching, you learn skills for processing information more constructively.
Many cognitive psychologists draw on the analogy of the scientist when describing our thought processes. Scientists observe nature and look for patterns and regularities. Once scientists observed these relationships, they develop theories to explain their observations. Experiments test these theories and provide new observations that enable scientists to modify their theories. Over time, science arrives at ever more refined understandings of the world through the process of testing, observing, modifying, and testing further.
Cognitive researchers call the theories in our head schemas. These schemas are like mental maps, orienting us to the world around us. We interpret events and interactions with others through these schemas, assimilating new events to them when possible and accommodating our understandings to fit new events when needed. As developmental psychologist Jean Piaget explained, this process of assimilation and accommodation provides us with deeper and richer understandings of our world. We are always elaborating our maps of reality.
We never experience the world directly; all perception is filtered through our mental maps. If our maps distort the world, our perceptions will be distorted.
Schemas are not just collections of thoughts, but are complexes of thoughts, feelings, and action tendencies. Let’s say, for example, that I was beaten severely as a child and now perceive the world as a dangerous place. One of my schemas might be that, “You can’t trust people; they’ll hurt you.” When others try to get to know me, that schema becomes a lens through which I view their behavior. Instead of responding with friendliness, I raise my guard and distance myself. Because of the schema, I’ve interpreted their behavior as dangerous.
Sometimes schemas, as the lenses through which we view events, are distorted. They lead us to view and respond to events in exaggerated ways, as in the example above. Take the example of the trader who views his worth through his profit/loss statements. He becomes overconfident and expansive when he’s making money, and he turns risk-averse and self-doubting when he’s in a slump. As long as his trading results are filtered through this schema, he’s likely to think about and respond to his profitability in distorted ways.
Problem patterns develop when our distorted responses to the world become self-reinforcing. In the example above, because others hurt me, I now perceive people as dangerous and untrustworthy—even when they approach me in a friendly way. My guardedness makes me seem hostile or suspicious to others, and they naturally stop their friendly overtures. That, in turn, convinces me that my views of them were right all along, reinforcing my distorted schema. When we are caught in such self-reinforcing patterns, we stop revising our mental maps: we become locked into negative ways of perceiving—and responding to—the world.
Automatic thoughts are the habitual ways of thinking that result from our schemas. Once a schema is triggered, it usually sets off a series of thoughts and feelings that guide our action. A schema of vulnerable self-worth might, for instance, lead us to respond to a market loss with dejection and depression and a host of thoughts amounting to, “I’ll never succeed.” These thoughts and feelings are not objective assessments of the markets or our trading. Rather, they are automatic, learned reactions that have become habit patterns.
We never directly observe our schemas; rather, we experience their manifestations through our automatic thoughts.
The goal of cognitive work is to unlearn these negative thought patterns and replace them with more realistic ways of viewing the world. This restructuring of our thinking means that we, like scientists, must revise our theories. The cognitive approach provides methods for accomplishing this revision.
There are many automatic thoughts that affect traders as they struggle with risk and uncertainty. Some of these thoughts are:• “I need to make more money.”
• “I’m so stupid; how could I have done that?”
• “I’ve got this market licked.”
• “I can’t afford to lose money.”
• “The market is out to get me.”
• “I’ve got to get my money back.”
• “Nothing I do is right.”
The first step toward becoming your own trading coach in a cognitive vein is to identify the thoughts that automatically appear during your trading. Several traders I’ve worked with have taken the unusual step of audio recording or videotaping themselves throughout the trading day and then reviewing the recording after the close of trading. It’s a great way to identify the recurring thoughts and feelings associated with trading challenges. Many times, there are just one or two core automatic thoughts that dominate our experience. These are the thoughts that will form the initial focus of your coaching efforts.
Your assignment is to observe yourself in trading with either video or audio recording, making notes of recurring thoughts and feelings. At first, don’t worry about changing these thoughts: simply observe how your mind is occasionally hijacked when events trigger particular schemas. It is crucial that you understand, from your own first-person experience, that you do not have complete freedom of will or mind. At times, all of us can be quite robotic, replaying thoughts that have become mere habits. By observing these habitual thought patterns, you begin the process of separating yourself from them.
COACHING CUE
Our most problematic automatic thoughts often come out when we’re fatigued and/or overwhelmed. Think back to times when you’ve felt overloaded with work, responsibilities, and market challenges. What are the thoughts that go through your mind? How do those thoughts affect your feelings and behavior? Observing yourself when you’re most psychologically vulnerable is a great way of clearly seeing the negative thought patterns and schemas that affect us.
LESSON 52: USE FEELING TO UNDERSTAND YOUR THINKING
One of the best ways to identify the automatic thinking that could most jeopardize your trading is to track your strongest feelings. In the cognitive framework, how we feel is a function of our perception: how we see things and how we interpret what we see shape our emotional responses. When our interpretations of events are extreme, we’re most likely to respond with extreme feelings. Those occasions in which we look back at our behavior with embarrassment, wondering how we could have blown things so out of proportion, are most likely reflections of times in which we were controlled by the automatic thoughts from distorted mental maps.
If, say, I think about the times in which I most completely lose my temper, they would be occasions in which I want to accomplish something but find my path blocked for no apparent good reason. Perhaps I’m trying to get to an appointment on time and find myself behind a slow driver who is absorbed in a cell phone call. Or it could be a situation in which I’m trying to accomplish something with a trader at a firm, but find myself stymied by a bureaucratic response. The thought behind my temper outburst is, “I have to get this done, now!”
Often
these are situations that aren’t life or death: they don’t truly need to be accomplished there and then. My schema says, however, that if something doesn’t get done now, that would be awful; it would be a catastrophe. I am responding to my own internal should and must, not to the objective demands of the situation. The exaggerated emotional response is a tip-off to an entrenched thought pattern that distorts my perception.
When we turn a desire into a demand, we mobilize the body and respond with stress.
In psychodynamic work, the focus would be historical: figuring out past relationship patterns that might have initiated my particular way of thinking and feeling. The cognitive framework, however, is less concerned with the origins of the thinking patterns than on what we do in the present to recognize and modify those. By tracking our extreme emotional responses as they are occurring, we can learn to recognize the thought patterns that affect us in the present and eventually challenge these. In the cognitive approach, this is accomplished literally by teaching yourself to think differently and filter the world through a different set of lenses.
For example, when I pressure myself about time and tasks that I want to accomplish, I recognize the mounting frustration and tell myself that this is going to get me nowhere. A different perspective on the situation is, “What’s the worst that could happen? Will this really be a catastrophe?” By pushing myself to entertain the worst-case scenario, I see how foolish it is to get worked up. Rarely is the likely consequence commensurate with the extent of the pressure I’m placing on myself. That, after all, is what makes the schema distorted!
The Daily Trading Coach Page 23