A while back, I posted on the topic of "brief therapy for the mentally well". Brief therapies are collections of methods designed to promote rapid changes in patterns of thinking, feeling, and acting. Much of what I do as a psychologist is help traders become their own trading coaches by applying brief techniques to their own situations. Some resources for learning brief change techniques can be found in this post and in my two trading books.
People who write about psychology (but who aren't psychologists) often assert that behaviors change through positive thinking, goal setting, and the like. One would think that the annual experience of broken New Years' resolutions would put an end to such fantasies, but apparently not. The idea that we can shape ourselves by willing self-improvement seems unusually impervious to lack of research evidence and much personal experience to the contrary.
So how do people control their behavior and sustain the motivation to change themselves?
Let's look at a very unusual example: the anorexic patient. Anorexic people greatly restrict their food intake, sometimes to the point of death. They frequently have a distorted body image and believe themselves to be overweight, even as they are literally wasting away.
Clearly anorexia is a serious psychiatric disorder, but it is an interesting motivational phenomenon. Here is an inborn, hard-wired behavior pattern--eating--that is overridden by a social motivation: the desire to not be fat. So all-encompassing is this motivation that it often proves to be resistant to efforts at treatment, medical as well as psychological.
What is the basis for the anorexic person's motivation? Not positive self-statements and goal-setting, that's for sure! Rather, the anorexic individual is motivated by disgust. Quite literally, the patient is disgusted by anything that feels or looks overweight--and that disgust is so strong that it keeps food at bay.
Daniel Nettle's recent book Happiness: The Science Behind Your Smile makes the important point that disgust is a much stronger emotion than happiness. We tend to habituate to happiness: what makes us happy (a new car, seeing an old friend), after a while loses its ability to bring overt joy. Disgust, however, such as the sensation of eating food that has gone bad, stays with us for quite a while. What disgusts us now--for instance, sitting on a bus next to a person who hasn't bathed in weeks--will most likely produce equal disgust should it happen in the future. Indeed, like the anorexic, we might even avoid buses altogether just to prevent a repeat experience of disgust.
There are solid evolutionary reasons for this, Nettle notes. The things that would disgust primitive man--tainted food, unsanitary conditions--are directly related to his survival. If it took many learning trials to become averse to such situations, humans might not have survived their learning curves. By hard-wiring disgust, learning, and motivation, nature provided the opportunity for one-trial learning: the briefest of all therapies.
When we examine many of the most dramatic examples of personal change, we find disgust as a common element. What gets a person to finally stick with a diet is reaching the point of disgust with his or her appearance, energy level, etc. Similarly, smokers and alcoholics reach the point where the consequences of their behaviors disgust them, whether those consequences are smelling bad, becoming short of breath, or losing jobs or driver's licenses. "I can't stand living this way," is a frequent refrain among therapy clients who are ready for change.
I personally reached the point of sticking with my stop loss levels when I became disgusted by large losses that ate into days' and weeks' worth of profits. Similarly, I became better at defining and acting upon my profit targets when I became disgusted with situations in which I had a nice profit in hand and let it completely reverse to breakeven. And letting winners turn into losers? That became *so* disgusting for me that I set my exits to ensure it won't happen again.
Want a reliable behavioral method for ensuring that you follow your trading plans? Simple! Hook up your trade station to an IV drip going into your arm. Whenever you violate your plans, the drip would release a small amount of ipecac extract to induce violent nausea. Very quickly, the association between the trading behavior and the nausea would lead you to anticipate negative consequences any time you broke your rules. An anticipatory disgust response, like that of primitive man and tainted meat, would keep you from doing the wrong thing. Permanently.
There actually is a treatment similar to the imaginary example above, and it's called aversion therapy. Taking a drug that makes an alcoholic person sick whenever they drink ends up being one of the most effective ways of dealing with the addiction. Positive intentions and self-help exercises don't nearly possess the force of gut physical disgust.
If disgust can turn eating into a behavior to be avoided and an alcoholic's drinking into a thing of the past, perhaps it can be leveraged into a brief treatment for trading problems. The key is turning common wisdom on its head. Instead of trying to *make* yourself do the right things, fill your mind with thoughts and images of how disgusting you are when you do the wrong things. Just as anorexics spend hours in front of mirrors berating themselves for their looks, you can create your own metaphorical mirrors and become emotionally connected to the wasted effort and lost money from poor trading practices.
We are most apt to change a pattern once we become truly disgusted by it. Would you continue to do business with someone who violated your contract with him and took your money? No, you'd become so disgusted with such a dishonest individual that you'd shun him altogether.
Well, that person is you when your own patterns violate your contract with yourself and cause you to lose money. Once you become truly disgusted with your own patterns, you'll shun them altogether. And that's the briefest--and most effective--of therapies.