Wednesday, August 22, 2007

Coping Strategies: An Overview

My evening talk tonight will include a self-assessment of coping skills and how these relate to trading decisions and trade execution. In an upcoming post, I will be elaborating on this topic and presenting a perspective different from the usual "stress-and-coping" model.

Here's a nice overview of two standardized measures of coping in the psych literature. As the overview notes, research suggests that active coping is more effective overall than avoidant coping. There are also indications that problem-focused coping (dealing directly with problematic situations) may be more effective than emotion-focused coping (venting feelings, seeking support).

In my own work, I focus not only on individual coping strategies that traders might use, but on sequences of strategies and their outcomes. It is common for traders to blend several strategies into an ongoing coping process. The key is determining whether or not that process is aiding decision making and performance.

Where high levels of emotional arousal become problematic is when they shift traders out of their usual, effective coping patterns. Freud referred to this as regression: in times of duress, we revert to earlier--and often less effective--modes of coping.

This is why mental rehearsals of effective coping, performed while imagining stressful situations, can be especially effective. The technique helps us access our mature, effective coping even during times of turmoil and uncertainty.

The key is figuring out the patterns and sequences of coping that work best for you so that you can incorporate those into the rehearsals. My next post will help you figure out what works and doesn't work for you, so that you can take steps toward being your own trading coach!

RELEVANT POSTS:

Using Imagery in Accelerating Behavior Change

Psychological Risk Management
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