Wednesday, October 31, 2007

Finding Your Voice as a Trader

Occasionally I'll meet a trader for the first time who wonders aloud why he hasn't made greater progress. He keeps a journal, he reviews his performance, he identifies what he does wrong and tries to correct his mistakes: why isn't he succeeding?

Here's a sample of dialogue from such a trader at the start of a coaching session:

"I feel like I should be so much further along than I am. There's been great opportunity in the market, and I just haven't taken advantage of it the way I should have. I'll have a good day or two and then I just go back to making the same mistakes. I'll get too aggressive and lose money. Then I get stopped out for the day and miss out on great trades. Sometimes I even wonder if I should keep doing this. I know what I need to do, but I can't seem to do it."

Now how does that sound to you? Sounds like a trader who is frustrated; a trader in some distress.

Now let's alter the dialogue by substituting "you" for "I" and pretending that the dialogue is coming from someone talking to the trader:

"I feel like you should be so much further along than you are. There's been great opportunity in the market, and you just haven't taken advantage of it the way you should have. You'll have a good day or two and then you just go back to making the same mistakes. You'll get too aggressive and lose money. Then you get stopped out for the day and miss out on great trades. Sometimes I even wonder if you should keep doing this. You know what you need to do, but you can't seem to do it."

Now how does that sound?

What sounded frustrated in the first person voice now comes across as hostile and blaming in the second person.

How would you feel if, during one of your slumps, someone spoke to you in this way? Probably not very good. One of the reasons why is that there is nothing in these statements that is a concrete idea or suggestion for constructive change.

Many traders have not found their own constructive voice; they are not consistently good at mentoring themselves. They recognize that they are frustrated, but they don't recognize that, by immersing themselves in negative, angry talk, they undercut their own confidence and motivation.

After all, how much motivation would you sustain as a rookie trader if your supervisor at a firm spoke to you that way after a few losses?

A theme I emphasize in The Psychology of Trading book is that each of us has a relationship to ourselves. That relationship is defined, in large part, by our self-talk: how we communicate to ourselves during good times and bad.

You can't advance yourself and browbeat yourself at the same time. You can't pursue success wholeheartedly if you're also telling yourself how bad you are and how badly you're doing.

Often, traders seek help simply to find their voice: the ways of talking to themselves that encourage, support, and challenge rather than blame, attack, and catastrophize. The frustrated voice, so often, is the abusive voice. Just turn those "I" statements into "You" statements and you'll see how they sound.

The way we develop a new voice starts with identifying and building upon strengths and successes, not becoming mired in weaknesses and losses. You'll succeed by more consistently enacting the best within you, not by making fewer mistakes.

And you'll succeed when you talk to yourself like a winner, not a loser. Because that's the voice you'll internalize. Once you internalize that voice, nothing short of growth, progress, and self-development will feel natural.

RELEVANT POSTS:

Changing Your Self Talk

Building Self-Efficacy

Solution-Focused Trading
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6 comments:

Jaxon said...

What a great post! You quoted me almost exactly. I must learn to speak to myself more constructively.

Krasimir said...

Another wonderful post remembering (advising) us how to become better mentors to ourselves.

bryan said...

Hi Doc, brilliant work! Thank you.
Bryan Wendon

Brett Steenbarger, Ph.D. said...

Thanks for the comments and the support! It's great when we can be both traders and coaches--

Brett

Raymond said...

Hi Brett, I'm a former succesful floor trader who hasn't been successful since he left the floor ( but thats another story). Anyway I just finished a quasi documentary called "What the Bleep Do We Know!? " It's about quantum physics and it's a bit out there in some respects but, the movie, about 30 minutes in, focuses on how we speak to ourselves and the effect that our own conversation with ourselves has on the life we create. I thought you might find it interesting. I know I did and I know that my pown self talk has had a negative impact on my trading these last few years.

Randy

LIQUID MAN said...

I can't believe that quote! I think you have found a way to read my mind when i'm trading word-for-word!

I must say that your blog has been more insightful than any other I have read in the trading world.