Wednesday, November 14, 2007

The Trader as Trading Coach: Cultivating Self Awareness

The new book I’m writing is designed, in part, to help traders coach themselves to improved performance. The idea is to periodically stand apart from our trading to evaluate what we’re doing, learn from our experience, add to strengths, and minimize the impact of weaknesses. The self-coaching of most traders, I find, is limited at best to the keeping of a journal. Too often those journal entries are simple summaries of the last trading day, combined with statements of “what I should be doing”. Rarely do the journals identify and focus on strengths, and rarely do they set very specific goals that are systematically reviewed and refined.

Perhaps the hardest part of self-coaching is sustaining the stance of self-observation. To perform well, we need to be immersed in the doing; we can’t be observing and criticizing ourselves while we engage in performance. If we fail at such immersion and become overly self-aware, the result is an interference with performance. This is what creates writers’ block and a freezing up during public speaking engagements. In a very real sense, the master trader must minimize the coach inside his or her head during trading. The goal is to be completely market focused, not self-focused—and certainly not focused on P/L.

The natural tendency after a lengthy day of focused attention is to want to relax. As a result, little attention is paid to performance and reviewing the past day. That is the time when the coach inside the head needs to be maximized, with attention directed toward oneself. What did I learn about the market today? What did I do right? What do I need to correct? What is my game plan for tomorrow? All of these questions require a degree of reflection and self-directed attention.

Research in psychology initiated by Duval and Wicklund in 1972 suggests that self-directed attention can be an aversive state for many people. In a self-focused mode, we become more aware of the discrepancies between our real self—how we are currently performing—and our ideal. Not surprisingly as a result, people tend to avoid prolonged states of self-awareness.

My own research at Duke University found that self-awareness is particularly aversive when people feel that they are not capable of bridging their gaps between real and ideal in areas of life that matter to them. Ironically, then, we are most likely to avoid focusing and working on ourselves at those times when we most need it: times when we are self-doubting and feel furthest from our goals.

If, however, we are going to mentor ourselves and accelerate our development toward expertise, it means that we have to make friends with self-focused attention. We have to learn to love the look inside, even when the view is uncomfortable. By identifying with our learning processes rather than our day-to-day outcomes, we place the inward look into a different context: one in which self-focused attention is in the service of a higher ideal: shaping our selves.


Three Steps Toward Self-Coaching

Therapy for the Mentally Well