Tuesday, August 11, 2009

Trading Performance and Developing a Positive Psychology

Reader Adam wisely pointed out this research summary that I recently linked as having particular relevance to trading. The gist of the findings is that positive psychology can be learned and that the learning of such qualities as optimism and resilience has meaningful impacts upon learning and performance.

One of the interesting programs described in the research was the Positive Psychology Program (PPP) that helped students identify their character strengths and consciously draw upon them daily. The results were improved learning and creativity in school, with particular gains among children who were not honors students.

Readers will recognize that the PPP is a structured method for the solution-focused work I've described in many posts. By focusing on their strengths, traders may be cultivating the optimism needed to sustain a lengthy learning curve and the emotional resilience needed to cope with inevitable setbacks.

An interesting finding from the research with students is that those who focused on strengths were more engaged in the learning process and experienced greater enjoyment in school.

Many times, traders kill off their motivation and damage their resilience by focusing on their weaknesses, blaming themselves for setbacks, and using trading as a venue for acting out self-critical self-talk and behavior. The fascinating finding of the recent research is that positive psychology is not simply inborn; it can be cultivated.

We would expect that those who perform well in markets would be happier and more fulfilled in their trading than those who perform poorly. Less well appreciated is that those who are happier and more fulfilled in their learning processes are more likely to perform well over time.

For more on this topic, check out the post on Building Trading Strengths.