Friday, October 09, 2009

When Trading for a Living Becomes Living for Trading

I've written in the past of addictive behavior patterns in trading (see this post and its links). One need not be a full-blown trading junkie, however, to reach the point at which trading takes over life rather than adds to it.

It is one thing to have "a passion for trading"; quite another to neglect important spheres of life in pursuit of market success. I can think of many personal passions, from writing to my family relationships, that don't prevent me from fully engaging in other activities at work and in my personal life. Similarly, I know many very dedicated traders who are also immersed in other work, family, and spiritual spheres.

The sad truth is that living for trading generally interferes with trading for a living. By making performance paramount--and allowing performance concerns to dictate one's mood and time expenditures--traders inevitably find that trading is controlling them, not the reverse.

A few self-assessment questions may prove helpful:

Are your trading activities contributing to a lack of fulfillment in your physical and emotional development? In your relationships? In your daily moods and energy level?

How much time are you spending truly preparing for trading vs. worrying about it?

Is trading generating well-being for you or eroding it?

Is trading taking needed time away from the people you love and care about?

People who spend huge amounts of time consumed with an activity may romanticize their monomania, but most of the time I find that they are simply inefficient: what they objectively accomplish is no greater than what others achieve with positive mood and attitude in fewer hours.

Trading for a living can bring a high degree of personal autonomy and freedom. That is exciting. Living for trading is the antithesis of freedom and autonomy: you can't be a free agent if you're a slave to the screen.


RickR said...

I think its quite easy to become hooked to trading. Sometimes by entering a trade it makes us feel alive, makes us feel human. Whether you are on the right side or on the wrong side of a trade, what you feel will dwarf a lot of other emotions you have on a day to day basis.

Adam said...

Brett ~

Thank you for an insightful post on a topic that until recently didn’t seem to apply to me.

I’ve just completed a three-week hiatus from trading. I went to cash and took this break ~ something I usually do twice a year ~ to pay attention to other things that give me pleasure: cooking, woodworking, writing, etc.

For the first time after trading full-time for about seven years, I found myself distracted from other pleasures by thoughts about markets. I don’t mean passing notions, but thoughts crowding others from my awareness.

This is a dangerous frame of mind while using powerful machinery spinning blades at a few thousand RPM. So, I retired to the kitchen, where I found myself frequently checking key metrics while kneading bread dough, though I had no positions on.

I’ve reflected on why this might happen. Nothing radical has recently changed in my life. I’m in good physical health. My YTD returns are respectable. My marriage is in a renaissance phase. I have no history of addictive behaviors.

In a recent post you said, "Very often, traders are less afraid of losing trades than losing trading." Earlier this year, in an article appearing in the quarterly, the Investment Professional, you wrote, “… it’s not losing a job (or the shame associated with being laid off) that’s the primary stress: it’s the fear of losing a career.”

This is precisely how I felt, though there is no danger of this happening. Obviously this calls for self-reflection, what I call “mirror time.” The mind is a beautiful mystery.

“… you can't be a free agent if you're a slave to the screen.” Or even bake bread.

As I am, no doubt many others are grateful for your many insights into the trading labyrinth.


Soberba Insônia said...

Astonishing post, Brett. I can say that I´ve been through a phase in my life, when I was introduced to the market (sort of 1.5 year ago).

Most of these mentioned topics, I can say I´ve committed them all. Such like pushing my friends away, staying from Monday to Friday, since de opening ´til it close of the market in front of the screen, using the weekends to study and jump into graphics analyses.

There was a curious passage that I had to do a small surgery in my arm and had to overnight in the hospital. I remember myself during the procedure, looking at the machine that controls our heart beats etc, imagining some entrance and exit points, using the heart beats as ticks. Next day, I begged the doctor to release me as soon as possible, so I still could get the opening of the market that very morning.

Believe, I´ve also made some trading with my arm in a cast (luckily was the left one).

Among other things, once I was immersed in the new ambient, I remember too doing some jogging and analyzing the outlines of the trees against the horizon and seeing them like graphics and the due Fibonacci retracements; or using technical terms in my short relationships with women, (i.e. My buying force is losing interest in this stock, Ok, she´s just a small cap, I will try to find something with more liquidity and so on)

In few words: it was insane.

But I also must say that even committing these ´mistakes´, it helped me a great deal to understand how the wheels turn in the daytrading environment pretty fast.

And later on, once my basic knowledge was consolidated, I´ve just realized that this approach was reaaaally over the edge, and I was pushing me almost to a nervous breakdown (without mentioning the erratic behaviors), something that is and was totally averse to my life style .

So I´ve started to slow down, try to find a balance between pleasures outside the market and inside the market. For me, it was easy, maybe because my peace of mind has always dictated my whole life. And I know Market can easily tear it down.

Today, I´m fine, I trade strongly just on tuesday, wed and thursday. Monday and Friday I just got the first movements of the day, and call it (sometimes I don´t even trade). The weekends I do long nature trekking, some photography, plenty beers with friends (of course) and some music stuff related as well...

And It´s been working perfectly

DaveO said...

What, you really mean you have time to see the good wife occasionally Bret? I wonder if I should speak with her to verify :)


ANNE-MARIE said...


You have written a golden piece here...and I do believe that this behavior is a cyclic part in the growth of trading; some of us just get caught in this and never leave. (Or at least that's what I'm going to say that having put trading above everything before I came to my senses)

AVP said...

Dr Brett - isn't excellence in any endeavor due to constant focus in it?

I mean when starting out in trading,just like building any business,working long hours is common,no?

After a while,the pace might slow down but not when the trading business is in a start-up phase.

Just my 2 cents.

Richard Friesen said...

One cause of addictive behavior is when we try to fill a deep felt need with a behavior that FEELS satisfying but leaves the underlying need unmet. Thus we continually crave the feeling to fill the unmet need. Awareness of the unmet need and working on nourishing that part of ourselves can go a long way.

AtticManTrader said...

Developing a traders mindset is such an important topic and this website has be up there with the best of them!

Personally, when I stopped working towards trading full-time and started concentrating on the trades themselves, my profitability turned around.

Too many traders believe they can become full-time in a couple of years. But turning a modest account (eg $20k) into something that can support even a the most basic of lifestyle requires developing an approach and mindset foreign to most newbie traders.

I for one wish there were more website like this one - trading psychology is IMHO the most important aspect of becoming a successful, consistent and (more importantly - emotionally balanced) trader.


Baranidaran said...

Hats off the words... "you can't be a free agent if you're a slave to the screen"