Saturday, November 28, 2009

Novelty: A Key to Psychological Change

My first post in this series dealt with the importance of processing market information in novel ways: fresh viewing can lead to new and better ways of doing. (See links included in that first post to assess your own learning styles).

Nowhere is this principle more important than in the process of psychological change. What helps people change in a therapeutic or coaching relationship is novelty: leveraging the power of a positive relationship to help people see themselves and their situations in new ways, so that they can respond differently. (See this post for a more detailed presentation of this idea; see this post for important implications).

In coaching ourselves for trading success, our job is to create new, constructive experiences that disrupt old problem patterns.

So many times, we become locked into behavior patterns. We are afraid to miss market moves, enter markets impulsively, lose money, and then feel even greater needs to participate in moves to make up for what we lost. Round and round we go.

The corrective emotional experience, as therapists call it, is to actually miss a market move and see--first hand--that other moves and other opportunities develop. After all, you can't overcome a fear by avoiding it. The novel experience is to face the fear and find out that the outcomes aren't as bad as you anticipated.

In behaving differently, we experience ourselves in new ways. If I go to the gym for a while, I begin to experience myself as physically fit. That, in turn, influences my energy level, which in turn can enhance my general outlook. Small changes can self-amplify, creating options for thought and action that hadn't been present before.

Suppose I have been haphazard in keeping up with chores at home and in staying in good physical shape. After a while, I begin *feeling* sloppy and undisiciplined, and that carries over into my decision making in markets. If I'm experiencing myself as focused and goal-oriented in my personal life, those same qualities during trading will come naturally.

But I can never talk myself into discipline if most of my life experience is haphazard.

A single new set of experiences can be enough to catalyze change. Becoming more goal-oriented in one sphere of life can provide the energy and optimism to extend that orientation to other life spheres.

If you understand that, you understand that there is no sharp demarcation between working on yourself as a person and working on yourself as a trader. How you experience yourself ultimately shapes how you think, feel, and behave.

Our trading performance always reverts to our personal means. For more on the topic, check out the post on "how to change yourself".