What my new book refers to as Trading Psychology 2.0 is that performance--in trading and across life--is a function of cultivating positive emotional experience, building on cognitive and personality strengths, and enhancing our creativity and adaptability.
In short, the old psychology is all about minimizing problems and disruptions. The new psychology focuses on building our most positive attributes.
Most of us function in 1.5 land: we are neither mired in problems, nor are we actively identifying and strengthening the best of who we are and what we do. We don't hate our lives, but we are not in love with our lives. We wake up, attend to morning routines, go about our work, and live life more or less on auto pilot--until random positive or negative events happen to befall us.
As part of researching the new book, I have consumed a steady diet of positive psychology books and research. The general conclusion emerging from this work is that there is more--much more--we could be doing to renew our romance with our lives. Positive emotional experience is something that can be taught and learned. A few basic exercises, conducted with consistency, can make a meaningful difference in our levels of happiness, life satisfaction, energy level, and attachment to others.
Consider the Penn Resiliency Program described by Martin Seligman in his book Flourish. This began as an evidence-based intervention for schoolchildren to teach them skills that prevent depression. Through the program, students were given twelve sessions of 90-120 minutes each, focusing on information, skills-building, and between session homework. Skills included cognitive techniques for dealing with negative thoughts and a variety of problem-solving and coping methods.
As Seligman outlines in his book, the Penn Resiliency Program did indeed lower the incidence and prevalence of depression, anxiety, and behavioral problems within the student population for two full years following the 12-session intervention. Lo and behold, however, the program also resulted in a number of positive outcomes, including better grades, greater curiosity and love of learning, improved emotional and social intelligence, and increased happiness, hope, and optimism.
This supports the research of Michael Fordyce, who found that teaching skills related to 14 fundamentals of well-being resulted in significant improvements in happiness and life satisfaction. Like the Penn program, Fordyce's training was relatively brief, but focused on concrete skills and their day-to-day implementation.
Imagine if you set out--each day--to implement a single action designed to improve your life in four different areas: your happiness and joyful experience; your satisfaction with aspects of your life; your level of energy and enthusiasm; and your connections to friends, family, and romantic partner. Over time, what would be the compounding effect of such skill-building? How would it impact your daily experience if each day was a day in the emotional gym, where you gave happiness and well-being a good workout?
To borrow an analogy from Colin Wilson, we are like automobiles running on a single cylinder. Frustrated with our slow speed, we persistently hit our gas pedal, taxing our engines even further and reducing our efficiency. What we need is to stop the car, get under the hood, and overhaul our engines. The elements of subjective well-being are the cylinders of our engine. Life is a lot more productive, a lot more enjoyable, and a lot healthier if we are firing on all cylinders.
Further Reading: Happiness and the Power of Expectations
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