Saturday, May 28, 2016

Meeting the Challenge of Secondary Frustration

One of the most common emotional challenges faced by traders is frustration.  Frustration can cause us to lose our focus.  It can lead us to make rash, impulsive decisions.  Little wonder that traders hope to trade in a zen mode, completely emotion free.

As long as we care about trading outcomes, however, there can be no emotion-free trading.  Nor would freedom from emotion be desirable for traders.  The emotional processing of events that can lead to frustration is also what gives us our *feel* for markets.  One successful trader I've known for a while uses his emotional reactions to provide him with insight on how other market participants might be feeling in a given situation.  For him, emotions are information.

Frustration can also be a motivator.  It occurs when we are blocked in our pursuit of goals.  When we channel frustration to better understand and overcome obstacles, we've turned frustration into a positive and essential part of success.

Indeed, I would argue that frustration is not a problem for traders and, in fact, is an inevitable trading outcome at times.  The problem is what we can call secondary frustration:  our frustration with being frustrated.  In other words, it's when we make it not OK to feel normal frustration--when we become threatened by frustration and try to push it away--that we're most likely to let it get the better of us.  Fully accepting and experiencing a feeling defuses its power and intensity.  When we hold ourselves to an unrealistic zen ideal and fail to accept frustration, our feelings redouble: we're now frustrated *and* we're frustrated with being frustrated.

Secondary anxiety is a big part of what keeps panic attacks going.  When people become afraid of normal stress and nervousness, their anxiety redoubles.  Interestingly, it's the calm acceptance of anxiety that gets us past fear.  The same is true for frustration and many seemingly negative emotions.  Making ourselves conscious of them and becoming their observer enables us to separate ourselves from what we're feeling and gain control over our state.  Identifying with our feelings is the surest way of allowing them to control us.

The emotionally intelligent trader can prepare for frustration, fear, greed, and other seemingly disruptive states.  By anticipating them, rehearsing our response to them, and channeling their energy constructively, we turn our experience into a powerful trading asset.

Further Reading:  The Basic Cause of Emotional Problems in Trading