Thursday, May 10, 2007

When the Coaching of Traders Doesn't Work - Part One

You don't see too many discussions of failed coaching among traders. The reality of the outcome research, however, is that, while a majority of people receiving psychological help will benefit (compared with people receiving no help or a placebo intervention), a significant proportion of those individuals will not retain their gains over a 6-12 month period. This is known as the relapse problem, and it is one of the most important reasons that the coaching of traders doesn't yield meaningful results.

We're accustomed to thinking about relapse in the context of counseling/therapy for substance use disorders and other addictive problems. Research tells us, however, that relapse rates are just as high for many other problems, from marital discord to depression. After all, how many of us have made efforts to change our patterns of eating or exercise, only to relapse into old ways?

There's a sense in which making changes is easy. The hard part is sustaining those. In a motivated state, when we're emotionally connected to the consequences of our problem patterns, we can muster the will to do things differently. Once that emotional connection is gone, however, we tend to lapse into what is most familiar.

Change is most likely to stick when we overlearn new patterns of thinking, feeling, and acting. It's when we make changes again, and again, and again across a variety of situations that those changes begin to become second nature to us. When the coaching process is too brief or intermittent, those opportunities for overlearning may be insufficient for the internalization of change. That makes it easier to fall into old patterns.

For traders serving as their own coaches, it is helpful to keep a journal of your change efforts, tracking your specific change efforts every day for at least a full month. The daily effort, repeated with consistency, will increase the odds that the changes will become an automatic part of your repertoire.

When people need help with alcohol problems, the folks at AA will encourage them to attend 90 meetings in 90 days. That's great advice for any change process. Make the change 90 times in 90 days. AA knows that "when you bring the body, the mind will change." Similarly, when you make the consistent efforts, the changes will become automatic.


Coaching the Professional Trader