Monday, August 25, 2014

Grit, Self-Control, and Mental Toughness: The Psychology of Trading Process

Shout out to Abnormal Returns for excellent links posted today, including this post on 7 habits of people with remarkable mental toughness.  As Angela Duckworth's research attests, sheer grit--the ability to persevere under adverse conditions--is a central element of success across career fields and performance domains. 

The notion of grit has so captured the interest and attention of students of success that Duckworth's second factor has gone largely unnoticed:  self-control.  Duckworth explains: "Self-control is the voluntary regulation of behavioral, emotional, and attentional impulses in the presence of momentarily gratifying temptations or diversions."  Grit refers to the ability to persevere over time.  Self-control is more of a moment-to-moment, day-to-day phenomenon:  the ability to resist temptation and distraction and stay focused on bigger picture goals.

Indeed, Duckworth's review finds that self-control is as central to positive life outcomes as such variables as general intelligence or socioeconomic status.  Interestingly, not all who possess self-control also display grit and not all gritty people exhibit strong self-control.  It is the two in concert--the ability to weather temptations in the short run and setbacks in the long run--that appear to predict success.

When you see how grit and self-control work together, you can appreciate why so many successful traders are process-driven traders.  By focusing on the process of good trading rather than the daily outcomes, traders rehearse both self-control *and* grit.  In other words, a process orientation to trading is daily training in the dynamics of success, a kind of behavioral priming.  By defining and following a robust process during good times and bad, we literally train ourselves in grit and self-control.

Further Reading:  Why Grit is Important to Trading