Sunday, October 26, 2014

Creating a Training Program for Happiness

Ah, yes, too often traders put the key to happiness in the market's pocket, ensuring that their mood will fluctuate with prices.  That is a vulnerable state, and not one conducive to peak performance.

When we refer to happiness, we're not talking about living life with a perpetual grin.  Happiness embraces positive mood, but also implies a high degree of contentment with one's life and inner fulfillment.  Not everything that provides pleasure contributes to our happiness, as we can observe in the case of addictions.  Indeed, the problem of willpower is that we often act short-term to achieve pleasure and thwart our longer-term happiness.  

The psychologist Michael Fordyce developed a happiness training program in the 1980s that demonstrated statistically significant gains in people's overall level of positive emotional experience.  The program drew upon five components  to achieve these results:

Changing Your Activities - Making a conscious effort to be more active and engage in productive, meaningful work.  Getting more organized and prioritizing your activities.

Changing Your Thinking - Making conscious efforts to be more optimistic in outlook and more present-centered.  Shifting expectations to make sure they are achievable and not frustrating.

Nurturing Relationships - Spending more time meeting people and engaging in quality time with friends and romantic partners.

Valuing Personal Growth - Spending time on activities that expand who we are, such as physical exercise, spirituality, and education.

Decreasing Negative Emotions - Making conscious efforts to interrupt worry, self-criticism, and pessimism and channel frustrated energy toward constructive activity.

Interestingly, Smith, Compton, and West found that adding meditation to the five program components further increased the happiness of subjects.  By increasing mindfulness, we are most likely to be consistent in enacting the other portions of the training program.

Imagine creating a daily to-do list in which you make concerted efforts in each of the five categories above for the period of a month.  Over time, you would begin to build happiness habits that would take on a life of their own.  

Why is this important?  Happiness has been linked to improved health.  Enjoying life is a significant contributor to physical well being as we age and can reduce the negative effects of aging.  Happiness also boosts our productivity, and it brings greater creativity and quality of effort to our work.

Happiness is not just a positive mood that comes upon us.  It is a way of life that can be cultivated over time. 

Now think about your trading and the five happiness ingredients above.  Does your participation in markets add to your happiness or detract?  If the latter, there are few better investments you could make in your trading than reorganizing your business plan and ensuring that your trading process is also a happiness process.  

My own formula for such a personal business plan is simple:  take the ratio of daily activities that give energy to those that drain energy.  If that ratio is well above one, you will most likely lead a happy life.

Further Reading:  Happiness and Success:  Which Brings Which?