Even though I haven't been trading much this week, I have been thinking about it nonstop and I have been mostly thinking about the why I win sometimes and why I lose sometimes. I especially was curious about the days when I can go back in time to those losing days and in hindsight plainly see where had I just done what I know to do, I would have won. I wondered what was different about those days vs the winning days.
Turns out, I think it is about my mental state or more specifically, my emotional state. Essentially I think it has to do with my sense of joy, happiness or peace. The more joy, happiness and peace I feel, the better I trade. The less I feel these emotions or worse, feel the opposite, the worse I trade. I know it sounds simplistic but I think its true.
I've been thinking this for a while now but only really thought in depth this week as I had these many hours to mindlessly work and think at the same time and then today I read the following article excerpt by Jared Dillan of Mauldin Economics. He is a trader, a writer and DJ if I remember correctly. He was once the largest bond trader at Lehman Brothers right before the collapse so he has credibility in this venue.
"People Are Crazy
I think most people (and the legal system especially) completely underestimate how emotional and irrational most people are.
Sometimes I walk down the street and look at people and think to myself how everyone is just barely holding it together. Go to a cocktail party—at least half the people there are in some kind of emotional turmoil that they are barely keeping under wraps.
Trading is about being smart, yes, but it is also an exercise in emotional fitness.
Neurotic, sad people generally don’t make money. Happy, confident people are the ones who make money. (Emphasis mine)
There’s a reason why guys like Paul Tudor Jones hire guys like Tony Robbins as a coach. I think Tony Robbins should stick to his knitting and stay away from real estate conferences, but he has probably helped people be competitive in a very competitive industry. All that hooey about being a winner really is true.
I have seen a lot of people succeed and a lot of people fail at investing, and let me tell you, it is not usually a function of intelligence. These dour, bad-stuff-happens-to-me-all-
People who act like winners usually win. They aren’t always nice guys, but they are winners. Like I said, it is rarely a function of intelligence.
I’m still working on the secret sauce. I’m profitable, but I’m a bit of a grinder. It’s never easy.
Here’s to things being easy.
Jared Dillian
Editor, The 10th Man
Editor, The 10th Man
The implication here is that I am sad and neurotic. At first glance I would deny that accusation but deeper thinking about this statement begins to ring true in many areas of my life. The sad part that is. The last few years have been years of loss: financially, my health and of course the passing of both my parents. Sadness is to be expected. To think otherwise is neurotic and I have expressed to others and denied to myself the presence of sadness. But now I think its time to own it. To acknowledge its presence in my life, embrace the reality of it and then move on to a more joyful place.
A starting point for that is acknowledging my health is nearly completely recovered. I only need to lose about 40 pounds and I will be in arguably the best shape of my adult life. That is something not every one achieves. Recovered health is something to be grateful and happy about. Instead of focusing on the difficulty of losing the weight, I now intend to focus on the gratitude I have that my heart has NO scar tissue from the heart attack. All of the bills from that episode in my life are finally paid and I can chase any goal I want from here!
This summer I am embarking on a new segment of my spiritual journey. It is uncharted waters for me. It is about the idea of self love. Not the dirty minded kind, but the complete internal acceptance of myself, my successes, my failures, strengths and weaknesses. The acceptance of who I truly am and learning to fully and completely love that person.
As I've worked toward this journey over the last few months and yes even years, I've always known there would be a point where I would need to confront this aspect of spiritualism. I've postponed, delayed and ignored it and now find myself at the point where it is no longer possible to ignore or delay. Nor do I want to. I want the freedom that comes from reaching this place in life.
I will write about this sporadically as this kind of journey progresses in fits and spurts. It is non linear and therefore it is not possible to construct a linear narrative about it as it progresses. Instead it must be narrated in hindsight.
For now though, I have adopted a marvelous quote I read the other day as my new spiritual motto. Its from Gandhi and it goes like this; "I will let no man walk through my mind with his dirty feet!" From this day forward I guard my mind and heart as though it is a priceless treasure....because it is!
Til next week.....
Cheers
Consistent 3rd person observation is difficult at best and nearly impossible most of the time for most people. However, I find myself doing it more and more especially in social settings. I see myself and how I interact with others. It's an odd sensation for sure.
ReplyDeleteI think it's an essential skill for performance activities. It's why athlete hire mental coaches. Part of the work is deliberate visualization of desired outcomes. The brain can't tell the difference between real life and vivid visualization. So it makes some sense to spend time in deliberate self observation and visualizing desired trading outcomes recognizing execution is still necessary in the heat of the moment.
Much work must still be done, but it feels as though the right track is being travelled.
I spent the last week or so digesting this post so I could reply with something of substance.
ReplyDeleteFirst off, I'm glad that you've finally gotten things squared with your health issues. I know from past experience that facing Death - even tangentially - is not something anyone even with the most gung-ho death wish is ready for.
Second, I have also reached that point in my life where it is important for me to love & accept myself. I think alot of life's tragedies for the vast majority of people is seeded by the flight response to having to be honest with themselves. I understand; I was there and it was really the true driving force behind me coming to Wall Street. I won't ever say if I'm mature or something like that because I know that I'm still somewhat prone to my weakest natures and I have to always check myself at negative things that I would have pursued at a younger age. I think that was the point in my life where I began to see God in a different and more real way outside of the regular portrayals. This led me to a much better relationship with my faith.
Finally, Mr. Dillian is probably a good trader, and a very good one at that, but I'm not fully convinced that the key to making money is simply acting like a winner. I believe that euphemism is stated above a vague and inarticulate concept of what it is to "win" - kinda like the way NFL scouts size up rookie quarterbacks and project past greats onto them just by way of the eye. The intellectual foundation by which all successful traders stand on is not really a foundation, nor would I even label it (even loosely) "intellectual". Markets are always changing and thus with it, rules of engagement. If you were in the market with a trend system, even a rudimentary one, back in august 2008 your life would more than likely be different now. But if you try to apply a trend system in today's market, you'd generally be paddling swamp water. What I'm trying to say is that my experience has taught me that attitude is important, but moreso the intellectual context behind that attitude and that is why I'm not particularly impressed with the assessment of someone who had a salaried trader position.
It all comes down to the intellectual foundation - or in the words in your more recent posts - "doing what works". I will never understand the functionality between two different viewpoints competing for the same reward but only one viewpoint getting it right. In many fields, the correct intellectual application is the deciding factor...but in the capital markets, this is almost never the case and to corral "intellect" just leads to more capital "spillage", if you will.
But I am a strong believer in a grateful viewpoint of yourself; i believe that intellectual creativity and awareness springs forth more easily when you are gentler with yourself, even with self-questioning and not necessarily doing mental/emotional 2-a-days. In my humble estimation, that kind of attitude is the key to unlocking the benefits of everything - not just trading.
Great post. Hope you are enjoying the weekend and good luck on this upcoming week.