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Trading Psychology - January 17, 2007

 
 

 

                            If you have any questions, feel free to email Ken Wolff or Shawn Wolff

      

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MTrader Class (C) copyright MTrader 2007

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Guidelines for Breaking Negative Habits

by Shawn Wolff  


[20:38] <gimmie> its.... Trading Psychology Meeting time !!!!!!!!!
[20:39] <KenWolff> oh yeahhh.... goodeeee
[20:39] <jra> yaaa
[20:39] <gimmie> ok... its been a while
[20:40] <gimmie> cause last week... i was gone wednesday afternoon.. and then friday.. and then monday was a holiday
[20:40] <gimmie> so... do you remember what we talked about last monday ?
[20:40] <gimmie> It was.. the characteristics of a positive person
[20:41] <gimmie> positive people = disciplined = positive portfolios
[20:41] <gimmie> do you remember that ?
[20:41] <wayne> Yes, both my boys now have it posted on their doors in
[20:41] <gimmie> noooo they dont !!
[20:41] <gimmie> really?
[20:41] <wayne> bet?
[20:42] <gimmie> thats sweet
[20:43] <gimmie> we also talked about... becoming positive in our quest for self knowledge
[20:43] <gimmie> I say we.. even if I was the only one talking...
[20:43] <d> yes
[20:43] <gimmie> and some of the blocks that people have.. to self exploration and a deeper look at their emotional make-up
[20:44] <d> positive attitude
[20:44] <gimmie> particularly.. Im afraid.. men.. because you are conditioned differently.. to avoid emotion
[20:44] <gimmie> boys dont cry.. etc
[20:44] <d> sometimes they do,Gimmie
[20:44] <d> only sometimes
[20:45] <gimmie> less often than we do d
[20:45] <d> correct
[20:48] <gimmie> so.. to become positive people

[20:49] <gimmie> as we all want to become... because we went over those positive characteristics.. and it becomes very clear.. that its the negative habits keeping us from our goals
[20:50] <gimmie> 3 areas where we are often habitually negative.....1. negative habits of thinking...2. negative habits

of feeling.. and 3. negative habits of behavior, or doing
[20:51] <gimmie> can we break those habits ?
[20:51] <gimmie> or are the auto responses.. we have been conditioned to make since childhood.. so deeply ingrained?
[20:51] <gimmie> sometimes we arent even aware of them.. they are so automatic
[20:52] <gimmie> and we dont realize that they are weighing us down.. zapping our energy and motivation.. and sabotaging our chances for success
[20:54] <gimmie> this is something I have been working on.. and striving for... over the last few years.. to become a more positive person and lose those three types of negative habits...and I have loads of notes to share with you..

over these meetings..
[20:55] <gimmie> not that Ive arrived.. no way.. but its something I would like to share with anyone in the same boat
[20:55] <gimmie> changing these negative habits
[20:55] <gimmie> There are some guidelines I noted.. for changing any negative habit
[20:56] <gimmie> 1. Check your motivation
[20:56] <gimmie> bad habits are really hard to break
[20:56] <gimmie> any bad habit
[20:57] <gimmie> and I think the habit of breaking discipline.. trading... is no exception
[20:57] <gimmie> why do people blow stops.. over and over and over.. even though they know all too well the consequences?
[20:57] <gimmie> its a habit.. of breaking discipline
[20:57] <gimmie> and its difficult to break
[20:58] <gimmie> it is however.. possible... but we need to be clear first of all.. of what we want
[20:58] <gimmie> our motivation for wanting to break that habit
[20:58] <gimmie> Ask yourself.... with all honesty...Who or what...stands to gain if I crack this habit?
[20:59] <gimmie> If you are the soul beneficiary.... ask yourself.. truthfully...
[20:59] <gimmie> Do I truly feel I am worth all this effort ?

[20:59] <gimmie> Do I want it badly enough?
[21:01] <gimmie> You might surprise yourself and realize.. that you are not the only beneficiary..
[21:01] <gimmie> your motivation might be... someone else... or the approval of someone else...
[21:02] <gimmie> if that is the case... its going to be much harder to break the bad habit... because its not coming

from within
[21:03] <gimmie> have you ever heard the saying... follow your bliss ?
[21:03] <gimmie> thats the only way to success... is if you are behind your motivations.. 100%
[21:05] <gimmie> if your story is more.....well I lost my job.. and I have some money.. and I really dont want to go back to consulting and the rat race... but we have a mortgage.. so I thought I would give this a try...
[21:05] <gimmie> thats not gonna cut it
[21:06] <gimmie> You cant become positive about your goal... dig into your learning process with zest and enthusiasm.. if you are not behind your motivation
[21:06] <gimmie> 2. Examine the habit
[21:06] <gimmie> (these are guidelines for changing a bad habit remember)
[21:07] <gimmie> Sometimes.. we are so ashamed of our bad habits.. that we try to pretend they dont exist
[21:07] <gimmie> So we wont keep accurate records... because we reeeealllly dont wanna know
[21:07] <gimmie> its easier.. to just keep plugging along.. and assume things will get better eventually
[21:08] <gimmie> If someone brings up the subject.. our guilt often stops us from having a rational constructive discussion
[21:08] <gimmie> " I know.. I know.. I know!!,,,, but I dont want to talk about it!"
[21:09] <gimmie> The result of this is that.. we dont give the habit too much thought... until a big crisis occurs.. like a blown stop.. or our spouse blows up...
[21:10] <gimmie> It is important to do a detailed analysis of the habit... so that we can identify the precise stimuli that sets it off
[21:11] <gimmie> If you are blowing stops.... what types of stocks is it usually?.. what time of day?.. whats going on

in your life?.. what level is your portfolio at.. at that time (desperation?)...
[21:11] <gimmie> what is setting it off?
[21:11] <gimmie> when am I most likely to ?

[21:12] <gimmie> If you dont keep accurate records...if you keep pretending everything will work out eventually..

and bury your head in the sand.. you wont ever break that bad habit.. of breaking discipline
[21:13] <gimmie> 3. Set goals
[21:13] <gimmie> and make sure the goals are realistic...
[21:13] <gimmie> we already know that negative people set themselves up for failure
[21:13] <gimmie> They are perfectionists...
[21:14] <gimmie> perfectionists.. are negative people... because nothing is ever good enough
[21:14] <gimmie> They are hard taskmasters for themselves.. as well as other people.. demanding impossibly high standards
[21:14] <gimmie> They often want to tackle the most difficult problems first..
[21:14] <gimmie> and they are not in favor of easy stages
[21:15] <gimmie> we often think of perfectionism as good... but its not !
[21:15] <gimmie> its negative
[21:16] <gimmie> So we need to check that we are starting our program off with a tast that has a strong chance of success
[21:16] <gimmie> and that we set goals that will get progressively harder and more rewarding as we move on.. gradually
[21:16] <gimmie> So this is what I propose.....
[21:17] <gimmie> make a chart... for your wall... something visual
[21:17] <gimmie> make it as colorful as you like :-(
[21:17] <d> :)
[21:17] <gimmie> a box.. for each trade....
[21:17] <gimmie> three colors
[21:18] <gimmie> red for bad trades....
[21:18] <gimmie> green for good trades
[21:18] <gimmie> or two colors
[21:18] <gimmie> but....
[21:19] <gimmie> define a "bad" trade... as any trade that you broke discipline on

[21:19] <gimmie> regardless of the outcome.. be it a stop.. or a gain.. or a blown stop
[21:19] <gimmie> any trade you made.. that didnt fit your criteria
[21:19] <gimmie> is red
[21:20] <gimmie> a "good" trade... is any trade that met your criteria.. any trade where you held your discipline
[21:20] <gimmie> regardless of the outcome.. even if it was a stop
[21:20] <gimmie> its a good trade
[21:21] <gimmie> now above that.. or below it... chart the level of your portfolio....
[21:21] <gimmie> because I believe that if you track your performance.. not in terms of dollars and cents... but in

terms of whether or not you held discipline...
[21:22] <gimmie> you will start to see those results in your portfolio.. over time
[21:22] <gimmie> its not going to work.. if you measure your success or failure.. by how much money you made that day....
[21:22] <gimmie> thats not going to tell you how "well you did"
[21:23] <gimmie> only averages over time will tell you that
[21:23] <gimmie> what do you think ?
[21:23] <gimmie> Im done
[21:23] <gimmie> ok.. there are 6 guidelines... but I will save the other 3 for next time
[21:23] <gimmie> thoughts ?
[21:25] <d> good ideas
[21:26] <d> ty Gimmie
[21:27] <gimmie> thanks d
[21:28] <gimmie> no one else has any thoughts ?
[21:30] <lucy> i have a thought, i liked this lesson....i'm back for lunch...are you going to post it..
[21:30] <d> i like the idea to use color
[21:30] <d> colors

[21:30] <d> i think you can see better the bad trades, and the good ones tooo
[21:31] <gimmie> :-)
[21:31] <gimmie> thanks
[21:31] <wayne> had to do a reread....good info gimmie, ...a lot to digest
[21:31] <gimmie> thanks wayne

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