Lesson #5: Part 3

We recently learned that acknowledging and accepting feelings, giving them free expression, sets the stage for transformation. I can honestly say that writing through these lessons has been profoundly healing and instructive. So many feelings have come up. I've shared some of my darkest secrets about how hard things have been for me. What a relief.

Now that I'm good at acknowledging and accepting feelings, does that mean I should vent whatever I'm experiencing? Brett says no. The psychological research suggests that unbridled expression of emotions interferes with concentration and performance. In trading, this is deadly. By yelling and bashing keyboards, I'm doing nothing to resolve the reasons for my upset in the first place.

Reflexive acting out negative emotions only reinforces them. I cannot overcome frustration by acting in frustrated ways.

Brett says that the idea is to transform feeling, not ignore it and not revel in it. His suggested way to do this is to replace one emotional state with another.

Substitute feeling for feeling, not thought for feeling.

Any stimulus stat evokes calm, focused attention can be effective as a tool for shifting emotions. The key is to evoke my yoda state--the calm focus--during periods of high frustration. I enjoy bio feedback for this type of work, and also classical music. But for me the true key is to minimize the times when I get frustrated in the 1st place. Preventive strategies are much more useful then working to quash the frustration once it's fully activated. In a relaxed state, I'll arrive at perspectives and insights that remain unavailable while I'm immersed in flight-or-fight frustration-mode.

One exercise Brett outlines, I'll have to try. Two thermometers side by side on a piece of paper. One thermometer I record my emotional frustration temperature. The other I record my temperature with respect to confidence.

The two times that I'm most likely to make the worst trading decisions is when I'm frustrated, as well as, overconfident.

When I identify an elevated frustration temperature, I can take a break from the screen and work on entering into my yoda state via breathing, bio feedback or just taking a walk. With practice, this can be accomplished within a matter of minutes and make it MUCH easier to act in a calm and planned fashion.

The key is to keep myself aware of my emotional state throughout the day. The thermometers are an easy, visual way of becoming my own observer....and trading coach.

Lesson #5: Part 2

I think it quite possible that I took so long to do part 2 of this lesson because it made me feel so darn uncomfortable. I simply DO NOT want to have all of my weaknesses staring me in the face. It's probably the reason why I've lived most of my life mired in basic routines. Not shaking up the house!

Last time we left with the notion that "feelings contain information" and how our emotions and feelings are core components of decision making. As my trading coach, my goal is to not banish the negative feelings associated with my worst trading. Repeat: Don't stuff, ignore or deny the bad feelings. Doing so is not going to allow me to evolve and beat the demons once and for all.

The most constructive step that I can take to change feelings is to give them full acknowledgment and extract their vital information. Feelings inform me about my appraisals of self, others, and world.

Brett quotes a study that found by writing in a journal or talking aloud for a half hour a day had a powerful effect on enabling people to effectively cope with challenging emotional circumstances, including traumas and crises. Trading is so much about dealing with hard emotional circumstances. I've been traumatized countless times from frustrated trading blowups. I've beaten myself up with over perfectionistic expectations of myself. I've endured literally years worth of self-loathing, self-ridicule and negative emotions. Trading can be a catalyst for some of the most cataclysmic self-destructive behaviours in the world!

By writing and talking about my challenging emotional circumstances (nice way to put it), they move from implicit feelings to explicit. They rise up from hiding under the surface to a freeway billboard -- fully exposing themselves. Here I can begin the process of viewing them from different angles and place them in a different context. I can begin to really investigate...to understand them in a constructive, nurturing fashion. I can realize that I don't HAVE to be so hard on myself. And I can put my energy where it should be: reading supply and demand.

Without acknowledging my emotions -- good and bad -- I lose their information and thus the opportunity to shift perspectives. Here in the lesson Brett examples a trader who is EXACTLY like me. The frustrated, angry trader brushes aside his tensions and forges blindly ahead, finding himself easily triggered the next day. (This is exactly what I do. Blow up days come in streaks.) And Brett then goes on to say how this is particularly the case when the frustrations are triggered initially by trading mistakes. Brett is spot on here as I can personally attest to.

Brett examples a trader who fought the market trend all morning, creating losses and a build up of frustration. Later, this fellow "blew up" in the afternoon. Brett does not mention specifics here but I can make some extremely educated guesses. If the trader was trading the ES, a likely scenario was that the morning trend was strong. And the trader, after watching the market rotate back and forth the previous day, could not resist fading the trend. He probably took at least 3-4 stops and generated losses around $600 per contract. At this point, if he were me, the frustration was now to the point that "fighting" was ALL that mattered. Fighting with trade entries. Engaging. KICKING THAT MOTHER FUCKER MARKET'S ASS. Not sound trading. Not profitability. Nothing but being the heroic caveman and chucking that fucking spear until my arm fell off.

This guy probably "threw his spear" until he had lost half of his account. More likely 3/4's of it.

That's what frustration can do.

I'll continue this lesson in part 3.

Lesson #5: Feelings Contain Information

So much of Brett's work feels like "it was written for me". He's able to nail the exact problems that I face. To show examples of the behaviours that I'm exactly struggling with.

Lesson #5 WAS written for me : ) It starts with acknowlement that when traders seek coaching, they are usually troubled by a particular emotional state affecting decision-making: anger, frustration, anxiety or doubt.

Thus far, this blog is chalked full of instances where I've struggled with frustration. Consumed in it. Initiating trades rapidly without regard to anything else but fighting the market with more trades. This out of control, all-consuming behaviour has been the most vexing issue of my life!

Our traits and temperaments affect how we experience the world and play a key role in our RANGE of emotions. Some of us feel good and bad very strongly like me. Some of us, like my girlfriend two years ago, are quite even keeled and don't REALLY love or hate anything! Or they are neurotic like my last girlfriend and wired to feel predominately negative emotions (It's ALL negative, really it is!).

Although I'd like to think of myself as being in control of myself, as Brett puts it, "The sobering reality is that much of our emotional experience is hardwired". I'm always going to fight the ups and downs of life. Because good feels GOOD. Bad feels BAD. My ex's will always be calmly boring or unable to find anything positive in anyone or anything. As they say, you CAN'T FIGHT THE TAPE!

But all is not lost. I cannot change my personality, but I can change how it is expressed. The trader trap is trying to control feelings with thoughts, trying to TALK myself into feeling better or different. Feelings are very powerful and meaningful. If it were easy to makes ourselves feel different at will, or talk ourselves into feeling different, then their would be many fewer psychologists in the world.

As my own trading coach, i need to garner the perspective that FEELINGS CONTAIN INFORMATION. Emotion is a key component in rational decision making. People with various parts of their brains knocked out (like my daughter's mother) are unable to properly emotionally process and engage is distorted behaviour.

This lesson is long. I'll finish it up tomorrow with part 2. It's a lot to process.

Lesson #4: The Greatest Enemy of Change is Routine

In familiar environments and routines, we operate on autopilot. Nothing changes.

This lesson is challenging because, as a trader sitting at a desk, it can hard to shake things up. We are stuck at the desk. Same chair. Same computer screens. Same software and blogs. Same, same, same!

So if the greatest enemy of change is routine, which turns me into a walking-dead- autopilot-zombie, no longer actively conscious of what I'm doing or why... How do I keep change the constant?

Taking a vacation works wonders, I know. Brett is spot on when he describes the benefits of leaving my native environment and having to adapt to new people, cultures and new ways. This is how we can discover new facets of ourselves. But this is a very limited solution for obvious reasons.

It's up to my internal trading coach to keep myself challenged to stay fully conscious and alert to risk and opportunity.

Brett outlines 4 routine-busting exercises.

1. Seek out divergent views. This is one exercise that I already do well as I talk to other traders, read trading books, and follow ideas on twitter.

2) Examine the big picture. Again, I'm fairly decent at this. Keeping in mind the larger time frames is an absolute essential.

3) Examine related views. Here Brett emphasizes looking across instruments and asset classes and ETF lists. Again, this is something that I do. Today, the hotest sector in the market, GLD, was printing measured moves to the downside. A structural cue to embrace today's rally higher.

4) Take a break. This is something that i'm NOT good at. Especially after a big loss day or week. Pulling back and clearning out my head helps to generate fresh market views and, most importantly, to reflect on the losses and what can be learned from them.

I need to focus on breaking the mental routines, espeically if I'm trying to do away with an unprofitable pattern of thought and behaviour (like my blowup days).

Conciously thinking about my thinking is probably one of hardest habits to instill!

Goals: Falling Short

I'm falling short of my goals. Here is an example of failed execution. I hope to have a positive example soon!

Lesson #3: Opportunity in Adversity

Interesting to look at "change" as both a challenge and a trap. I had never thought about how, when entertaining change, I divide myself into qualities that I like and qualities that I don't. I have to split myself into good and bad, acceptable and unacceptable.

And what comes next is that I embrace the good and try to avoid the bad. The bad is marginalized, denied, so that I consciously don't make myself feel like a piece of shit.

The problem with this is that when the dirty laundry is stuffed under the bed, it can't help to guide my learning. Stuffing the weaknesses is easy with positive thinking! If I only go down the happy road, I'll not have to think about and embrace all that I've done wrong.

As Brett quotes "The motivation for much positive thinking is a denial of weakness".

It's time for me to step up and love myself. To reach the point of accepting my shortcomings -- now that I'm fully aware of most of them -- and to appreciate my very humanness.

My weaknesses are a part of me and someone who loves me will love the whole package -- even if some of it stinks. So it's ok for my inner trading coach to love me and treat me well, even when I screw up.

As hard as it is to accept, my short comings can actually become opportunities to go deeper into myself and guide my own development.

Every frustration-induced blowup day is there to teach me something.

My excercise for this lesson is to create the three column worksheet Brett describes. Last Thursday's blowup day will work perfectly for this excercise.

Let's make myself stronger by reaching out to my flaws. Let's learn how to embrace Scott and take the first step to becoming the person I'm capable of being.

Lesson #2: Visibility

The root concept of this lesson is: The single most important ingredient in psychological change is the quality of the relationship between the helper and the person receiving help.

When acting as my own trading coach, the quality of the relationship with myself is paramount.

In this lesson, "visibility" is also a core concept. And I found visibility not easy to internalize or even understand at first. As Brett puts it" All of us have dreams, values, and ideals. How often, however, are these explicitly on our minds? I'm guilty of(as Brett puts it)living mired in routine, day in and day out, estranged from the things that matter most to us: that's a form of in-visibility".

And as he points out next: how can we coach ourselves successfully when we are invisible to ourselves? We must be visible to ourselves and sustain the vision of who we are and what we value. The success of our coaching efforts rest on our ability to sustain visibility and to draw on the magic of a fulfilling relationship with ourselves.

Easier said than done. I am constantly saying negative things to myself, insulting myself and, in general, treating myself like a piece of shit. At least I can admit it. Most people I know live with the self torment and don't even realize that there is another way.

Brett has the solution! And here it is: a simple strategy that can build a positive, visible relationship with my inner trading coach:

Identify a SINGLE trading strength to express as a goal for the coming day's trading.

Is it really that easy?

Let's give it a try in the days ahead with the newly created journal "Good and Bad".

Lesson #1: Change, Goal Setting and Emotional Force

The easy part about change is initiating the change process. As Brett says "the real challenge is sustaining change". Change efforts have to become habit patterns that become deeply instilled and second nature: or else they will not stick. And a relapse into old ways is the end game.

The main point of this lesson is to emphasize that EMOTION as the crucial element behind the change process. Once the goals are set and written down, EMOTIONAL FORCE is required to actively implement goals into burning desires,organizing principles and my life focus.

Of course it can't be emphasized enough that I can have all of the emotional force in the world but unless I set a clear path from the person that I am to the person I wish to become, I'll just spin my wheels.

In this post I'm going to introduce my trading goal sheet. Throughout this process, it will be continuously updated and commented on. It will be a core focus of this blog.

I've been a horrible goal setter for years now, having fallen into the pattern of just cruising along day-by-day, flowing up and down the emotional stream -- from happy to fearful! It will be interesting to see if regimented goal setting and review process will alleviate much of the emotional roller coaster ride.

Chapter 1: Change

This chapter begins with the clear statement that the root of all coaching is change.

A little bit about my own struggles at change: I've done a lot of change since 2007 -- but none of it has come easy. Most of it came on the heels of heartbreaking experiences.

My biggest change in the last 4 years has been as a result of Brett's work. Three years ago I emailed Brett, telling him that I had the experience of taking a couple of losses and then rapid-firing off a serious of trades that created a serious loss. A loss that I didn't even hardly remember creating. It was like I left my body for a spell, and that some other trader was at the controls, effortlessly racking up losing trades.

I came to label these days "blowup days": Days where I seriously breached my loss limits for the day with rapid-fire trading. Thankfully, soon after my email, Brett started posting about the mechanics behind frustration trading and how to prevent "going on tilt".

It took many years to finally cage this beast, as included in my personality traits are low frustration tolerance in stressful situations and impulsively. The first step was relatively easy: Maintain a relaxed state via bio-feedback practice and breathing. The sessions, with the heart monitor, showed me how breathing rhythms affected my performance scores. Also, it was sobering to see my heart literally STOP when I'd experience a flash of anger or frustration.

The second step was harder. What was my motivation to take serious losses? Why would ANY person do that? I finally figured out that putting on more trades after losses was a coping mechanism to avoid loss. As long as I kept firing, I kept that chance alive I'd win my money back. Unfortunately, with all of the blood flow now away from my pre-frontal cortex in this excited, frustrated and fight or flight state, the odds of making a good trade were basically zero.

Thankfully, my last "blow up day" was June 9th, 2010 where I lost 9 ES points repeatedly going long as the afternoon session straight-shot retraced the morning gains. My notes for that day indicated that it wasn't until later in the evening, long after the session ended, that I even "realized" I had lost 9 points.

I had fallen into the trap again. Even after all of my knowledge and focus on the situation.

Probably even worse than losing the money, these blowup days just shatter my self-efficacy. But emerging victorious over this devious problem has been also one of my greatest joys.

Next up: lesson #1

The Genesis:

Well I did it!

To some this might sound like something easy. What's so hard about starting a diary, chronicling the daily implementation of The Daily Trading Coach book? The hard reality is that it's very hard to do. My guess is that I'm one of a select few who would undertake such a task as it's just so much effort. There is no business like trading that looks so easy, but is so incredibly hard.

Just the sheer magnitude of this book is hard to wrap one's mind around. Page-for-page, dollar-for-dollar, word-for-word, it is the most valuable trader resource available today. It is 343 pages of blood-pumping challenges that will take the most diligent student many years to implement -- even marginally so. Each lesson is a sobering challenge that requires extensive homework.

I bought this book when it came out in March of 2009. I've read through it twice. Many times more in some chapters. Yet, I'm not changing and growing as much as I would like. My lack of discipline and desire to take the easy road are two of my most ferocious enemies.

Only through focused effort and daily implementation via this diary will I accelerate the learning process.

And I just might bring Brett's other two books into this process as well: Enhancing Trader Performance and The Psychology of Trading. But I'm starting out with the trading coach book for now.

I hope to share this blog with you someday, Dr. Steenbarger,