Lesson #8: Create Scripts For LIfe Change

Now we are getting to the fun stuff as Brett starts off the lesson by pointing out the chicken-and-egg challenge associated with making changes in our lives.  To change a behavior pattern, I have to be able to exit that pattern. If, however, I had the ability to avoid enacting the pattern, I wouldn't need to change in the first place!

I love how clearly this depicts the problem at hand.

This dilemma affects me greatly as it can be nearly impossible to stand apart from frustration and emotional overheating episodes that many times lead to revenge trading and constantly fighting the trend.

So Brett now brings us to understanding something about drama.  Specifically, it is helpful to start thinking about life in terms of the different roles that we enact during our life's performances.  "All the world is a stage", Shakespeare observed, and we are the sum of the roles that we play on that stage.

It is interesting that roles are are characterized by automatic, scripted qualities typically learned early in life, and for years, they worked.  Therefore, they are overlearned.   An example for me would be that I retreat and stay silent many times in social or group settings as a function of learning to stay quiet if I wanted to stay alive as a child.

Brett brings an example of how trading problems are scripted.  And he uses the frustrated trader as the example who is bound and determined to trade carefully, not rapid fire trades, and maintain rules.  But then he loses money, becomes frustrated, then breaks all of the rules and undergoes serious losses.  Then he doubles down on efforts to maintain rules, but eventually the next frustration event comes around and the same disasters reenact themselves over and over.  

And the loop is impossible to stop.  And as Brett then highlights in this chapter Trading requires a mind free to process data and select appropriate action.  But we no longer have a free will if we are mechanically reliving scripts from the past. 

So how do I break free of these repetitive patterns that are cyclical reenactments of roles I've learned so well during the course of life?

How do I liberate myself from the frustrated, down and out person who then resorts to pressing and fighting for success life or limb?  

I need to cultivate myself by placing myself in different roles.  To be the competent person who enjoys the process of skill development -- win or lose.  A losing trade, or a series of losing trades is just information and not something to be afraid of.  In fact, a series of losing trades can be amazing information simply because I've discovered a possibly powerful edge.  It's just that I'm looking at it upside down!  

Brett says to go out and throw myself into a structured social activity -- a role -- that requires me to enact these ideals.  

I will have to be conscious of the roles I'm playing.  And notice and reflect upon the times that I'm calm, cool and able to enjoy the process towards excellence. 

Key points to close the lesson, create the roles that mirror your desired identity; live scripts of my choosing   If I place myself in situations where I can routinely practice being the person I want to be, I'll rapidly make that person my own. Change begins with novel experience, but is sustained through repetition. 

Lesson #7: Change Our Focus

A valuable psychological rule is that if I want to change the doing, I must change the viewing.

Simple?  Of course not! All of Brett's sayings are easy face value, but to implement change on a consistent basis?  Ha!

As I write this, my win rate on the day time frame is not profitable.   And it's basically been stuck like this for awhile with no improvement.  Since, as Brett writes "Our thoughts are the filters between trading and trader", I'm hoping to unlock this stalemate in my mind.  After all, how is it possible to want to change my win rate so bad, and be utterly unable to do so?

Brett then goes on to mention how many times we respond in exaggerated ways to markets, not because there is anything unusual going on, but because a set of negative thoughts have intruded into our performance. This is me in a nutshell.  A losing trade, or series of losing trades takes me from market focus to self focus.  All I can do is wallow in emotional outbursts.  And my anxiety has nothing to do with the market, whatsoever. And to react like this, is clearly a script from my past.  I was very abused and  hurt as a child. So, to me, losing trades are not just losing trades with a valid purpose.  For me, with my scripts, a losing trade can be personal.  Then I'm out of my zone since I'm thinking about myself, and being a victim -- instead of market patterns.

A very virtuous circle.  But so cool to be fully conscious of it.

Now here is another Brett gem.  "Many trader's problems show up in how they handle opportunity, not loss.   True, for every trade that I've been dead wrong on structure and taken a stop, there are just as many trades that I MISSED out on due to psychological anxiety.

While cool and calm, I can rationally listen to the market, free of bias, or emotional compromise   But introduce worries into the equation and now "I've allowed the viewing to affect the doing.  I'm no longer absorbed in the market; my focus is gone.  I'm responding to my own uncertainties and insecurities".

So how do I stay in the zone?  Free to see the market?

1) Identify my triggers.  Anything that gets me to think about how well or poorly I'm doing while I'm doing it is a trigger that can nudge me out of the zone.  Being conscious of these is key for me.  Learn to treat them just like a noisy plane flying overhead -- noisy but not relevant    Most of the time for me it's frustration over a losing trade, or perfectionist thinking.

As Brett re-frames it: "It's not the thoughts of performance that take you away from your focus, but your identification with those thoughts".  This is an important distinction.  I always experience distracting thoughts and anxiety but it's when I IDENTIFY with them and give them POWER, then they become my focus.  And then I'm not listening to the market anymore and lost at sea.

"Negative thoughts are inevitable: the question is whether I buy into them". 

Brett then discusses meditation techniques such as guided imagery.  I also like how he says that instead of avoiding negative thoughts, bring them into your mind as your own, inner trash-talking -- and then visualize yourself taking out the garbage.

This is how I become an observer to the unwanted thoughts, rather than to identify with them. As soon as I observe something about myself, I immediately introduce an element of psychological distance. Thanks again, Brett!

Lesson #6: Find The Right Mirrors, Part 2

The good Dr. starts the paragraph with "When you serve as your own coach, your challenge is to structure your learning and development so that trading itself becomes an experience that mirrors your growing confidence and competence".   This idea is probably worth the price of the entire book.  But to pull off a feat like this takes continual, painstaking effort.

Brett then hammers home the point again about to properly self-coach: it's got to go beyond just pointing out "what I did wrong".  For most, self coaching is nothing more than self-criticism.

One of the best means for creating mirrors is the structured pursuit of goals.  When we create challenging, meaningful, and doable goals, we generate potential experiences of mastery and success.  Brett highlights the next point, and so will I:

When we make goal setting an ongoing feature of our self-coaching means, we continually construct opportunities for powerful, self-affirming emotional experiences.  

So here is the assignment:

1) Each day this week the journal should include: A) A specific goal to work on for the day, B) Concrete actions to take to achieve the goal and C) A self-evaluation at the end of the trading day to gauge my success in reaching the goal.

The goal should be a trading process that I wish to improve (i.e., something that I have no control over). 

For this week, I'm going to have the goal of trading a few experimental trades with short targets.  While on another account, pursue larger moves.  I need to find a way to get the win rate up.

If I end the day with a fine grade, then I move onto something else.  The idea is to never trade without consciously working on some aspect of my trading.

This approach of self-coaching and self-improvement has to be a part of my ongoing career. Because it not just about making money, it's about creating experiences that will sustain my sense of competence and confidence.

The lesson closes out with this point:  If you limit losses, pursue your strengths, and take concrete steps towards mastery, every single trading day can be a positive experience, even when you're not making money.  You cannot eliminate losing days, but there should never be days that leave you feeling like a loser.

Finally, his coaching cue is to grade for IMPROVEMENT.  Not perfectionism.  Not everything has to be perfect.  But improvement, no matter how little, IS improvement.  And that's what you're looking for.

Lesson #6: Find The Right Mirrors

We all know what a mirror does.  Thanks to mirrors we know what we look like.  But Brett points out that far more goes into our self image than just this physical reflection.  And he highlights the point that "virtually all of our experience serves as a psychological mirror".  And, too, that we see ourselves reflected in the impacts we have upon the world around us.  And Brett's final point in the 1st paragraph hammers home the fact that if we want to have a sense of self worth and competence, then we need to find the right mirrors.

This lesson was a stopping point for this blog for many reasons.  The main one being that this is a tough pill for me to personally swallow, as my childhood mirrors were so poor.  Then my early adult and mid-life mirrors were poor. And Brett points out next how damaging abusive relationships can be.  Especially when abusers are parents and significant romantic partners.   I've had both and the result of that is a twisted self image.  There is just no way around it.  And out of such twisted self-images, it's common to find partners and friends that validate the twisted identity, sadly repeating the cycle.   The mirrors are improving for me but it's no coincidence that my professional and personal life is a constant struggle.

But it's good to realize the damage that has been done and be consciously aware of how I've been impacted.   And by focusing on the good mirrors that I have now, much of the effects of facing distorting mirrors can be minimized.  Let the crappy people be as crappy as they want -- all by themselves!

The next main point of this lesson is the Devon principle.  In a nutshell, tackle work that you don't like, you'll be frustrated and feel inadequate. Persue work that you love, that matches your interests, values and abilities,  you'll feel self fulfilled and gain confidence.  A large portion of career success consists of finding the right mirrors.  And it's much easier to get to the top when you're climbing the right ladders.

Next time we will finish up this lesson with great learning and development tactics from Brett.