I'm starting this thread to document some work I am currently doing on the space between my ears.
I am investigating the 'moment of execution'. That is the precise moment that we click the mouse to buy or sell. Afterall all the hours of charts, research, books, forums, thinking time, lifestyle changes and all the other efforts to be successful are really just reflected in the actions which actually effect our P&L.
Rough calculation in that I spend perhaps 60 hours a week on my trading. Prep, exercise, meditation, journaling, trade cards, reviews, thinking time, and then of course the trading sessions themselves. I get benefits from the lifestyle that are not monetary but the I'll leave those aside for the sake of this discussion.
And of those 60+hours how much time is actually spent executing trades? Maybe a few minutes. So the tip of the iceberg is extremely small compare to the supporting structure.
And in theory all the non-execution work should flow naturally into a zen like click of mouse. In my case the reality can be very different.
Iíll add to the thread with a different concept or bits of research I see as relevant. And of course would welcome input.
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This is an interesting idea from sports psychology. How clear is your mind right at the moment you click the mouse?
(Warning: I have not looked into who the author is or his credentials and have taken the model on face value)
This model proposes it is the level of mind chatter that trips us up in execution, the equivalent of a fumble or errant shot in sports - and can even descend into total choking.
The comparison I make in trading is buying or selling - or failing to do so - when very quickly afterward you can see a glaring error. Why did you not see the relevant information beforehand? Or even worse descending into totally ad hoc unplanned trading.
The idea is to work through 4 stages of concentration to bring yourself to a point where there is no mind chatter, you are focused entirely on the physical act of timing your entry (I appreciate this may seem more appropriate to day trading). During the four stages you work through the contradictions fighting away in your head, and hopefully arrive in the fourth stage clear headed and just experiencing the flow of the game.
I have been able to do this (sometimes) and can state it can be done!
You know when you have been able to achieve this state as time seems to slow down and your actions seem effortless.
From a practical perspective I try to work through the 4 stages:
Broad External - A playboard with flash cards that track the elements I look for with my method.
Broad Internal - I scenario plan through the session for the other things that could happen to challenge my bias. Having a chart up with a very wide right hand margin so I can draw on possible future price movements
Narrow Internal - As a likely trade is setting up I will visualise the price action I want to see and the action I take as a result
Narrow External - THE MOMENT OF EXECUTION/ All concentration is now focused solely on nailing the entry.
If you apply the model and find you are feeling rushed in the 4th stage this may point to unresolved conflicts in any of the prior three stages.
Surprise, surprise, practice is the key.
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Here's a few interesting pieces on emotion regulation. Theory/model is the baby of James Gross of Stanford. In a nutshell he suggests 5 stages where we regulate the emotions we feel OR ANTICIPATE feeling:
The first three are typically in play before/during the emotions kick in, the last two during/after. The process is not linear, so changes at any stage can have effect through feedback. I've found this idea applicable to trading and in really practical terms. E.g.
Skipping a trade after a loser = situation selection, i.e. you do not want to feel the pain of losing again
Moving a stop/closing out early = situation modification, i.e. you are changing the possible outcomes to suit your emotional preferences
Putting on a trade and going out = attentional deployment, i.e. you want to think about anything but the trade and associated emotions
Re-framing a loser = cognitive change, i.e. re-appraising a loser as "just one trade of many"
Trying to suppress elation/anger after a winning/losing run = response modulation, i.e. trying to down-regulate
There has been a decent amount of work in comparing the last two stages: re-appraisal vs suppression and re-appraisal works well, particularly in promoting risk-seeking behaviour in the face of losses.