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Psychological barrier to pass a certain point / tantalization
Thanks for your feedback. What was happening during these 'pullback' periods is best described as follows: once the goal is in sight and I have traded for so long successfully, naturally I am full of confidence and perhaps overconfident thinking now is the time. Just one more trading day and I have reached my goal and I can step up the trading size/go back to even. I start to trade and lose/win. At that point I think due to the level of confidence I have reached, I feel complacent about the loss/win and think I can easily turn it around/make some more. I think at this point I am not clearly seeing the market anymore and start to overtrade, take suboptimal trades, leading to (more) losses instead. Then, still being confident because I've come so far, I persist in stubbornly thinking I can easily turn it around, taking even more trades leading to more losses and so on, until the point the loss becomes way bigger than the predefined maximum loss. But usually my confidence is still there at this point, so I start to break that rule. I think a lot of traders recognize this. Also, because the goal was so close, I feel the urge to continue trading, neglecting all rules I diligently kept to while steadily building the account. sometimes this coincides with some big trend day or news day, where you think you can make all the losses back with one big move, but this usually doesn't come to a good end or makes things even worse. So this can go on to the point where the losses have piled up to a point where you suddenly lose your confidence, and get a clear head again, but at this point the damage is already done. I think people who do not stop and go on through this process eventually blow up their account this way. I did so before.
So, what it comes down to, is that up to this point I was trading the process, but from this point on I started to trade PnL. I guess that sums it up. However, as so many traders will agree when reading this, when you're in the moment, this somehow just happens. That's why I stress self-discpline and self control. And it's one thing to read this in books on forums etc, but its another thing to actually put it in practice. It's like Federer telling you how to win at tennis vs actually playing tennis yourself and putting his words into practice.
Hope this clarifies. Writing this down, actually made it clearer for myself.
Good discussion pertinent to me.
Here is another idea.
Rank every trade you take according to the degree to which you followed your plan/process ...say 1 is not at all and 10 is exactly.
If your process is well enough objectvely articulated this should be possible.
The goal is to score 10 on each trade regardless of trade outcome.
To average 10 for atrading session is optimal.
If you score 5 or less on 2 consequtive trades stop for the day as your mindset is off.
This a bit like the 'tiltmeter' in the edgewonk journaling software.
It is a way to put the attention where it needs to be......
And i think to get relaxed before trading is important as we want our executive brain function accessible....not our old reactive crocodile brains.
And remember...the next trade is just the first of the next thousand.....but execute it well.
The 4-7-8 (or Relaxing Breath) Exercise
The 4-7-8 breathing exercise is utterly simple, takes almost no time, requires no equipment and can be done anywhere. Although you can do the exercise in any position, sit with your back straight while learning the exercise. Place the tip of your tongue against the ridge of tissue just behind your upper front teeth, and keep it there through the entire exercise. You will be exhaling through your mouth around your tongue; try pursing your lips slightly if this seems awkward.
Exhale completely through your mouth, making a whoosh sound.
Close your mouth and inhale quietly through your nose to a mental count of four.
Hold your breath for a count of seven.
Exhale completely through your mouth, making a whoosh sound to a count of eight.
This is one breath. Now inhale again and repeat the cycle three more times for a total of four breaths.
Note that with this breathing technique, you always inhale quietly through your nose and exhale audibly through your mouth. The tip of your tongue stays in position the whole time. Exhalation takes twice as long as inhalation. The absolute time you spend on each phase is not important; the ratio of 4:7:8 is important. If you have trouble holding your breath, speed the exercise up but keep to the ratio of 4:7:8 for the three phases. With practice you can slow it all down and get used to inhaling and exhaling more and more deeply.
This breathing exercise is a natural tranquilizer for the nervous system. Unlike tranquilizing drugs, which are often effective when you first take them but then lose their power over time, this exercise is subtle when you first try it, but gains in power with repetition and practice. Do it at least twice a day. You cannot do it too frequently. Do not do more than four breaths at one time for the first month of practice. Later, if you wish, you can extend it to eight breaths. If you feel a little lightheaded when you first breathe this way, do not be concerned; it will pass.
Once you develop this technique by practicing it every day, it will be a very useful tool that you will always have with you. Use it whenever anything upsetting happens – before you react. Use it whenever you are aware of internal tension or stress. Use it to help you fall asleep. This exercise cannot be recommended too highly. Everyone can benefit from it.
The subject you have touched is very deep, widespread and various in its development according to me. So don't expect simple answers.
A small example.
Do you know, what is the most dangerous time for newbies in driving? Approximately 2 years after they start driving. Why? Because they feel they are driving gods. Overconfidence, less attention. And this is when problems come.
Now about why this is happening:
- driving is a very difficult and stressful activity (you have to follow so many signs, you have to predict actions of so many other vehicles, fines, you may hit somebody etc..), and it's natural reaction of your subconsciousness to reduce that stress once "it's obvious" you are driving so well! (and that is a job of our subconsciousness - to simplify and automate things thus increasing our probability to survive);
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It relates to trading as well. Your subconsciousness is trying to "switch off" your consciousness ("you are already doing good, sit and relax, everything will fall into place itself") reducing stress to your organism
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- Ego
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Your subconsciousness is saying: "You are so damn good at driving/trading! You now have a higher rank in society!". Your subconsciousness is satisfied, job is done.
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The thing is, your consciousness doesn't realize the above. It's being controlled by subconsciousness. In fact most of our action patterns come from subconscious level.
Let me go up one level to describe those things in trying to answer your initial question "Why is this happening".
In fact it lies very deep at subconsciousness level. Our subconsciousness study all the time, and it has "knowledge" it collected during our life (and was taught by other subconsciousness of other people (like your parents) and so on and on, its experience in the end was being collected for centuries). And that is why it's so difficult to identify our action patterns, because most of the things you do is done automatically not having a single thought about that (like eye blinking, breathing, running away from danger, wanting to be liked by society etc..).
Trading is the field where all our "weak" points (from subconsciousness level) are enlightened in its purest forms. In usual social activities we are hiding all our "drawbacks" behind other people, situations, society in general where we are used (and were taught) to survive. And our subconsciousness acts accordingly.
From our childhood we have learned (from situations, reactions of people, other people's teachings) how to behave, hence we have our habits (already at subconscious level) from those ancient times. And it's very difficult to even identify all those things we were taught.
The point is, we all have same pattern of our reaction in everyday situations. Again, it's all on subconsciousness level. And you have same pattern in same situations (stress, risk, uncertainty, learning new things etc.). So my proposition is to identify your trading issues through other situations and your reaction to those you experience in your everyday life. Think about your life, what you did and why you did.
For me trading was a push towards thinking who I am real.
Let me give you an example. Some time back I surprisingly discovered I had some sort of "victim complex", i.e. I was doing sometimes something intentionally in order not to succeed (in trading as well). That could be anything. When I made some investigation, I learned that was coming from my childhood when it was so comfortable when your parents show compassion when you fail. And this pattern was sitting so deep inside me (looking for compassion instead of being successful) that it took a huge effort to get rid of such habit (how - that is a long story). First step was of course identification.
Another example: why do most people fail in trading? They follow the crowd. But this is what our subconsciousness was taught for centuries: in order to survive you have to be with the crowd! That is why it's so uncomfortable to sell when everybody is buying (and every cell in your body is screaming to buy as well), "you are breaking the rule, you are going against the crowd"!!
Also big issue for most people is Ego. I find it one of the most difficult feelings we experience and which tremendously effects or lives and inevitably - trading. In fact it's also the reaction of subconsciousness in order to survive and be at higher level in society (your subconsciousness is telling you: "OK, now you are trading great, you are very smart, you are now ranked higher", so you feel it's great and can't accept the fact that you are still trading "poor" and "ranked" the same level). Most of the time people don't even realize that feeling though. You may find this ego fights "for ranks" of people around you (and you participating as well) every day (when somebody horns behind when you are delayed a bit in moving on a traffic signal; and that guy was tremendously slow when he just started to drive, but now he thinks he is such a great driver and ranked higher than you). Normally it won't have direct impact in life (you are a boss, you are doing stupid things and you are stubborn, but you have other people around who will cover your wrong judgement and you won't suffer right now), but in trading it will have immediate effect.
And that digging out yourself and getting acquainted with your real "Me" (without all those acquired patterns and knowledge) is quite a difficult process. And you may be surprised when you meet that "real me" guy)
The point is - it's a big separate human activity, but you may start the journey to meet yourself, trading is a good push towards this according to me. And this what everybody refers to "become another person", meaning to get rid of those acquired patterns during your life that just prevent you from becoming successful (in this case - in trading).
Sorry for such a long thoughts.
Of course all the above is just my 0.02
Thanks for your feedback and stories. It's no problem to elaborate, all thoughts can be useful.
Yes, the subject is deep and indeed I agree with you the subconscious is largely responsible for the irrational behavior that I display when put under pressure or get hit by strong emotions (BTW see my post above about relaxation techniques). It's like an autoimmune reaction. Emotions like anger are associated with the flight-or-fight response and lie within our nervous system. Like @Linds said, our "crocodile" brain. So that explains the same pattern of reaction when trading when a very important event is due. Nervous system takes over and there you go. But I believe I can overcome it. The relaxation technique is a strong tool I think, and also being aware now and discussing it in this thread helps a great deal. Furthermore, working on self-discipline as I mentioned earlier, trying to substitute bad habits with good habits, these all are the things I think will help me overcome this obstacle. Your insight provided input to this as well so
Honestly all those breathing techniques never helped me (I mean not only trading) so I can't say anything. Most things I overcome were/are through will-power, pulling myself together.
What if you just quit trading for one-two days when you feel it starts to happen again? Go to a forest, listen to nature, relax, take yourself out of the system...
I would strongly recommend exercising, especially martial arts - they are perfect for mind control. This way your body (and mind) gets used to stress and starts to act different way increasing overall stability.
@roadahead,
have you ever tried the breathing techniques? it's psysiological so it has a direct effect on your nervous system. Yes, I thought about quitting trading too the last time(s) the goals were near. But you know what? I still sat behind my pc, doing other work, still opened the trading software, promising myself not to trade, but then I saw an opportunity and went down that road previously described. Looking back at it now, it was the lack of self-discipline. Ofcourse I shouldn't even have sat down behind my pc in the first place. I've an addictive personality so add to that the eagerness of reaching the goal and disaster is around the corner. But I'm reflecting now and next time I reach this point again, I am much better prepared. Also, I can re-read this thread for support . Exercising, yes, I practiced Martial Arts before, but nowadays running. Just didn't run for the last couple of months, so need to pick it up again.
thanks to @xplorer for posting a link to this article
based on an article from Les Meehan, peak performance coach
I took some excerpts from it that I found most interesting and added stuff so it is most applicable to this thread.
“Self-sabotage is one or more unhelpful behaviours that prevent you achieving a desired goal or outcome.”
trading is guaranteed to connect you with all of those ‘emotional skeletons’ residing deep in the depths of your unconscious mind waiting to be activated. These emotional skeletons in the closet are like ‘sleeper’ secret agents waiting to be triggered by some event or emotion. these ‘sleepers’ contribute to a common trading behaviour pattern that usually losses you money and that is definitely psychological in nature; this is the behaviour pattern called ‘self-sabotage’.
self-sabotage is simply a behaviour or action designed to prevent you doing the right thing. for example, your desired behaviour might be to stick to your trading plan but the self-sabotage behaviour makes you break your own rules you set in your system. the reason is that you don’t have the discipline to stick to the system and it becomes a self-sabotage behaviour. it is preventing you doing the right thing.
What causes self-sabotage behaviours?
“Self-sabotage behaviours are the result of an internal conflict between opposing parts of your psychology.”
the cause is inside your mind and not ‘out there’ in the external world. It is only your own mind that causes you to do one thing that is stopping you from doing something else that might be more useful to you.
“The biggest contributor to self-sabotage is some form of internal conflict.”
The internal battle for control. Internal conflict can be caused by one part of your mind trying to do one thing for you while at the same time another part is trying to do something else. Both of these ‘parts’ believe that their behaviour is the best one for you at that particular moment.
The ‘desired behaviour’ is to stick to the plan and be disciplined enough to do that. So your ‘follow the plan’ part of your mind is trying to get you to behave with discipline and structure to follow the trading plan. But from a young age a part of you has always been a bit of a rebel and even now as an adult you still might not really like being made to follow rules or be told what to do. So any activity that looks like you have to ‘follow the rules’ or ‘stick to the plan’ probably still activates this rebellious side of your personality.
And so the ‘rebel’ part kicks in and causes conflict with the ‘stick to the plan’ part; even though you know logically that sticking to your trading plan will help you achieve your trading goals! As soon as the ‘stick to the plan’ part tries to help you with disciplined behaviour, the ‘rebel’ part tries to undermine it. The ‘rebel’ wants to entice you away on some unrelated activity that will satisfy your impatient “I don’t like rules” inner child rather than support the efforts of your ‘stick to the plan’ part.
The ‘rebel’ part wants you to feel like that ‘other you’. The ‘You’ who values being: individual, free, your own boss, that “won’t be told what to do” child and not the boring ‘follow the plan’ limited ‘You’ that would be better suited to actually get the job done.
Types of self-sabotage behaviour
Here are a few of the types of behaviours that are commonly used for self-sabotage:
Procrastination – putting things off
Quitting at the first hurdle – easier to give up
Allowing others to distract you
Doing easier trivial tasks – avoidance
Refusing to accept responsibility for your actions – blaming others
Negative ‘Inner Demon’ self-talk – “I’m not good enough”, “I can’t do it”
The last one on this list can actually be useful if you pay attention to what your ‘inner demon’ voice is saying because it can help you identify the various ‘parts’ or ‘emotional skeletons’ that are still holding you back from your desired goals. Many of these parts will have been created during your childhood but are still active throughout your adult life unless taken care of.
Why do you self-sabotage?
“I don’t know” is really just another ‘avoidance’ technique. It simply means you are unwilling to look at yourself honestly and accept responsibility. The reality is, and it takes only a few moments of honest and open inner reflection, you usually do know why but most of the time you just don’t want to admit it. Or your subconscious is preventing you to acknowledge it.
self sabotage is some form of internal conflict between opposing ‘parts’ from deep within the unconscious part of your mind, but why do you have this conflict in the first place?
To answer this question we must be totally honest with ourselves and, as mentioned above, for many people that is a very difficult challenge. The reality is “Truth usually hurts” and especially so when you are looking into the mirror of your mind and seeing reflected back your very essence as a person.
But there is a very simple answer to the question: “Why do I self-sabotage?” if only you are prepared to listen to your true inner self and take responsibility for the answer (and many traders can’t or won’t do that).
How to stop the self-sabotage?
The only way to truly stop self-sabotage is to uncover the root of the cause that is preventing you from taking the action you know in your heart will allow you to move forward. Yes, you can try all sorts of ‘management’ or ‘motivation’ type methods and these may work for a while (or even completely) but for most unless you address the underlying cause the management methods will fail and the self-sabotage will come back. Failing to reach an important goal in your trading is an example of this.
to start dealing with self-sabotage behaviours in my opinion is to reflect, work on your self-discipline and start doing the right thing, whenever, wherever
. Exercising, yes, I practiced Martial Arts before, but nowadays running. Just didn't run for the last couple of months, so need to pick it up again.