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How We Traumatize Ourselves (Trading and Otherwise)
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How We Traumatize Ourselves (Trading and Otherwise)

  #1 (permalink)
Live Your Bliss
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How We Traumatize Ourselves (Trading and Otherwise)

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It was very painful for me to watch Rory's meltdown at Masters after leading for 3 days. He went into the final day leading by 4 shots... and completely choked going triple bogey, bogey, and double bogey, finishing 15th... not unlike a trader who 'loses' it... and starts trading wild and compounds his losses. It will take Rory probably many many months to recover his psychological equilibrium after damaging himself so much (for George Foreman, it took many years after the surprising and devastating loss to Ali in Zaire).

Why do we as human beings traumatize ourselves like that? Or least, how?

Because we crave, then we cling, and then we fear.

And fear makes us choke.

And choking in key moments devastates us.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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I think somewhere deep in his subconscious, he did not see himself as a Masters Champion. And therefore he self sabotaged to confirm those deep inner feelings.....who knows though really....I suffered something similar myself...not in golf and certainly not on the world stage but the stage was large enough and I choked......and somewhere deep inside during the dark months leading up to the public failure, I had already failed inside......my subsequent actions just confirmed what I had inside.....

And it has taken my several years to come to terms with the fact that my failure was in large part, my own beliefs and subsequent actions taken as a result of those beliefs.

I don't think trading is any different....you have to see yourself as a champion trader and then believe it with everything inside you....otherwise it will be a long hard struggle against yourself...

It will be interesting to see how and if he recovers enough to play at that level again.....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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aztrader9 View Post
I think somewhere deep in his subconscious, he did not see himself as a Masters Champion. And therefore he self sabotaged to confirm those deep inner feelings.....who knows though really....I suffered something similar myself...not in golf and certainly not on the world stage but the stage was large enough and I choked......and somewhere deep inside during the dark months leading up to the public failure, I had already failed inside......my subsequent actions just confirmed what I had inside.....

And it has taken my several years to come to terms with the fact that my failure was in large part, my own beliefs and subsequent actions taken as a result of those beliefs.

I don't think trading is any different....you have to see yourself as a champion trader and then believe it with everything inside you....otherwise it will be a long hard struggle against yourself...

It will be interesting to see how and if he recovers enough to play at that level again.....

Hmmm... That's very interesting, because what you say is true on one hand.... but on the other hand, most traders often overestimate (not underestimate) their abilities with rather dire consequences.

As an example, I had a friend who thought she was a true Champion trader. And indeed, in her first year she doubled her 100k into 200k. Needlessly to say, in her second year, she gave all her profits back and then some.

Seeing yourself as a champion trader when you're not is delusional and dangerous (and data tells us that most traders simply don't have what it takes to succeed in the long term, never mind being 'champions'). At the same time, however, one needs healthy self confidence as a trader. How does one find a happy medium?

I believe that it is experience, not just a mere decision, that should ground one's own view. If you have been consistently profitable over some extended period of time and understand the source of your edge, then the champion ideal is yours. If not, then you are merely day dreaming.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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Its sad to see McIlroy meltdown like that . A task such as trading (or pro golfing) exposes us for what we are in the truest sense . No amount of persuasion , charisma or bullying can help us win like in most other jobs . Throwing your weight around while trading drains your account faster than anything and humility , self awareness and self trust is the fast track to becomming and staying a winner . Its too bad that most people dont know how to admit when they're wrong or when to trust their own self .

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Many people don't know what the learning curve looks like. They are not aware that there are short spurts of improvement followed by long and sometimes frustrating plateaus and that the plateaus get longer and longer as you improve.

My hypothesis is that some traders become really good. They stick to their plan and don't give in to emotion. Eventually they find themselves on a long plateau and things become mundane. Finally, one day, they experience a breakthrough! They're so happy and they get so confident that they forget the basics temporarily and do something crazy. Then they lose all their money.

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Just look at him go now, guess it took him right around three years to recover. Too bad he didn't win that years Masters, I think he would have completed the grand slam, or close to it last year.

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lovetotrade View Post
Just look at him go now, guess it took him right around three years to recover. Too bad he didn't win that years Masters, I think he would have completed the grand slam, or close to it last year.

It actually only took him only two months to recover as he won the US Open in June, 2011 by 8 shots.

Choking is often just an encounter with the unfamiliar. If you've got the "goods", and you put yourself there enough, you will quickly learn how to handle the pressure.

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If we think about it, people extremely often behave emotionally rather than rationally and "forget" their original intentions. It is just more obvious in dramatic cases like sport contests or trading, because effect is nearly instant and exaggerated.

Developing emotional stamina is probably one of the most important goals for all of us.

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Anagami View Post
Hmmm... That's very interesting, because what you say is true on one hand.... but on the other hand, most traders often overestimate (not underestimate) their abilities with rather dire consequences.

As an example, I had a friend who thought she was a true Champion trader. And indeed, in her first year she doubled her 100k into 200k. Needlessly to say, in her second year, she gave all her profits back and then some.

Seeing yourself as a champion trader when you're not is delusional and dangerous (and data tells us that most traders simply don't have what it takes to succeed in the long term, never mind being 'champions'). At the same time, however, one needs healthy self confidence as a trader. How does one find a happy medium?

I believe that it is experience, not just a mere decision, that should ground one's own view. If you have been consistently profitable over some extended period of time and understand the source of your edge, then the champion ideal is yours. If not, then you are merely day dreaming.

I agree with that. The more I trade, it seems like the more it makes me humble! And if you can stay humble in this game, then you will learn your blind spots and get better and better.

If I am talking to someone who "trades the markets", I have a really good idea if they are a real trader or not by how humble they are. They talk about their losses, they talk about what they had to overcome, and they talk about current challenges. They aren't there trying to impress you with that great win, or show how smart they are... or boast about that huge winning trade, because they know that tomorrow it can all change...

However, a winning mindset is critically important, you just have to stay humble enough to admit what you don't know... but confident enough to honor what you do know.

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