Self talk for Trading

[newtrader101]

Dear friends,

Years ago, I was going through a crisis of losing self esteem and purpose in life. At that time, a book came into my life which shed much light on my problem and gave a method of handling it. The book was What to say when you talk to yourself by Shad Helmstetter.
It said our life experiences are determined by how we talk to ourselves about them and about ourselves. It is not new knowledge to us in India that thoughts make or mar one's destiny. But by introducing the term 'Self talk ' he made it clear that we could chose to think conscious i.e choose our thoughts.

The book has self talks for self esteem, time management, worry etc. An example of his method: a smoker who wants to give up smoking, keeps telling himself, I do not smoke, even when he is in the act of smoking.

Sounds contradictory, but is quite transforming. You should try it.

Like all other methods, this one also is not a one-time solution, because thought habits are deeply entrenched. One has to keep at it, perhaps till the end of his life.

Self talk for Trading
If you have observed yourself, you would have noticed that our thoughts affect our trading performance as well. Like when the market opens and yesterday was a winning day, then I may be complacent and careless. This attitude is the result of my thought, " Oh this is so simple. I won yesterday. I can do it." and jumps in where there is no trade.

When I lose I think, There I am losing again. I'll never make it. These markets are all rigged. What am I good at? Or my broker is cheating me...

Changing our self talk can change our experiences and trading performance.

Below is an attempt to collect thoughts on positive, proactive actions that can help us become better traders, Please contribute. It doesnt matter if it is obvious or said before. Dont think your idea is small or stupid. If you feel it helped you become a better trader or will help, do put it down here.

(Sorry this self talk below is not organized, That we will do later. Because if we wait for something to be perfect, we will never start!

 

[newtrader101]

I am a disciplined trader. I trade on the --- minutes chart. I do only two trades in a day.

I use stop loss. I keep my stop loss at the recent swing high or low.. I take a screen shot of each trade. I record each of my trades. After my initial target is reached, I trail it by moving the stop.

I check the risk and reward of each trade. I enter a trade only if the risk to reward ratio is equal to or less than 0.5.

I use money management. I do not risk more than 5% of my total margin in a trade. That is, if the risk is more than 5% of my margin, I do not take that trade.

I read atleast a page of the same trading book everyday till I complete it.

I do yoga/exercise every day. I prepare myself for each trading session by warming up (how?- it should make us alert and ready). I am moderate in my lifestyle- eating, drinking, sleeping etc.
Before a trade, I erase all previous trades from my memory- win or loss.

I avoid trading just before a news release.

I read positive thinking books.

 

[Riskyman]

Optimizing only one part of the system invariably leads to the whole system being less efficiently than it did. Therefore, you have to address the whole system to obtain maximum efficiency. What do I mean? Our brains and our minds are very complex structures. Both of these are tuned entirely for our survival and well being in the existing circumstances we are prevailing in... Both physiological and psychological. Any changes done randomly on a singular aspect will have repercussions on this natural balance that is already in place. Let me cite a very simple example. A person decides to lose weight and get physically fitter due to a moment of excitement. He joins a gym and works out religiously everyday thinking that the more he does it, the better it will be. Because he hasn't been all that fit in the past, he manages run a sprain on his ankle and is advised complete rest. Now he cannot exercise which makes him depressed. In order to counter his depression, he seeks more and more of comforting foods like cakes and pastas which in turn help him gain all the lost weight back and more. In the end he find himself fatter than when he started. This leads to a more severe complex and everything is back to square one. For better understanding of this, let us talk in terms of trading. Most of us as trader make rules,systems,checklists etc hoping that it will help us execute our trades better. We start and do well initially. Then something happens. Lets say one or two bad days and it destroys us completely. No matter what we do, we find it tough to go back to winning again. For some, it even gets worse from here. Why? As you can see here, addressing only one part of the ecology has no meaning as it makes the whole system less efficient than before. Therefore, a systemic approach has to be taken in order to address the entire neural ecology than only a singular part.

Self talk does only as good as the entire system does to itself. Self talk is only one part of the entire system. However, It only works on the conscious layer of the mind. The conscious layer is only an interface between the outside world and the world inside us i.e the unconscious mind. The conscious mind often lies, manipulates information, distorts data and mis-represents facts. Because of this we have distorted and misrepresented data in our unconscious mind too. If any long lasting, meaningful changes have to be done, they have to be done at the unconscious level. All our emotions, feelings, resources are held contained in our unconscious. When we tap into this unconscious reservoir, it becomes conscious. In fact, Most of our actions are driven from our unconscious mind throughout our lives even without us being aware of it. If this is true, then our failures in trading can be easy and directly attributable to our unconscious.

If I keep saying "I use stop loss. I keep my stop loss at the recent swing high or low.. I take a screen shot of each trade. I record each of my trades. After my initial target is reached, I trail it by moving the stop. " Will this make me a better trader? Likely not. Talking to oneself in itself is not a bad thing at all. Its a good thing. At best, it can make us a little more comfortable before a trade. However, it does not have any practical purposes in trading. Why do I say that? Every trader here, wakes up in the morning and talks to him along these lines. All good before market opening. However, the results at the end of the day are quite different. Why is that so? It's because the human mind/brain does not do anything without a reason. Like I have said, it is designed strictly for its own survival. Unless, there are compelling reasons at hand, it will continue to do what it is familiar with and stick with only those actions that will not jeopardize its existence. Therefore, it will continue to push you to do those things whose outcomes it is already familiar with i.e if your brain is very familiar with making bad trades/losing money, it will continue to maintain this status. Counter intuitive, you may say.. but so long as your bad trades and losses are not anywhere near destroying you in one go, your brain will not be easily be threatened. Talking to it in simple English will not help. Your brain understands a different language. There are multiples parts to your brain and each one does a different thing. The meanest of them all is the stem. It is the most primitive part of the brain and has not evolved much since we began our evolution. This part of the brain is the big boss of all other brains and it thinks only in terms of survival, both genetic as well as of the self. Make friends with this guy and it may be able to help you.

More later....

EDIT: @newtrader101 The purpose of my post above was not to disqualify any of things you have mentioned but more merely to add another perspective.

 

[Riskyman]

Changing our self talk can change our experiences and trading performance.

This reminds me of something.. A very long time ago, a bright friend of mine dropped out of college due to difficult circumstances in his life. To save himself some embarrassment due to the fact he dropped out, he would often lie to our other friends that he completed his college with xyz grades. He continued to state this fact to everyone he met. In a few months, he had not only convinced others he had finished college but he was himself convinced about it. It was such a strong talk for others and unto himself that he never went on to complete college even to this day. However, the self talk didnt change anything materially for him. It was just a thing in his mind. So i think we have to be very careful abut what we talk to ourselves.
Its one thing to end up lying to ourself and its completely another to make it happen in the external world.

 

[newtrader101]

The meanest of them all is the stem. It is the most primitive part of the brain and has not evolved much since we began our evolution. This part of the brain is the big boss of all other brains and it thinks only in terms of survival, both genetic as well as of the self. Make friends with this guy and it may be able to help you.
.

Thanks for your insights.
Obviously, just repeating positive self talk will not guarantee better results. Positive self talk will help those people who have long running habits of heavy negative self-talk. It might have been handed down by elders or friends. Very rare is the individual who bothers to examine the content of his/her thoughts. So introspection is a natural necessity. i.e. What am I doing/thinking now? This could avoid the type of situations you mentioned (the college student).

If your childhood environment was a nurturing and tolerant one, you wouldn't have picked up too many negative thinking habits. It'd have actually set you on the path to self-actualisation (fulfilling your potential). But in the current societal scenario, elders easily lose patience with youngsters who do not seem to understand/cooperate with them. Then the barrage of criticism starts: How many times do I have to tell you to not do it like that/ to do it like this? At this rate, you'll never amount to anything! (Leaving out the worse phrases)

The mind of the child is very receptive and he starts to believe : I cant. I will never succeed....I cant get it right...

Hey our justice system itself is punitive. Retribution for the wrong doer.

Countries like Netherlands and Norway that are exploring a more tolerant system of justice are experiencing lower crime rates. Netherlands is actually converting many of its jails to malls and apartments because of the lower conviction rate.

I agree with you about the necessity of immediate consequences to alter behavior. Such consequences will come to all those who are negligent. It's a part of nature. But the average man is smashed by them, that he never gets up again. Self talk enables us to maintain our belief in ourselves, and to keep pressing forward.

It is a kind of pep talk we give to ourselves. It is not a pancea, a single-pill-solution-for-all-problems.

Interested in your thoughts on how to tame the amygdala...

 

[Riskyman]

Thanks for your insights.
Obviously, just repeating positive self talk will not guarantee better results. Positive self talk will help those people who have long running habits of heavy negative self-talk. It might have been handed down by elders or friends. Very rare is the individual who bothers to examine the content of his/her thoughts. So introspection is a natural necessity. i.e. What am I doing/thinking now? This could avoid the type of situations you mentioned (the college student).

It is imperative to differentiate between "Talk" and "Belief". While "Talk"mostly remains only talk, it is hardly of any consequence, either positive or negative in the long run. What is important here is the "Belief System". It pays to note that a lot of our belief systems come from our own experiences of the inner and outer worlds. The experience in itself may not be as significant. However, what is of significance is the meaning we attach to these experiences. These experiences along with the meanings become the building blocks on how go about perceiving the world around us.
If a trader already has a belief that trading is a tough job then, no amount of positive self talk will help. Why? because no matter what is said the underlying belief system is not changed. Therefore, if you want to see changes, you have to change beliefs. How do you go about changing beliefs?

If your childhood environment was a nurturing and tolerant one, you wouldn't have picked up too many negative thinking habits. It'd have actually set you on the path to self-actualisation (fulfilling your potential). But in the current societal scenario, elders easily lose patience with youngsters who do not seem to understand/cooperate with them. Then the barrage of criticism starts: How many times do I have to tell you to not do it like that/ to do it like this? At this rate, you'll never amount to anything! (Leaving out the worse phrases)

I agree with you about the necessity of immediate consequences to alter behavior. Such consequences will come to all those who are negligent. It's a part of nature. But the average man is smashed by them, that he never gets up again. Self talk enables us to maintain our belief in ourselves, and to keep pressing forward.

It is a kind of pep talk we give to ourselves. It is not a pancea, a single-pill-solution-for-all-problems.

While for most parts, to the raw human mind there is nothing positive or even negative. There is no good or bad. There is only an experience. The meanings we attach to some of these experiences usually comes from social conditioning (not all of them though). As we go on in life, some of the new meanings will come from past experiences (a loop formation of sort). A child will pick up a stone and throw it at a dog. At that point there is no good or bad inside the mind of the child. It is merely an act of throwing a stone at the dog just like he would randomly throw the stone at any other object. The meaning to this experience may come from the mother who tells him tells him that its a bad thing to do or a wrong thing to do. On the other hand, if the mother told him that he did the right thing by throwing the stone then the child would assign a different meaning to this experience. The same experience but two different meanings. You see?
As we navigate through this world, we experience different things and for various reasons we assign different meanings to those experiences. And is exactly the thing that differentiates all of us from each other. It forms our personalities. Do you have a friend who shares the same values as you? (Values are just meanings in a different sizes and shapes). Do you have a brother or a sister who has a completely different view of the world as compared to yours? If so, why is that he/she even though raised by the same parents in the same household has a different view as opposed to yours? What happened here? You get the point I am trying to make? It is not so much about home upbringing at all. In my view, It is mostly our larger environment both social as well as physical.
However, at the core human level, we are all the same. There is absolutely no difference in any one of you. We are all wired to be the same.

So how do we change beliefs? Our past experiences form the fundamentals of our existing belief systems. No one just woke up one day and started believing in something right? As we experience things, our beliefs can evolve. Ex. a trader who started out successfully may eventually end up believing that trading is not a career worth pursuing(due to losses,stress etc) or even vive versa.
For us to change our beliefs, we have to change our experiences of the past. However, It is extremely difficult go into people's head and wipe clean bad memories and experiences. The only way to achieve it is by assigning a new meanings to the same old experience. This can be achieved by hypnosis, therapy both conventional and unconventional.

Interested in your thoughts on how to tame the amygdala...

We can talk about the limbic system another day. Time to sleep now.

 

[Riskyman]

@newtrader101 Forgot to mention there are two kinds of beliefs. Empowering beliefs and Limiting beliefs.
From your first line, I gather you were in the process of losing your self esteem I.e you didn't quite get there.
Good thing you already had an empowering belief. The self talk only managed to strengthened the belief and you were able to deal with the situation.

The self talk works when you have a belief system that is in line with what you are talking. If there is any contradiction, it is highly likely to fail faster. I am glad you had an empowering one.

 

[VJAY]

Wow Riskyman !!!! You have tremendous knowledge in psychology...Are you doctor?Thanks for sharing your thoughts here....
@ newtrader ...thanks for starting this thread with your valuable thoughts one the subject....

 

[newtrader101]

The only way to achieve it is by assigning a new meanings to the same old experience. This can be achieved by hypnosis, therapy both conventional and unconventional.

Isn't this taking away the key to self-empowerment from the individual and handing oneself over to the mercy of therapists? Nobody has greater concern for your welfare than yourself.

I can understand that those who are not receptive to this method may not benefit. Especially those who dare not question the beliefs handed down to them by others. It may be frightenng for some people to question beliefs, while deeply empowering for others. For instance, once I shared this book with a colleague. He wouldn't complete it, he felt it was sacrilegious to empower oneself with thoughts like I like how I feel, I like how I think, and I like how I do things. I approve of me and I approve of who I am...Probably he will find it better to rely on a therapist.

But if everybody thought like that, people like Roger Bannister wouldnt have broken the four minute mile, Man wouldnt have landed on the Moon.

I am not for or against any method. If something works, use it. If only part of it works, use only that part. If it stops working, stop using it, but give it a resonable time of trial.

 

[Riskyman]

Isn't this taking away the key to self-empowerment from the individual and handing oneself over to the mercy of therapists? Nobody has greater concern for your welfare than yourself.

I can understand that those who are not receptive to this method may not benefit. Especially those who dare not question the beliefs handed down to them by others. It may be frightenng for some people to question beliefs, while deeply empowering for others. For instance, once I shared this book with a colleague. He wouldn't complete it, he felt it was sacrilegious to empower oneself with thoughts like I like how I feel, I like how I think, and I like how I do things. I approve of me and I approve of who I am...Probably he will find it better to rely on a therapist.

But if everybody thought like that, people like Roger Bannister wouldnt have broken the four minute mile, Man wouldnt have landed on the Moon.

I am not for or against any method. If something works, use it. If only part of it works, use only that part. If it stops working, stop using it, but give it a resonable time of trial.

@newtrader101 Should have actually been "This can be achieved easily and faster by hypnosis, therapy both conventional and unconventional".

Self empowerment is a nice word only used to sell books. How do you self empower? Self empowering is nothing but changing meanings of our past experiences, tweaking them to change certain limiting beliefs and using them in a certain way so we get a desired outcome. The desired outcome could be anything. For example, building confidence or even having self worth. We can call it by any name such as self empowering, self help, self healing, self whatever. The bottom line is the same. The ultimate process of change is the same. Its is like a computer which processes and stores data only in the binary format irrespective of the language or operation system used. Nothing more, nothing less. Either do it yourself or take help of a therapist. Unless, you are addressing the core there is no way out.

One of the main problems with people is that they end up thinking going to a therapist or a practitioner is a sin. In our society it is considered a taboo to have a therapist specially a psychological one. People go to a doctor when they have fever, People hire a trainer in the gym when they are over weight, people go to a salon when they need a haircut. But still people will not go to a to a therapist to fix their minds when its not up to the mark? Why so much shame about it? we dont feel this shame when we go to a doctor though. You can heal yourself at home by taking some ayurvedic concoction, you can work out on your own, you can cut your hair on your own too. Why dont we? Because, going to a professional is so much more easier. Similarly, going to a therapist is the easier than struggling alone with issues for months.

PS: I note that you edited your message when I was typing this. Will talk later after trading hours.