Dealing with the Pain of Trading: Part Two

Bad Assed Trader:I’m learning a great deal about myself from trading – more than I could have possibly imagined.  The last week or so has put me through a testing time.  Not because I’ve lost any significant amounts of money, I haven’t.  It’s all about the baggage I bring to trading and the hopes, fears and greed I have to deal with before I can succeed at this craft.

I have reflected on my feelings and why I have felt pain from missing out on a big move and how I deal with the pain.

Many of my mechanisms for coping in life have come from my perceived need to avoid pain and fear - pretty logical I guess.  As a child and in my early teens I often feared doing things, particularly going to places on my own.  I don’t know where that fear came from but I remember it vividly.  But at about 13 I learnt a method of dealing with this fear.  I would imagine that I put on a raincoat and that the things I feared (daft things like being the odd one out, no-one talking to me, everyone looking at me) were just rain drops that would run down the waterproof surface.  The raincoat in my mind was my defensive shield and it worked, after a while I was doing it automatically.

But now I realise that this technique didn’t actually deal with the fear, it just masked it.

Similarly, when I suffered the pain of loss or hurt (like if I felt someone was mean to me) I would think about and imagine the future and make plans which would take me away from that pain.  I used the hopes I had for the future to deal with the pain of the past.  Again, this technique worked to a degree in that I would take positive action to address my position and I learnt the skill of planning and implementing change.  I'm quite good at that now - hence the career in faceless bureaucracy - so maybe I should thank the nasty people I suffered in my childhood....

But now I realise that this technique didn’t actually deal with the pain, it just shifted the focus of attention elsewhere.

My techniques were not about living in the Now or acknowledging my reaction to issues.  They essentially avoided why I was feeling pain.

Success in trading is all about being in the Now – not masking the pain of the past and not hoping and thinking of the future.  To succeed I have to learn to be in the Now completely.  Without mastering this fully my trading will always be flawed.

For a few days after missing the trade as I reported on April 4 I felt a knot of anxiety (or pain) in my chest.  It’s nothing of physical origin – I’m in fine health physically.  The knot of anxiety was related to my feelings about trading.  I thought I had accepted the outcome of the last couple of weeks but the pain was there urging me to give up – or think about giving up.  This is something I have not seriously considered and am not going to do.  I will not give in to this pain.  It existed because I unconsciously created it.  It existed and lingered because I was not able to use my usual techniques of masking it or planning my way out of it.

Each time in trading I have hit the buffers and it’s got really hard I’ve been able to come up with a new solution – a new plan – to deal with the perceived problem such as sticking to one strategy or one currency pair.  Each time I have felt the pain of disappointment in my trades I have been able to plan my way out of it and then felt great – full of hope!  And each time I have thought that the pain has gone, planned away, but really it was still lurking there ready to come back when my plan failed or there was a glitch of some sort.

I know I was right each time to reflect, analyse and take stock and even to plan what action I needed to take – and then to take that action.  But now I realise I have to deal with this pain.

Reading the book my coach Emmanuel recommended “The Power of Now” has made me realise I shouldn’t mask or defer this pain but instead acknowledge it, scrutinise it and work through it.  In the book Eckhart Tolle says we should shine a light on our pain.  It is all part of surrendering to what is (ie the fact that I have lost a trade or missed a great trade), accepting what cannot be changed (the past) and instead moving into the present.  It’s about letting go, but not doing that by avoiding, instead really focusing on the pain as an interested observer.

In "Trading in the Zone" (which I am now reading for the fourth time - I must be a slow learner) Mark Douglas says we traders feel pain because we are not fully accepting the risk of trading and the outcome of that risk.  To succeed as traders we have to accept that the market has a lot of random action and that we are taking a risk.  When our trades fail we have to be open to learning from them and we're not as open to that if we feel pain as we are then more likely to take action to avoid future pain.

I’m now realising how the techniques I have used for the last few decades which did actually seem to help me in many ways – by blocking or avoiding feelings of pain – will not work now with trading.

These pain avoidance feelings are still guiding me rather than what I actually see on the charts being my sole guide.  This is emotional trading.

I had lunch on Monday with a couple of really good friends and one of them was speaking about how he realised in his later years that at times of stress or pain he needed to “step outside himself” and look at what he was feeling and why.  Even though my friend had not read Tolle’s book he was actually reinforcing the message inside it which is the message that my coach is trying his best to get me to understand. This is the message that we need to become more aware, more conscious of our feelings, why we feel the way we do and to accept what is.  It is only when we step outside of our emotions and look at them objectively that we can fully understand what is guiding our behaviour and be free to determine how we need to act instead. 

This applies to trading and to life in general.  But whereas we can survive life without this skill it seems the trading can be seriously undermined without mastering this.

I have to acknowledge the amount of baggage I’ve been bringing to my trading in terms of hopes and fears and train my mind to focus on the Now moment, free of this baggage, as well as fully accepting the risks which are inherent in trading.  I know this is going to take time, I have quite a few years’ worth of baggage to exorcise.  

But until you realise you have a problem and what it is you cannot fully address it.  I can see this is going to be a long journey....