Self Sabotage & Breaking Lifetime Habits

Bad Assed Trader:  Last week I've had two days on another Forex Trading Bootcamp.  There's always plenty for me to learn - whether it's clarifying or reinforcing the basics, or most importantly for me right now, getting the psychology right.

It's brought home to me the fact that by breaking my rules recently I have been committing a typical trader sin - self sabotage.  There's no way of avoiding that reality, it is a fact.  I broke my rules and I had sworn not to - that's self sabotage, plain and simple.

The question I have to answer is...why?  Why do it?

Yes there's an element of my personality - being adaptable and exploiting opportunities (which aren't actually there but you imagine they are) but to say that's all it is is fooling myself in the same way those people who answer the question in interviews "What are your weaknesses?" with the reply "I'm a perfectionist" are trying to fool the interviewer.  Come on.  There's more to it than that.  Dig a bit deeper and face up to reality.  Otherwise you're just in chronic denial.

But why might traders (and why might I) self sabotage?

I did a bit of research to understand this better.  It seems that self sabotage is something inevitably experienced by pretty much all traders as it's deeply rooted in our sub conscious brains and is about beliefs and habits.  If we've never been successful traders then we don't yet really and deeply believe we can be and this comes out in our trading.  This means that to succeed we almost all (there are always one or two exceptions) have to go through a transformational process.

As Ed Seykota says in "Market Wizards": “A losing trader can do little to transform himself into a winning trader.  A losing trader is not going to want to transform himself.  That’s the kind of thing winning traders do.”

This is no doubt one of the reasons why 90% of traders fail - it is tough transforming oneself, it means taking a long hard look at yourself and rooting out certain strong and deeply held beliefs, behaviours and attitudes.

Youtube is always a good source of information and if you type in "trading self sabotage" many pearls of wisdom present themselves.  There's an interview with Brett N Steenbarger who wrote a book recommended to me at the boot camp: "The Daily Trading Coach" and he talks about the main psychological problems traders face which amount to self sabotage:

1.        Trading Addiction - this made me smile when I heard him say it – given that it was the title of my last blog (sheer coincidence).  On hearing this I initially felt shame that I had fallen prey to the typical trading sin, one of the biggest two according to Steenbarger, but then I realised that I didn’t just fall for this sin, I recognised it, identified and reflected long and hard afterwards on how I felt, why I did it and how I can recognise again if I start to get into that mode. 

     There is definitely a feeling of control which one loses when one starts breaking one’s rules.  This happens when you fall for trading addiction.  You can persuade yourself that you are still in control but it’s an illusion you have created to keep your rational brain quiet whilst your ratty brain takes over.  If you pause and feel for a moment you will know that deep down you are not actually using your full control.  

      Steenbarger talks about addiction to the thrills and excitement of trading rather than being patient and waiting for your set up.  To me, that basically boils down to whether you actually have full control over yourself.  Again I reflect on my own personality and how I have thrilled over the years at breaking rules or “letting go” – usually in the form of binge drinking as a student.  But I am not someone without strength and determination and I can, if I really believe in something, be disciplined.  I have lots of evidence to support this so this is the strength I now must liberate and harness for my trading.

2.       Impulsivity – which traders often call “over trading”.  When we’ve lost money or are feeling frustrated because the market conditions are not right then we find trades to make.  It is so true.  I think this is again where the self-control comes into play big time.  Many traders talk about how hard it is to stay out and when trends start to change (as Euro and cable just have) we get our fingers burned because we loosen our rules in order to get into trades which then of course don’t work because the trend is changing – which is what the market is telling us by not allowing our rules to be met.

 Self-sabotage reflects self-limiting beliefs and is powered by the sub conscious.  So if I sabotaged myself then something in my subconscious believes I’m not capable of or worth succeeding at trading.  I have to face this fact.

So what does one do to overcome this self limiting belief, to exorcise it?  There’s plenty of advice on Youtube and in books like the one I’m reading now “Ask and it is Given” by Esther and Jerry Hicks.  They basically boil down to various techniques to reprogramme your subconscious to steer you into success.  

The subconscious gets its information from the conscious part of the brain and cannot differentiate between things that the conscious brain tells it which are actually happening or things that the conscious brain tells it because it is rehearsing what it wants to happen. 

The way I imagine this is as if you had someone driving your car who was blind and you were sitting in the passenger seat giving instructions to this blind driver to make sure they drove your car safely and well.  The driver doesn’t know whether what you are describing is actually there or not but they have to believe you because they can’t see for themselves.  So if you want the driver to go slower than he’s inclined to drive you might tell him that the traffic is heavy – even when it isn’t – and this will make him slow down.  Tell him that the road is clear and straight and he's doing well and he'll probably motor forward fearlessly.

And so we need to issue new instructions to our blind driver, our subconscious, so that it will drive us in the way we wish.  The techniques to do this are to see yourself as the new person that you are aiming to be – the successful trader – to picture this in detail and imagine scenarios and how you will be reacting in them.  You repeat this daily and train your subconscious to automatically react the right way in a given situation.  

Apparently after four weeks you start to notice a difference and after six months the skill becomes automatic – the programming has happened.  It is about getting the right information into your long term memory where it is embedded and can be drawn on easily despite stressful conditions (just as how we slam on the brake automatically to avoid collision when driving – without even thinking).

My coach Emmanuel said at the bootcamp "The mind is like a wild animal, you have to train it"

Even Wild Animals Can Be Trained

So for my image today I've chosen to represent my learning as a cheetah mother with her cubs.  The cheetah is definitely a wild animal - like our minds - but they can be trained (usually by their mother) and they can be a source of inspiration for traders. The cheetah mother will wait for exactly her hunting "set up" before she takes the risk of exerting the considerable amount of energy necessary to hunt and kill her prey.  Her set up includes waiting for a young or otherwise compromised (eg injured) animal to stray slightly from their herd before pouncing.

Cheetah mother knows that to hunt and kill uses a great deal of her energy and this is only replaced by eating the kill.  Our trading capital is our energy and only replaced by a win.  She survives by waiting for the highest probability set up and then confidently going for the kill.  

I'm now embarking on a thorough training programme for my sub conscious.  I'm going to try something even more comprehensive than many of the techniques suggested - more detail about this and how it's working in my next blog.