A Process for Achieving Goals 4 (Success Series)

BarroMetrics Views: A Process for Achieving Goals 4 (Success Series)

I was going to start on Method today; but on the way to Singapore, I read Charles Duhigg’s ‘Smarter, Faster, Better.’ His chapters, ‘Motivation’, ‘Goal Setting’ and ‘Focus’ add to our discussion.

Charles suggest two practices stimulate our motivation for goal achievement. Firstly, reframe our actions from chores (‘must dos’) to choices (‘want to dos’).

This simple reframing provides us with the sense of control our brain seeks. Add to this the well-known practice of ‘I’ll just take one small step – just to start, and see what happens. I can also stop if I don’t feel like continuing’, and you have a fab strategy against procrastination.

Secondly, Charles suggests that we remind ourselves that the small steps are steps to goals supported by our values. He gives a personal example of a heading to his ‘to do’ lists: the reason for the actions he is taking. He suggests grouping actions for one goal for a single ‘to do’ session.

In his chapter on ‘Goal Setting’,  Charles recommends using SMART (SMARTER in our case) to create the tactical plan to attain our goals. For example ask:

  • What step that is specific, can I take to attain my goal? 
  • What step can I take that is measurable? And so on.

His other relevant recommendation (in the ‘Focus’ chapter is to create a vivid picture of what our day would be like if we were to execute our plan for the day. To this I would add a review of the day:

  • What went well?
  • What needed improvement?
  • What actions to take next time to create the needed improvement?
  • How much closer did today take us to our goal? 

Next Monday, METHOD; tomorrow, I’ll review Gold…..

A Process for Achieving Goals 3 (Success Series)

BarroMetrics Views: A Process for Achieving Goals 3 (Success Series)

This is the easy section to write. Much has been written about goal setting and goal review.

Vision relates to our right brain, goal setting to our left, and so, we need to set SMARTER goals:

  1. S: specific e.g. I’ll abstain from sugar and go to the gym three times per week to lose 10 lbs in Mar 2016
  2. M: measurable e.g. Losing 3 lbs per week will mean I am on target
  3. A: attainable e.g. you need to change mindsets, acquire habits and skills that will lead you to your goals.
  4. R: realistic e.g. goals that are slightly out of reach so you need to stretch but not so far out of reach that we feel we’ll never attain the goal. 
  5. T: time-bound e.g. a calendar end point for assessment.
  6. E: evaluate e.g. adjust in for changing circumstances and determine what is or is not working.
  7. R: redo  e.g. after evaluation come up with new actions to replace those that are not working.

Goal setting is necessary but not sufficient. To succeed, we need to plan what action to take and then take action – action that leads towards our goals. Without action, all we have are pipe dreams. And it’s not any action, it’s action that we change with deliberative practice.  

Any worthwhile activity needs deliberative practice; and yet, through the years,  the advice I have given that is most honoured by its breach is my exhortation to practice deliberatively trading two or three hours a week. Done well, this practice hones our intention and integrates appropriate market responses so they become second nature.

So how about you? Did you say you want to become successful? Perhaps very successful? How time do you spend in deliberative practice?

This post wraps up the ACT Hexaflex. The next blog, we’ll look at METHOD. 

World Events

BarroMetrics Views: World Events

For today, a sojourn to the world of politics.

Super Tuesday has confirmed that Donald Trump will probably be the Republican nominee. And, he has, at least an even money chance of becoming the next President. I thought that nothing could be worse for the world than another four years of Democratic big-government. But, a the horror of a Trump presidency shoves that into the background.

What do I have against Trump?

The US political system – the system that first enshrined individual rights and the supremacy of the individual over government – produced the free environment that led to the US economic empire.

Bush, and Obama expanded the role of government; Trump will probably complete it. If you listen and watch his campaign one thing comes through clearly – Trump will say and do anything to get what he wants: inconsistencies mean little (just Google ‘Trump Inconsistencies’ and you’ll see what I mean). With that in mind, can you imagine what would happen if he gets a notion into his head that all ‘xxx are a threat and should be summarily arrested without trial’? And with that in mind, we see his approach to diplomacy.

I can’t say I don’t sympathise with the US citizens; they are looking for a change from politics as usual: sixteen years of crony capitalism (2 terms Bush, 2 terms Obama) have decimated the US middle class. But, voting for Trump won’t be the solution.

The other day my friend said: “Well if they vote him (Trump) in, they deserve what they’ll get!”. The problem is, it won’t only be the US that suffers. Other parts of t he world, including this part will be dragged into the mire.

Let’s see what happens.

Why So Many Fail As Traders II (Success Series)

BarroMetrics Views: Why So Many Fail As Traders II

Continuing from yesterday…..

‘Being in the Moment’ affects Self As Context and Defusion. Self As Context is the skill to observe our behaviour from a third party viewpoint. The stance allows us to view ourselves dispassionately and objectively. Defusion means detaching ourselves from unhelpful thoughts. We treat thoughts as products of our mind rather than take them as reality and thus become immersed in their fiction.

Finally, ‘Acceptance’ means we make room for painful feelings. We learn to be comfortable with discomfort. The idea is to let feelings come and go without an investment on our part to fight, fly or freeze.

That’s the theory; below is a link to a video showing ACT in Action.

 https://dl.dropboxusercontent.com/u/10422981/ACT%20in%20Action.wmv

Why So Many Fail As Traders (Success Series)

BarroMetrics Views: Why So Many Fail As Traders (Success Series)

Most newbies come to trading with a belief that all they need to be winners is  ‘the system’; some come to trading with not even that belief – they confuse being lucky with being competent. Not long ago I was at a conference when I overheard a trader expounding the idea that ‘all educators know nuts. To succeed, you must find the information for yourself’.

I thought to myself: ‘does that mean he’ll only learn from his losses?’

Imagine how the human race would have stagnated if we had to keep reinventing the wheel. So, if successful traders can and are willing to share, why is it so many fail? Why is it despite the available winning methods and excellent risk management ideas , newbies just don’t make the grade?

The answer lies in the ACT Hexaflex. The four elements on the left side:

  • In the moment
  • Self as Context
  • Acceptance and 
  • Diffusion

can be labelled ‘winning psychology’. They share a connection, though each is an individual practice in its own right.

  • ‘In the moment’ can be described as being or living in the now. We humans, tend to spend much of our time randomly thinking of the future or thinking of the past. ‘In the moment’ calls for paying attention to the info and sensory perceptions as they are occurring now. We can attain this state through the REPS exercise or through meditation. Research on meditation, especially mindfulness meditation, has shown that meditators  make better decisions for a number of reasons (see What Are the Benefits of Mindfulness)

More tomorrow

act-hexagon-10.png

FIGURE 1 ACT HEXAFLEX

The US Elections

BarroMetrics Views:  The US Elections

Normally, I avoid commenting on politics, but the forthcoming US elections can have long-term consequences. The most likely Republican nominee, Donald Trump, and the possible Democratic nominee, Bernie Sanders, represent the worst of possible choices. If either takes the reins, he’ll do so at a time US power and influence is on the decline.

Their election was foreshadowed many years ago (1989 to be exact) in Lord Rees-Mogg’s book, ‘Blood in the Streets‘. The book’s thesis: we were about the see the end of US power, and it drew a roadmap of the possible scenarios that roadmap may take. The decline was delayed by Bill Clinton’s relative financial discipline (he increased the debt level by less than Ronald Regan), and was reinstated by Bush and Obama.

In the attached pdf, you have the debt level increases since 1960 (thanks to ‘aboutnews‘). Bush increased the national debt by 101% above Clinton’s last budget (USD 5.85T); Obama added USD 53% (6.2T increase to Bush’s budget). Unless the US does something about the problem, we’ll see the US stop being the reserve currency with all the economic consequences that the event will entail. 

So, the US needs a leader that it will lead it out of Ree-Mogg’s scenario.

What are we being offered?

On the one hand, Donald Trump, huge on hyperbole, lawsuit threats and little in detail. Not only that, his views change from week to week. For example in one week, he said ISIS was not a problem, and the following week, he would bomb them. One can, of course, evolve, but evolve from week to week? What seems clear to me, is Trump has no firm principles – he’ll say whatever he feels is necessary to attain his goals. That may well work for business, but for Presidency? I think not. The last leader of this ilk was Malcolm Fraser and, in my view, he set back, the Australian economy to a point that was worse than the mess left by Gough Whitlam.

On the other hand, we have Bernie Sanders (or Hillary Clinton, much of a muchness). “Spend it big, don’t worry where the money will come from, it will just be there (??)”. I have seen the effects of socialistic policies, and again, in my view, the program espoused by Sanders will be the last straw that will break US power.

The first that will suffer will be the US citizen. Under Bush and Obama, the US wealth divide has grown tremendously. No doubt the citizen is frustrated and scared. But electing either of the probable nominees will ensure Rees-Mogg’s roadmap. If the US citizen were the only one affected, then perhaps it would be OK. But, given the US’ position. a poor President will ultimately affect us in this part of the world.

Seeing as how I can’t even vote for the next nominee or president, I can only hope that the outlined scenario does not come to pass.

amount-added-to-the-debt-for-each-fiscal-year-since-1960.pdf

The Rubber Meets the Road (Success Series)

BarroMetrics Views: The Rubber Meets the Road

We are here folks. In yesterday’s blog, we cleared the preliminaries. Today we start on the substantives of ‘Mind’. It’s important to remember that we have assumed that we have a Method that:

  • suits our personality, and
  • has a positive expectancy return.

We also have Money rules that provide for optimal position and portfolio sizing.

Mind seeks to optimise our execution of our Method and Mind.

Let’s begin…….with the Reps exercise and meditation we seek to acquire early awareness of our biological responses that signal the onset of the fight, flight or freeze (3Fs). Early awareness allows us to deal with the 3Fs because unless we do, they will lead to sub-optimal decisions, and in turn, sub-optimal decisions lead to unacceptable losses.

Today, we’ll take another step in learning how to manage our 3Fs properly. To this end, let me introduce to new readers the ACT (Acceptance and Commitment Training) Hexaflex; regular readers have already been introduced.

Figure 1 shows the Hexaflex.

For the next few blogs we’ll be dealing with the left side:

  • In the moment
  • Self as Context
  • Acceptance and 
  • Diffusion  

More next week

act-hexagon-10.png

FIGURE 1 ACT Hexaflex

REPs (Success Series)

BarroMetrics Views: REPs

Let’s take a quick recap.

We’re exploring why traders fail. I have suggested that there is a two-fold reason:

  1. Traders don’t know what to do.
  2. Traders don’t do what they know. 

Trading success is based on: Mind x Money x Method.

Assuming we have the learning skills to acquire the necessary knowledge, and assuming we have two essential prerequisite values. of honesty and integrity, why is it so many still fail?

My amswer is they don’t do what they know. So the question is why not? In examining this query, we are confronted by a trading paradox:

  • Emotions are a necessary part of optimal decision-making, and
  • Unless we manage the emotions of fight, flight and freeze (3Fs), we are doomed to failure. Also, seeking to control, deny, ignore and suppress the 3Fs does not solve the problem. Indeed, it worsens it.

Research shows that mindfulness meditation solves the problem – just how, we’ll see later. For the moment, let’s turn to the mindfulness meditation, what it is and how to practice it.

I define mindfulness meditation as the process by which we train our minds to become aware of our thoughts and feelings without buying into the drama.

Usually the word meditation conjures up the image below

meditation.png

And while some traders take to meditation like a sduck to water, others are unable to implement the practice.

A useful alternative are Rep Exercises.

Based on the word ‘repetition’, reps are used by atheletes to define the nymber of times to perform an exercise. We apply the idea to mindfulness meditation.

The object of reps is to become aware of our thoughts and feelings without buying into their drama. Here’s the process:

  1. Separate the day into four parts
  2. Set a reminder on your mobile phone. 
  3. Anchor to a common behaviour during (1) above.
  4. When ever (3) occurs,  for three (3) breaths notice a sensory perception. 
  5. When the alarm goes off, see how many of the perceptions you remember. 

For example, I anchor to ‘brushing my teeth’: whenever I brush my teeth, for three (3) breaths, I notice how the tufts feel against my teeth. 

This exercise work. What it achieves we’ll consider in the next blog.

What You Are Asking (Success Series) II

BarroMetrics Views: What You Are Asking II

Continuing from yesterday….

So here’s the thing. Paul has instituted a checklist for his trading. That checklist includes multiplying the ATR by ‘X %’. And still he ‘forgot’ to do this for the NZDUSD pair – and not only that, his error could be anticipated!

What’s my point?

Success is a function of Mind x Money x Method. All three are necessary to success. Much of what blocks our attempts to succeed come from the subconscious level. We need to find ways to overcome the unconscious barriers as well as ways to acquire the necessary knowledge to succeed.

It’s this insight that most traders who are not succeeding fail to appreciate – accountability is seen as an external event: blame for their failure is levied on scams, poor teachers, etc.

Now, some of the criticism is undoubtedly deserved. How many ‘guarantees’ of success have disappeared in clouds of smoke? Too many, if my early experiences are to be a guide. But, today there are genuine instructors who can assist – you just need to separate the wheat from the chaff.

Like a trade, there are no guarantees. But, like a  trade, due diligence can place the probabilities on your side.

Next week, we’ll look at a simple exercise that enables you to be more self-aware. The increased self-awareness comes into its own when you catch early behavioural responses that occur when anxiety first arises.

What You Are Asking (Success Series)

BarroMetrics Views: What You Are Asking 

Today, I was going to deal with an exercise that leads to greater awareness of our biological and mental responses. However, since Friday, I have received quite a few emails that call for a public reply.

Essentially the questions raised can be separated into two camps:

  • a) Will the program be made available to the public? If so, b) when and c) what will be the tuition?

Short answers are a) ‘yes’, b) around May-June 2016,  c) no idea at this stage.

  •  How does the program work?

It’s a 3-month group coaching program that covers mind, money and method.

  1. The aim of the course is to ensure that at its end, the registrant is executing consistently with the result that he shows results with a positive expectancy return i.e. is making money over a large sample size (as distinct from ‘every’ trade).
  2. There is a preliminary assessment of the registrant’s psychological profits for accountability and tendency towards self-sabotage.
  3. The registrant chooses either a Mechanical method or Discretionary rule-based method, and decides on his trading timeframe (day trade, weekly trade, etc.).
  4. The registrants formulate his Method and Money rules OR chooses to adopt the given mechanical Method trading rules.
  5. The registrant needs to form 12-month and 3-month goals and benchmarks for the goals in the language of (1) above. 
  6. There is Group daily recap/preparation and weekly recap. The daily recap for 5 registrants lasts about 30-min to 45-min; the weekly lasts 60-min to 90-min. 
  7. The registrant keeps an equity journal and psych journal from which we can obtain valuable info allowing us to identify the strengths and weaknesses of each trader.
  8. Measures are taken to strengthen or eliminate the weaknesses identified; measures are taken to increase strengths that are identified. 
  • Is the coaching working?

In my view – too early to tell; we won’t know till mid- April. But the preliminary results are more than encouranging.

What I find interesting is that so far, the weaknesses have been relatively easy to identify. This means that the corrective behaviour is just as easy to prescribe. The question is whether the corrective behaviour will be carried out. And that question my answer, “I don’t know yet”.

Let me give you an example.

Paul (whom you have met in Single Most Important Insight), adopted the day-trading system. The rules call for identifying the Average True Range for an instrument and taking using ‘x%’ of the ATR to set an exit target. He entered a GBPUSD and in his words: “I’ve never had a profit so quickly” (he took a 45-pip profit in less than 5 minutes).

During his recap, one thing stood out clearly, on the next trade, he’d probably break his rules. You see, that GBPUSD had a range of over 200-pips and for Paul that subconsciously meant that his trade was not good enough.  I warned him but did not suggest any remedial action.

Sure enough, on the next trade, he ‘forgot’ to multiply the ATR by ‘x%’ with the result he missed exiting the trade by 1 pip. Knowing the danger, I sent him an SMS once my profit target was triggered. He managed to exit the trade with a small profit.

More tomorrow.