The Newbie and The Hero’s Journey

BarroMetrics Views: The Newbie and The Hero’s Journey

Anytime a trader takes on a course like Ultimate III, I liken him to undertaking a ‘Hero’s Journey’.

Why?

Because I have found Chris Volger’s adaptation of Joseph Campbell’s work exceedingly useful – useful in helping traders become consistently profitability.

You may object that a trader seeking profitability is no hero.

I could not disagree more.

Trading is one of the hardest professions in which to acquire competency. Some may even say it is the hardest. By any definition of ‘hero’, anyone who starts in the losing column of the newbie trader and attains competency – thus becoming consistently profitable – is a hero in my book.

FIGURE 1 shows the Hero’s Inner Journey.

Most students fall into one of the first seven stages. Most are at the second and third level – and to succeed, they need to overcome the challenges of those levels.

At the start they are immediately faced with a vexing question:

  1. The increased awareness of the need to change, causes them to register for a course;
  2. The desire/need to remain within their comfort zone (usually because of FEAR of the unknown) causes a reluctance to practise the new ideas.

The conundrum was brought home sharply to me with the current registrants of Ultimate III. As a precursor to starting the course, I ask each attendee to send me a handwritten pledge. It would take all of the 10-minutes to complete the assignment.

Of the thirteen registrants:

  • Three immediately sent in the pledge.
  • Nine did so only after a couple of reminders.
  • One still has to send it in.

I was telling my partner, Peter Ow, of my fears for the success of the group: ‘If they can’t even send in a simple pledge, how will find the will power to send in their course homework?”

Peter told me: ” They’ll be fine with the homework. They have all traded, and all are familiar with the Barros Swing material.

The pledge is scary – it’s something new.”

A useful reminder to connect new ideas with that which is known – to release the stress of unfamiliar territory.

So, how about you? Are there lessons you are avoiding to learn simply because of the discomfort you feel? What would happen if you did change? Perhaps you’d become a more profitable trader?

Heros Journey Inner

FIGURE 1 Hero’s Journey – INNER

 

Why? IV

BarroMetrics Views: Why? IV

Today we take a look at Professor Oettingen’s third motivational strategy: ‘mental contrasting’ where we go back and forth between Indulging and Dwelling. This focus creates a tension that drives us to resolve – thus providing the motivation for action.

The strategy calls for two steps:

  1. A frequent use of the mental contrasting strategy; and
  2. Execution of a plan i.e. taking an action step to move towards our goals.

In Ultimate II, I set as a daily task, step 1: to mentally review the outcome of the trading goals, and to also review the traders barriers to those goals and the steps he was taking to overcome the barriers.

Simple right? The exercise would take no more than 10-minutes per day. And yet……moving the attendees to do this took the patience of Job and the creativity of Jobs (Steve). Eventually, we managed to get everyone on board.

What will be interesting to discover is how many continued once they completed the course. We are looking at some innovative ideas for Ultimate III to encourage maintenance of habits.

Here we complete the series. We started with seeking to understand the reason ‘why’ is a necessary component of trading success, and ended with a process to ensure we maintain the motivation for discipline.

Have a great weekend!

 

Why? III

BarroMetrics Views: Why? III

In yesterday’s blog, we said ‘why’ was an important motivator. The Ericson process is effective and no fun; we need a strategy to keep going. Knowing ‘why’ drives the motivation strategy.

But, just what strategy is successful in the face of hard work and the inevitable temporary failure?

Professor Gabriel Oettingen of the New York University has done some fab work in this area. She found that there are three motivational strategies, of which one is superior.

  1. The ‘Dwelling’ – the strategy of Chamine’s saboteurs: Create a sensory-specific picture of the barriers to success.
  2. The ‘Indulging’ – the strategy favoured by the success crowd: a rich sensory-specific picture of what our future would be like if we attained our goal.

Her research shows that both methods have a scientific basis.

Negative emotions (Dwelling) help drive persistence, commitment and focus; positive emotions (Indulging) lead to mental flexibility and insight (creating new connections). Unfortunately, both strategies have serious drawbacks.

  • Dwelling: Climb into this foxhole and you may have difficulty clambering out. It may lead to a ‘what’s-the-point’ mindset.
  • Indulgence: There is more than enough research to show that visualising the outcome will reduce, not increase, the motivation to succeed because the visualisation process provides the psychological reward of success. As a result, we are less inclined to produce the actual outcome.

There is a third strategy – one that enjoys the benefits of both strategies without their drawbacks: for tomorrow, guys and gals.

Why? II

BarroMetrics Views: Why? II

Ericson’s first step to mastery is to set your goal. But, this presupposes ‘why’ we want to attain the goal. So, for me, the first step to success is to ask: ‘Why this goal?’.

In trading, the answer I am usually given is ‘to make money’.  But, if you think about it, it’s never just about money. Money is a tool of exchange. We can’t sleep with it, we can’t eat it, we don’t derive social pleasure from it, etc. Money is useful for its exchange value.

Bottom line, we trade:

  • For reasons of emotional security,
  • For what we can do for our loved ones,
  • For self-esteem and sometimes
  • Because we achieve a higher purpose – we  are able to make a difference.

If you recognise Maslow’s hierarchy, well done! I believe that Maslow’s model holds the explanation to our behaviour.

The question comes up ‘why do we need to know our why?’.

The answer is Ericson’s process is not easy, and it is certainly not fun. We need a motivator to keep us on track. Knowing our ‘why’ provides the motivation to persevere.

Also, notice that the ‘why’ is value driven. The idea fits nicely with the ACT model where actions are driven by value derived goals.

More tomorrow.

 

Why?

BarroMetrics Views: Why?

‘Why’ what? What’s this ‘why’?

To answer the query, we need first to understand why so traders continue to fail – fail despite the advances in the realms of investing, psychology and learning.

There are only two reasons why traders fail

  1. Ignorance (don’t know what to do) and/or
  2. Ineptitude (don’t do what they know).

Ignorance we cure by acquiring knowledge. In trading, this is the easy part.  I believe the majority of those who fail take this step. The stumbling block is turning that knowledge into a skill (i.e. overcoming ineptitude). Most traders use this format to learn:

  • Acquire some knowledge.
  • Learn to apply that knowledge through repetition until
  • The knowledge becomes second nature.
  • At this point learning (improvement stops).

That is precisely the route to take for failure.

Anders Ericson has made a study of mastery. The route Masters take is very different. Over the next few blogs, we’ll have a look at his route to mastery

 

Weight Loss and Trading

BarroMerics Views: Weight Loss and Trading

Firstly apologies for delaying the blog on the S&P, technical picture. I underestimated the time it would take to effect my travel plans. I’ll post the promised blog on Friday. There will be no blog tomorrow, Thursday, May 5.

A very absorbing article in the NY Times on weight loss. I attach the article.

The questions it raises for me:

  • For some newbies, does the initial losing experience causes our body and brain to release chemicals similar to those engaged in severe weight loss?
  • If so: the article mentions intervention methods, for those on a diet,  that successfully our biological responses, are there mirror methods for trading newbies?

I don’t know the answers. But, the question bear thinking about. Certainly it would address the issue of why so many continue to behave in a way that ensures trading failure. And behaving in this way even though the know better.

Their Bodies Fought to Regain Weight 2016-05-03

Because I Have To

BarroMetrics Views: Because I Have To

Do you know Kobe Bryant? At least have you heard of him?

If you are American, then the answer would probably be ‘of course’! If you are from S-E Asia, the answer would probably be ‘maybe’.

Just in case you thought: “Kobe, who”? Let me take a moment to introduce you.

  • He is an NBA superstar with a net worth of $320 million
  • In 2015, he earned $45.9 million.
  • His salary for 2014 – 15 was 23.5 million. (This made him the top NBA earner for the fifth consecutive year.)

Last night, Kobe retired from basketball. He had played with the same team, L. A. Lakers for 20 years. And he had a fabulous night – scoring 60 points to bring victory for his team! I hope when I go out, I’ll go out with the same style and grace. 

I was watching the interview after the game. A reporter asked him:

“What are you going to do tomorrow?”

Now remember:

  1. Kobe had just retired after 20 years;
  2. He had just scored a game-high of 60 points; 
  3. He’s worth $320 million; and 
  4. The auditorium was going wild chanting his name – “Kobe! Kobe!”

You know his answer? What would have said?

“Man, I am going to CELEBRATE!” (?)

Kobe said he was going to the gym, and then he was going to the office to work on his new business. You read right. He said was going to the gym and then the office. When the reporter asked him, ‘why’ he said:

“Because I have to – to begin a new routine and to maintain discipline.”

You see, Kobe had been following a fixed routine for 20 years. His view was that if he took one day off before a new routine was embedded, that was the worst thing he could do. Before taking time off, he needed first to instill a new regime. 

In my life, and in my coaching, habits (routines) are a critical element to success. They are a part and parcel of the discipline that I bring to the trading game. 

My question to you is, “do you have a routine?”. If you do, what would you consider to be the most critical element, and would you be willing to share with us?

We See What We Want To See

BarroMetrics Views: We See What We Want To See

If you had to pick two qualities for trading success, what values would you pick?

I’d pick:

  • Honesty – never consciously faking reality and
  • Integrity – in the sense that we keep our word to ourselves. 

Honesty implies that:

  1. We constantly strive for self-awareness and that 
  2. We accept that reasons are not justifications for continuing with unproductive behaviour 

Many moons ago, in my quest for figuring out why I was such a failure at trading, I was driven to a psychiatric coach. Dr George Lianos gave me many words of wisdom. But by far the best was the comment:

” If you are producing results you don’t want, don’t worry about the individual reasons for the results, focus on the pattern. Find out why the pattern is occurring”.

I saw a great example of this the other day. A trader was telling me about his trading history.

“I have good results. If it weren’t for the excessive charges and taxes, I’d be making money. If I hadn’t been short in a short squeeze, I wouldn’t have blown my account.”

Here’s the thing – he was entirely genuine. He really did  believe that his failure was due to taxes and a short squeeze. BUT, the fact was, he was losing money, period.

His story had two key facts: he was losing money, and he had blown the account. Those were the results. The reasons did not matter. What he should have been asking himself is:

  • What did I do that led to the losses and blown account?
  • What changes do I need to make to change my behaviour?

Focus on the behaviour and results. Change the former to get what you want from the latter.

Knowledge (self-awareness) counts for nought unless you take action. Keeping your word to yourself is a necessary component for taking effective action. Here the ACT Model and the information contained in Deep Work, and Living Forward will be of immense benefit.

N.B.: The link to the ACT Model is a PDF download.

Psych Journal Entries

BarrosMetrics Views: Psych Journal Entries (PJE)

PJEs are intensely personal documents. As such, I have found that showing examples of what I wrote is less useful that providing suggestions for a template.

The key to a keeping an effective PJE is to identify the ‘why’ for keeping one: to identify strengths and weaknesses in the application of our Mind, Money and Method to our trading; we are looking for lessons from our failures and success so we can improve.

My PJE has two components,  Mind and Method (includes Money).  I have no problems with my Money rules – the only question that arises there is “did I apply the optimal position to this trade”? The answer leads to improving my ebb and flow analysis.

The Mind component records my feelings before, during and after a trade, as well as recording any event that may have impacted on my emotional health.  Since I am predominantly visual, this entry takes the form of visuals and to a lesser extent, script. For example, if I have been in a prolonged ebb state, I’d note that – the beginning date – and show my emotion from anxious to fear to very sad (See Figure 1).

I’d also describe my feelings, using sensory specific language. In other words, the visual is the conclusion while the script describes my condition. For example, let’s say I choose the ‘sad’ face. My description may run: Since Mar 1,  when I have initiated a trade, it has proven to be wrong – if long, the market goes down, if short, the market does up. Right now, my heart feels like lead – my thoughts travel to less than desirable results…….

My objective with Mind is to feel the feelings and not allow them to affect my reasoning; if possible, I seek to combine my left and right brains in the decision-making process. So when in ebb stage, I look to balance my negativity with positive counter balances. Similarly, when in flow, I seek to counter the excessive optimism that tends to accompany that trading phase.

Method next blog…….

I’ll not be posting again until Tuesday, March 29

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…..