Tue 11 Mar 2008
The Power of Questions
Posted by ray under Psychology
Something different today. One principle I live by is CANI: constant and never ending improvement. In this blog, I want to tell you about a process I have found invaluable.
I think it may have been Anthony Robbins who said that the quality of our lives depends on the quality of the questions we ask ourselves. This is certainly true in trading.
Below are questions I ask myself when I do my monthly review:
- What worked for my trading this past month? What did not work?
- What do the metrics tell me - in what instruments did I make money? In which did I lose? Is there a pattern?
- Did I keep to my exercise and meditation schedules?
- Was there a correlation between my trading and how I felt for that day?
- Did I monitor the Ebb & Flow position sizing or did I persist with too large or too small a size even after market conditions changed?
- What were my greatest challenges/lessons?
- Of what am I most proud? What do I most regret?
- What attitudes and actions will I take with me into the new month? What lessons have I learned this month?
- What limiting beliefs did I shift? What negative emotions did I shift?
- How did I grow, improve, and expand myself?
I started using this process on the recommendation of Dr. George Lianos. At the time, our aim was to identify self-destructive behaviour that came from limiting beliefs. It worked so well that I adapted it to trading. Behavioural patterns are easy to identify; they are what my wife, Chris, calls ‘the tail of the rat’. From there I can trace the emotions and the circumstances that gave rise to the behaviour. Once I have done that, it’s only a short hop to identifying the limiting beliefs or what Denise Shull calls ‘the echoes of perception’ (www.traderpsyches.com).
The one resource you need to keep for this exercise is, of course, a journal. Here are some ideas for newbies who are asking: ‘What I do write in my journal’?
- Denise Shull: http://www.cbot.com/cbot/docs/70432.pdf
- Dr. Brett Steenbarger: http://www.brettsteenbarger.com/articles.htm.
(For Dr. Steenbarger’s article go to “Articles on Trading Techniques’”(4th Heading down from the top of the page, following “Psychology Articles”. The article is about the 17th article from the bottom in the section “Articles on Trading Techniques”).
March 11th, 2008 at 5:03 pm
Ray, I think there is a question missing. Did i have some fun and a laugh? Laughter is the best medicine they say.If you can see the funny side i believe it helps you overcome the inherent perils of this business and become a better trader.cheers Baz
March 11th, 2008 at 5:21 pm
Hi Baz
I agree - but in my case, in the jargon of my first profession, it’s a ‘condition precedent’ i.e. the question is so fundamental that it doesn’t need asking. If ever I stopped having fun, I’d do something else.
March 11th, 2008 at 6:02 pm
Ray
My way of keeping a psychological journal daily is to post comments on posts like yours and Dr Brett’s, in addition to more journal entry ,if necessary.
My other equity journal can be done on the Template you devised for easy entries of trades, to give us a quick run down of results on a periodical basis.
Both a psychological and an equity journal will enable us to track and revise our trading performance over a weekly, monthly or quarterly period.
This discipline will certainly keep us in check and to improve our trading performance in the long run.
March 12th, 2008 at 2:16 am
I gotta be honest… I had not had a consistent way of keeping a “psychological journal” until recently. After reading Dr. Steenbarger’s “Enhancing Trader Performance” I knew that I had to get into some form of this. But it was Ray’s suggestion from ATIC to grade our sense of well-being in the morning and afternoon (0-3) AND his “ebb and flow” theories that some things finally clicked!
I am also keeping a video journal, which I find extremely useful in reviewing my ideas, analysis, and trades, as well as my tone and delivery in the recording… how did I sound, elated, depressed, cautious, and if so, why? Was I being honest with myself there? … I saw that move, yet I didn’t take the trade, why not? etc, etc) I just got back from dinner with my wife where I bored the poor girl to tears with my excitement about my psych journal!
I also keep a private blog, as I find this an easy access journal in my travels. What I do now is upload my video journal to YouTube, set to “private”, and either keep up with them there or embed them in my private blog.
March 12th, 2008 at 2:37 am
Ray
While we are on the subject of asking questions, we do have to ponder on a few extraneous ones.
The markets gained their largest 1 day gain since 2003 on the basis of a world wide coordinated central bank effort to increase liquidity in the financial markets.
We faced a gap up opening, which is a challenge as with the Fed announcement , the futures markets took off.
However, soon it proved to be another fake breakout to the upside.
We should look at some questions arising from this report:
Under the new plan, a Term Securities Lending Facility (TSFL) will lend up to $200 billion of Treasury securities to primary dealers. The loans will be secured for a term of 28 days. The real benefit is that a variety of collateral including federal agency debt to private AAA rated residential mortgage back securities (MBS) can be used. These may be thinly traded securities and can be used to borrow highly traded Treasury securities.Unquote
The trade deficit continued to grow larger, projected amount about $59 billion. The increase is partly due to high rising price of oil against a weakening dollar.
How far will the FED go and where do we go from here?
March 12th, 2008 at 1:06 pm
Hi Ana. Good question, how far will they go? My question is similar: How will they respond once they see they’ve gone too far, and how long will that response take?
March 13th, 2008 at 1:20 am
Hi Jeff
SIMPLY ABOLISH THE FED!?
This what Jim Rogers said over CNBC
http://www.cnbc.com/id/15840232?video=682734828&__source=CNBC|MW|video2|
Quote:
Oil Wednesday closed at $109.92 per barrel, driven higher by a record low dollar. Oil pushed through $110 per barrel in the after hours electronic session.
“It’s now a financial market driven by speculation, a developing bubble. So like all bubbles, it can get a lot bigger before it breaks,” Zandi said. (unquote)
This is Doomsday on the horizon………..
March 15th, 2008 at 11:41 am
Cross ref from Traderfeed:
Anatrader has left a new comment on the post “Using Trading Journals to Identify and Change Your…”:
Brett
I like this quote about changing emotion which I reproduce here:
Quote
If it takes emotion to change emotion, then as Jim Cramer quoted his wife’s 4th commandment: If there is a position that is dogging you, take some of it off, throw the maiden in the volcano and please the gods.
March 15th, 2008 at 11:33 pm
PS
More on keeping journals :
Anatrader has left a new comment on the post “Formatting Your Trading Journal for Success”:
Brett
I find these words most instructive:
Your say:
The journal keeps you constructive, keeps you learning, and keeps you working on the things that are most important. It is not a tool for simply rehashing the day or voicing your feelings; it is your tool for self-development: your means for coaching yourself.Unquote
Self-coaching would follow from self development following an effective journal keeping, is how I see the whole process.