Overcoming Perfectionism in Trading

Discussion in 'Trading news and analysis (syndicated content)' started by Brett Steenbarger PH.D, Sep 2, 2017.

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  1. Brett Steenbarger PH.D

    Brett Steenbarger PH.D New Member Official Contributor

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    A reader recently asked the question of how to overcome perfectionism in trading. Like many traders, the reader recognized that the quest for perfection was actually demoralizing him and leading him to trade worse and worse. Trying to buy the bottom tick and sell the top, he was missing trades. Losing money, he became his own worse critic. Even when he made money, he found himself focusing on how he could have made even more by holding a little longer, sizing a little larger, etc. Slowly, perfectionism was stressing him out and interfering with his trading.

    Sound familiar? It's a fine line between being success-driven and achievement oriented and being perfectionistic. We want to keep pushing forward, but at some point the push becomes part of a problem, not a solution.

    There are two keys to understanding perfectionism:

    1) It is a way of talking to ourselves;
    2) It is a way of channeling anger and frustration.

    The perfectionist is channeling anger inwardly, looking at the gap between the real (actual performance) and ideal (possible performance) and becoming frustrated at that gap. That is why so much perfectionistic thinking is of the "should" variety: you *should* have held the trade longer; you *should* have been sized larger; you *should have taken the trade; you *shouldn't* have taken the trade. It's all frustrated self-talk.

    As I discuss in my books, we generally possess enough social sensitivity that we would *never* consider talking to a friend or colleague in the tone we use with perfectionistic self-talk. We would never get in some one else's face and tell them all the things they *should* and *could* have done better. We would recognize right away that there is no constructive value in such talk. It doesn't help anyone move forward.

    That is the key point to recognize: there is nothing constructive about perfectionism. It's self-abusive; it doesn't move us forward. It's a dumping of anger, not an effort to learn from mistakes.

    Once the trader recognizes that the problem is not their trading, but their way of thinking about their trading, then they can begin the work of recognizing the frustration in real time, interrupting the perfectionistic thoughts, and introduce self-talk that is more similar to talk one would do with valued friends and colleagues.

    In practice, the sequence looks like: "OK, I just lost money and I'm feeling frustrated. I can feel myself getting caught up in *should* thinking. That is the same perfectionism that has stressed me out and hurt my decisions. I might have made a mistake, but I don't deserve having anger dumped on me. Before I take my next trade, I'm going to review what might have gone wrong with the last trade and see if I can learn anything from it that will help the next trade. I refuse to keep talking to myself in a harmful way!"

    Many times, keeping a cognitive journal is a great way of structuring this process and developing new, constructive habit patterns. The Daily Trading Coach book describes this journaling in detail; see also the reading below. Once we become aware of the *consequences* of negative thought patterns, we can truly *regret* them, and build a determination to not repeat them. It is very healthy to focus on self-improvement: we move ourselves forward when we try to become better. We shut ourselves down when we demand more.


    Further Reading: What Format of Trading Journal is Right for Me?
    .

    http://traderfeed.blogspot.ca
     
    Last edited by a moderator: Sep 4, 2017
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