www.MyChart.ir TRADING PSYCHOLOGY 2.0 Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For more on this series, visit our website at www.WileyTrading.com.

www.MyChart.ir TRADING PSYCHOLOGY 2.0 From Best Practices to Best Processes

Brett N. Steenbarger, PhD Copyright c 2015 by Brett Steenbarger. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data

Steenbarger, Brett N. Trading psychology 2.0 : from best practices to best processes / Brett N Steenbarger, Ph.D. pages cm.—(Wiley trading series) Includes index. ISBN 978-1-118-93681-8 (hardback)—ISBN 978-1-118-93683-2 (ePDF)— ISBN 978-1-118-93682-5 (epub) 1. Stocks—Psychological aspects. 2. Speculation—Psychological aspects. 3. Investments—Psychological aspects. I. Title. HG6041.S762 2015 332.6401 ′9—dc23 2015016663

Cover Design: Wiley Cover Images: Business growth graph c iStock.com/Violka08; Black Chess King and lying Pawns on board c iStock.com/Dominik Pabis

Printed in the United States of America 10987654321 www.MyChart.ir EPIGRAPH

If you don’t have time to do it right, when will you have time to do it over? John Wooden v www.MyChart.ir CONTENTS

Preface ix Introduction xiii Prelude xvii vii CHAPTER 1 Best Process #1: Adapting to Change 1 CHAPTER 2 Best Process #2: Building on Strengths 95 CHAPTER 3 Best Process #3: Cultivating Creativity 199 CHAPTER 4 Best Process #4: Developing and Integrating Best Practices 277

Conclusion: From Best Practices to Best Processes 411 Postscript 415 References 417 About the Author 423 Index 425 www.MyChart.ir PREFACE

uccessful efforts to master markets lead us down paths of self-mastery. This book is one guide to those paths. SMarket participants have traditionally defined self-mastery as discipline—controlling the emotions that all too often distort information processing and trigger impulsive behavior. To be sure, discipline is ix required for any great undertaking, whether it is pursuing an Olympic medal, a business startup, or a medical breakthrough. But discipline, while necessary for success, is never sufficient. Discipline does not substitute for skill, talent, and insight. Strict, disciplined adherence to mediocre plans can only lock in mediocre results. If it were otherwise, there would be no losing automated trading systems. I’ve followed and traded markets since the late 1970s. During the past decade, I have served as a full-time performance coach at two trading firms—Kingstree Trading in Chicago and Tudor Investment Corp. in Greenwich, Connecticut—and worked with many other trading organizations on a consultative basis. Through the TraderFeed blog and three prior trading books, I’ve had the honor of interacting with thousands of traders around the world. If there’s one thing this whirlwind of experience has taught me, it’s that there is far more to market mastery than controlling emotions and impulses. Sustained success requires the cultivation of a host of positive performance elements: creativity, productivity, adaptation to change, and psychological well-being. The good news is that recent research in psychology and related fields has PREFACE x r h euto otn eei erigpoessot eyspecific very text, onto recent most processes my performance. Finally, suboptimal learning and generic frustration creating bolting domains, traders performance developing of by result faced problems continue the of emotional I are forms the processes. of many many learning are that and find there skills An to that unique challenges. requiring was and each work process talents, trading, that ongoing skills, of matches implication an that important as practice book, development deliberate second of expertise My emphasizing those. success, enacting Performance in Trader consistent Enhancing success more our underlie becoming that solution-focused patterns and a the introduced identifying trading: It to challenges. framework life common mirror these these, of first Trading The of books. previous my of extension natural o ocag o u ohl o oecnitnl a notedrivers the into tap consistently more you success. help your to of but is goal you of The change ingredients processes. to best practices—the not into best them taking weaving about success—and trading is your book this all, of Most simple a learn will you pages, coming ideal the ABCD: In and processes. essential real four our to between becoming. of gap capable 2.0 we’re yawning Psychology who and a are we face who between will selves: we that ensures reviews our and thought, to but independent routines hard, learning, productivity. daily optimize work rarely our to we of performance, tend organization of we the consequence, From smart. a not As and through knowledge. sift news this to opportunity with apply little up have keeping movements, of market and challenges management flows money day-to-day the the in in us of immersed most world, that is human news to bad contributors The these performance. of understanding our deepened profoundly o oCliaecetv rcse n eeaefehmarket fresh generate and processes strengths creative trading Cultivate distinctive to your How on Build and identify conditions to market C How changing to Adapt dynamically to B How A quality for effort of quantity substitute to tendency unfortunate The nhnsgt tsntdfcl osethat see to difficult not it’s hindsight, In productivity sustain you help that practices best Develop to How D n fetvns nyu okroutines work your in effectiveness and perspectives oue nteeoinlpolm ae ytaesadhow and traders by faced problems emotional the on focused , ek obig htgpb raigtaigscesdown success trading breaking by gap that bridge to seeks dpe eeomna iwo trading of view developmental a adopted , h al rdn Coach Trading Daily The www.MyChart.ir rdn scooy2.0 Psychology Trading rae cookbook a created , h Psychology The Trading sa is xi PREFACE best processes differs from these books in one key respect: Of course, no performance journey is traveled solo. Life is a team What makes any performance domain worthy is that none of us will It is not enough to find an ‘‘edge’’ in financial markets; as any tech Trading Psychology 2.0 Capital, Tudor Investment Corp., Kingstree Trading, and SMB Capital; sport and success cruciallyright teammates. depends I on owe many surrounding debts of yourself gratitude with to colleagues the at Graham real and ideal: between who wecan are and be who a we resource can in become. bridging If your this gap, book it truly will have fulfilled its aim. and prudence? In adaptingchange. to We change, cannot rest we on embrace individual bestthat change, practices; yield we we need ever-improved become practice. There will always be a gap between closer to self-mastery. This isthe rules particularly of the the case game withutmost continually trading, of evolve. where conviction What and other risk-taking, field but demands the also the greatest of flexibility dance or golf; chessteams players, brewmasters, can woodworkers, alwaysactivities and racecar are hone the their consummate psychological craft. crucible, For moving us that ever reason, performance ever completely master it. There is always room for improvement in quite as difficult—and rewarding—asreturning letting to go the of humble what statusperformance of once ashes. student, worked, and arising phoenix-like from fresh sources of competitive advantage. That requires processesing for assess- and challenging oura most good basic trader assumptions to and create practices. success, It a takes great one to recreate it. Nothing is entrepreneur can attest, competitive advantages are perishable commodi- ties. Those who sustain success continually renew themselves, uncovering the book aimsprocesses: to robust routines nudge for changing traders our routinesto toward and ever-changing adapting market what trading conditions. might be called meta- the usual focus on discipline,to emotional the control, broader and context trading of one’s sustaining plans peak performance. Most important, It breaks tradingexplores success research-based down ways into ofprofessional maximizing those lives. them The four book’s in aim ABCD our is to processes personal move and and trading psychology beyond better self-observers and catching best andwe worst can practices overcome as market they occur, noise with enhanced self-determination. of psychological techniques andcommon performance approaches challenges. to An overarching helpthat theme a traders of primary that overcome goal book is of trading psychology is self-coaching. By becoming xii PREFACE l o’etuh e hn o’lfidmn ftoelsosi h pages the in lessons those of and many follow. me find support that you’ll your kept think many for I has the me. thank-you taught to hearty that you’ve Finally, a all and blog business. life, TraderFeed the the in my of downs of readers and love Margie. ups wife, the many my through been to sane has all markets, of Laura, most not and Steve, She, families; Debi, their markets: Macrae; and financial Devon, support not-so-constant and love the constant greatest offered all The has possible. that through as family voiced many the publicly to the is as to however, be debt debt, to my with want work I studies I case but people those privacy, fine in my preserve traders to in the changed As of been studies. identities have and case names the the inspired books, and prior practices traders talented best many Stock contributed the at without who possible crew be supportive and wouldn’t the book Niederhoffer and The Lindzon Twits. Victor Howard and Wiley; Listers; at Spec the staff editorial ever-resourceful the www.MyChart.ir INTRODUCTION

here is a valuable tradition in academic scholarship called the literature review. A literature review is a survey of published Tresearch on a given topic, with an eye toward identifying what is known and what remains to be investigated. A good literature review is selective—covering the most important, methodologically sound xiii studies—and it is integrative, highlighting areas of consensus and debate within a research field. Without such efforts, science would generate far more data than understanding. At its best, the literature review is a bridge between observation and explanation. If undertaken properly, it illuminates existing research directions and inspires new ones. Although the exercise that inspired this book was a performance review and not a literature review, the aim was similar. I identified approximately a dozen of the very best traders I had worked with intimately over a decade of coaching and asked myself what made them tick. On the surface, they were quite different. Some were daytraders in the electronic futures markets; others were portfolio managers in currency and fixed income markets. A few were highly quantitative; others drew on pattern recognition in a purely discretionary manner. Some were outgoing, some introverted; some were highly emotional and passionate about winning and losing; others were relatively calm, cool performers. When I looked at what these traders did, all I found was variety. When I examined how they did what they did, however—the processes xiv INTRODUCTION ■ ■ ■ u tme: leaped at features out common actions—several and decisions their underlying nhnigya cen,catn ihpol h fe iteinsight, little offer who people right with the staring chatting (get traders, screens, as effective waste at and typically unthinkingly we time) do of time much unit How both per done). are things done they They lot that colleagues. a so activities (get their their efficient than prioritize done and time more their get ones. organize week-to-week simply exemplary day-to-day, greats a truly The on for basis: apparent out readily hold is productivity toss and This to trades willing promising are less idea—they runs. aside particular home any generating of holding and share just information fair they processing ideas—not their that is hit strength often and their is so that pitches bat rate Knowing good to hit of go share Their they their ideas. but get many high, so unusually necessarily generate not they because generate ideas performers elite better The greatness: on work seminal Simonton’s u rdn rs ’eecutrdcetv rdr:oe h view who ones traders: creative encountered I’ve firms, success- and seen trading curve I’ve Wherever ful equity effectively. capital smooth its relatively leverage to a it allows with diversification, business of the power provides the that to rel- a Thanks in manner. returns uncorrelated risk-adjusted atively superior delivers whom of each traders, edge. Creativity that expanding and honing had continually they of Rather, ‘‘edge.’’ ways trading found a successful possessed them they that made trading merely What not their was analytics. broadening their skills, reworking new and learning universe, by regimes not market chang- did to ing adapted and they broadly, did more Even action risk expectations. market their their confirm when alter occasions quickly to would sensitive they exposure, Often, landscapes. trading their changing altered fit and to environments market to sensitive were They Adaptability Productivity as factories,’’ others ‘‘idea where opportunity as none. detecting traders see for her such routines or to robust his extraordinarily develop refer in they an I original known markets. extraordinarily never to not have approach was I who that trader say successful to venture express Indeed, risk. would to and relative I reward ideas, maximize that generate ways fresh to in views ways their original find uniquely, markets h da o n rdn r sasmln ru of group a assembling is firm trading any for ideal The . yeprec ofim h nig fDa Keith Dean of findings the confirms experience My . oapro,tebs rdr eeaatv n flexible. and adaptive were traders best the person, a To . www.MyChart.ir INTRODUCTION xv They are Brett Steenbarger . —routinely . I can think of few vocations that blend risk and uncer- do are best processes: detailed routines that turn best practices Very few challenges are as noble or rewarding as fully becoming who The most important review you can conduct is not one of the Working with traders on a full-time basis, immersed in the daily Self-management well-cultivated information networks. They realize that higher-quality inputs will yield superior outputs. and reading low-priority/information-poor emailssuccessful and traders reports? invariably The areget workhorses, their not hands showhorses: dirty They rooting through data and make active use of sions, often by optimizing their lives outside of markets. the conditioning is cognitive asI’ve known well work as as emotional. hard Successfulroutines on for traders themselves keeping as themselves in on ideal markets. states They for making develop trading deci- to life’s many responsibilities whenSuccessful focused athletes on realize fast-moving that markets. will only allow very them high to levels deliver their of very conditioning best performance. For traders, cial markets, good enough isproduces the outstanding results. expected, Maintaining focus, the optimism, average; and energy it’slevel not during what periods of drawdown is not easy. Nor is it easy to attend tainty in as immediateenough way is good as enough: Slipups trading. are rarely In irreversible or many fatal. In lines finan- of work, good ■ you are at your best. Let the journey begin! the traders we hopeuncover to the practices become. and Our processestap task, that into in enable the best us markets within to as us. more in consistently life, is to you’ll observe how you bestand adapt manage to yourself. change, It is innovate, difficult stay fortimes productive, us to of appreciate—especially drawdown—that during at some times, in some ways, we already are research literature, but of yourself. Ifmicroscope, you you’ll place initiate your your best own trading review and under the a chances are good that management: These aren’t just things thatwhat the best best traders traders have. methods for deploying capitalgreat and managing risk. Whatinto makes consistent traders habits. Adaptability, creativity, productivity, and self- realities of tradingperspective performance, on trading has success. My provided overarchingcoaching conclusion effort is me from that years what of with makes traders good a are best practices—sound front-row www.MyChart.ir PRELUDE

’m not sure when I first focused on the fact that time is an event. IThere are many events that help us define time, from the Earth’s daily rotation to the radiation emitted by cesium atoms. We mark time with such events as birthdays and anniversaries; we think of a year in seasons and holidays. Waking up, eating, going to work, coming home, taking xvii vacations—we live life in event time. Suppose I am an athlete and my energy level is a function of when and how I practice and perform. Sometimes I practice daily; sometimes I take a day off; sometimes I practice very intensively; sometimes less so. If you were to chart my energy level over time, you’d see irregular ups and downs—seemingly no pattern at all. But suppose you defined time in terms of performance events. Suddenly we would have a new chart—a new x-axis—and regularities would become apparent. It is November 10, 2014. I am in my kitchen, sitting at the center island, accompanied by the youngest of our four rescue cats, Mia Bella. I have just finished overhauling my market charts, removing time from the x-axes and replacing it with an event clock. Examining past markets, I find striking regularities—ones I had never seen before. Soon I will see if those regularities provide actionable insights in real time. I’ve had interesting market ideas in the past. This one feels different, however. It feels like opening an animal crate that has been transported from a rural Kentucky high-kill shelter, picking up the soft, gray, purring kitten, and knowing this is the one. xviii PRELUDE hte hyb iecmain,cre alns rparadigm-shifting or callings, career companions, ideas: life be things, great they all with whether is it way the That’s you.’’ chosen ‘‘She’s commented, u o aet erayt eselected be to ready be to have you But and shoulder my to cling Mia watched area crate the in Someone hycos you choose They . www.MyChart.ir .... CHAPTER 1

Best Process #1: Adapting to Change

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. 1 Charles Darwin

■ Emil’s Restaurant

Emil is a chef who purchased a restaurant in a prosperous suburb. The restaurant had not been making money for the past few years despite hav- ing a broad menu, a friendly owner, and good standing in the community. The young couples that flocked to the suburb because of its superior pub- lic education system, convenient shopping, and low crime rate wanted something other than a traditional, sit-down restaurant. They desired a bit of the city life: a lively venue for eating, drinking, meeting friends, and socializing. The old restaurant was just … too … old … and the owner could not keep pace with shifting diner tastes. So he sold the place to Emil. Emil spoke with the new area residents to learn more about what they wanted in a restaurant. What he heard was that they wanted ‘‘fresh’’: fresh food, a fresh look, fresh music. He asked them to name some of their favorite urban hangouts, and then he visited the establishments. What he found was large bar areas with long tables, so that people could BEST PROCESS #1: ADAPTING TO CHANGE 2 i n igeesl n hr hi ‘ml lts’ e epeat meals. people multicourse Few and plates.’’ entrees ‘‘small large their for down share sat and establishments those easily mingle and mix n es.Toecmet epdsbeun utmr aetheir make customers subsequent best helped liked could comments they what diners Those about that least. comments share so and even meals, and drinks throughout fresh The available order their kitchen. the enter readily to ingredients, were immediately its tablets orders could and send patrons and dish Now electronically, each staff. orders of wait descriptions the by detailed distributed read tablets from order to day.’’ restaurant every the restaurant beneath different ‘‘A slogan all: The it menu. said logo new kitchen dishes his entirely evening’s of and an he cuts the created day, excellent herbs, team Each fish, ingredients. and those fresh fruits of of combinations local featured catch several superior and a beef, found markets. dry-aged staff local in and morning Emil that every source If fresh could dish he a ingredients every menus on with making with based supplemented to day, away menu committed do Emil fixed specials,’’ to traditional ‘‘daily the but few of menu, place restaurant’s In old altogether. the change to not media. each social uploaded other day’s to was linked the served and being to Instagram dishes to diners day of alerted photoset page A fresh dishes. Facebook A on upcoming system. and played sound feed, high-quality videos Twitter a music website, by amplified Cutting-edge exotic screens, illuminated block. hi-def that glass large, lights and streaming pictures stone, soft, traditional by the woods, environments, replaced were Gone walls, of brunch. the variety sit-down on a to create be bar could to open that from rearranged seating and colorful arranged modular, purchased quickly he chairs, and of tables selection broad a and inventive vineyards. drinks, quality sounds, soft from wines exotic electronic unique beers, upbeat craft drinks, loved mixed They The lively traditional experience. selection. and and music the background drinks beverage usual of the Creative than part not more dish. wanted important diners foods, main new an different single were a trying sounds on contemporary and feasting around well-prepared and moving quiet, sitting a enjoyed just dining They not the of experience, meal. portion social growing a A desired attractive. population was longer no customers in in people with mixing and drinking environment. and upbeat grazing an about all was it Rather, re rmtecntanso eu mlealdhscustomers his enabled Emil menu, a of constraints the from Freed decided He changes. radical most Emil’s not were however, Those, dining wooden heavy the of place In business. the rebuilt Emil So bring to used What changed. had market the that recognized Emil www.MyChart.ir 3 BEST PROCESS #1: ADAPTING TO CHANGE ´ ecor, and the ‘‘cool’’ ordering app. The website Best of all, Emil was able to hire a superior kitchen and wait- And the customers? They loved the up-tempo music, the clean The greatest power of the ordering system was that it created a database dining reservation, his or her favoritethe tunes evening’s were playlist. automatically added to the music choices, so thatcustomers the who database completed included a the profile. music Then, selections for when each customer made a implemented in the restaurant. One waiteralso suggested take people’s that music the requests, app so could tunes that staff during could their play diners’ visits. favorite A junior chef further suggested archiving all staff, as peopleannounced wanted sizable bonuses for to staff members be who generated part unique ideas of this cutting-edge venture. He on how to operate the tablet. Thatdisplayed led on to table simple step-by-step tents instructions throughouta the fix, restaurant. and Each each problem fix gave led Emil to an opportunity to show customers he cared. wrote inappropriate commentsgreater monitoring in of entries. their Several oldernewfangled customers, reviews, befuddled electronic by instrument so the on Emil their table, instituted needed to be coached A customer dropped hisnew protective tablet devices and for shattered each the ‘‘menu.’’ A screen. few That inebriated led customers to modern lines of thegained d traffic; Twitter followers andwas Facebook a friends buzz exploded: There about Emil’s restaurant. Were there setbacks? Of course. food, different layout, and different music.from Armed customers, with he continuous rapidly adapted data to shifting tastes. beverages. Gradually, the database helped Emilto understand emphasize which and dishes whichexperience to eliminate. on He weekend created a evenings different than restaurant weekday afternoons: different and fish dishes totables ones and with several redmixed drinks course meat; were older also meals; the diners customers ones looked who who ordered for the quiet ordered most specialty the coffee most from single patrons; he found thatgreatly the influenced descriptions their and popularity. pictures of Female dishes customers preferred poultry for Emil. Over time,discovered he that learned younger what males dinersthan liked women liked in different their and mid-30s. drink/dish He didn’t learned how combinations like. couples ordered He differently crowdsourced and regularsdrink developed reviews. reputations for their food and choices. Diners especiallydishes liked and reading beverages. about Asbecame the suggestions comment a for base kind pairing grew, of the ordering internal system social media site, where dining ideas were BEST PROCESS #1: ADAPTING TO CHANGE 4 en iln ocag h o r n htyud.Tenwrestaurant new The do. you what and are you who change to willing being ahr efiue u htmd epecm n ul i restaurant come.’’ his will built and they come it, people that. build made around what you out ‘‘If define figured customers wasn’t he the Rather, motto let Emil His struc- wanted, of experience. he Instead the way success. the to restaurant the key turing the mission. static—was and fresh—never challenge a Staying both became day’’ every restaurant different ‘‘A change.’’ Darwin’s to in adaptable ‘‘most that, the ensured was he he for terms, preferences, deep and experiences a orders to fresh Thanks tracking marketplace. database truly the in ‘‘edge’’ created distinctive a and Emil customers dimensions, social dining’s redefining In crowdsourcing). by informed ordering (electronic new processes also but music), favorite customers’ (playing practices new embodied lddhm ewsago we;h i htmd ieshappy. diners made entered what had diner did of kind he new scene. a success the after owner; why long it good not doing kept a is Emil he Unfortunately, was to that sold but He who business, him. owner the eluded restaurant with The frustrated world. probably changing was a to adapt to psychological not logical, is however, making. decision future with interference higher. ramp volatilities and even correlations portfolios ‘‘diversified’’ as on risk rangebound to adding low-volatility, managers in money markets; breakouts for sentiment; playing in and positioning traders itself of momentum effects manifests the macroeconomic by markets dominated chasing markets shifting in managers themes to portfolio spectacles: adapt line tone-deaf to forever sadly failure will customers The dishes, doors. good preparing our keep we if that markets think changing to adapting market for and predictors technical among relationships from outcomes. or tested inspiration carefully trends their or macroeconomic draw patterns exploit Others ideas fundamentals. those company of Some returns markets. generate to how from about ideas trading have for we restaurant traders, As Emil’s markets. of financial relevance the out figured have you now By ■ mlcudol copihta,hwvr yebaigchange. embracing by however, that, accomplish only could Emil means markets changing to adapting that is recognized Emil What nec fteecss h euti rsrto n oeta emotional potential and frustration is result the cases, these of each In h igeGets are oAdaptation to Barrier Greatest Single The aey oee,d aktpriiat eeo xlctprocesses explicit develop participants market do however, Rarely, nta epc,w r ieceswho chefs like are we respect, that In . ti h aua osqec ffailing of consequence natural the is It : www.MyChart.ir h otcueo h frustration, the of cause root The 5 BEST PROCESS #1: ADAPTING TO CHANGE to want in his menu. He was passionate believed ■■■ Key Takeaway believed was best. he Therein lies a considerable dilemma. Entrepreneurs need deep, endur- need to adapt to changing markets. Emotional disruptions of trading provide information, often signaling the The previous restaurant owner So why don’t bright, successful professionals adapt? Why don’t we, To be sure, there are traders with discipline problems and poor from startups than established software firms.harbor Paradoxically, the seeds success of can its own undoing once innovation becomes status quo. computer market; the personalpopularized computer makers tablets were and not smart those who phones; social media has arisen more changes needed to stayof ahead. technology—rarely have Think those ofmainframe sprung key computer from makers innovations the were not industry in those giants. who the pioneered The the world personal becomes difficult toare embrace wedded change to whenwe what your are very you to heart are what and doing. we soul Ironically, do, the the more more challenging committed it becomes to make the ing belief in their businesses tothat weather belief the that arduous cements startup a process. companyto It culture is and the attracts firm’s talent committed mission. That same belief, however, can imprison us. It become a different restaurant everyto day. the He restaurant wanted customers to flock his business. He became so attached to—somodel identified with—his that business he could not construct an alternative. He didn’t becomes difficult to embrace another. about his cooking and customer service. And that passionate belief killed like Emil, embrace changeToo often, and the the answer is stimulating ego: challenges Once we of are renewal? attached to a given reality, it failure of evolution, not merely a failure of psyche. managers do not suddenly morph intosee emotional mature professionals basket act cases. out When of frustration, we ready—likeowner—to the restaurant give up the business, there’s a high likelihood that this is a impulse control. There are also traders whoconflicts act in out markets, unresolved with emotional predictably tragic results. But successful money BEST PROCESS #1: ADAPTING TO CHANGE 6 on narsac td odce n14 yKr uce.H posed He Duncker. Karl by 1945 in conducted study research a in found udnt h otoi nei a 5pretblwispa.Ta e to led That peak. its below percent 35 a was became highs it expected its once off portfolio the percent the 20 to them buy burden great awarded a was often market that stock companies the The premium. unloved before that unloved was were more problem that became The companies Street. good value the liked This by He market. unloved contrarian: his the a by on him underpriced based made with was picker orientation perceive that struggling stock value can’t master was identify a to only who as ability not manager himself viewed we money He long/short analysis, performance. equity of an kind with a or trading alternatives: of way a the thwart to bound diners. of was generation he new restaurant, the of of desires definition d old and the menu with might stuck of owner host previous a fixed tried functionally have The redefining restaurant. and of set mental concept his the shifting by but restaurant, old the improving the solve and set mental their no shift were unsolvable. subjects could perceived seemingly frame, and they perceptual tacks, fixed different for functionally a container With longer uses a box. alternate empty as an it perceive as seeing to it of participants Instead study box. the the for for contents, difficult its not from separated was was box it the Once problem. the solving time sets. mental problem their use in its seemed, envision to it to trapped, accustomed failed were they They so that holder. tacks were candle for a They container as a fixedness. as box functional the the called seeing light then he and because what suggested, wall, Duncker the of box, problem, onto the the box with of the struggled out tack People tacks box, candle. the the these in take of candle to on the was None drip put solution wax. wouldn’t correct candle the drying The lit lighting the tabletop. the to the with that wall wall guaranteed the none the worked; to to solutions candle it variety the sticking a tack and tried to that typically candle way Subjects trying a lit. from such when solutions, in table wall the of the on to drip was candle not challenge a the would The wall, attach matches. it of to corkboard book resources a a these and them use table, to showing a candle, study, a the tacks, of in box subjects to problem a mtoa xdesfesfntoa xdes hnw dniywith identify we When fixedness. functional fuels fixedness Emotional by not succeeded, he that clear it’s chef, the Emil of story our In candle same exact the facing Subjects part: interesting the here’s Now be can change to adapting of difficulties the of illustration dramatic A u ntal hw h ak usd fterbox their of outside tacks the shown initially but etpclydntwn osethem see to want don’t typically We crcagst oaal sln she as long As avail. no to changes ecor ´ www.MyChart.ir ayyasao spoke I ago, years Many . a uheasier much a had 7 BEST PROCESS #1: ADAPTING TO CHANGE text is noteworthy for its conceptual Expected Returns : What drives price during one period is not what moves regimes The Power of Flexible Commitment The manager looked at me in total shock. It was as if I had suggested I suggested to the manager that his dilemma might be addressed by the market will rise or fall: I am also making the key assumption that markets at other times. When I place a trade, I’m not simply betting that notion of indicators in thepotential literature, market I drivers identify andduring the assess a most recent, which stable small, market are period. low-correlated Basic influencing to set this price approach is of action the and explains returns inactive terms trader, of I look thestructural at interplay approach different of is building these similar. blocks drivers. Starting than As with Ilmanen, an the but vast the array of technical Antti Ilmanen’s framework. In the book, he breaks markets down into ‘‘building blocks’’ ■ to outsmart the market and findsense, unrecognized he value. In was a looking very forthat important is self-validation, a not powerful profit barrier to maximization. adaptive And change. the social focus madenot Emil want a to track better money restaurateur. flows and But refine our his entry manager execution; did he wanted fixed: Any analysis thatsuspect. did From not my perspective, pertain a tocould money have company flow made filter fundamentals him for was a his more risk effective exposure fundamental stock picker, just as ‘‘But I’m a stock picker,’’ hedoing explained. something ‘‘That’s different, what I’ll I never do succeed.’’ For best.fundamentals him, If stocks like traded I boxes on start hold tacks. He was functionally and emotionally leverage his bets. that he solve his domestic problems by initiating an extramarital affair. strong stocks until theymanager were showing could early potentially signs limit of accumulation, his the drawdowns and more effectively information, summed over time, could providedegree a to useful which indication buyers of or the sellers wereshares accumulating with or urgency. distributing By their waiting to size up positions in his fundamentally creating a relatively straightforward money flow filterbook. for the I names showed in his him hownearer each to transaction the in best each bid stock price occurred at either the time or the best offer. This execution agonizing decisions about selling good companiesholding at bargain losers prices and versus risking poor performance and investor redemptions. BEST PROCESS #1: ADAPTING TO CHANGE 8 h tbe(ttoay eieta a endtems eetps will past recent most future. the immediate defined the into has persist that regime (stationary) stable the a o edt uni raotmode. breakout environment a cycling in the ruin in to money lead made by now had can that over strategy bottom run the or range, top getting a the to approaches of market ourselves a When open as moves. we momentum ourselves strong identify extremes, we market to If of vulnerable markets. we faders ourselves If rangy leave undoing. low-volatility, our we in of followers, frustration seeds trend the as sow we ourselves trader, identify of kind one as ourselves environment. dining altered the to adapted market Emil shifting to as trading one’s environments—just adapt suc- to trading ability to flexibility—the key in the lies Rather, cess grief. with meet eventually bears not and is bulls Success a either weakness. being and in found strength cyclical be both to its fade by (trend) to dominated want is linear we market as a component, a behave that to of want extent we the component, result extent To linear trend-followers. its the the by To dominated as is component. market asset a (mean-reverting) cycles, that cyclical any market a on of and work series MESA component his time for the known well defines is who Ehlers, John across profits finds harvests investor thereby successful and the drivers A of regimes. notes, time. market range Ilmanen a over capture As change that predictors. action tools market price as of have valuable drivers breadth more market and far important momentum so as been such been Factors other not returns. During have market index. positioning to the and in S&P sentiment returns periods, the inferior market to in volatility led modest bounces have and correlations ratios see and put/call to low Conversely, tended futures. Index we’ve 500 cross-sector correlations, in rises seen and we’ve and volatility equity high When been have action. ratios been price option have put/call prospective positioning of and drivers sentiment significant chapter, statistically this of writing my during nipratipiaino hsln ftogti ht new define we once that, is thought of line this of implication important An regimes. market assessing and understanding of ways many are There dominant been has that indexes equity for regime the in example, For etefsett dp ocagn aktconditions. market changing will to traders adapt successful to that fastest ensure the regimes be market of cycles life short The momentum e Takeaway Key ra or www.MyChart.ir mean-reversion rdr perennial trader; 9 BEST PROCESS #1: ADAPTING TO CHANGE ■■■ ; there’s no spark. It’s just not the same as it used to be.’’ fun ‘‘Love doesn’t die,’’ the saying goes, ‘‘it has to be killed.’’ In the case When Chris and Gina came to my office to work on their marriage, But how can we be passionately committed to what we’re doing in This, for me as a psychologist, has been one of the greatest surprises I watched Gina closely as Chris spoke. It seemed she was uncomfortable don’t go out like we usedhave to, we don’t do things with friends. We don’t and household; both held jobsexplained, they ‘‘we have liked. good ‘‘We’re times a onwith great vacations and the team,’’ no Chris kids one than could Gina. be But better it just seems that something is missing. We of Chris and Gina,or however, even it any was difficult murderous to intent. find Both a were murder weapon devoted to their children was the absence of the bondas they anything, had they once wanted experienced to deeply. know: As Where much had it gone? they were seriously contemplating a breakup.to The theme time they and came again back wasof that any they had great grown conflict apart. that It led wasn’t them the presence to think about separating; rather, it they showed fewin signs calm, of even beingdefensiveness tones a commonly and dysfunctional seen did couple. among not They troubled couples. engage spoke Nevertheless, in any of the bickering or the present and equallychange committed begin to to leaving swirl? it behind as the winds of rigorous processes that ensure adaptive change. around for the big-box retailerthe gaming that company fails that ignores to virtual reality. adaptto The to one’s discipline knitting of online sticking is shopping destined or for failure if it is not accompanied by equally cannot adapt to whatcycles.’’ Their Victor frustration is Niederhoffer a result refers ofcause. their to No rigid psychological trading, as exercises, not in the and ‘‘ever-changing primary of themselves, will turn business working with professional money managers: Thenot majority of because traders they fail, lack needed psychological resources but because they to Chris, ‘‘We’re going to have to get my car back from the garage. about. She looked a bitthat embarrassed and the explained, kids’ ‘‘I soccer just remembered practice was moved to the weekend.’’ She turned with what he was saying,head but as she if did in notcuriosity deep speak. thought got Twice, and the she looked better turned away of her from me her and husband. I Finally, asked Gina what she was thinking 10 BEST PROCESS #1: ADAPTING TO CHANGE eas hycet rde rmteodcmimnst h e ones. is new That the a to ones. commitments poses fresh old change build the from flexibly them, bridges they create For they as because themselves today. even pour commitments it They their threat. in ego into onerous living an by not challenge, future stimulating the for fight temporary it lineup. time current same its maximize the to at can talent it new the all scouts find does club to baseball research A the conducts blockbusters. and next off-patent go best-selling eventually that will knows firm drugs pharmaceutical A gasoline- units. traditional hybrid selling and the still powered readies while vehicles manufacturer electric automobile of An generation next offerings. existing of making to most committed are the they while services and products new of pipeline the planted couples successful The future. their it. for seeds embraced Indeed, They family. and the individually. in anticipated and change they developmental together the things by threatened more not self-sufficient, were doing more and began older spouses became mature the children their during the lives As new years. their parenting of aspects begun already had couples ones. new adopt even flexibly commitments they prior as sustain social, They joint and interests. personal career of and context recreational, broader a deep within retain now They but are themselves. ties, for transition family suddenly lives a it, new such embrace replace and during to define thrive who nothing who those is Couples there focus. shared If no lost. there’s now is daily shared, children The on difficult. be focus can couplehood to the return family the into surface, however, themselves life, poured the have who On couples For that? recreational travel! pursue and is socialize, interests, to Why time ample home. appealing: sounds the nest empty leave first children when oneigcase. counseling Friday. shop on repair early the close dialed didn’t and they phone, sure make his beat. to out a whipped miss didn’t himself, Chris morning.’’ excused tomorrow He kids the take to it need I’ll ecnol atrteftr fw mrc h atta h rsn is present the that fact the embrace we if future the master only can We a nurture thrive that Firms businesses. successful of true is same The successful most the that see would you closely, look to were you If occurs couples for periods challenging most the of one that out turns It iete ad hywr ra em n a n elv difficult helluva one had I And team. great a were they said, they Like oprprs y ad ucsflpol n organizations and people successful Rand, Ayn paraphrase To . ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 11 families. A company’s commitment ■■■ their then we compare charts. … Bridges are the key to flexible commitment. Unfortunately, there Of course, good psychologists not only listen for what is said, but also In the case of couples, we typically have multiple sine charts—and The reason the sine chart is so useful is that people, like markets, are One of my favorite counseling exercises is to ask people to draw sine what felt like discontinuous change is now a natural transition. were no bridges in Chris and Gina’s marriage. from gas-powered engines to hybrid and electric ones.abandon Most people a won’t commitment to abut cherished uncertain B. A Create in a bridge order between to A and pursue B, however, a and promising suddenly The parents’ devotion to their childrenchildren—and, becomes a eventually, new to devotion to adult to automotive excellence remains firm, even as the product line changes essence of one of my taped sessions without listening to a single word! off. We then had tothe describe, as session. the I tape was played, skeptical what at was happening first—until in the supervisor recounted the people and observing theirbehaviors. One postures, of facial my clinical expressions,students supervisors gestures, in to graduate and watch school a used to videotaped ask therapy session with the sound turned other for how it’s expressed. You can learn a great deal simply by watching low points of the relationship. Ainstructive: comparison It’s of possible the to charts see, first becomes hand, quite is the on degree the to same which wavelength. the Each couple fills out the chart without consulting the even as the relationshippartners. weaves A fresh worthwhile themes exerciseto through is fill to the out ask a lives sine each of chart member the for of the the marriage, couple identifying the high points and multiple themes. Each partner brings personal themes to a relationship, market precisely replicates past ones.History, Still while there not are repeating, striking does similarities: indeedany rhyme. well-crafted Our novels lives, or no symphonies, less express than themes and motifs. chart captures the peak and valley experiences of a person’s life. patterned. No one life experience perfectly repeats another, just as no one ask them to list their mostmost positive difficult life experiences life at experiences thechildhood at peaks and through the their early troughs. adulthood The and the sine present. waves In run a from single view, the waves on a piece of paper, with about a dozen peaks and valleys. I then 12 BEST PROCESS #1: ADAPTING TO CHANGE o ffiuigotwe opc ptercri re ogttheir killing get was and stability peaks to that of order and absence in lives, The their car marriage. it. in their their was stability that up created efficient had practice—but pick very valleys next to a the did when to they out and kids team, figuring a of as recent great their job to were specific They were valleys or Neither lives. What peaks Why? married any but. it. identify anything could were was Chris marriage nor That the Gina of stresses. charts valleys be job small to they and supposed and And financial job children their vacations, charts. to of family corresponding their accomplishments to at the corresponding and stared peaks successes, small Gina drew and They Chris stared. children, having of me, we for until higher as bounce them, don’t we For bottom. Sometimes hit spheres. opportunity: to both stability led the in crisis by commitments followed meaningful uncertainty career of and volatility relationship of periods by discrete mine: caused overall from but different way, so not the There were along charts children. downs their having and of ups peaks health-related and marriage big career the and were by courtship followed peak, their significant identified a both as in and valleys significant years, and childhood peaks their identified readily Both relationship. their so not life-event are of out, charting turns charts. it market the from charts, as different life-event well Those as Rorschach direction. and No personality volatility thereafter. with my valleys mid-1980s; capture and the could in peaks in test valley moderate peak more pronounced significant to a equally return then an a and and 1980s school; early graduate the and chart college own pronounced in more My or childhood; ones succession. in junctures, valleys in and life peaks valleys modest certain or relatively at drew peaks valleys multiple draw and they volumes peaks when speaks huge It waves. draw sine people the of person a when amplitude each and usually allows frequency exercise there’s the the vary valley, of to variation or someone informative peak An If particular why. others. reason a over identifying skip over lives—and their agonizes filling in time of periods with periods particular start long out others particularly peaks, spend will the people out Often, fill valleys. immediately people Some chart. the ht oee,wsweetesmlrte ne.Atrtepeaks the After ended. similarities the where was however, That, about deal great a me told charts the out fill Chris and Gina Watching see to watch I charts, sine the of case the In ■■■ www.MyChart.ir how esncreates person a BEST PROCESS #1: ADAPTING TO CHANGE 13 : The The Structure of Scientific Revolutions Key Takeaway . Once patients became aware of their repetitions, Change occurs only once thereach accumulation for new of solutions. problems necessitates the As it happens, people do repeat conflicts and issues throughout their A small example of paradigm shift in psychology occurred when the Over years of encouraging people to draw the sine-wave charts of their lives—in their marriages and in their trading. What therapists found in those conflicts in present and pastit relationships. was In the not heyday unusual of for analysis, therapya to period require of multiple sessions years. per week over and, from there, within theiranalysis other was relationships. As a youinsight, might long-term wrestle expect, with affair, conflicts within requiring the therapy, time and then and work through effort to achieve repetition compulsion they could change those patterns within the therapeutic relationship idea was that present-day problems areconflicts. reenactments of The past, goal unresolved ofhelping therapy was relationship, to allowing reenact the those conflicts analyst within to the provide insight into the reigning framework of psychoanalysis gave way tobriefer more active, forms directive, ofelegant intervention. theoretical Psychoanalysis framework was—and with remains—an explanatory power. Freud’s core incremental change yieldsentirely to new direction. qualitative shifts: The science takes an within a paradigm, followedand by questions accumulating the anomalies paradigmby (observations the fails upheaval to of address), revolution and and paradigm eventually change. followed At those junctures when he wroteprogress the of science classic, is typified by periods of gradual, incremental change a few blewthe up self-appraisals early and in reorganizationsthe their that significant would careers. peaks. eventually It This generate took was huge a valleys major to conclusion force of Thomas Kuhn low-volatility periods—and it’sprecede often the greatest the long-term opportunities. high-volatility Considerof the periods many life histories that of the Market Wizards interviewed by Jack Schwager: Not lives, one observation has stood out: peaks andproportional valleys tend to to be one relatively another. Like markets, people go through high- and 14 BEST PROCESS #1: ADAPTING TO CHANGE twsCrsdigtesitn.O n cain hnGn ocda voiced Gina when occasion, times, one other On At shifting. routine. the child-centered doing a Chris was to Gina was and it topic marriage Chris the the example. from shifted missing perfect was a quickly what was words in office capture my to in trying incident The routine. is and peak of power the is That priorities. base life’s the reorder to experiences. us ride boat a helped that small glacier make a a to way, of and important world very however, the a Alaskan of In that, more the experience. see than shared to to More desire Margie our words. cemented with trip beyond trip the beautiful a was was It experiences One wilderness. perspectives. peak fresh recent bring my and possibilities of novel new special in up world very our open a and experience: They taking ourselves ways: see child, fresh us a help from to experiences new birth come Those giving trip. path, peaks career Often, new a valleys. traveling life’s through us future: challenge. the a to Without not bridge-building threat, ones. no a is larger becomes there much Change on, gives the draw setbacks to weather small grit to the of confidence experiences master and to tools Learning the fight. us the have still winning and down at knocked being shot after a canvas the off of get to ‘‘grit.’’ University ability resilience the valleys. this It’s calls greater Duckworth life’s Angela researcher of Carolina challenges North the the meet us gives to what is resources adolescence and Mastering childhood ones. of good challenges necessarily moderate not the are valleys few with charts life emotional wave deep the of out was commitments. ready it became new I wholly and that for limitations life, career had and my Anomalies social, in personal, family. of point new recognition crisis my a form the to would who built from my children but become the would analysis, who and woman of wife the years meeting of over influence accumulated powerful single insight grand because any not around, experiences of turned life emotional My change. powerful rapid relatively of was catalyze tenets could found core to they question began What and Erickson processes psychoanalysis. Milton change and Pioneering accelerated French years. these and and explore Alexander months as weeks—not such and therapists days of them matter change a to managed within yet and patterns problem long-standing described vexing, clients Some anomalies. Kuhnian were however, practice, their owa osi enwe,lk hi n ia hr r e peaks few are there Gina, and Chris like when, mean it does what So carries that inspiration and energy the provide Those peaks? the And sine- why appreciate can you dynamic, Kuhnian the grasp you Once e aly?Btenteusaddwso ie l htremains that all life, of downs and ups the Between valleys? few www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 15 commitment. flexible Flexibility and Trading If we were to examine the thought process and preparation of those The reality for Gina and Chris was that their children no longer needed however, is to exit theexpress positions unexpected and support even for monetary reverseodds ease. them from At should the that the model point, Fed historical would take a backseat to the idiosyncratic risk of afternoon. Plan A forclosely and, the if trader monetary isas policy to expected, is follow add unchanged to the and the Fed language positions announcement is on hawkish dips in dollar strength. Plan B, buy signal from his USD model.versus Our a trader basket initiates of long USD otheris positions currencies scheduled and knows to that finish the its Federal Reserve meeting and make an announcement in the from the outset. Let’s say amental trader drivers has that built impact a currency model prices—from ofinterest the trend/momentum rate various to differentials funda- to economic surprises—and receives a strong successful traders, we’d see that flexibility is built into their trading plans The upward trend thattraders you are counted not on married ismarket’s to no cue—and the longer that a long requires particular certainty. or open-mindedness. Great the short side. They follow the If the headline isvery credible well and might institutions hedge areYou’re your acting willing position, on to lighten the entertain it, news, or the you get possibility out that altogether. this is a game-changer. Ironically, no one should betraders. able to We’ve do all flexible commitment beenbomb better hits in than the situations headlines and we’re inspires long a and bout of suddenly selling. a What do tape you do? ■ family had changed andother, they but had that not. wasn’t They enough. They had needed a a commitment to each no longer had aroutines—without purpose. a Without bridge anything to to the take future—the the couple place foundered. of The those to occupy dominant mindshare.and Their increasingly kids self-sufficient. were Leaving mature,come. home growing Many for up, of college the was couple’s soon routines, to once glue for the relationship, to their mutual concern forof the the children. avoidance Nice, of change safe that terrain—and was more strangling the marriage. strong desire to keepin the his family seat, together, pulled Chris outstopped moved his talking, uncomfortably phone, Chris obtained and his checked quotes, his and the market topic position. quickly Gina changed 16 BEST PROCESS #1: ADAPTING TO CHANGE nenlzdi eetyasa ope sarl,b h iepeople time the have by they rule, a that As identity couple. negative a as the years confirms recent more in only broken; internalized is breakage something know of They that talk them. concerns with secretly—harbor wrong marriage. is so their something not with wrong sometimes is secretly—and something though They as feel already wife and that thing one they building. eroded that wrong that the ladder against family positives leaning the were of climbing they busy see absence couldn’t so the were the They but wasn’t marriage. It negatives their years. great recent in of experiences presence peak of near-absence the was htwa tre salsn a a e eoeawinner. but a so become repricing, yet can in day losing slow a markets as started for trader what the look that given has clarity—to positions mental the exiting time—and based Quickly prospects statement. growth Fed repricing the are on markets intermarket that The trader rally. our bonds tells and weak action stay and stocks sharply as off sells feebly dollar our bounces and The then Quickly positions. long rates. indications the restrained exits economic and of bids hits policy weakening trader a notes for support Fed renewed the expresses when a sharply in off bring likely would policy monetary sellers. dollar in of tilt class dovish fresh a as present, the u rde oteftr.Lk h hfonrwosl oEi,we people that Emil, table. fact the the to to to sold coming up wake longer who we no until chef-owner are love, the we meals Like the cooking future. create keep the to fail to Chris—can bridges and Gina our we—like routines, ones trading existing in patents? as Caught their drugs of new pharma- end of like the pipelines are develop approach we to if fail What that trading? firms to ceutical approach basic our in flexibility impossible. been have in would dollar movement flexibility rate the such interest that model, or conviction macro momentum his unshakable of because an higher held move from had to message had trader unexpected the the to If adapt to Fed. trader the the enables that B Plan a ohwde scooithl opelk hi n ia The Gina? and Chris like couple a help psychologist a does how So Gina and Chris with exercise wave sine the from finding key The h e oortae’ onn ucs sntjs lnigtetrade, the planning just not is success morning trader’s our to key The sells dollar the session, the in early higher moving after say, let’s So u hti eiiiyi igetae hti ea rdr lack traders as we if What trade. single a in flexibility is that But flexibly lnigtetae ti h ciecntuto n eera of rehearsal and construction active the is It trade. the planning isn’t epu sfcsn nterpolm.Bt husband Both problems. their on focusing is helpful ■■■ hti u niecreslc lnB? Plan a lack careers entire our if What www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 17 The Psychology of play out. These exceptions to problem Key Takeaway don’t . When we are focused on problems and overwhelmed by them, We cannot improvedysfunctional. our functioning if we experience ourselves as Empowering people through a focus on strengths is a cardinal tenet The answer, as I alluded earlier, is to create a bridge between present So the last thing we’d want to do with Chris and Gina is spend the Notice the subtle shift: The troubled person tells the psychologist patterns typically hold thewhen problems kernel don’t of occur that solution: can It’s point the what way out. we are doing Trading we typically fail to appreciate thein fact which that there the are numerous problems occasions of the solution-focused approach to change described in disempowered state. Spending hour afterinto hour with problems, a subtly therapist, delving unwittingly reinforces contributes the to the notion initial disempowerment. of ‘‘troubled’’ and often come to a psychologist,themselves they have as gotten troubled. tocontrol Feeling the or point beset change of with experiencing those problems problems, and couples unable come to to counseling in a if that would feel like taking time away from the kids? Of course not. and future. What’s the one thingfor holding the and couple commitment together? to Their their love children. Will they work on their marriage deadly immersion in routine—is theto proceed? absence of peak experience. How majority of ourwe time talking don’t about haveexceptions what peak to their has experiences problem patterns. been on Indeed, their going very the problem—their wrong. sine-wave But chart to serve as their adaptive capacities: theand parts dysfunctional. of themselves that are not troubled that they have a powerful therapist,focused not that work they are succeeds powerful. in Solution- large part because it reconnects people with about exceptions to those problems—andkernel then of by pointing solution out has thatthe resided solution the came within from the the psychologist, person troubled individuals all would along! feel You see, if about overwhelming problems and the psychologist responds by asking 18 BEST PROCESS #1: ADAPTING TO CHANGE n nlv ihec te,tehm niomn el xiigand exciting child? feels a environment bequeath parent home a the could more other, What each excited loving. are each with parents If with love children. the displaying in on lost were and be overnight not they their would office energy planned my in the they other that as suggested animated became I them excursion. of two the as trip and time overnight family awkward an be take would to no It to children couple. occasion the a the were bringing using of and There idea grandparents the their on up. see hit who picked Gina was number conversation It a interruptions. the were there positives; Clearly of caring, communication. marriage: and their cooperation, in things trust, good role-modeling already were Chris not development, past. of the phase of mandate next parenting children’s the Their their repeat spouse. for blindly good way a the being pave not of to included definition was but now new parent The working, good clear: wasn’t was a bridge being that The marriage Never! parents? a as working in being contemplate could internalize.’’ and relationships appreciate good to kids. finding come the and could for children up pretense the splitting that a off creating better sense be probably no You’d there’s other, each for things role development. to children’s do their to of needed phase they sustain what next with and the role same model enhance to the to and needed do one would they was they marriage children, their What older couple. good their a for expectations. being parents model relationship good children’s be their truly for To template other each happy a with a had create be they to would relationship the together that times suggested good I have Rather, to couple. needed they that them telling out?’’ seek to relationships? them about influence them that would teach relationships that of kind does What other—what each other—being to each loving special fun, having you see don’t children affected the ‘‘If and absence Gina Chris. asked the pointedly I that role-modeling?’’ you thought are ‘‘What they children. their how and them between positives the revolutionary. pursue to not likely evolutionary, to feel most way efforts are a our We if need commitments. change we present onto So a holding trade one. while won’t uncertain future They an present: for the in priority stuck known remain they bridge, a Without ow ea okn o hs xeto iutosi hc iaand Gina which in situations exception those for looking began we So They hear! to wanted Gina and Chris thing last the was that Well, positive feel don’t genuinely you ‘‘if gently, suggested I course,’’ ‘‘Of wasn’t I this. contemplated never had couple the that see could I of absence the toward couple the with conversation the turned I and oatctm.Crslvdteidea the loved Chris time. romantic www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 19 The Rebuilding of Maxwell Maxwell contended that the players in the ES futures were like rookies Maxwell was one of the top ten traders I had identified. For years So it is with many, many traders who find the future leaving them No amount of work on problems would have helped Gina and Chris. Only when romantic love felt like part of their family commitment They found each other and vowed that they would never hurt their This made huge sense for ChrisChris and had Gina. come from a troubled,Gina alcoholic had family. been sexually abused as a child. at the poker table. That’s what made them idiots. One of Maxwell’s key that enabled him to bluff, fold, or go all in. table. He seemed to knowon when tilt, others and were when bluffing,attached they when to they held various were the hands, nuts. it While was he his knew keen the perception probabilities of his opponents edge. I wouldn’t describewas Maxwell very as intelligent—and particularly unusuallyand intellectual, shrewd. had but an He he uncanny was ability an to avid figure gambler out the other players at the poker e-mini (ES) futures market. Hiswere frequent ‘‘idiots.’’ They refrain chased was markets, thatand put otherwise other replicated their traders behaviors stops that provided at Maxwell obvious with a levels, trading is possible. he had been very successful trading intraday patterns in the S&P 500 markets encounter so much talkthat of failure, it’s frustration, necessary and to shortcoming occasionally step back and reconnect with all that a review of ten ofwith the in top the traders last andtherapy. portfolio decade. managers Performance In I a coaches had sense, worked working this with was my participants own in solution-focused financial ■ I mentioned in the foreword that the immediate catalyst for this book was energizing directions. They needed to find the solution that was there all along. behind. They need to find the bridges that link old commitments to new, to be. could they find a bridge tobut they their were future. very They open to weren’t finding willing a to better way change, of being who they wanted children the way they were hurt.on They their would children. never take their issues out 20 BEST PROCESS #1: ADAPTING TO CHANGE nbet n rdet h future. the to bridge a find to unable however. much, making wasn’t no also levels He money. sell and buy gauging than of More ways past. old the worked. the longer in that than lamented differently he moved algorithms prices once, execution price, on best relying idiot. get the increasingly to was firms he if trading wonder larger to began With he Gradually decline. began steady profitability slow, Maxwell’s a automated trading, of idiots wake fewer of the With aftermath in making. the descent market in its public began the trading proprietary to and appeal 2000 its lost in daytrading dominant as less market, becoming the were traders individual worse, To matters opportunities. fewer make with himself found Maxwell shrunk. ranges daily marketplace. the in advantage no perceived he edge his when of trading part not important An was shrug. would periods. he market there,’’ slow in one during no occurred ‘‘There’s sitting caught his were of bears Most and positions. bad bulls in when occasions those find to when opportunity the out figuring on out. it predicated figured was they before trading wrong a his were side. traders out other degree, the take take small couldn’t quickly no would buyers he To If low, were previous level. a buyers particular sellers or levels. a when high price prior at tell exiting various could or at he in volume coming screen, of depth-of-market this flow During a up.’’ the for ‘‘set Watching observe sat to and would market sat the he and for sat period, waiting He time, performance. of his amounts in good consistent so was he how once Maxwell idiots,’’ to reward opportunity doesn’t Byfadingthefearfulherd,heknewhecouldmakeagoodliving. explained. an market ‘‘The fear be side. soon that other would knew the there he take that positions, trade—and their the of driving out was baling breaking traders market the and saw support he key When ‘‘pukes.’’ fading was patterns trading utlk hi n iacmitdt htwre ntepast, the in worked what to Gina—committed and Chris like Just ebbing. passion The valleys. many much Not losing wasn’t peaks. many he Not so good, was management risk Maxwell’s average the and lower, steadily moved VIX on, ground market bull The greater the flow, order the greater The markets: busy loved Maxwell realized I live, trade Maxwell watch to opportunity the had I When ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 21 Key Takeaway Routine is necessaryadaptation. for efficiency; breaking routine is necessary for There is another reason, however, why traders don’t quickly embrace It makes sense from a purely evolutionary perspective that what has How many years did Gina and Chris plod forward in a marriage losing You don’t just wake up one morning and discover your edge is gone. series of winning and losing bets that can play havoc with our psyches. high hit rate/high blowup strategies, suchOver as the the naked course selling of of any options. series of, say, 10 or 20 trades, there are random we possess a distinctprofitability and can consistent be edge highly intrades—an variable. edge markets, tends Over to the be the apparent, particularly paths long if one of haul—100 is not our engaging or in more change in the face of changing markets and opportunities. Even when broken’’ is common advice. As longnot as broken, we we convince don’t ourselves have that to we’re seek fixes. Maxwell rationalized the decline in hisresult profitability of in stress, many burnout, ways: high-speed asEach algorithms, the rationalization and helped just sustain pure the bad status luck. quo. ‘‘Don’t fix what isn’t inefficient. enabled us to survive would become our default mode, our status quo. committed to building? An object inforce, motion, remains not in acted motion—and on by people any areconserve outside no energy: different. Constant We change are wired would to be disruptive, exhausting, and its compass before the contradictionspossible accumulated to and ignore it the was absence no of longer closeness in the close home they were necessary. For the restaurant owner, qualitativefar change and was he a sold bridge to too Emil. run specials, andparadigm, so however: on. They Allsinking were of ship. rearrangements Incremental these changes of don’t were work deck when changes seating qualitative change within on is the a same who sold to Emil did notThe suddenly erosion come occurred to over time, work during andto which find he no did boost customers. everything possible traffic: Change menu items more frequently, lower prices, Rather, as with those Kuhnian paradigms, negativegradually evidence until accumulates it is no longer possible to ignore. The restaurant owner 22 BEST PROCESS #1: ADAPTING TO CHANGE oe rs rds u vragetnme fte,te ehave we then them, of number great a a over over just but bet not trades, you edge so if an or But overcome overwhelms dozen game. to edge randomness the That the of When allow ruin: bets of out randomness. more risk you edge, court constant take you a are bet, with can odds moderately single path the any the when on in Vegas of all in randomness go betting instances: you keep enough If to after you. sense with apparent makes is it edge is why small paradigm That’s trading a the Even that viable. accumulates longer evidence no and 100, and 80, 60, the steadily to trade When is paradigm. action his improvements. the of to course refine incremental constructive ideas most the make trade working, is of to paradigm generation seek elements his the and from assess execution, should process, he trading Rather, his P/L. of monthly or weekly, daily, batting to approach promising on more far focusing the a and take is performance. outcomes swing adjustments short-term the Both of Ignoring slump. consistency game. the his his into of himself of out talks out he get harder batter times, to even of swings swing number and a his number hand out large changing hot strikes a a he gets When have pitches. he to at himself When considers at-bats. he so hits, gauged or of who 20 player every baseball become performance a they Imagine his money. trades, adjustments trader risk Those losing the taking. cost their risk of ultimately their increase reduce series and and a slumps about well convince encounter concerned they markets they trades, seeing When winning are taking. of they strings that have themselves they When curve. constant P/L relatively way. a the at along up paths different end extremely and with edge but ways constant point, many end a how have see to can we possible the times, it’s many Along random. Forecaster out. purely Henry’s were edge—play running that downs By of and lack ups surprising edge—or were however, the 100 way, of see rate; course win the could Over percent we size). (50 loss trades, average edge percent of positive percent 90 a 110 size size with win one win one average size); average and size); rate; loss loss win average average percent to of (50 equal edge size negative win a average with whatsoever edge rate; no win with percent that one (50 curves: researching profitability In three site. explored Solutions I Vertical post, his to posted Carstens Henry h rbe sta,oc nawie 0tae unt 0tr to turn 40 to turn trades 20 while, a in once that, is problem The overinterpret not to wise is Maxwell like Someone traders. for is it So the in downs and ups random these overinterpret often very Traders that Forecaster P/L the on based post blog a wrote I year Last www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 23 (2012), The Success Equation ■■■ It’s a genuine challenge to track edge and randomness over small Tracking your edge is relatively easy when you place several trades Maxwell was not broken, just as Gina and Chris weren’t broken. Like gotten to the point of questioning whether he could, indeed, go forward. series of trades and convinceOnly himself after that hope was ‘‘the raised market and isof dashed coming many seeking back.’’ times did help. he By get to that the time, point however, like our couple, Maxwell had those runs. Whenever Maxwell had gottenmeaningful to the changes point in of his trying to approach make to markets, he would hit a winning tively evaluate performance. Anleads overemphasis traders on to place recentand too performance losing much trades, significance not on recognizing recent the runs important of role winning that luck plays in whether performance is due toconvincingly luck about or this skill. challenge Michael in his Mauboussin book, pointing writes out that our failure to recognize luck makes it difficult to objec- performance expectations in theFor absence a purely of discretionary recent, strategy,over however, real-time the the trading. course sobering truth of is a that, limited number of trades, we cannot really know sample sizes of trades. If aoverfitting strategy historical can be data, backtested it objectively without is possible to generate a reasonable set of Those adjustments, no less than the hot hand/slump-inspiredof adjustments individual traders, can drain performance over time. by and represent nothingImagine, more then, than the trading random firm that bad allocatesmanager more luck capital who in to has the performance. portfolio a good year and not to the one who underperforms. per day. What aboutmight less limit active themselves investors to andfrequency several portfolio is managers trades low, who per an week entire or year month? of If diminished trade performance could go evidence that something hasconvince changed. himself that Still, this, too, a shall trader pass. like Maxwell can even if it was now far more difficult to anticipate the market’s inflection intellectual and behavioral independence. Hisflows ability in to volume detect helped ebbs and keep him out of trades going the wrong way, even after it ceasedthe to couple, take Maxwell was him doing whereand many he things the well. herd wanted In behavior to avoiding of consensus go. traders, But he also was like able to sustain a high level of them, he kept doing what worked and stayed confident in his course 24 BEST PROCESS #1: ADAPTING TO CHANGE oda dniyn httemre sdiga h iei’ on it. doing it’s time the at doing plenty is you’re market that the is what us told identifying be trades at to your good markets of predict review the to What need successful. don’t ‘‘you continued, I ‘‘Besides,’’ this. the you.’’ predicting ‘‘They’re are so challenged. and I waves?’’ future their with doing are guys glass. broken more on dine to about not was and balls tomorrow?’’ p.m. 3:00 at trading be will market the where who out traders opening. of my saw foolishness quickly the I at of hypes. sales fun head obvious making his such post believed shook blog and earlier wave’’ my ‘‘idiot of the me wave-based his reminded sharing He for bucks secrets. big trading charge to seeking guru a from gotten money made he instinct—and all was consistently. he surprisingly mode, scalping recognition In pattern It off. instinctive was markets. his that not up and sizing had markets about he quickly thinking see for his clearly capacity was to could his able I longer reflexes—and and no his Maxwell was Maxwell retained he review, it,’’ that the days From on or money. price jump hours make significant for I longer-term positions identify hold and to and tried market levels he the when was in It explained. happening what’s see ‘‘I inn rdshl o hr ie erfre oteeas these to referred He time. short a for held trades winning Talents, redeployed. dysfunctional. be to wholly need reminds not just trades remain—they some are experience best worked, and they of skills, hasn’t that review what A traders of useful. discouraged more becomes ever comfort When doing of empowering. affliction be denial, can in patterns are problem traders the to in comfort exceptions some Maxwell, for or search Gina When and coach Chris comfortable. like trading the afflicted a afflicting is of and someone role afflicted the the of comforting Much of trades. consists winning of review a enough institute levels! weren’t chart those just to There overreact to gone. market the long in level. were left that level idiots realized, touched chart it he a once to days, behave point would to Those market able the be how to anticipate used Maxwell and days, old the In points. awl okdpzld ews’ ueweeIwsgigwith going was I where sure wasn’t he puzzled; looked Maxwell Elliott the that levels your with thing same the doing crystal you crushed aren’t many ‘‘But too had already he that joked figure and to going laughed you Max are how theory, wave use don’t you if Max, ‘‘So, had he email an about me with joked Maxwell review, the after Shortly uigMxelstaerve,w on nuuulnme of number unusual an found we review, trade Maxwell’s During to is situations such in exercises solution-focused favorite my of One www.MyChart.ir cl trades scalp . BEST PROCESS #1: ADAPTING TO CHANGE 25 Thinking, Fast and ■■■ (2011), he explains that fast thinking enables us to respond to Pattern recognition was his bridge to the future. You could see the wheels in Maxwell’s head turn. Predicting an For efficiency’s sake, we tend to rely on the efficient fast system Slow thinking, on the other hand, is deep thinking. When we think in Theproblemwithfastthinkingisthatitissurfacethinking. Weperceive Kahneman, in an excellent research summary, identifies two basic uncertain future was what idiotsselling do. pressure, His not anticipate job it. was to identify buying and Why predict levels forpeople are price doing in movement real time?’’ when you can identify what trade, and then do something differentproblem in is the not heat a of lack market of action? discipline The per se. Rather, our fast thinking brain except in situations that call fordecisions deep and reflection. As actions a result, endreasoned many up conclusions. of our How reflecting many first times impressions, do not we analyze carefully a market, plan a remaining fully attentive toand road driving conditions. so That’s often leads one to reason disaster. texting by superficial bias, but it consumes a greatWe deal of can our drive cognitive resources. theIt’s car unlikely and that carry we could on solve a a conversation complex while mental math in problem fast while mode. slow mode, we observe,observed, catalog and our draw conclusions. observations, Such a analyze process what is less we’ve likely to be swayed recency bias and the availability heuristic,taking are control the result of of our fast decisions processing and actions. an African American manquickly walking cross the toward street, us thatour on same actions. the rapid Indeed, processing sidewalk many allows and of bias we the to drive well-known cognitive biases, such as something, rapidly assess its relevance tocase us, of and the quickly oncoming respond. car, In the that’s a good thing. In the case where we see us to respond to crisis.was If happening we on had the to road,traffic—or think we’d avoid through hardly oncoming be every vehicles! able aspect to of adjust what to the flow of Slow challenges in the immediate present. If awe car suddenly quickly drifts swerve into our to lane, avoid an accident. That rapid processing enables modes of thinking. One is fast; the other is slow. In 26 BEST PROCESS #1: ADAPTING TO CHANGE qiyivso h tde opne ndphadcntut complex constructs and depth long-term in the companies have real- studies we at who extreme, excel investor other equity can the who At daytrader, but recognition. the analysis, pattern have time deep we little extreme, relatively one performs At who ways. myriad in thinking slow volatility. options of are trading both the management—and from required is different portfolio making skills quite Market macro The markets. global financial radiologist. from in a is different is it very So so different. and very is are surgeon, psychiatrist each a A for specialties. is and so activities physician; of set a broad a medicine: like Indy. driver the is at racecar victory about the to all vehicle it’s the you but power to social tell engine, smarts car the the could has a reading engineer who of to The operation comes situation. and it dating construction when a analyze clueless of and are cues problems math then solve but can They situations, sense. practical lack to seem ucinn fcetyadrltvl accident-free. relatively a system and the efficiently of keep that functioning out decisions split-second and information make on, to changing in controller rapidly so the process coming enables quickly and planes to it, ability many This operates airport. the who busy processes going, voice quickly it’s of instead where tone but plane, her doesn’t each controller or traffic about air his The think situation. adjusts immediate subtly the to and salesperson message and The well flexibly. very very customers and process reads quickly, they very well, thinkers—but very deep most information the necessarily not are they people—not rule, a intellectual As two controllers. or traffic salespeople least air talented experienced very at highly of some- Think identify thinkers, both. deep sometimes to and smart neither, thinkers, reach times fast smart far be a can We isn’t intelligences. it systems—then processing processing, slow and occasions. fast opportune least our the controls at brain control the taking sometimes of part points different Kahneman literally, a Quite out, mind. reasoning slow, our hijacked has eotnrfrt rdn si tsasnl ciiy rdn,however, Trading, activity. single a it’s if as trading to refer often We who people intellectual bright, very known all we’ve Conversely, n ftetig htmk rdn neetn sta tbed atand fast blends it that is interesting trading make that things the of One fw hn ftoban—w eaieyidpnetinformation independent relatively brains—two two of think we If o etikacoshww trade. we how anchors think we How e Takeaway Key www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 27 trying to adapt to change, was ˆ etre was that he was the smart guy . Recall Chris and Gina. What was their Slumps follow when traders respond to market setbacks by switching My experience is that successful market participants rarely excel in Maxwell’s psychological raison d’ What turned Maxwell around psychologically, however, was that he redefined of these took Maxwell out of his zone: He tactically. Instead of following the marketflow, he tick looked by to tick longer term and support gaugingideas and order resistance coming levels from on charts earnings and reports, data releases, and recent news. All markets that were increasingly dominated by market-makingHe algorithms. convinced himselfwidening that his he needed holding to periods adapt and to these trading changes more by strategically than loss and acts on short-termpressure price take traders movement. out Anxiety of andstrengths. their performance cognitive So zones—and it away was from their for Maxwell. His setbacks began in low-volatility cognitive modes. The fastloses further thinker touch begins with to markets. overanalyze The deep markets thinker and becomes fearful of to their strengths. This waswere the certainly result true of of considerable fast Maxwell: thinking His skill. scalp trades the other. If youthat look they at discover what ways makes toprocessing them engage or successful, markets deep that what thinking leverage you skills. either find In their a is fast purely cognitive sense, they play nomic analysis with the quick processing of market trends and reversals. both slow and fast thinking, but they almost always excel in one or portfolios that hedge various sources ofthe factor price risk movements in order of to strong profit versustwo from weak companies. are In hedge between fund these managers that combine the deep dives of macroeco- an emotional affirmation that he was clever, unique, and distinctive. who profited from the idiocy of others. Making money for him was parents to their maturing children unlessNow they their modeled motives a were good aligned. marriage. Theytheir practically marriage leaped because into they enhancing were doing it now for a good cause. prime motive? They wanted to be great parentswith and the provide their kind children of upbringing theymarriage never until had. they They could reached not the change recognition their that they couldn’t be good increasingly relying on his relatively average deeper, analytical skills. his emotional commitment to trading scalp trades kept histreading fast thinking water—during skills this alive—andtime, however, wrenching his his trading results period account were becoming of more average adjustment. because he Over was but doing so by becoming less of who he was at his best. Fortunately, his 28 BEST PROCESS #1: ADAPTING TO CHANGE drivers fast change his meaningful bridge trading, his occur. to of could way driver emotional a the found with skills Maxwell trading Once solutions. the generated strengths. recognition he pattern his patterns leverage useful to the able expanding was By he at, markets. fading looked weak from and strong its him to very preventing relative the (VWAP), traded weak market price and the average neutral, how of strong, volume-weighted readings defined early he on proper example, based the markets For tide, on stay market. the to against the gauges swimming of simple using by side he to idiot open When an more contrarian. like much became a acting he was into also himself this making was that was this by saw Maxwell himself side—and Subtly, prove long uptrends. to the longer-term in than trying been side had short that that the markets was on in trades more his down losing breaking was his in of he found investigations I further What that needed. out were turned It trading of others. some at worked not recognition and pattern times on the based trading why tactical distinguish his to remained of work some of deal great Chris A overnight. and occur not Gina did than idiot an parents. be bad routinely to be he to willing idiots willing the more were best of no that, one his was see being with He was to he able ridiculed. priority markets, was that predict Maxwell to align when trying easier in to much needed wasn’t became priority just That emotional trading. We That He worthy. change. shoulder. be his to on to chip going himself proverbial a prove of the bit to from a out kid had was Maxwell A tracks, success. that the emotional realized of his side he wrong to once path spades the by in were successful strengths they and was his Gina he with embraced As that Maxwell strategist. grand but Chris, a trades, becoming by his not tactical, of more number being was a in he successful Ironically, was way. different strengths. a who his someone in from running thinker, others by deep affirmation a than seeking into smarter himself make be what to So would tried idiot. He an like do? feeling he market began did saw expense—he he his when at especially profiting makers money—and making stopped he When hti h takeaway: that the is That trading good his was it but problems, with me to came He turnaround The easy. was Maxwell with work the that pretend won’t I Maxwell that was demonstrated exercise solution-focused the What . ecno hnei efi otpit hs emotional those into tap to fail we if change cannot We www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 29 be independent of me. Sometimes change begins in and The Perils of (Over)Confidence It takes a while to get to the change point, however. Those anomalies— What helped spark the change was a relationship experience. She could losses or adapt to changing marketrolling conditions—until in. the profits stopped again: never live in a troubled household,Maxwell never wasn’t just have confident another about losing his year. trading duringyears; his he money-making was so confident that he felt no need to analyze his wins and overconfidence. We behave as ifas we’ve found if a permanent we life solution, can continue on in our present mode and never get hurt before she was willingAfter to all, reach when out ourwe to approach build to a confidence life counselor in or she what trading could we’re pays doing. rely off That on. in confidence the can present, become the consequences of doingresults—typically the right have things and tosomething now accumulate different. getting before the It wrong took we that contemplate young doing lady quite a bit of loneliness small ways, in a single situation,begins a in single ways relationship. other And than many talk. times it depend on me— didn’t want to go downto that the path. exercise, Instead I of congratulated her exploringher on her instincts. standing ‘‘resistance’’ We her then ground and jointly acting crafted on a different exercise. remain independent. A turning pointdid in not her perform therapy a homework occurred exerciseget when I her she had to acknowledge suggested. that It she took was a uncomfortable while with to the exercise and commitment to independencecommitments. made That it couldn’t change difficultexperience, until that to she she could sustain recognized, depend in emotional on someone her she own cared about and still again. As ashe result, remained she lonely, moved unable forward to rapidly sustain long-term in relationships. her Her career—and professional who experienced considerableand rejection later both in in a childhood to bad self-reliance, romantic determined relationship. that she She would developed never be a hurt commitment and vulnerable Plan B in our careers? Thethat cases our of core Chris motivations and and commitments Gina can andare lead Maxwell us ultimately illustrate to self-defeating. act in Years ways ago, that I worked with a very successful ■ We know how to plan for change in our trades. So why do we rarely get to 30 BEST PROCESS #1: ADAPTING TO CHANGE h otrs hnte r otoecndn.Adaltootnthat’s with positions often large too into all take Locked And to happens: overconfident. likely what most exactly is are they advice when that risk following most the Anyone conviction. during high risk-taking of increase and times convictions our trade should we that insist alternatives envision can first decisions. we life unless better future alternative make an of can pursue cannot ways study—we like Dunker’s particular fixed, in functionally is into longer subjects no strategies the locked are we these not when is, among are problems—that element we seeing common Once The flexibility. beliefs. cognitive our of opposite the sides considering of actively number and alternatives) a including multiple suggest (entertaining biases, They overconfidence 2). overcoming p. for (2011, stumped’’ strategies life rarely mental are your you of that aspect is remarkable ‘‘A Kahneman: Daniel from quote sive 80). countries. and (p. across markets future’’ present of are the variety biases a overconfidence predict such to that particular found abilities they in Moreover, their investors about that and overconfident research overconfident, of are are amount the people considerable reviewed ‘‘A that Xu concluded, suggests and and Stumpp, 2003 than Scott, money in conviction. more literature lose lesser to with tended peers and often, did their more in trade with overconfidence to those greater tended Interestingly, ideas, displayed views. also their bias to with confirmation tended agreed greater most Traders that information biases: posts of confirmation read processing reflected their boards expect, message might from you online As Korean on boards. participation South their of message at looked study colleagues interesting and Park An from out. investors trade anticipated working an scenario of market odds the or overestimate Over- to us views. lead our occurs biases supports bias confidence that confirmation information process A selectively traders. we and when investors among biases fidence straitjacket. with a becomes trader like it looks a the Commitment discipline—until when admirable past. earlier, loss the a from saw quite deviates become face idiosyncratically we could present We model As statistical convicts: a systems. in us He conviction belief absolute make stupid. our convictions totally by are our who imprisoned that those out and pointed convinced also totally are who those ti rnc hn hts aytaesadee rdn coaches— trading even traders—and many so that then, ironic, is It book, their In world. trading the to limited overconfidence is Nor overcon- and confirmation consistent finds research finance Behavioral between similarities the noted has Wilson Anton Robert Author 21) h et rteseh hscnlso,ofrn perceptive a offering conclusion, this echo brothers Heath the (2013), www.MyChart.ir uber-confidence, ¨ multitracking . Deci- We BEST PROCESS #1: ADAPTING TO CHANGE 31 ■■■ Key Takeaway If your risk-taking mirrorsmost your level vulnerable—and of least conviction, ableyou you to are will most adapt always overconfident. to be changing markets—when A trading coach Joe had previously contacted had suggested that the Take the case of Joe, a prop firm trader who contacted me following a even flexible traderswith become outsized episodes inflexible, of punctuating drawdown. winning periods then really size his positions only to have them picked off and wipe out was that Joe was mostwould confident make money when on he one was small on trade, then a another, run. then As another, a and result, he order book. As a result,that his when hit I rate conducted and overall aconfidence profitability historical ideas were analysis, lower than for for I his his found identified more high marginal trades. The second problem performance on the higher-probability ones.but It worked sounded good poorly in for theory, twoconfidence reasons. views First, led his to increased even size greater in visibility his high and vulnerability in the from his lower ones.had If in he a were particularconviction, to he trade clearly would and identify avoid predicate the lower-probability his setups confidence level and he maximize of his risk-taking on his contracts or more—was a sitting duck for sophisticated market makers. problem was that Joe was not differentiating his higher conviction trades rapidly detect supply/demand imbalances and exploit themtime on frames. very short A large resting order—in Joe’s case many hundreds of ES knew his positions and wastolerance. pushing Of the course, market someone just didalgorithms, beyond continually know his monitoring his point and positions: of modeling Market-making the order book, could with the market then tradinglamented in quickly our against initial talk. him. ‘‘If you ‘‘YouIf don’t can’t you get win,’’ filled, get he you filled, missed you the don’t move. want ’em!’’ It felt to Joe as if someone secretly futures successfully for several years,butter but now trades found were that his notlarge, bread-and- resting profitable. orders Specifically, in the when book, he he found left that these relatively were invariably hit, prolonged period of losing performance. He had been trading stock index 32 BEST PROCESS #1: ADAPTING TO CHANGE ieotoe ostain.S,freape er ieyt a ourselves pat to likely we’re example, for So, nega- situations. and to ourselves outcomes to tive outcomes positive attribute to tend We attribu- biases. positive tion to pertaining research mentioned I’ve writings, previous taking. risk and defining confidence a supreme that is we’ll trades. success assumption them, their trading the of of to to some element leads talk least easily we at perspective on if hindsight all-in and, That if went money they But most that identify trades. discover the usually generally conviction made we’ll low wizards, have market and who successful those bets the small for participants on looking market we’re books few all, their After up risk-takers. blow high be the certainly include traders almost worst-performing also will of will cohort returns the absolute course, of in Now, pack risk-takers. high the traders, of lead group who any ones In the bias. survivorship of consequences cognitive the overconfidence. of act mar- an view you quite to cease environments—itself gets we dangerous if conviction as trading kets in environment, confidence glorify explosive only dangerous for can We ever-vigilant changing, killed. remain a will In and as threat building devices. will every potential He treat of conviction. he’ll source of fields; premise a and the forests on through operate differently odds not move The will what terrain. he enemy convinced that scouting you’re good soldier are if a Imagine different fine? anything is doing do you’re why pursuing from all, people After keeps conviction change. on focus the often, Very culture? manner. needed different a he in entrepreneur, marketplace restaurant the our engage not to was Emil, make like to and one; needed Joe psychological regime that a change market-making The possible. with new as time visibility over little the orders as his distributing to by his execution adapt optimal to more to achieve solution needed Quite psychology. The Joe even profitable. conviction—or simply, with be do to to trades—even nothing had his likely problem book, more the in ones—were liquidity high larger and During dramatically. volume increased high him of against periods moving trades his of time, that odds at the trading volume precisely one-minute average was the of it percentage certain But it. it!’’ losing win was to he it that it in confidence in be lose was not to Joe to when have Joe ‘‘You urged judgment: coach his the point, in one At gains. prior his h rbe sta urm ofiec aeyprisspeeflexibility supreme permits rarely confidence supreme that is problem The reflect simply may driver success a as conviction on focus our part, In trading the in ‘‘conviction’’ with obsession an such there is why So a reached positions or orders Joe’s when that showed analysis My www.MyChart.ir .In BEST PROCESS #1: ADAPTING TO CHANGE 33 .Joe much below . = Belief in oneself is necessary much above average. As you might guess, Key Takeaway = average; and 5 = The problem is that traders who overrate their abilities are not likely to Routine is necessary for efficiency; adaptingeffectiveness. our routines is necessary for We’re now at a point where we can squarely lay out the dilemma: When I’ve given the exercise to groups of traders, the positive to prepare the comingthose day’s routines dishes, falls we away. get by—until the rationale for conditions. Consumed with the day-to-day focusmanage on risk, markets we rarely and step need back to and manageLike change processes the effectively. couple stuck in their routines and restaurant owners struggling changes in trends, changes inchanges market volatility, in changes in theevents, correlations, changes strategies in central of bank policies, market and changes participants, in macroeconomic changes in world As traders, we operate in a domain typified by frequent, radical change: market-making environment. But the sameaffect overconfidence single bias trades that can can threaten tradingfor careers. success; flexibility in self-belief is necessary for ongoing success viewed himself to bepoor a performance very successful to trader apsyche, and ‘‘slump.’’ though attributed That his what led recent he him needed to was seek a help way with of his adapting to an altered recent improvement, situational influences hampering performance,the and like. be proactive in recognizing the need to adapt to shifting market conditions above average in ability, despite resultsa that view. generally When don’t asked support about such theand discrepancy between their their self-perception actual trading performance, they cite their potential, their attribution bias has been every bit as clear. Most traders rate themselves as average; 3 very few students rated themselves aspercent average of or the below; group consistently, deemed 90 themselves to be better than average! others. A favorite exercise forgroup a to medical evaluate student themselves class relative I to‘‘caring’’and ‘‘motivated’’using taught their a five-point peers asked scale, on where the 1 such adjectives as on the back for aabout good market rigged call when markets we whenourselves make in money, we’re an unusually but favorable losing. complain light when Similarly, we compare we ourselves with tend to view 34 BEST PROCESS #1: ADAPTING TO CHANGE ■ rdto h eces ooebtee e rbbywudhv talked have would probably I me. bothered one I no book teachers, a the in of credit engrossed Shirer’s completely music, William desk, to finish, my to listening at wanted were sat I students talking. The and years. dancing, school middle my own during its brings emptiness me, for stress. And, of kind empty. feel feels I not Boredom exciting, I’m or bored. If interesting, understimulated. challenging, feeling meaningful, from stressed. something my comes feel doing about rarely stress I of me that source responded asked one I recently surprise, My my her and physician To while stress. A life short of explode. a level than to more ready for feels situation downtime be head a to in responsibilities. skills me and put chores social daily But to sufficient attend and learned situations group I’ve in Rare friendly years, garden? the the in almost Puttering Over I beach? do, occurrences. a I on when Sunbathing and, early. parties leave few always very attend I show. television entire ever-dwindling on exercise, drawing to wiggle screens, supposed first our we’re the reserves. behind energy at know sedentary but We stay we’re level, out. we know target but bailing We our it! we’re to do us, trade don’t against the we hold do—and to know to supposed we need often, too we All what changes. precisely making from us keeps that information needs physical my body, to attend my to for needed I not that well family—but things plan quite many and one do to markets, and managed intention work, I good to Somehow for wayside. One lifestyle the no: by of But fell change another shape. after straightforward in to get a approaches and make brief weight to lose to able pertaining be chapters would change book written and and changes books life make numerous people many helped had who psychologist enough day? busy do have a How barely through begin? you get you when to do energy program, How exercise/fitness shape. You an there. into sustain be yourself to you get used never to that need limbs you your to know flexibility and of level, becoming energy lack same yourself a the is find have there don’t You You stairs. while. climb a you when in winded exercised haven’t you Suppose n fm ogatmmre satnigarqie colparty school required a attending is memories poignant my of One an through sat I time last the recall can’t I self-disclosure: of bit A or knowledge of lack a not it’s that illustrate starkly situations Such a that think would You ago. long so not faced I situation the was This apn oeMotivations Core Tapping ieadFl fteTidReich Third the of Fall and Rise www.MyChart.ir . ept knowing despite othe To . BEST PROCESS #1: ADAPTING TO CHANGE 35 a routine I love. The closeness I That’s something. do like boring routine, however, and so I avoided them. My felt Scanning the outstanding exceptions to my pattern, I identified a The solution-focused framework that we encountered in the work Now the key question: If you were my psychologist, how would you How is this relevant to working out and getting into shape? Intellec- It’s not that I’m antisocial. I enjoy talking with people—indeed, feel with those purring friends is the best way I can think of to start my feeding bowl. I prepare fourNaomi, breakfasts Ginger, and Mia, serve and them Mali. one at a time to sense of caring and connectedness.before Every diving into morning my I work, wake greet ourbreakfast. up Each four early cat cats, has and, pet her them, likes and and dislikes, feed and them each cat has her particular normal daily tasks or engaging in everyday social interaction? number of occasions in which I performed routines out of a deep When you see aWhat problem were pattern, my look exceptions? for Whenroutine exceptions did activity? I to When tolerate that did and I pattern. even feel thrive alive during and stimulated when performing shape? with Chris and Gina and with Maxwell is particularly relevant here. try to help me? How would you help me tap the motivation to get into time jogging the streetscommitment. At or a purely curling emotional a level,more it boredom barbell felt than like fulfillment. seemed routine, contrary promising to that commitment was to productivity and meaningful challenges. Spending need to make changes. Runningweight room on a treadmill or doing my reps in the tually, I knew thatthe I loss of had energy to andwith attend Maxwell, saw to those my consequences my productivity had wane physical to as accumulate needs. a before I I consequence. faced could As the feel Stick me on a beach with30 nothing minutes. but Then sand, I sun, want and to surf and I’m fine for design. Send me on alearn vacation about where history, I cuisine, can encounter and a ways new of culture life and and I eagerly soak it all in. people are trying to makeWhat life could be changes. more I exciting enjoy thatMuch those being more part kinds of difficult of a for activities. person’s me development? are activities that seemingly have no grand it’s the essence ofcounseling, what however, I is do different asthe next-door a from barbecue. psychologist. hanging Counseling is Talking out an with instrumental with activity, people in neighbors in which at with people if they hadsocializing read and the leaving book. the But book standing unread? around It chatting never and occurred to me. 36 BEST PROCESS #1: ADAPTING TO CHANGE elytikta eiigafimtos ligotjunl,o n fthe of any or journals, out filling affirmations, anyone reciting Does wayside. that the motivations think by core really them the leave into inevitably into we’ll tap us, ourselves don’t animate talk these the that can if why We but appreciate fail. resolutions, can ourselves Year’s motivate you New to motivation, try core we of ways idea usual the get you Once ■ rae oiiehbtptenad si un u,hbtceto is creation all. habit of techniques out, change turns powerful it most the as of pattern—and, one habit We’ve time. positive workout for a ready eating, door, created After basement the routine. to over exercise the trot this, morning now getting of they the days to few to a forward accustomed After looking playtime. became my myself cats have could found I I so reps fun; the was through time It petting with friends. bonding exercise my my of of segment with part each let as punctuated morning, exercises I the them. between error. with in breaks time and my early used area trial and exercise blind in, my cats of to the door result the the opened I as day but One efforts, self-help or core coaching are. the already we express who of expressions to fresh those ways catalyzes it fresh that degree find the themes life they their define Instead, that marriage. change: motivations their never their develop for people home to great sense, them a sparked provide to that It motivation scalping. children core his maximize Chris’s and and aside Gina prediction was put to him led that himself encounter my would of overcome I to motivation, whatsoever. because have resistance core emotional would workouts, a no I into avoid that tapping not never By It’s procrastination. would child. effort. my shared gladly I to a would commitment situation, therapy deep I challenging a injury. the such make an and In from exercises rehabilitation the their in join of part as I’m activity. therapy when the to connection, purpose deep a a feel perceive I I when or when contribution, a routine making like helping also feel just it’s doesn’t children. not important; my it’s Routine of interviews, is one practice which for or search resumes them, job over the go aid we will When it and ads if employment resumes through searching reworking hours spend will I Similarly, day. oeie efidtoefehepesos o hog formal through not expressions, fresh those find we Sometimes it: That’s physical difficult perform to needed children my of one Suppose h icpieDentWork Doesn’t Discipline Why oemotivation core twsMxelscr oiaint prove to motivation core Maxwell’s was It . ouinfcsdcahn ok to works coaching Solution-focused . on oehn motn together important something doing www.MyChart.ir na important an In . BEST PROCESS #1: ADAPTING TO CHANGE 37 Key Takeaway , captures this dynamic effectively. Citing research The Power of Habit We procrastinate when we trycore to motivations push to a naturally behavior, pull rather us. than allow our If, however, we can create habit patterns that tap those core motiva- Exercise is now a routine part of my morning, in no small part because Duhigg illustrates that far more of our lives are dictated by habit than would have gotten metook pumped that for core hitting motivationnot the of only tapping gym overcome into procrastination, every but a morning. eliminate cause It it larger altogether. than myself to usual motivational aids wouldRah-rah have self-talk gotten would me have into fallenme the exercising. on exercise If deaf I room? ears, had but to the share cats exercise could with get a rehabilitating child, that tions, then we swim withbook, our emotional current. Charles Duhigg, in his the ‘‘shoulds’’ don’t speakcommitments to that define us; the they’re peaks and not valleys aligned of our with lives’ those sine waves. core thatwearetryingtogetourselvestodosomething.Thereisaself-division:a part of us that is alignedturn with the a ‘‘should’’ ‘‘should’’ and into a a part ‘‘want.’’ of We us typically that lose is trying that to battle, because it has become adiscipline routine myself to part exercise of thanmorning the I or have cats’ put to morning. on push clean myself I to clothes. no shower The more in very the concept have of to discipline implies our habit brains. A much more promising strategy is to change habits by we automate our behavior,to the more challenges we at can‘‘motivate’’ behavior devote hand. is limited that The resources they call problem on with our executive our brains to traditional change efforts to we realize. This makes sense in a purely evolutionary way: The more habit, for example,while we driving could a car. never Habit frees carryrequire our our minds on executive for capacities: a those planning, slower reasoning, detailed activities and that conversation analyzing. and slow thinking. Acting on plans versusequivalent acting of on slow habit and is fast the modes. Habits behavioral complex enable us behavior to engage while in attending relatively to new situations. If it were not for in cognitive neuroscience, hecontrol explains our habits how are not the those executiveour parts centers reasoning that of and are planning. the responsible Recall for brain Kahneman’s that distinction between fast 38 BEST PROCESS #1: ADAPTING TO CHANGE test upathssca er.Teipiain o rdn are trading for implications The fears. motivation—helping core social significant: a his allowed he supplant he once Rather, others—to others nervousness. engage his to battling able felt by was instead improve and didn’t anxiety with He responding enthusiasm. ceased know he to them, get vulnerable to help opportunities and this as others for situations social caring defined his he by Once patient. replaced gone, His completely seek conference. to was case a himself anxiety initiate on and physician it medical attending took and The resident and the prematurely. patient out her the release for concerned not became did student doctors wanted the they sure all, of make Most might herself. to hurt she could that and concerned depression avail. were into They lapsing peers. be no their about of to him one approached Relaxation for were patients concern of their residents. group methods a and rotation, management psychiatry his physicians stress During other with and rounds techniques when hospital up froze but on classroom, the going in well performed uncomfortable acutely He felt settings. and social phobia in social a struggled from but suffered capable He and school. bright very in was ago years with medical worked A payoffs. I and student cues linking routines new of source a as motivations cus ihrptto,tenctn u ai ae h lc fthe of habit gum place non-nicotine habit a the munching for vegetable takes door the new habit opens smoke that a gum And to habit. nicotine payoff, smoking urge the the and repetition, when cue who With cigarettes smoker link occurs. for the gum be to would chewing routine example special good fresh substitutes A created. a be a can find action—and pattern can habit habitual the we triggers If that payoff. cue—something a for has need pattern no self-division, no things. is right the there do habits, to routine possible. yourself right as morning disciplining people the a many build as have every reach you I meaningfully posts Once to because blog desire so write deep a do don’t taps I I writing that disciplined. But to to amounts years! I’m entries that ten because day, 4000 over day per for over one day posted of single rate have every a I At this, blog. TraderFeed writing the my of easily As is misplaced. but commitments. deepest found, our I taps that reason, A.A. pattern habit to at new buddies yield a new by not overcome develop will and habit substitution the procrastination a at A find buddies drinking well up may give but not bar, may alcoholic An ones. new creating htmksteslto-ou fetv sta ttp oelife core taps it that is effective solution-focus the makes What ohwd ebidtergthbt?Dhg xlista ahhabit each that explains Duhigg habits? right the build we do how So is discipline on emphasis psychology’s trading of much why is This ecnol dp ocagn akt yfidn rs asto ways fresh finding by markets changing to adapt only can We … n oon. so and www.MyChart.ir … a BEST PROCESS #1: ADAPTING TO CHANGE 39 . We commonly (2013), provides Give and Take The Purpose of Purpose Several years ago, I worked at a trading firm that had been very What is interesting in the call center is that the traditional business Adam Grant, in his eye-opening book, did not include money managers, and the outcomes of those meetings the performance edges of thoseproblem traders. became As clear: I The spoke firm, withtightly run management, by controlled a a by new CEO a and staff, small was group now of people. Management meetings puzzling: Many of the traders whowere were there still during the there successful and years markets had not changed so radically as to negate a greater purpose to their work that they delivered enhanced effort. successful and then fell on leaner times. The performance problems were incentives, such asespecially bonuses effective in paid motivating behavior. It for was when superior the staff perceived performance, were not skyrocketed. Fueled bylooked a beyond the sense daily routine of andinto inspiration frequent making rejection more and and calls poured with purpose, itself greater urgency. the staff who had benefitedmonths greatly following from the presentation, the measures funds of call raised center by productivity the calls. In the faced frequent rejectionlow, in turnover their high. One effortsfor day, to 10 the raise minutes call center funds. to routine Morale make was was time interrupted for a short presentation by a person compelling evidence that engaging aproductivity. He cause cites larger the than example oneself of a enhances call center, where telemarketers valuable cause. That sensepurpose: of Like purpose a hasresources lens, that an it normally important remain focuses scattered. psychological our energy, allowing us to summon might superficially comply,perceive but a our deeper meaning heartslabor and wouldn’t purpose long behind be hours acts, in however, and we it. deliver will superlative If efforts we in the service of the person—a boss at work or awe neighbor—were to didn’t push us feel to do was something right, we understandably would be resentful. We When our efforts to motivatewe ourselves in fail essence to push tap ourselves our to core become motivations, someone we are not. If another essence of our core motivations—that must remain intact. ■ express the strengths that brought us tohear markets in portfolio the managers first place worrystyle about that must ‘‘style drift.’’ drift But if we’re it to is adapt precisely to markets. It is substance—the 40 BEST PROCESS #1: ADAPTING TO CHANGE tyo o feeyhn eddb h uies embidn became building Team to business. individuals the by for needed impractical everything of became in top simply on risk it stay resources medium, concentrate and online and information the groupthink of via ensure explosion to to the victim With traders ‘‘silo’’ fall positions. to overlapping not liked managers would days, on they than old rather that the teams In in basis. conducted solo be to a firms professional at trading it. for built had that vitality very the sense lost grander a organization Without suite the right. management purpose, were of the they And that ideas. believed their however, floor to listen trading happened, would the things on toward those one resources of no deploy None because that to strategies. decisions and management—and profitable markets for very new put to ideas have led would generated have managers and could money The together cause. heads greater their a of service together the those traders on in brought run have been would firm that challenges trading performance ensure the principles, to Had steps employees. for active satisfying takes is and work making, speaking, decision before and listens in them leader others please servant includes to The want behaviors. to right the likely in most engage are parents children care, When and parents children. give, their distant love, among and rebellion authoritarian and Both prioritizing resentment Servant parenting: by generate others leadership. of lead Think servant effectively needs. most of we their premise that the idea the if the on different is been leadership run the have been would how described had more Imagine I company firm as customers. trading itself the toward at manifests behaviors scenario themselves then and of which attitudes give employees, positive who among Managers loyalty productivity. build vital, and A motivation gone. far with was problem one. the dispirited the me, a By become to base. had out talent organization best creative the reached the out firm of hollowing Several the firm, loyalty. time the left residual analysts little and and was down traders there turned up, performance When dried them. bonuses like employed feel the that didn’t revolt; company just open a It an company. not the was policies—including rather liked ‘‘them’’ It company traders violated. as as rules—were company ways, management larger reality the risk in to the then showed trading, ways—referring ‘‘us’’—and This organization. subtle on than own in focus their first from to traders up traders alienated it allowing done that was of this was While guise takers. the risk the under to communicated rarely very were n ftedaai hne ’ese vrteyasi h tendency the is years the over seen I’ve changes dramatic the of One correlated surprisingly is giving that is found has work Grant’s What www.MyChart.ir their opn.I was It company. BEST PROCESS #1: ADAPTING TO CHANGE 41 Key Takeaway What you will not do out of discipline, you will do out of inspiration. With the rise of teams, however, a new motivational dynamic entered To be sure, not everyone functions best in a team and not everyone to trading. Caring about eachabout other the became business. an important way of caring During discouraging times,periods teammates of lifted progress each andTeam functioning other good had given trading, up. a new—and the During in team some ways celebrated larger—purpose as a unit. the year! Among thethe better one I teams, had this observed created attougher, the a the fallen dynamic teams trading firm. opposite rose As to to the business the became occasion, spurred by a common cause. vested interest in theall, well-being if the and team performance didn’t of make the money, no others; one after would be paid at the end of Experienced money managers mentoredthe the junior junior teammates took team responsibility members forthat covering and areas were of the not market the specialty of the managers. Each team member had a the trading floor.team The functioning. focus Team was members not were solely accountable on to markets, one but another: also on an important adaptation, allowingtimely research, money stay managers on top to ofcomplex better fast-breaking portfolios. developments, conduct and monitor him to suffer discipline issues in trading—not because he recited daily opportunities for distraction than giving.intellectual His challenge joy of was finding discovery hidden and edges the in markets. I never knew he was immersed in optionscreate data, asymmetric risk/reward researching profiles ways for ofnot relative utilizing work value skew in trades. to a He team did and interacting with others provided him with more immerse himself in researchof daily; the his box, research focusing waswhen on almost the unique always traders aspects out in of markets. his During shop one were period highly focused on events in Japan, others; they speak to the powerthan of tapping oneself. into One any purpose trader thatof I is the larger worked most with creative at idea a generators small I fund have is ever flat met. out Not one only did he finds their corefindings, motivations however, in go beyond participating the in ‘‘give and team take’’ effort. of Grant’s reaching out to 42 BEST PROCESS #1: ADAPTING TO CHANGE tnadzto?Hwcnw osbymiti u w ult control quality own our maintain possibly we can How standardization? oss httae prtsudrteasmto hteeyls happens loss every that assumption the under operates trader That risk losses. self-esteem. If and confidence threats. to self-management threats as If be threats. can viewed losses financial are poor, be practices. is can losses trading losses that best poor, is from is management away problem trader underlying leads the or anxiety The nudge frustrated making; Both become decision paralysis. impulsive and to to money leads lose Frustration money. will anxious. losing traders when infrequently, especially Not trading, during overemotional become needs. their address better adaptation and customers the the his by about aroused found learn was he to purpose opportunity of because sense change, His rewarding. to intrinsically process didn’t himself Emil motivate routine. a to into and flexibility have likes turned This the their menu. of design the learned the and into business he forward information diners, the fed continually polling and dislikes continually In business. the process robust a cultivated He forinnovating.ThinkbacktoEmil,therestaurantownerwhotransformed routine: a into discovery turned had he that in things right the do consistently ways? to right efforts the conscious make don’t we if u ais sdsrbdb uig os’ htma we mean that doesn’t Duhigg, by described as habits, our sh a once oamaigu ups,h ol epu with up keep could he regimentation. purpose, not long innovation, meaningful needed As a He innovate. markets. to evolving to connected freedom was the he needed as work He his oxygen: opportunity. deplete would of ever-new standardization environment find for that to process quickly realized creativity of trader the part The sustaining larger coach the was The that trader visits. ‘‘process’’—missing this two of of name all the trades—justified for in tracking and lasted placing for coaching routine standardized The a proposed firm. his by at compromised coach be to them allow never would so decisions. he meant ill-thought-out ideas that his him because to but lists, much to-do detailed made or affirmations mgn ifrn ido rdr oee,woatvl embraces actively who however, trader, of kind different a Imagine not to how is traders from hear I questions common most the of One was contradiction seeming this to answer the trader, creative the For u—at—o ih etikn.I ecag yreconstructing by change we If thinking. be might But—wait!—you toejntr,orcetv rdrdcddt etwt trading a with meet to decided trader creative our juncture, one At ■■■ www.MyChart.ir need otn and routine BEST PROCESS #1: ADAPTING TO CHANGE 43 . Flexibility has become our routine Turning Adaptation into a Routine A simple example of how traders fail to adapt to change can be found I cannot stress this enough: Over the long run, you cannot succeed Note, however, an additional benefit to the embracing of loss: It turns Now, of course, the trader who embraces losses will not like losing themselves left behind by market rallies. in their placement of stop-loss points on trades. Surprisingly often, stops banks continued their zerohome interest in shares, rate a policiesfor fundamental years and had trading money prided pattern sought themselves changed. a on Traders not chasing who moves, suddenly found clearly subnormal. From 2013 forward, suchbring five-day further strength tended strength—there to was evidence of momentum. As central number of stocks register freshdistinct five-day tendency highs. toward Until mean 2013,S&P 500 reversion: there shares closed was After at a five-day a highs, subsequent large five-day returns proportion were of Change occurs during the trading day,continue as volumes and rise reverse, and fall and andI change trends recently occurs across examined entire what trading happens careers. to the stock market when a large ■ The challenge of adapting to change occurs on all time scales for traders. our calling. That is the purpose of purpose. distinctive. Try to change who youway and are then and wonder, you amidst the will resistance, fightdon’t why yourself you need all lack to discipline. the We push ourselves toward a goal when we’re drawn toward evolution has to be ofare. the kind We that evolve makes you bystrengths—and more doubling of finding who down you on new already core contexts motivations for and employing signature what makes us process-driven in our change efforts. as a trader or investor if you do not evolve with markets. But your routine. If we are always identifyingand what we what do right we during good could trades improve during bad ones, we now have become trade is a complete loss if it can be a learningtrade experience. review into a habit, and that in turn makes adaptation a continuous purpose; they can make us better, if only we can learnmoney, their but lessons. neither will normal drawdowns pose emotional threats. No for a reason.outcome—good There and bad. is Theor losses something prod can us correct to to our examine be how views we of are learned markets trading those from markets. Losses every have a trade 44 BEST PROCESS #1: ADAPTING TO CHANGE at ecnepc oemvmn n agtmr itn objectives. distant more target and movement more expect can we past, dpietaescncmaetepeetssinsvlm ihthe with volume session’s present the day, volume the compare median during intervals can frequent traders At the day. adaptive calculate current the median and that for volatility should hold targets market volatility downside and median upside particular recent hitting most of odds the track to is rdrnesi ehdfrcluaigpietresadso levels apt stop is change. and conditions method market targets uniform as Any price underperform to conditions. calculating market for adaptive evolving an method to What appropriate a hit. never is of are lack needs the targets up, trader profit dries that volume ensure If Fixed noise. will random reduced. volatility on help hit will are the volatility are in increased stops move shifts the that rises, real-time big ensure volume ongoing, If a to specs. market of adapt of to in odds activity fail are stops the specs placing result, of few a methods relatively participation As that bid/offer means market. the volume the than Low markets makers. move market to of likely more concerted is Their speculators. action directional be to tend days volume higher on volume. in movement price changes day’s to That the attributed .82. in between be whopping variability can a the correlation of is percent SPY the 64 for over year, range that means true that average variability over the and this that, volume with is SPY out shares, Why million shares. turns 122 million It over 43 little daily important? almost a average of is the deviation year this, standard past writing a the my for of SPY As in vary day. volume can to Index) 500 day S&P from the meaningfully for fund in exchange-traded volume popular instance, (the For SPY participation. market in shifts ongoing reflecting frustration. trading for ground fertile are stops retracement methods setting these as chart find, for I calculations a Invariably, levels. such on Fibonacci by or levels moves determined of resistance percentages levels, or price support fixed obvious at on or based placed be will sIv hrdo h rdredbo,oewyo tyn adaptive staying of way one blog, TraderFeed the on shared I’ve As hnyutikaoti,ta ae es.Teadtoa participants additional The sense. makes that it, about think you When markets, in frequently changes volume that is this for reason One ti o nuht ecnitn;yums ecnitnl flexible. consistently be must you consistent; be to enough not is It o htsm ieo day of time same that for e Takeaway Key fw r uirta nterecent the in than busier are we If . www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 45 flexible. For traders, and . This is a very important flexibly adaptive if you build habit and ■■■ turning flexibility into a routine so that change— What is significant in the volatility-based setting of stops is a kind The second element that stands out in the flowcharts pertains to what Two elements stand out quickly once traders complete their process One exercise that I’ve found useful for traders is having them build as for Emil the chef, theYou can best be processes robustly are process-driven ones thatpatterns embrace that flexibility. enable you to identify and adapt to changing conditions. adaptability—itself becomes aintegration: habit The pattern traderestimates of market who volatility is adjusts both disciplined targets and stops for updated of process noted earlier: participation, it’s easy toup leave and profits fail on to the takefrustration table and profits disrupt when in subsequent slower trading trading. markets. picks That in turn can generate stops accordingly. Key tothat this approach updates is estimates a ofmarket kind observations. volume of Without such and Bayesian a reasoning way volatility of adapting with to each changing market fresh set of That also suggestsinto that stops account should inthan be position the wider, sizing. recent and Conversely, past, we if we can can we’re take be trading that conservative slower in price targets and set lies within the loops and contingencies. For some traders, the branches management an explicit part of his edge. He had created a detailed roadmapmany of more both paths opportunity and to risk.simpler, his He more had profitability linear destination than flowchart, the in trader part with because a he had made position include rules, not only forOne buying trader and selling, I but recently forof worked risk branches with management. that included led in to adding his to flowchart positions a versus number taking positions down. Other flowcharts are filled withmarket does loops X, and then if/then I’lland contingencies: instead do If do Y. the Z. If Very often, the the market highly doesn’t branched do and looped X, flowcharts I’ll avoid Y flowcharts. First, some chartsmove are relatively to linear: B, They proceed begin with to A, C, and so forth, in a relatively straight line. parameters: The charts cancapture how be traders make as their simple decisions. or as complex as needed to a flowchart of their tradingidea process. generation The to chart includes trade everything execution from to position management. I don’t set 46 BEST PROCESS #1: ADAPTING TO CHANGE n ifrn atc n taeisrflcstetae’ blt ointegrate to ability trader’s the reflects strategies and tactics different and mechanical few a to limited is is market that making ‘‘setups’’! different chart from decision How whose benefit win. newbie to to the ways for multiple from profits hold find take traders their they good tactically Will The express chop? or income? they move fixed Will longer-term or similarly a markets. markets have currency with different through worked in have views traders I meeting traders different flexibly Skilled been to diners. commitment of needs his the summarized Restaurant neatly Different ‘‘A Day,’’ motto, His Every on. particular so offers and he dishes, which particular under seating, conditions the describing detailed, very results. suboptimal to leads inevitably or trading to markets approach so, less Procrustean busy to directional a more versus volatile; less to correlated volatile quiet more more correlated; being less trade from to in shift well markets to When work markets. how would static One-size-fits-all perfectly out ones. map trending versus to rangebound only it’s participants even processes, short-term if their successful differentiation—flexibility—to longer-term of even degree a that a require for however, process find, in due-diligence I edge essential recognition investor. an pattern be a might from ‘‘scalper’’ markets the investor. distract long–short equity would an What than flowchart differentiated less tend a will have trader to intuitive short-term, The Absolutely! complexity? most much is chart Which trader? paths. adaptive the and capture nodes to likely many with chart differentiated single a just cooperation. not market’s win, the to requires ways that strategy of other variety for a multiple captures conditions of he potentially consists market flowcharts that what flowchart gauges The has are stocks. he individual conditions while strategy, in When opportunities a that trading. for for index known favorable stock not I’ve for strategy’’ trader ‘‘core A his conditions, calls other trader. under different trader; a of saying, kind is I’m this trader I’m the of conditions, if these as trading set almost under that to a It’s trees pertains trading. decision as tactical that separate short-term, chart to subchart capture leads single a branch a to another much trends; leads longer-term so branch For not One aside. charts. is standing nested and flowchart holding, the selling, traders, buying, other to pertain chart the in h eret hc ocaticroae rnhn alternatives branching incorporates flowchart a which to degree The be would flowchart His innovator. restaurant the Emil to back Think too with knots pretzel into themselves tie highly investors and a traders with Can trading of flowchart linear simple, very a Contrast www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 47 . Problems occur when . ■■■ When the status quo no longer works, however, be trading? How well would the process captured in the chart The Limits of Trader Discipline Therein lies the rub, however. As a Despair.com poster wryly If your process isn’t flexible and adaptive on paper, can we really How detailed is your flowchart? How many alternatives for making Try the flowchart exercise: Start with the ways in which you generate adaptability becomes the new discipline user interfaces becomedoing more the of what consumer works. rage. Discipline is great for locks in poor returns. Imaginephone a company performance to coach be exhorting morekeyboard-based a disciplined smartphones mobile in just its as manufacturing touch and screens sales and of flexible graphical observes, consistency onlymarkets change matters and if traderscase are you’re of now Joe—exercising doing not greater the discipline a wrong in thing—as doing screwup. in the Once same the things only methodology, it will be thosestrategies that that are will most achieve faithful the in most implementing consistent the returns. than the value of taking riskis more the aggressively notion based that on trading ‘‘conviction,’’ it one level, success this is makes sense: a If function a number of of traders superior make discipline. use of At a profitable If there is a shibboleth more common among trading coaches and traders ■ flexible adaptability with robust, repeatablethe routine. market’s flexibility is greater than the flexibility embedded in our processes A good football team prepares aflexibly number draws of on running those and to passing exploit plays theneed and defense a on similar the level field. Our of playbooks flexibility. adapt to changes in market conditions? expect it to provide you with viable alternatives in the heat of battle? money does it capture? Howshouldn’t well does it structure the times when you trading day and how youdetailed review that your a trading. reader Try would be to able make to the replicate chart much so of how you trade. trade ideas andand then when capture you the turnrisk/reward. decisions those The ideas you flowchart into make trades should regarding and capture how how how you you manage prepare their for the 48 BEST PROCESS #1: ADAPTING TO CHANGE a usigtewogpath. wrong the pursuing my was I perspective, that problem: From a not adaptation. was confidence the frustration to of led sense which macho conviction, any It and not achievement. open-mindedness, sustain to sense, and order real humility in very limitation was a and In failure edge. embrace market to my had reassess I and doing was I what from needed, I What a reliability. was flawless with however, those trade and patterns best my at began one. morning York London New the the the with just now occurring not were opening, moves day—only market of Anticipated EST! time a.m. returned 3 profitable morning the markets most happens, how it my As on clock. as entries the on my just predicate not moving, could were I flows co-movement, money combined asset that measure and simple a Using lifting identifying bids. dominantly hitting by were or stocks flows offers for volume time). above-average appetite same which directional to the the degree gauge the at to similarly able also moved was markets (the I classes different false asset which of several co-movement to the degree After tracking by markets. progress made I global starts, in participants macro/directional intermarket assets. new international and among traders ‘‘macro’’ relationships global dis- among increasingly execution now the trade to was of this liquidity nature attributed I simply, time. Quite over differently retracement. were tributed natural often, and, a occurred in for already trading began had ready trading I moves time anticipated moves Asian the zone, market By and time session. the my US European of standard during many the during that occurring not was hours, were found anticipating func- I a was What good as day. I behavior be of market time to examine of carefully seemed tion to what me bad—led having go of That trades as returns. frustration and out inconsistent consistency the yielding at working were efforts observation—and not trades best morning my were the Despite trades previously. discipline, morning had they recently, my as More that well minimize periods. found to and slower I me hours later, best led however, during certain my analysis involvement a during That market after trading money. my and that, made preparation showed consistently my day break- longer focus the A no of daytrade. I hour to time, by times profitability profitable of most down my were hours morning arwfcso icpiewudhv odm olo adrat harder look to me told have would discipline on focus narrow A of dominance relative the investigate to me led hypothesis That the that found had I ago, Years example. trading different a Consider ifrn ido discipline of kind different twseoinlinformation emotional was It n httl et tpback step to me told that one : www.MyChart.ir eln ethat me telling , BEST PROCESS #1: ADAPTING TO CHANGE 49 ■■■ Key Takeaway We can experience cognitive and emotional upheaval . Not infrequently, the problem becomes a circular one: Frustration is the mother of adaptation. Oren was an experienced trader who contacted me when he found Let’s get back to the insight that any market can be modeled as the sum Traditional trading psychology has focused on the ways in which that he was losing in both his daytrades and his swing trades. Setups himself losing money as volatility ground lower. What worried him was very different markets.how Within much a of price stationaryattributed action regime, to is cyclical we behavior; attributable and to can how a much identify is trend; unexplained how noise. much can be Before we can identify patterns orneed rules a that stable the period market of analysis. issystems Many following, overfit times, we nonstationary traders looking markets, for seeking tradable universal patterns across one that displays consistent behavior.includes If wildly the different period market wewould conditions—2008 are be investigating and 2014 an in example—then stocks we are comparing apples and oranges. of a trending component and one ordetrend more a cyclical components. market Once time we series,cycles it’s during not any stable too lookback difficult period. to A identify stable dominant (stationary) period is itself doesn’t ensure that the ladder is propped against the right structure. Emil: The market that made you money isa now case, a different further market. In efforts such atDiscipline discipline will help are us likely climb to the yield ladder marginal of benefits. success more steadily, but in a skilled trader who has approachedand markets now with find consistency yourself in beset with theyour frustration, past challenge consider is the possibility like that that of the restaurant chef who sold his business to Rigid trading during changingfrustration, which markets leads to poorer leads trading and to even wider losses, losses. If you which are leads to of disruptive emotions: because we are no longer aligned with markets,us just out as of emotional alignment turmoil can nudge emotions can interfere with trading.a From that way perspective, of discipline minimizing is such emotions during as the the trading above, process. however, Experiences illustrate the potential information value 50 BEST PROCESS #1: ADAPTING TO CHANGE aewy rgl esni orig nachlci denial, in alcoholic an mourning, in person fragile A way. same streams shifting to the action communication. and to of intelligence thought open your emotional adjust remain to sense, ability and the that the flexibility, In aside is you. prejudices to intelligence and coming needs emotional signals your of put to emotional element com- ability of the important nonverbal degree and reading a An requires verbal couch: intelligence. That the the person. read from another would from trading you munications about as talked markets of I nuances book, first my In ■ ecud’ hnehscr ontv tl,s eietfidmresthat markets identified sets. he skill so particular style, his knew rewarded cognitive He core making. his and decision change short-term strengths couldn’t his core he to his suited more retained market the he a and found market, interests his and those by skills in his offered recognition between opportunities pattern mismatch basic a moved himself with that taught Faced markets. and markets frame commodities time several his on found He entirely. markets could he horizon, swing a adjustment. beyond the extended make moves not only market but step If adaptable, of was point. out Oren a trend. only to the not fighting also him telling but left market market, This the pullback.’’ his with the a of fighting for Out due occasionally ‘‘We’re movement. himself, himself directional found longer-term around he by positions frustration, simply over swings to run weekly and Oren adding moves left intraday and time to highs Trying position, lows. monthly long monthly core the around a Rather, was up trading. conditions market trading lightening swing the optimal nor to The daytrading adapted days. best of trading strategy one 30 to neither 20 was of strategy cycle dominant P&L. a his by in nied around chop to only plans, his ever followed and credibly would manner he disciplined a day market in each trades the his found planned he he if day, months, Each wondering back.’’ ‘‘come became discouraged, weeks to damage as becoming doing Still, avoided himself slump. stay and to his size struggling during trading him account his left his back now past cut the he in Wisely, him even. for well worked had that fyuaeateait o antrsodt l orcinsthe clients your all to respond cannot you therapist, a are you If rnddeetal dp,btitrsigy edds ychanging by so did he interestingly, but adapt, eventually did Oren accompa- uptrend, distinct a found and market core his investigated I h mtoal nelgn Trader Intelligent Emotionally The www.MyChart.ir is akindof BEST PROCESS #1: ADAPTING TO CHANGE 51 . Very often, they can help teach they are there for a reason We commonly hear that traders should develop trading styles that Traders who approach markets in a rigid way are not so different We’ve all had the experience of interacting with someone who talks importance of discipline, the notion of trading one’s personality has finding markets that rewardedlike the his received wisdom information about trading processing by skills. conviction and Still, the paramount that successful money managersmanage to possess make use different of personalities, their distinctivemarkets. but characteristics Oren, in all how the they trader engage already mentioned, was a good case in point, fit their personalities.shall There see is laterof in wisdom Jack the Schwager’s in book key this observations when observation, in we the as look Market at we Wizards strengths. texts was Indeed, one are painful, but us what we need to do to adapt to dynamic markets. of emotional intelligence wouldnegligent—medical lead practice. to Traders unintelligent—and dorather, ultimately they not face the face verdict of malpractice objective reality boards; through their P/L. Losses preferences and ignoresphysician the would be presenting open to symptoms justified charges of of patients? malpractice, as That the lack through lengthy bull markets,and ignoring focusing clear instead signsCan of on you market imagine the strength a frustrations physician who of is ‘‘manipulated firmly markets’’! set in his or her diagnostic increased institutional participation withexample—those an fixed expansion traders are of so focused volatility, onfail their for to own views listen that to they the market’s message. I’ve known traders to stay bearish They impose their viewspolitics, on economics, markets, chart not patterns, infrequentlymarkets or pontificating esoteric offer on market their theories. own When communications—breaking out of ranges on whether as salespeople, parents, or romantic partners. from the self-absorbed person who corners you at the office party. talk is so strongto that their own it needs interferes than with they are communication. to More you, attuned they are singularly ineffective, at us, not with us. Withwhat such people, they often want you to can say see them before formulating you’ve finished responding. Their need to intelligence means thataudience you if you calibrate want tolisten your make before an you communications speak, impact. so It to that also you your means can that make you the right have calibration. to an executive seeking aof career communication. change—all Parents know require this very well:to One different tough child styles may love; respond well another may wilt with a single harsh look. Emotional 52 BEST PROCESS #1: ADAPTING TO CHANGE potnt-ekn oe htsm rdrkoswe ‘tsntmy not ‘‘it’s when knows into trader goes and same market’’ That my mode. ‘‘it’s some when opportunity-seeking opportunity, knows more trader caution. bring self-aware of Some The equal: periods less. standing created and of not taking are high-risk occasions markets of and All periods actively see trader, trading would intelligent We of emotionally back. occasions an we find of If listen. P&L would to daily we when the and speak investigate to to when were off, back to when and approach thematic. more and longer-term become may on trading are the developments horizon, new and the out oppor- cleared and has shorter-term positioning become When may tunistic. style price the and choppy, crowded becomes become action markets flex- When to styles. traders trading enables their that adapt markets ibly in patterns opportunity changing reading sensing of and intelligence sets emotional the is mar- It with opportunities. changes ket markets in opportunity pursues trader present. conflict. expert not the are East How trends macroeconomic Middle distinct when tenden- of sense make weather can and periods cies seasonal in exploit to move products among great spreads Trading a be related and can oil crude commodities in price flat long ‘‘relative be going can Similarly, times, another effective. in such especially paying while At country inaction. one in or rates receiving action trades value’’ countries future different dictating across up weakness end and growth will of patterns on be that may so world particular hold, the of around officials instruments bank central income times, Other fixed countries. outright the creating in tighten, opportunities or environments. directional ease market aggressively to banks trading central their Sometimes adapting at good especially been r o hr o u aiain hydntcr bu u personalities our about care don’t they preferences. validation; or our to for sell there markets Sadly, to not in. are believed had he what who did He owner personality’’: his ‘‘traded restaurant Emil The unintelligence. strategy emotional embodiment very trading the of fixed be can a personality your to of sticking predilections the Oren, on based with saw we As limitations. its mtoa nelgnei eainhpmaskoigwe to when knowing means relationship a in intelligence Emotional have worlds rates and commodities the in known I’ve traders Successful uta motn staigyu esnlt staigtemarket’s. the trading is personality your trading as important as Just e Takeaway Key www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 53 The emotionally intelligent trader views . ■■■ Now, to be sure, none of us is infinitely malleable. None of us can Jeff was unusual among traders I’ve known, because he made emotional losses as teachers, not merely as threats need to adapt. Very often,can it’s focus us the on presence the need of for those renewal. losing periods that Or maybe they canfade occasions track when those the get out relativeThere of whack movements are in many nonvolatile of ways environments. instruments to adapt; and the psychological key is recognizing the Perhaps they need toanticipated widen moves to their materialize. Perhaps holding they need periodsand to asset identify and classes the that stocks wait remain longer relatively volatile for and limit trading to those. traders: They need marketsmake money. to An follow important throughfiguring step out how on toward they could moves adaptation have made for in money during such those order quieter traders times. to is among short-term traders,money for when instance, volatility picks is upperiods. that and give This they’ll back is gains tend because in to slow, the nonvolatile make short-term traders are often momentum you study your marketsdifferences in during how those those markets traded. times, A common you pattern I’ve will noticed most likely see trade all markets inA all worthwhile ways. exercise you But can neitherperiods perform are in is markets the to catalog perfectly last your static. couple best of winning years and your greatest losing periods. If to the European periphery,and however, aggressively he traded those drastically markets. modified He his made his views year in a few trades. market’’ and preserves capital. One trader I workedvery with years cautiously ago for traded most of thewould year, continue convinced to that be—difficult markets to were—and trade. When political problems came evidence of buyers coming in to meet sellers and he would quickly join prone to overreaction, creating profitableway. opportunities Thus, to if go traders the were other short a popular name, Jeff would watch for and popular trading sitesemotional to public identify following. when He hisbroad names only public had wanted participation. a to His strong trade belief and stocks was that that had the trading public was the stocks that were opening theMany day on of unusual volume these andattention were movement. from ‘‘momo’’ stocks the that trading had public. attracted Jeff considerable scoured Twitter, StockTwits, intelligence his edge in markets. He developed a routine for identifying 54 BEST PROCESS #1: ADAPTING TO CHANGE oee,cneune eoes ct httedsr o change for desire the Eventually, that familiar. acute a and patterns. into known so morphs old the become into to may consequences relapses gravitate to many there however, nature and stage, human change contemplation is at that It efforts During initial change. many for be of need phase active the an there of is accumulate consequences and us eerdt hsa hs of phase researchers a The as quo. this status the to with referred for many comfortable need are remain of awareness we There little so once. is change, there at Initially, all process. change occur (1994) the not to DiClemente stages does Carlo change personal and that Norcross, found John Prochaska, James from aktcniin?Ltscnie h rae usin o owe do How dynamic to question: adapt broader to the needed make consider changes Let’s trading the conditions? make market we can how So ■ nsa ciiy oh ett hr h potnt a greatest. showing was opportunity stocks the always where to were went he There so conditions. activity, unusual market to strategy his adapted simply breakout Jeff periods, or market followers unfriendly during traders—trend traders—struggled other stocks While the of trading. preconceptions be no had should he he short; He or time. long short be relatively to a pressure within no trade felt to trading names several of across list stocks a generate of and is dozens sites scan there become could had He Jeff as picker. all, stock of away, great important a Most he; go back. was stand so could to active, he were times, about herds slow of in When not herds. most of was than behavior the world edge to prop-trading consistency behavioral the His in peers. power staying his more far he’d had how opportunities. he his and him day give next public trading the emotional trading the be let He would ended, it. he day trade his what When early. knew days never his earnings ended Jeff and was ses- opens trading it the summer traded slow when he as or such sions, days, market Other active. the more was in stocks. he different volatility season, with good involved was was he there day When every the and traded side, He short conditions. and market different long in it implement to ways many quickly. winner would a covering short position was—the his often make he right—and was he If buying. the eas efstaigpoesicroae ihdge fflexibility, of degree high a incorporated process trading Jeff’s Because found but strategy, single a traded he that is Jeff about unusual was What edns o Change for Readiness any ido motn hne norlvs elkonresearch Well-known lives? our in changes important of kind need o hne htlast tg of stage a to leads That change. for precontemplation www.MyChart.ir nyoc l asfail ways old once Only . preparation contemplation ,with BEST PROCESS #1: ADAPTING TO CHANGE 55 . what is effective , during which action stasis—intellectually, we see choose : sustaining new, constructive behavior Key Takeaway maintenance If we look through the lens of this transtheoretical model, we can rather than readiness for change. Many coaching and self-coaching failures result from focusing on change Diets are a great example of this principle: Most of us have contem- from our current level of awareness to a point of committed action. coaches. It makes little sense to pursuein action an techniques action stage when of one readiness. is Instead, not our approaches if to we’re markets, contemplating efforts changes should in focus on what we need to move in facilitating change for a personfrom in what an is action required stage to of spark change readinessThis for is that quite is same different person a in contemplation principle mode poorly appreciated, even by seasoned mentors and less effective forconclusion those from the work merely of Prochaska contemplating et al. (1994) change. is that An important see that most established psychologicalapproaches techniques—and in general—are most aimed coaching at peopleand who committed are to prepared to taking change action. Traditional helping methods are much patterns and avoiding a relapse into prior, problematic ways. the focus turns to initial, incremental steps towardthose change. steps, Encouraged the by person the finallychange success reaches of becomes the point an of overriding priority. Once those changes occur, option, however, the gravitationalovercome. pull Focusing on of action relapse before cultivatingkeeps becomes our us readiness difficult orbiting for the to action status quo. only to see thosemindshare. die Few on of the us vinethe as consciously need daily for pressures change and dominate adaptation. manager As long as status quo is the default take initial action, then relapse into oldof ways, suffer stasis, further and consequences return toit’s goal-setting not and unusual the for desire businesses to to change. explore Similarly, new directions and priorities, change and preparing goals,to but action. fail Change efforts, to as sustain a the result, become leap frustratingly from circular: intention We plated going on athree, diet or and more! many We of typically us get have to started the point a of diet—or actively two, contemplating or 56 BEST PROCESS #1: ADAPTING TO CHANGE akt obndwt h rec hti ono h eonto that recognition the of born fleeting. is is mastery that all master urgency to the passion mere the with not it’s combined ones; It’s markets great development. the so animates and and that research trading advantage, of for passion competitive state gratification perpetual of immense a sources in draw new they’re They of it. uncovering the embrace from they change: change, for ready love just aren’t They traders trader rare those rare example, restaurant a the saw in we is As to bottom. It hitting contemplation of from consequences broken? the incurring change—move isn’t action—without for readiness what the fix sustain can why who all, significant After after adaptation. that’s of late—because incurred too been often have is losses it change,’’ action to ‘‘need an becomes to significantly. them diminished had catapulted tectonic market job had for the urgency in unprepared value time their them phase, the left their By while fertile shifts. advantage still market competitive were of markets Their sources primary expertise. fresh income cultivate fixed to specialized macro failure beginning with as traders them found as viewed they hands funds traders—not funds, their The hedge limited. trying at be before positions to for two opportunities looking or Now year markets. had a other trading for at opportunity by foundered manner market usual they the ends, in of money front make sources to able traditional longer No their dwindled. zero, short-term near anchoring banks central rates global With market. job the scouring turns change’’ appeal. to their ‘‘want lose that excuses and pain change’’ real to ‘‘need of into point consequences the negative when to only accumulated It’s have addictions. they’re their before up bottom give many hit to to for willing have force people that drug motive and experience observe the alcohol field the will is rehabilitation in professionals I Urgency why is effort. sale, This efforts. the a change for successful making as energy good of of as lack prospect look no the for place the by off making offer, Spurred it in purchase possible. put interested possible a quite to make become that easy to know suddenly and visit I is however, second house, a it my scheduled sell but has to someone house, desperate am my I If clean day. is another to ingredient need missing the the perceive Typically, changes? effective hsi n ftekycalne rdr face: traders challenges key the of one is This were who markets rates US in traders with spoke I ago, while A make to take to need we actions the and us between stands what So ofr—h nioeo rec—senemy urgency—is of antipode Comfort—the . ■■■ www.MyChart.ir ytetm ‘att change’’ to ‘‘want time the By urgency .Imay BEST PROCESS #1: ADAPTING TO CHANGE 57 That day, I withdrew entirely from caffeine and was rewarded I finally got to the point where I was sleeping so poorly and was so Much later in life—indeed, not so long ago—my lifestyle consisted There is a great deal to be said for ‘‘fed up.’’ When we say we’re My work became more efficient, and my nonwork time was far more reintroduced only the healthiest foods.weight. Almost immediately, I I slept lost through some the night. I regained energy and clarity of mind. with an epic headacheI for felt something! a I couple stopped of eating days. entirely It for a didn’t day matter; and at then least gradually of reserves. It was a scarythe feeling. I status knew quo. in I a flash didn’tfed that want I up. to could not ever sustain feel that way again. In short, I was and Tierney (2011) were depleted. Idisgusted simply with felt like the doing weight nothing. I Icomplete had was lack put of initiative. on, I but didn’t feel most depressed; of I felt all depleted—empty frightened by my fatigued during the day thatthe simplest I tasks. could Those not willpower rouse resources researched myself by to Baumeister complete even efficient, and I compensated by trying to workmeant longer. But more working eating, longer more caffeine, and more fatigue through the day. tablets that consist ofI aspirin, acetaminophen, put and on caffeine.deteriorated, Gradually, significant as I weight. woke I up frequently neglected at exercise. night. My My work sleep became quality less and traders, as wellhours, as I drank home copious quantities and of coffee familykeep to myself responsibilities. stay awake, awake. and Keeping I once also in long snacked a to while I’d pop a couple of those analgesic of getting up at 4 a.m.Weekend and mornings working were through also set the aside evenings for on work, as a I daily kept basis. up with markets was fed up, not with thein other another person, but person’s with company. the senseprepared Only of to when being make I lonely a hit significant change. that point of pain was I I lay on a porchsky outside for one a of very long the time. university From buildings that and moment, stared the relationship at was the over. I it was precisely when Imost lonely. was It in was the a companyget feeling of together, of my but utter girlfriend emptiness. I that We couldn’t I were get was scheduled myself to to get in the car and meet up. romantic relationship for far tooa long. while, I and contemplated yet change Isomething new for did and quite not promising. make At one the point, step however, to it end struck me the that situation and begin fed up, we have gottentolerate to a the situation. point of In disgust my where early we adult can no years, longer I stayed in a suboptimal 58 BEST PROCESS #1: ADAPTING TO CHANGE uue e etne o ahqeto hudb ufiin o the for sufficient be should question each your for about exercise. sentences talking we’re few all, A short answers—after future! your a out book try sketch the and Let’s in about markets? on moving your before roil responses your to questions. were seven of shifts consisting self-assessment, tectonic if be you ■ ■ ■ ■ ■ Exercise Self-Assessment uldb ‘e p’ hymvdfo otmlto oatv change. active to undergone. contemplation had from they moved one they the up,’’ ‘‘fed like by They loss Fueled around. another traders tolerate the not of could many simply turned about that It losses just making. traumatic decision lost those faulty was and they management blowups; risk poor career through in everything early Schwager experienced Jack about Many by Think (2012). interviewed consequences. traders to connection successful emotional the deep a of consists myself. found we had but I to which determination in state absolute de-energized the the to was eating back it go new ever me; the not that motivated not so was the exercising It changes. affirmative. to and those the all in sustain added to confidently able answered further be I would I which if me asked aerobics, Someone energy. alternating and of routine stretching, exercise an began weightlifting, I state. energized an in enjoyable uv eddt xli h potnte n vi h het you threats the avoid and opportunities the foresee? exploit to needed now, curve doing the you with are pace What above? keep noted to threats trading and opportunities, your markets, change in your to shifts need to you threat would of How source year? greatest past the the in been trading has specifically, What, years? several next the opportunity over of market(s) areas your greatest in the perceive you do the specifically, Where, over evolve to market(s) years? your several expect next you do specifically, How, owa syu ee fraiesfrcag?Hwpeae would prepared How change? for readiness of level your is what So e up Fed will rae rec.W fe o’ hnewa edntlike, don’t we what change won’t often We urgency. creates hnewa igssu.Abgpr fraiesfrchange for readiness of part big A us. disgusts what change narglrbasis regular a on ■■■ opes aetetm othink to time the take please so , www.MyChart.ir tsipratta o write you that important It’s omse h learning the master to , aktWizards Market BEST PROCESS #1: ADAPTING TO CHANGE 59 You are . Our basic needs provided, we face Key Takeaway . You are actively contemplating change—why else , you would be willing to write a dissertation if it promised urgently This was a psychological experiment. Did you continue reading Comfort is the enemy of adaptation. Psychologically, most of us live in zoos you need to speak and what do you need to research to gain clarity? What new markets or market informationto are help you prepare examining you in for detail the future? If you don’t have clear, specific answers to the above, with whom do becomes imperative. Think of a zoo,entirely where threats eliminated. to survival Even are the almost wild, most placed active in utter and safety, ferocious spend most animals of in their time the at rest. response. If it feelsthe natural safe, result it of doesthe perceived animal not safety; kingdom, nonaction waste saving is energy. resources the for Procrastination default those is occasions mode when in survival a principle that hasenergy. made If sense an for animal us perceives evolutionarily: a conservation of threat, it mobilizes a flight-or-fight difficult to sustain. That’s notself-defeating because complexes we’re hidden lazy, in nottruly our because past, wish we and have to not improve because we ourselves. don’t Quite simply, we are operating on change a better future. Without urgency, however,like the the effort effort it required takes in to the write gym is or during a diet: easy to contemplate, not ready for change would you be reading anot chapter even on motivate the topic?—but the simple your action readiness does of writing. If you felt the need for without writing or afterdefinition merely you jotting now a know few something cursory important notes? about yourself: If so, by to each question. Please continue, but only after you’ve finished your responses ■ ■ definitive action. exit the profession had contemplatedthe change point for of years, tearing down but the never bars got of to their psychological cages and taking few urgent imperatives. But marketssafety are not in zoos: ever-changing There is financial no environments. enduring Most traders I’ve seen 60 BEST PROCESS #1: ADAPTING TO CHANGE r nyu he-on tne,rayt aecags el explore we’ll changes, efforts. action make your to channel and ready best responses to stances, your how hands-on out three-point to wrote your who contemplation in you from are of step those for the Then, take preparation. to how on relevant. concentrate be will you’re action If If for urgency. prescriptions readiness. of no sense mode, of your urgent stoking states in beyond not later go you’re to versus need we early action, in for ready those for change to undertaken already efforts. you have change least, you very initial likely, you the most future, At mode—and contemplation. the preparation of in about point are thinking the past your are detail you to that perceived show on action act the to taking ready are In and need. change about thought have you Clearly h erapoc:Ndepol noato yipesn hmwith them impressing by action strategy into first the people call Nudge can possible, approach: We is fear placing action. what the toward them By steps showing strategy. spark and can people opposite inspiration of the front in ways, goals some outrageous in is, act.’’ to communications need ‘‘I into act,’’ leads should that ‘‘I up) turns fed Crisis (and action. concern take of to point them a unpleasant hit the employees highlight that to of so is idea negatives out The the employees. keep go of and front performance managers in lagging information mode, about information crisis collect to creating way their the In opportunities. about information with people bombarding and crises creating including zations, opportunities fresh after long money gone? them and make come to have companies used many what How unknown? to the face cling invites to it scary too quo; marriages it’s and status because jobs simply suboptimal the in threatens languish people Change many How reasons. uncertainty. same the for individuals—and first as often comfortable his orga- and complacent all, of as After become urgency.’’ one can of nizations surprisingly, sense a Not ‘‘establishing is changes. steps recommended needed make can nizations book, his In ■ ofrtemmn,ltsstaiecag n dpain e’ first Let’s adaptation. and change aside set let’s moment, the for So adapting of challenges the separately address will come to pages The you if mean it does what So obrigmmeso nognzto ihopportunity-related with organization an of members Bombarding organi- within urgency catalyzing for strategies several outlines Kotter apn h es fUrgency of Sense the Tapping edn Change Leading 21) onKte xmnshworga- how examines Kotter John (2012), did rt onyu epne ndetail? in responses your down write www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 61 in which mor- The Biggest Loser Emotional change precedes behavioral ■■■ Both nudge people out of their comfort zone by . The shift from contemplation to preparation . Think about the extreme training challenges that soldiers endure in Kotter mentions one effective approach: setting performance targets There is an important respect, however, in which fear and inspiration change—always an object of intellectual contemplation. Itand is desire only for when change we feelshort that of the we action need becomes become unacceptable. committed—and then anything and find resources they never knewbe so they wedded had. to How inertia can and, at itachievements? the be same Without that time, emotional so we capable engagement, can of change revolutionary simply becomes own would sustain aharassment regimen from overseers. of But sleeplessness, onceand constant inspired in exercise, to the and wear program, the bonded insignia to of peers achievement, the soldiers dig deep order to become part of Special Forces teams. Few people on their of weight. What changed? A freshemotionally set of and motivations propelled engaged them contestants outtion of and contemplation eventual and action. into prepara- years, each of these contestants wasNow, with unable coaching, to the lose motivation weight of onpublic competition, scrutiny, their they and own. make the Herculean efforts pressure to of lose phenomenal amounts You’ve probably seen the television show bidly obese contestants publicly compete to lose the most weight. For not change, but failing togo change. to extremes If to failure meet is theirthat stretch not targets, never an finding could option, creative have alternatives teams emerged will from status quo thinking and planning. so high that theytargets cannot become be mandates, they reached shake through people up. business Now as the usual. greatest risk If is those changing their emotional states and action cannot occur inthe heart a in status order quo to mindset. shift mind It and is behavior. necessary to shift are not opposite strategies. that he will have sohe loses much weight. more This energy inspiration strategy andimagination relies will and on look capturing exciting the them so person’s about much the better benefits if of change. the consequences of inaction. A physicianhappen who to tells his a heart patient if whatfear he could motivator. Conversely, continues a to physician eat might try in to unhealthy convince ways the is patient using the 62 BEST PROCESS #1: ADAPTING TO CHANGE n nigtergttyta upidteeeg o hne behavior. changed for energy the bins supplied through that rummaging toy chores right of turning the fun finding was the and toys It and valuable. many opportunities less so relationship would becomes get into filled one you was subsequent Eventually, chart each the influence. that after motivational child its each merely for lost that table have suspect the also on a I toy of a worthless. idea leaving the been kids, have the would with outing relationships weekend poor had I Had motivation. and shift emotional an she is while mall stickers. the her consequence, to earning a from go as her that to stop With happen. couldn’t got to I and going not stickers was his That home? Devon all stayed would How earned sticker. Crae the get if not to feel one only the being was sticker a outing fun a when bed horizon! the the into make on to turned was easy chore was boring It and let’s bonding. onerous C’mon, interpersonal positive weekend. an an this Suddenly a bed!’’ you in with your no out up delivered sticker, go make to was no like however, alert: would really an alert, ‘‘I way: to The led outing. responsibilities toy with weekend up keep to it focus. Failure special; total outing the were the kids made where what family, of for would part favorite time We their quality only eat. also out was was pick to toy to The out get game. usually would or and they toy and mall together a aisles to the Macrae wander and Devon took I redeem could If they toy.’’ sticker. ‘‘weekend week, a a the for got of chart they filled day day, their single the every Each charts.’’ for stickers ‘‘sticker chores received creating their they of completed idea the kids on schoolwork, the it hit their time up, we do Finally, rooms, growing their on. were straighten so children to and youngest them get two to our easy When wasn’t way. priorities the other but in do, get should they what know often Children action. and nteprnigexample, parenting the In getting not than Worse motivation: subtle more even an was there But done. chores getting for equation the changed charts sticker The that meant It deal. big a was toy’’ ‘‘weekend out, turns it as Now, contemplation bridging of challenges the with familiar very are Parents ihu h nryo mtoa u-n ol r eeintentions. mere are goals buy-in, emotional of energy the Without h aki eends hti nae oestrength core a engages it that so redefined is task The : e Takeaway Key htmvstecidfo otmlto oaction to contemplation from child the moves what www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 63 (2002), make an . The Heart of Change But we don’t need to hit a point of crisis to move us to action. All we See-Feel-Change: The Importance of Optimism See-feel-change is crucially important to traders looking to adapt to This works because I am substituting a higher, stronger motivation Most of us make use of this principle without realizing it. If I have to failing to adapt that you hit a crisis point and are forced to change changing markets. One way to see and feel is to lose so much money those efforts pickedthinking up about materially. one’s productivity A wouldforce not mere of have that process carried single, the short of emotional talk. analyzing and of urgency and aworkers need described by to Adam act. Grantinspiring (2013). Recall story When the the from talk workers someone heard given who an to benefitted the from call their center sales efforts, for action. Kotterprocess and is ‘‘see-feel-change.’’ Cohen When we suggestemotionally—inspires see us, that something or a that perhaps engages stokes more us our effective fear—we feel change a sense a process of ‘‘analyze-think-change.’’change While process, rarely analysis will analyzing can andshift thinking help produce the guide needed emotional a to move people to a sustainable state of readiness Kotter and Cohen, inimportant their point. book, They observe our tendency to pursue change through ■ need to do is tap into a motivation that moves us already from contemplation to vigorous activity. Crisisemotional is change, a as powerful I catalyst found for lifestyle. out when I realized I needed to change my for a lesser one. Often,but when don’t we perceive act, a it’s needBy because for restructuring our change we’re approach and tapping to action the into activity, the we can wrong move motivations. the gearshift new incentive, however, I’m energized to finish as early as possible. the evening out and, if there’s oneher. thing I Left don’t to want my to own do, it’s devices,allotted disappoint perhaps and I’d crawl let through work the expand workload to by fill the the end time of the day. With this somewhere fun for the evening. Thatinfinitely creates appealing an compared incentive—going with out muchsecond is paperwork—but motivation. The it goal is also now taps a shared a one. Margie looks forward to get through boring and onerous work,Margie: I will If sometimes the strike work a is deal with finished by the end of the afternoon, we’ll go out 64 BEST PROCESS #1: ADAPTING TO CHANGE oseta ucs spsil.Ta eonto rnsanwfeeling new a brings trader recognition a That enable possible. Heaths is the success by that described see wins to small make could The They actions own. difference. their their a experience—that on own over their setbacks. go see—in to to market needed learned the of to eventually barrier shocks they the side, over the rats unshocked avoid helpless the can moved physically they Seligman When believe when business longer the up no give traders they Emil, to sold who owner restaurant the achieve. to to failed easy they was so change situation, when their even change change helpless. attempt not over were could they they jump that that didn’t learned suggested, They They Seligman were happened? learned, They rats what barrier. collapsed cage, the the original Once the jumping, whimpering. on to and up returned floor give get the eventually jump, and on cage would shocked, collapsing rats different get the a shocked, again, in were jump placed barrier shocked, the When the of over side. jump sides unshocked to both rats the where floor the to for the long go on take shock and didn’t electric It barrier cages barrier. an the to in of exposed side put one were of Rats barrier classes, low helplessness. psychology a learned by college and divided on your themselves research from overhaul classic recall to Seligman’s may energy You discouraged the practices. because muster their be, can’t to the place typically leaving difficult people contemplating a By perhaps not That’s money. and altogether. is make discouraged business to It are failing changes. they sustained of time, large have periods they that for after protracted only rolling and/or me ball losses to out painful the make reach set to they traders putting can that for for uncommon wins point framework small important useful that very a is A provide practice. (2011) into Heath see-feel-change Dan and they Chip children, their for positive mode. something action model into focused directly role and moved to gears shifted need not they the did Once they on years, relationship. you For waning that Chris. good their and are Gina address odds couple, Without the our you, see-feel. Recall moves move. to that won’t gears necessary of it’s shift analyze-think, emotional that repertoire. you trading before filter to your what but and inspires into incorporate out, to it it what knowing that incorporate to critical promising is and is Analyze-think and alternative test, interesting The research, so option. to something attractive you feel an and not see is to That altogether. quit or hsstaini o odfeetfo hto h ruldtae.Like trader. troubled the of that from different so not is situation This book, their In wth o oCag hnsWe hneI Hard Is Change When Things Change to How Switch: www.MyChart.ir , BEST PROCESS #1: ADAPTING TO CHANGE 65 do can —a unique perspective translation My work in brief therapy identified precisely such a change trajectory. The Heaths point out that this is one of the important strengths of a Traders who contemplate change but cannot sustain preparation and are common factors accounting for thenot effectiveness what of analysts the do differently therapies. from It’s behaviorists or family therapists that effective in generating changetherapies appear than to be no more effective therapy thanproblems. the at That others has across all, led all people researchers but and to propose none the of idea that the perhaps there in their past; cognitivethought therapies patterns, translate and problemsoutcome into so dysfunctional literature on. is A that curious all finding the in major the therapies psychotherapy appear to be more common element was what Ifrom called which a people could viewdynamic themselves therapies and translate their people’s problems. Psycho- problems into patterns grounded emotional shift toward hope and optimism. Reviewing the major approaches to short-term treatment, I found that a Their research identified awas first any step ‘‘rehabilitation.’’ Prior of to ‘‘remoralization’’ before any there behavior change, there was an this. Perhaps my situation isn’t as hopelesscolleagues as it have seems.’’ Ken studied Howard and thepeople process make changes of when psychotherapeutic they work change: with how a mental health professional. what has been goingdoes wrong—yields bring intellectual little insight. inspirationthe That value, drawdown, same even suddenly trader, realizes, if shown ‘‘Hold it exceptions on to a minute, maybe I solution-focused approach to change. As we’ve seen, ifa a trader drawdown, is problem-focused mired in talk—endlessly analyzing and discussing emotional recognition that he washim trading well to even look in deeper his intowas slump the already roused sources working. of his success and do more of what Of course not. He hadmerely been showed lagging him in that his he performance was, and indeed, my trading analyses very well at times. The possibility of success ininspire a change. first-hand Recall way the analyses provides of theMaxwell. successful Was emotional trading it I fuel the undertook to brilliance with of those analyses that sparked his change? action typically are caughtsee-feel-change. in They analyze-think-change think mode,problems, rather but about none than their of that problems builds hope and and lament optimism. Only their seeing the and energy. See-feel-change. ‘‘When you engineerHeaths early observe, successes,’’ ‘‘what the you’re really doing is engineering hope.’’ 66 BEST PROCESS #1: ADAPTING TO CHANGE ruaie itn twsaptei pcal hnw okdelivery took we when spectacle pathetic a was It kitten. traumatized a huntress. action-oriented to animal was lazy she slumbering, moment, a from the In transformed fly. off the me, for leapt behind watching sitting intently body, now wall, window is her the She along tensed object. moving She new fly. the pursued the and island, watched she and but immediately Naomi her, head came sitting. to her fly were call a we raised where Suddenly, or island rest. her kitchen at the pet remains by I and buzzing while the closed in a eyes afternoon keeps in lazy much Once a pretty away. spends she type so I bed, while a bag as bag computer my uses She hope—to of burst a or fear action. of to jolt you generating a take move to not gears—either going of is It’s shift action. situation emotional to your an move means to seeing It urgency—needed currently all. feeling—the are at the Not you change? way instructions, in the the disinterested per or that lazy responses you’re your mean down it write does not did you If answer. htnwsen rae e eln n neoinlsito er that gears eyes. of of shift action. emotional set to an contemplation different and feeling moves a positive new a through a creates ourselves seeing of new see That power to the learn we Through relationship, see-feel-change. creating Seligman’s of from method cages. different the of so sides not unshocked the is to rats It helpless control. the guiding and greater helps a optimism therapist brings This the of possible. be helpless, sense indeed and may solutions hopeless that idea feels the new who instill into person problems a translating remoralization for By that terms colleagues: is and factors that Howard common doing by those are described of approaches One major work. the them all makes what it’s change; to contributes sIv enwiigti,m ims a am a enb yside. my by been has Naomi cat Siamese my this, writing been I’ve As to asked were you questions the and exercise our to back go let’s So eigti,m idge akt u nta dpino am as Naomi of adoption initial our to back goes mind my this, Seeing nta es,ayfr fcahn,cusln,o hrp sa is therapy or counseling, coaching, of form any sense, that In ofe ifrnl,yums e differently. see must you differently, feel To e Takeaway Key ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 67 If, . When I worked in a community mental health clinic in upstate New That’s when I realized that our newest household member had taught The breakthrough occurred when Naomi was on the bed, enticed by The first piece of progress came when I went into the bathroom with It became a real problem when we brought Naomi home. She cowered spiritual attachment. found her wayinstinct, out these of alcoholics fear overcame by addiction engaging with the a more more powerful profound hunting of a far morethe powerful cycle set of ofmotivation contemplation, desires that initial and supercharged change, the commitments. desire and What for broke relapse sobriety. Like was Naomi, a who greater revelation than a reasonedbeing conclusion. touched by So the powerful Lord that wasactions, it and this literally priorities. reorganized Desires feeling thoughts, to feelings, of drink did recur, but now in the context York, I metbottom several and emerged veterans with of aplanned deep Alcoholics religious process. faith. Anonymous This Rather, was who not it a had gradual, came hit as a blinding insight, more like a procrastinating, or troubled, the freshbeen energy elusive sparks behavior that previously had When everything is normal,however, we our can substitute behavior a stronger gravitates motivation for to the one our that leaves norm. us passive, me a valuable lessonof about mind change. and When body, acting we on are our in normal our motivations, normal nothing changes. state as with the fly—Naomi’s eyesafter got my large. hand. She She was archedbedcovers so her that intent body she on and forgot hunting went to the be moving fearful! thing under the food from me and that became a way to get herfood. out I in the put open. my hand under the cover and moved it around and—just onto the window sill andto slipped behind her the and curtain. I touchedI quietly was her, went able over to then get her retreated. to the After point where doing she no this longer shook. many She accepted times, Naomi and closed the door. There was no place to hide, so she leaped up did everything she could to keep herselfwe hidden. On could those occasions get when close,was she terror. shook violently. This was more than fear—it people—anyone. under furniture, scampered into rooms where she could be alone, and of the kitten inshaking. We a never found crate. out She whatsuspected had was happened someone to cowering her, but had at we the strongly mistreated far her. corner, She literally was intensely afraid of 68 BEST PROCESS #1: ADAPTING TO CHANGE atr a on ml isaectlss hyaesoso oeand hope is of that habit—and shots change. become sustains are can what action they action, catalysts; spark they are Once habit wins optimism. new Small a soon That born. and cats. was experience the the pattern repeat with to time motivation my gave win with experience small exercise single my a interspersing win: small enjoying a my of What with as motivation started cats. playful change the a That into companions. to tapped four area now activity exercise solitary downstairs a exercise been my the had in opened shift the I Recall perhaps another. when and life, sobriety routine day, your maintain another rebuilding for can start it to you do steps can If your you time.’’ work a and day at single day a ‘‘one for is A.A. in slogan The hthlsadpesdpro e,‘‘ see, person translation depressed the a creates helps that that professional new helping something the or with relationship someone the strategies: with see-feel-change interacting the involve among them thread common a Notice ■ nvtbyecestm pn nsgicn neato ihothers. with interaction significant in time spent following Screen spent time performance. is exceeds reviewing day and inevitably trading the ideas, of researching majority markets, The floor. trading world. and large self seeing for culture lens new fresh a a to powerful—it’s mirror travel so more why be the is can mirrors—create That through gears. better emotional ourselves shift mirrors—and to perceive opportunity More we When experience. activity, children. our on an of relationships in abusive self-experiences: engage by done distorted we troubled damage and Similarly, the lovable. negative of being with Think of us sense present the relationships immersed internalize time, Over we self. love, of experience in affirming an with us because part provides in it powerful is friendship deep or relationship romantic found mirror a is with interact we everyone and ways. and new seeing in of ourselves ways experience to old us in enable mired experiences stay the New to Without feeling. easy people. too of that all fear me way it’s her a makes interactions, forget in and fresh that me huntress the with thinking be interacting to of was her it way allowed case, a Naomi’s In learned way.’’ that just feel I’ve maybe person; bad o ecnsetewso eidteHah’ie fsalwins. small of idea Heaths’ the behind wisdom the see can we Now rdn a eateedul sltn xeine vno a on even experience, isolating tremendously a be can Trading that is blog the on emphasized I’ve themes the of One h agr fTae Isolation Trader of Dangers The a oeprec usle.Apro- A ourselves. experience to way a : Hmmm www.MyChart.ir … ab tsntta ’ a I’m that not it’s maybe ncusln,it’s counseling, In . vrtigw do we everything otof Most BEST PROCESS #1: ADAPTING TO CHANGE 69 . There was no dawdling Key Takeaway . Fear is a great motivator; hitting bottom can be a and I couldn’t wait to get home to test it out The beauty of positive mirrors is that they spark change without the need What is psychologically significant is that this interaction during the The potential for trader isolation is a major reason I have emphasized It is better to move to action through inspiration than desperation. inspiration, and the drive to make change happen. mirrors created by networking with the right people bringinspiration, change through rather than fear.experience In those vicariously sharing as someone wins for else’s ourselves. That small sparks wins, optimism, we to go through crisis most effective catalyst for change. But hittinggoing bottom in broke. trading can The mean game is over before change can occur. The positive so energizing that itexperience could led never have directly happened. to action. Had I been isolated, that trading— between contemplation and action: Hearing of the trader’s success was networking filled me with the motivationthe to experience pursue of a the trader, new I idea. saw Through that something was possible in my own idea immediately sparked a thoughtindicators that by I the could context qualify in mya which own new they line market occurred. of This research ultimately that led I utilize to to this day in my trading. approaching the market, tradingTo a be very action-worthy, limited thoseof set patterns day, of had tested with to patterns. a occur threshold at level particular of times market participation (volume). His success through their ideaspossible—and and can applications, provide a that meaningful mirrors emotionalnetworking gear to event shift. us At that a what I recent helped is organize, a trader described how he was traders and ‘‘talking shop’’—hasinto the potential a to vicarious turn process. see-feel-change When we see other traders encountering caught in doing the same things—even when those things stopthe working. importance of networking. Networking—meeting up with other lack the mirrors thatfresh inputs; could people catalyze don’t move see-feel-change.reflection from Change alone. contemplation requires to The action isolated by trader mere all too often is the static trader, While social mediatraders, has the opened majority the ofmirrors. door interactions Without are to too fresh frequent brief social contact to interaction among serve as and effective novel activity, traders 70 BEST PROCESS #1: ADAPTING TO CHANGE eodcnepain noaction. ourselves into launching contemplation, for energy potential beyond of source a ongoing our an of provides generate quality we and conversation mirrors, an quantity the each of expanding By as part experience. being isolation, see-feel-change overcoming of of for sense tool limitations powerful the the a participant is Networking each group. to winning adaptive, winning. mirrors turn about turn wins becomes in in small ultimately which person’s This which Each discussion, others, possibilities. the best for fresh to and contribute sharing ideas directions each spark new to traders, ideas lead talented person’s of One group practices. a Imagine intervention. ou.Ta ep sfoe ncnepain nbet uti action. sustain to unable contemplation, in frozen us most keeps matter That that and us. outcomes escape to the no control find to unable we helplessness, rats, in Seligman’s collapse like repeated Eventually, internalize failure. we for of time up sense over a so ourselves experience, set repeated internalize we We wins, failure. small for ourselves positioning of issue whole the making moot. lifestyle, discipline a habit, a for challenges up becomes themselves new Positivity set have success. many They goals. adaptive undertake doable They meaningful, particularly define pattern. regularly are and habit who a more known wins small Much I’ve made People action. with cues. automatically into activate right that contemplation patterns the action shift of creation to the is need efficient we motivation time through ourselves every rally to exhausting too efforts. simply It’s new creation. to us inspires that small and experience self, we ideal When our see-feel-change. perceive from we far wins, so not Broaden is skills. and build experiences and new build us helps turn in our which of of thinking, scope research the broadens the experience per the Positive lab. important, of Frederickson’s familiar. Barbara is one become experience That’s emotional to repeatedly. positive experience starts reasons we image which winning that internalize that We and Accumulate wins us. to image small winning a enough reflects It mirror. small a is win small A ■ ned ecntiko ewriga ru-ae solution-focused group-based a as networking of think can we Indeed, o opol e nosc state? a such into get people do How of Instead pattern. habit our becomes negativity however, Suppose, habit of function a is change that insight Duhigg’s Charles Recall hnigteItra Dialogue Internal the Changing ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 71 .Of . Many times we fail to move One of the habit patterns most important to cultivate as a trader is the ability Depression and its cognitive treatment illustrate the degree to which we create Depression is the most dramatic example of circular negativity. work on your ideal self. Every mistake is an opportunity—anddifferent, something an better. obligation—to Less-than-ideal trading do becomes something a trigger to need not be paralyzing. If you havelook built for a process mistakes whereby you and routinely have turned turn the them transition into from fuel contemplation into for action self-improvement, into you a habit. to lose in acourse, way losses that will be gives frustrating you to energy, a competitive rather trader, than but frustration robs you of initiative systematically disempowers a trader.bad If markets, you and are bad the trading,own victim turnaround how of story? can bad you luck, become the author of your It doesn’t help aa person positive learn from fashion. the Itemphasizing situation a doesn’t victim and mindset—bad naturally move things lead happen forward to to me—such in thinking small wins. Indeed, by externally (‘‘These markets are manipulated!’’) or internallyanything (‘‘I can’t right!’’), do but in both cases the channeling is not constructive. need to be clinicallyMany traders depressed are competitive to by nature fall andlose become prey frustrated money when to they or such make negative poor decisions. thinking. That frustration can be channeled our own realities through our internalfrom contemplation dialogues to action because our negativelyprocessing skewed information generates more helplessness than empowerment. We don’t can talk to yourself theyou way can break you’ve the learned cycle to of speak interpreting outcomes to as others, small perhaps failures. an idiot after a losingof day—the thinking. changed It’s perspective the helpsplopping shift equivalent him the of over way the Seligman barrier taking to the the helpless unshocked rat side of and the cage. If you can show the depressed person thatis he would saying never to say to himself—he others wouldn’t what he tell a trading buddy he’s trading like like an idiot. The latterevents is with a negative version self-attributions. ofpart depressive Cognitive because thinking, therapy it interpreting helps is depressed effective people in think about their thinking. If you inverted rose-tinted lenses. Imaginea two moderate traders loss. finishing One the seeslevels; day the the opportunity with other to throws add his to hands positions in at the air better and wonders why he trades As cognitive therapistsinformation with negative have biases, viewing the emphasized, world, so to depressed speak, through people process 72 BEST PROCESS #1: ADAPTING TO CHANGE ai atrsta hf eaietikn nocntutv actions. constructive into thinking negative positive need shift process. We that thinking. the patterns negative halt the habit helps halt to a which however, helpful, enough, into not not is is can thinking It tell traders saying the are their we listener, they a what voice things As that rant. traders see the themselves to had about listen then also and objective I’ve recorder more times, through become going At is can ourselves. what we down writing heads, By our thinking. to their people of encourage journals therapists cognitive keep why is This self-talk. frustrated ulak hnte xeddtergis etl isl ewould he himself told he gains, their buy extended would he they himself When told he pullback. day, When a next of positions. the the because higher own carry’’: opened to ‘‘positive currencies paid the were get would positions he the differentials, rate countries that interest those fact in the fundamentals liked emerging-market economic and strong positive of his cited currencies about He the me countries. buy told he to occasion, idea his frustrating well-researched to especially up this if living one time, not On as was Over market he potential. trading. was realized his his he as It in in frustration, loss considerable opportunity sound. created market seeking being avoiding one other as at the people: research, trade ideas different didn’t two his or were identified small he very he traded when either he all—even that money losing about act. to fails and route ‘‘safe’’ reward, the than sound takes loss on trader trigger’’ potential worried to the the ‘‘pulling attuned with psychologically More problems ideas. to traders trade lead among can observation worry common worried that A bad The try.’’ is can’t.’’ to that ‘‘I afraid anticipating says, ‘‘I’m person says, looking, person depressed forward The casting is happen. and will Worry self things future. the the blaming on looking, backward doubt be to tends good Depression be ultimately own. would his on he money manage whether to about enough Larry worrying well, progressing himself was he how found that Larry matter assured No mentor immensely. the times mentor many his respected he particularly because was This upsetting, expectations. mentor’s his worried meet and never curve would learning he his that by overwhelmed felt he times At manager. afo h atei acigyusl nteato eoigmrdin mired becoming of act the in yourself catching is battle the of Half htwstepolmbdvln ar.H on isl oconcerned so himself found He Larry. bedeviling problem the was That depression. from different thinking negative of form a is Worry money senior a under working trader developing young a was Larry ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 73 Key Takeaway When change is threatening, small changes can inspire further action. Larry’s worry problem is especially common with respect to fear of the Larry had plenty of ideas for improving his trading and putting on good As we will see shortly, however, there is a big difference between that can lead to a scaling up of the strategy. books into different strategies,taking with fewer the positions morenonthreatening with experimental way. less strategies If the risk. ideas It’s are good, a they way generate the of small testing wins ideas in a ongoing and evolutionary, there need be noTraders fear often of revolutionary will change. tryworks something over new time. Several in traders small I’ve worked size with and have segmented just their see how it familiar troubles feel safer thanwhere unfamiliar, small unexplored wins territory. become This extremely is important. If the change process is because he now viewed inaction as a risk far greater thanunknown. There losing is money. no guarantee that change will be successful; sometimes implementing ideas as athe betrayal thought of was visceral. his He life’selse, would work, why never do but want it? to his Through betray reaction that his reframing, to best he work; was able to move to action, he should or shouldn’t take thehis trade, but research. why In he should other actself-sabotage. words, on Understandably, or we he betray reframed had his never thought worry of pattern holding as back one on of ways of seeing ideas workmarket out. views He that loved the escaped processwork. others—and At of one he coming point up took I encouraged with justifiable him to pride write in down in his advance, not why A turning point for Larry came when we realizedideas that his was love of what generating really motivated him in markets. The trades simply were trades. His problem wasWhat that inhibited him he was his could thoughtof not process. losing As move as long from greater as he than idea saw the the to threat threat of action. not acting, he remained paralyzed. calls from others congratulating youit on on your in the trade first when place! you never put not chase the move and buy atday bad sharply levels. higher, When he the felt currencies completely closed stupid,he the failing had to act pitched on to an idea others. that Nothing is worse, he remarked, than getting making changes and sustaining those changes. Viewing his thought process 74 BEST PROCESS #1: ADAPTING TO CHANGE o odeog.Temaueo omn hnsi iei hte they whether is life in things many so of measure that The sense enough. the good mirror eventually not good the enough isn’t good be this isn’t would that that What and What experiences As? enough her? Repeated all self-confidence? with get a her to relationship and for failing your result for As for her result two into the with launch be school to would going from really home you came are own girl B, your little or buddies your trading If your children. to way that speaking yourself imagine do. to they failed something they always something offer or is I better, There done when but.’’ have perfectionists ‘‘yes, could from is, hear feedback often positive I them response The losers. into opposite the frustration. defeats, wins small the small it’s creates enough’’ of day, good focus—and ‘‘not losing are the efforts a could your gets and that and message days that table winning day the several losing on had the you something If left more. you made made week; you have this if matter or doesn’t today It enough.’’ money good ‘‘not is perfectionist the of action. and contemplation between barrier were formidable It alternative a motivation. best. is only destroys perfectionism the the however, than if reality, as less In complacency. motivation, anything as accepting prides perfectionism not justifies perfectionist and He The driven TraderFeed virtue. being the a on on himself as noted have masquerades I perfectionism As blog, perfectionism. those: problem of a as either recognized less than is that however, There pattern, cognitive frustration. another channeling is of ways represent from those people often keep Very that modes change. two are anxiety of worry the and Depression ■ h ruaie itn idamtvto rae hntemotivation the naturally. occur than can greater change and motivation Naomi, problem by with the a experience not powering Find our to so, kitten: back It’s traumatized did place. brought the first He had the what in change. on trading down the to doubling him by internalize but of trader, to number different a a able himself becoming By let for was he going. day if feel Larry change each would the he down, betrayal how keep of rehearsing mentally that to cons actively turn and and order days, to pros in needed the pattern he down but habit writing change, a a into make view Larry new helped light new a in h aywyt e htpretoimi etutv st simply to is destructive is perfectionism that see to way easy The motif The insecurity. by driven is perfectionism that is truth stark The h eiso Perfectionism of Perils The efcins a aewnigeprecsadtr them turn and experiences winning take can Perfectionism . www.MyChart.ir vrtm,the time, Over you’re BEST PROCESS #1: ADAPTING TO CHANGE 75 . We internalize repeated experience (1994), stress that relapse is a part of the change . This is why the right kind of goal setting is so important. Changing for Good Relapse Relapses tend to occur during periods in which we lose mindfulness. I cannot emphasize strongly enough: The idea of small wins means that your focus should not be on perfection, but eating. I prepare myselfhealthiest in options, and advance in and moderation. That decidesustain self-awareness my that enables longer-term me I intention. to will only eat the to situations; weexample observe would ourselves be responding going outthere to to will situations. eat be when A many I’m good on foods a available diet. and I’m that aware people that around me will be Mindfulness is a state in whichobservers we to are ourselves. self-aware, When as we emotionally are neutral in a mindful state, we don’t react actions and leave past patternssteps forever. forward, one Rather, step change back.’’ isfor Many years; a of they bit our are of well-engrained patterns habits. ‘‘two have It been is with easy to us fall back into them. book, process. We rarely make changes in straight lines, where we take new As I mentioned earlier, initiating change is onlypart part is of sustaining the battle. change. Another Prochaska, Norcross, and DiClemente, in their ■ because they keep usPerfectionism experiencing attempts ourselves to in push behavior waysfailure. from that Inspiring behind goals give with pull energy. the behavior threat from of a positive vision of the future. Our internal dialogues frame our experience. Whenin we frame negative life ways, events weadapting create and drains growing. on Constructive, our positive energy framings that are keep important us from improvement—challenging and yet doable—they areto much inspire. more likely goals, by definition, have strong odds of notwins, being they met. Instead pose of the creating threat of failure. When goals are framed in terms of Research from Locke andin Latham changing suggests behavior. that Their goaltoo setting work difficult is finds, or threatening, effective however, they that tend to when not goals be are effective. Perfectionistic into something ‘‘not good enough.’’ on improvement give energy or drain it.activities It’s you engage a in, great and filter theenergy. work for you It the perform. does people Perfectionism drains in not your inspire life, performance; the it turns inspired performance 76 BEST PROCESS #1: ADAPTING TO CHANGE h as ‘’ oa alr;Icntsceda ntig’ n the and anything!’’ at succeed can’t I failure; total a person ‘‘I’m the between the says, difference in who the up Consider caught moment. than the rather of mindfulness self-observers, frustrations that neutral and is become this to connectedness, us for social allows reason found The reduction, been concentration. stress with in also benefits, improvements people has health among practice confer Mindfulness relapse to disorder. preventing depressive in therapy major cognitive effective Teasdale mindfulness-based from significantly that Research was relapse. found meditation of (2000) mindfulness prevention on colleagues the research and to that relevant out quite turns is It willpower? of us it. sustain pattern to behavior willpower new takes a longer see once no concretely it course, we habit, of when a And, plan becomes us. trading a to or coming diet it benefits a Conversely, the to willpower. stick of to us easier robs much that and is and energy, self-blame of negative Such us reward. with robs immediate in thinking solace miserable seek to ourselves easier much is make it worry, we When negativity. trading. one’s for plan of business a sound happiness from a longer-term reward following the quick had overwhelms of contemplate temporarily promise trade never The short-term would planning. mindful they in position engaged short-term a they in enter up and caught get action they market when happens not what does know ultimately satisfaction. traders longer-term rewarding Most our sabotage is can what indeed, and, that happiness tray us is dessert bring problem the The from eating party. is the happy rewarding at us feels make What would weight. What the change. losing at is efforts relapsed many of heart the 132). p. (2012, deliver’’ not we do so happiness, that of things guarantee from a satisfaction for chase As reward book, concept. of promise her important the very in mistake brains a out is points This it’s McGonigal patterns. and depleted Kelly reactive become into muscles fall willpower to action our easy intentional time, in of energy period expend finite a we a over When is run. willpower people short that than the suggests temptation in This resource resist to task. to the told performed likely and not less foods have much tempting who are of they front them, an in eat placed perform not are people then When temptations and self-interest. short-term task longer-term effortful forgoing their at in good acting not and are general in people that o a eoecm eaiiyadtepyhlgcllasta drain that leaks psychological the and negativity overcome we can How is willpower our depletes that factors psychological the of One at lies happiness and reward between distinction (2012) McGonigal’s suggests (2011) willpower on research Tierney’s and Baumeister www.MyChart.ir h iloe Instinct Willpower The ‘‘Our , BEST PROCESS #1: ADAPTING TO CHANGE 77 (2012), The Hour Between Dog and Wolf ■■■ Key Takeaway , cite research that finds 60 to 70 percent of all Changing for Good Our emotional state generally follows our physical state. By quieting the mind and body, perhaps by focusing on deep, regular Relapse tends to occur during overheated periods, when we are least Coates makes a powerfulbattle case are more that biologically many than logically of driven. our actions in the heat of the body, which promote risk taking(cortisol). (testosterone) and As reacting a to former stress trader as well as a neurobiologist and economist, John Coates explains that these shifts are mediated by chemicals within of market action, act outcenters. of In the his fight-or-flight excellent responses book, of their motor our planning and reasoning. This isthat why worked-up I traders mentioned are in literally my outplan earlier of books their their minds. trades They with analyze the and frontal cortex activated and then, in the heat or frustration and our bodies goflight. into Part of overdrive, that preparing overdrive us involves for thecenters fight blood of flow or shifting the to brain the motor and away from the executive centers that facilitate breathing, meditation places people inemotional a arousal. When state a that stressful is event incompatible occurs, with we respond with fear just thinking and feeling,thinking but and feeling. being consciously aware of how they’re person who says, ‘‘Nowthat I’m telling I myself can’t that succeednegative I’m message. at a The anything.’’ second total person The failure takes first a and self-observing person stance—not identifies with the we are most likely to lose willpower and mindfulness and act on autopilot. in relapses in drug and alcohol, smoking,by emotional and distress. eating It behavior is are when preceded we are taxed by upsetting situations that to maintain sobriety when we are sad, angry,drains, or anxious. we Once fall willpower backawareness into to old arrest patterns—and the process. all Prochaska, too Norcross, and often DiClemente, lack the self- mindful. It is onefocused on thing helping ourselves to and our maintain peers. sobriety It is while something very at different A.A. meetings, 78 BEST PROCESS #1: ADAPTING TO CHANGE h anro ata hsqitdhmi idadbd n placed and body and mind in him quieted This mantra. a in word exhalation, of each the manner with ‘‘out’’ himself the word to the his repeat and On inhalation simply more self-suggestion. each to and with the ‘‘chill’’ exercise and more the breath modified becoming his Kevin down, on own, breath, was cooling focus each was sole With His he closed. chilled. that eyes himself with breathing told slow he deep, a was down take could he he how hot, down. was of cool he to mindful that action identified a corrective regularly explicitly was more he Once thermometer become feeling. was Kevin The helped states. ‘‘hot’’ that identified as clearly device we confidence that is and and exercise how the midday, excitement indicating to printed temperature,’’ morning, Key was. emotional day, the he ‘‘cool’’ his each or During ‘‘take ‘‘hot’’ station to thermometer. had trade a he his of afternoon of picture front a in with paper of sheets several of minds.’’ out emotions our the Kevin of ‘‘out just nudged us arousal—not put that physiological distress—can idea and promising emotional a of having form him and against mode streak mindfulness far hot of move a to on trades being allow of he maximum would that of he Convinced defeat. view, times admitting size. before his at largest was in was his nor right It trade was wish, person. would me self-sabotage Kevin a to hidden that as clear confidence a imprudent became with or it operating impulsive talked, he not I from was and prevented he be Kevin that would that As Kevin Kevin to size. else clear or significant stop it trading to made had firm behavior trading this the either of owner The drawdown. and stubborn. hence diligent became largest—and he was was drawdowns—that he he outsized when to size, was vulnerable It most normal stops. his his to out. trading adhered stop religiously was ordinarily that would he positions he when where hold levels and Ironically, beyond size far and extra-large him trade against wrong, would went went he losses. times, trading what those painful large, Every out At experience reactions. would figure stress Kevin in however, back, often, up so caught step becoming loss, without management. trading a continue risk take good unusually could displayed He also He depth the screens. in market sellers and of buyers identifying in workmanlike was he time the h ipemnfleseecs htw efre ohl ei cool Kevin help to performed we that exercise mindfulness simple The had he where Kevin, with exercise thermometer emotional the used I painful a undergone had he Kevin, with working began I time the At of Most career. my in early with worked I daytrader skilled a was Kevin htwsa y-pnrfrm:I hwdthat showed It me: for eye-opener an was That . twsnttedsrs flsn oe u h euphoria the but money losing of distress the not was It www.MyChart.ir any BEST PROCESS #1: ADAPTING TO CHANGE 79 out.’’ Relapse … our emotional experience to move amplify ; if you are not operating on autopilot, you have the Summing Up: Moving from Contemplation to Action When you have a sound trading approach that is working well, sticking Two motivations move people from contemplation to action: fear When I lost weight and got myself in better physical shape, two makes sense when we’reappreciated making is that decisions we in must the heat of battle. Less to a disciplined routineapproach is makes no all longer the working,from sticking sense adapting. to The in that idea the that same successful routine world. trading keeps must When you tame that our emotions emotional shift can nudgedaily you routines can to never action; take you routine out trading of limbo. by following somewhere in emotionalthe limbo fearful between imperative those ofinspiration emotions: the to not need move feeling to to change, the and next also level not of feeling the your development. Only an positive and possible outcomes. Iffor you a have while been but contemplating change remain in a personal or trading rut, you are operating one’s psyche and one’s trading account. of negative consequences and the inspiration that comes from visioning Most traders are aware ofbut few the take need purposeful, to directed keepthe action toward up need adaptation. for with By change changing the is markets, time painfully apparent, much damage can be done to purpose of the questionnaireMany was readers will to have assess skippedonly your jotted the readiness down completion or for of mentally the change. noted questionnaire very general or and generic responses. We began withapproach a to short adapting exercise your trading to to answer evolving questions market conditions. regarding One your ■ opportunity to steer yourself. He found itcognitive, much emotional, easier and to physicalrequires state act mindlessness that in kept a him mindful. desired way when he was in a him in a state where he becamefeeling. very Whenever sensitive he to started how to he get wasa excited, thinking he moment, and simply took closed a his eyes deep for breath, and reminded himself to ‘‘chill the downstairs exercise routine, as mentioned earlier, was helpful in emotional shifts made a big difference. Having my cats become part of from status quo to a new and positive equilibrium. 80 BEST PROCESS #1: ADAPTING TO CHANGE hti ilb osbet emxmlyscesu ihmnmleffort. minimal with successful maximally be hope to fantasy—the possible a hard of be out from will playing escape escape it the an is an that trading it’s it’s cases, those perhaps perhaps all In else; shortcomings; work. and someone failures for past perhaps working routine; from from 8-to-5 escape an working an an from for it’s escape looking ones. is an reasons positive it’s negative for Perhaps for to trading escape. drawn drawn to is drawn is is who who who other one person trader: The the of reasons; types negative two for are trading there that me taught have o usecag eas o’elsn oe,btyuwl embrace will money. you losing of but sick money, you’re losing once change you’re might because You change indefinitely. pursue accumulate not to consequences negative allow imperative. not an now was it alternative; exercising an scale, not that like on felt justify stepped longer I to no and used change drained eating was I level coffee, that energy much my hours too When the long regularly. drinking working was and I and scale ebb. and much, low well the too at as on was fitting weren’t level stepped clothes energy My I my pounds. disgust. 200 near sheer hovered simple, needle was shape into I if way but no devices, there’s own therapy, up. my physical show to doing to left fail friend I’ll when a gym to commitment the a to make go might I to shifts. action similar take make us not into helps Tapping values altogether. and fear motivations her strongest forgetting our the game, on the hand pounced in my She joined moving over. and by took hand her instinct hunting with her played bedcovers, I the Once under people. her of overcame sight Naomi the kitten was to at traumatized but terror the experience, out how social reaching Recall the it. enjoyed and at only good parties not pretty I organizing that into found counting I myself were halls, poured people other where I undertaking As an me. in reticence fail on social not my to the than as desire serve Stronger my fresh to hall. was up dormitory signed a I our do? for creates I director did what social developed—or one So well be. socially my to social as wanted with I not pleased a confident—as was I was to felt I but sophomore, development one college turning academic a individual that As found an experience. consistently emotional from I’ve activity pattern. habit an fresh a developing er fwrigi rpitr rdn rs ak,adhdefunds hedge and banks, firms, trading proprietary in working of Years tsm on,ms fu aeeog bu usle htw will we that ourselves about enough care us of most point, some At back get and weight the lose to me prompted that force second The ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 81 It suddenly hit me that what I most loved about markets was not Recently I found, however, that even the hunt for new ideas was not This distinction is crucial, because it once again suggests that an You can tell what kind of trader someone is by how time is spent outside down, but compiling information into a coherent scenario. When I was analysis, but the synthesisthat of big all idea. I had That analyzed. was It what was I coming was up good with at—not breaking the market find myself demotivated. I spent more time withlittle my to research, spark but that my did trading interests, also something that was surprising. money. That led to taking time awayideas. from The trading and cycle generating got new to big theto point stay where engaged with I markets. found That surprised it me, difficult because to I normally rouse don’t myself gettingmepastatradingblock.Iexaminedmytradingandfoundapattern.After taking some time away fromit, markets, and I make would good get money. a I big would idea, then trade place subsequent trades and lose to make the changes Ithe need most out to of make those in new markets ideas. out of a desire to make fresh idea that brings profitability. Stepping back from tradingmy and opening mind to new perspectives recharges the batteries and energizes me When my trading has stagnated,time nothing away works from better screens and than going takingenjoy into some being idea-generation mode. profitable, I but certainly what is particularly satisfying is generating a important way to shiftcore from motivations contemplation and generating to the emotional action shift that is they can by provide. tapping into there is little appeal toputting trades markets on outside and making of money. Because the theyfor immediate are self-validation, looking there experience to is markets of nothing to be gained when markets are closed. on improving one’s performance. Infade each when case, markets the aren’t motivation open doesFor or not the when trader they whose are motivations not are providing profits. primarily avoidant and negative, discovering new relationships driving markets;sharing ideas the within a mind-broadening network of of colleagues; or the fulfillment of working interest that goes beyond the thrill of puttingmoney. trades on The and making/losing positivecuriosity source of of understanding motivation a might global be macro the picture; the intellectual satisfaction of vulnerabilities. of market hours. The trader with a positive source of motivation has an Those drawn tofit trading of for values, positivetheir skills, reasons identity—an and find exercise interests. of in their Trading trading strengths, becomes not an an an avoidance ideal expression of their of 82 BEST PROCESS #1: ADAPTING TO CHANGE oee,cno eyu rmr oiain o naigmarkets. engaging for motivations primary your be cannot however, further. myself wounding and losses larger needs traded creating and unmet frustration, tilt on of my gone out have to might I frustrating process, my so revamping of proven instead that, have making rut, of might pattern trading money the my Indeed, losing into out. gotten me and pull had to I little once been getting have situation, would a not there such was In to I void. markets markets the Perhaps needed fill and needed person. to life my a now of parts as various and in me excitement life and validate gratification in or successful money strengths. me of been make actualization not the had than I needs Perhaps deficit from more say, would moved I period, short action. relatively significant a taking In to ideas. demotivated synthesis; being big for from reflect time to without book had the trading into all go could generation trade idea No between myself rhythm trading. a shifting and create to By able native was mode. a thinking—I the writing been of mode always in in has was thinking strength—writing I information-processing by an when to simply light perceived to insights. never came important to abstract have led would also it I enjoyable; Connections this any was for only intended researching. Not not and audience. and observing stream-of-consciousness been fairly had was ideas, I market writing all my The synthesize out writing to began writing I the app, using Evernote the of help the With u lotecetv n:Ilv okn tabodrneo nlssand analyses of opportunity. range bring broad that a ideas at into looking them love synthesizing one, I then scientific one: the creative just unprofitable, not the net was also was motivation but core I in My picture, patterns engaged. bigger less trade a also to of but devoid attempted were and that granular analysis with too my well quite became did I and When ideas them. overarching generated I mode, synthesis in e’ a yudryn oiain o rdn ae sMaslow as came, trading for motivations underlying my say Let’s process. trading my in change important very a to led recognition That rdn a eqieectn,adi a eqiepotbe Those, profitable. quite be can it and exciting, quite be can Trading oigcoe oorsrntscnpoieteeoinlsitnee to needed shift emotional the action. provide take can strengths our to closer Moving e Takeaway Key ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 83 Taking and Sustaining Action: Identifying Opportunity in your markets over the next several years? several years? Where, specifically, do you perceive the greatest areas of opportunity How, specifically, do you expect your markets to evolve over the next ■ Self-Assessment Exercise ■ best responses: into your perceptions of both opportunitiescan and you threats in pursue markets. opportunity How andIf avoid you threats did in not the answer next the several years? questions earlier, please now jot down your Let’s go back toare that pursuing to earlier adapt questionnaire to new andany and strategic review challenging market review the conditions. of As actions with a you business, the questionnaire is designed to tap and capacities. ■ catalyzes the transition from contemplation toin action. limbo We and don’t autopilot operate if we are tapping into our most profound values something beyond immediate excitement andthose profitability. drivers Very have often, reflectedenergy, even core when strengths markets and are interests not that paying provide out. It is that energy that periods. When markets change profoundly, thetrading work of is rebuilding neither one’s excitingknown nor who immediately have sustained profitable. long-term The success have traders always I’ve been driven by There will always bethere low-volatility will always markets be that periodsyou are of through the drawdown. not good Thrills times, exciting, but and leave and profits you will nothing to carry draw on during lean 84 BEST PROCESS #1: ADAPTING TO CHANGE ■ ■ ■ ■ ■ nfldge facrc hte ueso elr eeeeuigwith executing were sellers or buyers mean- whether a accuracy with identify of could degree I ingful series, time these trade-by-trade of a most in that transactions of sequencing clear the studying became those After it markets. with discretionary ‘‘footprints’’ in distinctive algos, spoke leave large, these I developed among As and trades algorithms. used execution who of via share conducted growing was traders a that ago, while observed A I participants. market knowledgeable from response ‘‘aha!’’ traction—not established. gaining firmly were were they they as once ago, more or those decade recognized a who developments those are represent stories investors/traders. don’t success they individual Today’s case, information. the and new be would to ones continue institutions well smaller may trends financial of those While large expense that the at or would grow computers trading of by proportion Perhaps dominated increasing future. an be that the saying into by trends responded recent you most detailed, clearest, than general the more are extrapolating responses your traders, If opportunity? many the market like future are greatest with you evolve of to areas start markets perceive expect you We’ll you do do where implications. and How questions: their two and first the responses to answers those at look a hlyfehprpcie o nieEi’ iinfrterestaurant. the for a vision represented Emil’s they unlike perspectives; not perspective, old provided fresh my They wholly on markets. improvement of an view than charts. my more volume shaped and profoundly price analyses traditional Those viewing when possible provided not that pressure insights selling and pressure buying of to measures led information promising this Aggregating time. in point any at urgency particular o edt pa n htd o edt eerht anclarity? gain to research to need do you whom do with what above, and the speak to to answers need specific you clear, have don’t you If future? the detail for in you examining prepare you help are to information market or markets new you What threats learning the the avoid master and to opportunities basis, the foresee? regular exploit a to on needed now, curve doing the you with are pace What above? keep noted to threats trading and opportunities, your markets, change in your to shifts need to you threat would of How source year? greatest past the the in been trading has specifically, What, togasest hs usin,o h te ad lctan elicit hand, other the on questions, these to answers Strong take let’s questions, self-evaluation the answered you’ve that Now www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 85 To do new things, . New observations spawn new questions revolution. Hyatt’s studies may lead to the recognition that One of the best ways of answering the first two questions is to see what Imagine executives at companies like Samsung or Hyatt responding Two elements contribute to clear visions of the future: new observa- but operating fromreturns that in framework segments blinded of the investors stock to and meaningful bond markets over many years. rates and continued purchaseresult in of bear government markets in debt—will bonds unwind and stocks. and That may eventually occur, making money and who has not. Asassumptions I I write have this, heard one from of traders therepression’’ most and imposed common investors is by that the central ‘‘financial banks—the holding down of interest sentences, filled with vague generalizations? has been working in markets and what has not, including who has been insights enable thethey companies succeed to in actively thetheir pursue present. responses to the How the long future, first would two even questions they as above stay consisted in of a business couple if of aging Baby Boomer customers withtoward discretionary income convenient, are gravitating all-in-one destinationadventures resorts and that cultural provide experiences unique amidst the usual amenities. Such integration of computingquantified and self mobility, as phones become part of a evolve. They collect data on theirthey customers; study they conduct retail focus and groups; lifestyle trends.reveal Fresh emerging observations demographic at trends Samsung that may will necessitate a more radical to the first twohave questions been in our studying exercise. consumerand The travel trends odds and and are have high preferences a that in strong they sense smartphones for how their markets are likely to you have to be looking at newand things those can generate fresh answers. at the same thingsrelying in on similar the data—the same odds way—makingstatus are quo strong similar that views, observations you’ll hampering remain and any mired efforts in at adaptation. consumer preference data that simply had notconducted existed manually, when via ordering was wait staff and printed menus. If you’re looking ently because I was looking atthe different market future data. was Emil’s similar: adaptation His to led study of to diners new and their observations. favorite His restaurants tablet-based ordering system generated The new information came from transaction-levelto data. a colleague As at I the commented time of mywithin study: the ‘‘Everything of interest one-minute is bar.’’ occurring Quite simply, I was seeing markets differ- tions and new information. In the previous example, thecame new from observations studying execution algorithms and their transaction patterns. 86 BEST PROCESS #1: ADAPTING TO CHANGE htIfudwsntiglk htIhdepce:Tecce were market. cycles stock related The more expected: the were and had of embraced trading I past downs what my than and like duration research in nothing ups of longer was cyclical period found the extended I an tracked What to I been led which had This in that stocks. of in patterns patterns short-term reversion short-term particularly mean the profitable, proved of longer during Many no changed reliable absence. had by markets of occasioned that found years hiatus I a my fund, hedge following a trading at work to rigorous full-time a returned in I patterns their When studying manner. markets, those re-search us of many is creativity why reason major a is markets. this changing book, As to place. the adapting its to in take essential later to waxes see in another shall and adaptations wanes we to key theme make Learning one us as firms. helps trading, dollar our lenses domestic multiple US small through of versus markets impact view exporters differential large the on to strength underperforming due are ones shares capitalization capitalization At large smaller following. this, institutional writing little of have time that the stocks among and patterns volatility in found of be can opportunities Fresh to price. were outright we on if solely apparent focus be relative not would performance—how performing that are ideas generate relative currencies can or others—we to world, on the of focusing regions stocks, instance, some For ways. unique dpain htcudb sflt ortrading. your out to figure useful to be way could great that a adaptations is an success with be their traders can reverse-engineering with toward which discussions eye into the of Going some own. from your practices, differently into with best incorporated Talking doing their networking. of reveals are benefits traders great winners the experienced of the one is hasn’t, what too, who This, and see losers. money to making been possible has who it’s of returns the tracking By ayo ssac hog akt osewa hyr on.Ntas Not doing. they’re what see to markets through search us of Many in markets at looking by identified be can opportunity Sometimes o r otlkl ossanpotblt fyusuytescessof successes the study you if profitability sustain others. to likely most are You e Takeaway Key ■■■ www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 87 Identifying Threats Taking and Sustaining Action: Another important advantage of research is that it taps into some This is one of the great advantages of research: It can generate fresh first to go when markets traded defensively. Clearly this was a threat equity markets, the microcap market allin but those dried shares up. Speculative was action fine during bull market periods, but was among the success to the fact that market-making algorithms werethose not markets, as which dominant in permitted a cleaner readdid of very supply well and for demand. a He number of months and then, during a risk-off period in It is notavoid enough threats to to our identifyexperiencing trading unusual businesses. success and trading One microcap act trader stocks. He I on attributed worked that opportunity; with was we also must ■ process becomes natural, as the work gives energy. I might have felt aboutof leaving opportunity behind that my drives former any trading.to entrepreneur: It life. the is Once desire the operating to sense in bring that a entrepreneurial vision spirit, sustaining a change bread and butter and focusThe on excitement larger ideas of grounded seeing in new the ideas cycle work. play out has eclipsed any regrets of those core motivationshelp us that sustain not change processes. only Forresearch led the move me most us to part, put the toward aside aforementioned the change, shorter-term but trading that used to be my pipeline does notcertainly guarantee ensures stagnation. success, but the absence of one almost important component ofsmart adaptation phones, and in menu business. items areresearched Before launched, and they automobiles, have tested been on extensively multiple segments of the public. A research insights that open the doorcompanies to to new opportunity. pharmaceutical From firms, consumer goods research and development is an my trading evolve fromperiods. shorter Searching term led to to researching longer, led more to variable adaptive trading holding practice. Interestingly, however, the cycle phasesthat displayed helped structural me similarities estimate whetherbottoming we phases. Only were after in seeing this rising, research topping, play out falling, in or real time did to such structural factorsany as particular volatility, fixed correlation, durations. andmarket, In sentiment but other than were words, aperiodic: cycles They appeared occurred over in varying the time frames. 88 BEST PROCESS #1: ADAPTING TO CHANGE odns smresmv nvoetwvso uigadslig The selling. and their buying of with waves that stick violent times to in at move managers markets crowded trend-following as so for holdings, become difficult positions becomes others. and it for views threat Connectedness a example, exits. managers, for money For some runs for mass scrambling opportunity an themselves to provided found led degree, extremes significant positioning any when to media involved not social traders in older particularly herd. connected, investing less the were read out to who and ability Traders in their on get based to nimbly, able most were positions they of as connected, traders most same performing were best the who the those and of were conversations Many portfolios. the the in in appeared up positions came or research Connecticut, same suburban was The York, but I New London: whether firms in manager matter within money didn’t a just It with speaking continents. not across another, and one companies across with connected how were find to managers surprised was portfolio I I funds, When hedge with world. work trading began the first in observe already we interconnectedness the from advice can they standardized when or advisers to robo-advisers. guidance fees high crowdsourced pay credible, will not people receive It’s that me advisers. to investment clear traditional all to individual at challenge the hedge for a opportunity also virtual tremendous but a a investor, asset is as world, This the themes. operate of and regions to classes, multiple investor across portfolios average that constructing see the fund, to enables difficult not trend It’s acumen. this their commission develop for who retail investors, followings single among and shared reputations a are portfolios for and all themes The views, fee. and Motif themes as express market to ETFs such particular and stocks firms of baskets purchase Brokerage to investors investment. allow Investing social I’m is trends the tracking of One currently challenging. more that investing correlations long/short increased made to have contributed also cost-effective have in funds classes asset these and but sectors ways, market stock of variety opportunities traditional a great trade of created to have makers opened (ETFs) the phones funds Exchange-traded imperiled smart devices. also to phones but cell opportunity, basic phenomenal from transition The threats. with trading microcap his opportunity. supplement of to sources needed other he and business, his to h otne ieo oiltaigadivsigpoie oincrease to promises investing and trading social of rise continued The largest the pose also opportunity of areas greatest the Sometimes www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 89 : Longer or shorter holding ■■■ : Markets, market sectors, or stocks that appear to : More relative trading versus directional, outright trad- : Fresh fundamental information; new information about There is so much you can change—in what you follow and how What shifts do you need to make in your own trading process to Yet another market threat in recent times has been the crushing of ing; greater emphasistrading on of trading mean volatilitytum/trend/continuation reversion/range/reversal patterns versus patterns price versus momen- direction; New strategies New time frames and times of opportunity New markets to trade New inputs for finding opportunity and executing trades periods to adapt to shifting market conditions; changes in times of day be well-positioned for benefiting from theon developments the you perceive horizon supply and demand inmarkets, including your shifts markets; in market novel trends perspectives and themes on related you trade—that the choice canwhere feel to overwhelming. focus? How do you decide ■ ■ ■ ■ adapt to marketpossibilities changes you that might contemplate threaten are: your profitability? Among the a certain level, helooked for pulled setups back in individual on stocks his trading above stock average volume. index trading and instead and progressively scaling out whenmoved to trades more went volatile assets, their where way—andplay momentum out. patterns others were One likely trader to I know has used VIX as a gauge: When it got below and took their P/L negative.some Of those traders experimented who adapted with successfully, different entry execution—entering large extension for their trading foundThis that was such follow-through particularly was threateningpositions. missing. for Just traders as who they tended added to to scale winning into trades, the markets reversed volatility across assetsFor in a the number wake of of years, traders activist who central relied bank on policies. momentum and price choppiness of market movement, exacerbatedplays by havoc positioning with extremes, stops andkeep sound drawdowns entry small execution, while riding making longer-term it moves. difficult to 90 BEST PROCESS #1: ADAPTING TO CHANGE htptenhdntbe paett i eoeormeig:He meetings: our trades. successful before his underlying him patterns the to out apparent break profitable. to been be thought to never not likely more had much pattern was he That size, moderate in entered he trade When posi- scalp losses. his his a was of up proportion sizing large It that a for see universe. responsible to was trading Joe tions enabled your that inventory per- in an useful such opportunities particularly precisely and a threats how with and on you where provide spective (and will money careful money) losing A making you’re decisions. you’re how poor and more where particularly are of make that inventory decisions we make times, we other Sometimes poorly respects. trade adaptive; all we in that time rare the is It all framework. solution-focused the to circle oaiiyadcreainsit nmres n hsba ob quite be to bias this to find adapt I and markets. identify to in failing shifts logical of correlation more result was and problem the volatility and the was money however, It making fact, psychological: of of than point cycles In through it. go wrong losing repeatedly something then were to be problems psyche to his had his that there with assumed perspective, his he From me, psychological. to engaged able manager was money the he regimes, volatility trends in volatility shifts losses. monitoring his to attenuate carefully significantly book more his By adjusting periods realized. volatility and rising had during he risk portfolio than was overall he more correlations, those much of taking Because one. as correlations diversified base. behaved a points, longer the like no looked those portfolio at what At and him significantly volatility. increased leave occurred positions market and among losses high the back large of that roll clear the periods became it rolling during it have trading, Sisyphus his to mythical examined only we the When hill of More the image profitability. up the stone his had I reduced once, significantly than that experienced he drawdowns however, often, so painful Every months. most in profitable was aytms h nwrcnb on nyu w trading own your in found be can answer the times, Many hswsapriual neetn iuto eas,a h time the at because, situation interesting particularly a was This and trades his on rate hit solid a had manager money another Yet aytms o r led aigaatv hne nyu rdn and trading your in it. changes recognizing adaptive not making already are you times, Many e Takeaway Key www.MyChart.ir .Thisbringsusfull BEST PROCESS #1: ADAPTING TO CHANGE 91 Where to Look for Fresh Directions This is where networking with traders can be especially helpful. By In the case of my trading adaptation, the inventory of profitable more sensitive to interrelationships among asset classes. emphasis was on inflation versus disinflation withinon the global United States, economics. not That made an impression and helped me become strategists who work at hedgemonetary funds policies and around expected a theon lively world. oil discussion Instead, and of commodities their and discussion factors focused that were influencing prices. Their at—and also whatbecome leads more them sensitive to to shift importantbank changes their policies, in focus. and economic This geopolitics. data, central can I help recently you met with a group of macro networking, I’m talking about actually gettingtalking together shop with traders with and them,When not you spend merely time exchanging with chat traders, messages you find online. out what they are looking difficult to chart an adaptive path.assesses The this final issue: question Do of you the know questionnaire where to look for tomorrow’s answers? Many times, it is not clear to us how markets are shifting, making it ■ Markets were moving inthose longer-term and cycles place and, immediate iflikely price to action I be into did chopped their up. not larger adapt context, to I was seemed like random performanceI pulled was out actually successful quite andmuch emotional unsuccessful meaningful factors trades. as once cognitive In ones my that impacted case, my it performance. wasn’t so formulate overarching scenarios, I wasin much meaningful more likely market tomarkets, moves. participate heedless When of I a traded larger context, patterns I setting inevitably up lost in money. What The likelihood of losing money was directly proportionalof to my the trading. frequency When I took the time to synthesize my market research and emotional upheaval as the reverse, especially among experienced traders. and unprofitable trading revealed that time was a crucial element. often, it isprevents not. us Assuming from that takingchanges. a trading In hard my problems experience, look it is are at just our as emotional common trading for ones poor and trading to making create needed common among traders: Insteadways of of adapting looking to these, for they threats assumehas that a in poor psychological performance markets origin. necessarily This and can certainly be the case, but surprisingly 92 BEST PROCESS #1: ADAPTING TO CHANGE xeine rdr ontfi eas flc fdsiln ra absence an or discipline of lack of because fail not do traders experienced that releases trades. data short-term or profitable exploits to earnings leading day to consensus, off underreact of well to are time investors traders on on event count Similarly, based may The participants. market returns. moves among subnormal patterns market behavioral to segments lead who typically and trader stocks the sentiment, among bullish of breadth, volatility upside majority waning low greatest of their the periods have often Similarly, When markets potential. defensive, advances selloffs: and market bearish violent Sustained is public them. from patterns from follow those profiting observe frequently to of possible ways often is identify It and patterned. are that ways in indicator. of standard informative—measure the sensitive—and than more US breadth The far all a averages. being moving across up their stocks ends above latter track trading I percentage the breadth, to and of look exchanges signs others While for mousetrap. lines better a advance–decline building from come informational times, can Many edges charts. bar informational at potential looking merely a traders has over day edge the throughout see trading agricultural stocks to all the downticks and among data in upticks aggregate edge satellite can who informational trader to The an markets. access commodity has has with patterns who crop value and trader predictive weather and The holds markets. trading information to the that respect within when shared come world widely edges investment not Informational information edges. them: obtaining rebuild behavioral from and and businesses, their edges build informational markets, changing to adapt to realized. been is actually pricing) has that options volatility in the to anticipated relative volatility opportunities high (the momentum volatility identify implied and when stocks and realized among just between was volatility relationship It the implied emerge. examine to will me relationship led fresh that a testing if such while see a much to in too periods not once time there’s but Usually varying exciting, value. over predictive out meaningful them any test yield will they I when ideas, Often such trading. own read my I to apply could way that unique momentum momentum a at of suggested looking work review of The SSRN. a via read found I I that can strategies Recently, trading that charge. papers of research free of downloaded source be fruitful particularly a is SSRN finance. orpa hm hti eta oti ok h aoiyof majority The book: this to central is that theme a repeat To behave markets in Participants behavioral. is edge of form other The traders enable that edge of sources two are there sense, broad a In applied in research reading from come also can perspectives Fresh www.MyChart.ir BEST PROCESS #1: ADAPTING TO CHANGE 93 ■■■ is grounded in the ABCD themes: Adapting Trading Psychology 2.0 cultivate those virtues? That is the topic of the second section of this book. they fail tois appreciate not the enough opportunities toThat and requires trade threats diligence, today’s openness, around productivity, edge; them. and we creativity. It Can must we also find tomorrow’s. of emotional control. Skilledreason traders that fall skilled by restaurateursthem the do—they successful wayside keep until for doing it the what same works has no made more. Attached to their old ways, understand and exploit ever-shifting market dynamics. foundation of our current successes.talents, Understanding skills, interests, our and strengths—our sources of excellence—is essential toour defining future. Our goal is to leverage the best within us, so that we can Successful traders learn to generate newthose sources into of their edge businesses. and But incorporate how canre-master we them not only as master well? markets, Adaptation but requires building the future on the to changing markets;Developing Building best practices strengths; andsufficient processes. Cultivating We’ve to creativity; just develop seen and an that edge it and is not assume that it will last indefinitely. www.MyChart.ir CHAPTER 2

Best Process #2: Building on Strengths

Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, 95 the not-at-all. … The world you desired can be won. It exists, it is real, it is possible, it is yours. Ayn Rand

■ The Trader in a Slump

Charles had been a successful trader for years. When he came to his new firm, he couldn’t have been more excited. He had access to much greater capital and world-class research and analytics. He was surrounded by bright, talented colleagues and enjoyed support services to assist with every facet of his trading. Everything for Charles at his new setting was perfect, except one thing: He could not make money. Everyone at first attributed Charles’s slow start to the transition to a new platform. After all, risk management policies were different, and there was a learning curve associated with new software, new resources, and new colleagues. So no one worried after a few months of tepid results. But a few months became half a year and then stretched to a 96 BEST PROCESS #2: BUILDING ON STRENGTHS n ayohr a undtetikeo neetit full-fledged a into interest of trickle the turned subdiscipline. has others many Seligman, Martin and Csikszentmihalyi, Mihalyi Dean Diener, of Ed work Simonton, The Keith research-based. of highly facets positive become in has was interest and psychology the self-actualization human time spirituality Over on time. studied its work who for whose original Jung, startlingly Maslow, Carl Abraham from to theorists, creativity, of variety a to of name the i rds i redrsodd ‘htaeyudig rdn iethat? know!’’ of like I trading one Charles doing, the described you not are Charles That’s ‘‘What from responded, When comment friend him. his a trades, with didn’t but his He stuck himself, firm. colleague sabotage larger to longtime and anything a new doing the was at he success think feared he inside, deep if, he money. suddenly make and been to firm had able new switch longer his of light no his door was a the disrupt though entered not as he new moment seemed would the simply the thrown he It of once. that use at so all selective methods specifically made colleagues he and Indeed, resources him. environment for new The distracting ideas. wasn’t generating for were processes markets his analyzing was were for as he methods similar, when His setting. done old had his he at what money from making different anything doing was he feel of portions painful—pullbacks. good still missed normal—but he to entered, himself he exposed and before became markets moves direction for he his waiting As in By wrong. move further. on plain declined to put rate just to hit His were failed his capital. ideas he risk-sensitive, his bled Sometimes more been. times slowly ever other he had ideas; Rather, it it good hole. than So lower a failed taking. was in he risk rate deep as his hit was and, up he risk bumped modest that significantly only never wasn’t taking he by traction, firm gain new to his at started He They more. slump. any his problems about transition spoke Charles’s quietly of spoke one No year. full hr sarvlto fo ntefil fpyhlg,adi osby goes it and psychology, of field the in afoot revolution a is There htwsteqeto ebogtt u rtmeeting. first our to it? brought know he even question didn’t the and was changed That had Charles that be it Could wondered He psychologically. himself doubt to began Charles Slowly, didn’t he that was however, Charles, to perplexing most was What money. much too losing not in diligent was Charles part, his For oiiepsychology positive oiiepyhlg wseryinspiration early owes psychology Positive . ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 97 but because . What if problems It turned out that my medical student had been identified with a I first glimpsed the implications of positive psychology when I worked This has opened the door to a radical revisioning of the problems So what is positive psychology? At its broadest, it is an attempt to texts for many specialized medical volumes and little access to people provided him with audio booksto the and medical learning school, supports. the Once resources he were moved limited. There were no audio almost completely dyslexic. This was not aas particular he problem lived at in home college, and wasHe able to also have people had read him access his text to material. a very good special education department, who different from Charles—a change of setting and a decline in performance. learning disorder. He could process the spoken word very well, but was very organized, and very motivateda to college succeed. undergraduate His was academicfirst record excellent. year as And of medical yet, school, relatively he early was in struggling with his poor grades. Not so students I met with were simplywork and trying the to impacts cope of with those theyear student stresses stresses particularly on of stood their their out personal in my lives. experience. One He first- was very bright, school. As onestudents would dealing expect, with these high were performance largely demands. bright, Fully motivated half of the in life. as a counselor for medical students and residents at a Syracuse medical are the result of too littlethe positivity, case, not the any role excess of of negatives?help psychology If us is that not become is so more much of to who help we us already change, are but when to we are most fulfilled people face. Perhaps we fall short,we not fail because to of enact our our deficits, strengths and draw on our greatest assets turned on its head.the Steeped new in psychologist the canachieve research find supernormal and ways outcomes. practice of of helping average, positivity, normal people a variety of techniquesparadigm to of increase seeing the a positive psychologist aspects to of work life. out your The problems old has been tribute to our lifehealth: fulfillment. happy, As successful a relationships; result,people eminent with positive creative high psychologists levels geniuses; study of and subjective well-being. This in turn has led to and much more. The keypositive insight aspects of of the our positive psychologists experienceconflicts. is Rather, are that we not the each simply possess the competencies result and of capacities that resolved con- understand positive aspects oftentment, health, human relationships, productive experience: work, happiness, creativity, spirituality, life con- 98 BEST PROCESS #2: BUILDING ON STRENGTHS i td ru n,b h n fhsscn er a civdhonors achieved had year, and second his other, of each end the from by learn and, to contributor group other, significant study a his each became He quiz ways. fresh in to information effective process students very a the were groups for The response. way groups eager study the form by record to gratified audio community was student and and the readers to hire out reached to I parents lectures. his all and school the with worked u a eeoe raihsneo ml,tuh n ieto n can and see, direction can’t and home. who touch, multi-floor smell, Mali, was a of cat truly navigate sense he calico freakish a disability; blind developed a my has had like but he was that He absolutely much abled. an so differently was a wasn’t he was aloud, It he material student. learn, the stellar to process read could to he that If had for student. he something, compensated bad If memory. somehow heard auditory but he incredible ability, an Once reading with memory, memory. lacked photographic recorder He a one stuck. tape have At it a people me. some had for as student ideas Just the this me: finished struck instances, material it many the on in point up and, picked my he heard of aloud, had notes all the he nailed read I and only as not questions soon read he good As to questions. amazement, very my proceeded asked To but I section. attentively, by service—and listened section note-taking him, a to material to the access notes— have and books did the came he Out aloud. material the anxious over was go and he together And all. course. important at an strengths in his exam to major play do-or-die a not about did was that he setting Rather, problems. a constructive— psychological in was particular any attitude had His he school. feel load medical didn’t reading I of monster years the two address first adequately the would of this that me to butitwasn’t clear Icouldhelphimbeefupavailableresources, Yes, challenging. was a he just in me, test to important an came had he and time courses days. his the few of By one failing him. of to afraid books very the read could who h tdn ne ppsigtets ihfligclr n we and colors flying with test the passing up ended student The olnttiko ntiges od,s ugse esedtime spend we suggested I so do, to else anything of think couldn’t I was one this but problems, people’s by stumped often not I’m aypromnepolm r h euto aln oacs performance access strengths. to failing of result the are problems performance Many e Takeaway Key www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 99 . And, very often, trading ■■■ Once he could access his strengths, he was aAnd success. so it Without was those for Charles. As we explored this idea, it became clear that the interpersonal cues of What I came to realize was that this was every bit as disruptive When Charles came to his new firm, he was hired as a solo money BythetimeImetwithCharles,Ialreadyhad19yearsofexperiencewith strengths, he faltered. in several courses. Once schoolworkclinics, moved and to hospital the floors, patient much of care theand settings, learning discussing was and by observing, he doing, performed very well. market interactions were an important part of Charles’s timing. He was him develop his best trade ideas. process. Trade ideas unfolded with interaction. Insiloed. his There new was setting, limited he interaction. was Withoutideas conversations to and flesh people out to read, he no longer had access to the cues that helped quite effective in processing information interactively. Hehearing benefited himself from talk, and he learnedhe from drew the responses on of these others. cognitive When strengths, idea generation was an iterative student. Charles was notreading only people outgoing; and knowing he when was theyheld talked also their uncannily genuine books and good convictions. when at they Like my medical student, Charles was also been a team-based activity at his prior setting. Now it wasfor his task Charles alone. as the switch to the medical school was for my dyslexic able to perform this researchmeant on that his he own, was now the working absence in of relative team isolation. members Idea generation had manager. At his previous shop,of he had researchers access able to to an assistant delve and into a group ideas for him. Although Charles was uncanny ability to sort through information toHow detect we a trade macro is big intimately picture. linked toproblems how we are think. the result of failing to draw on our signature cognitive strengths differ in their cognitive strengths.others Some are traders incisively analytical. are I’ve startlingly worked intuitive; have with portfolio unusual managers who abilities to read market patterns and others who have an time, I learned one very important lesson:important Cognitive skills to are performance every as bit as personalitytion traits. in People very different process ways, informa- as we saw with our medical student. They also medical students and quite a few subsequent years with traders. Over that 100 BEST PROCESS #2: BUILDING ON STRENGTHS u.H ol lopc po hmsta eeaott eoea become to about were that themes on stop up to about pick and also positions could in suffering He were out. traders when read to able i l ontv tegh,hspromnepce padh regained he and develop up trading. picked him to over performance help excitement return his his the to strengths, With able cognitive sell-side. was old the large who his on A assistant, coverage firm. with an new conversations of his useful hiring within his people right was the step to out building to reaching team efforts the involved of our Some turned Embedded returned. enthusiasm we markets. about Charles’s When building, insights for team trends. good market feel unusually and gained so-so participants he a market setting, team with dynamic trader, isolation, a In mediocre within own. running his lacking a on quarterback plays was a generate he not like could was He his he receivers. used team, or well backs a as he beliefs Without and their own. assess reactions, his to as their assistants and and researchers traders with interactions observing on thrived He lost they cues, those without markets. screen for a feel of their front buying/ in and volume Sitting about interest. cues selling important an with them when sounds provided and struggled pits his sights the who The of of electronic. traders went probabilities floor making market the the of like share calculating increasing much and simply very limited by was were the He edge cues reading hands. those an was game, find edge online couldn’t his the he game that In table. online explained was the the He who around master up. tells mine to it tried of gave player eventually friend poker and A tournament early. good them very a enter and consensus growing sbfr eas fnwcmimns te ie,tesiti holding in shift the times, Other commitments. new life closely of as of because markets before because follow as to occurs possible this longer no Sometimes it’s period. Perhaps circumstance: holding her or his change further them taking by strengths. worse signature problems their make from traders can that slumps changes during the the Similarly, make from success. stray their control. can underpin emotional they that strategies, of trading strengths or lack settings all a their or Not change discipline traders experience: lost When of Charles’s result in the lesson are problems important an is There ■ hre’ kl a smc naiiyt edpol smarkets. as people read to ability an much as was skill Charles’s omneapeo hspolmi h rdrwosesto seeks who trader the is problem this of example common A h tegh r e oPerformance to Key Are Strengths Why www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 101 because it was no —the trader who trades scalper Conversely, when investors try to narrow their time frames, they As the short-term trader moves to longer time frames, the quick Now consider the investor. Investors typically perform in-depth Let’s look at the extremes. Take the Why is this? short-term P&L, the trading process became frustrating research markets and assemble hershe findings had into to market focus themes. on When chart patterns, support and resistance levels, and to manage her positions on shortermarket time choppiness frames took to her out avoid of drawdowns.she her As grew best increasingly ideas frustrated. at Her horrible price unique levels, strength was her ability to new firm, risk was managedcut very tightly. after A losses trader’s risk ofpractice taking only could was several be that she percent continued of to capital. trade What big-picture that ideas, but meant now in had that is their strength. Itrader vividly at recall a working hedge withshared a fund her very who skilled research had macro with achieved me, a superior and track it record. was She surprisingly original. At her modalities that are not distinctive strengths. speed their thought processes and can short-circuit the explicit reasoning activity. For the short-termthe trader, skills of that pattern can recognition mean and getting relying away on from information processing short-term position trader, holdingneeds positions to for overlook short-term hoursthe patterns to scalper. that a With are the few the extension days, bread-and-butter of of time frame comes a shift in cognitive reads of market patternsedge. become What is as signal much to as the source scalper of is distraction noise as to the investor. Even the of cognitive skills fromimplicit and pattern perceptual; recognition: the former The isanalysis explicit latter and and reasoning. grounded is in much extensive more valuations. Many investors I’vedetective work: worked Most with of their compare timethat is their they spent efforts assemble digging for to over pieces time. to a Notice puzzle how this is a wholly different set research to help them identify macroeconomic trends and/or compelling that show how demand and supplyessence line of up pattern at recognition, key the price abilitymoving levels. to markets This make and is quick act reads the decisively. of rapidly very short time frames, secondsfrom to the minutes. order Classic book, scalpers observing rapid derive shifts cues in the depth of market screen period comes from a desiremoves. to Very harvest often, returns the from switch longer-term of market time frame comes at a fearsome cost. 102 BEST PROCESS #2: BUILDING ON STRENGTHS yszn onhrpstos ieighrsos n sn pin to options using and stops, her widening positions, her down sizing by rewarding intrinsically longer ephrssansaigpwri ogrtr views. longer-term in power staying sustain her help uhfi see osdrd hsrslsi nuuulyhg alr rate. failure high unusually an in results This considered. the no even of however, is strengths often, fit the Very between taught. such practice. fit being good approaches trading a the good is and there trader a models if student takes and well work manager wing can portfolio this her of or or All trader his a under where trader desk, junior may trading efforts the training Alternatively, at and own. occur trades their on and ‘‘setups’’ them good apply to of chart expected examples as efforts such shown trading, Many are to short. Students approaches fall specific reading. very education on trader focus at traders train efforts to many so why see can opportunities. market find fresh and to capacities them best our- apply our remake to leverage to way to a is try challenge we real their the drawdowns, generated when by that change selves, strengths Frustrated traders the success. with that initial touch their lose is and problem markets to common approaches and a lackluster weakens, be formance would play out. my stand sport, would it one another, In court, In unmotivated. opportunities for basketball turnovers. looking a and create the right, on or whether to left me gauging the to Put defenses, better activities. moves reading opponent the immediately I’m for and feel however, little no domains, those have have in fall but I not interesting, do and skills track My either. or basketball master bowling or make play like to motivation moves sport a improvised find and perpetual I fascinating. plays the The and planned teamwork, basketball. our of and effort into enjoyed combination individual us of long combination tap have the they movement, I because motivations. performance, to deepest essential are Strengths new prcaeteiprac fsrntst efrac,we performance, to strengths of importance the appreciate we Once per- their and markets about excitement their lose traders When lesson: important an me taught manager portfolio this with work My eaems p ofidfllmn nteeateto u strengths. our of enactment the in fulfillment find to apt most are We h a nyal ooecm hsproblem this overcome to able only was She . e Takeaway Key ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 103 Without such structured programs, trading novices are typically left Imagine a trading education that grounds students in economic, Compare the education of traders with that of medical students. yield success in highly challenging and competitive financial markets. student learning clinicalonline practice courses? Oddly, through we reading expect and an equally disconnected sparse infrastructure to to their own devices in discoveringthrough ways their to capital trade before successfully. Many everup run finding in their frustration optimal before niche; success many is give achieved. Can you imagine a medical higher than the abysmal rates typicallyhave achieved, the because ability students to would select the fields most conducive to their success. market making and short-term trading. Someinterests would in develop specialized individual marketsmacro generalists. or The success asset of such classes; an others educational effort would would be become far great deal about hisanalytical or skills her strengths mightspread and trading; those gravitate interests. with well-developed Those to intuitive abilities with might quantitative pursue strong trading, options, or and across variouseducation, the international trading student, markets. like In the medical such student, would a learn a comprehensive currencies, fixed income, equities, options,term short-term investment, trading, relative longer- value and spreadhybrid trading, trading, quantitative discretionary trading, trading, market making, and trading within draw on those. monetary, and trading fundamentals and then rotates them through find appeal in primary care; thosesub-specialization. with A focused major interests part will of lean medical toward educationstrengths is and discovering passions one’s and applying those to fields that are most likely to with strong interpersonalmedicine skills or and psychiatry; interests those withmight may lean greater toward gravitate technical surgery performance to or skills radiology. family Those with broad interests will which do not. Thispractice is areas because make greatest they use develop of their a strengths keen and interests. awareness Students of which trainees and mentors and gradually participatefor in patient routine care. tasks By necessary the endhas of a the reasonably clinical good rotations, feel the for medical which student medical specialties hold appeal and rotations through a varietyspecialties of clinical as services, including internalDuring such medicine, these different rotations, radiology, students first psychiatry, observe and the practice surgery. of advanced A medical studentprinciples spends underlying medical significant practice. time Work with learning patients the begins with basic science 104 BEST PROCESS #2: BUILDING ON STRENGTHS inlofrnst ewol nutdt h ako atrn lblmar- global mastering of task the to unsuited wholly be to offerings tional r samaigu rdco fhwyuwl rd successfully. trade will you you how Who of strengths. predictor greatest meaningful your a the with is win play are to your align way to best is The game interests. mental and paper, skills, on than talents, out trader your them following a testing and styles, as folly. trading development and as your markets viewed to multiple studying important rightly more be nothing lead would is will There it practice pretending professional and student world-class medical to or is chess mindset beginning skills, mental a a and to Teaching game knowledge performance. of high consistent, base delivering solid in important a acquired has one to Once students entice mentorship. and to coaching rationale further a obtain as students. and used courses among more was trading take success evidence successful of no lack to was the led There Indeed, courses primer. chart any the to technical in that needed of obtained whatsoever now consisted be curriculum who could The traders that teaching. failed patterns by by living taught a were make classes a found by the I offered that program, seminars the out into trading looked to in I When participate failure group. to educational of well-known asked untested once blame wholly was the following I while pass signals. founder then understandably and who education students as generic peddle principles often participants, too trading vulnerable all coaches most and mentors, trading’s gurus, self-proclaimed off Preying bankruptcy. moral markets! master can all, we ourselves, After master managers. we if money game; world-class mental they, a of greed, is and trading returns fear the their achieve control can and too, learned they’ve the setups to stick and only plans they If convince emotional! to primarily ready are wings, failures the their that in coaches’’ students ‘‘trading of cadre a is there kets, oeecs,s a h nyoeaaei h os.Atrgreeting After house. the in awake one downstairs only went I the when was morning I the so out in hang exercise, early strengths. cats to typically our our was let and with It I area me. until us workout with program basement align exercise my to to regular door a shift the sustaining opened small problems had a I is how Recall takes it all Sometimes ■ n tdfcl ohd ycnep o uhitleta and intellectual such for contempt my hide to difficult it find I educa- standard find traders developing when injury, to insult add To rdn samna aei rcsl h aewya hs rsurgery. or chess as way same the precisely in game mental a is Trading idn tegh nteSals Places Smallest the in Strengths Finding www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 105 ´ es and grocery-store A colleague that I greatly respect also listens to music when he My initial writing of this book proceeded slowly. Many other activities strengths. boredom. In both cases,impact small our changes productivity—particularly in when the those changes environment draw can on greatly our concentration over sustained periodstopics of in time, depth. allowing My himpulling strength to is together perusing analyze ideas. large His amounts work of style material and avoids distraction; mine avoids music and relaxingis instrumental almost tracks. the His exactworld; purpose opposite I with of am the mine: seeking music He outside is looking stimulation. to His filter strength out is the focus and productive in my writing. works, but it is through headphones and it consists entirely of classical music) is playing in the backgroundvocals. with a The thumping novelty bass of line and fresha driving music style tracks that from Pandora, I all enjoy, drawn has from kept me alert and engaged. And that keeps me energizing for me and, oddly,am calms writing me these considerably. words, a For very example, loud as soundtrack I of EBM (electronic body dorm room. I knewdoes that not if appeal to I me—that playedElectronic it the music would be wrong with a high music—the mere beats irritant music per and that minute, distraction. however, has always been favorite music while I wrote. Ibest had surrounded learned with many a years high agoin that degree I college of worked stimulation. was Most performed of in my cafeteria studying and commons areas, rarely in my expose me to far toochange many I distractions, including made, thosePandora, cats! however, The hook was small up to my program portable my speakers, and own blast radio a station steady on stream of food courts. Normally, staying at home and writing in the den would responsibilities. At one pointwrite I in decided my to den change instead of my at work my setting usual venues and of caf intruded, from trading markets to working with traders and family the cats, bolstering my exercisetechniques routine. were No necessary complicated to psychological and get turning me an to individual exercise—just activity into opening a a shared, caring door one. and Mia typically would runmeals—it to became the easy downstairs to make door itthat after part finishing of brought my their own me routine. The strengths to psychology (caring for others) played out with the cats, replenishing their water, androutine—and feeding them, the I began cats my hung exercise with them. out Once with the the exercise became only part person of the who cats’ was routine—Naomi awake 106 BEST PROCESS #2: BUILDING ON STRENGTHS ehv oko h eaei re ocnitnl cestebs ihnus within best the access consistently to order in are strengths. we our who out know bring to to have fail We that environments often, generic Too performance. in our perform drive we that strengths the of aware aren’t we if when environment. best enhanced traded socially He a the engaging. would in however, and was I him, stimulating he For traders. music: minutes. my other few like a with was after chat chat thin active wear spent to in with that day worked found trading I have the trader of One all noxious. find and and almost stimulation isolating social be need to others of aloneness periods environment); long right for the alone or (in work time romantic can but I Others unstable differently. precipitously. curiosity, an relationships drop to in and respond would were interest performance I my intellectual If relationship, distracted. of family emotionally degree I’m high if a distracting. not exceedingly sustain drama emo- can of stable form very I any a find in and best function environment I tional relationships. close our as strengths allowed environment strengths. the processing information to his element access social to trade a Charles great adding such because him more gave but assistant get ideas, the because surprisingly, difference huge performance—not not a his made in it and, make assistant, an enjoyable we hired Charles When strengths, and accomplished. our engaging facilitate By more environments. that work our environments to work responsive and highly emotional sustaining are possess We that performance. strengths in cognitive changes massive create can o,Dsoe orStrengths Your Discover Now, what see and trading. look for strengths a mean personal might take of they surveys Let’s thorough personality. particularly comprise two that at strengths different understand- in the strides ing great made has movement psychology positive The ■ ti ifiutt nierorevrnet o efrac,however, performance, for environments our engineer to difficult is It our accessing to important as is variable environmental no Perhaps environment of change a Charles, of example the with saw we As h rtsre oe rmBciga n lfo’ 01book, 2001 Clifton’s and Buckingham from comes survey first The eprombs hnorevrnet r lge ihorstrengths. our with aligned are environments our when best perform We htAeYu Strengths? Your Are What ruddi h eerho h Gallup the of research the in Grounded . e Takeaway Key www.MyChart.ir . BEST PROCESS #2: BUILDING ON STRENGTHS 107 —the ability to perceive and value the unique —the ability to translate ideas into written and spoken —the capacity to feel linked to others and feel part of —the ability to adjust to new conditions and situations. —the drive to broaden social horizons and include —the drive to outperform rivals in performance —the ability to think ahead and plan actions. —the ability to derive enjoyment from intellectual —the ability to use data and logical reasoning to understand —thecapacitytoguideactionsthroughstructuredroutines. —the ability to take charge and lead. —the drive to help others realize their potential. —the drive to vision and work toward a desired future —the desire to interact with others based on shared —a doing orientation and an ability to take decisive action. —the ability to see the world through the eyes of others. —the ability to manage and coordinate complex situations. —a high level of achievement drive and orientation. —the capacity to work with and become excited about ideas. —the desire to treat others with equality and consideration. —the ability to understand events by placing them in a wider —the drive and desire to continuously engage in learning. —a strong system of values that guide decisions and actions. —the desire to collect new things and experiences. —the ability to be guided by the efficient pursuit of goals. framework. Deliberative Developer Discipline perspectives. Ideation Empathy Fairness Context something larger. qualities of others. Input Intellection pursuits. Learner Inclusiveness others. Individualization Focus Futuristic state. Harmony words. Competition situations. Connectedness Communication Command Belief Analytical the world. Arranger Adaptability Achiever Activator 9. 7. 8. 6. 5. 4. 3. 2. 1. 14. 12. 13. 20. 15. 16. 11. 25. 24. 22. 23. 21. 19. 17. 18. 10. synergistic. Here are the 34 dimensions identified by the authors: organization, Buckingham andassessed by Clifton their online outline instrument, knownis 34 as particularly StrengthsFinder. useful strengths That because test it that identifies clusters are of strengths that can be 108 BEST PROCESS #2: BUILDING ON STRENGTHS ulte,s tcnb ifiutt dniywihmgtb u signature our be might which identify to difficult strengths. be can it so qualities, 34. 33. 32. 26. 31. 30. 29. 28. 27. laetr h ae u nyatryuv nse your finished you’ve after only but question. each though page, to responses strengths, the 30 the turn of of each list Please to repeated. a be important you will most undoubtedly give some do 10 are will each, that the This three to of experiences. the apply positive each identify might to to three relevant best than your most more are Although that experiences. peak strengths three the written identify have you until chapter the experiences. it in top made on your what move out and Don’t experience Take you. each recent. in for be happened positive what may out others write adulthood; have and may early time were experiences or these that peak childhood of ones remain in Some now. that occurred as even you—and out you for for stand experiences successful life should and experiences significant, these happy, important very of is each What experiences, that ones. academic individual is experiences, purely work or be experiences, and could relationship passions These life. our your of drive clearly most exercise. that an try strengths let’s performance, the identify To Exercise Self-Assessment hsi eybodls.Alo shv tlatsm falo these of all of some least at have us of All list. broad very a is This neyuv opldyu it eiwte3 tegh bv and above strengths 34 the review list, your compiled you’ve Once experiences meaningful and fulfilling most the of 10 down Write Woo Strategic Significance hs fothers. of those Maximizer Self-Assurance Restorative outcomes. Responsibility relationships. Relator Positivity teaiiyt esaeothers. persuade to ability —the tedsr omk h oto ls redhp and friendships close of most the make to desire —the teaiiyt eetmast ec eie ends. desired reach to means select to ability —the teaiiyt e h eti iutosadothers. and situations in best the see to ability —the tedsr omk h oto n’ w sesand assets own one’s of most the make to desire —the tediet akeadsleproblems. solve and tackle to drive —the teble nteiprac foesefforts. one’s of importance the in belief —the teaiiyt aeonrhpfratosand actions for ownership take to ability —the teaiiyt rjc n c ihself-confidence. with act and project to ability —the www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 109 Key Takeaway Experiences become peak experiences whensignature they strengths. uniquely draw on our As in my examples, you want to look across the 10 peak experiences Of course, peak experiences can embody quite different strengths. If I think of other peak experiences, certain successes as a therapist Let’s take an example. One of my peak experiences was adopting in multiple positive life experiences,it there is is a an very important good part likelihood of that you. Across my 10 experiences, the strengths that you wrote down and observe recurring strengths. If a strength appears of Focus, Ideation, andTraderFeed Significance blog since lie 2006. They behind also lie myand behind mentorship. daily my passion writing for teaching of the Significance. I wrote the entire bookthe without sheer a contract elaboration in of hand,heart, because ideas that was I important had to something me worthy and of publication. I Those knew, same in qualities my One of my mostfirst fulfilling trading experiences book. was Key writing to and that publishing achievement my was Focus, Ideation, and beer and discuss marketsthemes and of ideas Arranger, Positivity, in and finance. Responsibility. Once again, we see the a degree of Arranger,well working as through Positivity complicatedtogether and life a Responsibility. problems, group Just as of the money managers other from week, various I firms to brought enjoy craft stand out: ones in whichanother I person’s was life. able Most to of make those successes a in significant counseling contribution also to involved in adding to our familynot and overwhelming. found this to be challenging and meaningful, focusing on the wayslives and in we which would theResponsibility. We contribute children realized toward that would we theirs. contribute were taking The to on third huge our responsibilities strength was these was Arranger, navigating complex practicalmake and legal the constraints adoptions to happen. Theitself second was as Positivity. an This manifested overcoming of numerous obstacles and frustrations and a my two youngest children.adoptions These and were required somewhat several complicated strengths private to reach fruition. The first of 110 BEST PROCESS #2: BUILDING ON STRENGTHS ou,Rsosblt,Cmuiain n civr aealo tthe at look a Take Achiever. and Communication, Responsibility, Focus, Intellection, Learner, Significance, Ideation, Positivity, include recur that rdr oss aso o akt.Ta stu,bti osnot does it lives. bring their but that to strengths passion signature true, the engage is markets passionate because are That markets, traders about Successful successful markets. fulfilling from. comes that for passion most such hear where passion your explain commonly supported a We have possess experiences. that traders strengths life the meaningful on and draws it best. your if at are you who odds to The central are experiences. these peak that your good frame are commonly most that strengths ■ include: traders among observed performance I’ve clusters your strength to important are groupings these that see others. you find if often, you’ll Very strength, grouped. one are experiences peak 10 the for identified a in fruition to come ideas seeing context. but competitive money, challenging, about making me caring, just excites not to what is application Similarly, markets me. their excites and most ideas that pure contexts of a positive as combination function the never developing is all could young, I It to strength, academic. central to a are is coaching multiple Ideation Positivity my Although and and those. in of Responsibility children out of adopted strengths reach have The I traders. I that that and things, cats coincidence new learn rescue not people’s to improve is desire to ways the It positive is in lives. am those apply I and coaching who ideas, my new of to discover aspect central core also are A They traders. book. of this of writing the important support to most is our it Often, define unique. that us strengths of multiple one capacities. each with of make interact interaction that Strengths isolation. the ways in truth. synergistic exist the these in from though another further as be appear could it makes Nothing strengths of list The ■ oplans to Discipline and Deliberative o eestekypit ortaigi otlkl ob successful be to likely most is trading Your point: key the here’s Now ocniu u xrie aealo thwtesrntsyou strengths the how at look a take exercise, our continue To combine Positivity and Learner, Ideation, of strengths the example, For ucsflExperience Successful Create to Interact Strengths How srntsta nov lnigadsticking and planning involve that —strengths hncutr eu,i’ togindication strong a it’s recur, clusters When www.MyChart.ir oeo h common the of Some . BEST PROCESS #2: BUILDING ON STRENGTHS 111 : The trader ■■■ —strengths seen among traders working —strengths that enable traders to adapt to —strengths that make use of research to guide —strengths that involve goal setting and following Note that strengths greatly shape how we approach trading It also keeps us out of touch with the essential drivers of our success. Reflect on how long it took you to identify the strengths for your peak Of course, clusters can include three or more strengths. I’ve known Tina was a young developing trader. She was very motivated to Communication and Relator well in teams Focus and Activator Adaptability and Learner changing markets Analytic and Strategic forward action feel a tremendous need tobegin analyze to go our off performance. the rails It that we isearlier, reflect that only on what tends when has to we gone keep wrong. As us we problem saw focused and not solution focused. descriptions of problems and frustrations.application Few to track trading. strengths Much and of their the time, if trading goes well, we don’t traders go through rocky periods in their performance,focused they become on quite their problems,many but trading journals. not Many journals their maintained by strengths. traders are This filled with is reflected in found it very difficultstrengths, to it identify may peak well experiences beyour and the greatest case assets. their You that associated would you be are surprised how not common well this acquainted is. with When with leadership strengths constructs trading within a team context. experiences and how easy or difficult the exercise was for you. If you firms. with analytic and learning strengths is highly research based; the trader the depth and breadthdistinctive strengths of in Self-Assurance, their Woo, Maximizer, research. Developer, and Command. I’ve They also have known been traders very with effective team leaders within trading very strong tradersAnalytic, and who Ideation. They display are great strengths idea generators and in succeed from Learner, Intellection, ■ ■ ■ ■ courses. Most of whatShe worked she hard read at tracking andpositive markets learning learned on curve an pertained in intraday to basis simulated daytrading. and trading, showed so a she began trading live. learn about markets. She read numerous books and took several online 112 BEST PROCESS #2: BUILDING ON STRENGTHS e eun eemxd ssenihrls uhmnynrmade she as nor diminish money to much seemed trading lost for neither love her she however, as Oddly, much. mixed, were returns Her htsegtfo en hr hnhrcide eundfo school. from returned children her trading when from there derive being not from could got just she accommodating Tina what quite but was trading, husband her Her encouraged time. and her spend she to conflict how the with over frustrated felt more felt she and family joy the her from gave distant that more activities felt part she trading, her was with early time As left job more preparation. spent That and she day trading school. for in Her evenings and were afternoons family. kids late the and and mornings while children place took the largely and from time away her take to were strengths those of Which voice. trading? her her by in expressed that ones energy the the of some for were accounted those but strengths, Connected- other and possessed Developer, would She Empathy, ness. she Relator, in dimensions, high Clifton quite scored and have Buckingham the On interpersonal. at excitement job. her little day about her relatively voice regarding was her all There in several children. heard her I in with that and success excitement experiences interest the their definite of was none and there but markets, school curiosity, about in spoke Tina school grades especially When and the was children’s sports. wife Tina coordinate her a children. to of two being husband their proud of of her role activities about the with extracurricular spoke relished well and she she worked when that pace and up clear her mother that was picked striking It inflection it family. found vocal I her her case, and Tina’s In speaking say. of they what trading by her as talk and responsibilities, home challenges her the job, and children day interests. and her, her husband to balancing her around about of her conversation length on the at focusing spoke brought time she I little Once surprisingly situation. spent immediate and qualities traders the and successful markets about of questions many asked She mixed markets. help. about for Her out itself. were reached trading she she with and if her, not as to but sense almost trading, little was of made It responses idea returned. the curiosity with her love when in only aside, up trading it the pick put she to once, than More trading. pursued actually eyotnwe rtme oen,Ilana uhb o they how by much as learn I someone, meet first I when often Very curious quite and personable be to her found I Tina, with met I When h rbe a hthrtaig erdt h a iefae tended frame, time day the to geared trading, her that was problem The None. distinctly were strengths Tina’s that clear became it spoke, we As www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 113 select as strengths. It turns we don’t have to have all of our not . One of Tina’s pitfalls was that she fell Key Takeaway What Strengths Don’t You Possess? Successful trading has to fit into your life, not the reverse. What Tina’s situation teaches us is that We will explore the issue of strengths as weaknesses a bit later. What Of course, just because a competency is not your strength doesn’t make peak experiences. Review the Buckinghamabove and and Clifton identify list which of items strengths you did ■ Let’s now return to the list of 30 strengths you identified for your 10 and commitments central to her identity. By stepping back, tradingflexibly express a views and longer manage risk, timeto she pursue frame, discovered markets a and sustainable passionately, way using while options not compromising to the strengths for the stereotype that atrading successful that it trader becomes has an overriding to interest.is have What such she that ultimately a such found passion a for passion does not have to take the form of an obsession. needs met through our trading,most but fundamental we needs and cannot strengths allow our trading to frustrate our that engaged in mutual mentorship, directly drawing on her strengths. lengthened time frame allowed her tothe be expense involved of in her markets, but otherof not commitments trading at and also passions. gave The her reduced time pace to create a network of developing traders low-risk strategies that enabledminimal her time needed to to rideher hedge research positions or and for preparation otherwise could weeks, adjust be with performed positions. during Much weekends. of The turned Tina’s situation around isterm trading that using she a began variety to of options dabble structures. with These longer- were relatively found. I suspect if you asked people who knew me well, they would say areas for personal growth. For example,the across strengths my of 10 Fairness, peak Harmony, experiences, and Inclusiveness are nowhere to be your success. it a weakness. Rather, capacities that are not your strengths can represent out that the areas that are not your strengths can be quite important to 114 BEST PROCESS #2: BUILDING ON STRENGTHS h tegh fCmadadWowr o ato yls.CnIlead I Can list. my Similarly, of self-defining. part not not were are Woo and they Command but of strengths qualities, the those possess I that copiho hi own. never their could on they accomplish perspectives of with with strengths them analytical interfere provides the however, and on researchers, down Drawing preparation. them market bog normal would their perform to it tried themselves, they If research markets. for such sense picture to bigger services a research gain them sophisticated savvy help to of subscribe couple know A I space. traders virtual and short-term in firms collaborate trading we inside formal whom with with both work colleagues might includes we This groups teams: environment. informal team-based and a within work we discipline! no fine he possessed trades, suddenly exiting holding and and harried longer entering felt a for longer criteria to selective moved more he and When that period setups performance. those his precisely was disrupting it were a but ‘‘plays,’’ and do the to rushed following him of exhorted felt situation. job Coaches better making. he any decision however, poor most to setups, approach led This chart-based to frazzled. rapid ways enough trade of Given to think style. Trying creatively cognitive his can in It he Deliberative disciplined. time, quite quite after was is life discipline he of with out areas problem turned other approach one in into though they not ran markets, but in enjoy, met mentor, another I their others of trader strengths One that the own. fit their success might that the manner a in find markets to who Eager one as traders. not Relator, a as good very am I Command. it. effective. would in particularly been been not hasn’t to have heart tried I have My roles, I Woo when and Similarly, Command losses. did on and simply dead-ends take but to theory, led in and great me was fit It not admired. and observed I had failure. that I and myself others frustration convincing for tried recipe I a years, is For not make are to we Trying someone performance. into our ourselves compromises that and motivation our own. my complement in effectively strong qualities are Those who Woo. colleagues and with Command business working my enjoyed in possess have Similarly, I me. who in relationships, qualities others those with out embrace brings Being who strengths those people Inclusiveness. out and seek Harmony, personal to my Fairness, tended In have successes. have life I or however, however, self-concept Those, relationships, my of situations. parts certain key been in never Yes, others? persuade and hnw oetofrfo u tegh,w a compromise can we strengths, our from far too move we When optnista r o u tegh,hwvr a evlal if valuable be can however, strengths, our not are that Competencies developing for pitfall particular a is others emulate to desire This www.MyChart.ir should rd nwy iia to similar ways in trade BEST PROCESS #2: BUILDING ON STRENGTHS 115 . There is much to be said for self-acceptance. We are who we are. Effective collaborations also come from traders who view markets As you look over the strengths that are not ones that you identified for your peak Marriages are not so different. Similarity of values and temperaments One team I worked with for many years consisted of a portfolio Our job is to discover ourproductive strengths and work find that the embrace kind and of express relationships and the best within us. But there in superior entry and exit execution of longer-term trades. at discerning macro themessensitive over to how the markets mediumanticipate trade term. intraday around swings Another short-term in is markets. price Together, levels quite their and teamwork can results wholly automated—that incorporates the best of each. in complementary ways. For example, one might be unusually talented ideas. Left to his or herideas own devices, and the implement creative trader themof could never with strengths test creates model-driven a consistency. hybrid The trading—neither blend wholly discretionary nor of this natureideas that teams I’ve up seen with atheir have own, skilled the resulted quant quantitative programmer analyst when could never and a generate programmer. insightful trading trader On with great with a highly disciplinedcould be colleague a by great way sharing to ideas create and synergy. Some trading of plans the best collaborations For instance, perhaps you(Ideation are and Analytical), very but strongstemming not at from those so generating ideas strong trading (Discipline in and ideas managing Deliberative). Collaborating the positions with our own signature capabilities. experiences, select one or two that you believe could complement your trading oriented. One of usat getting is bills good paid atcomplement on our planning time! own, vacations; By we the can teaming expand other with our people is horizons whose without great strengths interfering member of the couplevery is interpersonally sensitive highly and achievement capable. I orientedlove tend to and to develop be the big-picture idea-oriented plans. other and Margie is is highly responsible and detail but complementarity of strengthssuccess. can I be can a formula think for of lasting many marital happily married couples in which one and the analyst benefited from knowing thatforthrightly his in ideas the would portfolio. be expressed prudent, and conservative in riskeffective taking. collaboration, Over in time, they whichthat developed the the an manager analyst’s recommendations benefited were from well-grounded and knowing researched manager who was unusually aggressive andmore decisive cautious in analyst. his His trading analyst and in his fact was extremely detail oriented, 116 BEST PROCESS #2: BUILDING ON STRENGTHS hnyur ootae.N n a tegh nalaesrlvn for relevant areas all in strengths has one even No sport, trader. team solo trading—a a life—and you’re making when for said be to much also is epewobigotyu tegh—n h r iln n beto are. grounded remain you able you who and as in even willing yourself, are expand can who own—you the strengths—and their find share your you out If bring stagnation. who for effective recipe people a cement is we Isolation others, relationships. to working expand strengths we our others, contributing of By strengths ourselves. the on drawing By performance. optimal oesrntscno a u eps oiain n asos nthat In passions. and motivations tap deepest not our does that tap Work cannot that. strengths than worker, subtle core unmotivated more be an would the I’m problem during the that questions but make conclude follow-up right might I’d the manager Perhaps ask My to performance: would surveys. fail my or job day in the per calls up for fewer show ardor would my That time, diminish. Over greatly enjoy. stimulation. would most and intellectual job they the miss shows within television connectedness little the experience about would Perhaps I people shows. surveying television about job people a with it’s talking phone the supply. on short day in all not is those enjoy to motivation to and excuses cats find don’t or I’d I books and procrastination. avoid effort, of concerted amount take fair in would a engage experience that someone or likely chats, day If phone each daily downstairs. television of of Mia number amount a or certain read my a Ginger to watch me with to to with get me time visit gravitate to wanted TV, discipline spend will watch no or rarely takes I books It I and phone. lap. new the my time on on chat free cat or a me neighbors, and Give book, a us. chair, to lounge best feels what strengths. however. and truth, needs unfulfilled the her were from daytrading further her sabotaged been What have and could control emotional Nothing lacked Tina discipline. losses. that in conclude resulted might observer that casual decisions A poor made of she Out frustration, trading. resulting about the excitement in moment-to- her This, diminished life. the and family her in her distracted from turn, absorbed detached felt highly she markets, was of action Tina moment When focus trading. to difficult active it on made commitments the and Tina, strengths Recall family fulfilled. whose and trader expressed not if success derail can Strengths ■ mgn,hwvr htteol o a n soei hc spend I which in one is find can I job only the that however, Imagine, and best do we what to gravitate naturally We way: this it at Look a orSrntsAs eWeaknesses? Be Also Strengths Your Can www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 117 ■■■ Key Takeaway Unexpressed, unfulfilled strengths derail performance. The Gallup Organization has undertaken this research on a global One of the greatest challenges for business management is the problem So what happened? I began to reach out to other traders online and A classic example that I described in earlier writings occurred when I setting, my strengthsdevoting become myself a to the weakness, demands of preventing the job. me from fully their work; 24 percent report being actively disengaged; and the rest scale. Across 142 countries, only 13 percent of workers feel engaged in positive contributions to theirreport organizations. a How high many degree of doinvested in engagement? you their How think work many and feel are making as a though positive they’re difference? of employee engagement. Suppose youlogically ask committed workers if to they their feel psycho- jobs and if they believe they are making markets. Those Developer strengths help mefull-time as trading. a coach, but derailed my stand back and ask myself whatmy in the unmet world was needs going on. andthe Quite strengths simply, psychologist in were me intruding was on not my fulfilled, trading. I When could not find fulfillment in many interesting traders that way andhowever, I enjoyed spent helping time them. in Too online often, chatown mode trading helping traders setups! and After missed my failing to make several good trades, I had to my own office gave me none of that. responded to their questions, especially of a psychological nature. I met counseling, and why I’ve adopted childrenthe and fulfillment rescue of cats. another Being being part is of deeply fulfilling to me. Trading solo in focusing solely on marketssterile. and Why? One trading of plans myhelping most struck others distinctive reach me strengths their as potential. is It’s Developer: unbearably why I I love enjoy teaching, why I love left my full-time work asto a trade psychologist full at a time. medical I school hated and sought it. Sitting all day in front of a screen and 118 BEST PROCESS #2: BUILDING ON STRENGTHS 9preto okr eotbigeggd vr7 ecn are percent 70 over engaged; Canada, being and report States workers United the of In engaged.’’ percent ‘‘not 29 are they say simply htte ol aeadsnae workforce. disengaged ensured a as management have strengths, talent, would employee they young that excluded best that pro- ways its leadership defining in lost By cesses receive company. firm their not to trading loyalty did little the these felt employees not, time, suggestions than Over often excellent response. more had committees a but people firm, management young the in improving these role for of were no Many stars and processes. up-and-coming recognition and floor—and formal trading no young the given develop to off one programs At and no employees. were the talent—on there of worked, I many where of managers firm names senior trading the from know hear don’t never managers employees and companies, many In firm. sky-high. not was were salaries and though whatsoever was even talent, problem engagement top turnover recruit employee to no of able had degree company the The visit, tangible. my the within During valued those company. and and of informally—recognized achievement personal The formally—and specifically goals. was for employee were their goals hit goals of Managers employees bonuses. part outlining helping with of central year, tasked determination a the the was and of plan reviews start That the development. draw at to professional expected plan was manager, employee a senior to each most up Moreover, the voice. to suggestions a clerk were had lowliest make everyone All the From meetings. firm. incentivized—to the company improve periodic encouraged—and in strongly included were employees a eventually in. will and sets unexpressed, alienation people most of and So measure unnoticed choice, unemployed. go being strengths the over their fulfilling slots, given than fill less and, is a the that jobs job to fill a need choose tailored to People prefabricated into not in descriptions. fit are to job expected brought Jobs are employees typically organization. employees; of are the strengths within they slot hired, prescribed are employees When and business for challenge organizations. significant other a and represents work this quality employee service, deliver that customer to that likely and least productivity Given are employees employee disengaged. disengaged with actively actively correlated directly are is or engagement engaged not either eetyhdtego otn ovstacmayi hc all which in company a visit to fortune good the had recently I disengagement. of epidemic this for reason simple very a is There opr htstainwt h vrg ealote rmanufacturing or outlet retail average the with situation that Compare www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 119 level of engagement your ■■■ I was also surprised. I felt Dale had talent and could develop into a Still, he was frustrated with Dale. Although Dale had plenty of opportunities to take risk in his small Several months into the new working relationship, the boss gave me an Dale was an analyst at a trading firm, but his goal was to become So that raises an interesting question: What is to cancel the meetings because he was busy attending to the big book. on a weekly basis simply to focusinterest on and his confidence trading in as him. a More way of often expressing than my not, however, Dale had a track record. How manyfor young a traders shot would at raisewould such heaven put an and more opportunity? earth attention Dale into recognized his this trading. and I told offered me to he meet with Dale successful portfolio manager. He hadgoal, the and mentorship he to was given accomplish a this clear path to growing his capital and developing it was sized unusuallyoccasions his small, boss even encouraged forbut him somehow his to it modest never take happened. more capital. risk On and several Dale agreed, portfolio, he had entered few positions. When he did take a position, data releases and updated the team’smanager risk said metrics he each had day. never The worked portfolio with such a diligent assistant. booking and reconciling trades, keeping inpricing touch options when with needed, relevant and research, sending outnear alerts when key positions were price levels. Dale stayed on top of central bank minutes and the firm. assessment. Dale’s work was excellent. He was attentive to detail work: Second, he liked the idea ofmature teamwork and into the a possibility that co-manager Dalerole, could of he the believed, team’s gave Dale funds. a This real structuring incentive of to the remain loyal to him and capital over time. Dale’sand boss liked had it for discussed two theinto reasons. his arrangement First, own with by portfolio, seeing me he the would see positions clearly that Dale’s Dale greatest put convictions. work for the ‘‘big book’’ fronttrade his and small center, book but well, also because encouraged that Dale could to lead to allocations of more an independent money manager.keep Eager his to attract motivation Dale high,trading to his account. his portfolio He team made manager and it boss clear gave that him Dale needed a to small put his analytical as a trader? 120 BEST PROCESS #2: BUILDING ON STRENGTHS eare twssmtigh hudd,bth one iem kids my like sounded he but do, should he something was it agreed He a olblDl’ tegh ’ a hth a necletservant trades, excellent executing an and was expressing I he in If that leadership business. say real larger I’d showed the He strength, to leader. Dale’s contribution a label extremely making to also money, liked making had was liked all Dale He of manager. least. his most the to but loyal in and him work his to to appeal profits dedicated about not worrying did and losses positions of and trading actual The analytics. and returns. risk-adjusted enhanced that to ideas ability of his expressions through unique portfolio find the to the performance to significant superior adding trade was a the had saw 90 he also that edges he the one but My combining view, By stocks. directional volatility. the in in in edge move edge three-dimensional an upward a saw on an He playing as was chessboard. Dale well that as was impression volatility, immediate benefit in to wanted pickup He important a ahead. given from releases liked particularly data Dale view, and meetings the but policy express stocks, monetary to US options long of be pricing to the wanted managers portfolio Many the expressing By team the money. curves, money. lose on points considerable not mispriced saved selecting did and terms team relative Dale’s in view but trade, money the lost the in managers many position on squeezed, short were had plain-vanilla shorts and a When well market. He than futures carried profile instruments. that risk/reward view different better short of far a a express pricing to way the a and found eventually curves, Dale United other the States. between United and relationships the curve, States in the income on fixed points various short examined be to example, wanted For ideas. mechanics, boss trade the of Dale’s of care expression the taking shape to by helping by only also not but portfolio team the to contributing work his in what accomplishment and and date? successes challenge mentally to of greatest back sense his greatest step were his to What him date. him gave to asked year I the work. review his and about things good hearing didn’t whatsoever. and thrills blood any his him in give wasn’t It to veggies. seem their eating to service lip paying aersoddqikyadetuisial.H adta ewas he that said He enthusiastically. and quickly responded Dale been had I that said and him congratulated I Dale, with met I When experiment. little a tried I So trader. a as engaged not was simply Dale that me to clear became It lohdtesrn es htDl’ raetlv a research was love greatest Dale’s that sense strong the had also I on. working was he that trade another me show to proceeded Dale + ecn ftaeswudtk.Ihdn ob htDale that doubt no had I take. would traders of percent www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 121 , Mark McClusky details ■■■ Key Takeaway Surprisingly, many of those who most loudly How intensively are you engaged in the concrete Faster, Higher, Stronger Engagement is what enables us to deliver our peak performances. Dale eventually put trading aside altogether. He indicated that he was Dale was not engaged in his trading because it pulled him away In his 2014 book, So back to the earlier question: What is your level of engagement blossom for the team. Focusedat, he on had what no he problem loved whatsoever with and engagement. what he excelled supportive, recognizing that heDale’s could not work. find Dale anyonemanaging wanted else capital. to He neither derived replicate the joy from limelight developing ideas nor and seeing the them pressure of or between the particular trading approach pursued and those strengths. best suited to a role as an analyst and strategist. His manager was entirely values, interests, and abilities. When we see disengagement ingenerally trading, because it’s there is a mismatch either between trading and strengths from what he most lovedthe doing. trading His very context. strengths We were naturally weaknesses engage in activities that maximize our but accomplished this bylimelight serving and wasn’t within motivated a bydiligence team. huge and paydays. He ability His to did strengths collaborate not were effectively. his want the lead to large cumulative impacts on performance. The key to such what goes into peakfields. performance He in stresses athletics that and small, other continuous performance improvements in processes everyone has the will to win, but far fewer have the will to prepare to win. proclaim their passion for trading are relativelyto disengaged when quality it time comes spent inand trade performance planning, review. research, As basketball position coach management, Bob Knight once observed, aside emotional expressions for moment,behavioral however, engagement: let’s consider your tasks associated with trading? as a trader?glib Too assertion that often, they, traders indeed, have respond a to ‘‘passion’’ for this trading. Putting question with the 122 BEST PROCESS #2: BUILDING ON STRENGTHS htcnb mrvd n fot oadipoeet h deliberate the improvement: toward efforts and improved, about be feedback can outcomes, what of measurement constant the is improvement a epke ssai nafs-hnigworld. That fast-changing engagement. a of in power static the us lose keep we help us, can to speaks activities what self-improvement with our fit rou- When don’t self-improvement strengths. those cultivate extend to that traders tines for rarer even it’s strengths, taking. and risk learning through simply through not expressed improvement, is engagement continually Their to elite ways themselves. for better them look and make religiously money. performance themselves: their doesn’t track with making They that competitive are like but traders competitive they also, Truly performers. money because making competitive same like are the traders Gamblers Most they By engagement. of that primary engagement. measure when excellent assume trading for an on is metric working closed are spent helpful markets time screens of very amount watching the a actually reasoning, spent is time trading of amount and the to relative trading risk generation, processes. behind idea those of fall research, all to embraces likely in who similarly trader engaged the is not review, markets performance while is and losses who management, of but challenges and trader open, victory player A are of a process. thrills to the improvement slot enjoys his continuous not who lose but McClusky’s games quickly in during would field Olympic he immersed the training, direct on prep and engaged and practice in was training during player of spent soccer years game a time the that If with actual work. for compared preparation small The very The is days. so. competition or many hours over of couple extends a last may performing game actually in than performance improvement. is point McClusky’s better; get one. just great don’t a performers becomes elite selection. that pitch pitcher in good and the ball, the time, of Over grip in improve- conditioning, meaningful strength but in small ments similar by Imag- followed change. is small it relatively that a however, that’s ine, itself, In accuracy. losing not while and fully windup his not during is foot front he release.Byextendinghisfollowthrough,heisabletoimprovehisvelocity, to that foot back reveal from may weight his pitcher transferring baseball example, a For of (1996). filming Ericsson slow-motion Anders researcher by described practice oetelvlo naeetta srqie o uhongoing such for required is that engagement of level the Note srr si sfrtaest n rdn prahsta xrs their express that approaches trading find to traders for is it as rare As improving on working and trading for preparing spent time of ratio The neiepromrsed a oetm okn nhso her or his on working time more far spends performer elite An ekybsebl rfootball or basketball weekly A . www.MyChart.ir hygtbte tgtigbetter getting at better get they . BEST PROCESS #2: BUILDING ON STRENGTHS 123 . We either exercise our principle has many important implications. Here’s Everything in life is use it or lose it use it or lose it Making Our Strengths Stronger Clearly this is but a small list of the possible activities that could The Going out for meaningful entertainment and socializing Engaging in learning for the sake of learning Engaging in political, charitable, and/or service activities Engaging in artistic and cultural interests and activities Getting quality sleep Reviewing and working on your trading performance Engaging in significant physical exercise Engaging in spiritual interests and pursuits Relaxing and nurturing yourself Enjoying individual interests and recreational activities Exposing yourself to new information about markets Engaging in quality conversations with trading colleagues Spending quality time with friends Spending quality time with family Enjoying and cultivating a romantic relationship ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ principle: ■ In the TraderFeed blog, I have emphasized an important performance spend a good amount of time working on market preparation, but little these in a given week.the things Inevitably, we we do end and up the making things choices that we regarding put aside. For instance, we may populate one’s calendar. It’s difficult to imagine being able to do all of evening hours. Over theyou course doing of the a following? typical week, how much time are a worthwhile exercise: Takeout a your activities look each at day of your the weekly week schedule during morning, and afternoon, map and personality, emotional, and cognitive strengths,don’t they remain weaken. strong Strengths unless we routinely exercise them. capacities or they atrophy. Ifaerobic we conditioning. don’t If work out, we we don’t lose strength actively and employ and challenge our 124 BEST PROCESS #2: BUILDING ON STRENGTHS n aer u pn eaieyltl iei xrieadqaiysleep. quality and exercise in family time to little relatively attend spend might but We career, friendships. and cultivating and socializing time otedge htw ontps usle,w antbnfi rmtefut of fruits the from benefit cannot turn work. to we hard ourselves, push very not is practice do often deliberate we it that fun; degree passionate the sense, all To that not In them. is for difficult practice are deliberate that peers, activities the lesser on their time to more relative those. spend performers, beyond elite moving that systematically finds work and Ericsson’s limits our our strengthen finding truly from improvement to performance comes that fail clear we makes that work McClusky’s mode strengths. maintenance spend in we often, time and very much Very, routine experiences. so be new to can us vacation push friendships can A it maintain those. or relaxing, expand can can we we or Similarly, relationships could quo. and or and status limits you the your challenge test maintain may to simply exercise designed Physical specifically boundaries. your are extend activities those of many our capture that practices to best is the process-driven in becoming grounded strengths. we’ll for remain As reason we you. major that of a part ensure book, become the won’t in it later and see commitment, hard a not routines it’s weekly and daily your of success. part my trapping for worse, essential strengths to very bad the eroded from that gone work them, in have losing me would began and experience strengths trading interpersonal my my that using strengths stopped I social performance. Had trading the my disrupted neglecting completely psychology earlier to and me my brought trading Recall on effectiveness. Focusing and efficiency example: and work time over diminished energy to of us lead rob physical can sleep our and nutrition, neglecting exercise, Similarly, for needs quality. interfere work eventually and and concentration distraction atten- with a get become to needs up unfulfilled act The children tion. in neglected; builds feel he Spouses conflict that relationships. work Eventually his those relationships. with family consumed and so is romantic who neglects trader the is example classic A and capacities certain underdeveloped. build inevitably relatively we others time, leave our spend we ways the In ahdy oe oeo h rbesta curddrn h day, the during occurred that problems the of some notes day, each h otmln sta fteesasrnt o att ul,i a obecome to has it build, to want you strength a there’s if that is line bottom The performance. derail can they disuse, with atrophy strengths When laerve h ciiisi orwel aedradietf how identify and calendar weekly your in activities the review Please osdrterve rcse ftaes rdrAkesajournal a keeps A Trader traders. of processes review the Consider good into emysa oda htw o u er unlikely we’re but do, we what at good stay may We . great . fi’ o nyu ponmn book, appointment your in not it’s If . www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 125 . , recruits for but never translates those into . Trader B, on the other hand, Enhancing Trader Development as a normal mode of daily functioning This latter point is extremely important. Humans, like other animals, There is a more subtle manifestation of use it or lose it that results What Trader A probably doesn’t appreciate is that he is likely to If you ask Traders A and B if they keep a journal, both will say yes. have evolved in a manner that enables them to conserve energy. If there beyond their comfort level physical conditioning and drillingeffort over of time, skills. he Ifthat inevitably a remain drops recruit from build the cannot the training sustain strength process. to Those face adversity and push themselves unusually rigorous training process,multiple where difficult they tasks, are andwhen given plenty not little of deployed, attitude sleep, they from drillmasters. are Even expected to maintain high standards of highly developed capacityconditions. to As sustain I described performanceArmy in Rangers, under Navy SEALs, unfavorable and other elite units invariably undergo an directed effort is itselfresearch a competency on and willpower. strength,peak as One we’ve performers of seen in the with important the factors military differentiating Special Forces from others is the when traders fail to strengthen their strengths. The capacity for sustained, book—the status quo itself evolves. ByTrader failing A will to increasingly improve find his himself with repertoire, amethods. shrinking arsenal of effective no incremental trading skills.changes He its is like product amaintenance mix department of status or store quo, that because—as marketing we never strategies. saw in The the first result section of is the not a become a victim ofis use keeping it a or journal lose and it. ‘‘sticking to Secure his in discipline,’’ the he knowledge actually that builds he concrete goals and planspushes herself for beyond her future comfort level. action find She areas makes needing systematic improvement efforts and to address those. executed in a routine manner,expresses with emotions and little makes boundary-extending observations, effort. It Both no doubt considerOnly themselves one to of be them, motivatedvulnerabilities however, and by is hardworking. strengthening on a strengths. genuine The learning journal curve, of reducing Trader A is B examines the factors associated withgoals her for worst trades the and following sets week concrete to improve the areas where she fell short. and grades his performance. Tradergenerated B and tracks managed, each what tradethe her and trading, mood how and it and how was energy much money state was were won during or lost. Each week, Trader 126 BEST PROCESS #2: BUILDING ON STRENGTHS o’ at nry hscnevto feeg shgl dpiei an in adaptive highly we is secure, energy and safe of are conservation we This If energy. mode. waste flight-or-fight don’t into go we threat, a is spsigteevlp;efr tefbcmsasuc fwl-en and well-being of source a becomes participants. fulfillment. itself effort default of envelope; performer’s peak setting the The pushing default rule. is the the than rather moves exception, the it is Stasis that is military distinctive and generate athletic training elite not makes to What tend challenge. we and sleep present, stimulation own not that our is cats stimulation Like when day us. the against of works much conservation met, of are setting needs basic default which our in environment an In scarcity. of environment nyu al iepromdi netariaymne,te o are you then manner, nothing extraordinary is an there in If performed level. in comfort life performed your daily were beyond your say you in truly took can that you manner activities a many how identify and trading excellent achieve of trading to host a processes. a have in and trades excellence we excellent no individual, be career, without can up career There a add acts. in individual never our excellence in will excellence achieve performance To OK-to-good excellence. of routines to week daily after our week into important day, built very is but excellence simple, unless very a excellence: to of us principle leads discussion previous The ■ uhn h neoei vr rao ieta atr ou.OrTrader Our us. to matters that life of area every in envelope the pushing teghnorsrntsi ofr sorporme default. programmed cannot our We is comfort deliberate: if stay of strengths to our level strengthen capacity the the sustain requires not practice performers. to elite Deliberate among himself McClusky training by observed is effort He sustained he bit. directed, a but setting process, default training his challenge move a systematically to not it does use performance not change does and and journal rote a keeps who A The e’ eieteerireecs.Nwrve orwel schedule weekly your review Now exercise. earlier the revise Let’s h alr otanorevsi tefangtv training. negative a itself is ourselves train to failure The h xelnePrinciple Excellence The s to oeit lose or it use rnil en htw aet eoego at good become to have we that means principle ecno civ xelnei n edo endeavor of field any in excellence achieve cannot We e Takeaway Key www.MyChart.ir nohrwrs a after day words, other In . is in BEST PROCESS #2: BUILDING ON STRENGTHS 127 .Ifwestop . Ironically, the they live their jobs Use it or lose it also means that if time, he expressed to me. The kids were out my But that’s not the worst of it. If you doubt this, take a good look at what happens to so many people This is very relevant to trading because many traders, deep inside, To be sure, retirement can be a stimulating and rewarding time of life, cooperation. I recall one retiree whorearing was behind. happy to Now leave is his job and child we do not exerciseengaging our in character caring strengths, activities,need those to we collaborate, eventually become we fade become less more caring. cantankerous, less If able we to sustain no longer cats than as creative, productive human beings. comfort. Not surprisingly, many loseto physical aches conditioning and and pains fall that prey theyand chalk less up able to to old sustain age. meaningful Over time, efforts, they living are more less like those sleepy in retirement. They work for a career,To and not what is work! their And ultimate reward? in they the don’t. garden, They socialize they with travel, friends, and they they putter enjoy what they define as a life of grounded in the ordinary. Weover either time, use we our lose capacity it. for excellence or, jobs: Like so many peak performers, long weekend hours researching markets, reviewing theirpreparing portfolios, themselves and for the week ahead. No, they didn’t have 8-to-5 to settle for 8-to-5recalling careers. all I the couldmiddle successful only of traders shake the I my night worked head to with in track who disbelief, markets get in up Asia in the and Europe and spend pursue trading as an alternativeI recently to attended the a trading hard conference where work thedaytrader, of speaker, exhorted a traditional his well-known careers. audience to work on their trading lest they have of raising children and buildingit a can career. be Once difficult those to activities find are substitute gone, arenas for boundary pushing. but not if it represents aare flight naturally from forced efforts to to extend extend our the boundaries self. Most simply of from us the demands self-indulgence. Years of failing toa strengthen host his of strengths weaknesses left and him vulnerabilities. with chose a romantic partner who wasand equally who untethered filled to her career void or with family a compulsive successful shopping. businessman Over and time, family I man watched fall into a low-energy morass of boats.’’ Severing connections with familyhimself and isolated, work, lonely, and he bored—and gradually made found Health up for problems that followed by from overeating. his poor eating and lack of exercise. He of the home and raising their own families; they could ‘‘row their own 128 BEST PROCESS #2: BUILDING ON STRENGTHS udndb 0huso okprwe.Lce nosc ide,no not mindset, a is such one into Locked where week. per lifestyle work of comfortable hours 40 a by burdened as trading projected speaker aert nalasrigcalling. all-absorbing an to career over yourself week? expand next truly the you will How tomorrow? us. excellence to embody intrinsic Callings is those. which of that from both retirement and from no job retire is there a ultimately enduring; than We are more career. becomes a work than our more when principle excellence the very a captured he them, point: has Ed important talent former latter—the When the the that stimulation. but—for out talent, pointing and or have by traders challenge, great become open and Markets learning, good are book. compared of Seykota the markets in source risk whether ongoing less or matter an more Trading is doesn’t there career. whether It a closed, calling. than a more finds becomes however, strengths, strengthening their venture. as ongoing trading an of of success speak the they in ownership often, taking ‘‘business,’’ Very management responsibility. risk sound fiduciary in grounded and They career, field. a performance as demanding management a money see in operate they work their that to professionalism recognize of level and firms a promised trading bring They established it view. at a that such traders have Most was not do work. appeal of Its hours few job. for a pay great as merely calling a trading as trading viewed approach speaker who those and career, a trading make who those effort extraordinary of source a as not achievement! work, and normal trading to entered alternative They’ve an traders: as are work-avoidant markets to when anathema trading is one’s markets open developing to not of adapt idea and entire strengths The cultivate time. over to efforts the sustain will trader ealCalsDhg’ xeln book, excellent Duhigg’s Charles Recall ■ hssi htcagsi eairaenttersl fmtvto and motivation of result the cultivating by not develop we are Rather, self-improvement. behavior at in efforts conscious changes that is thesis h rdrwoemre atcpto sa xrsino ever- of expression an is participation market whose trader The job, a as trading pursue who Those distinction: important most a lies Therein hs r h usin httasomtaigfo otn o or job routine a from trading transform that questions the are you Those will How today? excellence with undertaken you have What h ih Habits Right the Developing of Habit a Making u tegh rm u callings our frame strengths Our www.MyChart.ir h oe fHabit of Power The eaems ieyt live to likely most are We . 21) His (2012). Our . BEST PROCESS #2: BUILDING ON STRENGTHS 129 . The elite racecar Key Takeaway To sustain deliberate practice, we have to take what has become Elite performers consciously craft their habit patterns. Consider the elite performers in Olympic events. The entire focus From this perspective, the strengthening of strengths that we see turned excellence into a habit pattern. broke first. They thenimprovements. consulted The with American workerstime; assembly and the process Japanese instituted achieved did process continuous quality not improvement. evolve They had over assembly lines at aaccelerated speed the designed to assembly minimize lines errors. to Japanese firms find out which parts of processes seek out and embrace their shortcomings. Severalcarmakers decades ago, were American eclipsed bysought Japanese out firms weaknesses in in part the because assembly the process. latter American firms ran oneself itself becomes athe dominant exception, habit in pattern—itimprovement, the is performers weekly have the to calendar. norm, get not To to the sustain point the where they habit actively of self- habits, and then extending those habits to rise to still higherof levels. their training is to push for improved performance. Working on excellence becomes a habitcourse: pattern, development internalizing takes new on levels a stair-step of performance, turning those into automatic and systematically makedriver efforts is one at who makes improvement successive levels ofonly improving to driving automatic, disrupt habit and seek yet further levels of performance. When behavior, we free ourselves to better attendwith to the passengers. road and conversations Once automated,on however, their own. skills no longer improve it’s been internalized. Ericsson observesperformanceintoautomaticbehaviorisbothaboonandanobstacle.When that our ability to turnwe effortful turn our concentrated efforts to learn to drive a car into automatic continuous improvements in performance: We progress by turninglevel a of new development into a habit and status quo and then build on it once among elite performerspractice is itself into the a habit pattern. result Habit becomes of the scaffold turning supporting effortful, deliberate the right habits. Successful people arethat those who bring have internalized success. habits Thisnever be provides achieved if them they always with had a to rely consistency on fragile that willpower. could 130 BEST PROCESS #2: BUILDING ON STRENGTHS aaeeusat.Te ekt vi ossaddadws hnthose When drawdowns. and losses avoid to seek They upstarts. Japanese u lodentalwte ostte back. them set to setbacks them weathers allow That only doesn’t deliberate. not also stay performer but elite to The able factor. be self-control the must is we research. practice, Duckworth’s deliberate in sufficient sustain not To we was If success, Without grit, for setbacks. But necessary occasion. practice. embrace while deliberate we on true sustain that short cannot means we fall resilience, it envelope emotional we’ll lose the ourselves, or Pushing challenge it conscientiously. a use continually it of chart to spirit resilience to the ability stick maintain in the and to self-control, action ability (2) of and the course setbacks; grit, from (1) rebound contributors: and as out on, stood move to seeking quo. In status vulnerable difficulties. a their reinforced revisit unwittingly thing was they last do the however, to level, wanted emotional they purely a guide At to trading. efforts corrective future institute their identify and made, trades, have difficult may their they revisit mistakes actively the have improvement, to performance had adaptive was of have would pattern maximize avoided they stair-step not the also emotions, drawdowns. climb negative traders their To minimize of learning. the to face what was the in goal but emotionally. adaptation Their good, trading and learning and not systematic well any and all cool, was their That maintaining back stepping difficult markets, on firm of themselves trading period from prided a a traders those experienced visited of had I Many who performance. back, traders ferreting while young in with A aggressive spoke mistakes. as and from defensive learning become to and likely out as are they occur, atr sdpee,w aeoronitra lentrta can that processes that in participating alternator are soldiers internal really Forces the training Special own rigorous once and undergo athletes our Rather, who Olympic drain. have Those recharge. periodically we a we provide depleted, that is battery a battery exactly not depleted. to feel is to access begin consistent we more when times gain at to focus learn and capacity energy can a of We itself resources cultivated: is be sisu can that out that points the Lahti experienced phenomenon. have course, second-wind the of as discovers Runners, one efforts. that extraordinary wind of second result of kind a as it describes under persistence Lahti than duress. more is Sisu culture. Finnish native her in grounded hnAgl ukot ta.(07 tde ucs,tofactors two success, studied (2007) al. et Duckworth Angela When the like less and automakers US old the like more operate traders Many mlaLhihssuidapriua tegh called strength, particular a studied has Lahti this? Emilia do to able they are How iui eyipratcnet eas tsget htwillpower that suggests it because concept, important very a is Sisu www.MyChart.ir sisu, htis that BEST PROCESS #2: BUILDING ON STRENGTHS 131 . In the In a very . His urgency in working ■■■ . Like many successful traders who find a sisu entered. It was an idea in the equities markets that had caused some Oskar differed from his colleagues in that he was not comfortable with Oskar didn’t like that. He wasn’t focused on the money he had made. But, no. Oskar knew exactly how he wanted to manage his upside: He sold Oskar is a trader whose performance has led his firm for a while. It improvement dynamic in which theof extension energy. of the self is itself a giver cultivate sisu. Pushed tolearn their to limits more again consistently andbecomes access again, gratifying their and these second pleasurable, performers setting winds. up That the access essential performance itself the appeal of climbing yet taller heights and achieving even higher goals workouts and accessing calling in markets, he could have retired on his earnings years ago. It was He drilled down on hisimportant performance to sense, find he things was toMarkets work simply motivated on. offered by him a self-improvement, kind not of by gymnasium for trading deliberate itself practice comfort. As soon as heHe experienced started a researching other winning markets period, and he ideas to became find antsy. new opportunities. good ideas simply becausemidst of they making had money, his not focus wason panned on the getting out issue better was previously. every bit as great as if he had been in drawdown. he entered the trade, his recent gains would have been larger. He wanted to improve his level of resilience so that he wouldn’t avoid losses earlier in thehe year. decided Although to the not opportunity pursue recurred the recently, trade because of those earlier losses. Had some of his cashwith positions solid risk/reward. and What he rolled wanted over tonot discuss his was a options trade that into he had new strikes longer-term positions. period of performance,by he phone emailed at me myweighing and earliest how said convenience. much My profit he he assumption wanted should was to take that and speak he lock was in versus let ride in quite well. As he begannot change to significantly. make He still money, looked his forand conversations improvements ways he with of could working me make on did those improvements. After a particularly strong wasn’t always that way.extended When period Oskar of first negative began, performance, he though went he through managed an his risk 132 BEST PROCESS #2: BUILDING ON STRENGTHS idmadKnowledge and Wisdom you. about say might central most are that strengths relationships five the 5 trading and your 4, to 3, are 2, that 1, with strengths label areas, of assessment the (VIA-IS). is Strengths test the of cultures. that across by Inventory valued of designed Action focus test in particular a Values A by the assessed called are authors These next. summarize briefly htdoehmfrad aigsrntsws’ nuh enee to needed He enough: those. wasn’t hone strengths continually Having forward. him drove that ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ strength: of disorders, psychiatric domains of six system defines classification DSM the to counterpart a designed as clearly sanity,’’ of ‘‘manual Their (2004). Seligman and from Peterson of comes strengths examination at research-based look different the very A strengths. categorizing identifying for scheme and one but is Clifton and Buckingham of research The ■ Temperance Justice Humanity Courage knowledge and Wisdom esetv:Wso,cpct o utfctdviews multifaceted for capacity Wisdom, Perspective: curiosity and activity Intellectual learning: of Love thinking critical thought, of Independence Open-mindedness: experience to open Novelty-seeking, Curiosity: ingenuity Originality, Creativity: Transcendence eeaete2 hrce tegh ulndb eesnadSeligman: and Peterson by outlined strengths character 24 the are Here 24 the of Out exercise. short a conduct let’s list, earlier the with As will I that strength of areas specific 24 are domains six the Across oka hrce Strengths Character at Look A hnw’ltk oka htyu atrigo strengths of patterning your what at look a take we’ll Then . n hnietf h v tegh otcnrlt orclosest your to central most strengths five the identify then and hrce tegh n Virtues and Strengths Character www.MyChart.ir from BEST PROCESS #2: BUILDING ON STRENGTHS 133 From the exercise, you should have two lists of top five strengths: Spirituality—Sense of faith, purpose Hope—Optimism, future-mindedness Humor—Playfulness, ability to have fun Appreciation of beauty and excellence—Capacity for awe, wonder Gratitude—Thankfulness, appreciation of life Prudence: Deliberate, practical Self-regulation: Self-controlled, organized Humility and modesty: Accuracy of self-perception, ability to acknowl- edge mistakes Forgiveness and mercy: Compassion, empathy Fairness: Moral responsibility, consideration for others Leadership: Capacity to take initiative, guide others Citizenship: Social responsibility, teamwork Social intelligence: Emotional intelligence, interpersonal skill Love: Connectedness, capacity for attachment Kindness: Generosity, nurturance Vitality: Energy, enthusiasm Persistence: Persistence, industriousness Integrity: Authenticity, honesty Bravery: Valor, willingness to undertake risk ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Courage ■ the first for our trading; the second for relationships. Take a look at Transcendence Temperance Justice Humanity 134 BEST PROCESS #2: BUILDING ON STRENGTHS ucs ntaigadtoeta rn orrltosi happiness? relationship your your bring to that lead those that and strengths trading the in are success similar How compare. lists those how n aiyi culyabedn fcr tegh htalw l obe to all allows degree. that meaningful strengths a core to of expressed blending a actually a as family—is writing, appear and trading, might coaching, what in quickly words, involvement would other lifestyle—active In multifaceted I focus. domain, challenges other-centered competitive the the enjoy a of without deeply tire in success, I development and While and life learning psychologist. is person’s of a same another as of The work part performance. my but being suboptimal the to me for respect of in with destined side earlier true was one mentioned embraced other that lessons the work not the in myself realized Immersing have chapter: would I trading, spouse, strengths. psychologist, emotional and a interpersonal as on draws draws functioning parent trading my and my and simply, strengths most intellectual distinction interper- on the emphasizing put Humanity, To draw sensitivity. of qualities sonal strengths category on Relationship the focusing ideas. from trading Knowledge, predominantly original and generate Wisdom to of needed heavily category borrow strengths the rela- Trading from and different. trading quite the are Otherwise, particularly strengths positivity. hope, tionship and is optimism strength of overlapping intelligence, aspects one the social as The kindness, well hope. love, as and includes: relationships integrity, coach, family I and people marriage with my those covers relation- which My hope. list, and ship persistence, open-mindedness, learning, of love otbscbrmtro hsitgaini h ereo u personal our of degree the is integration this of barometer basic most a strengths. represent signature your may a of involvement in synthesis as ways market higher-order the are and indeed, relationships you problem; blend who a you from necessarily which not significantly is differ This may friend. trader and spouse a as are you Who a efre hseecs eoeItidm ada full-time at hand my tried I before exercise this performed I Had creativity, qualities: five following the includes list strength trading My aealo tyu it n e fyucnietf iia integration. similar a identify can you if see and lists your at look a Take o ow nwi eaescesul lnigorsrnts The strengths? our blending successfully are we if know we do How ufiln ietl nertsordfeetstrengths. different our integrates lifestyle fulfilling A e Takeaway Key www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 135 , I found my first niche The Psychology of Trading Higher-Order Integration of Strengths As I pointed out in One trader I knew many years ago was involved in a relationship with hope that counseling canhow help much her I find charge for gratifying sessions. relationships and asks to deal with the aftermath ofone several example unhappy relationships. after She another recounts ofbe reaching taken out advantage and of giving by the of men herself, in only her to life. Shortly after, she expresses market communications. The skilledcommunication psychologist and looks for meaning patterns thatpeople of to shed therapy. For instance, light a young woman on might come the to counseling concerns bringing in trading when Iof recognized conversation the between counselor similarity and between client tracking and the following the flow flow of strengths. The trader in the unhappyan relationship integration. was unable When to we find integrate such as strengths, a creative the approach result to often work shows and up relationships. Some of life’s greatest fulfillment comes from bringing together multiple ■ as seeming complementarity devolved intoeventually an disintegrated. unhappy The relationship that failure toto relationship integrate weaknesses. differing strengths led schisms grew: He became more involveda in Democrat. Republican She politics; spent she more was spent time more with time friends he with viewed friends as she ‘‘artsy’’; saw he as ‘‘good ol’ boys.’’ What started what he sawmusic as and her theater lack activitiesbut of that that support. had increasingly He been encroached on a gradually time large pulled for part away trading of and from their research. dating, The list of priorities, and sheconcern could with not understand markets his and sometimes-obsessive trading performance. He began to resent found her interesting and stimulating,he and displayed she about appreciated the politics,however, curiosity conflicts economics, began to and take hold. world Making money affairs. was not Over high on time, her and frustration. a very bright woman who had strong cultural and artistic interests. He well-being. When we successfully find expressionthe result of is multiple a strengths, life thatthe brings expression happiness, satisfaction, of and our meaning. various When strengths is blocked, the result is conflict 136 BEST PROCESS #2: BUILDING ON STRENGTHS mind? tit rdn rcie ealoesildtae h aefo a sequences and recurring from track sequences to came ability musical keen integrate who a to as trader to trading in sensitivity skilled up way showed His one motifs a background. recall found music I and practice. classical strength trading distinctive into a it taken have who a importing domain. of performance way fresh This my a became into trader. strength it, a unrelated called as seemingly I a strengths as couch,’’ as creative the strengths and from ‘‘trading interpersonal competitive my my integrating with larger of the therapist way to respond my step and to became market, ability the picture The of were lows. communications ensuing the sectors the the be read from few would back, rally those a a often, lead quite would Very that weakness. that sectors fresh notice new the to to in but respond off participating sell volume, and not markets increased detect see would on to I needed lows times Many perspective emotionally, themes. the reacted underlying and muster the way not if personal therapy, could a in in I as communications trading, the In took communications. to I was those communicating job read my and were weakness; back and Markets stand strength falling recognition. and pattern rising about of something kind same themes this the link me. toward can healthy behavior I her and because and new issues possible this presenting is her begin That between to man. eagerness a an with fee with relationship a and with respond meta-message—I’m reasonable will my is money—and read your that will in relationship than she new you a that in for interested good ready I’m more very is and she are if me, odds way to The the in she important life. stand what is fees know let happiness me to her going let that not should emphasize she so I do, afford. I can than better money budget her her for knows alliance. good her ‘‘using’’ a however, of as forging across meeting, the come complicate first will I this our if fees), that, is (the good this feelings are that handle odds to Given the opportunity differently. an such needs as relationship, our finds useful and solid in she quite issues a that be her forged fee could reenacting already a reenactment symbolically she’s we her for Had quote Now up the I relationship. myself If to men. working set male. I respect by a high, me, be with used to to deaf heart feels her tone She out be pouring issue. would psychological but underlying asking, she’s question owa oi u h e su ako e.Ipitotta she that out point I her. on back issue fee the put is do I what So literal the address would That fee. a quote my is through do going wouldn’t What’s I question? What her to respond I would How vrteyas h otscesu rdr ’ekonaethose are known I’ve traders successful most the years, the Over on drawing myself found I trading, in involved became first I When www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 137 Key Takeaway The well-being that comes fromcan expressing ultimately fuel strengths improved outside trading. of trading Many effective higher-order integrations of strengths have nothing to Other higher-order integrations of strengths result from wedding Still another talented trader brought to markets a successful career trading. Many traders use middayenjoying hours bonding for time hard with workouts colleagues,that in but carry the over also into gym, stimulating research endorphins and trading. and periodically get togetherrelaxed setting, appreciation to of creative sample beers, and resulting new conversations inevitably and stimulate unusual fresh brews. ideas The that find expression in coaching and gratifying, but also makes forwith a my powerful shared wife—and relationship ultimately experience Several stimulates traders creative thinking and in I markets. have developed a strong interest in craft beers do with trading, but canfound benefit trading that nonetheless. I travel have consistently to unusual destinations is not only intellectually and social commitments providesbeyond the meaning daily movements and of motivation profits and above losses. and fulfillment in mentoring up-and-comingcauses traders. and On teaching others the might surface, look likethese social distractions traders, from however, markets. the For synthesis of trading with these interpersonal interest. Their trading is aa portion solo of pursuit, their but profits theyactively to find pursue fund meaning opportunities socially in valuable to using causes. train Other junior traders talent, deriving immense trading to seemingly opposedmany areas traders of who interest. possess For a example, strong I sense know of social responsibility and day. What made himfrom his successful playing were days on the the very college field. strengths he imported as an amateur athlete.constructed his He own defined workouts trading andthe ‘‘game ultimate as films.’’ sport, For a pitting him, him competitive against trading the sport was world’s best and competition each he found, were not so different fromin those similar in music resolutions. and typically resulted in markets and their underlying nuances.translating market Indeed, behavior he into often musical found terms, complete himself of with rising sequences and falling volume, pitch, and cadence. Crescendos in markets, 138 BEST PROCESS #2: BUILDING ON STRENGTHS aeyhsbe h nerto fsiiult n rdn performance. trading and spirituality of integration the been has lately ero alr ihatv oncens hog ryr ewsal to able was he prayer, through connectedness active with failure of replacing By fear student. the to speak not did is exercises psychological ‘‘What Standard anxiety?’’ your away! or with bang Lord him the to in label him faith ‘‘your would encouraged been him, this I asked had I banger.’’ that He stronger,’’ ‘‘Bible fearing class. a that, each as start like peers to anything and prayer do classes of to to moments Bible afraid few his bringing a prayer. idea: We in of unique power engaging Christian. a the to evangelical including led faith, an conversation of power That as he the faith mindset, about length student’s spiritual at the spoke deep into very further had his delved techniques revealed I cognitive When and from benefit. suffered exercises who limited Behavioral counseling anxiety. in with test worked creativity: severe I of whom kind student recall I a a personalities. to vividly and values, amounts needs, our change to methods behavior employed. self-help actively to adapting are secret they unless the trader of a techniques to Much self-help useless best be for will the world medication all the taking Similarly, in in effective. compliant be be to to treatment has the bottle. patient the the in words, they’re when other work In don’t pills that physicians among saying activities those sustain to times own. and multiple their failing on dieting after is programs exercise social this and from diet benefit of people of not example seen have classic does I again, A discipline and Time strength. exercise. that of benefits—if that area promises some pursue Because not express it Why? generally if there will suggestion. discipline—even often, People missing. a the Very is on yoga. Transcendence of or follow-through strength meditation little undertake be he will that trader out comes synergy benefits. mindfulness the and personalities; reduction stress their additional the of meditation from aspect The this significant. develop and feel higher, activities to long larger, and They something Peterson category. to that well Transcendence connected strengths goes the with often in traders place it would be but Seligman to reduction, tend stress These is that. course, beyond from of greatly appeal, the benefited of have mindfulness. Part promote with to designed worked disciplines other I’ve and yoga, traders meditation, the occupation, spiritual of particularly many a as but trading of think normally don’t We mgn iuto nwihI sacah ugs oastressed- a to suggest coach, a as I, which in situation a Imagine encountered I’ve that strengths of blendings creative most the of One ttre u hsvr ipeitreto okdaaigywell. amazingly worked intervention simple very this out turned It old an There’s self-improvement. for implications profound has This www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 139 , Geoff Colvin makes a worthwhile , I described some of the research pertaining Talent Is Overrated Revisiting Multiplier Effects in Development In his 2008 book, What the research found is that our native talents (strengths) lead Enhancing Trader Performance zone.’’ We will explore the flow state in greater detail below, but it is tradiction: Deliberate practice is effortfulin and yet deliberate performers practice immersed experience a pleasurable sense of being ‘‘in the observation. He notes thatchosen the environments, multiplier and effects deliberate derivedintrinsic practice motivation. from This, are talents, he ultimately points out, driven helps by to explain a seeming con- played no role inpart my of selecting my development. environments To and this day, hence I never have little became mechanical aptitude. a multiplier effect: The enrichedhoned environments my that talents, I sought so out thatarea further I relative was to on my an peers. exponential growth Mechanical curve skills, in not that evident in childhood, I spent time in thewho local library appreciated and my found love encouragementout from of environments teachers reading. that made My the most initial of talents my verbal led abilities. me This created to seek devoured every book ofmy Greek hands and on. Roman I mythology loved that stories I of could the get heroes and gods and their exploits. was not elevated insurprisingly, the I did least not and gravitate tothings in classic and fact boys’ activities working was such with well as building my below hands. normal! Early Not in grade school, however, I us, from anFor early instance, age, I displayed toInterestingly, my signs performance prefer IQ—a of measure certain a of visual/spatial environments ability— high verbal over IQ others. from an early age. as a writer, does thator primarily is it come cultivated from through exposure inborn to talents the right and environmental capacities influences? was the resultenvironment of in efforts developmental outcomes. to For example, tease if apart I have the success effects of heredity versus In to multiplier effects in development. The discovery of multiplier effects ■ the student; the otherboils didn’t. down What to often an looks issue of like alignment a with motivation strengths. issue place his worries in perspective.very Physiologically, similar prayer impact may as have a hadslowing a down breathing thought exercise, and focusing emotional concentration arousal. and One, however, spoke to 140 BEST PROCESS #2: BUILDING ON STRENGTHS oiaindrvdfo xrsigadeecsn n’ tegh.We strengths. one’s intrinsic the exercising of and function expressing a from be may derived zone motivation the in operating that noting worth n okevrnet r o elsie oorcpcte.Agreat A our shape capacities. help our interests romantic to Our marriages. social, suited failed physical, is well this our of not that example are likelihood good environments a work is and there zone, rarely the we If in implications. operate profound has talents those develop and have exercise would He possible: been multipliers! have not effects,’’ would ‘‘division faced engineering trading such environment a on home no worked His he floor, Had edge. distraction. his such not minimize to was engineered that was and only trade markets to moving at him looking tempted perspective, need screens his don’t From no I beast.’’ one. see the for feed to call ‘‘I’ll to surprised said, he was quote,’’ and a want house I visiting ‘‘When his anywhere. recall at I others. trader for successful not very and only a traders some find for well others arrangement traders works the screens floor; Even Some of discussion. and trading banter environment. floor the in same distraction on and noise the interaction in from placed greatly yield firms they benefit are trading that traders at needs particularly all challenge, our major where to a tailored is This so effects. not multiplier are also but development, drew that one strengths. to multiplied—his environment stagnant on—and a and from before went He than successful. happier more was to He and how skyrocketed. also performance development Functioning manager’s knew were professional portfolio ideas. the but All trading environment, enhanced day, fresh markets. this generate all in in to screens able dislocations professionals to short-term creative glued of be advantage to take want professionals successful didn’t work experienced, optimal who were their and partners created they The stresses together, environment. partnership minimized and, effective that colleagues an several developed trading with He firm to abilities. He his research approach capital. his left own an maximized who his sought manager managing long now portfolio is a had and with strengths. performance spoke our lackluster I on after draw day that other environments the ways in Just exponential ourselves in place grow we We when to development: applies professional much and very personal however, principle, The development. childhood those fulfillment. and because gratification precisely deepest strengths the offer our environments cultivate that environments seek oto h eerhltrtr nmlile fet etisto pertains effects multiplier on literature research the of Most h data aet edu ose u niomnsta nturn in that environments out seek to us lead talents that idea The and learning hamper actively not do environments trading Many www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 141 ■■■ Key Takeaway evolving, but not consistently. For example, a trader recently are Multiplier effects ensure our growth as traders. One of my favorite solution-focused exercises is to take an inventory Why is this important? If you are on a positive learning curve, benefiting from multiplier Here’s a very quick survey: How, specifically, is your trading different Good partners make eachpartnerships other and better. trading teams. It is the same in solid business social and emotional environments.than When draw relationships on thwart ourthan rather strengths, enjoyment. they Good create romantic more relationships conflict bring and multiplier frustration effects: in too many ways. Some of those were reasonably profitable and others emailed me andtrading, lamented he his found trading that losses. he When was taking he too examined many his trades, trying to trade The ingredients of success may indeedconsistently reveal contribute the to factors that the could multiplicationwe more of our talents. Many times of best trades andour reverse best engineer trades, and those. what What caused our made downfall us during our successful worst in trading? those strengths. In adivision world effects, of not developmental use multipliers. it or lose it, stagnation brings those you cannot identify important, positiveevolved ways in in which the yourstrengths past trading or year, has your either trading your environments trading are is not not optimally playing exercising to your ensures that we continuallychallenge and seek fulfill us. out That ongoing environments exposure toand and fresh inputs, environments situations challenges, ensures that that we will keep learning and growing. If profitability. Stagnation—trading inchange—is the the surest same sign waysThe that you even intrinsic are as not motivation multiplying markets that your strengths. accompanies the exercise of strengths effects, you should be growing your trading practices, not just your today compared with a year oryour two trading ago? style, What markets, changes have and you processes made over to the past year? 142 BEST PROCESS #2: BUILDING ON STRENGTHS uhpoe hnh a eea rdso hnwe efcsdon focused he when than on performed trades he several that had he was when observation poorer interesting much One disastrous. were eas nrni oiain aetknabcsa oetiscones. two—it’s extrinsic to or backseat year a a taken have of motivations period intrinsic see the because we love over when they growth often, all, Very trading—little risks improvement. of stagnant of the most process Perhaps managing the ideas. and and their self-mastery markets, with in associated rewards ideas and those ideas, of generating love expressions traders finding Passionate motivation processes. intrinsic The trading trading. from of comes motivation money extrinsic The the professionals. is successful incentive drive and performance that of outcomes process the studies the merely Those is not it trading. that of clear work make practice actual deliberate the of to than rather money, making manage to how clue managers. no money of have are flows would information trading. who but the firms for people, financial in managing needed managers at information talented excellent very incoming with worked of in also processing excellent I’ve rapid been good many the have not are for who at who but strength analysts trends, their macroeconomic a many and out companies not with researching bring is worked simply to I’ve This ability amounts people. quickly. large its process often in to information, ability limited of an trading requires entrepreneur Trading find or and strengths. to biologist, greatest meaning likely member, greatest very clergy their artist, is finds an who as Someone development variety wide strengths. the express human and embrace of optimally can endeavor of field being No well. rather trading was but he himself, when was changing already often he require so who not of have more did I As success experience. his more his markets, found, from in immersed energized more more far and on was he focused profitable, skills, instead When his and state. fit general that flow in his trading trading possible the divide at any succeed to of to him out trying stopped causing him he took were turn positions in Multiple which time. attention, a at trade one eha o bu eradged u scooia well-being psychological trading but for experience greed, emotional and important fear most about the undoubtedly lot is a hear We ■ r hr epewosml r o u u o rdn?Absolutely! trading? for out cut not are simply who people there Are o aytaesaeatatdt akt eas ftealr of allure the of because markets to attracted are traders many Too mtosi rdn Psychology Trading in Emotions Important Most The Well-Being: Subjective www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 143 .Itis Indeed, it is the very infrequent infrequent occasional often very often HAPPY, JOYOUS, HAVING FUN: It is when one or more of these dimensions are chronically low Note that at any given time we can score high on one or two of these So what is psychological well-being? Research finds four broad dimen- By the end ofyou’re not the rating week, your mood you’llassessment every of have hour your or seven day’s so. emotional sets experience. Rather, this of is ratings. your best Note that your emotional balance. Printday seven for copies a of week, the rateby your list circling day’s below one experience and, on of each the the following choices dimensions following each set of emotion adjectives. Self-Assessment Exercise This emotion journal is a very simple exercise that can help you assess very difficult to, say, maintainwe intellectual lack curiosity energy and and are creativity swamped when with angry, frustrated feelings. balance between positive and negative emotional experiencethe that helps degree to determine to which we can consistently access and draw on our strengths that we findoccur disruptions when of negative emotional mood experience, suchanger/frustration, and as and anxiety, guilt, performance. depression, dominate Disruptions positive emotions. also response to life events anda changes constant in high lifestyle. degree It’s of unrealistic well-being across to all expect situations. energy. Similarly, wefriendships might and enjoy marriage, but a remainprogress. less high It than is degree content also with of common our for affection trading these in four dimensions our to rise and fall in dimensions and low in others. Forand instance, we content, might be but generally happy because of poor physical health we could be lacking 3. Energy—Enthusiasm and excitement4. about life Affection—Meaningful connectedness to others 1. Happiness—Positive emotions, including2. pleasure and Contentment—A enjoyment sense of satisfaction with self and life the absence of positivity that can lead to suboptimal performance. sions that contribute to the quality of our experience: performance. Positive emotional experiencefrom contributes concentration to and everything memoryeven physical to health. It creativity is and not just productivity—and the presence of negative emotions but 144 BEST PROCESS #2: BUILDING ON STRENGTHS o eesrl cr ihahg aac fpstv ongtv emotions. negative positive to experience positive many of Indeed, balance high a with score necessarily not life. good enjoyable frequently a is an the more distress for infrequent recipe emotions analysis, and well-being positive of Frequent ones. experience level negative capture than we broadest sets if the assesses four At exercise second (distress). the experience and negative (well-being) experience emotional week. a for day every page this to Return ore taygvnmmn,pstv n eaieeoinaelkl to likely Of are emotion another. negative and one positive moment, of given any independent at course, relatively are the experiences in findings emotional of set important very a highlights literature. research This week. to week RSRTD NR,ANNOYED: ANGRY, FRUSTRATED, FEARFUL: ANXIOUS, WORRIED, DEPRESSED: NEGATIVE, DISCOURAGED, FRIENDLY: OTHERS, TO CLOSE LOVING, EXCITED: ENERGETIC, ENTHUSIASTIC, PROUD: SATISFIED, CONTENT, neetnl,hwvr ayo h ucsfltaesIhv nw do known have I traders successful the of many however, Interestingly, positive capture adjectives of sets four first the that see can You SELF: WITH DISGUSTED GUILTY, SELF-BLAMING, n fteeris ftoefidnsi htpstv n negative and positive that is findings those of earliest the of One eyifeun nrqetocsoa fe eyoften very often occasional infrequent infrequent very often very often occasional infrequent infrequent very often very often occasional infrequent infrequent very often very often occasional infrequent infrequent very often very often occasional infrequent infrequent very often very often occasional infrequent infrequent very often very often occasional infrequent infrequent very and eaieeoin rqetyfrom frequently emotions negative www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 145 , note Positive Psychology Key Takeaway Negative emotional experience canrisks. be very useful in managing trading Compton and Hoffman, in their 2013 book, Research with twins and adopted siblings suggests that temperament As you look over the emotion journal you have kept over a week’s of overconfidence biases by continually preparingThe for blend adverse of outcomes. positive andsuperior negative risk-adjusted emotions returns. actually helps them achieve from risk management concernswithin and and keen across positions. awareness I’veare of ‘‘worriers’’ often and vulnerabilities ‘‘warriors’’: they joked take that risk, but many keep talented themselves clear traders different. Positive experience comesgenerating ideas and from seeing them come the to life. intrinsic Negative experience comes enjoyment of emotionality does not necessarilyand imply vice increasing versa. When negativepositive successful emotions, and traders negative experience emotions, high the levels sources of of both those are typically quite that unique processes areemotional involved in states moving versus from neutral neutral to to negative positive states. Reducing positive be negatively correlated, although we occasionally haveabout ‘‘mixed feelings’’ certain situations. Asrelationship between we positive and widen negative emotion the weakens. time frame, however, the has a strongemotions genetic are basis: most Parents likely who to experience give a birth wide to range emotional kids; of those who a relative balance of emotions versus a tendency toward negative emotion. That variability itself isemotional meaningful, as experience. it One captures ofemotional the balance the versus volatility neuroticism: core the of degree ‘‘big to your which five’’ we personality experience traits is emotional balance, as work,situations relationship, can financial, change physical, significantly. and Takeratings social a of look at each the variability of in the your categories across the seven days of the week. time, you willexperiences no that doubt illustrates seeeven the variation relative longer in independence periods, both of you positive those. might and Over negative observe considerable differences in 146 BEST PROCESS #2: BUILDING ON STRENGTHS r eaieyee-eprdaems ieyt aepai ais The manifest babies. temperaments placid our way have one is to experience emotional likely of variability most are even-tempered relatively are mtoa aaeeta u oe management. money our as management emotional that environments compatible emotional effects. out multiplier seek represent those to provide us temperaments lead such, Our as and, lacking stimulation. strengths stifling, and state richness optimal my more in find with emotional Others, would without balance. temperaments, emotional downs best emotional positive function and overall I ups an and have balance. continual extremes would own the I my as reason. destabilize however, that would lives them, for emotional with entertaining rich living have and difficulty who engaging people quite many are known and have more I simply expressions, moods. facial are interactions, and their people in up Some shows This others. frequency. than intense the than rather experience, term. short the in path trader as random negativity and the relatively of profits a periods be traces with her performance alternate or would would his positivity this by of swayed Periods of positive losses. greatly in example is spend experience we good emotional that A time whose of states. amount negative the of takes versus waning emotions of of and variability amount waxing that the a form than One is mode. experience each overall in our spend we to time crucial less happiness response of are experiences the sadness extreme of or few A wording journal). emotion the the most of (hence is options well-being that intensity overall the for not is and responsible it experience that emotional suggests 2009) of (1997; frequency colleagues the and Diener Ed of research lows The and highs emotional for wired more others. are than us of Some themselves. ahr emksmdrt eswt smc ossec spossible as consistency much as losses. nor with wins bets change big doesn’t moderate neither for also makes looks Eddy he He Steady much. Rather, game. very trades the on of sizing part his both winning are and stops losing and and targets with or planned positive are in Trades swings emotion. big negative doesn’t experience this doesn’t He and time. emotions over of greatly balance change positive generally a has Eddy Steady ifrn omo aiblt etist h mltd femotional of amplitude the to pertains variability of form different A ways. two in itself manifests experience emotional of variability The tsrrl eonzd u u rdn tlsaea uhaotour about much as are styles trading our but recognized, rarely It’s osdrtotaesw ilcl tayEd n mtoa Edgar. Emotional and Eddy Steady call will we traders two Consider ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 147 ■■■ In Eddy and Edgar, we have two different traders with two completely Emotional Edgar is a highly competitive trader, with a previous Now let’s consider two other traders, whom we will call Research but he achieves superior absolute returns. Eachhas is successful, found because a each way to trade that maximizes his particular type of well-being. hurt. Eddy has areturns. high Edgar Sharpe can ratio: and does He make achieves and superior lose risk-adjusted a good amount at any time, his emotional balance and keepsstyle him of focused on trading his helps core himgreatest trades. maximize Edgar’s opportunity energy and and optimism profit when greatly he when sees other traders are getting significant amounts of money. Those are the trading days he livesdifferent for. emotional makeups. Eddy’s style of trading helps him maintain no longer drive price higher or lower.out At of those his times, chair, Emotional Edgar fading is thecan herd bleed with capital, large but size. when markets During get slow busy markets, and he one-sided, he can make is dominated by market makersdirectional or speculators. It if is there in the is latter marketsmoney. broad that His participation favorite he trades makes among come most when of the his speculators are offsides and can is in the market and whatOne they glance are at doing a at depth-of-market each screen point and in he the can trading tell day. you if the market world’s best money managers and computer systems.markets He most stays of engaged the in time, as fastopportunities breaking for news him. or Emotional data Edgar’s releases greatest can skill create is recognizing who background in high schoolchanges and from college day to athletics. day, as His he hates emotional losing balance but loves battling wits with the and aims to maintain apatterns positively that sloped he profit/loss trades curve. in Hethose. a When has discretionary those a fashion patterns few and are deviates not little present, he from does not trade. when she is completely immersed in the investigative process. intensive work periods, all calls goScreens to are voice turned mail off and at the those phone times is as muted. well. Rachel is never happier than finds she generates her best ideasSoft when she music is plays content and inwith not distracted. the original art background, on and the the walls office and scented is candles well on decorated, the desk. During Rachel and Social Sarah. Research Rachel tradesreads from copious her research reports own and office. conducts She hereconomic own studies data. by modeling She maintains a quiet work environment, because she 148 BEST PROCESS #2: BUILDING ON STRENGTHS h rdn or u aeysasi h et h ak paddown and up walks She seat. the in stays rarely but floor, trading the e hnamre slkl omv n hni slkl oreverse. to likely is it when and move tells to This likely times. is all market at what a doing when is her Her who orders. of placing abreast her before keep color relationships market and Sarah quotes and for together comes phones information furiously this of all times, affecting At flows markets. and major reports, economic latest Social banks, information central gathering overseas televisions. day, about She per cultivated. colleagues overhead of has dozens she the with network speaks routinely information on the phone, is news strength by great financial conversations Sarah’s the on carrying watching traders, and with speaking aisles, the ep odtriehww naemarkets. different engage we very how a determine to is affection helps and it makeup. energy, contentment, but emotional happiness, blend trading, we and How in well-being. style well-being work psychological her find Both to finds conducive who creates Each environment another connections. an social focus, energetic and and active through contentment well-being quiet through well-being 3. 2. that 1. traits of set five’’ of ‘‘big a personality: aspects identifies comprise research broader of and wealth A intimate well-being personality. the illustrate psychological Sarah between and Rachel, connection Edgar, Eddie, of examples The ■ ycmaio,Sca aa sawilid h cuisasa on seat a occupies She whirlwind. a is Sarah Social comparison, By neaan ehv w eydfeettaes n h derives who one traders: different very two have we again, Once u okadevrnetsaetewy nwihw ilexperience will we which in ways the well-being. shape environment and work Our pnest experience to Openness people in emotions negative Extraversion and positive of balance even more a versus emotions balance Neuroticism/emotional elBigadPersonality and Well-Being Scaiiy tmlsseig n noton interest outgoing an and stimulus-seeking, —Sociability, Lv fvrey oet,adashtcinterests aesthetic and novelty, variety, of —Love e Takeaway Key Tepoest oeprec negative experience to propensity —The www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 149 —This is the trader who is highly disciplined, —The creative trader is turned on by ideas and fresh —The tendency to approach situations in organized, —Like Social Sarah, the social trader processes infor- —Likeability and the ability to get along well with others disciplined, and detailed ways Agreeableness Conscientiousness Following are a few common constellations of personality traits, Each of these personality traits can be thought of as a path toward The creative trader and relatively free of emotional impulses and biases. The social trader trader approaches markets methodically, sometimes by trading systems or by integrating discretionary decision making with backtested signals. The grounding in rules and routines serves to keep the trader focused The conscientious trader operating by clear, explicit rules and processes. The conscientious dominant motivation. itself through ancuriosity interest across markets in and multiplebe trading instruments. secondary sources Trading for of may even the information creative and trader, as intellectual curiosity is a approaches to markets. The high openness to experience manifests often the social tradermarkets, is providing highly a attuned potential todirection. edge what when others the are herd doing is in about to shift mation in interpersonal, interactive ways andcollaborative works style. in The a social highly trader social, oftenconversations participates in on online chats, the trading floor, and gatherings after hours. Very ■ ■ ■ emotional characteristics, andamong successful cognitive traders: styles that I have observed styles, helping to determinelike how to we do process with information that information. and what we conscientiousness. Edgar took openness toto experience an and extraversion extreme,significant seeking risk. Our in personalities embrace markets both cognitive distinctive and emotional opportunities to take the personality dimension of extraversion. Research Rachel,hand, on was the other more introverted, happiestidea when generation. open Steady to the Eddie experiences was of a model of emotional balance and well-being. Social Sarah, for example, displayed standout strengths on 4. 5. 150 BEST PROCESS #2: BUILDING ON STRENGTHS ■ ■ us. within best the out bring to is it emotions if energy, joy negative provide and to the fulfillment, needs control trading Our merely trading. to with enough associated to sometimes not likely is energy, satisfaction, It most happiness, affection. brings and We’re doing we’re our this. in what effects we for if multiplier development those As reasons experience suggest and success. logical work to in our ourselves are immerse decades to there essential recent above, is in saw experience accumulated emotional has positive evidence that of wealth A ■ on ast xrs hs hog hi aktparticipation. market their through and those important. strengths express uniform distinctive to crucially possessed a ways they or found is Rather, type strengths. This personality or traits single personality. of a set her possess not or did his traders Successful fit that his trading approach across an found to (2012) Wizard each findings that was interviews strongest and Wizards Market Schwager’s traits many Jack personality of and emotional, One cognitive, strengths. our with greatly however, varies trading, from derive we well-being The performance. trading of or better you. is for style better which is not which is but course, worse, of excitement issue, curb The that discouragement. states and and strategies stimulus- from are benefit traders They balanced dampening: and emotionally research and from conscientious or traders The other ideas. from stimulation and input seek They oiieadngtv mtoaiyaentopsn xrmso a of extremes opposing not are emotionality negative and positive o mtoal aacdtaest osrc eaieybalanced risk. circumscribe relatively to options positions, construct uncorrelated and hedges, of to use making portfolios, traders and positions unusual balanced not drama is emotionally It the markets. avoiding for volatile by and Eddie, taking markets high-risk on Steady with the focused associated Like rules, stays stable. trader and naturally balanced routines the is of trader imposition balanced the emotionally through stability trader derives balanced emotionally The oiieeprec sntteopst fngtv experience negative of opposite the not is experience Positive owa ow nwaotwl-en?Hr r e e findings: key few a are Here well-being? about know we do what So sw hl e hrl,pyhlgclwl-en samjrfoundation major a is well-being psychological shortly, see shall we As stimulus-seeking: are traders creative and social the sense, rough a In Well-Being about Us Teaches Research What Weestecncetostrader conscientious the —Whereas www.MyChart.ir sntdabove, noted As . BEST PROCESS #2: BUILDING ON STRENGTHS 151 The Psychology of . Argyle reviews evidence . As Compton and Hoffman point (2001), points to research that finds a –0.43 correlation Well-being tends to be stable over time Happiness is different from life satisfaction our day-to-day well-being. Simply copingto with fuel stress performance is success. not sufficient and negative emotions hassuggests that important we need implications to take for active and traders, proactive measures as to enhance it do not necessarily bring joycan and find affection, energy for and affection example. in Similarly, asignificant we good relationship stress and in still experience our work. This relative independence of positive of the variance in positive emotionemotion is explained and by changes vice inemotional negative versa. experience, such Exercises as relaxation that techniques can to lower help stress, reduce negative single dimension. Argyle,Happiness in his excellentbetween positivity book, and negativity. That means that less than 20 percent 17-year period, roughly a quarter of people surveyed dramatically that we cannot changeand our well-being colleagues status: cited Research by from Compton Diener and Hoffman found that, over a particular moment, but weauthors tend note, to return this to isnegative our temperaments consistent have set a with points. strong genetic the As basis. the idea This doesn’t that mean our positive and out (2013), research pointshave to an a average ‘‘set-point’’ in levelEvents our of well-being. can emotional We balance lead that us persists to over time. feel more positively or negatively at any satisfaction. I know a numberunhappy of in financially their successful traders marriagesexperiences who and of are happiness, families. distinctly but Their not success necessarily has a brought sense of ongoing life be experiencing stress and distress on aweek particular day and or still during a feel given satisfiedtraders with is life pursuing overall. One happiness common at pitfall the for expense of broader satisfaction. the researchers point out,different time frames. the Satisfaction represents different a broader measures judgment about our of lives; well-being positive experience tap is more immediate. It’s not unusual to with life satisfaction andClearly, positivity negative and emotion negativity are correlates connected about to satisfaction, –0.50. but as that shows a higher correlation betweenamong happiness individualist cultures and versus life collectivist satisfaction ones. Diener’s research group (2009) has found that positive emotion correlates about 0.50 ■ ■ 152 BEST PROCESS #2: BUILDING ON STRENGTHS ■ ■ n vrl aifcin ol ru htrltosi ult a be may quality relationship that argue would that I relationships satisfaction. research romantic overall of and note quality the also between Suh association (2013) strong and a Hoffman finds and Diener men Compton others. both women. among with well-being and predicts closeness our marriage can that in lack we found unhappy have that we (1997) are rare if we is if or It energy relationships well-being. and satisfaction, of happiness, element sustain central a is Affection rmsrest eopesadrgi mtoa balance. emotional regain away and time decompress frequent to feature and screens that frustration, from routines anger, build to can prone we are those. states, we negative own that within know points—our work we that if set experience—and example, suggests own For emotional This our of change. understand balances to radically unique important however, to month, vitally unlikely to is month are the it and to points week years set to five week first our From the years. from five satisfaction life last of level their changed n oeti eti fia onre.Te xli htaverage that explain They countries. African Scandinavia certain in in highest well-being lowest find and that studies cultures several cite across (2013) significantly varies Well-being are epetn ob ape n oestse hnumridpeople unmarried than satisfied more and happier be to tend people destabilizing Married be can satisfaction. overall result to and the balance ability needs, emotional one’s for family of threaten and sources trading personal other in basic having losses meet without When trading security. their or from income living attempt who a to traders make contributing to relevant to needs, very is psychological This and satisfaction. life social enhanced their meet better people enable to can income Higher satisfaction. correlated with less than happiness is with associated income even higher been however, Interestingly, has well-being. their found, higher wealth meet have with greater (1997) to countries, Suh able higher-income and are among Diener they As that needs. perceive basic they and when happier when be particularly satisfied to tend well-being, more People incomes. with moderate and correlated low comparing strongly is income ocag u elbigstpit,w edt utvt lifestyles cultivate to need we points, well-being. maximize set that well-being our change To e Takeaway Key www.MyChart.ir opo n Hoffman and Compton . . BEST PROCESS #2: BUILDING ON STRENGTHS 153 links performance to . This is not surprising, . Argyle cites research that Trading Psychology 2.0 (2005), took a look at the autobiographical Happiness What is the takeaway from all this research? The old trading psychology well-being help people engagecontributes in to healthy well-being. behaviors, What just isgood as good for wellness for our bodies, our and minds vice appears versa. to be than the others: fullyonly 90 percent 34 lived percent to ofis the the reasonable age to lowest of assume 85. positivity that In group the contrast, higher reached energy that level age. and It optimism of accounts written byof nuns the when accounts they forhighest took positivity positive their (top emotional quarter vows, content. of rating the The group) each nuns lived significantly with longer the poor health. One particularly eye-opening study cited byin Daniel Nettle his book, Well-being is goodfinds for that our happy physical peopleInterestingly, health live negative longer emotion also and has enjoy a better significant correlation overall with health. Physical exercise is associated with elevated well-being to trading success. Conflict withinevitably a takes spouse a about toll trading on and performance. its rigors than that faced by salaried workersguaranteed in stability reasonably in secure their jobs. work, Without traders benefitat greatly home. from An stability understanding and supportive spouse is a huge contributor even more important for traders thanBecause for markets people can in be other occupations. so fickle,work traders for cannot always gratification. count That on is their a very different psychological situation inordinate amounts of time sitting incan front of take a a screen. toll Over on time, energy this level and overall productivity. emotional benefits. These benefits include not onlyby the endorphins ‘‘high’’ created but also thefitness increased can self-mastery and bring. self-image This that is critical for traders who very often spend given that energy levelArgyle’s is review finds one that even key short periods component of exercise of lead to overall positive well-being. our work. If you think of traders as athletes, then an important part of of trading well and making money;relationships, it how follows from we how meet we cultivate our our physical needs, and how we approach stress is shockingly outdated. optimal emotional and physical states—manywe live of our which lives depend outside on of how trading. Well-being is not simply a function paradigm of invoking discipline, controlling emotions, and coping with ■ ■ 154 BEST PROCESS #2: BUILDING ON STRENGTHS iedsge ootmz u oiiiy h eerhsget htnot that suggests research The positivity? our optimize live to us designed of life many How a well-being. exercising of consists conditioning their nyi hspsil,bti sasltl ia omxmzn u health our maximizing to vital absolutely is it success. but and possible, this is only a eahee hog eiae riigporm hsprogram This program. training dedicated components: 14 a of consisted through well-being in achieved gains be that suggests can impossible. however, be (1983), should Fordyce this truly genetics, by were our Research by points determined set and our stone If in positivity? fixed their improve to learn people Can ■ hntecnrlgop lhuhn fotwsmd omntrthe subjects of percent monitor 81 practice; to into principles the subjects made put of to percent efforts was 93 undertook surprising effort a group, no experimental the Although of of compliance group. variety control a higher the significantly Across than scored group training. The experimental entire (information). the measures, only the well-being program received the of group segment experimental first the con- to the assigned group Fordyce trol twist, interesting an compo- In 14 each. techniques accomplishing the specific for including about them, of information explanations detailed (1) (2) and conditions: nents; two of consisted and priority top your happiness Making 14. relationships close Cultivating problems and 13. feelings negative Reducing yourself 12. be to efforts Making sociable and 11. outgoing more Becoming 10. .Wrigo elh esnlt,icuiglkn orefand yourself liking including personality, or healthy past a on on focusing Working than rather 9. present the to oneself Orienting thinking 8. optimistic positive, Increasing levels realistic 7. to expectations Lowering 6. worrying Reducing organization and 5. planning our meaningful Improving is that work 4. at productivity Improving socializing 3. spent time Increasing 2. active Keeping 1. h riigpormdvlpdb odc atdacleesemester college a lasted Fordyce by developed program training The o a eCliaeWell-Being? Cultivate We Can How uprigyourself supporting future www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 155 , Martin Seligman describes a well-being Key Takeaway Flourish . It is not necessary to raise well-being in all respects; This suggests that tailored programs can be effective in improving We can train positive emotional experience. Fordyce observed that most of the subjects did not make use of each Seligman observes that greater participation in the program resulted An extension of the Penn Resilience Program was offered to students In his 2011 book, focused, consistent improvements in howmeaningful difference we in think our and level act of positivity. can make a well-being. our emotional balance component of the program.address Rather, the they areas selected of fromoverall happiness the most were options relevant to rated to as them. valuable, All components but not all were needed to improve reported increases in happiness as areported result positive of cognitive the and training; behavioral and 86 changes percent from the training. classes and the between-class exercises significantly improved outcomes. in enhanced gains among the students. Active participation in both the and did not participate.went At through the the training displayed end better of grades,fewer improved behavioral the social problems, skills, program, and greater the curiosity students and love who of learning. psychology curriculum; half did80-minute not. The sessions, program each consisted ofand of which structured twenty provided homework. Teachers information, were taught blind as skills, to which students did outside of Philadelphia, with therelationships, and goal emotional balance. of Half of improving the students character took the strengths, positive being. Interestingly, the program alsoThese benefits improved were the noticed health across of racial and children. ethnic lines. different populations. Overall, thedepression program over a has two-year follow-up been period. It foundreduced also to anxiety increased optimism, and reduce behavioral problems, and improved general well- to improve assertiveness, creativity, decisionnumber making, of relaxation, positive and a copingmany skills. countries, The across program many has different been community delivered settings in with very program that has beenPenn the Resilience object Program of is dozens taught of to outcome schoolchildren studies. and The is designed 156 BEST PROCESS #2: BUILDING ON STRENGTHS rtn ono ‘he odtig’ hthpe ahdyfraweek. a for day each happen was that Philadelphia things’’ outside good ‘‘three program of the down by writing utilized exercises the Among hnatal aesest omr fwa ae shappy. us makes what of and more well-being do brings to what The steps about period. take more week’s actually think a then to over was strength exercises the the use of Action to gist way in new Values a the finding on and strength test another greatest Still future. their happened the finding in thing involved often good more exercise happen the it make why could they about how write and to instructed were Students n adem eaeesl itatd hti uhls ieyt occur emotion. to positive likely with less charged dawdle much feel is to we That tend when distracted. we easily for affection, are or we up daydream; energy made and enjoying a than not in satisfaction, we’re more and where is happiness state Without activities productivity. well-being work routines. the increased their in through in plowing spent in tapping efficient time more by The what and on energized done focused get people more to become that needs experience is emotional positive instead resources their accomplished. willpower happens into tasks and What daily level static. and energy work our are get that assume to assumes they time however, have because This, not well-being will their they prioritize that to afraid generally of are pieces and fulfillment. bits own our on to rely devote than to time rather leftover activities, to well-being around be fit chosen to of would have the form would some tasks idea daily us of and The brings responsibilities company Work know affection. well-being. we the that and enjoying activity happiness day—an and brings prioritize—each restaurant and one new satisfaction loved both a our brings to may workout out we of strenuous Going example, catalog a energy. For in a us. engaging be for that specifically would find work result that The happiness, behaviors us affection. positive bring already that and activities are energy, of log that satisfaction, daily things a keep the in would we of engage program, training more to well-being Seligman’s simply of do variant solution-focused not to a In is succeeding. but task behavior, Our ways problem goals. in our less act with we consistent times, that are at Recall that that, framework. assumes framework solution-focused solution-focused a the implement to is well-being htIv on nipeetn uhafaeoki htpeople that is framework a such implementing in found I’ve What improving to approach powerful a that suggests work Seligman’s ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 157 , Jim Loehr and Tony Schwartz (2003) The Power of Full Engagement my batteries. A briskpumping and walk helps or energize my vigorous evening.work If stretching I to gets try home going the straight responsibilities from blood I and quickly work run out that of is gas. due the next day, in the morning. I alsoif am I more fail likely to to getlate. feel Reading adequate tired before sleep—usually and going to low the bed energy resultto is sleep a of great quicker, staying relaxer which up and in helps too turn me leads get toEngaging better in sleep. physical activity at the end of the workday recharges and so on. When I’mthat too feels stationary, very I low find energy. myself feeling stiff,The and quality of mynext sleep day. If also I greatly eat and impactsup drink during my too the energy close night, to level and bedtime, the I’m that likely disrupted to sleep wake leaves me more tired if I strictly limit mymore than coffee that intake and to I one tendtiredness. cup to get in wired—and the then morning. suffer Any aI rebound get more energy if Iget don’t out sit for of long my periods chair working frequently, and instead walk around, get a drink of water, Starting my day with physical exerciseexercise energizes my has entire day. to The challengeweight-lifting, me, or either jogging/aerobic through training. vigorousam If out stretching, I of breath, break I a am more sweat likelyI and to also feel have vitalized more going energy forward. if I eat light, especially early in the day, and Once again, this is where the solution-focused framework can be In What recent activities have given me greater physical energy? ■ ■ ■ ■ ■ ■ well-being. Below I outlinegive those right questions here and and now: the responses I would quality and the productivity of our time will expand meaningfully. valuable. A few questions can get us started toward more consistent we tend to focusemphasize on the time quality management of tofully the get engaged energy things each that done, day, goes rather tapping into than into that time. these If sources we of are energy, both the identify four sourcesmental of energy, and energy: spiritual energy. physical They energy, make the emotional valuable point energy, that 158 BEST PROCESS #2: BUILDING ON STRENGTHS ■ ■ ■ ■ ■ ■ ■ ■ ■ htrcn ciiishv ie egetreoinlenergy? emotional greater me given have activities recent What htrcn ciiishv ie emna energy? mental me given have activities recent What etn ylmt nufmla ra.Freape aigtisto trips taking example, For and areas. things unfamiliar new in entirely limits doing my from testing results also energy Emotional gives for goal benchmarks one. small next setting one the at love for Succeeding I energy to those. written. efforts hitting as then book and such a progress goals, get longer-term or to weight energy tied lose emotional those heightened include generate job me that a for activities in the succeed of them Many my help of or one work help at I interview. when problem as a such with home, children at challenges shared enjoy contributing I capital. and efforts more those for of success. requests part trader’s being a their to of craft challenge and the years love I their plan to with with work me managers situation portfolio energy meaningful example, For emotional a coaching. tackling I’m heightened someone I’m the when experience challenged being to of likely most am I nrytn ob ihs,i etn htIhv piie o low for optimized have I that setting a distraction. in highest, mental an be and to focus my tend in when energy is that mornings working because early environment, in am home best my in work I I not me). when but interrupting me) (people energy around distracting activity (music, mental stimulating is better that environment much have energy. with mental the I busy of of level be flow heightened to the a like in at immersed I me Being keeps like. juggle: day I and that schedule with work I energy the that mental work with of advance busy in level very day my am high out laid and a have I at when focus operating sustained and am optimism I that know I rewarding. very is uncertainty after and emerge confusion a to of into begin period facts long picture a those clear the assemble Seeing to picture. have meaningful and sources information multiple conflicting face I of when trading from energy emotional derive I energizing. and stimulating is wilderness Alaska, recent to a as trip such boat activities, new in engaging and areas new www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 159 approach life as a team. I derive great spiritual energy from being partfriends of social and activities colleagues with where there is active sharing of experiences shared experiences with Margie. Wenew restaurants, take take day in interesting trips shows together, inand the spend visit city, time travel with abroad, family. Almost allfrom of plumbing our repairs household to challenges, planning investments, weProblems tackle together. are less problematic and time is enriched when we me when I’m writing, reading,starts and with exercising, talking and to them, my pettingcare day them, always of feeding their them, and litter. taking that Each is of expressed in the a four way that cats touchesA has my her heart. very own special personality form of spiritual energy comes from engaging in my children during themake me day feel closer and to them. sharing Sharingcreates activities with the a family bond members events that cuts of across their generations andMy lives is time inspiring. with the catsfrom is connectedness. another It is form very of common spiritual that they energy will resulting hang out with from seeing opportunities set upexploiting and the opportunities then that having allow a events framework to for unfold over time. I am most likely tofeel experience closely heightened connected spiritual to energy my when children I and grandchildren. Texting or afternoon to fully exploring it.idea unfold It and is show very promise. energizing to see aI new get my greatest mental energyat from screens trading over when long I periods am ofpositions. not time, staring Rather, managing and my micromanaging greatest mental energy in trading comes new and interesting websites, andmarket engaging research. in interesting and new My mental energyof is time greatly to increased workactivity. when on If something I I and get set can a aside new be idea wholly a in focused markets, block I on like that to dedicate a morning I have a highof level mental of energy from intellectual reading curiosity books about and new derive topics, discovering a great deal What recent activities have given me spiritual energy? ■ ■ ■ ■ ■ ■ ■ ■ 160 BEST PROCESS #2: BUILDING ON STRENGTHS nobdhbt n eaeiplieyi eaeoeaiga ihlevel high a at operating fall the well-being. are to and we maximize likely energy if least will of impulsively are that behave We and productivity. trader habits its a bad as into well as as develop time basis to your of the want quality form you These rituals performance. the your for energize that day spiritual trading and your mental, emotional, physical, with energy you provide most that activities day. each energize oe,btte eie orm phsrs aigadpru truly pursue and taking risk his up ramp to making by decided year the then started had but He money, funk. trading a in himself found Calvin ■ eair.Ta smc oeefcieadefiin hnhpn that hoping to things. you than right push to the efficient through do come and continually effective will resources right more willpower the scarce toward much you is pull and That with you seen behaviors. of we’ve fail part As become domains. will habits four of I work, the importance Duhigg’s in way the energy no emphasize high Schwartz sustaining is in and there rituals Loehr activities, energized. these life live week—in to to week and day ■ ■ yls sakn fslto-oue euta a rwo to on draw can I that menu solution-focused of kind a is list My oeta aegnrtdqieals.I mgone—a to grounded—day am I If list. a quite generated have I that Note apns sahbt o admeoinleetbfligus. befalling event emotional random a not habit, a is Happiness lmntn riso u Energy Our on Drains Eliminating uefiil ahrnso ieiddfinscet nqebond unique satisfying. a and deeply boring is create be that friends to likeminded gatherings of social Gatherings and parties superficial. most find I ideas. and otiuigt otycue n en ato h rwhand growth the and mentoring of through teaching. part as people, as being young such promising and of energizing, development causes spiritually worthy very to are contributing values on based Activities inspirational an have that outlook positive energizing value. heroic, Especially a meaning. with and books purpose are life on is emphasis where religion the and psychology, philosophy, on books reading enjoy I a atclratnint h ciiisbfr,atr n during and after, before, activities the to attention particular Pay . orcalnei ognrt oronmn,bsdo the on based menu, own your generate to is challenge Your e Takeaway Key www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 161 What was clear to me was that Calvin’s trading problems were the When I took an inventory of what was happening in Calvin’s life and Nothing had dramatically changed in markets; Calvin’s ideas seemed By the timeexhausted. Calvin One glass came of wine home turneddrinking into to from two excess, and further work, three. exacerbating Soon his he he funk. was felt stressed and and girlfriend. That meant thatalso other hadn’t friendships taken were extended neglected. time He off work in well over a year. prior exercise program. As his tradingneeded suffered, he to rationalized devote that more he time to research andDuring position his management. limited free time, Calvin prioritized his time with his son end. He wasn’t sure why, but suspected hisHe long hours had were put a factor. on significant weight in recent months and stopped a in the short run. A recent romantic relationship looked as though it was coming to an to his ex-wife’s relocation. The relocation had led tofelt a acutely dropoff guilty in about this, Calvin’s but visits also with powerless his to rectify son. the He situation He had been divorcedreturned two to the years surface earlier, over issues but of recent child legal support and problems visitation due was reactive: tryingWhen to I reflected cope on those with ingredients of negative well-being—joy, things contentment, happening to him. result of broader life problems. In just about every facet of life, he ■ ■ ■ ■ ■ ■ as good as ever. He was simply trading poorly. trading, here were a few of my observations: have to follow ourmistakes process all and over he again.’’ agrees, but then we make the same plan the trades,’’ Calvin’she’s assistant taking explained, them ‘‘and off then when the we’re next 25 day bps lower. I keep telling him we like a rookie, doubting himself,and chasing stopping trades to out avoidassistant, of who missing confirmed moves, positions that he on was not mere trading like noise. his I usual self. spoke ‘‘We with Calvin’s with a high degree of frustration. Afterperiods all, and he had drawdowns been in through many theundue flat emotional past wear and and tear. largely Now, however, navigated he them found himself without trading significant returns. Trends that had benefited himand went into his consolidation profitability flattened out asmanager, well. so He it was was an experienced surprising money that he responded to the flat P/L period 162 BEST PROCESS #2: BUILDING ON STRENGTHS ihu trhueo oiieeprec,h ieal a eoea become had literally them. he of experience, all positive missing of was storehouse Calvin a that Without see could affection—I and energy, ifrn trader. different aac htmtesi hte ahdyhsaddt u trhueor storehouse our The to with added generation. has deal day energy can each whether we continual is way through matters that only is balance The drains leaks. energy ongoing insulation continual from the life us is many sense protects the that in that to steady Well-being resources a energy. our require at lose that stay challenges gradually don’t we we Rather, resources, point. energy energy our renew continually not spiral? downward his from Calvin insulate could problem. house. his to leaky adding the was solution in his His heat smarter. of working was not the He chagrin him. but gave up harder, it the than turning resources his (to of like more took was tightly it Ultimately, this more of positions All his assistant). managing tried and harder leakage. feel energy himself his to make contributed to only attempt psychological fact poor in without but a like better, was we’re drinking He what wine of His exhausted. picture well-being. spiritually very he the and literally, was become mentally, Quite Calvin had generating. categories, emotionally, was those physically, he of than was one energy more every far In expending Schwartz. emphasized energy and spiritual Loehr and it. by was mental, life drain emotional, Think spiral. physical, of that downward the area a about those creating every it, about renewing and than Just rather energy leaks: energy taking with events give rife and that activities was ‘‘house’’ divide those Calvin’s to categories: like I two earlier, into mentioned had I As drains. heating the problem. arrives, new a bill created has utility solution The the issue. higher, money When a and becomes difficulty benefit. higher heat limited the only turns with situation, but the improve owner, to The attempt uncomfortable. an house in the making hallways, the through run hsbig sbc otepicpeo s to oei.I edo we If it. lose or it use of principle the to back us brings This however, What, insulation. install you house, leaky a have you When worked He around? situation his turn to do Calvin did else what And energy own their experience people energy, leak can building a as Just drafts Cold winter. in windows sealed poorly with house a Imagine … n adr ewk perir pn oetm nresearch, on time more spent earlier, up woke He harder. and ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 163 ■■■ And that drains life, not just trading performance. Their point is a very important one. Overuse of energy can lead to Toward the end of the trading break, I met with Calvin and his When you’re up to your eyeballs in heating bills, the first thing you and the vigorous exercise thatprey give to energy. underuse. If Our we batteries stay inevitably in drain. routine, we fall special. Returning to the list thatof I time generated, devoted note that to it’s creative the work; stretches the special trips and joint activities; energy storehouses are the efforts that takeRoutine us activities, beyond engaged our in routinely, comfort do zones: not energizevitality us. We in find fresh physical, emotional, mental, and spiritual activities that are burnout. Underuse, however, is equallystores problematic. When are our underused, energy they are like batteries that drain. What taps our contributed to its depletion.and Because underuse we of can our resources, lose Loehrto energy and periodically Schwartz from engage stress, overuse in it activities is necessary that renew our energy. let him down. Another improvementof that very they specific targeted was rules the for setting entry execution. They were only allowed to than react to price oscillations.particular Making force that for as a Calvin: team He commitment liked had his assistant and did not want to was strong agreement betweenboth the of lists. them The was number-oneduring the priority the need for to day get to off review the ideas desk and and away positions from and screens plan actions rather assistant and Iof asked each what of needed them, to independently, be to improved generate in a trading. list Not surprisingly, there found out that it was hisher preoccupation to with trading distance and from markets that him.and led that She hurt. felt that she was a number-two priority, quality time and, to Calvin’s surprise,time his away ex-wife from approved of work hishe to taking had get a closer heart-to-heart talk to with his his girlfriend son. over When a Calvin relaxing dinner returned, and with me, was toamusement take park a destination vacation. with He his stopped son trading for and a went long to weekend. an It was do is stop turning upyour the windows. heat And when that’s it’s what all Calvin escaping did. through His the first gaps step, in after meeting 164 BEST PROCESS #2: BUILDING ON STRENGTHS d opstoso ercmns n nta nre a ob fa of be to trade Every had winners. like entries felt truly initial trades winning and that retracements, so size on threshold positions to add uho i aer ewscret ehdgte wyfo being from away gotten himself. had rediscover, but He change, to correct: during not well was was ‘‘cure’’ things He His these himself. of career. all his done much of had as Calvin was much coach: I a life. as social daily cheerleader ‘‘ritual’’—a and a eating, a approach exercise, developing same his assistant: the guided his took routine—that with drinking we taken of case, had each replacement Calvin In that and friends. eating, with turned healthy socializing focus with exercise, our and when more particularly lifestyle wins—and providing consuming, started to small were days created they His simply than insulation. of energy he degree basics, a to provided those using return and to son), his coaching with relationship the (his doing value from he key away a Was stepping on self. By focusing old not. markets, course his Of to revolutionary? returning or was unique he anything like feel to started Calvin their changed changed be that only developments could specific these identified and views. them market size of and two the stop, if target, specific a had eoeh ol eicvrhstrading his rediscover could thoughts—we he before and lifestyle house. behaviors his reinsulated his self-defeating never have would his continued his tracking eagerly problem-focused—analyzing conflicts, been he past together so work our going, Had momentum changes. wanting himself the found energized he keep and again, money positive to making him began kept he As turn markets. in for which exercise life, and social loss, weight his sleep, stimulated better The through energy. gained fresh Calvin to on that leads energy energy focus and activities upward and turns When spiral, spiral negativity. the downward well-being, increased a by is followed there is activities, negativity wrong the in engaged When avnsassatwseegzdb en nlddi h ocig and coaching, the in included being by energized was assistant Calvin’s htIswi avni htIsecnitnl nwrigwt people: with working in consistently see I what is Calvin in saw I What ti o nuht atrsrs;w utssanlf aso fw’eto we’re if passion life sustain must we trading. stress; our master energize to enough not is It e Takeaway Key . avnhdt eicvrhshappiness his rediscover to had Calvin www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 165 Ingredient of Success Conscientiousness: The Underappreciated The ‘‘industriousness’’ component of conscientiousness reflects per- Because conscientious people are more likely to work hard, avoid A behavioral analysis from Jackson et al. (2010) identified a num- to follow risk management rules and avoidundermine impulsive trading. behaviors that often the conscientious trader is moresystematically likely learn from to experience. keep Conscientious a traders journal, are set also goals, apt and persistence in learning. The conscientious personseek is detailed particularly feedback likely about performance to andsubsequent use improvements. that Compared feedback with the to lazy make or distracted person, sistence. The deliberate practiceprocess emphasized in the by genesis Ericsson of as expert performance a presumes cardinal a high degree of to need close supervision inin their work higher and were paying,responsible more people less likely tend to to physically engage be given demanding more responsibility. work. In other words, occupational success: ‘‘ideational flexibility’’—open mindedness—anda ‘‘self-directed orientation,’’ whichPeople who is were essential self-directed versus to non–self-directed conscientiousness. were less likely They are also morestudy likely from to Kohn succeed and in Schooler their (1982) careers. found An that interesting two factors led to acting on impulse,tend and to achieve pursue better goals grades in in school an than less organized conscientious manner, people. they responsibility). The authors foundoriented and that self-controlled; they conscientious are people organized,before hardworking, are acting. and think goal- ber of behaviorswork; negatively impulsivity; correlated antisocial; with andlated (organize, cleanliness, laziness) conscientiousness industrious, appearance, and punctual, (avoid formality, ones positively corre- fashion, we are talkingmanner. about approaching markets in a conscientious in the research literature. A conscientious personresponsible, is one and who hardworking. is When organized, we refer to trading in a disciplined I recently wrote awhy two-part conscientiousness series is of important posts andthat how for conscientiousness it is the can one TraderFeed of be the blog cultivated. ‘‘big five’’ on Recall personality traits identified ■ 166 BEST PROCESS #2: BUILDING ON STRENGTHS ee i nryadpoiepyhlgclwl-en.I a fascinating was It well-being. psychological provide and energy his renew rdn o ayo h aeraosa avn ete r omake further. energy to our analyzing try depleting and while then journals the We all more Calvin. trades, out more as filling our by reasons in conscientious short same more falling the ourselves station, of trade long many the the to in for in leaks spent trading de-energizing energy is but our experience run bring daily short We of the run. Most in efficient basis. is regular interest which a passionate routine, on experience life not for do love also and we level burnout, energy and suboptimal depression a at life live energy. and well-being that generated effort have of eating, would amount discipline No his jumpstart discipline. to increased revamp well- fed to energy greater increased experiencing energy the was being, he the Once to patterns. exercise contributed and up drinking, which followed of then personal and all He girlfriend his friends, son. to connections his his enhanced with that himself activities activities with immersing fulfilling and on markets and from working enjoyable break from in a not taking came from turnaround but trading toward his step leaked first journals his the His With on plans. failed: follow-through and lacked have simply would have course, would of Calvin energy, This, his on. planning so journals, and completing by trading, conscientious more encourage become and to governance rule him poor Calvin’s on focus to been have would reverse the not happier, became if he once ends of pursuit our in process. consistent the from be well-being to derive likely we more are We school in work. success energy, and and satisfaction, behavior energy conscientious happiness, to restores see contributing well-being affection to that and expect degree than would the ways we To disciplined willpower, ebb. organized, and low in at behave are to we likely when more is are willpower we When link. high, the essential as are self-regulation cortex with frontal conscientiousness, the to of functioning executive the and attention reactive into trading.’’ fell ‘‘rookie called on Calvin he centered conscientious, what boss of Normally patterns his discipline. for of concerns loss assistant’s decision his Calvin’s poorer and of impulsivity Most greater making. over to conscientious led less energy became Diminished Calvin a time: sense, as important rule-following very his on a specifically In toll trader. a took well-being of loss the that h tiigapc fCli’ unrudi hth eaemr conscientious more became he that is turnaround Calvin’s of aspect striking The that suggests research neuroscience cognitive (2012) Posner’s Michael to failed another after area life one as spiral, downward Calvin’s Recall nitiun ocuini htw akdsiln n iloe eas we because willpower and discipline lack we that is conclusion intriguing An nudrtnal ocigapproach coaching understandable An . hl oto saentmrdin mired not are us of most While . www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 167 . The Daily Trading Coach —The combination of physical relaxation Key Takeaway Biofeedback as a Strategy forWell-Being Enhancing ability to sustain intention. Emotions of greed, fear, and frustration drain us of energy and lower our For years, I have found biofeedback to be a highly useful tool for A provocative study from Tang and colleagues found that even a short what we are doing. If we think of flow as a skill to be developed, rather and intensified concentration is preciselyto the enter set the of flow conditions needed state, in which we become pleasurably immersed in General training of the flow state negative patterns and instillmost new, promising positive applications: ones. Here are a few of the With a few adaptations, biofeedback can be used to break a variety of ■ traders. This is why I emphasized its use in the signals to guide your efforts.stress That management is married biofeedback: It to is deliberate meditation practice. and tell you whether you are succeedingyou are at getting relaxing out and of the focusing zone. orand Over whether time, cognitive you learn strategies the needed kinds of to physical keep the beeps at zone levels, using focusing attention—while youyour are blood hooked pressure, heart up rate,measures muscle to of tension, monitors physiological brain and waves, that cognitive and track stress. other Beeps from the monitors Imagine carrying out meditative activities—slowing the mind and body, ■ balance. By neutralizing sourcesimportant of tool our in energy themind leaks, cultivation and meditation body of facilitates is conscientiousness, ongoing an behavioral as self-control. control over being and diminished stress. Meditationfor attention, appears but to also be for emotional training self-control not and enhanced only emotional would promote conscientiousness:intentions We’re if most we remain likelyfound mindful was to that of the sustain them. daily meditation What our also the led to study enhanced authors emotional well- also period of integrative mind–body meditationattention and daily emotional resulted self-regulation. in It improved makes sense that mindfulness 168 BEST PROCESS #2: BUILDING ON STRENGTHS nit n otlt lodslylwrHV ovrey h activities the Conversely, HRV. of lower degrees display high report also who hostility People and MacArthur stress. anxiety also the under and are age As of we with beats. when decline measure to decreases heart tends HRV a between notes, (1997) is time Network Research in which variation (HRV), normal variability the heart-rate measuring on controlling to focused has and us state work biofeedback flow my training the years, of recent in example In suggests. the useful as particularly experience, emotional be positive cultivate can it programs, management ■ ■ e,fishn,ta ecnke usle ne oto ntemost the in control can under we ourselves that keep so situations. difficult can arousal, we of that state firsthand, our for see, biofeedback, about and feedback Through real-time anxiety challenges. get we market performance anticipated combating as for methods for focused—even preparing Exposure useful and scenarios. relaxed extremely stressful most remain are deep our to breathing confronting our us are and trains we still This bodies We slow. our keep and out. visualization we this events, us Throughout stressful behave. and stress of think to to like would possible as potential we detail how much as the in recreate and have situations those re-experience that situations imagine xriet ne h o tt a eapwru a osatthe are start you to when willpower. activity way losing break powerful and useful saturated a very yourself be finding a makes can it state biofeedback day—and flow trading short the A enter bodies. to and exercise minds our regulate then and occasions, distractions training flow random as at used occurs be simply can that state a than raeatraeraiisaduetoet hr-ici tesresponses. stress short-circuit to and those use still and can realities body we alternate imagery, create vivid your in Through breathing. keeping mind your deepening while your and slowing quieting immersing are and you relaxing that something so guided biofeedback, combining with is exercise imagery is useful negative particularly from down A results body’s arousal. slowing typically emotional the that Similarly, impulsivity sustain the self-control. with down to incompatible bodies enhanced difficult and minds exercising very our incompatible slowing and is are are we that It if body response distress. and flight-or-fight mind and of stress states enter with to us teaches it management Stress xouemethods Exposure lhuhboedaki eeal mlyda najntt stress to adjunct an as employed generally is biofeedback Although Hr etr pteha niaeyadvividly and imagery on heat the up turn we —Here Pr ftepwro ifebc riigi that is training biofeedback of power the of —Part hog ifebc,w er otn out tune to learn we biofeedback, Through . www.MyChart.ir biofeedback BEST PROCESS #2: BUILDING ON STRENGTHS 169 , very much connected to the earlier mentioned Biofeedback training that teaches us to sustain high HRV is Billy’s work style works, but it is also productive of low HRV. The Imagine Billy, a trader of multiple global assets. He typically wakes What is especially interesting is that sustaining heightened HRV for work is not one that builds our self-control and capacity for well-being. completely go off the railsexample illustrates, and that vulnerability lose is created large when our amounts approach of to our money. As Billy’s pick up and the assembly line of informationpace. and When market I moves doubles first its began my workI with very wondered active daytraders how in Chicago, consistently profitable traders could once in a while training, teaching him to sustain athe state prior of discussions low of HRV. As use we’ve itoperate seen or in from lose the it, zone. Billy This is likely is losing likely the to ability leave to him vulnerable once markets more in a rush thanreact in rapidly the zone. to Bombarded those, withbody he inputs and and focusing has attention. needing few His to work opportunities style for is a slowing kind mind of and anti-biofeedback different market cycles. odds are good that Billy is jumping from development to development to stay on topof of fast, fast-breaking adaptive developments. thinking It that has is contributed precisely to this Billy’s kind success across and started to make adjustmentssequence to of his processing new trading developments, plans assessing and theirtweaking views relevance, positions. and and This positions proceeds throughout the day, enabling Billy up early to check pricesresearch reports, in and Asia emails and that Europe havetime accumulated and he gets in then to the pours work, in-box. he over By has news, the actively processed a variety of developments a kind of well-being training training of self-regulation and conscientiousness. affection. Not all positive states are highsatisfaction energy and and high warm happiness. affection Calm candramatic be a equally fashion. positive, though not in as at peace, and mentally/emotionally unburdened. Recallof the components well-being described earlier: happiness, satisfaction, energy, and an extended time period doesone not that lead is to experienced pleasurably. a As neutralstate already emotional in noted, state, which it but is we a tend kind to of feel—not flow joyful and pumped up—but calm, arousal, and intensified focus.frantic, All distracted of states these that can are make the traders very reactive. opposite of the typically needed toemotional increase arousal, HRV and includeincrease control relaxation, HRV, I over a have found, breathing. low is to The state induce a quickest of state of way high mindfulness, to low 170 BEST PROCESS #2: BUILDING ON STRENGTHS akt u ybrn ns aigaatdt ranc aeof pace breakneck a to adapted Having ones. boring by but markets r nvre u nyfo h as p hnte ol o eyon them. rely betrayed not legs could spindly they their When development, body up. upper waist like their the looked from they only that but bodies upper Universe, bodybuilders their Mr. working like at were adept so associated They became strengths conscientiousness. who build and to calm failed also focused over they with but patterns frames, market time distractibility. reading short and at very excitability trained strengths their considerable literally amplified cultivated daytraders that They way hyperactive a The in habits. themselves when us, harmful against greatly build work can we it or habits, positive cultivate we when do consistently we what become gave That sort. negative one. not a manufacture could of to they drama—but desperately If and tried tilt. action them they on interesting fix, daytraders action the particularly an of it get many found put I markets makes that slow odds. tilt’’ ‘‘on that undersized gambler the with is It bets bet. to outsized much controlling how is and gambler play professional to the when of conscientiousness The bet. big gamblers, some like they, action. that high-stakes on realized high They got junkies: them- trading described as openly them selves of of several one Indeed, was excitement. for participation and market excruciating activity from was derived liquidity they well-being greater The for them. waiting experi- and they back boredom The sitting could sizes. enced simply position trading traders’ were the they accommodate products not contracts futures of the amount in total the transacted which being in occasions midday many at were Especially there periods. hours, low-volatility dif- during it back found throttle more—they to or ficult day per trades 100 averaged trading—many aifcin hog eetdboedakwr,w a eoequite become can we work, calm biofeedback quiet, repeated and Through mindfulness, satisfaction. patience, concentration, attention, of legs h ucsflgmlrkoswe ofl ado o aea make not or hand a fold to when knows gambler successful The busy by undone not were daytraders those of many Interestingly, h isd fuei rls ti hteeyhn euetan us. trains use we everything that is it lose or it use of flipside The ifebc n eiaincnb iwda ol o uligthe building for tools as viewed be can meditation and Biofeedback eaetandb u routines. our by trained are We htcnwr eymc oorfvr as favor, our to much very work can That . e Takeaway Key www.MyChart.ir We BEST PROCESS #2: BUILDING ON STRENGTHS 171 , suggests that the development of positive emotional Positivity Using Meditation to Build Positivity As mentioned earlier, Fredrickson’s research, summarized in her 2009 A simple way to think of this is that relaxation training takes a car I found this study particularly intriguing because it was precisely such new strengths. This broaden-and-build process suggestsexperience that themselves people and who life positivelyin will constructive be ways more compared likely to to those develop who lack well-being. experience brings aresilience and host improved of health andthat, benefits, social under relationships. including conditions Her of increased work well-being, finds we emotional broaden our minds and build enter states that bring far better performance from our engines. book, that is revving andgenerating positive stalling torque in and high movement.to Instead neutralize gear of negative and training emotion, ourselves we brings can it train ourselves to to lower downshift and gears, loving-kindness meditation. positive imagery. One ofbeen my holding favorite one images of during mymy body. HRV cats, It stroking sessions turns her, has out and that feeling this is her exactly purr the against kind of imagery invoked by biofeedback sessions. For instance, when traders I worked withto attempted empty their minds,their control their HRV breathing, readings and were stay not physically as still, high as when they actively cultivated well-being training. an invocation of positive emotions that I discovered raises HRV during mind but to fillIn that it sense, with we thoughts, can images, think and of feelings loving-kindness of meditation well-being. as a kind of meditator deliberately invokes images and feelingsand of love, compassion contentment, while maintaining a stancecalm, of and focused mindfulness. attention, physical The goal, therefore, is not simply to empty the A 2008 study frompsychological Barbara impact of Fredrickson an and eight-weekkindness colleagues long meditation. training examined This program is the in a distinctive loving- form of meditation in that the ■ emotional health and our tradingto wealth. extract Well-being energy training from enables situations us that we cannot control. good at invoking the zone,in but that we zone. also If train wegravitate ourselves cannot toward to generate function well-being drama. well without That, drama, we over will time, will be hazardous to our 172 BEST PROCESS #2: BUILDING ON STRENGTHS hysoe ujcsfim htete a oiieo eaieemotional negative or positive had either that films subjects showed they elbig hshlspol ul rs aaiisi asta could emotionality. that negative ways of spirals in downward capacities the further with fresh brings occur build never turn people in helps which This functioning, well-being. of improved spirals to upward lead to These helped well-being experience. turn emotional in positive which positive coping, future to how generate approaches shows the broader that to from In research leads perspectives. learn on emotion and people reports interactions Fredrickson help fresh review, turn from 2013 in benefit which and other networks, each social also Positivity build important slumps. to an into turning other is helps from resilience do setbacks This as preventing quicker. in stress much element stress. to back of physiologically bounce but effects react people, negative well-being high the ‘‘undo’’ with to Those helps experience emotional In to strengths. responses tunnel- adaptive be and ideas to fresh likely adaptive circumstances. generate changing more make rapidly to are and unable negativity and conditions in visioned market mired changing Traders traders to decisions. enables attend view important flexible quickly more have to broader, well-being A socially, of trading. inclusive benefits different for implications more these those Clearly be others—including themselves. of to from views tend favorable also their They broadening experience situations. confronted when who novel flexible people behaviorally with more review, are well-being research of 2013 levels high a in notes Fredrickson states. negative more in those to in hidden process operate to remains us to that enabling information tend view, we of our focused, broadens center Positivity negatively the mode. are to tunnel-vision we primarily When attended field. state visual negative the a in visual a those of while areas yet peripheral a field, the In in perceive subjects to world. tended that the state found emotional (2006) of positive Isaacowitz views and of our Wadlinger conditions study, broaden under another narrow, that, literally is the we implication to emotion, The more positive figures. responded the of films picture. aspects bigger negative local the the to responded viewed They who ways: Those global in test the on figures narrower or global more andmorelocal.Thesubjectsgiventhepositivefilmstendedtoperceivethe and that broader attention was visual of perception task whether a identified perform subjects the had then They content. o r h raeigefcso oiiiylmtdt ecpin As perception. to limited positivity of effects broadening the are Nor which in study clever a conducted (2005) Branigan and Fredrickson hsbodnn ne oiieeprec lolast uligof building a to leads also experience positive under broadening This Positivity rdiko ie eerhta hw o positive how shows that research cites Fredrickson , www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 173 You want your trading process to be a well-being , I outlined a simple self-hypnosis strategy that . The Daily Trading Coach Using Self-Hypnosis to Feed Positivity In The implications are clear: In the loving-kindness meditation study, those who spent the most time One of the upward spirals particularly linked to meditation and deeply and slowly and focusfeel all completely your focused, attention you on tell your yourselfslowly, hands. that slowly Once there pulling you your are hands magnets together. slowly, As your hands get closer and I found to be effectiveand in cementing calming discipline. emotional The arousal, exercise focusingwith involves attention, your taking hands a in front seated of position you and palms facing each other. You breathe emotional and behavioral self-controlcan problems be addressed often through faced self-hypnosis. by traders cessation. Hammond’s 2010 review ofis research found a that rapid self-hypnosis anddisorders. effective These intervention findings for are overcoming important, anxiety because and they stress suggest that the Clinical Hypnotherapy concludes that self-hypnosis canfor be very such effective problems as weight loss, pain management, and smoking ■ A wealth of studies cited by the International Certification Board of building process only led to further positiveoutcomes emotional that experiences, added but to also further positive well-being. life strengths built by participation in meditation were mindfulacceptance, attention, self- positive social relations,images and and good experiences in health. a Evoking state of positive heightened focus and self-control not positive emotion. Most promisingly, when subjects spentwith significant time the meditation activity,persist in the subsequent days, positive even when effects they were did not more meditate. Among likely the to with the meditation received the greatest results in terms of increased we create conditions in which weheightened are flexibility likely to and respond adaptability to andof situations social with benefit connectedness. from enhanced levels that high vagal tone leadswhich to in positive social turn and lead psychologicalourselves to outcomes, to further sustain improvements high in states vagal of emotional tone. well-being By and training vagal tone, biofeedback involves vagalheart tone, rate variability a (HRV). In measure a 2010 of study, Kok the and Fredrickson earlier found mentioned 174 BEST PROCESS #2: BUILDING ON STRENGTHS oeadmr oue,admr n oeptetadi control. in and patient relaxed, more more and and more more and feeling focused, are more you and that more yourself tell you closer, r eln oeadmr nrie,mr n oefildwt energy you with filled repetition, more each and finish more energized, you more as and more that, feeling yourself are tell you perform you exercises, As force. or the with force outward with pulling and together fingers hands performing variation, your your while interlocking different pushing point a as visual single such In a exercises, focus. on callisthenic use focused calm can stay you of can example, you state above however, a the In achieve states. to techniques positive self-hypnosis of these variety use a work can access Fredrickson’s mind we to As of suggests, up. arousal meditation the themselves loving-kindness to wind with react unwittingly and who and themselves, traders body center than breaths, and few markets a methods on take these focused to practiced stay have able who more traders much the are battle, daily the of through heat on the carry In that day. benefits significant yields practice well-being. consistent of of level methods. these higher linking a ingredient common access the is to focus relaxed order Sustained body, in the slowing attention breathing, focusing altering are and you as case, each such In routines above. one self-hypnosis the and exercises, biofeedback practices, tion well-being of levels higher state. to a physical lower achieve and emotional, hands—to programming cognitive, of your your are together in on you bringing shift focus words, gesture—the a you other use In time to together. any yourself them focused and will bring and together; and you relaxed hands hands the become (1) your of will bring twofold: beauty you you are The when (2) two. suggestions focused and or The relaxed minute portability. become a its within typically focus is can high I exercise that of result the state with a years, for reach it using been have I I focus. exercise. calm together, clear, hands the my to bring returning My I and suggestion: time slowly breathing Any more myself zone. one find the will add to you gateway a exercise, induction.) the are the for hands it with use progress and in recording suggestions you a the make As give to can easy (You it’s focus. but calm head, absorbed your clear, wholly a feel with will present, you the zone. yourself, in the tell in you more touch, and hands more your feeling that, When are yourself you come telling together, keep come to hands and begin your slowly as slowly and deeply which breathe hands, you your as together from wavers never gaze Your ihrptto,Ifidta rdr a eoevr dp tthis at adept very become can traders that find I repetition, With yeprec ihec fteetcnqe sta iue e day per minutes that is techniques these of each with experience My medita- among elements common observed doubt no you’ve now, By . www.MyChart.ir htsiti n from one is shift That BEST PROCESS #2: BUILDING ON STRENGTHS 175 ■■■ . Key Takeaway We don’t have to wait for good things to happen to Through training, we can become the masters ofand our cognitive, physical emotional, states. Itisnotunusual,duringbusinessmeetingsorlongperiodsofworkingor Nolan was a successful trader, but he had one overwhelming problem: I cannot emphasize this strongly enough: It is not sufficient to train keeping my attention focused. In eachas case, I a am relying training on process, self-hypnosis functioning suboptimally. entering a desired state whenever I find myself attention. Similarly, when I startstand to up, feel walk at low around, ebb, and I perform will a take a few break, callisthenic exercises while source. (Once again, prerecorded suggestions can be quite effective.) trading, that I bring my hands together slowly and focus my (wandering) and enthusiasm. Once you’reyourself feeling that any time invigorated, you focus you your attention thenyou and perform will suggest the bring exercises, to that energy back, as if you’ve been connected to a power markets and took few breaks. He worked with strict risk limits and for markets and hadfast-moving no markets. problem While coming in trading, early he for stayed data releases focused or on multiple his lateness to social eventsago and in putting their off marriage of that errands.wasn’t she She going would learned have long to to be pay the ruined. bills Interestingly, if their Nolan credit was always punctual procrastination. It didn’t seemNolan to would matter what findsometimes the a not responsibility until was: way a to deadline had put passed. it Nolan’s off wife despaired until of the last minute—and us in order to sustain well-being ciated with biofeedback, meditation, andthroughout the self-hypnosis day, can meaning be that repeated tivity into we a are habit using pattern. repetition to turn posi- ourselves to reduce negativeWe emotions can such learn as to anxiety accessthe and and quality of sustain frustration. our optimal lives and emotional our states, work performance. improving Many techniques asso- 176 BEST PROCESS #2: BUILDING ON STRENGTHS ee lwu.Flo rdr osdrdNlnt eaprgnof paragon a place. be the to over all Nolan was Nolan considered however, else, traders Everywhere Fellow discipline. up. blew never etmr nrie,h ol efr i eeiin ihgetrspeed he greater with suggestion—as repetitions his useful perform would a he added energized, with more He him felt willpower. charging mentioned was his exercise repetition renewing self-hypnosis each energy, that the himself in to engage suggesting above, would During he session. exercise power session, vigorous a but take the short him create a have by to to followed was work, had that after do we nap to mornings, way The early him! for during mornings best more functioned he drive. since and that, focus his of home some coming renew to minutes—after he sufficient 20 was occasions That those nap—about work. of power from most short on a surprisingly, taken so had he Not which drained. in Borrowing evenings feel energy. was examined didn’t his we problem renewing playbook, his solution-focused for Rather, the method from him. reliable any drained lacked work he his that that not had was he read problem after or particularly kids, burden, the a with like help day. felt all lawn, matter worked it the didn’t of It mow overload. papers—all to on research asked felt was he he too!’’ time, such this, whether ‘‘Not at was, that, felt thought recognized he common He procrastinated, A Nolan overwhelmed. Whenever and/or observation: tired was simply key This He effort. a sustain issue: and by willpower direct into verified to classic dive needed a resources was mental was do day’s the seemed, to lacked active wanted it an he This, thing efforts. after last new especially usually The and evening—and drained. felt distractions the in fewer trading—he early By likely found rested. least he well and morning, felt day the the In in morning. late the procrastinate to likely most was to needed adapt. he to needed steps that very the realized avoided he Nolan but trading, eroded. his in slowly changes make years enjoyed had of he number that returns a risk-adjusted for his solid all The on money. money long lost made or had either trades He which diminished. diversification, were now of trading, benefits his be aided The to on.’’ seemed ‘‘risk Everything he or markets. correlated, off’’ multiple more ‘‘risk trading became markets in When benefit only days. less times, few found several a journal after a slip started it He let way. to priorities the other in but get trading, to his seemed track always and review should he knew He him. aeu netgto al normeig icvrdta Nolan that discovered meetings our in early investigation careful A with up catch to began problem procrastination Nolan’s time, Over edcddt ul nta lmn fslto.Isgetdt Nolan to suggested I solution. of element that on build to decided We His windows. the through leaking energy of case classic a was Nolan www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 177 A Workout for Mind and Body For example, many foundational yoga poses involve opening up Having rested and then pumped up, Nolan felt in the early evening conditions of physiological arousal. Pumpingthe up mind the body focused while and keeping when mindful we prepares are us pumped up for during staying the in heat the of market zone action. even mindfulness, narrow our focus of attention,positions and create tense an our unstressed muscles. state for Yoga theactive. body, even as This we are is physically important because it trains us to stay controlled under considerable self-control and precision and all aremindfulness, undertaken typically in with a state controlled of breathing. Whenwe we tend are stressed, to breathe in rapid and shallow ways, react to events without patterns of well-being. the body, stretching muscles, and maintaining balance. All require as self-awareness and gratitude.learn Through to repetition, associate particular yoga postures practitioners with particular states, creating habit us is that wemindful can at be the highly same physically time.designed to active Indeed, evoke particular most and physical, emotional, of calm, and the spiritual controlled, states, poses such and taught in yoga are Yoga is a particularlybreathing interesting and practice mindfulness with in physical thatcommonly activity, such think it as of combines stretching. meditation work We as on a seated discipline. What yoga shows ■ method for recharging his batteries andand renewing emotional his well-being. cognitive, physical, particularly fascinating was that, in theno more energized longer mode, a Nolan was procrastinator. Heenter didn’t into any need kind to of change deep his therapy. personality Rather, he or simply needed a reliable Instead of achieving diversification by tradingto multiple markets, look he at began trading volatility as a source of unique returns. What I found responsibilities. One of his priorities was to teachas himself he options trading, became convinceddiversification that this benefits would that provide he him had with been some missing of in the his recent trading. very much how helook usually forward felt to first using thing this in the second morning. morning He to began tackle to his most pressing and effort and buildwere his energy relatively even brief further. buteach As session. strenuous, a with result, effort his workouts increasing throughout 178 BEST PROCESS #2: BUILDING ON STRENGTHS n oyta lnstebnfiso eiainwt hs ftraditional of those with meditation of benefits the blends that body and ieaiefrmdtto.Teetr ciiybcmsasqec of sequence a becomes activity entire patterns. The habit set is positive meditation. to workout myself for motivate the aside to because necessary time not exercise; it’s to mindfulness, myself with it’s associated motivate work, breathing to the necessary with associated not physiological is of workout periods the during Because mindful routine arousal. staying workout with The associated routine. is workout turn associated The speed in becomes the self-hypnosis. awareness for from ready and getting derived posture, with I’ve breathing, of that period benefit initial the of much creates 2. lifting, (stretching, 1. activities three workout The all rate. across heart rules target running): of a workout sets at aerobic an two pace in the follows spent keeping is treadmill, minutes 15 the arms final on shoulders, The and lifting legs. neck of and work minutes to chest, chosen 10 and sets by with followed machine, is weight a That then on situps. waist, with and back finishing to and moving legs, arms, and hands with starting quite stretching, feel typically I minutes, few a energized. After ‘‘Energy and myself, centered relax. to myself repeat feel I and exhalation, feel out,’’ and each in,’’ With erect ‘‘Energy energizing. myself, an to body maintaining repeat my while I inhalation, exhalations each and With inhalations posture. which of in calm, mindful seated am and I focus, concentrated initial breathing, an deep involves of described I period that workout speed The workouts. physical hnbgn h omlwrot tr ih5t 0mntsof minutes 10 to 5 with start I workout: formal the begins Then mind for routine workout a blog TraderFeed the in outlined recently I htIhv on sta hseecs otn,rpae a fe day, after day repeated routine, exercise this that is found have I What ciiy h oli osa ntezn,ee sIa oigquickly moving limits. am body’s I my as testing each even and zone, throughout activity the to in mantra activity stay from out’’ to energy is goal in, The mind ‘‘Energy activity. my keep the and posture on and breathing focused my had of I mindful remain as minutes I awareness that several centered first same the body. the during the maintain achieved of I part single activity, any each taxing Throughout overly possible, without as limits period my a push short I as By into time. benefit half-hour’s exercise a much over as that condensing up workout pumped concentrated increasingly a getting create to in is results idea The activities next. the between to time activity rest minimum is There htti en npatc is practice in means this What . www.MyChart.ir oerpdyfo one from rapidly move I . BEST PROCESS #2: BUILDING ON STRENGTHS 179 the sequence … 500 on the bounce; price could + ■■■ Key Takeaway We learn toconditions. function in the heat of battle by training under heated What made this little sequence special was not the modest profits of Suddenly, without advance planning, I shifted my position in the chair The trade was moving away from me as the market headed lower. When I first began this routine, I didn’t envision all of its benefits. clear. Within a short time,back sellers to reentered the the day’s market lows,been and a where we range I moved trade covered, all along. taking advantage of what had in the overall market. Quickly,a I short. exited That the is unusual long for positionthe me. and Normally, market. flipped I This to would exit time, and then however, reassess the market’s behavior seemed quite not take out its prior high; a key sector barely budged during the bounce The NYSE TICK could not move above continued for a few minutes. I said out loud, ‘‘The buying has dried up.’’ the trade but whattime the I process could of the recollectprice trade in movement taught which kick-started me. the me It flight-or-fight into was response a the to state first adverse of calm focus and sound I felt tense, but I felt moreThe like an market observer bounced to a my stress bit, than held, a dipped, participant. bounced, held and sat up straighter. I adoptedthe the speed seated workout. position I that began I tofocus take on regulate the just my market. before breathing I and was aware maintained that my my heart rate had increased and that whether this was awrong, broad but I shift could of not market put my participation. finger Something on exactly felt what it was. to the upside, but it wasn’t materializing. Iand looked across sectors different indexes and tracked the recent upticks and downticks to determine I found myself tensing up. My mind began to race. I had anticipated a break benefit of the combined workout routine. Indeed, I thought oftime-saving combining measure. work It on was mind only and later body that simply I as discovered a the greatest 180 BEST PROCESS #2: BUILDING ON STRENGTHS h iduns ihteoe otr fcetepne n itn very sitting and expanded chest of posture open the with mindfulness the processing. information st eoeee oecnrle hntesufi itn h fan. the hitting is stuff the when of controlled way more a even a achieves become teaches is it to it stressed, it us are however, we and when all, control energized, losing of of staying Instead Most reprogramming: of well-being. way sustaining more a and became is building I It arsenal. as trading zone my the in deeper move a to during up. myself focus worked unexpected trained an controlled had unexpectedly, to and I somewhat led and focused literally up Quite stay episode. pumping trading to pumped-up was myself mindful body training more my a of in while day being of after naturally clarity Day came calm breathing the state. the by followed posture, quickly proper was the and in sat I Once straight. ntuh oee,w aearltosi iheeymjrfctof facet major every well-being. with to relationship a important have particularly we is however, love truth, of In expression that see, or depressed necessarily aren’t They lives. their their unhappy. in with audacious love less in enthusiastic, less of less goals, become reality sequence they sad daily age, a people It’s a as politics. by that, office and replaced deadlines, fades, project time meetings, magic As business work. the their however, of with lives love on, state in professional moves natural are their the aspirations—they is approach and dreams this often with that people but assume young comfortable we Similarly, are and things. that love couples in see passionately We not outgrow. we that something of experiences concentrated achieve. most can the we of that one well-being is It satisfaction, affection. Love happiness, and feelings. well-being: energy, of same I experiences those and which the together experience of in cruise to all a encapsulates party gratifying took extremely Eve we it Year’s later, found years New I 30 the yet Some good, of wife-to-be. particularly my details not met vivid is amazing remember events the can for quite memory I It’s you’re My love. love? when in in extraordinary immersed become fell experiences first Ordinary you experience. when remember you Do ■ h idu pe oku a eoeamjrpyhlgclto in tool psychological major a become has workout speed mindful The etiko oei em frmni eainhp n,a we’ll as and, relationships romantic of terms in love of think We is love of magic the that premise the accept we however, often, Too pca oisi elBig Love Well-Being: in Topics Special hysml aktego fbigi love in being of glow the lack simply They twsalstu ytesiti posture in shift the by up set all was It www.MyChart.ir . associated I . BEST PROCESS #2: BUILDING ON STRENGTHS 181 : to find in them As we’ve observed so often in this chapter, tapping into well-being Now imagine what it would be like to be in love with markets Imagine, for a minute, your relationship with financial markets. How and how they acted during rangehow conditions. they I occurred, could and track I breakoutsmarkets began and and to true observe breakout differences ones. between fakeout time I developed quite anindicators encyclopedia. behaved I at major could turning track points, how how markets they and behaved in trends, them in real time.indicators Instead, on a I five-minute printed basis andrequired out quite collected a charts them few every minutes of to day. download major Each and day print markets out the and data, but over make ourselves research, observe, andus study: away Indeed, from nothing our can passion.school, keep I When wanted to I study worked markets intensively, a but full-time knew I job couldn’t follow at a medical means that wethe don’t right have things. to When we continuously are rely in on love with motivation markets, to we do don’t have to visible: We are understoodrelationship and with markets appreciated makes for usbrings who out visible our we as greatest well. are. interests and As A strengths. we good have seen, it interested in deepeningthey their can market about experience, markets. learning A everything good romantic relationship makes us feel something unique, special, andmarkets valued. will be A market-focused personThey even who are outside not is of simply in normal preparing love for trading a with hours. day’s trading; they are passionately will frame one kind ofour experience. experience If will we be treat quite markets different. as battlegrounds, for combat each day. Other traders,dysfunctional frustrated, talk and about manipulated. markets being Howimpacts we our trading relate experience. If to we markets think of very the market much as a casino, we A hot-and-cold, confusing relationship?traders A talk fulfilling about markets relationship? as Many if they are battlegrounds and they prepare impacted by the quality of those relationships. would you characterize that relationship? Is it an adversarial relationship? more broadly, we havefrom a our offices relationship at with workinterlocking to our network our physical of homes. environment, relationships. Life can The be quality conceptualized of as our an lives is greatly our lives. We have awith relationship our with bodies; our and jobs;relationships we with we have our have recreational relationships a activities, with and relationship with our our friends. families. Even We have 182 BEST PROCESS #2: BUILDING ON STRENGTHS h o ftereoinlpirt it hnta apn,self-esteem, happens, that When list. priority emotional their of top the eiw o w ulyas uigta ie lcdvr e rds It trades. few very placed I time, that During years. full two for reviews td a ie ea naallddtbs.Ms motn,i has love. it from come important, only Most can that that database. data all the unparalleled with time, intimacy an Over an me provided pressure. given selling has and to study stocks buying learned of assess universe I wide that separately a across explorations and transactions data into down later market tracking the during my of break value during was the was It and It TICK sectors. enjoy. NYSE market the you discovered that I I series that to day television forward days look printout a Each might in 2006. you episode as since much next data, daily the new blog. updated the TraderFeed seeing manually to the forward been on look has update set I data which of One many measures, breadth of a becomes interaction love, in joy. are of you source When time spend children. to and myself wife motivate my I with more than no markets I choice. follow a to even myself wasn’t motivated it amused motivation; wasn’t question It The me. day. confused and each information market study and download markets. with love in was I trading. the about wasn’t xeine eiiaigdadw nm rdn,i ol utadI and hurt would it disappointed— trading, be my would in drawdown debilitating a experienced connectedness? of spiritual implications religious is ego focus deeper, the main a in your if up of powerful losing caught and power a too winning be become the really would beside you markets pale Could of love. would love it The faith. but into religious motivator, fall her suddenly or losses connected his deeply and was to who wins trader passionate trading, a being than Imagine perspective. us to important than more you to important more is that life your trading.’’ should ‘‘You in simple, was something answer have conference My on markets. trading always toll in one success at a to asked secret take being the markets recall for I of alike. uncertainties partners and the traders and performance of downs rdr h elc hi eainhp mlctypttertaigat trading their put implicitly relationships their neglect who Traders oti a,Imiti h onodn.Ec a rc variety a track I day Each downloading. the maintain I day, this To to motivated so stay could I how times many asked being recall I and downloads daily my conducted I fascinating. was investigation The hti h oe flv.We elv akt,bthv something have but markets, love we When love. of power the is That and ups The relationships. of expense the at comes trading often, Too iial,telv fasos n aiyi htkesm on.I I If going. me keeps what is family and spouse a of love the Similarly, and ol tl aeago n ihlife. rich and good a have still would I ■■■ www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 183 , Love 2.0 . Many times, the answer to our When we derive energy, affection, (2015), finds that when partners ■■■ Key Takeaway Positive Psychology Our connections to others are a powerful buffer to trading stress. Research studies tell us a great deal about how love contributes to Research summarized by Lopez, Pedrotti, and Snyder, in their overtrade markets to manufacture good feelings market problems is cultivating the positives from our nontrading lives. mood, and energy levelan become important correlated set with ofhappiness, P&L. emotional and Love buffers: satisfaction from provides activities outside of markets, we don’t have to our overall well-being and effective functioning. In her book, love places us inmake greater us harmony more with loving others, over time. and that harmony helps helps to moderate stress and facilitatesand social children interactions. When are parents inoccurs sync on with both one ends, another, the helping production cement of loving, oxytocin trusting bonds. In short, becomes a source of well-being thathealth. protects Fredrickson against notes stress that and the promotes neuropeptideciated with oxytocin, bonding, which is is stimulated by asso- close, loving interactions. Oxytocin areas of the brain that are associatedas with bonding with and attachment, rewards as associated well withthere goal has attainment, been become long-term active. coupling, When the mere sight of the loved person overview book, in long-term romantic relationships are shown pictures of one another, another, there isAnother actually person’s a reality becomes ‘‘neuronal ours. coupling’’: Minds are in sync. met. Indeed, when there wasand a speaker, closely the felt brain connection wavethose between patterns listener of of the the speaker! listener This actually suggests anticipated that, when people connect with one he found was that certainWhen people people related related to the closelymimicked story to those more of their than the others. story, speaker—even their though brain the wave two of patterns them had not by neuroscientist Uri Hassonwoman at tell Princeton a University. story Hehad while had various being people a listen connected young to to the story a while brain connected to scanner. scanners. He What then Barbara Fredrickson (2013) summarizes fascinating research conducted 184 BEST PROCESS #2: BUILDING ON STRENGTHS owl-en.Agl,i i 01book, 2001 his in Argyle, well-being. to 3. 2. 1. with with compared study, those networks. the of strong of with percent end those 30.8 the of percent by 50, 9.6 died of had age networks social the nine-year weak a over over those people Among 7000 tracked period. (1978) Syme and interesting Berkman particularly study, one that and In mental individuals. find superior married in among studies resulting health cultures, physical cites across of Argyle true well-being. is variety a of this that levels a just evidence higher with earlier, not associated noted support, is married As actual being brings problems. physical superior system of with that venting associated when is especially system support health, and notes social similarly positively strong He satisfaction. a correlates life that and friends happiness with both with satisfaction significantly that evidence cites owa osti enfrtaig he mlctossadout: stand implications Three trading? for mean this does what So related is overall attachment social that suggests research Indeed, rdn elbcmspr facmimn olvdoe,ntjust not ones, complexion. loved to different commitment a a on of takes part becomes that taking well risk likelihood Trading strong, greater are a and ties and relationship When family optimism, slumps. outright of become will loss setbacks trading a energy, downward a immersing of creates further This spiral difficulties. focus, their of market source the their in themselves on down double of downs challenges and performance experience ups who the traders often, to Too buffer performance. market a life as happiness, affection of and sources energy, satisfaction, consistent cultivate ties traders family that and important relationship romantic well-being. strong sustaining while Sustaining a horizons is trading network broaden active to and way strong great A mentorship. infor- also only but assist not sharing, include and mation networks markets these of of Many solving. challenges problem day-to-day with the most understand are an traders to provides Fellow likely It system. benefit: support additional social an professional is effective there develop- but market of of research, top networks and on ments strong stay them and helps active network This very traders. peer have majority the with, worked networks professional Building ieaylvn,goigtig edtnigadcr.Fcsn on Focusing care. of and tending part need as thing, relationships, growing cultivated romantic living, and Successful any exercised patterns. like habit be positive can creating well-being of source workouts Love part. own one’s on intentions good Wa er nigoti hscatri htany that is chapter this in out finding we’re —What Aogtems ucsfltaesI’ve traders successful most the —Among www.MyChart.ir h scooyo Happiness of Psychology The —Itisextremely , BEST PROCESS #2: BUILDING ON STRENGTHS 185 principle: Love not actively ■■■ use it or lose it cultivated is well-being forgone. What do you doyour each children? day Your that romantic evokesare partner? and you Your expresses doing closest your tobase friends? love of deepen What support? for Recall your that closest relationships? Broaden your day-to-day responsibilities andtogether putting on the back romance burner is and one of quality those guaranteed time energy drains. The idea is to focus not just on the work productivity of your time, It didn’t take long to isolate a major cause of his problems. His firm had Shutting people out. A very skilled trader I worked with several years ago went into a Now let’s focus on a less comfortable topic: the reverse side of building give energy and make us better—as traders and as people. but also the emotionalthrough quality. the Well-being marathon is race of thesocial a fuel support career. that Cultivating is powers love, essential friendship, you to and health and success. The right relationships his performance declined, and he became unhappy with himself. he loved his time observing andwas studying diluted markets. with When noisy that conversation, experience his information processing suffered, the contacts he most valued.a That major simple improvement change in of performance,market environment contributing preparation led to time. the to He quality was of a his trader who truly loved markets, and space for the startreviews of in each quiet, trading without distraction. dayother When traders, and socially he conducted and wanted to his to share ideas, interact research he with and came upstairs and sought out hired several new traders, all ofThey whom were brought young, eager, and good talkative. nothing energy but distraction to to the the trading trader. He floor—and moved they to an brought enclosed office and he was highly critical of his performance. the back burner because price actionnoticing was not fundamentally. yet By confirming what the he timealready was moved he without returned him. to It the was an ideas, uncharacteristic they loss had of sharpness, trading drawdown. He felttrading that of his his idea ideas generation wastwo had less missed than waned trades. sharp. and Both He his were was ideas especially that frustrated he by had researched and put on affection and social support. 186 BEST PROCESS #2: BUILDING ON STRENGTHS n ecietersrnts vnwe hyms ob themselves. doubt most they when even strengths, their perceive and life: in experience. step professional uncomfortable and if personal environment. our important maximizing an suboptimal There is a build noxious. influences in to negative squandered are sense out it little Shutting who see makes to rings people It only experience out. well-being, some filtering our with are worth optimist experiences There an some topic. are is this pessimist on a true that saying the Still, ■ ■ ■ raweeIge pwsvr idecashrl h a of lap the class—hardly middle and safe, very school-oriented, family-oriented, was very a up was it grew The luxury—but outlook. I my where to in contributes area life greatly of environment prosperous quality immediate a my high had and Experiencing problems; has center. congestion years downtown/community and professional 30 traffic sizable parks, a few past schools, crime; population; of the public rates low for for infrastructure; and support in libraries, strong lived characteristics: have common I community Every n vnacstosi yvesd o codwt h (usually the is with That accord me. tweeting not or blog do the slurs, views on remarks, commenting my person sarcastic if anonymous) to accusations subjected even been interactions and have online I the fresh however, disagreeable. bring who times, are and At world markets. the people to social of meeting parts perspectives in different love from active I are enjoyable. been who quite online I’ve are blog, interactions TraderFeed Most media. the starting since Ever inspired are who do. others they greatest around what the being by is of work One own group. my latter for the inspirations in cultivate those and group with former relationships the and good with need, controversy. interacting in time they involved little become something very you spend have if I you you disown to when first the you former are use they The output. to work eager their more is of are group quality and others quantity and the politics on office focused more are through settings advancement work in on people focused some that found I’ve years, possible. the as Over there time little as spend I in qualities area, those an experience don’t I If neighborhood. well-maintained osdrtefloigeape ffitr htaebitit ydaily my into built are that filters of examples following the Consider people in good the see can generally I optimist. an be to tend I www.MyChart.ir BEST PROCESS #2: BUILDING ON STRENGTHS 187 You can only enjoy an optimal environment if you filter out all that is company; filtering the amount of timegreat spent for with the obnoxious mental people ecology. is people inevitably will be inneighborhood your or in workplace; your others family. Life might is too be beautiful in to be your spent in such time on possessions than on theirthreatened own by children; who your are insecure achievements;name-dropping and than and in who discussing are real ideas more or interested topics. in Some of these Let’s face it: Some peoplepeople have pretty who crappy need values. wealth I’m referring to to impress other people; who spend more business venture, where I will inevitablycapital be the and partner name to provide recognition.) the swamped Without with unfruitful filters, and it’s unfulfilling correspondence. easy to become each week, it only takes 1to percent of create that group real tothe time consist of people and ‘‘takers’’ offering energy opportunities sinks. to (My ‘‘partner’’ with favorite them responders on are some These are not stimulating,one-sided—all collegial taking, interactions. not They giving.you’re are This active painfully is particularly in problematic social if media. If thousands of people read my blog like a person who haspeople won wanting a to lottery: be Suddenly you yoursome find ‘‘friends.’’ are Some yourself looking are with for looking jobs; for some hot want you tips; to share secrets of success. environmental pollutant. When you experience a degree of success in markets, you become controversy and hype. A common example ismarket breathless crashes predictions from of commentators seekingmost public media attention. I when avoid I’m trading: Most of the time it feels like an I find most traditionalonline media to videos be often noisy. attract Television, websites, eyeballs and by engaging in manufactured when the ‘‘block’’ button becomes useful.constructive I response the will first generally time; tryLife after a is that, civil, too everything short is for blocked. becoming the receptacle of others’ drama. time spent as possible with people and activities that drain energy. suboptimal. No junk food in the refrigerator;news no flow; tabloid no journalism empty in chit-chat the socialwith activity; those no caught unnecessary up interaction in drama or those envying your success; and as little ■ ■ ■ 188 BEST PROCESS #2: BUILDING ON STRENGTHS h epeadatvte htisieyuadbigottebs nyou in best the out Find bring things. all and rest. in you the equally inspire you filter be, engage that and can and activities you people and that all all people be to the to things aspire you all If be reality. cannot it’s But book. the in it rdr mfinl ihpriiaei htrosdsge oshare to designed rooms chat in participate with friendly am I traders values, well-being. to and contribute beliefs that groups common affinity with powerful become together churches people bringing support By one’s more with system. contact having frequent more and with family the correlated outside ties strongly social that particularly observes He is group. a attendance within life church people bonding is, and activity, attendance social church happiness a that part, explains higher well-being, in He report not. of do frequently who those predictor more than satisfaction spiritual attend who strongest those the as is attendance the church of example classic reverse—a Fredrickson. by the noted as spiral upward to well contributes as experience They spirituality and emotional relationships. positive increased family emotional that and evidence marital improved to better point with also as well associated as health, is physical spirituality that of review observe their support. in social Snyder, creating of and interests, Pedrotti, base Lopez, as our widening well and as experiences values Very bonding cause. promising shared common enjoy in to participants together key people the brings The often, it like. that the is group and affinity activities; an recreational courses many worship; programs; in and training appear education and spiritual groups causes; Affinity political belonging people. around of likeminded forms: power of rela- the community romantic is a appreciated and to Less friendships well-being. of our importance to the tionships recognize us of Most ■ nwalo hssud as n ugetl lotdd’ include didn’t almost I judgmental. and harsh sounds this of all know I ayafiiygop raieo oeifra ai.Anme of number A basis. informal more a on organize groups affinity Many in Argyle, ecnpocieycet u niomnst aiieeprecsof experiences maximize to well-being. environments our create proactively can We fnt Groups Affinity Well-Being: in Topics Special h scooyo Happiness of Psychology The e Takeaway Key www.MyChart.ir ie eerheiec that evidence research cites , oiiePsychology Positive (2015), BEST PROCESS #2: BUILDING ON STRENGTHS 189 in team; you either played I Special Topics in Well-Being: Gratitude Of course, what the coaches were also teaching was gratitude. Before Trading can be a lonely activity and, especially for self-employed Participating in affinity groups can be challenging for more introverted you point your finger at yourself and boast of your success, you point within the team concept or you didn’t play. was on the wallscore.’’ If permanently: a ‘‘Acknowledge the playerquickly did pass came not out that of point leads the a game. to There finger was a to no acknowledge an assist, he for me occurredbasketball during team. my Coaches stint routinelyhighlight as put lessons signs a from up team recent in practices manager the and for locker games. room our One to sign, college however, ■ In previous writings, I mentioned one of the practices that most hit home genuine camaraderie. Life becomes richer when played as a team sport. traders, it can be quiteme isolating. anything, If it’s years that of there coachingout are traders many have there. talented taught Those and creative are professionals the people who provide inspiration, insight, and for children and adults alike. it enables them to meet newfresh people setting. and Indeed, enjoy each it’s other’s notchildren company at in socializing all a common with to each find other couples to with generate young bonding opportunities of beer styles andand the offerings outings provide satisfies a curiosityideas. great Many social and couples forum interest are for interested sharing in in experiences participating and novelty, in group activities, as traders, including some whosocial don’t events, share participate my interest in in craft the beers.in usual As a a dinners result, number I’ve and participated of craft beer tasting outings. The focus on the wide variety traders, and yet it can be tremendously valuable. I have found that many both educational and social functions.good The personal conference and was professional a outlet, as particularly itsimilar brought trading together styles traders and with values. dinner meetings to connect withconference colleagues. organized I by recently the participated Traders4ACauseconference in group. fees a The that members benefit pay designated charities; the conferences serve information about trading opportunities.function Generally, as they well, serve providing an a outletHedge social when fund trading is portfolio slow or managers frustrating. and bank sales/traders very often use 190 BEST PROCESS #2: BUILDING ON STRENGTHS oadtoewohle aeyu ucs osbe hnw feel ourselves mire we don’t We When have. we possible. what success value and your on focus make we gratitude, helped who those toward hi crs hi orasaefildwt tiue u o gratitude. to not led but attitude, that with positive filled passes are their acknowledge journals about Their don’t scores. write their certainly not they do and in with They frustrations write performance markets. their traders with vent Many They and ones. poorly. themselves negative trade they to when entries only positive journals of ratio the is lack. we what over frustration in o h oiie ntestainptaptnilpolmit perspective. into Gratitude problem thing. potential small a a put was situation the bodywork in the positives for the bill for the injuries. sustained fact, had one that relief: no of to and was OK chunk Next however, was he a reaction, that fact be My the to on out. was going focus shell The was to half- there amount need is knew fair would that I a Dad vehicle, part incurred money the and the to accident not car damage half-full, a body is into of got that son cup my life’s naturally When of empty. we part gratitude, the feel on we focus When well-being. emotional of ponent cso tes oi sntsrrsn htEmn a on evidence found has Emmons that positive surprising the not on is focus it so to retrieve others, selectively us to of leads us acts also primes and Gratitude life information. of negative aspects negative on focus attention to our life turns of naturally aspects it positive because to information, positive retrieving at better Gratitude experience. groups. emotional positive the to between contribute uniquely significantly to appeared differ not emotional negative did but group, experience hassled greater the significantly than better satisfaction reported and in group happiness being gratitude reported the and Interestingly, more health. The exercised hassles. its its also raised recounting course group group blessings the the high-gratitude its over percent Over counting daily 25 group by events. idea levels about the positive happiness The experiment, wrote or 10-week blessings. negative and the daily life’s of on about emphasize focused wrote to group subjects was another of while group burdens, one which in n ttrsotta hsi agrpolmta rdr realize. traders than problem larger a is this that out turns it And for look I things first the of one journal, trader’s a review I When nhs20 book, 2007 his In com- key a is optimism and optimism, to connected closely is Gratitude mosmksa motn observation: important an makes Emmons Thanks! ersin nteohrhn,tpclylasus leads typically hand, other the on Depression, . oetEmn ecie nexperiment an describes Emmons Robert , ■■■ www.MyChart.ir rttd ed st become to us leads Gratitude BEST PROCESS #2: BUILDING ON STRENGTHS 191 ■■■ Key Takeaway When we demand perfection of ourselves,achievements we that display fall ingratitude short toward of perfection. Perfectionism undermines traders not only because it sets up unre- How often do you feel pride in your accomplishments? Satisfaction and ever lower levels of well-being. results. Long a successful trader,missed trades. he This found only his led focus to waning, further leading self-criticism, to still less gratitude, The net result ofand, his in an focus, important however, sense, hebrought was never little that felt well-being success. he His and never trading this, experience felt over gratitude time, took a toll on his trading like the subjects in Emmons’sblessings. study This who wrote trader only insisted of thatcomplacent. hassles, satisfaction He never would prided of make himself him on lazy never and settling for less than greatness. larger gains. If itbeen sized was up. exited One well, traderof I it everything worked could with that have routinely did wrote been in not better his go if journal well it (perfectly) had in his trading. He was gratitude. The perfectionist, bygo definition, well. is If focused a on trade what was doesn’t profitable, it could have been held longer for of each. alistic expectations and fosters frustration, but also because it sabotages positive emotional content. When the ratio waswere closer to more 1:1, the likely couples to beclose unhappy relationship and brings eventually partners divorce. together Gratitude and in enhances a the well-being that gratitude leads to aJohn strengthening of Gottman social compared bonds. When happythat researcher couples the communications with of unhappy happy ones, couples he were skewed found 5:1 in favor of cursed? In solely focusingjoy, contentment, on and appreciation. where Without webecome those mired positive fall in buffers, negativity short, we and our we batteries lose inevitably drain. access to in your progress andfrom development? others? Gratitude How for often what do you’ve you learned feel blessed in your work, rather than 192 BEST PROCESS #2: BUILDING ON STRENGTHS fes1 rttd-uligpractices: gratitude-building 10 offers 8. 7. 6. 5. 4. 3. 2. 1. ohwcnw otragetrsneo rttd hog ie Emmons life? through gratitude of sense greater a foster we can how So uti rttd.O h te ad ti ifiutt sustain to difficult is it hand, negative. other is language the if gratitude On gratitude. sustain er ryr fgratitude of may prayers we Learn troubles despite and others. received, giving caused we’ve on have gifts focus The for to others. us grateful for leads staying created naturally have and questions others; you of to difficulties combination given and have problems you the what you (c) (b) what others; (a) from on: received focus you have which in technique meditation my Buddhist in have questions three I yourself what Ask appreciate romantic unfulfilling to and easy marriage. unhappy it recall in makes I be be. This to could relationships. like things was bad it how what ourselves vividly remind we if situation bad the Remember both fosters appreciation satisfaction. of and attitude happiness an with them to connecting and journal gratitude a Keep od like a Words turn language and your accountable Watch commitment. ourselves full-blown keep a to into intention way good great a gratitude is practice gratitude to vow you a keeps partner Make exercise an as gym. much the path, in grateful a on you keep to refers Emmons gratitude. reminders source a visual a is into Use granted health for your take well-being. for ongoing we of gratitude something into turn the to tapping Feeling way you. and powerful around body world your the of appreciate state better to touch and but senses gratitude. of your achievement, mode to goal a Come in increased pray who to people leads for only points prayer Emmons that have. we evidence what to for thanks give we Rather, rewards. fortunate ti uhese ob rtflfrorpresent our for grateful be to easier much is It . s orsne fsel at,sgt hearing, sight, taste, smell, of senses your Use . oe rudtehuecnrmn o of you remind can house the around Notes . h od euehl hp u reality. our shape help use we words The . and dniyn al h oiie nyu life your in positives the daily Identifying . h usin mosotie r rma from are outlines Emmons questions The . npae,w o’ s o aosand favors for ask don’t we prayer, In . blessed conaiiypartners accountability aigapbi o oegg in engage to vow public a Making . r omnaogpol who people among common are www.MyChart.ir epewohelp who people : BEST PROCESS #2: BUILDING ON STRENGTHS 193 . . Behaving in more grateful ways leads to . We can be creative and find gratitude in even To a much higher degree than we commonly realize, we can mold up to the actions of ourThink bodies! outside the box negative events, such asthat what we we develop learn because of from dealing bad with trades those who or hurt virtues us. Go through theincreased motions feelings of gratitude. Sometimes our minds need to catch Putting It All Together: Trading, Strengths, and Well-Being Notice the common theme here: We can grow gratitude—and all 9. our moods. our cognitive, emotional, and physical realities strengths. It’s back to useourselves it in or sources lose of it: joy,others, If contentment, then we energy, we are and are not connectedness at actively to the immersing mercy of random events and their impact on life satisfaction, energy,that affection: we These can allmore cultivate. are positive Quite lives, the and literally, results that training we of will can help habits us train broaden and ourselves build to our live forms of subjective well-being—through directed practice. Happiness, 10. been supercharged by the interplay between strengths and positivity. we exercise our strengths,we we are generate positively well-being; toDeliberate focused, practice, the we at extent make a that psychological maximum level, use is of simply learning our that strengths. has emotional, and cognitive wellness.spiral Indeed, that described is by the Frederickson’s ultimate (2009) upward research: To the degree that sense—and as the upcoming material on creativity will demonstrate—wewill be best positionedstrengths; to and keep (2) operate up as consistently with as markets possible in if a we: state of (1) physical, play to our when we are suffused withportion well-being. It of is this not book bysecond accident emphasized that part adapting the to has first changing focused markets on and strengths the and well-being. In a big-picture The old trading psychology taughtthem us in to decision control making. emotions and Theemerging minimize new from Trading research Psychology in 2.0 positive perspective psychology is that we operate best How does expanding our positive experience make us better traders? ■ 194 BEST PROCESS #2: BUILDING ON STRENGTHS hscleecs teghn h ri h aewyi teghn the strengthens it way same the brain the strengthens exercise physical xrieo u ontv,eoinl oil n hsclcapacities. physical and social, generators, emotional, cognitive, idea our systematic better of the but becoming exercise exercise, to physical just key managers—not risk the and is traders, Exercise information’’ new 53). in logging p. for (2013, basis cellular the is which another, one to in motivation and Ratey, attention, makers. ness, brain better decision become better we Spark become because we traders and short, and brain In makers the capabilities. stimulate adaptive we our experience, enhance fresh cultivating to capacities and potential our strengths, the extend capacities—has and emotional us our rewire stretching to workouts physical had thanks that cells mice brain exercise. more their the on significantly to water, grown enough, had Sure the rats swim quicker. active of much to the route out dissection, had the get learned they to active where physically route been experiment escape an an versus recall in active and placed When were learning. we new mice neurogenesis, facilitate grow passive of which brains process cells, the our brain Through new abilities words, learn. gain to cognitive other them our In push activities. expand we when unfamiliar and in brains engaging our by of plasticity the actively exploit not are they mental if sharpness poor their of lose artifact can absence employed. an the minds with actually our deconditioned exercise, is become can of aging bodies decline our to cognitive as due the Just of exercise. is deal assume great A we those minds. that than their disease stimulate Alzheimer’s not of debate do incidence who lower political a in have engage and and longer environment) live puzzles controlled crossword a perform in actively group research who great (a nuns to p. pointing that (2001, exercise, becomes’’ evidence mental brain of benefits the the our ‘‘The of observes better part similarly vessels. Ratey the that 359). it, fit blood more stress the we of and more is, ‘‘the density circulation explains, and Ratey it,’’ use number we the more increasing by heart: ae bevsi i 03book, 2013 his in observes Ratey book, his in Ratey, John h remaigof meaning true The exercise—from of form any that is shown has well-being of overview our What bevsta xrie‘otmzsyu idstt mrv alert- improve to mind-set your ‘‘optimizes exercise that observes , s to oeit lose or it use srsGiet h Brain the to Guide User’s A … ■■■ npsigorlmt,eecsn our exercising limits, our pushing In . i lo norgsnreclst bind to cells nerve encourages also] [it sthis: is Spark www.MyChart.ir htw r otlkl to likely most are we that , ego htwihw exercise we which that grow We xlishow explains , . BEST PROCESS #2: BUILDING ON STRENGTHS 195 the more positive their … —We make decisions, relying too heavily —We overestimate the likelihood of given outcomes —We believe in or do something because others —We selectively look for evidence that fits a preex- —We believe we can affect outcomes that are not in —We overvalue what we own, so we demand more —We tend to like things because we’ve been exposed —We are unable to see cognitive biases in ourselves. — Weoverestimateourpredictiveabilitiesafterchanging —We are swayed by the way in which information is —We rely too heavily on recent events when anticipating In each of these cases, our information processing becomes distorted Most traders are familiar with the cognitive biases that bedevil traders Bias blind spots Recency bias Anchoring/availability biases Exposure effects Illusion of control Hindsightbias Framing bias presented. Endowment effect to part with something than to initially acquire it. Overconfidence bias Bandwagon effects believe or do the same. Confirmation bias on individual pieces of available information. future ones. to them. our appraisal of information after outcomes are known. our control. and/or our ability to predict outcomes. isting view. a sadder mood.mood As state, the the authors sooner explain,dominated they (worst) switched ‘‘ gamble’’ from (2012, the p. dominant 3). (best) This to was the because the happy become unduly risk-averse orInterestingly, research risk-seeking from following DeVries losses andmaking colleagues and in found gains. that a decision rule-based task was worse in a happy mood state than in because we do not weigh evidence impartiallyknow, and completely. our As mood traders states greatly impact our susceptibility to bias, as we ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ research are the following: and others who make decisions underAmong conditions of the risk more and uncertainty. challenging biases documented in behavioral finance 196 BEST PROCESS #2: BUILDING ON STRENGTHS oia nlsso h ue htutmtl eemndoutcomes. any determined by ultimately than that outcomes rules recent the by of swayed analysis be logical to likely more were subjects rga o oref h rga ossso h following: the of consists program The yourself. for program moods? positive of impact biasing potential factors of awareness us. lose bias we can when that spots blind positive bias of by victims controlling become of or swayed We eliminating one to be of rather, issue prey to but an not fall likely emotions, It’s control. we as ones. of negative that just as trading illusions are emotions our we and about mindfulness, biases, best Without know, confirmation feel traders biases, we experienced when overconfidence As often traders. is successful it us make to enough ■ ■ ■ ■ ■ ■ ■ aesr ahdyta o xriephysically. exercise you that day each sure Make joy, experience others. to to capacity connections your and exercise satisfaction/gratitude, you that day relationships. each closest sure your Make build to time create to days your Organize about learn to strategies. basis regular and and markets planned a on colleagues with your Network correct and well, doing are you perfor- errors. what your on as build well mistakes, as mance performance positive your right evaluate the Regularly create stimulation. and to distraction from environment freedom social of blend and physical processing your are Maximize you strongest. are sure you make which to in ways advance in in information workdays your out Lay ohwcnw utvt oiiiyadytntb wydb the performance peak by a swayed developed have be you that not imagine this, yet answer and To positivity cultivate we can how So not frame—is mind positive well-being—a that is means this What mrvn u rm fmn os’ eesrl mrv u trading. our improve necessarily doesn’t mind of frame our Improving e Takeaway Key sn u mtoa ecin sinformation as reactions emotional our using www.MyChart.ir . BEST PROCESS #2: BUILDING ON STRENGTHS 197 .You Increased mindfulness is the meta- ■■■ What we do to develop ourselves as traders is one and the same with In other words, the net result of such a peak-performance program I think you can see that, over time, you would become very good That is a comprehensive program and, no doubt, it would be chal- We are now halfway through our ABCD sequence. We found that and extend your limits. Make sure each day that youactivity. engage in stimulating, challenging mental Make sure that each of these activities are conducted in ways to push what we do to developor otherwise, ourselves trains broadly. us Everything and we impacts our do, performance. wittingly self-aware and self-directed human being. you would be actively guidingconsequence your of life. a comprehensive effortdon’t at just building become strengths a and well-being better and happier performer; you become a more would be a tremendous expansionwould of exercise mindfulness. your Every self-awareness major andcomprehensively activity your ability and to accurately. observe yourself Instead of letting life come to you, your days, using your self-awarenessyour to time. guide the best ways of utilizing You would become very awareand of you your would physical become and highly psychological attunedimportant, state, to you your would social become relationships. increasingly Most intentional in the conduct of at organizing your time and using it to build aspects of performance. lenging to implement allconducting of a thought it experiment, all imagineon of undertaking a daily all the basis. of time. What the would But above be for the net the result? purpose of ■ ■ Cultivate creativity andfinancial the markets. ability to find unique sources of edge in trading success requires Adaptingmeans to that changing we markets must and Buildand this our skills strengths. in to How turn can build we adaptive apply trading our businesses? talents That is where we must www.MyChart.ir CHAPTER 3

Best Process #3: Cultivating Creativity

Creativity is allowing yourself to make mistakes. Art is knowing which ones to keep. 199 Scott Adams

■ The Trader as Entrepreneur

The old trading psychology emphasized planning your trades and trading your plans. The new trading psychology—Trading Psychology 2.0— stresses the changing nature of markets and the need to develop fresh plans for new contingencies. The old psychology placed a premium on controlling emotions. Trading Psychology 2.0 is about cultivating positive emotional experience through the exercise of signature talents and skills. The ideal trader, according to the old trading psychology, is a disciplined rule follower. The ideal trader V.2.0 is a creative entrepreneur, uncovering and exploiting fresh patterns and rules. What is an entrepreneur? When we think of famous entrepreneurs, three qualities come to mind: innovation, vision, and leadership:

■ Innovation—The successful entrepreneur creates something new. We are accustomed to seeing Starbucks coffeeshops on street corners, but it wasn’t so long ago that premium coffee served in dedicated cafes´ 200 BEST PROCESS #3: CULTIVATING CREATIVITY ol ffiac.Tdysmres oiae yatvs eta banks, central activist by dominated markets, the Today’s in finance. shelf-life in of limited changes a world resulting has the trading clerk-like world—and that be each the ensure way of need markets—that same nature world the changing in and the static actions is periods same a It the day. time in executing clerk, and trader a The markets than more approach. all little that across to work faithful could remain that edge an innovation, out the is Where opportunities. from leadership? and and profit vision, supply, to and demand trades gauges places news, and research reviews computer, ■ ■ p.Wtotlaesi,vsoswudb itemr hndreams. than more little be would visions leadership, Without app. the into management goes project intricate that the companies consider are but design of success, unique their success with to products central the Innovative Google. of and Apple Think strategies as realities, such into activities. into those day-to-day them translating guide and turns that ideals and and the ideas ideas walks takes communicating talk business the entrepreneur a talk whether The to determines walk. great leadership It’s but business. they mission, a unless of of nowhere efforts go the vision energizing guide an consistently and hanging ideas documents New sterile walls? than on more little become that organizations oehn e n on tbte isa h er fentrepreneurship. of heart the at lies better phenomenon it doing unique and Doing new computing. completely something mainframe of a world was the challenged masses Microsoft when computing the personal for Similarly, States. software United and the in idea unique a was eaeadfiigteefrtebsns,mtvtn n inspiring Leadership and motivating vision business, That the efforts. experiences. for best theme special defining offering a to became accommodations. itself excellent devoted offered hotels Capella good very The with relationship guest. the each personalizing way stay, their person’s to of each out process individualize went to in They check different. of the was heart vision from Capella’s the level, cleanliness. service, high at guest a lying at emphasized vision everything the hotels standardizing the encountered premium by first Ordinary struck I property. When was each business. I a group into hotel idea Capella an turn to vision Vision fmreswr efcl ttc hnoewudol edt figure to need only would one then static, perfectly were markets a If on turns in, comes trader A trading? to relate this does how So Anwpouto evc os’ utsl tef ttakes It itself. sell just doesn’t service or product new —A Hwmn ie aew enmsinsaeet in statements mission seen we have times many —How development o f h etsatpoeo messaging or phone smart next the www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 201 : They start with a Key Takeaway traders are intellectual entrepreneurs Vision, creativity, proactivity, and opportunism: All of those are What qualities do we find among entrepreneurs? Leutner and col- The trader’s long-term success hinges on entrepreneurial skill. When traders refer to their work as their business, they express produce profits—those are the business processes that lie at the heart of time, identify andthem exploit into opportunity. trades, Generating and ideas, managing translating those trades to minimize risks and qualities that wetalent see is not among just traders finding good sustaining trades, career but building success. businesses Their that, over Their research suggests thatthese four specific domains personality are more traitsbroad important personality associated traits to such with entrepreneurial as success extraversion than or conscientiousness. nition; opportunity exploitation;authors innovation; described and these value as EntrepreneurialCreativity, creation. Proactivity, Entrepreneurial The Entrepreneurial Opportunism, and Entrepreneurial Vision. leagues (2014) examined the qualitiesand associated developed with a entrepreneurship test that assessed four key facets: opportunity recog- trader’s ability to coordinate thosezeal. roles That and is infuse the essence them of with entrepreneurship. visionary trader-as-entrepreneur is a self-contained organization filling manyresearcher, roles: risk manager, planner, businessdeveloper. manager, The success and of new the product trading business crucially depends on the ideas into trades andreturns. managing We those trades areactivity for accustomed that superior occurs to risk-adjusted among thinking many people of in business entrepreneurship organizations. as The an vision of markets, engageidentify in unique opportunities, innovative and research then and exercise development leadership to in turning to change—and that necessitates a high degree of entrepreneurship. high-speed algorithms, andresemblance tight to the intermarket markets faced relationships byAs Bernard we Baruch bear saw or in Jesse the little first Livermore. chapter, success in trading requires active adaptation a very real sense, an important truth. Eachprocesses trader that indeed result isnot in a products business outputs or unit, that services, engaging but yield in rather profits. ideas and Those their outputs implementation. are In 202 BEST PROCESS #3: CULTIVATING CREATIVITY raieendeavor. entrepreneurship—is creative all a trading—like root, its At management. money l-motn.Tebgpaesta liaeycnrlvlain enter is valuations that control tape I ultimately the that on when appears players explained volume big he how The it’s important, all-important. but is office, home Volume his investors positions. visited and traders exit how for and sense business keen enter long/short a gained and the he learned years up, he ground where for the from fund, advisers hedge a financial at with working then worked Having the distribution. and distribute and companies to undervalued key the The ones. investors overvalued when them. accumulate that occasions on to those believes finding act begin He is perspective, investors fundamentalist. his pure from once success, a matter but only anything fundamentals is Allen ends. do. others to is before goal out the things for where figure positioned story, and detective poorly clues giant gather and a as priced markets richly views are He growth. that growth ones solid sell with companies and undervalued prospects buy value. to looks of of Allen reading long/short many managers, estimates information, Like databases. of own the of collection maintenance his and the reports, at research with revenues, aids arrive of Misha, to assistant, models earnings His sophisticated A and creating manage. margins, research, to profit own capital his own Allen all covers, his he does companies getting the about before information of analyst encyclopedia long/short financial virtual senior equities a an a as with as career opportunity rare his team a began grabbed He then work. and markets adviser how is topics favorite seldom as or often as trade likes. management and he risk as opportunities, own own his set his to pursue his freedom policies, manages the a now him analyst and as gives junior business This money that capital. a good own from made retired himself: he Having than manager, himself. fund other for hedge employee trades one Allen Misha. only business named has Allen’s he about different runs that he What’s is because business. successful trading is He world-class manager. a portfolio successful a is Allen ■ o er,Alnhssuidtefopit fivso accumulation investor of footprints the studied has Allen years, For managers money other to similarity Allen’s where is however, That, his of one that out find quickly you Allen, with speak you When le,teTaigEntrepreneur Trading the Allen, www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 203 ■■■ —Allen makes a point of tracking everything Our conversation lasted for quite a while and covered everything The amount of research that Allen puts into his calculations of Let’s step back for a moment and take a look at how Allen actually that budget difficulties between Congress and the president would lead fresh earnings reports. He isimpact particularly stocks sensitive that he to is news following. that For could example, he became convinced he can find aboutreports his companies, and including new recommendationsassistance, and he and updated also analyst follows breaking world events, news. economic data With releases, and Misha’s Reading and researching ■ profitability over multiple years. began with me. Every year,trading. he The added core one of or two hisevolved. new business He approaches remained insisted to the his that same, this but is he the continually only way he could have maintained his business, but was alwaysnetwork looking of to colleagues expand precisely it. He to maintained engage a in vast the kinds of dialogues he from the cognitive biasesdata of to investors inform to long/short using sector trades. the It shares was outstanding clear that Allen knew allocations. Ultimately, he explained,driven he long/short sector wanted book, to added to see his long/shortnames, if book would of a add individual alpha sentiment- to his performance. as it capturessectors. the What actual Allen demandand wanted and out to of supply discuss various forces was sectors for whether could money be indexes useful flows and in in tracking changing sector TraderFeed blog, that Iamong track major ETFs. the That, daily I number found, of is shares an outstanding excellent sentiment measure, track the analyses that tell him whenfor supply and his demand companies. shift significantly Despite yearsto improve of his success, edge. Allen He continually contacted attempts me when he found out, through the accumulation and distribution is nothingmuch short of the of routine astounding. company-based research He to leaves Misha, freeing himself to and exit positions in distinctive ways,releases. particularly Knowing in advance those of earnings understanding footprints, when value Allen matters for maintained, forward is price action. essential to several distinct elements: spends his time. If I were to break down his process, it would consist of 204 BEST PROCESS #3: CULTIVATING CREATIVITY ■ ■ o h atta ecvr ra nvrewt w-esnteam. two-person a with universe broad his a covers of he one that compensate impact fact Allen could helps the he dialogues for that of while, news set ongoing a of This piece in companies. own a Once colleague economy. a general from the learns their gauging finds he in but them follow, helpful of not views does Many he sniff-test. that talent sectors his and companies passed cover have whom professional of his all in colleagues network, to daily speaks the Allen from considered addition, being In need those bullpen. may and positions that existing with actions taken prioritize be to and and distribution databases, news the and review from day to accumulation information desk Every summarize the trading. from events, away inform company-specific time background strategy spend Misha chess and and his tactics Allen taught used how Misha that and understand and fact statistics to student the and a liked programming Allen as player. up record himself chess strong turned competitive unusually process a an search as with a graduate after recent Misha a selected He to talent. relevant identify most information the on greatly focus Misha to portfolio. to portfolio work his the ability of of delegation Allen’s out The taken sideline. aids or of the portfolio out on it the taken placed Indeed, to are and bullpen. added companies the and that in bullpen updates those material the of also because but for is book performed often his only experiencing in not or companies are demand the calculations good his These finding updating supply. basis, are end-of-day overhanging shares and whether intraday on an patterns both views volume on and stocks price when his tracks or for He reports guidance. earnings forward release provide companies they his when models updat- time his considerable ing spends He relevant distribution. data and includes accumulation that to database separate a and companies his about rvdn rs oreo uuetrades. future of bullpen, source the fresh to Not additions a to providing action. lead volume research and and reading considerable price his infrequently, and/or a contingent performance selling maintains business or buying their Allen of on thinking portfolio, is he the companies addition in of ‘‘bullpen’’ In company. companies companies. that the his shorting for of to reasons one his impact of would one became that This spending defense in cuts to paigo databases of Updating neato ihcolleagues with Interaction Alnmitisalredtbs finformation of database large a maintains —Allen Alnpie isl nbigal to able being on himself prides —Allen www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 205 —Every week, Allen and Misha —This is the most amorphous and yet most essential and risks identified by the stress tests. been lost by the portfoliosize in positions past and the market overall scenarios. portfolio Allen to survive is the careful market conditions to of positions and decides whether theOne portfolio important needs to exercise be is rebalanced. puttingtime the book it through is stress changed. tests Those every stress tests estimate how much would have was long midcaps and short large caps.to That make, was and not a they bet quickly theysizable runs wanted rebalanced by their stocks within holdings. the book, Similarly, Allen after looks at the relative sizing of diversification within therisks book. in They the also book. monitorweighted For with instance, hidden midcap at factor longs one than point shorts, the so that, portfolio implicitly, was the more team tions. They are particularly sensitive to increasesrisk-off in correlations periods during in markets, which could greatly reduce the degree balanced with independent bets. Risk management and portfolioreview review the portfolio and especially the correlations among the posi- potentially impacts a range of companies.to The addition the of bullpen such themes and book is a key ingredient in keeping the portfolio These positions, paired withsectors, shorts performed quite in well. Other the times, discussions energy betweenand Allen and Misha or raw between materials Allen and a colleague will uncover a theme that detecting in bellwether consumer discretionary stocks. Heseveral looked of into those stocks more deeply andpoised found several to that seemed benefit well from increased consumer confidence and liquidity. there were both supplycrude oil and and that geopolitical the weakness reasonsbe would for persist. a He the boon believed this to decline would US in consumers, confirming the buying interest he was drop in thefollowed price the of energy oil. and His raw conversations materials with sectors convinced a him colleague that who insights that help shapesome his growing portfolio. buying Fordiscretionary interest example, sector he among in had recent companies noticed sessions in and the also noted consumer a considerable discussed. Toward thatwhich end he he chronicleswriting. his maintains Every so thoughts often, an this through reflection ongoing and stream-of-consciousness writing journal leads to in important Idea generation element in Allen’sof process. the He finds office it and essential reflect to on take everything time he out has read, tracked, and ■ ■ 206 BEST PROCESS #3: CULTIVATING CREATIVITY aiu ciiista r epnil o eeaigpot,adhe and profits, the generating manages for also He responsible direction. are its that He provides activities employee. and various and business the manager, guides leader/visionary, roles: organizational ■ ie eeain,amnfcuigpoes(rd tutrn) n a and structuring), management). and (trade construction (portfolio process process manufacturing distribution process development a and generation), research a (idea has he automobile and any company, Like pharmaceutical (ideas), profits. or earn to products trades) market (as into products news, those them (from distributes is materials he transforms raw sense, conversations), real numerous very takes statistics, a He In factory: performance. idea his an and portfolio; himself his manages manages he he Misha; and facets assistant, his several manages across he effort business; and the time of his manages He manager. a foremost d nqepromnet i ok a enttakdhsmissed his tracked not he Had book. his to would trades’’ performance ‘‘QE same these unique the believed add in He States. shorts United versus the overseas in industries stocks initiated with he positions coverage, long bank reviewing several central After his missing. increasing was and he performance bank impact that his central unusual stocks of an particular for exerting coverage demand were his on these improve believed to added he taking he as note Recently, developments, themes. his spotting to in section he job where a better see a take to journal done to idea have decisions his might the tracks also also He just but not opportunities. selling, tracks, forgo he or and result, buying a about As concern spot. decisions His to the trades. fails he marginal that on opportunities put for not is Allen does rule, and a overtrade As themes performance. not missing company does (2) and and sector driving book; up the the two end into into that into them companies fall placing putting then mistakes in and greatest conservative bullpen too his be being that not (1) convinced to categories: is out He turned ones. that decisions good on particularly focusing making, review Performance potnte,h ol ee aemvdi hsdirection. this in moved have never would he opportunities, htmksAlndfeeta neternu sta efil three fills he that is entrepreneur an as different Allen makes What rdn sntjs uiesbtas uiesorganization. business a also but business a just not is Trading htw a e rmti rcs con sta le sfis and first is Allen that is account process this from see can we What Alnkesascn ora otakhsdecision his track to journal second a keeps —Allen e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 207 —As we shall see shortly, creativity depends —The portfolio changes frequently, but behind The Success of the Trading Entrepreneur There is a second challenge for the trader-as-entrepreneur, however. on a combinatorial process in which familiar inputs are assembled into Entrepreneurial creativity Entrepreneurial vision market opportunity. believes that he succeedsbets by generating informed many by relatively thedynamics. independent melding His of success hinges business on fundamentals his and faithfulness to market this basic vision of not under accumulation and aof short the trade. isn’t If being the distributed,holds core he fundamental up, is rationale out he for the will trade not no longer chase the stock with buyers or sellers. Allen stories become compelling trades. He often claimsmoney that he managers trades as other much as he trades individual names. If a long is If an ideathe does book. not The vision,fundamental fit and as technical into thinking, where Allen companies this with sees compelling it, framework, is it a does blending not of the fit best into of the portfolio is a highly thought-out philosophy of what moves stocks. ■ ■ Allen is an entrepreneur intraits every identified sense in of the the workAllen’s term. entrepreneurial of If strengths: we Leutner return and to colleagues, the we can identify ■ Allen could never sustaincreativity profitability. is your When principal you process. are an idea factory, exposures. If ideasentrepreneur-trader are creates new the products almost product continuously. Without creativity—the of ability the to see trading old things business, in new then ways—and the productivity, reins in his bets.itself Even is when constantly tweaked trades to remain adjust in for the shifting correlations portfolio, and the factor book cycle for traders is muchbut more he rapid. also Allen is not is a bydistinct long-term no investor. accumulation means When a his for daytrader, stats no his longer identify longs or distribution for his shorts, he sure that they do not interfere with one another. The product cycle for cars or pharmaceuticals typically lasts years, but the manages himself to ensure peaka performance. self-contained A organization. One trader of suchis the as that great Allen it challenges is requires of unusual his flexibility trading to fill these various roles and make 208 BEST PROCESS #3: CULTIVATING CREATIVITY teghi i blt oda nagiigvso ossana ongoing an sustain to vision greatest guiding a Allen’s leadership on Perhaps draw business, to self-leadership. trading ability of his the is form of strength case the the takes In primarily many. leading person ■ ■ akn olpeo 08adqieln uigtecnrlbank–led central the during long recovery. and market quite housing stock and the 2008 during short of flexibility net collapse This be banking to time. him the allowed at opportunism short themselves and or present long that net combination opportunities best his the of reflect limit should book rigidly a his that not to believes He does himself exposure. he limit and not does sector, significantly. Allen particular shifting day investors, be each long/short may activity many demand selling Unlike and and supply to buying when contribute for determine can screens to that also reports, He opportunities earnings bullpen. identify day latest the Every to releases, sell. news data or company news, own and Misha to with wants already reviews already he are he that that moves stocks board in on jump beginning to looks He one: opportunistic bevtosadifrain ei bet uti innovation. sustain to with able fresh is himself a he keeping information, By generate and portfolio. can observations the eventually for ideas and fresh research of further number to distribution. or leads accumulation pattern undergoing That stocks notice will the he among times, pattern the Many a find conversations. to those trading from in away embedded step themes to ability interaction his consistent and his peers talented is with success Allen’s to Crucial outputs. unique d ohsasnlo potnte,a ntecs floiginto relative looking gauging of of way case a the as in ETFs to popular as tries of opportunities, always outstanding of shares Allen arsenal the Similarly, his portfolio. to the characteristics add to the all additions displayed good yet bullpen—a not of the have of that ideas concept good his of by reserve illustrated nicely distributed. is being proactivity are ones This overvalued and be compa- accumulated to being undervalued are when seeks nies phases simply He earliest book overvalued. the sell the identifying or in and by undervalued names proactive buy put are not not they does because does he simply He and moving investor. is value something because a nor trader tum proactivity Entrepreneurial nrpeera opportunism Entrepreneurial developing today’s. always managing is just not Allen portfolio, that tomorrow’s means Proactivity sentiment. sector enral hn flaesi na neproa otx:one context: interpersonal an in leadership of think normally We Alncnieshmefnihramomen- a neither himself considers —Allen Alnsbscpiooh fivsigi an is investing of philosophy basic —Allen’s www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 209 Success for Founders at Work ■■■ . This has important implications for would-be traders. A young person If we look at successful startups, such as those described in the Becoming a trader is not just running a business; typically it’s process of imaginative innovationthe trader-entrepreneur and is process-driven so rigor. muchhaving more a vision than and having actualizing a it plan and trading it: It’s looking to emulate the success of a money manager such as Allen might subsequent ventures. someone lacking such a track record.associated If with entrepreneurial traits entrepreneurial are success, indeed those then with it initial also makes success sense would that also be likely to succeed in their for this, ranging frombegetting entrepreneurial success: skill Suppliers, andmore experience venture likely to capitalists, to success and be drawn employees to are someone who has been successful than in entrepreneurship. Entrepreneursare with significantly more aor likely track those to record who succeed than failed of first-time on success entrepreneurs an initial attempt. There are several reasons an important sense,entrepreneur. An starting interesting 2008 new studyat from Harvard ventures Gompers Business and is School colleagues found in evidence of the performance blood persistence of the successful entrepreneur often has started multiple companies. Thissense makes if the research on entrepreneurial personality traits is correct: In interviews conducted by Livingston,entrepreneurs we are find serial an entrepreneurs. unusual proportion It’s of rarely one and done: The future is essential todeep belief the in success the core ofahighlevel. vision the of the startup enterprise entrepreneur. can Only sustain such a effort at to building thestaff information to infrastructure developingability to relationships to hiring with multitask and vendors and supervising and work long distributors. hours The in the face of an uncertain to cover every aspectthere of are the many employees new covering very enterprise. specificfounders In roles. are In a the responsible mature startup, for the organization, the entire business, from securing funding clear that a significant share ofattract the a core entrepreneur’s group success of is committed the professionals who ability will to work long hours developing a startup business. Jessica Livingston’s(2008), book, interviews a variety of successful startup entrepreneurs. It makes 210 BEST PROCESS #3: CULTIVATING CREATIVITY p hywudrciea nta loainfo hi aae n then and manager their ground from the allocation from initial business an the receive would learn They gradually up. and analyst junior a as start hydnthv h tc-oi-vns hti eddt utts over enterprise. multitask the of to facet needed every manage is and that hours stick-to-it-iveness long vision, that the and spark have spark creative that don’t without the they But innovation, vision. entrepreneurial is the lack behind to they lies seek What and with faithfully. formula it trading success than established copy franchisees enter an like don’t for more look think they They They up often entrepreneurs: business. set a too starting and all on of stocks, mindset it cases, trading the go such about to In can try account. they might an they everything Alternatively, learn time. own, over their that grow to seek ihu ro xeine hr sn a o ol fetvl e a experience—and taxes? requisite get and the effectively lack payrolls could would you handle You ground. way you the no off would is business there how experience, and prior orders, Without track and keep staff you sales among would How of responsibilities work? work their services? supervise divide of properly to menu and right members how the know create you and would staff, negotiate right How location, the right hire the lease, select apply best to to the enough permits know and you would licenses How which startup for? know and you business prior would having How a experience. shop—without repair from auto an benefit or store can they way entrepreneur. no and serial the is like organization—developing curve there learning an enterprise—so building an in trader running or experience manager lacks money beginning often typical the more, successful What’s lack with startups. associated an others, entrepreneurial opportunism entrepreneurial of miss creativity, and formulas proactivity, entrepreneurial they of success vision, mindset but the entrepreneurial the true, replicate the with to are markets looking approach those franchisees, who of Traders risk, All point: with associated important uncertainty. emotions challenges and the the and and reward, biases markets efficient cognitive about overcoming hear of you’ll low, so is traders mgn rigt tr padfeetkn fbsns— grocery business—a of kind different a up start to trying Imagine professional for rate success the why trader average the ask you If aytaesfi eas hyetbihiefcietaigbusinesses. trading ineffective establish they because fail traders Many e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 211 It is no different with trading businesses. Go back to the description As we saw in the last chapter, this is most evident among traders who, Think of the traders you know, and the chances are good that many will areas needing improvement. Manage all these activities efficiently and effectively on a daily basis. developments in the industry and across your tradingMonitor universe. your performance and systematically identify and address Continually generate trading fresh ideas andon bullpens top of of ideas evolving that stay opportunities. Build and utilize an effective information network to stay on top of mental information, marketmanipulated data—in and reviewed for a decision support. form that can be readily Define and sustain a visionyou that seek in informs markets. and guides the opportunities Systematically gather information—news, economic data, funda- ■ ■ ■ ■ ■ ■ of Allen’s business and thenprocesses ask in yourself, place as to a do the trader, following: if you have robust even if you had ahard pressed general to familiarity organize with and manage business a ideas, complex you enterprise. would be inspiring and invigorating vision. a business from scratch onprospect a of part-time riches basis: They without are effort, motivated not by by the the efforts that flow from an markets are closed is an idealit that is appeals to precisely many the aspiring opposite traders—andfail of for true the entrepreneurial same vision. reason Those that traders any entrepreneur would fail trying to start multitasking found inmoney business managers. startups The are ideafor trading that typical hours you among and can make successful learn money, and a then few live setups, a life come of in leisure when work for someone else and endurerealize the 9-to-5 that, daily ordeal. in Little starting dofor they the a man—only trading you business, are you the man! work The very extended long hours and hours intensive entrepreneurs. ironically, are attracted to trading precisely because they don’t want to because they lack disciplineto or run plans a but world-class because business. they They are fail ill-equipped as traders because they fail as engage in the above efforts onlybusiness-like in manner. piecemeal They ways—not experience in problems a in structured, markets, not simply 212 BEST PROCESS #3: CULTIVATING CREATIVITY ■ ■ ■ ■ ■ ■ enterprise: your at in business, ■ employees Allen’s several at be look would there our least on very Based the How have? employees. the you these do manage are within and employees You direct play many to employees. you is job that separate Your roles represent owner: the business actually of business each trading that moment a a for imagine Let’s hi fot ota o r tyn ntpo eeoigadtrading and developing of top task. on small staying no is are That you ideas. coordinate best-of-breed that and productive, so are need efforts they You that their them. ensure of roles, each their supervise structure to to is job your business—then trading ihtebodvso n iso ortaigbusiness. trading your of consonant aims is consistency and that vision manner the a broad exercise in the then together with roles and those level bring requires high to It perspective a of at control: multitask emotional to and ability discipline the than more performance superior much their requires ensure and them, coordinate them, manage roles, notae iha trcierwr-ors eainhpadthen and relationship trades those reward-to-risk manages and process attractive monitors, research an executes, the with by developed trades ideas into the structures who trader gathered A them information on tests based markets, ideas new in develops opportunities and out, investigates who researcher (price/volume A action an market instruments) various in of relevant behavior colleagues patterns, and from earnings network, views releases, developments), information data bank (economic fundamental central events, trading reports, news/current to of relevant top on information stays who assistant An oc h eiw esnladtaigifrainadguides and information trading and performance peak personal and learning reviews who coach A right failure of the case for in has backups those as business of well all as the resources, other that the and software, ensures of equipment, data, who targets manager return technology the A achieve to taken risk being right the the is business that and risk ensures conditions who of market and amount of positions, across top and on within stays exposure who manager risk A fyu rdn uiesi utyu oee,te o utpa l those all play must you then however, you, just is business trading your If your of employees team—the your of members the are these If rdn n h rsso Management of Crisis the and Trading www.MyChart.ir This . BEST PROCESS #3: CULTIVATING CREATIVITY 213 then organizational and self-managerial Key Takeaway . Most traders have never needed to cultivate the The successful trading business weaves best practices into best processes. What has made Allen successful over years of trading is that he has taken Imagine trying to run a restaurant where you are the only employee. If consistent profitability merely follows from faithfully executing our of activities that seem daunting and unmanageable and turns them into a researcher/idea generator and as amany actions trader and of roles those into concrete, ideas. routine By processes, assembling Allen takes a set generate ideas and a well-defined process forand adding ideas managing to the both portfolio also positions has and honed detailed portfolio. processes Through for tracking his his journals, performance both he as a them into best processes.information Allen from has a newsdistinctive distinctive sources, process process people, for for and gathering thinking markets; about he also that has information a in ways that a group of bestinto practices—ways trades, of and generating ideas, executing translating and them managing those trades—and woven can place winning trades doesn’tof mean your that trading you business. can succeed as the head stay on top ofday—would all of be them daunting. and Becausemean coordinate you that them you can effectively can every cook succeed single a running good a meal restaurant doesn’t business. Because you market the business, keep the business runningand each keep day, up plan the with menus, industrya trends. busy Even restaurant, if the this cross-section were of humanly skills possible required—and in the ability to You are the shopper who acquires the ingredientsalso for the all the chef, dishes; the you’re business manager, the server, and the accountant. You unfocused or unmotivated,entrepreneurial but skills needed because to they generate a have winning startup not business. cultivated the degree of self-management and organization toand simultaneously coordinate carry multiple out complex roles.overwhelmed Little and wonder that fail they to become execute their processes—not because they are integration of many roles cutting acrossto domains—from research and idea generation risk management— skills are essential to success intentions, a good planyou and a need few for psychological a exercises lifetime should be of all success. If, however, trading requires the 214 BEST PROCESS #3: CULTIVATING CREATIVITY ohv etpatcs o ult oto,te utb oe into woven enough be not is must it they chapter, control, next quality the trader For a processes. in best as practices. see succeed shall best to we have do As to to need chance. you to what left then is trader, a as succeed to to housekeeping to management services. room food and reservations from control, osc etpatcsadpoess hyaetegt ftesuccessful the of guts the are They processes. devoted and entirely practices be best will such chapter to next Our machine. business well-oiled namne hti ossetwt h nmtn iino h startup. because: the fail of still but vision insights, animating market the great have with processes can consistent multiple trader coordinate is A to that ability manner the a is business in entrepreneur own true her a or trader his a makes of What accomplishment. repeatable an a is into process actions have They coordinate process’’: ‘‘a To have processes. simply intersecting don’t multiple, Traders easy! so were it only If business. startup ■ ■ ahmjrpoesi apdotadfloe oa to followed and out hotel, mapped Capella is a process At major stores. each one. maintaining other and selling, every displaying, ordering, with on stocking, day synchronized every execute and Target or Walmart out like stores mapped Department clearly is UPS or plans? daily your into hardwired are blocks building those of many business. beginning activities trading the your be your specific will of in the These blocks successful down successfully. building role write be each list, to executing the into order go in in that item play of each to list to have a Next Create you trading. exercise: to that useful roles needed a major good roles Here’s the many place career. a the might across integrate and success effectively ideas sustain cannot good they have but might trades, They organized. not are hl te at mngn ik founder. risk) well, (managing work successfully parts ideas) other (generating not while business are the of success parts trading that so sustain interwoven, to needed processes The as organized not are performance. of consistency success without randomly, trading disappear and appear sustain thus and processes to needed actions The fyu al aedrde o a u vrtigyune odo to need you everything out map not does calendar daily your If eotnha bu rdr edn o‘sikt hi process.’’ their to ‘‘stick to needing traders about hear often We elbsnse r adie.Eeyfcto h uiesa FedEx a at business the of facet How Every hardwired. calendar. are daily businesses your Real at look exercise, your continue to Now, they because fail traders often Too well-organized. is business great A www.MyChart.ir T oesr quality ensure to BEST PROCESS #3: CULTIVATING CREATIVITY 215 and seen it at work among groupthink ■■■ Trading and the Crisis of Creativity Cognitive biases play a role in this, no doubt. If your peers are starting This seems odd on the surface. Traders and portfolio managers are Perhaps it was easier being uncorrelated before the online world influence at work that undermines traders’ entrepreneurial uniqueness. to make money in an idea, it’s difficult tomissing feel the as trade. though Chat you’re rooms the can only become one echo chambers,massive contributing confirmation to biases. There is, however, another and more subtle for a distinctive ‘‘edge’’ in markets to achievetraders, success. recognizing So why the do need so to many be unique, wind up as part of herds? fresh ideas. They also knowthose that of if their their returns colleagues, are theyup simply their give duplicates trading their size of and employers capital. no Even rookie reason traders to understand the bump need bright people for the most part. They realize that they need to generate and then quickly exitending. those These herd positions effects when addmanagement it challenging. to choppiness appears in that markets trends and are make risk result is that positionsthe become past. crowded The far demands more oflead quickly making traders now money and than and money in keeping managers losses to controlled chase trades that look like trends what other traders were doing.real-time Now, with news, chat everyone and draws multiple from sources of the same information base. The placed everyone in touchtelephone with everyone. and When tickertape, trading took it place was via quite difficult for traders to know their firms and trading firms dogeneral, not I bring have unique returns found to thatthem, investors. are correlations, In shockingly within high. trading firms and across spike in a populardevelopment stock leads leads to to athere a consensus rush is trade of groupthink, in daytraders. traders rates A do or central not currencies. bank When bring unique ideas and trades to completely different firms,another—I where hear traders the are same not trade ideas, speaking the with same one trades. A high-volume traders online and onof trading groupthink floors. because, I as a haveproprietary trading a trading coach, particularly firms, I banks, unique have and view worked hedge with funds. multiple Very often—across ■ You’ve no doubt heard the term 216 BEST PROCESS #3: CULTIVATING CREATIVITY ruh notefimb redwosre shrmno ttefirm. the at mentor her as served who friend a by firm the into brought sta sweemvmn—n potnt—ed oso up. show to opportunity—tends money, hot movement—and companies the where follow news, is to that always the heavy as was idea received in The traders. vaccines center the researching from and attention and front equipment was protective virus making Ebola names. those the for mentions When media social many in losing those strength—resulted and their momentum and volume ‘‘momo’’ high on through with focus moving similar online The stocks—those Twitter. and traders Twits Stock accomplished as such those followed platforms of traders trades the Other as emulated reputations leaders. traders had same many traders profitable; the Certain particularly tracked trades. being potential often same firms—they the and trading followed. stocks proprietary being other that stocks to at similar the software—software used in screening same moves the used important they Because and trades, ideas, out day. trading high the of relatively portions sustain only large to for not ability concentration requires the of that levels also involvement but market processing, short- of cognitive continued style rapid of and a filtering screening, It’s further additional trading. by day, term the followed for scalps, screening selected for active names of trading consisted quick the day For the filtering, result, preparation. and a trade as the promising shop, of Eileen’s very in part few traders important of a very dozens a to out is those spit opportunities Winnowing might candidates. screen trade requires any This potential as names. individual processing, of real-time range intensive broad a among opening activity and pre-market market tracks that software screening specialized of help became trade to range the was as one. idea move, trend the continuation a a volume, a for increased in pullback on first trading the out been buy broke had then stock and a range market When narrow ways. the trending by better influenced moved they smoother, be that in meant to This algorithms. likely of trading less short-term and far making were stocks the companies that explained small mentor of Her that trade. breakout setup the second was A and learned then exhausted. she ‘‘pump and had rise buying as them when let aggressively seen to them was them short were trade to These way the were volume. so candidates, companies dump’’ high stocks small individual abnormally of in on stocks flow trading order where ‘‘plays’’ the promising read identify to and how learned she him, From nti tl ftaig odaon ftepeaainocr ihthe with occurs preparation the of amount good a trading, of style this In was She firm. trading proprietary a at trader career early an is Eileen h rdr nteflo ihEle eeclaoaie shouting collaborative, were Eileen with floor the on traders The www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 217 . and again. … and again … ■■■ Key Takeaway The ideas theyVolumes were were expanding trading significantly and, weretion, with came not the increased rising volatility. only participa- Wecatch popular, often a hear but falling traders’ advice knife. ultra-popular to Thesesheer not volume traders and were volatility fading of the a trades rising were rocket. working against The them. When markets change, rigid discipline keeps you doing the wrong things. I spoke with Eileen and her mentor and I found two things: What was going on indeed? How can a successful trading approach The trading floor became more frustrated. A number of traders railed It was an exciting environment and Eileen displayed promise in her 1. suddenly become an absolute loser? trades, hoping to make moneyconfusion. elsewhere. Everything Eileen she responded had withseemed to learned utter work. over What was several going months on? no longer No one wanted to miss the shortingit opportunity finally in the broke, hyped so stock when theyP&L were eroded. reluctant To to abandon compensate, their many idea. Steadily, traders took relatively marginal about ‘‘algos’’ and the difficulties of making money in rigged markets. other names. She focused ona a larger large cap runup name in that theaggressively. had It, euphoria stalled too, over out stalled social after and media zoomed stocks higher. and shorted that Each time they sold theher stock, peers it were bounced becoming to locked fresh in highs. the Eileen idea, saw and that she decided to focus on This seemed liketraders a aggressively shorted. no-brainer The stock short. moved downstrongly. At and Traders then went the rebounded back first to the sign well again of exhaustion, and had risen onthere strong was volume no forproducts reason several in development, for days. but was To such far from all coming an to appearances, market ebullient with them. move. The company had trading. Several months intothe her floor mentorship, began to however, lose the money. traders A on company received a great deal of hype 218 BEST PROCESS #3: CULTIVATING CREATIVITY tiuews ‘egtpi o aiggo rds o o doing for not trades; good them sold making agreed, have for would coach Their trading paid unscrupulous views. An get research.’’ creative ‘‘We out-of-the-box was, new, new attitude reading generating research, for and time materials, have not did startup they business understandably—that a than rather like markets. trades, operated expanding They and out products firm. churning generating Eileen’s line, at testing assembly occurred maintaining and that time an markets of of in None changes amount ideas. tracking large new activity, very market and a of discuss database spent could his also who He colleagues views. knowledgeable debate Considerable with business. his spent ran he was developing how time never and for Allen manufacturer, and to place products back stagnant Think consumer in ones! and a new process soap like of no bars were had out They churning literally development. they and frames, research time short very on creativity trading on focus the adapting. to market all than them led worked that rather assumption setups implicit see That their and markets. if all back in as time stand operated They not the changed. did screening, recognize had busy they conditions so to that were failure traders trading The the and market. filtering, the was of however, character the losses, in shift the The losses. of initial the true, cause followed was actual that that trades of marginal Some the discipline. with poor particularly to losses their attributed traders in pausing was higher. really move out same impulsive stalling the an like trending, looked were What indexes disasters. the were and setups up picked volumes very Once succeeded stalled well. they once plays momentum fading mode, trending 2. hnte ee’ rsrtdadriiga h aiuaos the manipulators, the at railing and frustrated weren’t they When a in not were stocks when especially and conditions lower-volatility In hnIrie hswt h rdr,te responded— they traders, the with this raised I When of crisis a was it peers; her and Eileen for crisis P&L a just not was This nEle’ hpwr gtn h current. the traders fighting the were that so shop stocks, Eileen’s quality in lower the even The lifting interest. was buying overall tide considerable rising the seeing uptrends, to solid indexes correlated NASDAQ in and both highly small-cap were were the to pursuing particularly and were market, they stock trades the volatility, that of or realize Most trends. vigorous volume not unusually did in fighting were levels—they trends they high at for looking screening not however—just were they Because eas hywr oimre ngnrtn da n trading and ideas generating in immersed so were they Because . www.MyChart.ir Those . BEST PROCESS #3: CULTIVATING CREATIVITY 219 Creativity Provides Food for Our Strengths In this example, my trading process is highly analytical. I have identified Trading with intellectual strengths is largely aimed at prediction. Let’s A recent TraderFeed post drew on research to describe two trading historical relationships between price and earnings growth/momentum, realized earnings. it. From the perspectiveundervalued. of I my want to model, beshow the long company that, that is company, over as fundamentally time, my historical prices analyses will revert to a particular multiple of for a company, I update mymuch higher models than and is being discover projected that by a earningsmarket consensus should of has analysts. be fallen The on overall geopolitical news, dragging my company down with that link suchcontributions factors of as various revenues, productrelationships. expenses, If lines profit I to notice margins, earnings that and business and the is price–earnings booming in a new product line process market information in completely different ways. say I am a trader of individual equities. I build models of my companies of market participants. Theirdiscretionary. This trading is leans a fundamental toward distinction: The the two kinds qualitative of and traders oped intellectual skills andand talents view quantitative markets through relationships.capacities data, Traders view models, markets with through the highly perceived intentions developed and social behaviors brains: an intellectual brain and a socialrepresent brain. As two the spheres post observed, of these potential strength. Traders with highly devel- talents and skills increativity, new we become ways one-trick ponies. to Creative inputs exploitour and strengths. fresh insights feed opportunities. Without and creatively utilize these to adapt toat ever-evolving the markets. intersection Success of lies strengths and creativity. It is the result of employing If there is a single themeproportional to to this our book, ability it to is harness that cognitive trading and success personality is strengths directly ■ modifying that style tolike fit franchisees—repeating different market aentrepreneurs. conditions. past They success operated formula—rather than like on the idea of working onwas their that discipline, their and collected business fees. model Thewith was reality broken. their They style were highly of disciplined trading. They simply lacked a creative process for 220 BEST PROCESS #3: CULTIVATING CREATIVITY bevtoso utmrvst,aeaecsoe re ie,ads on. on so based and sizes, earnings order forecast customer to average me visits, customer enable of that observations tools developed have I and aso eciigadudrtnigtebhvo fmre participants. market of behavior the understanding and perceiving of ways the players. from market Allen other like of I, tendencies strengths, the social trading with am trader example, a earlier In as behavior. sense, trader real of very understanding trading a my a into of that elements factoring the and synthesizing situation about about than less is prediction process and thought looks My analysis highs risk/reward. of recent terms most in trade the good against a like leaning downside a and on bounce extension attract the price reduced fading also for the break, prospect will Given the trade. and It bounce breakout the trades. a on for long buying playing those of of out selling fresh stop are the who to those need among that selling and anticipate accelerate can overleveraged will with I support think, worked of they break how Having downside knowing predictive. a and is time and hypothesis long general a my for in not that traders bring and Notice will one dips. that those situational times, buying a three should tried held we who the that if sellers attract (2) level fresh to and support failing participants; recent frame the are time quickly break prices longer I low of modest. the interest quite the buying (1) is by identifications: stocks, assessed among two as downticks sellers, make to to off tailed upticks relative has buyers of volume of ratio that proportion notice the I a bounce, that that third and the say bounced has On Let’s time level. each that manner. and times from three qualitative level downside a a tested in has market behavior investor and understanding trader on focuses rather but predictions, quantitative making with models. conventional purely employing intellectual those the over give edge turn thinking an in which trader Creative predictors, model. for the candidates price new of to and part leads earnings ongoing of an estimates becomes accurate it power. the movement, predictive to its uniquely average, contributes backtest model—milder, it conditions—and If my winter in weather severe variable more new longer-range or a into include can tapping I By forecasts, When purchases. make behavior. discretionary and more customer shop more to on tended and have influences consumers expenses, milder, seasonal been revenues, have at of winters look set and predictor forth, usual the so intel- example, outside For this models. step enhances fresh might and Creativity I inputs and trade. new now suggesting should by trades trading it price lectual where says links analysis that my prediction a where on based is trade My h rdrwodaso oilsrntsi o rmrl concerned primarily not is strengths social on draws who trader The raiiyfestaigta tlzssca tegh yyedn fresh yielding by strengths social utilizes that trading feeds Creativity www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 221 Key Takeaway The creative process exercises our strengths and thereby extends them. Of course, in reality, many skilled traders do not operate wholly in For the more empirical, quantitative trader, creativity generates new led to a unique insight intoinspiring situational profitable drivers of trade price ideas. in several markets, disappointment could easily cascade into aconsensus run trades for and exits. benefit I from quickly large sell managersstops the bailing are out as hit. downside The fresh understanding of end-of-year P&L dynamics has so will be moreproduce risk-sensitive a than move usual. that When benefits a the data crowded release positions, fails I to realize that the close, several positions areregarding crowded, upcoming reflecting central consensus bank decisions. expectations Icannot realize afford that these to managers lose their years during the final weeks of trading and Let’s say I interview many portfolioout managers at that large it hedge has funds. been Imaking a find modest only year of a performance, small with many return managers on their capital. As the year comes to a numbers hit a particular threshold. The skilled money manager stood bank was more andwith blunt less models, likely simply to assumed that act the on Fed would the hike data rates it if the tracked. Others, understanding of the thought processes of variouseach Fed speech members. by He each read FedThis member social and sensitivity tracked enabled changes him in to their identify language. occasions when the central decisions, including economic growth, inflationperformance. expectations, He and also, asset however,Fed had personal members experience and with prominent former Fed watchers and possessed a nuanced aspects of decision making. Inof the the TraderFeed money post, I managerthe gave who the Fed. possessed example He an tracked unusual measures level that of Fed insight members into use to anchor their intellectual modes or socialboth modes. domains Some that traders enable possess them to strengths fuse in the quantitative and qualitative market participants are likelythe to cognitive behave. strengths In of the both trader. cases, creativity feeds and better datatrader, that creativity aid generates prediction. fresh For insights the and more understandings social, of qualitative how 222 BEST PROCESS #3: CULTIVATING CREATIVITY u ypaighmefi h he ftecnrlbn ebr and members bank central numbers. the those of view to shoes likely were the they in how identifying himself placing by out rs da n rds esav u tegh.Adwa edntuse, don’t we what And strengths. our lose. starve we we trades, We interests and exercise. and ideas fresh skills, cognitive talents, ways. with challenging core same new, our the in exercises them is using it by strengths chapter, our last develop the in saw we behave. later might bulls the important how an for became insight that of significantly, but piece rise release not data activity weak and unusually bearish an bear saw saw of then I When activity market. relative the in the groups of bull perspective also qualitative it models my reversion—and quantitative mean informed to versus weakness led momentum of and This predictions reverse. strength made that versus when continue anticipating to out in ready turned were important activity crucially selling and and be buying buying to low of and combinations selling; The low selling. and high buying low high selling; selling; high low and the and buying through buying high feature looking could of market two-dimensional a Any Instead had perspective: now I series. selling, versus time buying downticks of distinct from lens unidimensional I upticks as separate however, those and conversations, treat data my the and into on deeper Based go to market. selling decided stock versus buying the gauge to in TICK NYSE strength I the years, as For such frames. measures time used had different fact on at operating the looking and to participants, differently, different eyes markets completely traders my were bearish sellers opened and and conversations bullish buyers during The that of market. number me a stock to with the occurred spoke about This I when data. year to past respond the to likely are data participants new both yield can creativity 1. process: creative the to book, stages his several in contribute that Sawyer, factors thought. the on creative conducted to been has research of deal great A ■ hntaigdcsosfs uniaieadqaiaieinsights, qualitative and quantitative fuse decisions trading When hn fpyia xrie edvlpwe eps u iis As limits. our push we when develop We exercise: physical of Think Preparation ecpin n ideas and perceptions htI h raieProcess? Creative the Is What gteigrwmtrasadosrain;collecting observations; and materials raw —gathering and e esetvso o market how on perspectives new www.MyChart.ir ihu rs nusyielding inputs fresh Without . xliigCreativity Explaining describes , Creativity BEST PROCESS #3: CULTIVATING CREATIVITY 223 ■■■ —the process of evaluating the insight and developing it —a period between preparation and insight during which —the experience of generating an idea or product that leads to Insight a fresh perception or understanding Verification into a new form Incubation there is an elaboration and organization of the raw materials gathered Sawyer makes the important point that ‘‘Creativity takes place over In the second mode, we gain an appreciation for market sentiment The previous discussion of traders with intellectual and social strengths follows from immersion in one’s materials.nothing Without incubates ample and preparation, no fresh insights emerge. medium of the artwork iscreators an often essential get part ofp. ideas the 58). while creative In process, other working and words, with creativity their is a materials’’ process, (2006, not an endpoint, and it time, and most of the creativity occurs while doing the work. The 4. 2. 3. attention shift. His ongoing conversations alerted him to unappreciated economies. The lack ofobserved attention weakness to could EM lead convinced to the meaningful trader trends that once the there was an of economic weakness inthat several no emerging one markets was lookingthe and United at was States that. surprised and The the focus activities was of entirely their on respective Europe central banks and and deal about what traders areWe looking at also and gain what they anthe think appreciation market. is For important. for instance, what a trader is I not worked with on noticed the troubling radar signs of those in and positioning by observingparticipants. and During the talking course with of those many conversations, informed we market learn a great themes for the overall market, as whento one fresh segment highs of the or market lows breaks ahead of others. for instance, I update spreadsheetsbreadth that track across volatility, correlation, multiple and pattern indexes will show and up in stock a few market sectors sectors. of the Often, market that a become leading reviewing information, talking with manycombination market of participants, or the some two.review multiple In models, the and/or run first many mode, statistical we studies. Each look day, at many charts, suggests that preparation will differrisk as of a oversimplification, function I of would trading say style. that At traders the prepare for trading by 224 BEST PROCESS #3: CULTIVATING CREATIVITY ann oentc,alwn i oadt oiin tgo levels. good at positions to add to were him markets allowing emerging notice, when more identify gaining him helped also but opportunity, akt ndfeetwy n u fotadtogtit h process. the into at thought look and one to effort in me put curves forces and yield reviews ways of the different up flattening in Shaking a markets others. as in across be such not might occurring market, but there a be when country to me might tells specific themes also story it when a but me equities, and tells reviews, currencies, within That rates, chart focusing intensity up asset. sometimes shake and the given to classes a of like asset can I function across be process. it focusing a can cognitive sometimes or is our however, elaboration of difference This, little activity The day. and with awareness. manner trading our rote the expand surface, of a start in the conducted to review example, prior for traders, charts Many minds. our stretches it when when effective been had they than useful standardized more Digging informally. more time. conducted far a over interviews in views the it in doing way—made shifts but conversation—and of information, each appreciation of list during deeper array deeper a a rich them to a asking provided led by This also makers week. each market questions with of decided conversations ago his years depth with anchor greater worked to I into trader going One however, information. gaining times, fresh are provides other moves At when strength. see to losing me view and enables my sectors updating and or Constantly indexes components various mixed. market of all more or is most participation a across the to occurring whether is want is I market move moves, the stock market in if the the things know Whenever fewer of breadth. at understanding at look look my can cross-sectional to we and Essential things, detail. more greater at look can We depth. and moves waxing of to likelihood the as reversing. gauge or traders clues extending helping useful reversals. stocks, in provided their interest earlier: volume waning described and firm of trading extremes patterns Eileen’s bearish Tracking from screening and stock the put/call bullish as Recall can identify such gauges sentiment, to of sentiment measures social ratios, conventional Such more to ETFs. example added and be good stocks social of of A tally mentions ongoing traders. an media provides other which site, and StockTwits of the quantify from tendencies comes to efforts behavioral see the sometimes analyze we participants, market of views smninderir rprto eet rmbt rat and breadth both from benefits preparation earlier, mentioned As subjective more and views data-driven combines preparation When hte civdvabedh et,o oh rprto smost is preparation both, or depth, breadth, via achieved Whether www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 225 : autotelic experience ■■■ Key Takeaway ,Csikszentmihalyi(2013)describestheconditions . They gather reams of information and then they Creativity ’’ (2012, p. 97). Creativity, from this perspective, is a … The quality of our preparation shapes the quality of our trading ideas. Sawyer observes that creative people tend to multitask: They work on One of the great mistakes traders make is that they jump straight from Inhisbook, information, but do so in an active, constructive manner. A convention I’ve foundmy helpful spreadsheets until is I not identify aton finishing least one a recent worthwhile review observations. hypothesis based session That with constraint forces me to not only review dual process, consisting of heightened awareness and attentional focus parallel,’ unlike the conscious mind,at which can a focus time on only one thing multiple projects at one time.one ‘‘While project,’’ he they’re explains, consciously ‘‘the attendingmind others to are seems incubating. The to unconscious be able to incubate on many projects at once ‘in we immerse ourselves broadlyneed and a deeply period in of information, incubation to we make typically best use of our new raw materials. preparation to trading plunk themselves in front ofthat screens information. and Unfortunately, creativity expect doesn’t to work make that way. optimal Once use of to intellectual curiosity, it fuels idea generation. end of a trading day, I mayspreadsheet feel review. tired, but For I me, often revive theto quickly review during track is my the like clues a and detective figure story: out I the want ending. When preparation is yoked fruitful. Creativity, Csikszentmihalyi emphasizes, is an It is enjoyable inmakes itself. it more It than a is ‘‘to-do’’ box to this check intrinsic at the value start of to each day. the At the experience that flow state: Itimmersion is directly impacts an the immersion likelihood that in the the preparation will present. be The quality of that that lead to successful preparation.exclusion These of include distractions intensity of from focus, consciousness,about the and performance. the In absence other of words, worry effective preparation accesses the 226 BEST PROCESS #3: CULTIVATING CREATIVITY osncgiiecntans aycetv rfsinl n httheir that find professionals creative Many we when constraints. occurs cognitive that process loosen nonconscious and automatic an by followed ep stk h aeil forpeaainadasml hmin them assemble and preparation that our shift of perceptual materials this ways. new the is take It patterns. us from broader break helps how into a and take fits considerations longer-term and action about flow today’s think buying order to growing free the signifying I’m from market, market, back the the step of notice I out and When and tick, For by interest. in trees. tick orders for time, of real forest flow in see market the to the follow back might stepping I a instance, for allows and information other, by accompanied correlation is the it into correlations. whether similar deeply classes—and more among asset look defensiveness ‘‘risk-off’’ those to a between me of leads part idea of is That selling bonds investors. Increased suddenly of connected: buying I are and prices. these briefly stocks perhaps bond and that of markets thought movement other the upward to market. have surprising drift the the might of on mind segments touch my across market jogging, weakness stock out and in While strength myself immerse track might and I data example, phase associations For the trigger preparation. during assimilated of period information incubation of processing the our stimulate during that suggests process activation we spreading cues of that theory One researchers. among debate on working while incubate puzzle performance. enhanced one another puzzles. letting the the and In total on attention of puzzles. better 18 the Switching significantly sets given among performed two freely were subjects switch for condition, subjects to latter puzzles allowed the and the condition, time on third of minutes work a to In were minutes. had subjects the three they condition, that second a so In puzzle. interrupted continuously each worked on difficult subjects minutes six the three for condition, solve one to In subjects puzzles. asked crossword study interesting One creativity. the recombining and preparation. combining during implicitly, accessed though occurs information as seems processing it of time, kind that routine explicitly During in a matters. not engaging other are walks, on working taking they or be when tasks, might times They problems. during on them focusing to come insights best hthpesdrn nuaini atro oeitrs and interest some of matter a is incubation during happens What on effect incubation the demonstrating studies summarizes Sawyer nsc ae h nuainpro eae h mesv ou on focus immersive the relaxes period incubation the case, a such In www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 227 not . ■■■ , points out that play is a powerful stimulus for processing Zig Zag The implication is that we can overthink to the point of losing creativity. Can we become better as information incubators? Sawyer, in his 2013 When we jump from preparation straightaway to trading, we analyze Zabelina and Robinson conducted a relevant study in which they found perspectives. It is a combinationopen-minded synthesis—that of seems tight–loose—intensive, to facilitate immersive the analysis generation and of fresh suppression of left hemisphere, verbal,that logical facilitated creativity. processes In via a sense, the thean current transcranial incubation stimulation process by enforced suppressing normal analytical thought processes. to generate novel useswas for stimulated, familiar there tools. washemisphere When was no stimulated, the impact creative right output on rose hemisphere creativity, significantly. It but was when the the left reprocess information. A fascinating studyused by a low-level Chrysikou electrical and current colleagues towhile stimulate subjects the participated brain’s frontal in cortex a creativity task. The task required them activities like play andour taking minds walks off help the us problems incubate we’re simply trying by to taking solve and allowing us to book material we’ve absorbed. Whenand enter we an play, open-minded mode. we As relax Sawyer cognitive notes, it control may well be that know about the creativeworking is process, a however, key part suggests of the strongly effectiveness that of creative work to analyze, analyze, and thenaway trade from and trade. markets This to neglects incubatecompulsive the and stepping worker, generate fresh such perspectives. stepping To the away feels like laziness. What we without synthesizing, leaving ourselvesthat with don’t a coalesce jumble into ofworking meaningful hard puzzle can wholes. pieces conflict This with working is smart. one The driven way trader pushes in which of thought. information together. In a sense,and preparation incubation achieves provides broad rigorous synthesis. analysis Inpieces; one in mode, we the find other, the we puzzle assemble them. That requires unusual flexibility and operates withinformation serial after processing, another. In deeply the othercreator assimilating operates cognitive with mode one defocused (incubation), attention and piece the parallel processing, of pulling that creative individualsIn display one flexibility in cognitive their mode cognitive (preparation), control. the creator focuses attention 228 BEST PROCESS #3: CULTIVATING CREATIVITY eeprec oeto nih.Prasbcuew aebe in been have we because Perhaps insight. of moment a experience we a bevdeog eune fpritn tegho ekesto weakness or meaningful. was strength pattern persistent whole. the of a that as intuit sequences period isolation. enough week’s the in observed saw separately, had I data music, the I the breadth during with day’s back spreadsheet stepped each the I at When updating looking was was I I result When the week, as shift. came perceptual insight pattern My a ways. to of the new key in the connected root, information data; old qualitative intimately at assembling or is quantitative one, that, with occur argue intuitive can This would creative, recognition. I a intuitive? is or process Logical qualitative? or weakness. broad of week full in a days edge after significant the two no downside higher was over market’s there the closed occurred Clearly chasing occasions gain. had average 27 sizable pattern a those with of this later, Twenty which years. in eight occasions strong past query very historical 27 a a conducted found had quickly I and I meaningful. music), was that to this noticed listening that never and intuition and back that long stepping noticed week all until I data pattern as the soon entered moving As had three-day sessions. I their (interesting: trading above consecutive closed had five stocks for 500 averages fewer S&P that all noticed of I cognitively recently, half me sheets than keeps the and of mood one good reviewing a While in flexible. me my data is places the music it The review play; come. of to I week equivalent favorite while the my about music of think and to One spreadsheets happen. listen my from it to make is not routines do morning we feels weekend us; to insight comes creative it period, though incubation as the during mode open-minded hnw obn n eobn htw r otlkl ohto the on hit is to It likely Lisa. most are Mona we and the that combined recombine with find, and up combine could came we he when eventually faces who and beautiful Vinci, them, most da recombined of the example of the aspects uses took He something 113–114). create pp. to (2001, possibilities original’’ perceptual your increases ways thinking novel of in phase perceptual the in place takes hteaperie nitrsigqeto:I ypoesquantitative process my Is question: interesting an raises example That which in experience ‘‘aha!’’ of kind a is incubation of result the Often, ihlo nhsbook, his in Michalko, nih stersl fapreta shift. perceptual a of result the is Insight rcigCreativity Cracking e Takeaway Key www.MyChart.ir xlista ‘‘Creativity that explains , … obnn information combining BEST PROCESS #3: CULTIVATING CREATIVITY 229 views the Creativity in Science A true aha! experience occurred when I was looking at breadth data The spreadsheets I maintain require at least a full hour of daily updating. Dean Keith Simonton’s account of picture of strength and weakness. For example, as I am writing this, we Just as interest rates exist on a curve,monetary with conditions, the momentum shape at of various the time curve capturing frames captures a broad indexes trading above their 3,averages. I 5, had 10, collected these 20, data 50, forstruck a 100, while me and when that the 200-day the thought suddenly moving data as a whole can be viewed as a momentum curve. data for a while. from the Index Indicators site, tracking the percentages of stocks in given are different trajectories offor momentum a across nuanced the indicators, readingThese patterns allowing of only jumped shifts out at in me once upside I had and immersed downside myself in participation. the seemed to me, we shouldprior see to shifts in market the turning breadth points.framework, of That, but buy indeed, and for has sell reasons proven signals to a be bit a different helpful from what I expected. There track this when the thoughtways struck me of that capturing those indicators momentum were simply and acceleration. If that is the case, it an extended periodexample, of one time sheet tracks across NYSEa stocks many that variety columns give of buy of technical and sell categories. indicators, signals such For for as Bollinger bands. I decided to insightful ideas than the one who looks at only a handful ofThere permutations. are dozens of sheets, each of which tracks market measures for things in many ways—truly1 to percent play of with our perceptions combinationstrader and ultimately ideas. who provide If new entertains only information, 1000 the combinations will generate more unique, but rather they entertainmore so likely to many hit creative on thethis combinations few perspective, that that the represent they best genuine path fresh are to insights. From the ‘‘aha!’’ moment is to look at many provide the ‘‘aha!’’ moment of recognition. Whathe makes maintains, scientists is great, not so much that they constantly arrive at creative ideas, Einstein, who referred to productiveand points thinking out as that ‘‘combinatorial scientists play,’’ willmost entertain many of different combinations, which will lead nowhere. Over time, however, one or two never come to us via intuition. creative process as one that draws on both chance and logic. He cites pattern that feels right. It feelspatterns in right the because past. Without we’ve a seen database of sothrough relevant many repeated experiences similar generated periods of preparation, the right combinations would 230 BEST PROCESS #3: CULTIVATING CREATIVITY hre iefae n togvle tlne eid.We hthas that When periods. longer at at values levels strong oversold and very frames with curve time momentum shorter steep very a saw recently sago ieiodta ao hleg o ortaigi h osof loss the diet. is creative trading deficient your a for from challenge comes major that a perspective there that screens, likelihood at good staring own, a your is light on of working a blocks you’re building If fresh if insight. the information, creative are as Fresh perspectives—these trading. It’s is novel successful isolation and picture. of Intellectual conversations, enemies bigger sense. great makes a the puzzle world of see single the one to Suddenly a on: trader of goes addition a bulb the enables it’s that for times, implications piece Many had policies. which bank conditions, economic central anticipate in managers slowdown helped global turn a in patterns commodity- Those of countries. currencies producing the macro in broad weakness alerted of possible markets of signs those managers in early portfolio traders example, by For noticed to level. weakness broad commodity lead about a researchers—can at traders or recognition other pattern economists with with Speaking another. consulting of markets—or eyes the through momentum world information. the conveys that of day, shape to day the from from only movement the weakness its not in and but is curve, strength and, It perceive day perspectives. percent can every time 50 we moves multiple below curve, curve well the The of and periods. movement frames 200-day time and 100- short which at on in curve, overbought opposite a an captures are from curve different the we very as is rally, That a uptrend. to an led in generally dip has it past, the in occurred ahrta noesl ercmn.Bcuetedt eealready were data the Because stocks, retracement. in a strength oversold noticed further an to I than led market shares. upticking rather among stock significant downticks the which and in in upticks pattern of selling flows and collect the a I buying instance, through and For moment-to-moment data significant. the as on me review strike data will and I out jump times, will Many pattern data. market of spreadsheets hypothesis. that validate to us for promising remains a doesn’t is still sense, significant, It that as hypothesis. in insight, us creative strikes The world so. idea real it an make the because automatically in Just out value. it its test verify to and necessary it’s perspective, new a generate oeie,t civ h h!eprec,yuhv osethe see to have you experience, aha! the achieve to Sometimes, e’ eunframmn oteisgt htIdvlpfo my from develop I that insights the to moment a for return Let’s we Once insight. an of achievement the with stop doesn’t Creativity ■■■ www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 231 ■■■ Verification doesn’t always take the form of formal backtests. Some- Too often, when traders do achieve creative insights, they don’t Paulo is one of the most successful portfolio managers I’ve had the to confirmation biases. insight. By identifying what wewe should can be noticing ensure if that our we idea are is truly correct, validating our idea and not falling prey data releases going forwardmates. to While see additional if relevant those datathey don’t fall can definitively short be prove very of our useful consensus idea, in esti- giving us the confidence needed to act on the pattern of global economicmight vulnerability monitor in the weak statements commodity ofconcerned about central data, economic bank conditions. we We officials might to also monitor see economic if they are times it occurswith over our time, insight or as do we not. For gather example, observations in the that case either of seeing fit a larger from the latest market movement. Thethat verification our process new idea helps is ensure actually a sound one. traders have not undergone true immersionan in price incubation and volume of data their and could observations, be little the more feeling than a of recency bias, directional extrapolating certainty future price action to cognitive bias and ourTraders typical may blind spots convince withbullish themselves respect or bearish that to implications, our but particular biases. are those chart true patterns creative insights? have If the structure the process ofsimply verification, because it assuming feels that that way. the That is insight dangerous, is given our valid propensity but the verification processinitial added insight. to my understanding, clarifying the I learned that significant uptickinghad following oversold a market conditions differentthat set had of already forward displayed ongoing outcomes strength. than My upticking insight was in validated, a market momentum on average.confidence in The the idea, verification and it processoutcomes also associated helped with the me provided data. understand For instance, the me in variability the of verification process with arrayed in spreadsheet form, itof wasn’t Excel difficult and to isolate usehigh the those upticking. sort past Sure function cases enough, in these which were we followed had by seen positive unusually upside many years, trading a basic strategy but always refining it. privilege of working with. He has maintained consistent profitability over 232 BEST PROCESS #3: CULTIVATING CREATIVITY h otitrsigpol nw era nsa n eyinteresting very and unusual read He knew. I people interesting most the a enitmtl ikdt i raiiy akt aebcm his become have markets creativity; his was to playground. it success creative linked so His markets. intimately life, in directions to been fresh approach for has look very to him his for His nature in second stimulation. embedded become to was unique himself Creativity allowed offered never stale. they he curiosity because if with stale, became life activities never his trading in of engaged area only every about and just approached He lifestyle. one. boring with single a conversations of many think had can’t cross-section I I’ve and wide back, Paulo a Looking knew people. and fascinating destinations, of unique to traveled things, 1. creativity: about appreciated 8. 7. 6. 5. 4. 3. 2. 1. process: creative the in steps of eight edition second the in Sawyer, ■ htIcm oraiei htPuohdtre raiiyit a into creativity turned had Paulo that is realize to came I What of one also was he that was Paulo of observations early my of One i con ae he aubepit htaentcommonly not are that points valuable three makes account His raiiyol cuswe hr a enetniesuyadcleto of collection observations. and existing of study extensive been has information there when occurs only Creativity products. ideas Externalize ideas Select ideas Combine ideas. new ideas Generate information. of Incubation environment. the by presented information related Gather knowledge Acquire problem the Find idn rbesa ato Finding Answers of Part as Problems Finding tpaa rmpolmsligt lo o reprocessing for allow to solving problem from away Step . vlaigadrveigideas. reviewing and Evaluating . ecnol eeo e da rmade foundation deep a from ideas new develop only can We . utn da oehri asta edt insight. to lead that ways in together ideas Putting . rwn nkoldeadeprec oarv at arrive to experience and knowledge on Drawing . ou teto napoiigquestion. promising a on attention Focus . mlmnigiesadtrigte nofinished into them turning and ideas Implementing . er smc spsil bu h hsnproblem. chosen the about possible as much as Learn . cur e nomto bu h problem the about information new Acquire . xliigCreativity Explaining www.MyChart.ir 21) elaborates (2012), BEST PROCESS #3: CULTIVATING CREATIVITY 233 . For example, a . Asking the right questions After the insight is achieved,process, there in commonly which is an thenovel extended creative idea implementation idea can lead has to toin a a be bad way given trade that if gives form it a is favorable reward not to expressed risk. and executed Creativity starts with finding promising problems precedes finding novel answers. Sawyer cites a study from Csikszentmihalyi (2013) in which he studied Out of my experience in Chicago, in which I saw algorithmic market Traders tend to be practical people, concerned with what to do composition, and then began entirely new sketches. Their final sketch objects very quickly.sketching They process. The spent second grouparranging the and of rearranging artists majority the objects. spent They of most started sketches, of changed their their the time time in the painting. He arrayed athem variety to of select several, objects arrangecomplete for them the their in artists any sketch. and way One they instructed group desired, and of then artists arrived at their selected from asking a promising question. artists with two very different styles of deciding on the subject of their Before I could arrive at any meaningfulproblem insights, to I had work to on. formulate In a good no small measure, the promising answers came frames by aggregating the transaction-based data.to address The is problem whether I high-frequency data, wanted accumulatedand over even hours, days, weeks, could provide unique insight into forward price action. displays and toward dataapplication. from executed Because trades, I ashowever, in wasn’t the I interested Market naturally Delta in turned higher-frequency my trading, problem clarification to longer time strength and weakness. This wasmore detailed only and clear conjecture, look at however. the high-frequency Iwas world needed to most focus a relevant. on what That led me away from data from depth-of-market making replacing traditionalthat activity high-frequency in data were the an pits, essential key I to became understanding market convinced problems we’re addressing helps ensureuseful that solutions. we can arrive at novel and orientation can be limiting, asasking. it Many does problems not in give the properThey real time world, are to Sawyer question- notes, fuzzy are ill-defined: and need elaboration. Spending time clarifying the in markets and when to do it. They naturally look for answers. This 2. 3. 234 BEST PROCESS #3: CULTIVATING CREATIVITY hmevspiaiywt htt sketch. to concerned what they with sketch, primarily their polishing themselves of instead minutes; few a took only aescesu r aer hntoewosettertm sketching. terms in time off output. paid their creative problem to artistic of spent good likely who a the formulating more those spent into significantly effort than that a Investing was careers group later, sketch art the to years that successful what found Five have out study sketching. figuring the in in time artists time most 31 the their the than of the of creative most study formulating more spent time significantly rated that most was group the sketches spent their that of subject group The creativity. their ei.Ago rd steotrwho odie.B ignoring By idea. good a of outgrowth the another is after trade sketch good one an various A and produce shading, Imagine media. color, to composition, generation. learning people suc- time that idea spending taught one without ongoing creative that model: of than business institute rate more their art extremely of low far function is trading shockingly a rewards the exist—but is daytraders that does among convinced cess success am con- daytrading Their I expenses. rare. that after money was percent—less 360,000—made was clusion 0.13 of only success out 360,000 however, When 1,000 the period, fees. than of multiyear after percent a returns 13 over positive only measured that earned found studied and traders period 15-year in a than over ideas trading good generating time trading. more actually creative spend Csikszentmihalyi’s that like and They is more traders impression artists: much the standout operate of ones a successful think personally, the known I I’ve When again insights managers trades. rearrange creative money informs and at that rearrange, arrive arrange, information to likely who the trade less traders to are than what they markets on result, into focusing a than As effort rather when. of trades, share and lion’s managing the and spend placing They drawing. on time their spend then and skznmhlite a eea r rfsosrt h kthsfor sketches the rate professors art several had then Csikszentmihalyi abr e,Lu n da tde h efrac fdaytraders of performance the studied Odean and Liu, Lee, Barber, idea an grab quickly who artists the like behave often too all Traders xeinede o eesrl edt xets;w o’ necessarily don’t more. trade we we expertise; if to better lead trade necessarily not does Experience e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 235 , observes that creative scientists do Creativity in Science . Immersion in more markets and intermarket relationships; Can We Become More Creative? Simonton, in What this means is that the best way to become more creative is to become to fertilize others. If creativity is, at heart, a combinatorial process, projects proceeding simultaneously. This createsfor multiple opportunities unexpected interactions among the projects, allowing one project metaphors’’ (2004, p. 80). This meansbroad and that deep. the Simonton creative points scientist tocreative is a scientists both wealth typically of run research extensive that research shows programs, that with many not simply flit fromwork,’’ topic he to explains, topic. ‘‘is ‘‘Usually a permeating core most set of their of themes, issues, perspectives, or course, but it alsosolve. helps Good with research the opens identificationdifferent new of areas can questions; worthy lead problems juxtaposing to promising to research new from studies. recombination. Creativity amonginteresting scientific in this researchers regard: Successful is researchersreading spend particularly considerable published time research. This keeps them on top of their field, of immersion in more market-related data; and immersionrelated in more research market- provide us with more materials for combination and I can be quite creative; in others, I simply lack themore experience informed base. I not lived withthe her novel for feeding approach. a If, considerable say,finicky time, I parrot, suddenly I I had could would to be care have for completely never someone’s lost hit for on solutions. In one domain, food in a ‘‘casserole’’ whereand a the favorite most taste nutritious food (gravy) was waseager underneath. layered Sure when enough, on she she top becomes tastes the gravy and proceeds to finish her meal. Had particularly finicky with respect to the foodbody she’ll language eat. After across watching many her feedings, I hit on the idea of preparing her expertise in thatfield field; from and different the perspectives. Ihave cognitive have learned flexibility to lived understand to many their years perceive ‘‘communications.’’ One with one’s of cats our and cats is The research we’ve seen sotalent far that suggests one that is creativity eitherat born is the with not intersection or a of without. mystical focused Rather, immersion creativity in occurs a field; deep experience and ■ idea generation, wepredictably starve dismal. the trading process—and the results are 236 BEST PROCESS #3: CULTIVATING CREATIVITY erhn n esaciga ramr xesvl hudla oa to lead should extensively outputs. more creative of area number greater an re-searching and searching h rvoscatr st eoemr ruddi u strengths. our book, in the grounded in more Torrance, become Paul to E. is chapter, each previous spaces, the many book. in his on manage him trades helped that many information had useful providing he falling Simonton, a scientists by the from Like described benefited prices. commodity that to in downtrends pairs interest or led environment entering in rate insight and trends creative commodities identifying His and was rates edge. he own soon, finding on its thinking; by hit risk multidimensional with had overall each he limiting what trades, construction: course, portfolio offsetting of Of value and ones. the markets falling in was rising pairs,’’ from from of benefited ‘‘pairs benefited that of that idea those trades the pairs his on combined focusing hit he After he which trades, him. himself pairs against found good moved on he that attention directionally, he they positions as traded of when him, out he against Indeed, scrambling When went longer. that value. positions pairs views better to the offered added with with often stick he less pairs, to was traded pairs exposure him His risk enabling overall results. trading, His highly in was rules. and difference by trading directional structured the his than for quantitative more reasons was trading possible There outright. stock many instruments one the were trading pairs—long another—than trading short successful and more ETF or much was he that found .Fe oreft useyu w ahta ae odueo your of use good makes that path own your pursue to yourself expectations. Free others’ from yourself 4. free strengths. to greatest Learn your with develop and 3. it practice, pursue understand, and Know, something with’’ 2. love in ‘‘fall to afraid be Don’t 1. seven- a Up wrote Grow were: points to he ‘‘How key research, it His Gifted.’’ titled his Creatively and on children Based creative 68). for ‘‘manifesto’’ p. point (1988, like’’ the risks, take and to willingness thought curiosity, perseverance, of honesty, independence judgment, and courage, person: creative the of characteristics doing is that concluded ‘‘ and people creative distinguishing data testing personality … n rdrIwre ihrcnl eiwdhstaigrslsand results trading his reviewed recently with worked I trader One n a nwihw a eoemr raie eetdin reflected creative, more become can we which in way One gifts. intensity. h sec ftecetv esni en nlv ihwa one what with love in being is person creative the of essence the … hscaatrsi ae osbealteohrpersonality other the all possible makes characteristic this h aueo Creativity of Nature The www.MyChart.ir summarized , BEST PROCESS #3: CULTIVATING CREATIVITY 237 Key Takeaway . We will only sustain immersion in a field and tolerate ambiguity Trading Failure and the Downhillof Spiral Creativity you love. Creativity follows passion. Early in my academic career I worked with a young professor who was a It is perhaps not surprising that what makes us productive is also what makes us criteria, he played it safe and conducted studies in a well-established to achieving tenurea at certain his number institution, of a peer-reviewed top-tier university. publications Needing to meet his tenure downhill spirals are more common than is commonly acknowledged. skilled researcher. He had published an article in a top journal and aspired of love with our work is awe great fall way out to of lose our love creative with edge. somethingat But that how one is do our point passion? Can in we time be creative and then lose that edge? I would argue that such If the above researchinsights when is we love correct, what we’re we doing and are do what most we likely love. Falling to out generate fresh ■ 7. Learn to depend on others and their strengths (pp. 68–69). 5. Find great teachers6. or mentors. Don’t waste too much energy trying to be well-rounded; do what of who they already were. out to become creative. Rather, theythemselves followed in their their craft, interests, and immersed generated creationsexperience. from They their were accumulated able to become more creative by becoming more woodworking, jewelry, or painting,the I piece. Very will often ask that the leadslove to artist for a what conversation their that inspired materials. reveals the As artists’ Torrence observes, the artists did not set us. Creative people lovelove for creating what and they their aremuch creating. to creations speak I are with enjoy driven artists going by as to to arts-and-crafts a view fairs their as works. When I see creative creative to arrive at fresh perspectives if that field is intrinsically meaningful to 238 BEST PROCESS #3: CULTIVATING CREATIVITY u hyadesdcertpc nteltrtr n eedsge obe to designed were and literature the path-breaking, in not topics were clear addressed experiments they His but research. psychology of area fte r oigmnywieohr r itn on oee,the however, coin, minting are performance. others with while struggling money losing also are are they them If around reasonably others money a losing when handle from can well funds money hedge that making and found routinely firms have are prop I at in. floor traders involved not trading are next you the that the idea on shared widely or or online mastery intolerable others them cultivate particularly when bring becomes will situation will The what theme. believe market on they distinctive what paycheck—not on next focus Like the traders priority. the understandable paycheck. the professor, a becomes the money home doesn’t Making bring it bills. itself not in the success, and pay trading money for necessary lose is interest to out intrinsic enjoyable find While quickly not and is doing are it they that what about excited careers their start that halt. a loved—and to he career what research with his not touch ground and lost he papers problems, publishing scientific became solving focus in the interest the intrinsic Once an loved constraints. buried university, had perform extrinsic to He different pressure research. a the but than at game, more research position emphasized a was be teaching sought to where he waited never Instead, He tenure. productivity. denied lost which further in and graduate spiral assistants, fewer downhill publications, student fewer a creativity, lost created to led This productivity lab. lost of his exodus from an to students perish.’’ contributed or graduate and ‘‘publish productivity of lost pressures meant the enthusiasm and Lost chase paper the of was complained too, this, but interest, his a of edge. publishing area cutting tried an insufficiently with, deemed He in work studies. research to existing many the students of as review conduct in grad not of publishing could stable professor success solid the particular a labs, Without finding other was journals. in were better professor work professors the to those chose now, students as By graduate top declined. the Several were concerned. resubmitted others and the accepted was reviewers provisionally; One to the journals. second-tier, peer deemed address but high-quality, to not the to scrambled manuscripts were by He They literature. identified field. the shortcomings the to in contributions journals major be best the from down quickly. published—relatively conducted—and stetnr lc ikdo,tepoesrbcm icuae.He discouraged. became professor the on, ticked clock tenure the As turned were manuscripts his of several chagrin, professor’s the To ol ru htsmtigvr iia cust rdr.They traders. to occurs similar very something that argue would I www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 239 , however, Trading Psychology 2.0 The developing trader typically possesses no such shielding. Very In most professional fields, developing students are shielded from This dynamic, for the traders as for the professor, occurs because inevitably subverts performance. when we leverage strengths, cultivatemarket expertise, opportunities. and Putting creatively the outcome adapt horse to before the process cart Common wisdom, as we’veof seen, discipline will or chalkproposes insufficient the a failure effort. very up different to explanation: a We lack can only master markets attention on the next idea, thewhat next sustains trade. enthusiasm When and that the doesn’tprofessor, drive work becomes to out, discouraged improve? The and trader, spirals like downward the in productivity. their own accounts facewith real-world the constraints need from to theincubation, outset. and earn the Faced a cultivation quick of paycheck, unique the expertise and trader quickly forgoes focuses learning, life constraints. few prop firms pay salaries to new traders, and traders learning with tial to the cultivationperson of to expertise pursue his and or creativity, her because passion it without the allows interference the of practical Similarly, apprentices in variousenabling trades them to are focus typically on gaining paidsustainable the career. a skills This that base shielding will of wage, provide the them developing with professional a is essen- physician develops a specialty field—comesgets with rich a as salary. a While medical noby one student or the resident, needs neither are of they so daily distracted income that it interferes with their learning. petence. In medical school, for example,afloat loans typically keep during the student thestudent undergraduate reaches MD learning status, process. the residency Once position—when the the medical budding with the very immersion needed to sustain creative output. real-world rigors until they have achieved an acknowledged level of com- to draw will become trappedpainting between and two what priorities: is what most inspires likely the to sell. Such a divided mind interferes vation, turns attentionoutcome. away Imagine from the dilemma process, ofartwork a and to painter make directs who a living needs it and to feed entirely sell a his family. to Inevitably, or the her choice of what the short-term need to meet performancelonger-term criteria takes professional precedence over development. This subverts intrinsic moti- situation becomes intolerable. They wouldalready rather moved chase to be trades part that of have thewhile success their around relative them performance than watch goes passively south. 240 BEST PROCESS #3: CULTIVATING CREATIVITY omnefils efidta vcto rcdsvcto.Musicians, vocation. precedes avocation that find we fields, formance ultm noefo i a o.Mkn rdn i ob shelping path. is career hobby eventual his an such trading as Making it sustaining other explore job. while him day finding selectively his reliable very from in quite income trade full-time were involved to a him but currently enable month will is a which He in signals, times occurred. few they a when fired edge. only an that with signals signals trades The momentum found was yield to weakness—and action volatility and and strength breadth market combined further to weak lead and to likely strong when momentum—identifying generating ideas. in those trade utilize worthwhile and strengths given making—and their have discover while they to pressure, time markets themselves financial of and free styles mistakes from—their trading learning exploring various By out trading. simulated trying facilitates and that them platform testing their trading then a of and on most out patterns devoting market by researching jobs time full-time developmental holding have while recently met yet trading have up I is traders taken Several process. as This developmental accumulate can a professionally. experience of and part develop fields can skills which their schooling typically in way another their all pursuing athletes during ever and recreationally—often years—before masters, and chess informally actors, perform and actresses artists, ■ ■ ■ ■ ■ ■ include: These creativity. with associated characteristics in Andreasen, ■ novelty Playfulness Sensitivity Individualism Rebelliousness Adventuresomeness experience to Openness n fteetaesbcm acntdb h hnmnnof phenomenon the by fascinated became traders these of One per- many In spiral? downward a such avoid to way a there Is ermn Problems Reframing Creativity: of Essence The wrns foesonfeig n hs fothers of those and feelings own one’s of Awareness : noigceto o t w sake own its for creation Enjoying : h raieBrain Creative The nenlydriven Internally : usinn ovnin ilk o xenlconstraints external for dislike convention; Questioning : oeo exploration of love A : oeac o miut n natato to attraction an and ambiguity for tolerance A : 20) ecie ubro personality of number a describes (2006), www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 241 , observes that an important part of Key Takeaway , Seelig (2012) makes the argument that skills Cracking Creativity inGenius : Capacity to sustain productivity in the face of setbacks : Single-minded devotion to work : Driven by an intense desire to know Michalko, in Creativity is a set of skills that we can exercise. In her book, If we think of these as lifestyle and workstyle variables and not merely Simplicity Persistence Curiosity it is that your perspective will change and deepen,’’ Michalko notes solution—not unlike themore painters times in you Csikszentmihalyi’s state study. a problem ‘‘The in a different way, the more likely reframing problems is alteringwe our literally perception. change Creativity how requires weformulated that see. problems He in uses as the many example of ways Einstein, as who possible, to arrive at a good rates. Reframing the issue fromtraders the take advantage perspective of of a those historic players rise helped in the US dollar. the issue from the perspective offunds, corporate money however, managers realized and pension that thesethe entities areas with would negative have rates to and retreat plant their from capital in areas with positive in negative interest rates in manythe regions. implications Many of traders negative rates were and puzzled slow by to respond. Those that viewed of problems. Shifting the frame of problemsand can lead potential to fresh solutions. perspectives Acentral great banks recent began example pursuing of very different this monetary occurred policies, when resulting the skills she emphasizesreframing involve of cultivating problems. imagination, From this includingour perspective, ability the to we find become answers if restricted we in are stuck in our definition and perception related to creative thought can be exercised and developed. Several of ■ ■ ■ as the result ofcreativity their is a ongoing form creative of brainin activity. exercise: creative From Novel capacity. thinking this leads perspective, to an increase as all-or-none traits, then it becomes clear howset we of can cognitive build creativity and as emotional a skills.how Andreasen cites specific research regions that of shows the brain develop among professional musicians 242 BEST PROCESS #3: CULTIVATING CREATIVITY ayo h esnlt lmnsietfidaoe ti adventuresome, is It above: on identified draws elements problems personality reframing of the process of this many how Notice 23). p. (2001, l rse,ta odm h olrwstedn,icesn h dsof highly odds or crosses the two most or increasing one across in trending, predominantly occurring was was was move dollar the down the If continuation. me or told up that number move large crosses, a a all tracking If by moves crosses. dollar dollar of breadth of the at stocks, look to similar to manner began a I In productive. particularly not were dollar US about question the pressure. than selling clarity levels. greater in static far increase absolute, yields an question and process have breadth we The weakening if than on returns (momentum) rising upside been see to pressure—we likely selling making more has outpacing much fewer breadth steadily are pressure highs, and buying new rising and making been lows, new have stocks getting we more is If expanding—with market time. the been over as whether important is weaker as question or is useful stronger level more oversold A or itself. overbought that level is an the productive to not getting it’s of reason path The the oversold. or overbought is market It there. position long with manner confusion my replaced a perspective. it valuable in entered importantly more point but and points, that that several trade below me for saved range move candidate a to a action with oscillating identified price range, consistent I for a in waited Once a trade I price. being to price, average day likely central were the checklist a we against My me around day?’’ argued told trend unanimously That day. days a asked trend trend this then ‘‘Is for I solution. criteria question: no for of different to positioned question, very led The be a order?’’ day. also I my next myself but the execution: execute day of I entry start the should the the on ‘‘Where by on level rise anticipated good stuck market’s a myself the at rise found broad enter a I to anticipating market. wanted futures, stock e-mini S&P Not the buy perspectives. in to fresh wanted opened I frame ago, of long were about change ideas asked simple productivity-improving and The many advanced. request easier, the jobs ideas switched workers’ Few making they productivity. When of improvement forthcoming. the were regarding ideas submit to answer. meaningful a at we arriving markets, of of odds questions to the multiple ask increase ourselves and ways pushing multiple In in markets persistent. view and curious, open-minded, playful, ihlogvsteeapeo ooa hc se t employees its asked which Toyota, of example the gives Michalko iial oie htqetosa otesrnt rwans fthe of weakness or strength the to as questions that noticed similarly I a whether asks encounter I questions productive less the of One www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 243 The reframing of problems is a central change technique in psy- One daytrader I worked with pushed himself by posing the question, The reframing of problems can occur when we’re working on another person, not entering a new and threatening relationship. good time tonight and getpressure is to taken know from the this situation. person The focus better?’’ becomes a one great of deal exploring of is unhelpful, because it doesn’t focus attentiona on the good basics of relationship—getting cultivating experiences. to By reframing know the dating the experience other as, ‘‘How person can I and have sharing a defensive way when meeting newto people. That the very relationship defensiveness failures leads situations that with are the most question, ‘‘How feared. can The I avoid client getting approaches hurt again?’’ This chotherapy. When a client enters therapy,stuck it’s in often a because particular he or viewperson she who of is has self been and rejected world. in past A relationships common and scenario now is behaves the in a only served to stymie him.when he He stopped made worrying significant about progress, ‘‘world class.’’ interestingly, improvement, he would stay constructivelythat focused would steadily on move him achievable to goals his ideal state. Stressing a distant end goal of my firstbecoming recommendations world was class with that athis he week different to question: become replace a ‘‘What better do his trader than I I question need was last to about week?’’ By do emphasizing from world-class traders. His question,positive direction. however, Inevitably, did when he not lost money, leadseemingly he him became falling frustrated, in further a behind in his quest for world-class status. One ‘‘What do Ibooks need and articles to and went do to numerous to trader events become to absorb a lessons world-class trader?’’ He read me from making yesterday’s mistakes?’’ Asideas with are the likely Toyota to employees, springwe know to about the good surface, trading practice. as the new question cues what efforts at solution.question, A ‘‘What are more three useful rules I framing can of follow today a that journal would prevent entry is the most traders’ journal entries focus on mistakes andThey poor trading address practices. the question,a ‘‘What particularly did productive I problem do framing wrong if today?’’ it That does is not not lead to specific question about the dollar index’s most recent move. ourselves, not just when we’re dealing with markets. As I noted earlier, weighted in the dollar index, thatand suggested a more idiosyncratic more behavior mixedstrength forward via path. a diffusion Asking index a turned out question to about be more dollar helpful trend than asking a 244 BEST PROCESS #3: CULTIVATING CREATIVITY rdn—a tefla oa h!mmn.I ouinfcsdcounsel- solution-focused In moment. aha! an to lead itself trading—can ih ermnsaeepwrn:Te aiiaecetvt ydirecting problems. by right the creativity toward facilitate us They empowering: The are well?’’ markets reframings overbought right when traded solutions recently valuable you find have then ‘‘When asked, but overbought, is whether market contemplating personally particular by own a stumped a be have individual’s may to trader an shown The on solution. is relevant drawing problem difficult By seemingly occasions?’’ a those you experience, on your have put ease ‘‘When ‘‘What is asked, at and who new?’’ be mind someone person might meeting the relationship comfortable a instance, felt in recently for hurt So, being dilemma. of our already afraid have to we answer when an occasions past found finding involves reframing the ing, nwrdsml etqetoscvrn aiu set ftedigestive the of and aspects partner; various study covering a questions with the test system discussed sample digestive together; answered work the they of how function show and to structure diagram flow a of part as asks has question student the process. The whereas digestive poison. structure, organ a a about of which of terms asks ingestion in that the information question by processed impacted a most with student be difficulty the anatomical would the have their for and instance, then system For but tests digestive the shapes, angle. instructor of different organs the the a pull memorize or might from When way unfamiliar information textbook. an the in a worded for be via memorize might question to or the delivered information, been students lecture have might for a it as common it in repeating is fashion, rote It a in tests. information for studying students can we modalities, solutions. switching fresh By stimulate is it. and know know associations we we unlock What how on. of so function and many display; a of graphic partially in diagram a a in occur data drawing capturing can colleague; idea; valued the This a with visible. idea ideas an our ways—discussing our of creativity making the processes: enhancing for thought strategy second a describes Michalko ■ h ih ermn fapolmwehri hrp rin or therapy in problem—whether a of reframing right The a u tdn o nymmrzdteogn u lodanthem drawn also but organs the memorized only not student our Had from comes switching modality of value the of example classic A wthn Modalities Switching Creativity: of Skills The www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 245 Key Takeaway Your access to information is only as good as your means of storage. Imagine, however, if the trader had actually rehearsed a variety of My attention, however, went to the fixed income market, which was Traders all too often operate like the student, processing market infor- are ways of encodingmeans of material encoding facilitate for recall recall under a and variety of understanding. circumstances. Multiple system, there would have been littlefor problem the pulling test question. up Hearing the information, information speakinginformation, information, drawing writing information, explaining information—all of these trader formed a game plan baseddiscussed on with these scenarios colleagues, that and was reviewed written aloudto out, in the the release. minutes leading up market reaction to data releases tomoves distinguish when and these when led to they trending were ultimately retraced. Then imagine that the scenarios for theheadline data number, release but inFed on advance, policy key makers. focusing components Imagine, that not further, were only that of on the relevance trader the to reviewed recent trapped by a bout of buying. Inthe viewing market trader action was one-dimensionally, too easily locked into a limited view. my perspective, the sellingsustainable reaction shakeout, looked but more the like traderWithin a minutes insisted he fakeout he was than forced had to a price stop out, confirmation. as those selling the news were already moving toward unchanged on thewhich session, still and held NASDAQ well shares, aboveof their the overnight lows. key I numbers also noticed from that the one release was not especially weak. From were heading for a big break in prices. ening. I recall sitting with afollowing trader a who key was tracking data stockimmediately release. index moved trading The lower. headline The trader data immediately were announced weak that and we stocks action. Lost, of course, is anshifts understanding in of correlation intermarket and volatility relationships; inthat the would broader reveal market; whether and information market conditions are strengthening or weak- mation in limited ways. Somecontained will in even a rationalize bar that chart the is information all that needs to be known to anticipate price 246 BEST PROCESS #3: CULTIVATING CREATIVITY rprd ei lomr ral rprd yepoigavreyof variety a employing By prepared. broadly more also is he prepared; oalvn ud oato.Sc rdri ieyt epn a more fashion: far multidimensional respond a in to trader. likely unidimensional is the than trader event a an document Such to written creatively action. and bloodless to flexibly a guide from living plan a a to turns trader the modalities, ■ ■ ■ ■ ■ nld eae da bu eta akplc;eooi strength; economic policy; bank would central associations trading about my central rates, ideas interest my US related example, in include rise for anticipated an If, was thoughts. idea broad associated a creating a of associations, own in its network circles. idea generates connected then an as circles idea with those that of begins to Each associations map adds mind then and The circle visible. central ideas one’s making for flexible. that and so quick those, be for can planning response and possibilities anticipating is the events, trader market creative to responding of Instead role. information-processing h niemn a ol naslt ytikn bu h trade the about thinking my encapsulate would map conditions. market mind labor entire and of releases, statements The data the as recent such Each officials, others, on. bank to markets; central so linked and be income dollar; would associations US those fixed the of versus across currencies of behavior movements relative price expectations; inflation o de ofiec nyu rd;adwa ol edyut exit to you lead give would what would and position. what trade; the position; your your in confidence for added rationale you the writing in in moving Outline they events? market Are or separately? news or known any unison with in sympathy moving related they against market Are or ones. relationship, instrument, stock, of your context Track broader the into fit action movement? price recent does How multiple across frames. market time or relationship, instrument, stock, your Track pn opeaefravreyo hti scenarios. what-if of variety market a the before for it prepare to to listen and opens recorder a into plan trading your Talk lesser and greater to idea. lead for the in would pull confidence what and of colleague information knowledgeable colleague’s a the with idea trade your Discuss hr r aywy rdrcnsic oaiist rcs markets process to modalities switch can trader a ways many are There better only not is scenario second the in trader The point: the get You ihlodsrbsmn-apn sapriual aubemethod valuable particularly a as mind-mapping describes Michalko active an in trader the places naturally modalities switching how Notice www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 247 . I might, , Simonton points to historical Genius, Creativity, and Leadership Productivity of Our Thought The Skills of Creativity: Increasing the This dynamic informs daily forms of creativity as well: Generating Equally important, however, is that the act of drawing the map itself serves as a look at and think about more things. You don’t have to discipline yourself quality of thinking. This is onecomponent reason of that creativity. curiosity When is such you an hunger important to know, you’re driven to more ideas isexplains, the increasing best the fluency path of to thinking contributes generating to good the ideas. creative As Michalko means that the successful creatorwho is the held productive over creator. a Like thousandproportion Edison, patents, of productions the end creator up produces becoming so highly much influential. that a output. In evidence that successful creators tendend to them start their late careers in early in life, life, and sustain high productivity throughout. This Let’s return briefly towhich Dean links Keith the Simonton’s productivity research of on thought creativity, to the generation of creative ■ market activity. By switching fromvisualizing, the you modality encode ofit what thinking more you to readily know that available in of for a drawing real-time fresh and processing manner, during the making heat of peer trader share a common trade idea. Ifmaps each the of you idea, independently the mind resultand will assumptions likely that be enable each a of fruitful you sharing to of broaden related your understanding. ideas aloud, but it’s thinking aloudto in elaborate a our structured thoughts. fashion Michalkomaps. that also Suppose encourages notes you us the are value working of as group part mind of a team, or suppose you and a me to scour otherstrength data to is determine consistent whether or the mixed. picture of The economic mind map is a way of thinking and ‘‘GDP data,’’ but then noteshort that of the what strength would in be the expectedto payroll from the data the addition falls recent of GDP a strength, question leading mark in one of my nodes. That in turn leads kind of brainstorming, as associative linkssay, lead draw to new, circles unexpected from ones the ‘‘economic strength’’ node to ‘‘payroll data’’ and the marketsensitive to I’m the assumptions I’m trading. makingevidence and Reviewing that would either alert supports the me or to undercuts incoming map those assumptions. would make me 248 BEST PROCESS #3: CULTIVATING CREATIVITY sSmno bevs ucino n’ aso o i rhrfield. her or his for is, passion creator one’s the of of function output a prodigious observes, the Simonton productivity; as high of state a into hmlmne h ako oi rdn potnte cosmarkets. observations: across my of of opportunities doing few many trading a was with, solid are he of Here worked what lack he the out managers lamented figure money whom to other the curious relatively from was a differently I during period. even for summer continued knack ideas quiet unusual generating trades. good an in for candidates had productivity out picking He His and markets ideas. of variety trade a at for looking lacked never he because ■ ■ ■ ■ ido atreghn,weego da eejs atn obe to That waiting week. every just productivity. ideas his were fresh energized ideas generate outlook to good himself a where expected as He hunt, found. generation egg idea Easter treated of He kind markets. irrational or slow, choppy, portfolio his money within high. average positions stay of the to number than the longer allowed trends ideas which price with manager, as stuck well He as markets. of world within advantage the take price to around and designed developments were stops fundamental out, wide pointed he reasonably ideas, set His targets. and moderately positions sized h rlfi rdrws’ fadt eeaebdtaeideas trade bad generate to afraid wasn’t trader prolific The trade or value stocks relative one. as a directional entertain commodities a to trade particular as willing to any as just willing to and as himself bonds, more just limit high-yield at not was did He looked also class. and He asset peers. papers, ideas his research trade than more for charts places read many colleagues, in more looked trader prolific The h rlfi rdrlvdtehn o ideas for hunt the loved trader prolific The peers his than frame time wider a on operated trader prolific was The He regard. that wanted. in he painters trades Csikszentmihalyi’s the like had much assembling he very countless kept until spending he book his ideas, of reassembling his Instead and refining perform. and to research performing ready hours not ones trades the good an the from out with sort consistent could action were price they that theme—so if overarching on—particularly preferred He trades size. many in necessarily have not to albeit book, his into went it sense, n rdrIrcnl okdwt meitl tukm sunusual as me struck immediately with worked recently I trader One www.MyChart.ir envrcmlie of complained never He . fteie made idea the If . .Hespokewith .He BEST PROCESS #3: CULTIVATING CREATIVITY 249 Imagine setting quotas for aspects of your own trading process. You Can we make ourselves more productive as thinkers? One straight- In Michalko’s terms, the trader I worked with was unusually fluent. that remain. a novel, promising idea.cancel Driven your by least-productive that meetings mandate, and you would participate naturally actively in those the highest-quality thinkers available, improving theprofessional productivity of interactions. your Alternatively, imagine setting ameetings: quota Every for meeting your on your calendar has to result in a write-up of might, for instance, require yourselfthat to came write from down conversations one withblog distinctive idea other posts, traders such each a day. quota As with would my push you to seek out and speak with topics—something I could haveas never a accomplished productivity without aid. the quota fresh topics, ultimately leading mepapers to that read I books, would articles, have andhas otherwise resulted research overlooked. in a Living compilation up of to thousands that of quota posts across a wide range of on my blog writingpost was that every I single needed day. to That generate forced a me fresh, to high-quality look in novel directions for quotas for himself and hisand assistants: a one minor major invention invention everygenerates 10 every quite days 6 a months. stable Over of time, creations. One such of productivity the guidelines I imposed forward method described by Michalkofor is generating setting new a ideas. time limit He and draws quota on the example of Edison, who set ideas, not because heof was ‘‘mutations’’ and clairvoyant, let buthis benefit. the because he natural generated selection lots of the market work to were afraid toparticipated. ‘‘chase’’ The fluent the trader participated trades meaningfully in unusual once trade they had moved and never to five times asWhen many one line or items twoaction, in of he his those became portfolio trades more as displayed aggressive the unusually other in favorable traders. those price positions. Other traders trades, my trader putthere was on a fundamental anything story and thatinto favorable the had price book. action, a That the trade meant reasonable went that, rationale. at any If given time, he would have three He came up with notWhere only other traders more might ideas limit themselves than to his several ‘‘high-conviction’’ peers, but better trades. 250 BEST PROCESS #3: CULTIVATING CREATIVITY rdrwsal ocathsonvrulteam. virtual the own that his best craft by worked to what was able seeing was It and trader ideas exponentially. new expanded existing the generation with his experimenting supported idea ideas his those that when the out views—so with figured up of came he who many learned desk, ideas—and he trader’s best time, senior Over trades. the as crossing taken ideas This were of which money. number made that huge junior idea any a trade to to sound bonus led a cash with a him offered provided ago who years trader many at big trader worked senior next I A where the outset. firm the find at a to pool idea likely their more restricting those are than trades trade and ideas willing with after traders experiment emerged Similarly, to only iterations. company unsuccessful the many a through for became of running idea it sharing creative and and The Instagram editing renamed hit. were the phenomenal company on: and caught site particular The in photos. adding one the until with not experimenting features did began of app founders that The company another. app the one so an with on, created catch locations that their company share to startup users a allowed of example the offers Seelig I result, with a head As my feeding ones. in promising effective most information. as high-quality well the as on efficient more focused much I filtering became at that adept That so become day. but links, daily, that site the covered the consult articles only the not from to me day well-curated pushed each a generating idea of as trading constraint good the site myself one solve Returns set To and Abnormal links trading. market-related the my of source to selected contributing on I truly articles problem, those and that of stories few news with skimming of my Web, myself productivity the of found the efforts, on I One focus and time. output. to reading was attention our my fluency of our my improve to quality refocus to constraint and efforts we recent the quantity day, under the each operate improving we idea greatly If new ones? a trades new those produce of of failing management generation tick, the the by of terms or tick in positions new anything our accomplish following to screens, at staring aim traders, conscious a becomes lec sms ieyt ors hnw r pnt experimentation. to open are we when flourish to likely most is Fluency productivity when productive most become we because works quotas Setting al rdciiyqoa uncetvt noahbtpattern. habit a into creativity turn quotas productivity Daily o uhtm n nryd ewseas waste we do energy and time much How . e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 251 , Robert and Michele Root-Bernstein (2001) cite the Combinations The Skills of Creativity: Finding Fresh Notice that synthesis is a fundamentally different information pro- Markets behave much like African musicians. At any given moment, A key to the creative value of the combinatorial process is that simple musicians, I can focus on the musician playing the percussion instrument in the behavior of any single instrument. cessing modality from analysis. If I’m listening to a collective of African follow-through can be quite different. Iabout can only what make an is educated guess information driving is in markets the combination by of movements listening across to instruments, not them in concert. The more idiosyncratic one. Thefrom participants those in macro in moves idiosyncratic are ones, different and the implications for near-term behavior of currencies, anddetermine the behavior is of whether stocks. wein What are I’m a trying seeing thematic to a manner macro based trade—markets on trading macroeconomic fundamentals—or a any single share. Suppose(fixed I income notice that prices interest areat rates rising). the are One moving behavior of lower of the rates first on things the I’ll short do is and look long ends of the curve, the higher or lower volume. Therea is single little stock. complexity When to weas step the back movement a and of whole, listen to patterns the emerge movement that of stocks are not evident in the movement of each stock in a market average may be trading higher or lower and on regimented performance thus leadsperformers. to The complexity combination of and performers diversityence generates that a across is musical far experi- richer than the output of any of the individual musicians. beats. Although each musiciancombination operates of in musicians creates a a highlymoment, form some repetitive of musicians are music way, striking in notes the while which, others are at silent. any Highly given example of African tribal music. Theyet music it has a is complex never structure, formally and musician taught plays or a even different instrument written and out. produces This a is different because pattern each of elements, when combined, canSparks yield of rich Genius interactions. In their book, This means that we workanalyzing as it. hard at synthesizing market information as As we’ve seen, creativitywe is put at new heart things acan together combinatorial effectively and hone process, our assemble creativity in old by which cultivating things our combinatorial in skills. new ways. We ■ 252 BEST PROCESS #3: CULTIVATING CREATIVITY n h utevrain fsudpoue ysrkn h ntuetin instrument the striking by produced sound beats, of of intensity variations the subtle in fall the and and rise the rhythm, of pattern the discern and riea ort i nlctgre.W ae hs aeoisad on and, categories and these groups label We the to categories. group turns final we six then to that search four so the at Our categories, arrive among categories. the connections into for among cards look connections then problem the We the grouping to card. all cards, related separate gathering factor a by each start on with we written problem, that a suggests He about ideas. facilitating information in new recombinations of and generation combinations the utilize to ability our to ing respect with offense the take dividends. to growing time safe, offering was stocks it Rather, play. was stocks The wrong on repositioning. the defensive defensive becoming a that suggested merely markets not of yield, combination for we chase with that a me along seeing convince helped were That, banks, bonds. central global were high-yield from we comments among that dovish and interest strongly buying rallying was solid income seeing fixed that see also however, more could assets, across outperform I looking By economy cycle. a the in late in sectors downturns growth-oriented tech that to sectors as resistant and pattern, relatively market discretionary defensive are a consumer of part normally outperform is That to stocks. starting were shares a of part one be might of novel that movement the trade price pattern. rotational larger relative markets, a revealing the In another, as versus in simple information. asset as immersion that be our may across combinations from patterns back broader step ourselves to open must perspective—and we microscope information—our process, market creative the of discern function we a analysis, are breadth. In achieve patterns elements. we synthesis, the individual in because and simple, depth; is of patterns, the That interplay of parts. in the function individual meaning of its a a of is discern sum meaning the We the than hunt. more game is that successful its whole a performance, discern a of might we of rhythms conclusion, quiet start the calm, the slow its appreciating and the time, whole, over In a pace rhythms. building as and musicians tones the of of interplay sound the to listening detail. rich are reveal to whole the of part a on equivalent in cognitive focuses the microscope—it is a Analysis of places. different in and ways different riiga oe obntosmasta,prorerirdiscussion earlier our per that, means combinations novel at Arriving We in. not out, zooming are we hand, other the on synthesis, During ihlo in Michalko, utilities and staples consumer that noticed I instance, for back, while A rcigCreativity Cracking ugssasml xriefrimprov- for exercise simple a suggests , www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 253 Afraid of loss make $ Locked on 1 trade Can’t miss move No reading Distracted incomplete No conversations Info overload Beat up self area only me Slow, quiet Rushed, Big breakout for me against me Mood Market Preparation Thought Process Anxious, tense Eager, excited Frustrated ChoppyBored Too detailed Moves Need w/out to Confident Reverses Hurried Range trade Covered 1 An example will make this tool and process clearer. Suppose that the Suppose we now look at various combinations of these factors as Based on my review of discipline lapses, we can see that situations Factor 1 might arrive at: I generate trading plans, butWhat am I not then need consistent to in brainstorm are actingmy all on lapses the in those factors discipline. that plans. are Below associated is with a matrix of categories and factors that I explore fresh relationships among the components of each category. problem I am working on is improving my discipline as a trader. Perhaps a separate sheet ofeach paper, category beneath list each category them label.vertical as Finally, strips we columns, cut and the with lay paper the them into side elements by of side, moving them up and down to bine ‘‘bored’’ mood with ‘‘choppy’’ markets; ‘‘rushed’’ preparation; and potential problem scenarios to work on. For example, I might com- distracted, overly focused on a singleabout trade, missing self-blaming, a and move. The concerned brainstorming hasfactors uncovered associated many situational with discipline lapses. the day has beenfresh rushed, conversations, too detailed, overloaded, withoutmy and fresh thought limited reading, process to without has one been afraid area; of and loss, when pressing to make money, I am anxious, frustrated,markets are bored, slow, choppy, eager, moving confident, againstreversing me, and breaking against out hurried; me; in and my when favor; trading in a range; when my preparation for associated with failure to act on my trading plans include periods when Factor 3 Factor 4 Factor 2 Factor 6 Factor 5 254 BEST PROCESS #3: CULTIVATING CREATIVITY rsigt n potnt namre hti o feigmc direc- much offering not be is would that I market situation, a a in opportunity such find In to money.’’ pressing make to ‘‘needing of thoughts ocno orwiig utlti o.Tegamrmyb or the nothing poor; until be writing keep may emerges. You grammar new matter. The disjointed—no flow. be refuse it may to let thoughts Just is writing: technique your this in censor to thoughts to my key write The or will charts, fashion. I of stream-of-consciousness traders, number knowledgeable large a many viewing with articles, speaking of number a problem. reading the After of sense ways, make different can we down in which facets breaking through those By lenses juxtaposing new trades. then create or we and themes problem a possible of other facets factors suggest those to how see up could we line theme, captured market chart a our to if related factors Similarly, various trading. our impacting are that problems trade. current even the view in broad comfortable a a am use sustaining I I am when which I in that techniques, ensure of to set scorecard separate process-based entirely an as to profitable. I’m label lead when would might vigilance This my I relax factors I as of money,’’ house combination thoughts with ‘‘playing This and trade.’’ preparation; one daily the of my on combination ‘‘locked of second part for as A breakout and ‘‘big conversations’’ a ‘‘no efforts. boredom making me’’; market my happen,’’ of mood; ‘‘confident’’ rechannel a things aware be can might make become factors I to to that techniques hard so on too pressing ‘‘trying work to as me label leading might I constellation factors This well-prepared. of not I’m which for and movement tional rt,Ifidmsl odrn bu h iem fteFd ilit Will Fed: the of I dilemma As the markets. about developed wondering of of myself weakness those find relative in to I the write, weakness relative noted stocks economic another market stressed still emerging article periphery; new growth another European economic of States; on the generation focused United read the I the article to one in that thoughts notice of might I combination ones. the from leading ncmiigdfeetfcos ecnipoeoraaeesof awareness our improve can we factors, different combining In n fm aoiewy fcmiigiesi uoai writing. automatic is ideas combining of ways favorite my of One nvtby h uoai rtn rgesnwtogt n ideas, and thoughts new triggers writing automatic the Inevitably, hnw rcs nomto i uoai rtn rsec,we speech, or writing automatic analyzed. have via we what information synthesize process we When e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 255 by Analogy The Skills of Creativity: Thinking When we employ analogy, it is as if we change the lenses on the glasses Recombination can also occur as part of talking aloud. The dashboard we’re wearing. Each analogy highlights something distinct in the subject suggesting new ones. Jean Piaget, who saw in stage-likecould biological explain development our a cognitive process that that development. A is good well theory is elaborated, an accounting analogy for our current observations and psychologist B.F. Skinner elaborated principlesanimal of behavior, learning he as drew an on acquire analogy. such That unusual helped patterns explain as how phobias. people A could different analogy inspired It would be very difficult for menew to band, describe but the musical if style I ofyou’d told a immediately have favorite you a it sense for sounded the style like and two spirit of of the your music. When favorite groups, Many times, we can illuminate unfamiliar topicsof what by we casting know them well. in Analogies terms draw parallels that bring patterns to life. ■ into a fresh synthesis. make a comment like that, it isthat an important comes observation: from It’s an years intuition automatic of writing—it’s a following way of markets. putting together The a talking range of aloud observations is like of stocks rising onto the fall, even day as (and thecommented making aloud, S&P ‘‘The new 500 buyers Index are highs leaving price on this remained market.’’ the I near know day) its when day’s began I high. I aloud. This is mytrading. Just signal recently, to we bethen opened buying alert the pressure to faded day relatively a session early strong possible in in the change morning. stocks in The and number how I’m key sectors, indexes, and assetout classes. of Very whack often with I’ll the notice broader something picture and will make a note to myself on my tradingvarious software measures of is stock organized market breadth, so as well that as price I action can across see, at a glance, lead me to pursue freshan writings idea starts on to the crystallize statements thatrate of is hikes Fed at could odds members, squelch with the as the rally market in consensus stocks. that really want to raise interestsupport rates unusual when US interest dollar rate strength? differentials Andselling already will if US stocks the really Fed meet with remains relatively accommodative? The new musings 256 BEST PROCESS #3: CULTIVATING CREATIVITY bev htaaoisaedfeetfo iiis nta hyd o focus not do they that in similies, from different are analogies that in observe Root-Bernsteins, The understand. to trying we’re area ned oalreetn,teiesi hsbo—n h hl fmy of whole analogy. the core book—and a this on based in ideas traders—are with the work extent, large a to Indeed, constructive take. to to direction how the knew pointed already he pain, steps with coping with dealing his his for linking to analogy, needed emotions simple was The problem. analysis his psychological with deal deep to No him ideas. the trading researching steps, to of those turned set took attention next his he and when rejuvenated ensure Indeed, focus pain. his to found the he with meditation identify use not did lifestyle—and he that his back himself—throttle of too to referred was of I medication, result He point, the with one injury. as pain At distraction sports the meditation. his managed daily earlier and he an adjustments, so lifestyle of replacement, hip result he chronic for from hip—the that young further suffered his trades only he in this profitable Interestingly, and pain distraction. very himself, his with of to frustrated couple contributed was a He researched. missing floor. had trading in his on resulted dynamics interpersonal This the including events, life by group. a of that members in fittest resulting found the resources, who of of survival animals availability Malthus, the the of and by work limited plants is the of growth and of population breeding qualities theory the The various His form. analogies: produce example. new to two a prime on in a drew topic as evolution familiar Darwin a recast mention analogies and creatively good Root-Bernsteins to inputs of ability feature of their distinguishing organization The is those. the processing between of working relationship speed in material the of computer, to retention a the memory, to of the information, that from inputting relationships, and of of range nature brain wide a the illuminated potentially of have I working then the create I between if wider, analogy hand, any other an capture the not On does relationships. but structural fundamental feature, is more common that eye,’’ a winking connects a It like simile. looks star a ‘‘The say, I If similarities. surface on manage n rdrIwre ihrcnl on isl nsal distracted unusually himself found recently with worked I trader One nlg soeo h otpwru hnigtosaalbet us. to available tools thinking powerful most the of one is Analogy that an eqikyrsoddta ewudne otk care take to need would he that responded quickly He pain. scooia pain psychological ■■■ www.MyChart.ir n se o ecould he how asked and prso Genius of Sparks , BEST PROCESS #3: CULTIVATING CREATIVITY 257 When I began to study the students who were able to master the Particularly noteworthy among the pre-med students at Cornell (who One of my earliest positions as a psychologist was as a student breaks with others,successful keeping students each made otheruse greater motivated—and of use notes awake! of copied The word charts for and word from diagrams readings and and lectures. less Finally, the overloaded students. They generallythe studied workload with partners, and dividing reviewing the material interactively. They also took on almost constant overload and could not keep up with theirworkloads work. successfully, I found that they studied very differently from anything they had dealt with inthey the encountered past; in and their (2) courses the wastheir type qualitatively earlier of different coursework. material from Because that that of of these two factors, the students were they were having difficultyexamined keeping up the with nature their ofmajor new their challenges: workloads. courses (1) As and the I homework, amount I of identified work they two faced was greater than science’’ students were thethat most they frequent were visitors verystruggling successful to academically. in Their counseling) stress their was largely prior stemmed schooling, from the but fact were that now comprised a disproportionate share ofthe my medical visits students in in Syracuse any (of given whom week) first- and and second-year ‘‘basic resources to become morewith successful someone students, who and treated them less as likely patients. to speak and referred to our workwas together to as counseling, normalize notturn the therapy. encouraged students helping My to goal process seek help. as They were much very willing as to possible, access which in presenting problem at the counselingas centers I was saw stress. The it,that problem, was reason, I situational insisted overload, on not being intrinsic on mental a illness. first-name basis For with the students normal young adults asked tounusual function at cognitive a consistently load. high level This under helped explain why the most common struck me as quitedysfunctional different. For and the did most notdisorders. part, My meet the perception was students formal that they were DSM were not basically criteria bright, motivated, of psychological and knew very well what psychological disordersfull-time looked psychologist like. As in the only theproblems rural county, in I that saw community. most Work of on the a significant college campus immediately counselor working firstschool. at I Cornell had University worked previously and at then a at community a mental health medical center 258 BEST PROCESS #3: CULTIVATING CREATIVITY h ucsflsuet eebte hnteohr tfitrn the filtering at simply they others sense; mystical the a not than was This better information. were important most students successful the oeta ne yfis-aebsswt h tdnsadwligesto willingness and students and the with skills school. basis ‘‘therapy.’’ first-name study the than my once, rather ‘‘counseling’’ on than by term More the emphasis offered of use my services my issues criticized that psychological Many emotional felt the ‘‘deeper’’ They cheapened from ignoring. learning was suffered I They students with. that the worked disgusted I absolutely that students were the insisted few to approach a ‘‘unprofessional’’ my Quite by colleagues. professional my of were efforts their overloaded. learning, felt longer and their no mastery improve they of to and degree disposal energized mindsets greater their a at and felt tools benefit grades students had and students’ the teaching groups the Once group significant. own on was our their impact used The form a We collaboration. to enlisted mentors. from students even as encourage and serve to peers to sessions successful peers their those to of of groups few skills conducted the We collaborate. students to teach delighted too on specialists only skills campus learning the stressed-out were skills, there learning the Fortunately, needed that psychotherapy. They not learners: was their better of problem become to efficiency real needed or students The effectiveness efforts. the study aid not subsequent did certainly cause—although distress than problems the their of result issues the more psychological was with experienced primarily dealing not were everyone however, mattered. leagues, suddenly big practice and the conditioning Conditioning to gifted. during naturally came hard was they themselves on When work shine practice. to could and having who without athletes earlier gifted field their naturally the in like methods were such employ They to schooling. have didn’t they that more motivated were key effective. students the more also successful capturing but learning, and the their with material, formats, efficient the multiple dividing in and information groups material, in important less working from things material important important time prioritizing most more By the learn. spent were to those lecturers that when assuming noted topics, particular also lecture, on They their important. in and be texts must their in it both appeared concept a if that assumed hsitrse egetybcuei ugse httesrse-u students stressed-out the that suggested it because greatly me interested This sufficiently and enough bright were students successful less The ehp h otfsiaigapc fti xeinewstereaction the was experience this of aspect fascinating most the Perhaps www.MyChart.ir htvrdsrs they distress Whatever . BEST PROCESS #3: CULTIVATING CREATIVITY 259 I realized that the troubled traders were just like my medical That is when the analogy hit me. It was a creative bolt out of the blue Fortunately, the traders were quite willing to educate me, and I was Fast forward to 2003: It was my first experience working with traders students: bright, motivated youngThey described adults emotional difficulties, facing including stress, frustrated information trading, overload. that reshaped my career. overwhelmed when volume picked up and pricesUnlike moved the in volatile successful ways. traders,became they unusually tended busy. to shut down when markets higher or lower pricesverbalize who as was evidence in the ofthey market trending and were what activity. frequently they They confused were doing. did by As market not a reversals. result, They also became allowed them to see when higher or loweror prices were whether attracting business, prices awaysuccessful from traders value were were much shutting more off focused activity. on The price less alone, treating all peers. The Market Profile display provedtheir to be thought quite helpful process—it in capturing anchored was their volume perceptions transacted of value at and price moves levels away that from value. This supply at those levels.close Very colleagues, often, benefiting from they the shared pattern recognition those of perceptions experienced with The very successful tradersand had what a they were clear doing. idea Theyvolume were of at able particular who to price track was levels large and in trades respond and the quickly high market to the demand and I needed to listen and observe before I could be ofable meaningful to observe help. the very best traders as well as those who were struggling. of managing simultaneous bidsno and experience offers with in placing a hundredsimmediate book. impression of when Most trades I began per of work day. was all, that As I I was a entirely had result, clueless. my much longer-term than thatwith of reading the order flow Chicago from traders. depth I of market was screens not and familiar the dynamics on a full-time basis at Kingstreein in Chicago, electronic a firm futures that markets, providedMy liquidity especially own in trading CME experience and was CBOT not products. related to market making and was the feedback Iunusually received critical and from bitter. a surprising number of colleagues was meet with them insurreal: informal Every groups bit was of called myhelpful—and ‘‘inappropriate.’’ It experience that was told was the me feedback that of what the I students I was worked doing with—but was 260 BEST PROCESS #3: CULTIVATING CREATIVITY itre.We xmndterlvsotieo rdn,Icudnot could I trading, of outside lives health mental their significant examined no had I most When but histories. trigger, the pulling of fear and nevnin ntewrdwudnthl hmi hycudntmake not could dynamics. they price/volume if and them flow order help of psychological not sense the would essentials All world fashion. on the constructive focus in a interventions to in another needed one they on particular draw students, a and medical in that moving the action were price Like markets why at fashion. of volume sense make conceptualizing them than of help more way could needed a traders was troubled the else What anything trading. poor of cause merely the challenges—not but trading fundamental significant, more of were result the problems were they trading behavioral the and to emotional specific Those seemed setting. faced they problems behavioral emo- whatever and Rather, tional disruption. emotional of patterns ongoing detect eptaesmk oeefcieueo n nte ndeciphering in to effectively another more able one to able was of were traders I use troubled other, the effective Once each activity. more dividing market on make from drawing benefited traders by who help workload students a with conquering years and markets. moving for from worked information of in Having amounts strengths huge their traders, the utilize of losing to sense able of led making were trades That they winning how successful. the understand were them from helping who practices best those view identify of solution-focused to practices a me took best emotional I the roots, on tracked their focusing and for of search Instead the traders. and the problems helping for ideas than specific rather challenge, processing cognitive one. information emotional a an and through as learning solely trading seeing a by as and created challenging lens, shift under perceptual reasoning process the analogical the learning was in element the creative something The with: of conditions. terms familiar competitive in very it was cast domain—the I making—and unfamiliar market very electronic a took of It world psychologist. trading a as role my htmd h nlg oeta eesml a hti e overy to led it that was simile mere than more analogy the made What and psychology trading of view my reshaped completely analogy The nlg rae rfudpreta eraiain eati new in act things. We new see reorganization. we because perceptual ways profound a creates Analogy e Takeaway Key www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 261 Creativity and Lifestyle If you’re an experienced trader, at some point you’ve traded a market Where I see traders most often make use of analogy is in drawing The analogy was cemented for me, however, when I began to hear reliance on habits frees us up to attend to fresh daily challenges. When It is very difficultroutines to from lead day a to creative day. life There if is you much are to caught be in said for repetitive routine, as the ■ today’s market andrepeat you’ll in every find detail, but—as historical the analogies. saying goes—it History will rhyme. may not forward price behavior. similar to the current one. Focus on the essential, defining aspects of to all similar occasions in thehow past the when Nikkei there traded was such goingitself’’ an was forward. easing his His and way mantra see of that using ‘‘history past repeats market patterns as analogies for unclear one in its price and volumewith behavior. One closely hedge approached fund analogies manager Ihe in worked thought a the more Bank research-based of manner. Japan would If ease monetary policy, he’d go back programs came in and scoopedJanuary’s ’em trading up.’’ Sure and enough, there we’d was go a back to day that eerily resembled the recent Chicago was almost a savant ina that recent regard. trading He day and and Iat would suddenly the be he’d start discussing say, of ‘‘It the reminded year me when of we that broke day the overnight range and those buy on their trading experience.have Many unusually very strong episodic successful memories. traders One I’ve trader known I worked with in of problems, not the superficial facetsis of no solutions! way I had to toto pursue smile. consensus. There the cutting edge without alienating those wedded traders was less effective thanthe theirs because insights it of did Freudian not psychology. take Real into account psychologists got at the heart criticism from peer trading coaches. Iof was trading, focusing not on ‘‘surface’’ aspects thecoach, deeper in a emotional public roots forum, pronounced of that traders’ my approach problems. to working One with overload greatly declined once they felt aand greater degree mastery. of understanding track market activitytheir over the problems time withdeclined frames emotional significantly. relevant disruptions to As and their with undisciplined trading, the trading medical students, their emotional 262 BEST PROCESS #3: CULTIVATING CREATIVITY nprto o akigtoediycalne nnwadpoiigways? promising and new draw in we challenges daily will those where tackling however, for routines, inspiration of sequence mere a becomes life h nqeopruiisaon us. missing around routines, is opportunities our unique through that the sleepwalk will opportunity—and we thinking, finding fresh activity minded, is creative however, a trading, automating. fundamentally of even Some work and practice. routine essential making of worth The uniformity are trading assembly-line-like our an of elements justify to used are investigations. data worthwhile new and the questions as new reason, to that lead for market often databases illuminate me several to encourages of to effort subscribe an also variety in I writing data, patterns. a blog market read fresh The analyze music. to and to collect me to listen leading I entries, way new the blog at authors look fresh to stimulate me to forces about worthwhile exercise things something The written forward trading. have move or I psychology, cannot until post markets, I day one my hours. of write morning rest to early the with myself in always require almost I day, generation. lifestyle per a idea become my also has to blog contributor TraderFeed the of writing the creativity, on time vacation finding to basis. committed regular we’ve a year, vacations per booking times of of Instead couple discover. marriage—when basis. a to regular one’s a or things on work with experiences one’s world, fresh stale—in sharing new become entirely to where an difficult from in is two It us or place hour can an live even we traveling that that found area We’ve NYC shopping. and greater experiences, dining the offerings, cultural in activities, towns outdoor unique and offer neighborhoods to month a once music. creative and music creative new more in unique is exactly myself in markets immersing not about me I’m thinking is when touches my It and that find profound Japan. consistently emotionally from I listening ways. is band but I’m talented tune, instance, a upbeat for Gazette, an particularly The this, are by writing creativity Reila I’m I of to moment traders elements the the lifestyle and At the markets involved. all about Not creatively playfulness think with. the things, me work sustain new helps to not at that unlikely mind looking I’m I’m of people, directions, If new new routines. with investigating week-to-week or talking things, and new day-to-day reading my in creativity ageadIhv eu rdto ftkn ekn rp tleast at trips weekend taking of tradition a begun have I and Margie of elements embed to important it found have I years, the Over o fe,tecnet f‘dsiln’ n ‘rcs orientation’’ ‘‘process and ‘‘discipline’’ of concepts the often, Too stimulate to quotas using of idea the with earlier mentioned As forlfsye o’ upr open- support don’t lifestyles our If . www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 263 , makes . The final . Creativity results Group Genius . Team members are unusu- . For the jazz or comedy group, . Creative output is the result of an ongoing . The interactions within a team frame new . Many creative directions lead to dead-ends and Creativity in Groups great deal of trial and errorInnovation in emerges the from process of the creation. there bottom up is nothe leader inputs and and interactions no ofdictates from prefigured team managers members, or script. not experts. Results from hierarchical spring from interactions and adaptations of team members. Surprising questions emerge questions and challenges, andthat emerge those from shape their interactions. theInnovation is creative inefficient adaptations are rapidly abandoned, replaced by more fruitful leads. There is a Team members build on thefrom ideas the adaptations of that their team collaborators colleagues. members make to the inputsOnly of afterwards their doescreative the product meaning is not of pre-planned; each it emerges idea organically from become the clear Innovation emerges over time process; it’s not a single momentSuccessful of insight. teams practiceally deep receptive listening toincorporating the those inputs. inputs of others and thus can be flexible in In his book, Sawyer identifies seven features of creative collaboration: 7. 6. 5. 4. 3. 1. 2. They, in a real sense, surprise themselves with the output. others then pick up.groups What are not makes working improvisation toward aemerges distinctive defined through is endpoint. the Rather, that the spontaneous the creation interactions of the group members: (2007, p. 7). Sawyer’s paradigm for group innovationof is jazz the improvisation music groups and comedy troupes.becomes The an output from input each for member the others, stimulating new lines of direction that ‘‘Collaboration drives creativity,’’ Sawyer explains, ‘‘because innovation always emerges from a series of sparks—never a single flash of insight’’ and Orville Wright,designing who a developed flying a machine.discussion, highly Their with notes interactive solutions to reveal approach problems a emerging to high from their degree interactions. of mutual can generally benefit from collaboration. Sawyer,the in important point thatinteraction, innovations not are individual typically genius. the He result of offers group the example of Wilbur ■ Not all traders trade on their own, and even those working independently 264 BEST PROCESS #3: CULTIVATING CREATIVITY akrudi lblmcotaigepcal ae n currencies; and rates strong a trading—especially has macro who leader, global the team: in the background of members four are There team. to trades. be likely of that can out most he taken markets which and are in in whipsawed ones moves frequently are money these markets his low-VIX as Quiet, makes volatility, continuation. show Mel and from rule, volume to is good breakout a likely the display more As if is range. position—particularly the he protracted swing ride breakout, a a the to as trade on look the expands and ride volume bids quickly If will hit he profits. breakout, the or take after general shortly offers up with dries lift up volume If line will momentum. that he breakouts direction, sees candidates he market are When These volume. trades. in breakout uptick for an showing up stocks and of keep for ranges him screens couple in Mel help trading trader, a to momentum to A these developments. from subscribes market information with He uses plans. and trading services research his updating and trading, to not overhead, ideas share broad team. to a very assembled as only has work so group style, The own shared. own his typically his trades are and office the products, in own trader his Each trading. account, from break which traders, a other as with helpful interact is to The Mel commissions. enables and also arrangement support, that office office technology, ‘‘arcade’’ superior an of to out access trades him and gives account own his trades Mel day. traders. account individual helps of and rate suboptimal success is low the trading for to however, fact, approach of individual point In purely occurs. a success that which in context group the Wizards Market trades and identifies person one which opportunities.SuchaviewisreinforcedbysuchsourcesasJackSchwager’s in activity, individual an as trading e trshsdyb edn h es eiwn o akt are markets how reviewing news, the reading by day his starts Mel trading typical a through goes he as Mel, call we’ll trader a follow Let’s of think typically We traders. for perspective familiar a not is This o e’ olwadfeettae,Js,wotae spr fa of part as trades who Jose, trader, different a follow let’s Now rdn sbs lyda emsport. team a as played best is Trading eve ucs safnto fteidvda,missing individual, the of function a as success view We : e Takeaway Key ■■■ www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 265 We’ve seen that when people are immersed in meaningful activity, Note that both Mel and Jose are experienced traders with similar group flow is one in which team members spark ideas in one another. the members. Each cues thefeeds others off in the unexpected meaning and ways, momentum and created. the In group the trading team, the the immersion of a teaminformation. When in there is their group flow among interactions the improvisational andthe troupe, mutual story processing line of emerges organically from the spontaneous interactions of drawing on their strengths,both they experience creativity a flow and state productivity. that facilitates Sawyer refers to ‘‘group flow’’ as currencies. Mel maybut be he able cannot to processimprovisational all appreciate creativity of of all the the of integrated information team. in these real relationships, time to realize the for trades in commodity-related energybecomes and a raw prod materials for ETFs. the It group also leader to take a fresh look at commodity play off one another, arrivinginitially. at For combinations example, that when none the hadacross senior the envisioned trader commodities, Jose calls has learned out that an this can idea be that a valuable cuts trigger trader. This not only helps Jose developthe confidence in creation his ideas of but sparks jazz new musicians and ideas. improvisational comedians The described by trading Sawyer: They team performs a bit like the real time. Jose, on the otheracross hand, is markets, constantly as fed updated well information as real-time research studies from the junior the odds of a trend day to the downside across markets. trading styles. Mel operates solo and is limited in what he can follow in attempted bounce. He synthesizesand the calls inputs out from his the ownother traders idea: team follow selling members Jose’s stocks trade for carefully, a as break it will to help new them lows. handicap The put/call sentiment in the stock markethas has been been associated unusually bullish, with which near-termjust weakness. above Jose their sees stocks overnight hovering lows and sellers hitting bids shortly after an in European assets, led byparticular strength the in gold. periphery, The studies while from the the junior senior trader suggest trader that notes patterns from thosecommunicate studies. on As a regular an basis.his integrated Each or calls team, out her the patterns area that four of show focus. traders up in Thus, the leader may see considerable selling a senior trader who trades a widetrades range breakout of commodity patterns futures; Jose, in who runs stocks quantitative and studies for ETFs; the and other traders a and junior trades trader, the momentum who 266 BEST PROCESS #3: CULTIVATING CREATIVITY rbe-ovn n.Tersl fteflwi discovery. is flow the of result than The rather one. creativity, ‘‘problem-finding’’ problem-solving a a phrase, Sawyer’s use to is, It e w,btwl n rs nprto fpaigofteipt fother of inputs or the his off on playing improvise if can inspiration musicians. fresh musician skilled find jazz will remain A but Mel, thinking. own, like of her silo, ways a old in in flowing operating stuck and traders processing information, problem new of particular the instead a with behavior; becomes their This change unprocessed. markets widely; goes when of process data mode cannot of reactive trader a wealth the creates a focus, need flows narrower the news the and with With action up price operation. keep of and downs risk and manage ups to the on focus The broadens. yoe-iddes hntejz uiin lyofoeaohr it’s another, one as off play well musicians as jazz rule-following the by When aided open-mindedness. is by Creativity manner. research: freewheeling this a of in findings ideas out entitled toss book, that Linker’s high- groups more than produce ones ideas to creative quality promising, lead most the necessarily on not focus filter and to does ideas encouraged groups traditional it that suggest While ideas, studies Interestingly, group. more ones. the better to the to superior lead within is may ideas group a brainstorming of as out assemble later tossing then freewheeling and generate own individuals their having on as cases, ideas brainstorming many In of creativity. supportive of entirely enhancement been an not has research Sawyer that leads. crazy promising notes how most the matter them non- from possible—no pulling complete then as on sounding—and ideas without is many brainstorming openly, as of producing ideas focus censorship: contribute The others. to in from interaction encouraged criticism group creativity are to of members approach forms an which group is Brainstorming with brainstorming. associated is most technique the Perhaps ■ hntetae prtssl,temnstotnnros ahrthan rather narrows, often mindset the solo, operates trader the When raiiybed adaptivity. breeds Creativity osBantrigWork? Brainstorming Does icpie Dreaming Disciplined e Takeaway Key www.MyChart.ir atrsteesneo the of essence the captures , BEST PROCESS #3: CULTIVATING CREATIVITY 267 . Warm-up exercises can spark the activity . It’s important to write down the ideas generated . Keeping track of the number of ideas generated— . Brainstorming works best if a problem or topic is . Facilitators of the brainstorming process can step back . Moving around the room, mapping ideas, drawing . A deterrent to creativity is introducing criticism and perspectives at the very starttime of allotted. the session, makingGet the most physical of the diagrams, and actively usingcontribute different to materials the to free and illustrate spontaneous a flow of point ideas. and creativity of the group. Afor homework example, exercise can before provide the session, an opportunity for team members to share room. This allowsmemory ideas of participants. to beStretch your grouped, mental tapping muscles into the spatial in a visible form, such on paper that covers the walls of the meeting Build and jump when the group is in flowslows and down. jump Groups to develop a a different focus momentumcan when to be the their flow nurtured. creative flow that The space remembers creatively—visually, as well as out loud—there isthat a they greater likelihood will stimulate the freshNumber thinking your of ideas others. and even setting athe goal, group such that as encourages fertile 100 thought. in an hour—creates a goal for Sharpen the focus well articulated and specific.more When likely the to focus generate relevant is andPlayful clearer, useful rules groups ideas. are censorship too earlyticipants in are the encouraged idea to generation voice process. ideas When freely par- and express them Describing the brainstorming that is a ‘‘religion’’ at design firm IDEO, Sawyer notes several shortcomings of traditional brainstorming, 7. 6. 5. 4. 3. 2. Tom Kelley offers seven secrets for successful brainstorming: 1. Individual creativity thus feeds the creativity of the group. own—the automatic writing described earlierare is more a able good to example—they freely generateas a a wide range group of then ideas. Coming enables together group flow to begin with high-quality inputs. including the blocking of one’s own ideasthe when members ideas need to of process othersin a and limited the range tendency of of topics. When groups individuals to can cluster brainstorm their on their ideas not anything goes. There is disciplineharmony, even in as the there use are of experiments rhythm, within melody, those. and 268 BEST PROCESS #3: CULTIVATING CREATIVITY hyhv ou n nalte ielmt u prt reywithin freely operate but limit, time allotted an and focus a have They hs osrit.Bantrigwrsbcuei swr—n because fun. work—and is is it it because works Brainstorming constraints. those aae rddms ftelqi ar akt,btwloe Cara’s welcomed but markets, macro liquid the a of of most consisted portfolio traded The one manager trader/assistant. This execution team. an to different and opportunity a manager portfolio join the single and used firm Cara current him, her with at members stay team take to able was but floor, the on chatter of the plenty and was Cara there brainstorming. result, between no a fit As team. poor of the a style of point was rest cognitive there vantage picture intuitive), and the versus broader informality) (analytical From the versus fundamentals. grasping (conscientiousness very industry in personality learning and than was economic moving/trending she of of was interested that more point what seemed felt managers in The vantage Cara interactions. team the nightmare: the from than a From little trade was fundamentals. the it in and interested creativity, logic more her were colleagues. underlying went discuss members her frequently the to team recommendations from the Cara trade reactions as of for unread, thoughtful write-ups difficult her get it still, and Worse made informally detail This talk in to floor. research very preferring trading were schedules, team the meeting the on to of sticking members senior about The lax frustrated. become to her of positions members. the team with other correlated the not were ideas spread that generate trades could volatility-based Cara and was as as This markets, was nontrending ones. and in directional helpful products a very as the had trades across also spread curves She recommending industry supply. futures comfortable and excellent the demand Cara of had with knowledge touch and products. sound in background her energy kept research that and strong contacts metals a from precious came on emphasis particular collaboration. creative feeds and positive members team a the sustains among This chemistry dynamics. cognitive and personality of alignment elysoeacigpiti htscesu risom r dynamic. are brainstorms successful that is point overarching Kelley’s h emwsfinl n ecmdCr,bti inttk ogfor long take didn’t it but Cara, welcomed and friendly was team The with markets, commodity the covering team trading a joined Cara an is there when teams in best work traders that found generally I’ve hnteta edreetdt aeapsto taohrfimand firm another at position a take to elected leader team the When ■■■ www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 269 Key Takeaway —Teams that work well encourage intellectual —Successful teams reward individual initiative and , Linkner (2011) stresses seven rules of creative —Creative teams reward productivity with praise and —Creative teams encourage idea generation, even —Productive teams have fun and sustain a sense of —When teams get too large, they tend to operate by Failing forward when the ideas don’t work out. Thinking small consensus rather than by individual, creativepromote initiative. interaction Smaller and teams cross-fertilization of ideas. risk-taking and open communication of views. perks. Fostering autonomy freedom of inquiry. Encouraging courage Fueling passion mutual purpose. Celebrating ideas A team is only as strong as the culture it maintains. Culture matters. The values and work styles of teams shape their 6. 5. group to be unusually fertile in its generation of ideas and trades. between Europe and thegroup United because States. personality Brainstorming and workedmembers. cognitive for Being on style the the were same page, aligned with among similar work the styles, enabled the macroeconomic considerations. For example, shea pounded Brent-WTI the table spread on tradeoil that markets, not but only also fit expressed the relative fundamentals economic of those weakness/strength fundamental ideas. Cara lovedsoon hearing found herself about filtering her macro own fundamentals ideas based and on their fit with broader there was a compellingThe fundamental assistant thesis had backedtrack a by of when price solid market behavior. behavior background was in starting to technical line up analysis with and the group’s kept commodity focus as aanalytical diversifying himself influence. and Theresearch manager spent and was meeting considerable highly with time experts. He off never the entered positions desk unless reading 3. 4. 2. 1. interactions and canDisciplined either Dreaming facilitate orcultures: frustrate creative efforts. In 270 BEST PROCESS #3: CULTIVATING CREATIVITY 7. h raiainlclueo h emddntrwr uooyand autonomy reward not did team because the independence. wasted intellectual of were culture creativity offer organizational of the to by reserves up expressed Tremendous have already ended ideas manager. they meetings trade the the the did for surprisingly, sessions incentive Not cheerleading becoming What views? depended controversial bonuses. or meetings, annual new the for attended him who no on assistants, in senior research known very markets His a competing on belittling—of of where views. even views firm discussion dismissive—and his was trading and free made a terms He uncertain the at sessions. meetings and the on led ideas in manager to sat once open I not those. was manager portfolio materials raw process. the participate creative and to of energetic, group forward the an plenty to in looks value bring be team to opportunity the will an it’s on as there meetings, Everyone research views. that fresh multiple so generating bring meeting, for to the members valuable. team to and the pieces new of something each not with up encourages do come meetings This to has The information team view. the additional research-based until out the conclude seek refute to or team the support often, the either Very apart lead ones. pick will vulnerable discussion and to the points or encouraged specific valuable original has highlight are of that and Members piece and research portfolio trading. one the least for to at relevant implications meeting is each that research to published bring to expected is don’t they as meetings, the of tire productive. an soon seem generate teams In They the and meeting. anti-brainstorming. output, the novel are little to meetings brought such are sense, and perspectives important debate new little is few any views, There as already. by their voiced discussion, offering those preceded to turns not ones take similar is often Members and very often, preparation. agenda Very focused firm itself. of no in kind times, has idea good Many meeting meeting. the markets—a discuss team however, to the meet is generating will example are of teams interactions classic consideration their A little whether value. with and week maximum interacting to are week they and day how to day from operate otatsc etnswt h ahrnso aasta.Everyone team. Cara’s of gatherings the with meetings such Contrast culture to attention little too far pay teams that is experience My oeo hscudhpe nCr’ em fcus,i h lead the if course, of team, Cara’s in happen could this of None n oka akt nuiu ways. experiences unique and in backgrounds markets different at look have and members the if ideas of Maximizingdiversity Tasaemr ieyt n rs combinations fresh find to likely more are —Teams www.MyChart.ir They . BEST PROCESS #3: CULTIVATING CREATIVITY 271 Tapping into Group Creativity Even When You Are Independent At a different firm, I once interviewed for a position and spoke with One strategy I employ when I interview for coaching positions is to find via chat, tweets, and email. Rarely, however, are such interactions traders can link withof one the another greatest—and and least createindividual exploited—areas virtual traders. teams. of To be opportunity This sure, available is traders do to one communicate with one another group collaboration? It’s important tofor recognize traders that to it be isthe a not creativity part necessary of group of flow. a Thanks structured to the group online in medium, order independent to benefit from So how can traders best make use of brainstorming and the power of ■ and trading firms, I’veand found, open is dialogue are an threats authoritarian towill culture. those not in If innovate—and power, innovation that the signs organization a simply long and painful death warrant. no openness to such aa conversation. hemorrhaging Not of surprisingly, that talent firmdid in suffered not the take subsequent a year position and there. One I of was the happy best that predictors of I failing teams at the firm. In point oftraders fact, were the let morale go problem as was the as fact much about that how they were terminated, but there was quite a few new hires.asserting The that manager’s response this was was swift aearned and business and defensive, that where if people traders couldn’t were accept paid that, perhaps for they what didn’t belong they a number of traders andthere managers. was a I morale indicated problem to on a the senior trading manager floor due that to the departure of suggested to me thatand this the was forthright a sharing of culturein views—an assessing that organizational important valued culture. piece divergent of thinking information ways to design andThe implement manager strategies was that surprised effectively by utilize my capital. idea and quite interested in it. That and portfolio constructionrisk-adjusted might returns. be That, particularlya I useful trading indicated, in coach could enhancing to be collaborate an with opportunity risk for management staff in unique at his firm werecapital. too I suggested risk-averse that and thesomething not firm’s to taking risk management do full policies with advantage might that of have and their that coaching around trade structuring an occasion to voice a nonconsensus,coaching, out-of-the-box or view about markets. trading, For example, one manager told me that traders 272 BEST PROCESS #3: CULTIVATING CREATIVITY neatosaemr oiladepesv n esoine othe to the oriented Rather, less outputs. and creative expressive to and lead social to more as are way a interactions such in structured ewsntlsn oe,btas a o aigmc.Irlyda relayed I much. making not was also but money, losing months. of recently not couple friend past was trader the A He over ideas. money making trade not of about generation me our approached feed performance, can about it thinking as our just for aid colleagues to can turn will brainstorming she Creative or he advice. slump, a into gets trader a when provide times, helps This trading. their daytraders. to the context of picture that larger many action a of price with sets them of studies skill historical the conduct outside I are given turn, markets, In time to work. devote short can other on I my the stocks than leading bandwidth multiple is more track what takes and They which frames, market indexes. the who stock of of daytraders pulse action the differently with price for things are to feel at conversations good want very look favorite a who my I have but of traders, trade, Some I me. with as from speak frames similar trade time I everyone who and participants When markets bringing market successful time. of from perspectives same challenges hear groupness, the logistical of benefit at the the together of conversation with some Each is dealing colleagues. there that individual without so with one, chats next the of informs but series based a group be be not will multiple will conversations create the to times, diversity Many sufficient perspectives. with participants of compatibility ideas. expand trade on to to eye is respect seen, an with we’ve ‘‘keep groupthink as on create idea, not is The 18.’’ bandwidth, focus at the it the ‘‘buy in moving, on daytraders than on are when rather this’’ going that Even stocks markets. what’s in out out it calling figure express are to can much how we so know we’ll if There’s not world, markets. that, are and sense conversations events about underlying the ideas an that general as find trades generally specific about I observations other. the off the plays of manager each which a in it’s process freeform; back-and-forth and open-ended are most the conversations hit to these the research Invariably latest street. in the and markets observed various data of and and behavior reports the news to heard of releases significance the has from vary everyone will with Topics what in day. recent checking see simply to is other conversations each for locations. catalyst different initial from the trade Usually, who colleagues valued with teams virtual ideas. fresh of generation eea otoi aaesta aewre ihhv sustained have with worked have I that managers portfolio Several ovrain ihohrtaesaentawy bu akt.Many markets. about always not are traders other with Conversations and quality the balancing is groups virtual of creation the to Essential www.MyChart.ir BEST PROCESS #3: CULTIVATING CREATIVITY 273 Key Takeaway The Single Greatest Barrier to Creativity Traders can be independent without being isolated. One of the deterrents to creating virtual groups is the desire to accept that a givenas chart a pattern single is backtest. bullish Traders copy or each bearish other’s without trades, so fearful of much missing Traders assume that atime research to report verify is observations accurate, without and taking conclusions the for themselves. Traders As I mentioned earlier, what has strucktraders me is most in the years relative of working absence with of unique, independent, critical thought. ■ win and used thatposition to to go ensure to that a possible, he relatively always distant target. allowed some piece of his position sizing during theour life of conversation, trades—an but outcome thatshared that was with sprang him. wholly from He independent took of the anything idea I of giving had oneself an opportunity to to give myself a fair opportunityabout to his risk-taking win. and That ways led of to combiningto risk a sensitivity good opportunity. with conversation openness Ultimately, that led him to more flexibly manage his time when I went through somethingwas similar so when my tight risk that management upside of it my prevented ideas. I me was successful from at adequately not losing capitalizing money, but on I the was failing becoming interdependent. sport, even whenwith trading independence. Many independently, successful independent allows traders get creativity that way to by coexist risk is stayingtranspires locked in in markets. one’swithout One own sharing or head, can copying failing share specific to trades. observations process Treating and trading all think as that a aloud team another and brainstormdiscretionary ideas traders for don’t future possessand that system the kind worry development. of about Most intellectual giving property, away secrets is overdone. A far greater property. If you’ve developedno a one promising reasonable backtested willthe trading expect other system, you hand, to I’ve share known the system code traders with to them. share On signals with one keep one’s ideas to‘‘secret sauce.’’ oneself, To be lest sure, it too is many important to people protect genuine gain intellectual access to one’s 274 BEST PROCESS #3: CULTIVATING CREATIVITY hrcmnsi rutik nwihtemjrt ftaessaesimilar share these traders of all majority of the result which in The groupthink, on. is capitalize shortcomings might peers their that opportunities 2. all of half roughly 1. twofold: becomes that challenge fact trading the the money, embraces lose will than one trades larger Once are trades ones. winning trades. losing their their that of their fact half the about from on come money lose profits to Their traders for common very is It failure. of consequences safety the the to when known preferable is seems what familiarity with of stay result We the innovation. mistakes, of mistakes for shutdown punished make a or is to criticized failure, are is and value people not idea early if does The especially culture ‘‘Fail a and Pixar. If curve. quickly. at them learning mottos from learn the the Mistakes readily—and of bike. of one a part was ride fast’’ natural to fail a learning 108). are is p. process setbacks (2014, creative and asserts the he to new,’’ analogy something ‘‘theHis doing are Mistakes of failure. result of embracing inevitable the is culture that of cornerstone promise. tremendous hold that few combinations the many on so focus generate That, you You flat. eventually, creativity: that, falling of ideas point You your the short. of is fall however, majority to the destined are without which brainstorm of cannot many of won’t ideas, fear they many the faces, to requires of Creativity their down generation directions. original on boils pursue flat or it ideas falling unique day, of out the toss afraid of are end people the When At failure. business? doing of ways trades. and views dCtuldsrbstecluea ia nhsbook, his in Pixar at culture the describes Catmull Ed traditional and ideas conventional to stick traders many so do Why h hlspyo aleryadfi ati atclryatfrtraders. for apt particularly is fast fail and early fail of philosophy The oto ftengtv alo h & distribution. trades rigorous P&L losing to the from Learn of down tail boils negative often the the one of between control marginal difference the The a and the one. is trader is winning it profitable situation a failure; losing finding a a toward pain of step reflect a first out not reflect Getting does simply success. trade not management a money should of it out wrong; Stopping is threshold. idea trade your when wrong you’re when recognize Promptly a aayecetvt hni rd e aso thinking. of ways new prods Losing it lost. when market; not creativity is catalyze all the can learning, for practices. stimuli trading about become your trades reevaluate assumptions losing to When you your lead will loss questioning the sometimes for provide will stimulus loss the Sometimes a important. something you teach can I o’ewogi rd,yu osgenerally loss your trade, a in wrong you’re —If Aso-oslvlsol reflect should level stop-loss —A www.MyChart.ir raiiy Inc Creativity, .A BEST PROCESS #3: CULTIVATING CREATIVITY 275 Key Takeaway In crowded, efficient markets, creativity is the new , however, starts with the premise that one never . We must maximize strengths, not just reduce vulnerabilities, It All Fits Together Creativity is the new discipline. Traditional trading psychology has begun with the premise that, Have your losing trades crippled your trading, or have they made you we do best. Ouremotional performance well-being: will Positive be emotional best experienceadaptation both if and fuels we broadens creative and experience builds consistent our strengths. the purpose of exposition,best in adapt reality, to they changing are marketsmost closely likely by intertwined. to playing find We to creative market our adaptations strengths, if we’re and grounded we in are what Chapter 2 stressed the necessity ofchapter leveraging has our focused on strengths. creativity The and current whyin it is crucial novel to approach ways. markets While I’ve found it useful to separate these topics for ■ Chapter 1 emphasized the importance of adapting to changing markets. day; it is doingchapter the will right take things—the ainto look best robust at adaptive things—each best processes. day. practices and The how last we can weave those to stay ahead of the pack.practices. That means We that must it is transform not‘‘Process’’ those enough is to best more possess practices best than into simply best doing processes. the same thing consistently each to dynamic markets. Discipline and self-controlsuccess, are but necessary for not trading sufficient. discipline Trading Psychology 2.0 possesses a single,always unvarying changing; successful edge traders, like in successful markets. entrepreneurs, adapt Opportunity sets are sustain the consistencyand of self-control your are trading. the essential That building means blocks that of discipline trading success. once you find your edge in markets, all you then need to do is losing—and use losing to fuel creative adaptation. a better trader? Do youironies dread loss is or that embrace it? we One only of trading’s become great winners once we come to terms with www.MyChart.ir CHAPTER 4

Best Process #4: Developing and Integrating Best Practices

277

If one does not know to which port one is sailing, no wind is favorable. Lucius Annaeus Seneca

■ What Are Best Practices?

Best practices are the cornerstone of quality improvement. We cannot improve the quality of our efforts if we do not keep score and differentiate between what is successful and what is not. That means that every effective practitioner is to some degree a researcher, tracking outcomes and using those outcomes to guide future efforts. Best practices, in that context, are a crystallization of deliberate practice. Let’s imagine a situation in which a chain of restaurants tracks customer comments and satisfaction levels. Over time, certain units produce reliably better ratings than other ones. Several restaurants in the chain achieve absolutely outstanding reviews; a few also receive 278 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES eie ovstec ftestsa utmradosrefirst-hand observe and customer a as sites the company, the of for each control visit quality of to head decides the Jeff, ones. poor startlingly n 5 evc tteedo h el evst h 0rsarnsin restaurants found: lowest 10 he the what the with of 10 visits summary the a He and is meal. ratings Here satisfaction ratings. the highest of the with end preparation; chain the He food the at the ratings. of service quality the (5) (4) meal; and in initial the (2) during variability ambiance; service (1) the (3) categories: five service; for into ratings own account his down might breaks that factors the ■ e ostain nwihtbe ol estigfrawiebefore situations while created a gaps for communication sitting same be The turn could staff off. tables to floor cleaned which slower and being in staff were situations diners wait units to between once led popular communication over Poor less turned over. The rapidly tables meals. were tables their and finished clean, were floors very bussed, quickly kept were were Tables restaurants tidy. well-rated and The clean rated. unusually kept poorly were restaurants that popular ones the the between and ambiance in differences were there meaningful Still, diners. for allotted space and schemes, color materials, Ambiance ftesu ftedyadtakdfrvstn.Itrsigy o only not Interestingly, visiting. for thanked and sample day small they the a of given when soup were the customers diners of all a down, greeting Within sitting nametag. poster of prominent minutes a a few wore member member on staff each each was of and picture staff entered, A restaurant diners. of the children the little of restaurant, crayon the and to rated book give coloring highly to small order sets most personalization to himself the little upon it At was took manager experience. there dining and the selection, of music the thought Little into circulating. and went them greeting time diners little with spent up keeping they busy that so were At managers lively. units, became successful which led less of the This some OK. customers, circulated was the everything with managers sure conversations to make restaurant to selection The regularly tables the up-tempo. the and among more a restaurants was at popular played music less Music the of welcomed. at Diners and than location. door volume visible the higher highly at a heartily in greeted specials were day’s the entry placed the and near way dishes restaurants the displayed sound popular for restaurants account successful The less to The seemed differences. them: The factors Several about energetic. unexciting. and buzz more dull seemed a and have higher quickly. up to was cleaned level seemed not were units (particularly days) popular customers snowy by The or created rainy on messes entering other ones and spills which in B ein h etuat r adotsmlrywt similar with similarly out laid are restaurants the design, —By www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 279 —At the restaurants with the lowest satisfaction —The observations with respect to ambiance highlighted pointing out thatthe he top wanted restaurants, the the staff meat responded immediately to to be his concern, more well-done. At less consistent at the lesser-ratedask units. wait Jeff staff specifically about made the sure preparation to of one of the dishes he ordered, also stopped by during theand meals water to were ask promptly howwere refilled everything asked was. at if Coffee the they top wanted restaurants bread and baskets diners refilled. This service was tied up with takingrestaurants, orders wait from staff other regularlyreceived diners. checked their At with dishes the diners to highest-rated after make they sure had everything was OK. Managers Service during the meal ratings, wait staff seemed togood operate news.’’ on They the did principle not of stop ‘‘no news by is the tables frequently, seemingly Initial service were the satisfaction ratings foraverage this tips were restaurant significant through higher the as roof, well. but The bottom restaurants were not similarlystaff proactive. had At to several, be wait asked for water. At the bottom restaurants, waitotherwise actively staff engage simply diners. took The ordersthat very and top diners did restaurants got made not a sure basket of rolls and water very shortly after seating. units. Wait staff provided a very friendly greetingand at the made top special restaurants effortsrecommendations to explain if the customers daily seemed specials uncertain and of even what make to order. greet customers and accommodate them. Even afterservice the differences seating, initial stood out between the highly rated and low rated one case, where a wait wasapologized longer and than usual, said the he managerAt personally would the provide less the party well-rated with restaurants, free there desserts. was little extra effort to make them feeltable, welcomed. the greeter Even and when managermenus made to diners sure look had they were at to given so copies wait they of for wouldn’t a feel their time was wasted. In be taken, andthe food lower to were their bemade satisfaction served. a ratings. The special The successful attempt more restaurants to diners greet had customers to in wait, a friendly way and significantly quicker to seat customersthe and single take factor their most orders.found, Indeed, responsible was for the the differences time in it ratings, took Jeff for customers to be seated, orders to the importance of initialcustomers service. more The successful quickly restaurants than greeted the unpopular ones, and they were ■ ■ 280 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ■ ■ ahhnso hnegoe fe oigfo odt od Jeff execution. units of food. bottom consistency and to and top detail food the to from attention between was difference moving major after consistently a gloves to that concluded failed change staff or and hands washer; wash three-sink the adequately or with air-dried not sanitized were the restaurants, plates above and inches bottom-rated utensils six shelves; than the on rather ground floor of backroom the half on stored over was food At hands gloves. washing changing frequently by and food contaminating adequate plates took avoid staff and to prep precautions utensils food and properly; sanitized; stored and washed was properly were food restaurants, At top staffed. could and the organized he all well that stations with so kitchens, had kitchen, organized invariably better restaurants the top through The first-hand. feedback. him preparation food offering of escort witness and point to a restaurant them made each asked Jeff of He meal, managers the the After with flavor. visiting with better out and coming steamed, crunch properly some better-rated more the were restaurants At the mushy. units, at out quality overcooked coming prep restaurants, invariably lowest-rated food were the to These exception vegetables. notable than cooked The rather smaller concerned specs. notably dressing by was meat for cheese of called cut blue a than with case, another served In requested. was as In at ranch, salad prep. instances food a the several case, in In made one places. were lesser-rated mistakes restaurants, the lesser-rated tended at the it than units, best-rated warmer the exception. be at notable to quicker served one was with food restaurants, the the Because across acceptable be to evc etls esnlt ef h tf emdls omte to committed less seemed staff diner. the the of Jeff; satisfaction to fulfilled the The personal They manager. the staff. less from the felt visits follow-up of service no attention were there the but catch request, it to his and—in restaurants, Jeff apologized bottom-rated for also the longer who At took manager, dessert. the free a by followed table case—offered always one the was to This visit rectifying. a to by steps taking and apologizing ult ffo preparation food of Quality hi el.A h oe-ae nt,tesriewssoe and slower was finished service had the diners units, the lower-rated if the payment bring menu At collect to dessert quick meals. and a also their guests see were to to They wanted check drinks. additional they best the wanted if the they diners at if staff ask and serving to The quick This restaurants. was finished. top had units they the after at long happened tables their rarely at sitting left meal often the were of end the at Service I eea,Jf on odpreparation food found Jeff general, —In A h otmrtdrsarns diners restaurants, bottom-rated the —At www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 281 Key Takeaway . Wherever possible, the best practices were best practices . cessful performance from average and poor performance. Best practices are observable, measurable actions that differentiate suc- What Jeff realized is that the difference between excellence and Based on his observations, Jeff broke down each of the five areas that always someone present toleft. thank This was the much diners spottier at for the lower-rated coming units. when they had less time to acknowledgeseemed staff harried for much good of performance the and time. indeed At the best restaurants, there was on the kitchen tothe lesser-rated ensure restaurants, that managers were orders busykept putting were a out processed fires less and promptly. consistent At eye on the dining floor and the kitchen. They he found out thateye the on managers the at diningprovided the prompt floor friendly top service. and units The acknowledged managers invariably also serving kept kept a staff an close when eye they more inconsistent. On several occasions,to Jeff flag noticed down that wait guests staffhighly had to rated get restaurants. their When checks. Jeff This mentioned did this to not the occur managers, at the It was the execution of eachfrom phase the of rest the dining process that differentiated the best They were laid outStill, similarly some consistently with performed similar well and furnishings some and consistently fell decorations. short. mediocrity was not justto one a thing, very but good arestaurants dining host served experience of the or details one same that that added food failed up and to worked stand out. from The the same menu. specific actions thatdeemed to distinguished be the best restaurants. These were had guided his note taking—ambiance,during service the before the meal, meal, food service preparation, and service after the meal—into food being served was abest consistent, practices appropriate temperature. across All the of five the areas were collated and assembled into a for the kitchen operationrather was than using air cloths and drying using all thermometers regularly dishes, to tools, ensure that and utensils greeting customers within a minute of theirfor arrival. Another wait best staff practice wasthem introducing menus oneself, within three serving minutes of diners their seating. water, Yet other and best practices giving captured in detail and quantified. For example, one best practice was 282 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rn nalclnes h dawst tnadz h ee fquality of level the standardize to was were idea restaurants The their cylinders. that all ensure on to use firing could managers that checklist ntebs rcie oepaieteriprac n nuethat training ensure This service. and excellent importance providing their of basics emphasize the to knew practices everyone programs the best training of shift the managers structured flexibly the suggested in to by also staff promising managers liberal deemed The allowed more were restaurants. that a other process each bonuses; new with and hours a raises and of policy; schedule vacation high-quality to revised attractive A more restaurant ways candidates. the brainstorm at to This employment headquarters to making employees. corporate region of at good to discussions for region further competitive from to was vary led restaurant to each had resources salaries that human to Staff ensure the business. on suggested needed the This was of practice quality. side best then not to additional could did an attend managers that that and Jeff the staff staff units, operations When popular a motivated. oversee more particularly properly by the not created at was better fires that performed and many well out rules put follow to had managers and recruit staff. to better able were retain He high-performing restaurants the better units. at the well-rated issues simply, Quite disciplinary the restaurants. fewer at were there stability that saw more bottom also much and top found the candidates. at he quality rate hire turnover restaurants, staff to the easier examined was Jeff it when was so Indeed, manufacturing there and units, local labor top-performing for at the competition offered At less outlets. jobs retail with upscale and well restaurant plants compete the at not tips and did wages simply Hourly people. that jobs young out many for found where available areas he were in further, the located for probed were concern Jeff restaurants major worst-performing When how the a units. not about top was the This extensively at help. talked managers quality hire units to him. was worst-rated surprised it the however, difficult learned, of Jeff lowest-performing managers What the to to The improve. of wanted openness to managers restaurants of wanted best the degree ones the and high of performance a managers their found the sustain He as units. process, review bottom the and top managers the the the took checklist—with of thus tentative He findings—and observe. his not sharing did of he step that practices best to related factors of level consistent a be business. would the there throughout that satisfaction so customer units, top-rated the at found efto nte tp oee.H elzdta hr ih be might there that realized He however. step, another took Jeff udny hnsmd es oJf.A h noua restaurants, unpopular the At Jeff. to sense made things Suddenly, www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 283 . The managers of the top the best practices came together to form it is important not only to identify best and worst . The goal was greater than simply getting staff to perform Linking Best Practices into Best Processes Most businesses consist of actions that are coordinated as processes. What Jeff learned is that sanitation; food storage and safety; proper preparation of food; and and then bringing thekitchen, food to there the were table several when it processes, was including ready. proper Within the cleaning and for welcoming guests and quickly seatingbringing them, getting them them menus, a and breadfor basket taking and water. diners’ There orders, was communicating a those separate orders process to the kitchen, These processes areproducts then or linked services. In in the such case of a the way restaurants, there as was to a process create superior best processes individual actions. It was to coordinateto those create actions consistent, in memorable such dining a experiences. manner as storage of food, dryingthree-sink washing of unit dishes were and partIn of utensils, the a and organization high-quality of correct food the safety use training, process. of the of greeting customers, seating themand promptly, water and was getting all them part menus of a high-quality welcoming process. The proper all employees topractices the were idea not of taughtcoordinated high-quality set in of customer activities isolation, that service. deliver but value. The For rather example, best were the practices conveyed as a Notice also that it wasn’tbest enough practices to simply and give hope eachjust that restaurant the a they starting list point followed of for those. a Instead, structured the training program list that was introduced ■ able to go beyondpertaining his to observations hiring and and retaining help talent. create fresh best practices never have been able to pursueBy constructive asking human ‘‘why’’ questions resources and initiatives. soliciting multiple perspectives, Jeff was effectively. Details fell by thedeal with wayside problems simply on a because regularJeff managers basis. had Without would consulting to never the managers, have learned about the staffing challenges and would practices, but also to understandand why bottom they restaurants were are all motivated, there but themore latter personnel group dealt problems with and thus could not manage their restaurants as program went through several evolutionspractice and in itself. eventually became a best 284 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES drse otesrigadhnln tf h epruetepackages the route help who staff handling and and sealed sorting properly is the it business, to ensures and the addressed package be best in the takes involved can that who clerk person process ensure the Each from the to track corrected. in process to and mistakes identified ability delivery that quickly the the followed—and is of being business are step the practices each of at success the package time to of each Key amount short sent. a being within arrive of can processes packages delivery expedited route standardized that processes and ensure routes handling efficient and most sorting the to Sophisticated packages FedEx. result or UPS the at cases, as the for customers. employed dissatisfied and steel construction poorer of a quality be would the in there the should variation or oversee following much, be too in staff vary uniformity temperatures Line Should is practices. there best stamping. time these that of and ensure amount to cutting the processes and before manufacturing metal; heating maintenance the in the for temperature steel; spent heating unblemished ideal of best an selection considered of be to the can as bottoms that screens. such actions and and separate practices, keyboards into tops divided the the is accommodate cases. process to in Each of and holes hinges bottoms metal and stamp the tops would place the process into another process metal cut One Still process Another heated, computers. them. the cut laptop and mold them, for would heat steel, cases of sheets metal raw take the might manufacturing makes a that Consider performance. plant of levels high standardizing and customers for temperatures. comingtoeat.Qualitycontrolisallaboutminimizingunwantedvariability experiences different greeting different wildly radically at want doesn’t tables also to It delivered soup want not does and efficiency purpose). that regularity. desired ensure with achieved helps its are practices goals (achieving effectiveness best effectively into and processes manner) Dividing efficiently timely both executed a be and process (in control each Quality that require ones. performance unacceptable peak and practices best reflect These uiescnrnvr fcetyb iiigpromneit processes into performance dividing by efficiently very complicated sophisticated, run very can A business off). packages dropped leave if guidelines delivery; areas for practice protected sending dry, best in before of x-ray set by and a packages up all and (screen example) pick X for (handling efficiently expectations minute, who performance per of packages staff set delivery a follows the packages, deliver to destinations their to rcs eet oriae cin n oe ihals of list each a that with comes Note and actions temperature. coordinated and reflects process freshness food of maintenance proper nmn ed,teeeyo ult svraiiy restaurant A variability. is quality of enemy the fields, many In ra xml fapoesdie uiesi akg eiey such delivery, package is business process-driven a of example great A www.MyChart.ir o n don’ts and dos . BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 285 Key Takeaway The greatest business successes are ones that have been process driven. When a business is a knowledge business and not a manufacturing one, With the development of the Cochrane Collaboration and a centralized Despite the differences between knowledge and service businesses can be quite different from those taken another day. project to another. Trading, inreading that sense, and is trading a knowledgemanufacturing of business: widgets. The markets As is markets more change, the like actions consulting taken and one less day like best practice. A consulting firmclients; will there offer may different services be to very different little overlap in service delivery from one level of standardization thator one at might a experience delivery onguests facility an will is assembly have different not line needs possible and at, individualization of say, service a is hotel, itself a where different a process orientation becomes more challenging.such A knowledge as business, aservices, medical where office customer needs or can hospital, be different delivers at different a times. range The of coordinated and then dividing processeswith regularity. into best practices that can be performed to the aftercare nursingchecklist procedures. Just to as ensure a that pilot a consults plane a is pre-flight safe to fly—a nice example of best hospital for a procedureinformed and protocols. have These govern your everything treatmentto from guided the surgical by preparation dosing research- of anesthesia to the sterilization of the operating room these findings werethe assembled backbone into of best best processes. practices Now, and it these is formed not unusual to come to a database of outcome research, physicians could—for the firstup time—look world-class findings on any particular disease, treatment,and or identify procedure more and less successful alternatives to care. In many cases, incorporated large amounts ofefforts to subjectivity. integrate research There knowledge and were findings into no clinical practice. systematic significant differences in recovery rateshospital from setting various to diseases anotherAlthough from and one from physicians one received surgical similar provider to training, another. their decision making control has become a major themeexample across these is enterprises. An the excellent deliverythe individual of judgment healthcare, of which trained for physicians. Outcome years research was found guided by and manufacturing ones, the improvement of quality through process 286 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rcie eddit rcs—hscasmk s fpooosas care. protocols quality receives of patient use each that make ensuring checklists, process—physicians their a into melded practices 2. challenges particular 1. Three processes. best in out: linkage stand their and tices rigorous by services identified practices how best studies. but periods. the outcome in course, waiting grounded of was long deployed individualized, of were associated was because problems counseling services the actual denied utilization The eliminated high being also and students but students with counseling, the the only from for not ratings resulted rates satisfaction This high issues. and particular very effective their most in for the help to of students forms routed that efficient process turned triage counseling and a literature student into research them a the in directed identified I practices best when took of service process combination psychiatric intake a My from with services. treated benefit optimally these be can might from who who and benefit therapies; medications; can who longer-term of and understanding Outcome shorter our services. and shaped psychotherapy subjective greatly seemingly of has as research delivery field the a in as hold knowledge-based taken even has practices best smninderiri h ok h nhrn fpoescnrlin control process of anchoring the book, the in earlier mentioned As rdn fespriua hlegst h dnicto fbs prac- best of identification the to challenges particular offers Trading ako adrsac data research hard of and Lack performer both The be markets. to researcher. in challenging performance engaged it seeks is makes who who differentiation trader trader of the the lack also Indeed, is trader. quality the improve no to study is there to because Jeff easy, of not successful is and equivalent during This skilled trader time. markets less of each periods study the and unsuccessful to and skilled in informative most comparing wildly is of it vary traders, Instead can trade. hand, they other meals. strategies same the the serving restaurants on and The preparing Traders, simple business, traders. same as the unsuccessful not in is and engaged it successful trading, comparing In ones. as low-rated and restaurants rated differentiation of Lack auatrn ln,acano etuat,o optlsystem, hospital a or restaurants, of chain a service, delivery plant, package manufacturing a a is it Whether etc. position practices; particular management to attributable profitability particular the to practices; attributable research profitability traders profitability the the trades; most know of not types While would particular of most practices. losses, and best profits on identify data have to them enable would I h etuateape efcudvsthigh- visit could Jeff example, restaurant the —In Taesrrl olc ucm aathat data outcome collect rarely —Traders www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 287 —Jeff segmented his data —Many traders are attracted to their work . As we saw in the case of the restaurants, we cannot know Steps Toward Becoming a Process-Driven Trader They believed in theconstraints efficacy of of research-grounded their practice. work and rebelled against the service delivery. Experienced professionalshow felt to that deliver services; they they didn’t knew wantresearch best practice and dictated protocols. by external When I first developedthe the student triage counseling protocols service, at I facedwanted pushback every from therapists client who to receive long-term therapy or medications. Resistance to constraints precisely because they have theand opportunity not to work face forThey the themselves resist constraints the notion of ofseem traditional best to practices business and limit environments. process their control,among freedom as of healthcare these choice. professionals A when similar dynamic best appeared practices first came to what works well andfrom the what moment doesn’t diners if entertheir the we check, door pay, don’t to and the track leave. momentessentially performance Without they such in receive outcome the data, traders darkcountry are physicians about were many their years successes ago. and failures, much as quality control beginsprocess with data collection at each phase of the business Breaking the businesscollection down into into fiveservice during processes buckets: the meal; ambiance; food preparation; service and service after before the meal. the meal; Despite these hurdles, we increasingly see professional traders take a QuantEdge, finds that theseapproach to have money management. taken They win a becauseconsistent they data-driven, are in simply their more evidence-based ability to identify and exploit trading edges. in quantitative finance, where large portionssignal of generation trading to processes—from trade execution—are automated. Asuccessful perusal of funds, highly from Bridgewater, AQR, Millennium Partners, and process-oriented view toward trading. Nowhere is this more evident than 3. how it pertains to trading: 1. We can use the exampletraders of need Jeff to and take to the ground restaurants theirinto to work in identify robust, best steps practices successful that that are processes. woven Let’s take each step in turn and see ■ 288 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 2. r on tdrn ahprino h rdn rcs ota we impact that might so this we how process how and outcomes. trading trading process and the our our of doing in variability portion are the each we understand during what it noting doing be are Much would oneself. effective worst managing and more and positions, managing best risk trades, the expressing or as ideas, ideas all formulating quickly end-of-day ideas, capture researching can trader’s in to involved they data practices unlikely A that their is wrong. so journal to went end-of-week processing, back problems of go where can phase identify they each system, service at delivery its collection package in a when problems Similarly, observes made. changes be regarding end- to detail simple needed meaningful A that lost juncture. process, have each would customer-service at review the practices of-meal best of and step problems every noting purposes restaurants, at control process the observations for with inadequate made wholly example As is foregoing on. journal end-of-day so the an trading and from a set, see of goals can end made, of we the mistakes act at documenting an journal week, it trading or consider day a traders keep Most to oriented. discipline process supreme the not and is trader who quality-focused one the between difference processes the see the clearly throughout observations Gathering physically. and emotionally, performance cognitively, peak condition, in themselves self-management, keep (e) to in and engage of traders risk; activities of the taking management the and including losses provide and trades, that profits managing portfolios (d) into superior risk/reward; trades with superior the trades as assembling ideas and those risk/reward expressing (c) ideas; research five and trading observations into into synthesizing trading (b) gathering research; down and and break data information market-related typically and units. markets I analyzing unsuccessful traders, (a) buckets: vs. with successful work and in my into area In happening each down was essential in restaurants business what experience observe compare the then dining could broken the he categories, of Having these element satisfaction. an customer was to these of Each vr rdn rcs ed t w journal. own its needs process trading Every e Takeaway Key www.MyChart.ir Hr,w a most can we —Here, .Jeff such BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 289 . I thus spent The profitable trades resulted —Obviously, we are interested in —Over time, in each facet of the trading process, and macro perspectivesbest with trades captured more analyses technicalof that considerations. spanned market weeks The action; andbig the even picture months unprofitable and resulted tradesalso in found did forest that not being time lost emphasize spent for formulating the trees. sound My entry reviews execution was formulating the trade idea andidea. the When profitability of trades the werethey trading were of formulated much less that more likely to informally benot successful. and only quickly, from moreconsiderable analysis, time but on different forms the of winning analysis ideas linking intermarket views actions jump out thatThese become are candidate associated best with andpractices, worst trading because practices. wins until I we say andto isolate ‘‘candidate’’ losses. them maximize and and make minimizethese conscious them, efforts truly we are don’t effective knowI ingredients for observed of sure a success. whether strong In relationship my between own the trading, amount of time spent These clusters can beown, important, personal as processes. they A alert trader,process for us of example, discipline to may that patterns enhances have both in aof trading our general life. and That non-trading areas would have meaningfulUsing implications the for quality correlations control. and of worst trading practices behaviors and outcomes to identify best with favorable andwe unfavorable will trading see correlations returns. amonglow Over the scores trading time, in behaviors. also, Forexercise, self-management or instance, diet; (failing presence of to familyassociated or sustain with relationship low adequate conflicts) scores may sleep, be in idea generation and risk management. profitability, but may enhance profitabilitytrades or by preventing keeping us from us overtrading. out Asin we’ve of the seen, bad profitability short runhence, can the result from correlation random ofneeds runs trading to of behaviors be good with over orthat trading bad a we luck; outcomes considerable will number see of patterns trades. linking It particular is trading-related over actions time correlating our actions as tradersanalyses with our will profitability, inevitably buttrading detailed behaviors go could lead further to lower thanrisk-adjusted absolute profitability returns, this. but higher as For weunit example, take of good more risk money taken. out Certain of behaviors markets may per not show up directly in Correlating trading behaviorsthe at outcomes each of phase trading of decisions the trading process with 4. 3. 290 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 6. 5. htw a o ntal bevd n rdrIwre ihwas with worked I trader One observed. initially not practices of worst had and implementation best we our to us that in alert also variability may it to processes; Variability and us practices restaurants. as alert rated markets may poorly in profitability and periods in well-rated unprofitable the and treated profitable Jeff treat to processes and want practices of we function a process. as decision-making profitability active track to an Continue than habit have automatic criteria an best of the become more has to time, execution good according Over that repetition through trades list. familiar so the into become following get as by to criteria well simply me execution as practices enables entry efficiently which my it checklist, natural captured complete a a to I me become Similarly, allows effectively. has which as and day, structured the very of part is process research internalize. we that My habits/routines my into actions out effortful turn processes writing us into by helps practices thinking of ‘‘chunking’’ and my This interest; update spontaneously. to thoughts greatest information of this measures use spreadsheets breadth then and update intermarket sources; read the I high-quality for day each selected, where process, from research material the of structure variety to me a trading. own led to my That in attention profitability the with associated and was trade measures amount breadth the the researching that spent above practices time mentioned many I of turn process. can repeatable and we single, sequence them, a a joins into in that them process work placing a By creating routines. reliable into coordinated, them into turn practices best the processes assembling best trading, more of and facet measures them. each of breadth Within light the in across ideas look trade structure harder observation carefully a This take patterns. to these occurred me to led attention trades without worst traded up; I lined when measures patterns breadth when resulted different trades among best my instance, informal For from keeping. emerged patterns journal have practice would never best that Some ones unexpected and risk/reward. were buy enhanced to sell weakness to for bounces Waiting trading: profitable with associated otne hc okdwl nsm ieprosadntwl in would well not trends and periods that time assuming some his in was losing well of he worked and track which winning that continue, kept the discovered We across and actions trading. periods trading his meaningful and in noticed process yet periods thought and losing disciplined and and winning driven process highly Oc o aecniaebs rcie,yuwn to want you practices, best candidate have you —Once www.MyChart.ir —Here BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 291 .Itwouldbeeasy . Much of what contributes to success How Many Trading Firms AreProcess-Driven? Truly be more mindful of the possibilitytracking of of trend practices, reversal. processes, It and isthe outcomes the goals that ongoing described led earlier us in tostay achieve this grounded book: in Adapt our strengths; totrading and changing markets. sustain markets; creativity in viewing and others. This led usevaluation and to a identify modification of best his practices review processes associated so that with he trend could What these steps mean is the successful trader will spend as much time studying At large money management firms, we can observe a similar differ- his or her trading asin studying trading markets is what occurs outside of trading hours. analysts in the research process and frequent meetings ensured that industry statistics and news; tracking marketlong performance; and and updating short recommendations. Senior strategists supervised junior a number of researchEach analysts research covering team followed various itscompanies equity own being market processes, followed; sectors. including meeting modeling with the management; keeping up with entiation of functions andyears management. ago One featured firm a that single, I highly worked experienced with portfolio manager and ensures that his orbut her it area is operates thehigh-quality by performance. coordination best of practices the and various processes, areas that leads to seamless, housekeeping at a hotel is assignedoperations to of a a dedicated medical manager; practice and fall the to office a business manager. Each manager and allied healthcareexaminations, staff, and chart checkoutmanaged reviews, processes. separately: interviews Each The restaurant facet with kitchen of patients, is the managed by business a is chef; the could readily diagram theprepared rooms processes and by served during which their stays.physicians guests The offices have are of their primary checked care check-in into processes, initial assessments by nursing that shows, in detail, how inputsfor are transformed a into corporate outputs headcustomers through like the Jeff dining process. to Similarly, any create good hotel a manager chart that tracks the flow of A hallmark of a process-driven enterprise is that you can easily create a flowchart ■ 292 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES otoi aae n h aiu eirsrtgsscnee updated conveyed strategists the senior between various meetings the Regular and teams. manager portfolio within shared was information ol ou ntefimsivsmnswtotbigudl itatdby distracted needs. unduly business being without daily investments firm’s manager the on portfolio focus the and could that areas ensured functional management into separate fund them a assigning of activities various performance the employee Dividing and review. the hiring, payrolls, individuals benefits, handled employee high-net-worth staff of to resource administration human fund A the investors. rela- institutional market and investor helped an who by staff, staff coordinated tions exposures. were management risk ever-changing investors risk its with and a portfolio Communications while overall the shares, on eye of an kept borrowing transactions all the of records managed kept and staff when divided accounting quickly and team filled office This be back shorts. A could needed. orders and that longs so supply team’s sectors on the across color responsibilities of provided each and for stocks and demand markets execution and on of eye team an separate kept A traders decisions. trading guided and information n rn eoeteedo h w-ercnrc.Teehrn failures hiring These contract. new two-year action the of disciplinary of portion end in small the resulting before A firing poorly, stint. and spectacularly two-year hires out new first worked of their half hires Fully beyond been. last have could not it did as effective as not promising was process ones. many best at the on look pounce and to time fund given organizational any the This at invite candidates allowing consideration. to efficient, serious whom was and decide structure detailed to more interviews for the back of review write-ups to recruitment regularly and met the managers documents recruitment by should of who coordinated group the deciding were and managers manager and interviews of The reference, team interviewed. of a be letters and with documents resumes, well-organized, record collecting was track manager process set hiring recruitment a the the a followed at instance, and unit For smoothly management routines. of relatively Each operated practices. firm best aforementioned in grounded and driven en elognzd oee,i eydfeetfo en process- being from different very is however, well-organized, Being eprlo,hwvr ugse htwieefiin,tehiring the efficient, while that suggested however, look, deeper A olwn otn osntmk o process-driven. you make not does routine a Following e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 293 . This . As a result, for . Different interviewers asked different . When a new hire either had to be let go or left of his Clearly this was a problem within the human resources operation, The problem, quite simply, was that each management unit had hiring routines remained static—and flawed. or her accord, theregone was wrong no and how institutional the effort problemrecruitment to might process. have identify As been a what flagged result, had during there the was no learning over time and Managers did not engage inwork systematic reviews out of hiring decisions that didn’t Managers were inconsistent in considering internal talent for positions their competencies across various programmingAnalysts were languages hired and without tasks. detailed review of theirInterviews past were research. not standardized example, programmers were hired onskill the and basis experience of level, their without self-reported detailed, well-constructed tests of While there were job specificationsinto for each specific position, these competencies were and not translated ways of evaluating those was especially problematic withoften junior were not analysts considered and forcareer managers, more track who for senior the roles. junior The staff lack led to of a a crippling clear loss of staff morale. method for probing skills and experience. questions at different times,could so not that be candidates easilyinfluenced compared. for by the Interviewers a likeability of seemed given candidates to and position did be not have unusually a structured an ongoing set of visits did not lead to an allocation to the fund, the calls on investors. Theyto identify placed how key to information best in follow a up central with database each potential investor. When but the same lack ofaffected best just practices about and every absence unit ofthe process within investor improvement the relations fund. A group, notable which exception conducted was thorough reviews of all ■ ■ ■ ■ processes were routines, but theycontinuous were quality not improvement. best Just practice within drivenshortcomings the toward were hiring evident: process, several operations. never undertaken a systematic study of best and worst practices. Their resulted in considerable lostmany time and ways, effort they forbusy were the putting fund like out managers. the fires In that restaurant they managers could who not properly became supervise so real-time 294 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES nomto owr osbeun fot.Ms nt ihntefund, the within units that Most feed efforts. and subsequent wrong went to what forward identify information to designed was process review u htwstepolm ihtergtpatcsadpoessi place, great. in been processes have and practices could manager. right continuous it portfolio the With good no problem. a the with was was that firm But and good there were a practices was however, they It best improvement. performance, quality routines, of of by identification review operated clear ongoing a they Without because process-focused. that, the they—or assumed whether affirmative. managers been They have the had would of answer they the any way process-driven, asked same company—was you the much If pretty it. job done their always did everyone year, portfolio to the year teams. the whether of and ideas the ideas of advantage best full taking the was determining generating manager of way was objective team no was which there execution. result, tracked a not systematic As were performance. firm versus the for at discretionary analysts of of recommendations on the value fills Incredibly, poor the regularly versus not and good did demonstrate positions staff to execution metrics trade performance the updated investor the example, like For less one. and process relations hiring the like more operated however, ubro er.Ti aei l h oesrrsn om htthere that me to surprising more ranks. the the a all in for it tension him was made for worked working This had hard years. many as of Indeed, me number employees. his struck to He hiring, loyal on. about very so and decisions and most bonuses, in in promotions, involved hands-on single and firing, was quite a and identify was style by He to management traded. led being willingness his firm, capital of trading the provided proprietary lack who a a owner was and This detected times I problems. hand, at address other the tension On firm unusual well. friendly along an a got was managers it and hand, traders one and On culture. organizational strange very solutions. craft to their late problematic, than too truly other sometimes become is operating problems it are time the they By well time. how over profitability gauging of way little organizations trading effectively, have many Shockingly, run case. be the necessarily must not firms is that large but that assume We realize. people most nsot conaiiywsi hr upywti h r.From firm. the within supply short in was accountability short, In n rdn r aears eaieyeryi ycre a a had career my in early relatively across came I firm trading One than common more far is experience, my in example, previous The ■■■ www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 295 : You go where the data take way. He had an idea about quality, and that was his his The incident, however, enlightened me as to why so many trading This dynamic showed up in trader meetings as well. Traders were What I discovered was a widespread perception that longevity at the about the dining experiences they desired. He allowed the data to create and serve them commitment. Emil’s revolution was to listen to customers and learn unwillingness to cede control to the data;that they they want to want run the to businesses example run. of This Emil’s brings restaurant. The us former back owner to wanted the to cook first meals chapter and the commitment to bestdata practices become and the continuousyou. guide process to For improvement, business many decisions business owners and managers, however, there is an house—and yet that was never acknowledged or corrected. houses fail to follow a quality improvement agenda. When there is a significant responsibility. When I connectedlater, with the he analyst was a no few longerat years a an larger analyst. firm. He His was loss successfully was running a money major self-inflicted blow for the trading only views supported by data.upward path When for it the became analyst, clear he jumped that to there another was firm no and a position of contradicted the owner’s trade idea.room An and awkward silence finally fell the acrossOver the time, owner the dismissed owner made the less analysis and less as use being of the ‘‘overfit.’’ analyst, who offered feel comfortable voicing their own observationsthose and contradict ideas. Rarely those would ofanalyst, the once owner. spoke A up new at hire, the a meeting skilled with quantitative a backtest that dramatically encouraged to attendInterestingly, however, the the meetings tradersbegin inevitably and the waited meetings for share and the views voice owner his to and views. research. Only then would the traders experienced similar computer issues butthe did IT not manager raise was their a concerns, personal as friend of the owner. The IT manager tookthe trader exception of to blaming the his criticism losses and on in others. Interestingly, turn other accused traders operations within the company wasexample, taken complained as about disloyalty. One computerbe trader, problems fixed for and that that, took on too a couple long of to occasions, had interfered with trading. bonuses. Employees who hadmanagers conflicts were with downgraded the infor owner their bonuses or and reviews advancement. the The and favorite key had problem was less that criticism opportunity of any firm was perceived as a function ofowner. how well He one had got along his with the favorites, firm’s and those were singled out for the largest 296 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ifrn etuat ttepo r,teonrwne ob the be to wanted owner the firm, run prop to want the didn’t At owner restaurant. former different The a day. every restaurant different a hs h aeyubte—n hs iln n bet itnt the to listen to able and reality. with objective willing process-driven work of those to verdicts A have better—and liked. you you quality-focused, make he be who people To those boss. the the with data makes work firm to wanted He boss. oslmt.N eerho efrac?Hrn slf osubjective fit to to and left down dumbed guidelines is is process Hiring sizing case, each performance? informal In interviewers. on to of research impressions left No is limits. Risk management loss risk expertise? No journals. or in impressions software left of is collection Learning No spotty failure? the and traders. success to about stocks feedback the scouring No of patterns. supporting matter chart for a those becomes traders selection on on Trade heavy resources? light is research firm and prop generators) average the and (revenue overhead, capital limited eliminate With to firms. need small a by managed adequately be can than late. too practices, vulnerability best its applying discovered and firm traders. of the many risk matter of overseeing dismissal a the rigorously only and anyone loss was Without steep It a realized. in the resulted managers large this times, than before the time those risk times more At at far positions. that took little identical firm so was or traders, there overlapping of Unfortunately, entered portfolio hand. traders overall of the out of ensure get to oversight not limits size would position losses had Each that P/L. the that dominated traders however, large informality, very improvement. quality that rigorous of is way the It in atmosphere daytraders. stands informal by an to enjoy validated appeals firms nor prop that such consistent Many neither results. of are tracking market processes sizing broader position hiring simple the by and in handled heuristics is happening management them—technical is Risk of what markets. front across see or in to is fail what often on focus setups—and traders result, a As technology needs. information and management, lack risk firms accounting, a of handling prop range managers broad of Many number focus. small a process have and a resources research for central funded. challenges and own staffed its richly poses less That and funds hedge than smaller considerably h rbe sta hr r oepoessta oit odtrading good into go that processes more are there that is problem The few a worked, friends several where firm trading proprietary one At are with experience had I’ve firms trading proprietary the of Most ■■■ www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 297 Key Takeaway Success hinges on operating within the span of your quality control. I recently visited a small proprietary trading firm where several Does that mean that there is no future for smaller trading firms? Not I would love to pump readers up with the idea that all that’s needed for of its traders and develop fresh sources of opportunity? the limited resources allocated. Canmarkets? such Does a it firm even keep knowso up about that with the those changing specific can be strengths maximized? of Can each it trader make the most of the creativity trader, trading specific patterns that showed up during rollover periods, traders combined theirtrading capital strategy and that had joined proven successful forces. over time. Each One was had an a event unique of a department store,survive—and but thrive—by that is being best not of the breed game within their they niche. are playing. They owners have cultivatedup-and-coming close designers. working This means relationships thatfresh with they designs are a and first variety new to products. market of with They cannot achieve the sales volume regional designers. Unlike the large clothinghighly outlets, individualized the service, boutique offers knowledgeableto sales find staff, cutting-edge tops, and skirts, the dresses, handbags, ability and accessories. The Consider the small downtownclientele clothing and boutique specializes that in caters sourcing to unique a fashions local from a variety of at all. After all, therethe are many Apples, successful Amazons, small Walmarts, businesses, even and among General Electrics of the world. trading psychology hasfollowing enshrined a limited set discipline of trading as rulesa is dynamic a not sufficient business. to cardinal build and virtue, sustain but the advertising/marketing research and inventory management ofor Target Walmart; the average neighborhoodkind car of dealer quality cannot improvement structure process the that typifies Toyota. Traditional that other small businesses fail: They simplywith lack the the competition. resources The to average keep family up clothing store cannot engage in trading success is a passionreality. for If you trading don’t and have the hard resources work.spring to leaks. That run Many, a does many tight trading not ship, firms you’re fit fail going to to survive for the same reason 298 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rdst eyseicvltlt raotpten nasalnme of number small a his in limited patterns breakout Another volatility dates. specific very expiration to options trades and dates, ex-dividend l h ie tbitabsns rudisdsiciesrntsadstayed things well. and did strengths all it distinctive be what its on to around focused business try highly a not the built did It Like based time. firm strategies. the partnership prop all trading successful to niche the path profitable boutique, develop clear clothing to a ability given their were on hires programming including New and criteria, skill, of experience. quantitative the set knowledge, rigorous manage and a experience and on market based develop was hiring to Hiring of assistants strategies. Instead new to strategies. hired its decided they expanded principals traders, had firm it independent once prop only The firm the business. grow the stay and running process able on development and was focused research group the the of overseas, segments from outsource consultants trader to trading per quant strategy new hiring new selectivity of By one least development year. This at per the out opportunities. rolling on of focus goal trading the to with the strategies, them as of focus of each well could enabled variety as each also a that business across selective the sufficiently day on was the trading throughout Their focused the trade markets. of and to None trader assets. tried value and owner/traders instruments relative between a relationships was stretched on another Still markets. futures bevtoswudla et en ymrigruieoe time, over routine morning my refine higher to a me with lead Those a associated decisions. would that trading is better observations out cats to leading the find satisfaction, and with also calm of spent might degree time I of productivity. amount greater level greater energy and higher day with more the associated time—and is through more exercise that in state learn psychological time—spent might day’s vigorous I my time, routine, with Over morning it productivity. my correlated and of and aspect it, work each tracked to down it, orientation broke varied process I a suppose that Now call day, life. to the or pressed a for hard and up be coffee showering would and one have having exercising, but cats, I markets, my process. checking feeding eat, as and to same bite greeting the of is routine routine morning that a is have orientation traders process misunderstandings greatest about the of one earlier, on touched As ■ ml uceswt focus with succeeds Small ePoesDriven? Process Be Traders Individual Can How hsi eyimportant. very is This . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 299 is process orientation. That . I hear from many solo traders who follow the TraderFeed blog. Most This is not a perspective one typically finds in the trading literature: The previous discussion of process control for small trading firms Filling out a checklist or journal can help us stay more mindful of our of mindshare and energy. With the inevitable loss of concentration and multitask across these roles. A large parttraders of are the also problem active is traders, that so many that solo trading occupies a large proportion are simply too absorbedon in their markets performance. and Theyand trading can self-management to handle in monitor a the and sequential tasks fashion, work of but research, lack trading, the bandwidth to ask thoughtful questionstrading and profits. strike The me most as common diligent problem in I their hear pursuit about of is that they function of one person needingwell. It to is lack do of bandwidth, too not lack manymany of independent things desire traders or to effort, that run ultimately undermines a trading business things is to let so many details slide that the lossMany of quality trading becomes fatal. problems—and emotional problems related to trading—are a prepare the food, andit serve impossible the to customers, stay the in solo business. restaurateur The finds only way to accomplish all those methods of risk management.solo The person average individual trying trader tosupplies, is run keep like a the the restaurant. restaurant Unable clean, to bus buy the the tables, foods wash and the dishes, substitutes for true, systematic process measurement andA improvements. simple screen for technicalresearch. criteria Casual substitutes rules for of thumb true, for tested position market sizing substitute for rigorous one’s own performance: All of thoseperson. functions Not must surprisingly, be this filled exceeds by the the bandwidthtypical of same most result people. once The again is a dumbing down of process. A simple checklist The true solo traderand acts trading as coach. Researching business/riskdata into markets, manager, trading assembling money ideas, observations manager, executing and and managing trades, and managing becomes especially relevant when considering the individual trader. When most traders state thatmean they follow is ‘‘a process,’’ that whatefficiency, they but they over really time engage will not enable in them to regular become more routines. effective. This may help their states and actions, but does not, inIt itself, constitute is a only process orientation. whento the change assessment our of efforts that outcomes we leads exercise to true systematic process efforts and quality control. so that it becomes betterprofessional outcomes. and better at generating desired personal and 300 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES edn obuso ortaig ti h ontv odo h work, the of load cognitive the self-awareness, is of It loss trading. a poor and of bouts discipline to of leading flagging a comes willpower a en dpaint hnigmresadn tayimprovement steady no there and efforts, markets of changing performance. to adjustment in adaptation and no review be such can Without processes trading decisions. future into and learned trading lessons factor the to efforts reviews that performance planned thoughtful and is for energy sustainability and time to leave trading must key approach limited The thus during mandatory. timeframe and managed become Longer job positions hours day. day timeframe the short the throughout or around positions bandwidth fit full must occupy trading trading the cannot to learning while developing approach meet for ends The make true to ropes. particularly job is day a This work diner. who business traders all-night catering the the like like less more be and must approach trading sustainable individual psychologically and The cognitively is that trading to approach an requires evening. all people many different for very a meals is different evening run the preparing to for from catering meal able profitable a preparing a be day run a conceivably not Spending could business. might but basis, chef solo individual a on the restaurant To analogy, improvements. earlier steady engage the markets, make her use track and or to performance, energy his monitor and In to research, time play frames. in the have to the time to trader also on and individual but based the indicators strengths, month enables longer-term per selectivity and times case, shorter- each few markets a of monitors trades up only blog lining but the day, through exercise, the met to through An I break adjustments. trader Another midday make disciplined up. lengthy and unusually set a performance, patterns review takes certain concentration, but renew when day only day years the for of through and known trades times daytraders have resources. certain successful I modest at trader with successful work trades relatively very at One with dynamic traders. same succeed swing this to seen have firm I the burdensome less bandwidth enabled on demands and made focus of degree high a that problem. root the is often which individual, single a by handled htw a ihteporeaytaigfimdsrbdaoewas above described firm trading proprietary the with saw we What htti ugssi that is suggests this What ucs eursapoesfripoigyu processes. your improving for process a requires Success e Takeaway Key eoigpoesdie sa niiultrader individual an as driven process becoming www.MyChart.ir . BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 301 Tables? Multiple time frames? Color coded? SetI with typically alerts? make How use do of mytypically screens make when use I’m of trading my well? screens How when do I’m I trading poorly? and benefit from? Which sources don’t I make use of? Which sources benefit? How can I create moreme streamlined displays to that efficiently will focus enable onimportant the for information my that trading? is What most informationscreens is relevant that not and would displayed add on my valueof to displaying what the I information already would be look most at? helpful What to ways me: Charts? from? Which ones don’t I use? Which ones have not provided Trading Business: Twenty Sets of Questions Conducting a Process Review of Your So let’s wrap up: Trading itself requires a number of coordinated 2. What sources of market-relevant information do I routinely read 1. Which market displays on my screens do I routinely use and benefit as robust processes. Information Collection and Analysis: Here are 20 sets of questionsand that begin can the help journey you toward review identifying your best performance practices and linking them Becoming more process oriented starts with asking the right questions. ■ fit into a businessone’s plan; trading. one cannot meet business needs ad hoc around is sufficient time to attendthe to demands the of needs trading don’t of leave thethe time entire to trading run trading business, and business. the improve If each business facet model of is fatally flawed. Trading must on self-management and process improvement. Whenresources, traders trading lack must become those focused and highly efficient, so that there and weaving of thoselarge best trading firms, practices there into are enough ongoingto managers deploy trading and for technology trading-related processes. resources activities In that traders can focus more readily While all thatmanagement—managing is energy, going mood, on,needforongoingmonitoringofperformance,identifyingofbestpractices, and the concentration—and trader the also faces the need for self- activities, including theinto analysis trading of ideas; data; and the the management synthesis of trades of based information on those ideas. 302 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES yteiigIfrainit Ideas: into Information Synthesizing .Wa ore fmre-eae ovrain oIruieyse out seek routinely I do conversations market-related of sources What 4. to listen routinely I do information market-relevant of sources What 3. .Hwd nlz aktrlvn aata meaiig How examining? am I that data relevant market analyze I do How 5. .Hwd eiwalo h nomto htIgte during gather I that information the of all review I do How 6. nomto htohr ucsfltaesaemkn s fand of use market making of are sources traders are successful What other, benefit? that with information me provided not have oIosreaogohr ucsfltaesta noprt into incorporate I that traders trading work? successful my am other, skills the analysis I among in data observe when additional present I What information do be poorly? analyze trading may am I that I When do patterns well? test How I observe? what do I of How data conclusions read? the or validate I hear do I How information noise? from or mere information trading reflects to significant that meaningful distinguish is I data do of How set not? given a whether I establish I that do so conversations market my from them? insights forget don’t track I do weekends? Before How During trading? hours? After my hours? market to conversations? During helpful hours? and market most information been of conversations source have valuable When markets in a well? respect be and trading know could I am good who do I Whom with poorly? when trading having am interfered I I When have am conversations conversations What Which trading? trading? materially my contribute don’t to conversations Which from? benefit and I’m that so possible? time as listening efficiently my as I’m streamline working When I well? can trading How I’m poorly? when trading What to other, those? listen of do I use do make information information I market might market how and of to listen sources traders successful What benefit? provided not with have television? sources me and Which of? videos, use make online I don’t newscasts, sources Which as such from, benefit time? and of minimum a wasting am streamline I I can that How gained so them? time I’ve forget reading that not my do insights I the that so track readings and my from record during I or do week market the How reading During weekends? benefit sessions? trading greater after on find or focus I before I material Do do poorly? information trading market I’m What when well? focus trading I do I’m information when market on What those? incorporate I could how h a n ek o oIcmaeifraincmn from coming information compare I do How week? and day the www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 303 different possible trading vehiclesoptimal for risk/reward my relationship? How trade do idea other,express successful to their traders achieve ideas as an tradesDo when I express their my views ideas areor through in similar multiple concentrated to form trades mine? in in just multiple one markets or two markets? Are my best trades expressed inoptions) risk-limited ways or (hedged, through as outright directional positions? How do I look at less? Return to thewhen research I process? generate How moreprioritize do ideas those I ideas than and handle I decidethe situations which can characteristics of ones possibly the to ideas trade? that focus haveMost on? How most often often What do made lost are me me I money? money? in the synthesis ofstatistical analysis ideas? to aid How my generation do ofmy ideas? best When I idea do generation? I make Start engage of in the useHow day? End do of of I the technology make day? Weekends? sure and Iin have sound quality idea time generation? each day or week to engage and generating ideas through brainstormingquestioning? discussions How and do mutual I lookto further understand them into and ideas make I themresearch obtain my resources own? from and How others do analyses I toI make dig generate? use of deeper into initial ideas that my reviews? doesn’t fit with my preexistingask views? new, How difficult questions do that Iuse require use my further my review research? review to How add to do to I confidence in my ideas? information leads to the sameto conclusion? contradictory When information conclusions? leads Doreviews by I reading? conduct Discussing? mykinds of Drawing best reviews lead or information to the diagramming?reviews generation are What of not good ideas? productive? What How kinds can of I improve the productivity of different sources? How do Iwell review versus information when poorly? I How am trading do I identify situations where different 9. What routines enable me to best step back from analysis and engage 8. How do I make use of other traders when I’m reviewing information 7. How do I ensure that I review and emphasize information that Managing Trades and Risk: 11. How do I best express ideas as trades when I am trading well? 10. How do I handle situations when I come up with few ideas? Trade 304 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 2 o oIslc rdsta twl noaprfloadbalance and portfolio a into well fit that trades select I do How 12. 6 o oIognz ytm eoe uig n fe rdn to trading after and during, before, time my organize I do How 16. Self-Management: that and realistic are that trades my for targets profit set I do How 15. manageable losses potential keep to positions my size I do How 14. exposure risk my reduce to levels stop-loss of use make I do How 13. yrss o oItaktecreain mn ypstosand positions my among correlations the track I do How risks? my ie o oIuebek ntetaigdywe mtaigwell trading am their I organize when day know trading versus the poorly? I in and breaks well traders use I trading successful do How am pre-market, other, time? I use do when I How time poorly? do weekend How and performance? post-market, trading my maximize learn I could how and trades skilled their other, in do them? profits How from take poorly? trade know targets I (so I set when I close traders and do too well How targets trade distant? place too I or to when further) tend as run I positions often Do markets manage targets? that I to do closer How get adjust volatility? I they market do How for level? targets reward-to-risk favorable profit a have I that ensure my paid does get truly How I risk? ruin? Do more of sizing? take I position risk expectable when of to that function lead a ensure as not vary to will profitability portfolios trades and losing to of positions manageable? series taking size be risk I will and positions do sizing across How losses portfolio worst-case overall that my do ensure manage How sizing? and position to track to add adjustments I my I much by how do and added trade, How is a of meaningful? profitability course the be during off will them gains take or that positions ensure to also but I total do my reduce How to exposure? portfolio the risk overall decreases? my when when for levels or level placed levels stop-loss stop a increases adjust stop not calculate I significantly adjust are do How I volatility stops favor? do market my that How in moved ensure market? has I the position to do close How too position? each for poorly? take trading typically am I I When do well? risk trading am much track I How when I rises? risk my do volatility adjust and when How positions exposure my rise? of volatility correlations the and when volatility market exposure risk my adjust www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 305 You . The idea is to stay within your bandwidth and set yourself up for their self-improvement? situations when I identify them in real time? behavior to improve my performancemy as performance, a personally trader? and How professionally, to dofrom make I sure what review I I learn do wella and path poorly? of How improvement? do How I do set successful goals traders to I keep know work me on on avoidfrustration,discouragement,overexcitement,overconfidence, and complacency when Inegative am emotional experience trading? when I Which am trading: actions anger/frustration, depression, contribute guilt, to and anxiety/worry? How doemotional I state stay when I mindful am of trading my well? How do I handle emotional experiences of happiness, satisfaction, energy, andactivities affection? Which most give meperformance? energy Which and activities rob contributeperformance? me to of positive energy trading and detract from trading well? When I am trading poorly? Which actions enable me to what kind of exercisedo do I I engage perform; in; what what kindspursue kinds of when of intellectual I and social am spiritual performing activities activities at do my I best? At my worst? my best versus worst? What do I do on a regular basis to generate am trading poorly? How much sleep do I get; how well do I eat; Per the earlier discussion, this set of 20 questions should lead number of goals that only receive half efforts. target success. Fewer goals that you work on intensively are better than a large in your trading. Once you turn those bestyou practices are into ongoing then routines, ready todon’t tackle want to the tackle next new set practices of until you process fully improvements. assimilate the ones you initially above review to identifytrading—information the collection, single improvement idea toand generation, self-management—that each trade would area make management, of the greatest your positive difference provide you with raw materials for establishingprocesses. and Please reconfiguring trading note that iton is all not potential necessary—or best desirable—to practices focus at one time. Rather, you could use the you to identify best and worst practices in each area of trading and 20. How do I use my observations of my thoughts, emotions, and 19. How do I manage the emotions involved in trading when I am 18. How do I generate emotional well-being when I am performing at 17. How do I manage my lifestyle when I am trading well? When I 306 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES praht hne ouigo ihs il ra o mrvmn,is success. improvement, with for meet areas what to yield likely abandon highest most steady on don’t targeted, focusing A you change, better. for things to that doing room approach for search sure of the in plenty make well doing find to you’re but want profitable you been improvement, have can you it enhanced If to that led performance. is truly improvements time which one determine to at difficult become improvements process your multiple whether attempting hazard determine One of performance. to trading better months to contributing take is generation may idea it improving process, as such research areas, other your In improve level. to energy take or might outlook you emotional steps your as such quickly, you rather areas, results some notice and will In too results, determine efforts. subsequent All immediate to abandoning fruit. see discouraged, while don’t bearing become improvements, a indeed attempt is takes traders improvement it often process that given so a markets, whether of variability random oofrafwprpcie npoesipoeetadtaigsuccess: trading and ■ like improvement I’d process point, on this perspectives to few book a the offer from to strands of number a together Pulling ■ oreo datg ntemrepae htaeyutyn obuild to trying your you is are what What and marketplace? trading, the mission. in your and advantage in of well opportunities, source superlatively strengths, do of you trade do vision businesses What next clear for the Success a week. out market with and figuring day many begins current on of success. the is trading economic through the getting focus and and behind the growth vision often, brings a Too way that perceive participants. unique way I a a sure in not in business, opportunity I’m need startup unique a a the capture fill For to and vision. often animating is an vision the but funding plans, only not clear needs business and trading a startup, any Like enterprise. vision? the is What elz lota efrac ie n al ipya ucinof function a as simply falls and rises performance that also Realize xeine o frustration. not emotional experience, positive yield should improvement performance at efforts Your Improvement Process on Observations Few A ale eloe ttaiga nentrepreneurial an as trading at looked we Earlier e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 307 has Trading Psychology 2.0 —If you’re an average teacher or Just this morning, I worked for a In many cases, process improvements require skill . The successful trader is willing to acquire the skills needed of time. Throughout my career, trading has provided a supplemental provide economic security. That doesn’t mean youand can’t be it profitable, doesn’t mean that developing yourself as a trader is a waste dealt with tradingimprovement as and peak a performance become true norms.is What performance this that, means domain, for the where vast constant majority of readers and traders, markets will not not support themselves througheconomic success their is work. a function Infew of performance elite actually performance: fields, selected Many for are success. called, Much of of what differentiatesfields. performance The domains average gymnast, from baseballmake player, other or a chess vocational player living does from not his or her activities. Most actors or artists do Where does trading fitshort-order into cook, your you can life? make ayou living. lose If you money are and an average go trader, out of business. This is an important facet for managing risk—all contributeyou to better a over time. learning curve that can make expects markets to accommodate his or herdata, skill better sets. software Acquiring for better displaying and manipulatingfor data, better analyzing skills data, better methods for generating ideas, better tools upgrades to identify and exploit market opportunity. The unsuccessful trader professionals emerge from careful observation and measurement.you If have all is a chart andof a what few drives canned indicators, markets. you are missing much to conduct the investigation. The idea thatno discretionary trading use makes ofIn numbers, most statistics, fields—from or inferential medicine reasoning to is engineering—the madness. judgments of was sensitive to multipleincorporated time both frames and realizeddatabase, statistics, a and and spreadsheet volatility skills, I measure would implied have never that been volatility. able Without basic What skills dofew you hours need to onand learn? an volatility. improved The set goal of was measures to for create price a momentum momentum measure that power of the vision that getsthe entrepreneurs startup process. through the long hours of as a business? Wheregreat to do make you steady want improvements,should but to be directed ideally be toward those a five improvements set of years longer-term goals. from So now? often, it’s It’s the ■ ■ 308 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ■ ■ unn,wudyubcm nivso nta company? that in investor an currently become you’re you that would business running, trading If the business? running trading were promising else a someone running a you be are to but yourself trader, believe promising may You to change. has at self-appraisal efforts honest, meaningful An precede processes? those that in processes grounded of you development keep and practices best Your your edge? of market identification of sources fresh ideas—and fresh generate creative Your to skills? ability those around success grade trading your your of to you organization Your contribute your and conditions? that would strengths market specific different How the to of card. adapt understanding to report ability a your in yourself yourself give trading, your o uiespas yso h tr n eto h rudi great a is business. ground any in the success on of feet are pursuit and the Fantasies stars for terms. the formula realistic on in eyes plans; success in business define stands not trading you where help on will perspective life clear my your A into versa. fits vice trading not and that life however, and ensured, trading have general of my I to challenge contributed self-development. has the trader a enjoy as myself I developing that living. believe primary my not income, ud ordvlpet rwehrte edt rsrto and frustration to lead and they The energize, whether inspire, better. or they getting whether development, goal: is your one goals guide your on for focus yardstick to best want performance a you As discouragement. professional, and frustration for formula great a is Perfectionism table.’’ you. the on then than money ‘‘leaving and for money opportunity themselves castigate as more movement define make be implicitly and be traders always many always accounts Too will will larger there trade and There miss who extend. you people that missed, that move’’ the opportunities losses ‘‘catch who be and traders always reverse, will that There profits consistency. with one journey the Enjoy tyhns ihyourself with honest success. Stay of of are source source a a goals be not not that is will ensure trading it well-being, If and achievable. development and place your stimulating, you challenging, of self-improvement, control on in focus yourself you When disappointment. h raetcalnetaesfc srmkn hmevswe they’ve past. when the themselves in remaking successful is been face traders challenge greatest The Yuwl ee eltetptc rbytebottom the buy or tick top the sell never will —You Rgthr,rgtnw ihrsetto respect with now, right here, —Right e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 309 Trading starts with the understanding that sources of edge in Fifty-Seven Best Practices for Trading Success I have found that some of my best practices were inspired by others Traditional trading psychology has been all about taming the emotional ranges, breakout moves, areasMany of times, high however, and what low the volume, broad and market the is like. setting up to do in If we’re trading ait’s stock-market-sector natural ETF to track or charts a of broad what market we’re index, trading. We look for trends, Best Practice #1: Tracking a Basketto of Anticipate Stocks Market Moves and Themes handful of the ideas, thoseyour can performance. catalyze changes across multiple areas of my own trading. A largeblog number in come response from to readers a ofwill call the speak that TraderFeed to I you placed or late your in ways 2014. of Not trading, all but the even practices if you find value in a raw material for your ownpractices. A inspiration number and of adaptation, these best hereamong practices successful are traders. are 57 Still ones others best that are ones I that have I observed have developed to aid and then adapted to best fit me and my trading. In the spirit of offering customary is usually not what isinterests. best Living aligned in with a our cake talents,formula of skills, for custom and personal may or be professional comfortable, distinction. but it is not a The philosopher Brand Blanshard oncelike observed raisins that in most a people cakeodds ‘‘live of custom.’’ are If quite we do high things that the we’ll consensus do way, the them in suboptimal fashion. What is ■ your growth from Trader 1.0 to Trader 2.0. psychology, some to trading, somesome contributed based by on TraderFeed readers, my coaching experience—that will help you kick-start psychological negatives; we must leverage our strengths and bestto practices ensure that wechapter, evolve we as will markets examine an evolve. array In of the best remainder practices—some of related this to that traders could consistentlyPsychology exploit 2.0 their edgemarkets are in always markets. changing. Success is not assured by simply reducing forces that can lead toprimarily poor on trading reducing decisions cognitive and and actions. emotional Its negatives focus in was trading, so 310 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES lsi xml curdi 07 sfiaca hrsldtemarket the led now. shares right financial as doing 2007, are in stocks occurred leading example what classic by A telegraphed is future the nec fnn etr,pu 0sco n pcat ne Ts eeis Here ETFs. index specialty and sector basket: 10 current follow plus the I market sectors, that stocks of nine 10 of breadth have each the I in basket, gauging current of my In way weakness. a or strength as indexes the large-cap questioning the within worth often it’s range, a capitalization in breakout. the stay seeming proportion when stocks large a example, but individual high, new For of a make attention. often averages S&P very number of and however, Dow a worthy weighted averages, see tell broad the we the a buck to When it’s market can contrary factors. weak stock moving idiosyncratic a shares individual to of in Any due strength market. like basis market showing strong I three-month overall are a and that in reasons one-month shares weakness the a and the of on identify One lows to 2008. and is highs in new manifested tracking fully that weakness ■ ■ ■ ■ ■ ■ ■ ■ ■ N,CL,BIIB CELG, UNH, WMB APC, IP FCX, LMT DHR, MET GS, elhcare Health EIX PPL, Utilities Energy Materials Industrials TWTR ORCL, Technology Financials CL COST, WBA, staples Consumer SBUX LOW, NKE, FOXA, TWX, discretionary Consumer o ubro er,Iv rce akto tcshgl weighted highly stocks of basket a tracked I’ve years, of number a For (L)XM V,SB M,CP O,OY PXD, OXY, EOG, COP, KMI, SLB, CVX, —(XLE)—XOM, (L)DK E,D O X,AP R,PCG, SRE, AEP, EXC, SO, D, NEE, —(XLU)—DUK, (L)D,MN O,P,LB P,EL APD, ECL, PPG, LYB, PX, DOW, MON, —(XLB)—DD, (L)BKB F,JM A,C X,UB AIG, USB, AXP, C, BAC, JPM, WFC, —(XLF)—BRK.B, (L)G,UP M,UX A O,US CAT, UPS, HON, BA, UTX, MMM, UNP, —(XLI)—GE, (L)AP,MF,V,T B OG NC IBM, INTC, GOOG, FB, T, VZ, MSFT, —(XLK)—AAPL, (L)JJ F,MK ID MN BV BMY, ABBV, AMGN, GILD, MRK, PFE, —(XLV)—JNJ, (L)P,K,WT M V,M,PEP, MO, CVS, PM, WMT, KO, —(XLP)—PG, (L)CCA I,H,AZ,MCD, AMZN, HD, DIS, —(XLY)—CMCSA, www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 311 —IYR(realestate),KRE(regionalbanks),SMH The takeaway here is that we can learn a great deal about the broad Another value of the stock basket is tracking stocks and sectors trading There are many ways of using the basket to diagnose the broader For the most part, the stocks in each group account for more than Specialtysectorandindex (homebuilders) (semiconductors), XME (mining), IJR (smallQQQ caps), (NASDAQ MDY 100), IWC (midcaps), (microcaps), IWM (Russell 2000), XHB helpful to track realized volatility and correlations across a basket of This is really a formalizationspecific of application. the A first best bit practice, of but with background a will more help explain why it is Best Practice #2: Tracking Volatility andamong Correlations Sectors ■ sector and index averages can providebeneath the useful surface alerts of for those what averages. is occurring stock market fromconstituent shares. the Tracking bottom the stocks up—by that are most looking highly weighted at in the behavior of shares, suggesting thatWhen particular this sectors occurs are acrosstrending gaining sectors, move it in or the can market. losing be favor. a useful alert for a broader with unusual volume relative to their peers.be Very an often, alert high that volume will institutional investors are either acquiring or distributing top but also highlightspullback. the shares that might be most vulnerable in any it is common to see amake number fresh of shares highs within even one as or stockssuch more in sectors divergences other fail sectors to not continue higher. only Noting provides an alert for a near-term market how many of the shares makeprior fresh support highs or below or prior lows; resistance; howor how many lows; many hold and close above so near on. daily When highs the broad market is topping out, for example, market, some of which I willscreen outline as is separate best simply practices. looking My initial through charts in rapid succession and seeing sector and index ETFs looksspecialty at sectors. small- and medium-cap shares as well as half the total weighting in thea respective sector—or sector ETF. any Any broad broadas move stock in a market result. move—will To include achieve these a shares broader view of the market, the last group of 312 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ncce,weeteei ofie yl uaino mltd.I other In amplitude. or duration cycle moving fixed as no market is the there Consider where above. cycles, outlined in one the as such stocks, eln n nices nvlm,vltlt,adcorrelation. increased and to volatility, leading volume, rise, in the increase sustain an to and shares in selling of results mass process critical topping a the of Eventually failure ways. own sectors their as move decrease, to correlations begin and and restrained volume as more phase, be even topping to sectors, tend this volatility and During higher. stocks drift of weaker can proportion among averages overall distribution large there, see a From to volume. buying with begin solid we on peak, highs price we momentum new and fresh a At making strength shares strength. reach continued the we to in point leading participate some strength will a effects: shares momentum with see most is will rise, typically up the vigorous it this of area, During phase volatility. bottom and When volume a enhanced volatility. from of continuation and bounce increased volume averages on broad increased and bottom the and a rise stocks make across their typically among examination of stocks correlation An degree that structure. finds and common cycles a length multiple posses their generally in but vary fall, will cycles words, hnlremre atcpnsaeatv ntemre.O average, On market. the in active are restrained see participants us more market helps and large with volume when with correlated occur highly strong is frequently Volatility feature correlations. typically markets trends Strong range stocks). correlations; of idiosyncratically market moving are a they as when (behaving and market) stock a as (behaving more significantly been have levels. volatility low at Returns and than informative: correlation positive are of values levels volatility high of and at Backtests correlation correlation). low and correlation) and volatility high and (stretched volatility ones (falling a bottoming markets provides and This topping both periods. for track 20-day heads-up I’ll moving useful Typically, over average. correlation running and a volatility compute every and with sector sector each of other correlation the compute also I workbook. Excel ngnrl orlto el swe akt r oigi unison in moving are markets when us tells correlation general, In an in basket my in sectors the of each for volatility realized the track I okn tteprso h aktcntl sagetda bu h whole. the about deal great a us tell can market the of parts the at Looking e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 313 Ideally, you . The symbols from the market open . The failure to track volume/volatility during the unfolding of In general, knowing what average volume has been at each time How about volatility? Because volume and volatility are so well Can correlation be of use to the day trader who does not trade a trade is responsibleeasy for to much overstay poor one’s trade welcomeprematurely management, when in as volatility shrinking it is volatility expanding. becomes markets and exit Going where the volumewant is to can identify put opportunities in volatility whichyour on both favor your direction and side. volatility will move in off business. When wevolume see relative that to one other sectora is sectors, rotational attracting this trade. unusually can The high act short-term as trader a needs useful movement heads-up to on profit: of prior price ranges. of day helps us identify when today’s market is attracting or cutting more likely to diehelpful out in and gauging reverse moves (lower to volatility). fresh price This highs is or especially lows and especially out in the market.directional It players takes to a sustaindifferentiating healthy a moves market degree move: that of Volume will participation can extend be from (higher useful large, in volatility) versus those correlated, looking at how today’s volumedays provides compares a with useful that clue of as recent to the relative participation of large traders open. A mixed set ofmixed—and red range-bound—market. and The green count symbols ofrough red is sense and more for green correlation characteristic gives on of a the a day time frame. open and red if it’sis trading that the below vast its majority open. of A shares quick will tell trade above for or a below trend their day market are color-coded: They are green if the stock is trading above its market some cases, they only follow the individual stock they are trading. and Correlation Across Asset Classes Many traders only follow the market they are currently trading. In Best Practice #3: Tracking Price Action, Volatility, quote platform, I havehow the they names are of trading the during stocks the in day my basket and track guiding discretionary trading. multiday cycles? In an informal way, I believe this can be the case. In my a move with highlikelihood correlation and of volatility continuation—than has oneis more with a juice—and fertile lower more area values for of testing each. relationships This and developing quant rules for 314 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES wm h eadadspl o htte r rdn.Ircl sitting recall I trading. are developments they market what for larger supply when and demand over the run swamp get they Unsurprisingly, oacutfrtenwifrain hti unwsaueu elfra for tell useful a was turn in That information. new markets the repricing pattern for were This traders account rose. macro to gold that and suggested sold reaction rallied, Stocks market bonds markets swift: of weakened, was move dollar markets US many can in the of weakness off, group, response unexpected The a economy. showed as US release the and, data a directional Recently, are many significantly. because traders important is those This of markets. dominating are traders macro of harbinger a often is together abroad falling Weakness or sync. weakness. rising of domestic a are out markets are in they global It or when when economies. and see markets other to to emerging helpful spread later very in only is and first Europe up global of region Similarly, show particular price. may of driver weakness traders, important economic market an and highlight stock rates moves for in those helpful moves as extremely and Understanding been currencies equities. has of of markets trading terms the currency in in first time up over show only economies. to with their tended activist to has liquidity quite impact For adding been This on. and have focused bonds banks be buying central may policy, writing, you monetary market this the of in as of not trading example, but the and markets, in apparent classes, two most asset or be one world, will theme the a of times regions Many instruments. multiple macroeconomic across trade cut managers that money themes Large and markets classes. equity asset other in other happening across is what observe to fails and market the to vulnerable was he market, him. broader against move the tracking to Without funds. the correlation sector that stock’s and ETFs just his stock several higher, was his of as constituent it trading demand, key fine; a ETF-driven and just was by swamped sharply flow eventually order reversing was the flow before read order move He open indeed out. did the him It at stopping pressure. bit selling a seeing remained was down a who stock trader, noticing his the to that was out adamant this and pointed markets I stock tendency. income overseas risk-on general of fixed its behavior in and on the pressure commodities, at keen selling looking especially markets, of was was indications I saw Meanwhile, He book. he ideas. order as trade stock, his particular a out selling talked was he market The and difficulty. performance opening having was who daytrader a with h aednmcocr hnatae ace nytestock the only watches trader a when occurs dynamic same The rcigmlil se lse sas sfli dniyn hnlarge, when identifying in useful also is classes asset multiple Tracking www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 315 First, however, a quick review: The NYSE TICK looks at stocks in the On my quote board, I like to see market action across different in gauging the degree of interest and participation behind the moves. underway with very highbuying or or selling low as TICK prices move readings. to Seeing new highs such or extreme lows can be very helpful dominate and act with urgency, theyValues will of hit NYSE bids and TICK cause near downticking. zeroor show no sellers particular and dominance are of buyers common in quiet markets. Trending moves often get basis for my analysis. What theare TICK more tells aggressive us at is any whether buyers pointmarket, or in they sellers time. will If buyers lift are offers eager to and enter cause the upticking. Conversely, if sellers of all upticks minus downticksFor is my own the intraday reading trading, for whichTICK TICK is in not for real high time that frequency, when second. I executing track a NYSE trade and on a one- and five-minute NYSE Composite Index each secondwhether of each the stock trading is day trading and on determines an uptick or on a downtick. The sum trading and longer-term positionhowever, needs trading. to differ How for the traders of indicator shorter and is longer used, time frames. Best Practice #4: Tracking Real-Time BuyingPressure and with Selling TICK The NYSE TICK ($TICK) is a tool I find invaluable for both short-term see the whole field, not just the receiver you intend to receive your pass. story. Conversely, seeing some markets move andcan others be refuse an to early budge sign ofgreater money perceived rotating opportunity. from some Like markets a to football others quarterback, with you want to over to the US open. Configuringand your quote many board parts to of see manysituations the markets in world which at markets one are glance in enables sync, you sending to an detect important those thematic crosses to see ifstocks are there up in is Europe and general Asia, I dollar want to strength see how or the bullishness euro carries weakness. If regions of the worldincome instruments, and commodities, stock I indexes, likeUS and dollar currencies. to is If see the up versus prices the from euro currency, a I variety want of to look fixed at other dollar It is the thematictrend trades. behavior of markets that leads to some of the best trending day trade. Markets canrise move on idiosyncratically, good earnings as news, whenstocks or stocks markets have can risen move with thematically, as other when assets in response to central bank action. 316 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES otpadbto ha fpiedrn nemdaemre cycles. market intermediate during price of ahead bottom TICK measure and momentum cumulative the top for to tendency the a notice of also you you’ll indicator If change), (x-day price. momentum of short-term ahead bottom a to construct readings TICK market during individual price for of ahead and top cycles to TICK not cumulative is the It for day. unusual to is all day at from TICK interest cumulative selling cumulative and the buying tracking flat trading, in useful position relatively quite longer-term a my creating In line. level, evenly TICK zero fairly action the TICK higher around restrained steadily show distributed move will will markets TICK Range over lower. cumulative dominating or the are that below a or means above sellers time to which its or of zero, most reading spend buyers will TICK TICK if day, trend minute’s a see During time. each can adding we By total, cumulative market. the of behavior important at lows. pattern common market longer-time-frame ones—a TICK high Indeed, attracts very low by very readings followed that lows. which are in readings TICK stocks those situation the low of from creating value, very dumping seeking rise participants wholesale and and the high lows is very it important it both hand, make see other market. markets to the range-bound as unusual on low-volatility, not a values, seeing is low we’re It or that high likely many more versa. vice is see and underway, don’t likely we is day When trend upside an values, low large many of activity the for footprint high useful reason, a this participants. provide market For values activity. TICK basket low such or small sustain and cannot traders individual firms another; trading or institutional way large, one if leaning being happen only are are can they participants This that baskets. means large it in time, sold same or the bought at direction same the in move upticking but downticking downticking, or or upticking only not are shares of proportion hnTC hits TICK When hnw e eylrenme fvr ihTC ausadnot and values TICK high very of number large very a see we When lofidNS IKt eqieueu o rcigtetrending the tracking for useful quite be to TICK NYSE find also I eyhg rlwTC ednsaemaigu o nte reason. another for meaningful are readings TICK low or high Very grgtn ihfeunydt a hdlgto ogrtm frames. time longer on light shed can data high-frequency Aggregating ttesm time same the at + 0 rmr r–0 rls,i en htalarge a that means it less, or –800 or more or 800 e Takeaway Key hsi eyiprat hnstocks When important. very is This . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 317 18 to –16, as a majority of Dow shares undergo first buying and + There are several valuable uses for the $TICKI. The first is to use it as a The most common way to track upticking and downticking is NYSE paints one picture but other $TICK measures may point differently. prints more positive values than negative ones duringto the trading identify day helps trending moves. Too, there are occasions in which $TICKI gauge of buying and selling interestthe specific cumulative $TICKI to across large-cap multiple shares. days and Tracking tracking whether $TICKI then selling. TheTICK Dow measures TICK precisely ($TICKI)each because minute. is the more Dow volatile shares trade than many other times constituents of many market indexes, theyand are actively downtick traded rapidly. and uptick Inof any given minute, we can swing from values very useful in detectingThe the upticks breadth and of market downticksvery strength for different and the distribution. weakness. Because Dow the 30 Dow stocks, 30 however, stocks form are a important Program Trading The cumulative upticks and downticks for the general market are Best Practice #5: Using the Dow TICK ($TICKI) to Track measures on the day timevalues. frame and These look shifts for can shiftsdemand be in and the a can distribution great provide of useful tell entry for and intraday exit points shifts for in trades. supply and the NYSE TICK. Whenabove all or the below TICK zero, measures we generally aremarket. have Often consistently I a will staying strong glance indication at of a a one-minute trending or five-minute chart of TICK Index, for example, versus thethe S&P upticks 500 and Index. downticks $TICK.NQ-STIndex specific reflects and to again the can stocks provide in useful the information NASDAQ when it 100 diverges from smaller capitalization shares andcould can be provide useful an to indication of express when stock it market views in the Russell 2000 of smaller shares andunusual those to listed observe onof divergences NASDAQ. TICK. between It These the is generally reflect not NYSE the particularly and relative US strength versions of larger versus all stocks listed on US exchanges.$TICK.US-ST The for e-Signal this very platform broad uses measure theall of symbol stocks, ticking. not Because just it those includes listed on the NYSE, it is sensitive to the behavior TICK ($TICK), but otheruseful. measures One of that I upticking follow and regularly downticking is are upticking and downticking across 318 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ekadbucdhge.Te$IK ednso h onewere bounce exceeded the never on TICK were NYSE readings stocks the $TICKI which but in The period strong, higher. market among bounced a primarily and saw examine or recently weak to market We measures entire caps. TICK the large other across actively the the are occurring to players is turn market this then large whether I that selling. us during tells or downticking or it buying upticking period, downtick of market or degree given uptick high a to a see names we liquid When the or once. lead products at can futures Either index ETFs. selling selling by liquid by most indirectly the or dump directly to is either large stocks shares, sell among to occurs way orders typically easy of An seen, participants. executions we’ve market upticking trading—basket as are program This, shares of time. Dow same because of the majority at a downticking that or indicate they as attention, ekoe ubro as u h uuaieNS IKmd fresh made TICK NYSE cumulative the but unusually days, was of $TICKI number which a in over situation weak a had recently we example, For elo oe,btoe h oreo er hscnadu oa to up add can this year, a of course traders. the active for over great return a the but meaningful like through seem money, not hand price of may better execution their deal a to get improvement show often Each can entry. to my I sellers for stocks, liquid or of downticking buyers bring and lower). the to upticking market fails for the to that move the waiting cannot weakness fails move sellers By $TICKI that cannot that on (indicating lows buyers buy strength price will that fresh $TICKI I me on and (showing higher), sell highs market generally price will new I generate orders. my of of leg next the That riding shares. and of bounce lower. universe not the downmove and broad fading the in caps the useful large across was the buying information among fresh covering of short initiation was an bounce the of much above Values $TICKI. of short-term values the to indexes. overreact stock capitalization-weighted not the in me weakness entire helped price the across this strength Recognizing underlying broad market. was to there limited that was and pressure selling caps that large me told That period. that during highs oino ylsi tc aktpie.Mn rsnain fcycles of presentations Many the prices. is trading market my stock for in principle cycles organizing of an notion earlier, indicated I’ve As Correlations Intermarket and Stock Breadth Using Market Cycles Market Tracking #6: Practice Best swt h te IKmaue,Ipypriua teto oextreme to attention particular pay I measures, TICK other the with As ial,Iwl fe s ednsi TCIt epwt h execution the with help to $TICKI in readings use often will I Finally, + 8o eo 1 anm immediate my gain –18 below or 18 www.MyChart.ir + 0.Ti odm that me told This 500. BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 319 An analytical routine that I have found to be particularly useful This leads to the next phase of the market cycle in which volatility At first blush, this doesn’t sound particularly helpful. What cycles in the prior best practice, particularly valuable are situations in which even as ‘‘selling pressure’’ increases. When buying oron selling the pressure upswing, are up or down movesbuying tend or to show selling follow-through; pressure waning generally precede reversal. Per the discussion values and downtick values.buyers This and helps sellers me in differentiatepressure’’—the the the cumulative stock sum activity market. of of It upticks—to is fall very as common markets top for out, ‘‘buying this is to take$TICKI five-minute and values treat for the high $TICK valuesvalues and for as one-minute the ‘‘downticks.’’ period values I as then for ‘‘upticks’’ and keep the a low rolling one-day total of the uptick separates upticks and downticks into distinct distributions. The way I do is a mistake, however, as the risefollow-through. from Waiting important lows for does tend the togood show portion next of pullback the market often upmove. entails missing a number of shares making fresh newfrustrating lows period dwindles for rapidly. traders, This as can theyand be don’t may a feel have comfortable missed chasing the the price subsequent bottom market strength. This high upticking readings among theprice various momentum: measures Strength and is leads to followedrise upside by from further market strength. lows, During most the stocks participate in the strength and the and correlation remain highin and to buyers from take longer advantage timeframes of jump the retreat of the sellers. This creates very various uptick/downtick measures, failsand that to is generate often a fresh good price indication that lows, sellers have been exhausted. these lows, we typically seeextreme broad negative selling, numbers with and the thenweakness. NYSE dropping TICK to At hitting higher some lows on point, further the selling activity, as reflected among the lack in time-based regularity,similarity. however, The they make typical up stocktypically for market follows in cycle a structural starts period of at high a volume/volatility price and low, correlation. which At but these are aperiodic. That is, they vary in duration and amplitude. always construct schemes in retrospectexplain away and contradictions, identify but I alternate have countsin not anticipating to found forward these price ideas movement. Cycles to do be exist useful in market prices, make the assumption thatscheme, these such are as wave fixed patterns. in Ican duration have report spent or years that follow on the I a cycles have fixed issue and found no such reliable regularity. Yes, one can 320 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES u o rm$IK hssget httebyn rsligatvt is activity selling or buying $TICKI, the from that pressure suggests selling This and $TICK. buying from weak not or but strong very see we cu erccetrigpoints. price turning the cycle in near frequently found, seeing occur nice I’ve we’re divergences, market—a Such what indexes. broad large-cap confirming of the not movement to is extending breadth not that is heads-up and caps large to limited ylclsit ntemre seteeyueu natcptn hne in changes anticipating volatility. in and useful direction extremely market is market anticipate the and in perspective shifts thematic cyclical gain to correlations intermarket and breadth in shift upward an rallies. market as made eventual earlier, stocks the months anticipated fewer than lows, lows market 52-week those At fresh Fed the higher. by stocks conditions monetary propel of helped easing the 2009, market and broad 2003 eventual In led declines. respectively, stocks, in financial weakness and relative for the technology clues 2007, or and important 2000 with sector In change. us market one providing broad eventual changes, often, those Very lead can will changes. class countries—we asset cyclical across thematic classes broad asset those anticipate central as relative of well movement on the equities—as relative tabs and and the commodities, keeping earnings, currencies, By rates, company of for stocks. releases, movements heads-up in economic nice change actions, a cycle as bank serve of and possibility classes are the asset These among stimulus). monetary shifts of selling meaningful a withdrawal and the rates) higher (anticipating (anticipating stocks dollar income of fixed but US of a currency), selling the US in a helping to the price led is favoring has to differentials turn rate traders in (anticipated leading This signs strong hiking. is stay seeing Fed which we’re of economy, example, probability US for greater the this, in writing strength I’m of time asset various the of At behavior fundamental the classes. in broad changes observe these typically we When shift, drivers developments. geopolitical monetary or in changes factors, policy, macroeconomic to due be can This changed. ylscag eas oehn mn h rvr fpiehas price of drivers the among something because change Cycles vnwe o rd utoeastcasadisrmn,uigbreadth using instrument, and class asset one just trade you when Even ylspsesdfeetfeunisadapiue,btsimilar but amplitudes, and frequencies different structures. possess Cycles e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 321 Of course we want to avoid debilitating losses because it takes a while We may reassure ourselves that a truly adverse event will only occur One of the sillier examples of mis-sizing positions occurred when on remaining capital to return to breakeven. A drawdown of 25 percent to recoup them. A drawdown of 10 percent requires an 11 percent return moves for the current volatility1 regime. percent Those adverse excursion. scenarios That mightlevered could be position. be for debilitating a if I hold a highly needs to ensure survivaland in desires a for worst-case profits scenario,position at not overnight, the just I moment. meet need If needs to I look am at holding worst-case scenarios an of S&P overnight futures one in 20 times, but ifa we’re month trading actively, or making quarter, dozens of that trades adverse in event is guaranteed to happen. Sizing sharp move across marketslead and to a outsized losses. convergence of correlation. This can Simple historical investigation could uncovercorrelations the among waxing the and asset waningnot of classes, conducted. but As often a those result, investigations an are unexpected market event can lead to a were hit and losses were twiceexcusable as form large of as the the trader samein anticipated. mistake A occurs two more when different traders own asset positions classes and assume that they are diversified. diversify his holdings bythe adding two a indexes long are NASDAQcorrelated position. during highly risk-off Of correlated periods. course, and When stocks become sold particularly off, both highly positions I spoke with a trader who was long the S&P index and decided to rather than stopping out atis a increased, pre-chosen the level. Once variability the oftrader holding vulnerable returns to period increases an as unplanned, large well. loss. This leaves the warning. The sizing of thegap position risk does and not leads takewould be into to allowing account a a short-term the trade potentially tail, to debilitating turn into loss. a longer-term Another position example money in the trade, butto may the not position reflect how beingthousands the of stopped trader shares out. of would a respond A stock and good then seeing example it would gap lower be on an buying earnings tolerance. So let’s say thatES a futures. trader X is is bullish chosen and because buys of X the desire contracts to of make the a certain amount of Best Practice #7: Sizing Positions for SoundOne Risk of Control the most commonbased mistakes I on see the traders need make and is sizing desire positions for profit, but not for their ultimate risk 322 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES oehl u oe,w aet obetermiigcptljs to just capital remaining the double we to If even. have break we to money, capital our remaining half on return lose percent 33 a requires oiinwt utpeo otat.Abs rciei rdn is trading in practice best shorter A a contracts. holding X than of riskier multiple much a long-term be a with can Holding position contracts sizing. X position with expanding time position to extending losses that equivalent meaningful forget is incur often period Traders frame still frame. holding can time well-defined position extended a the the over Without however, trend. level, a stop still ride and but directional to holding extend trade, desired order and a size in the position in times reduce sustaining trader stay a of see to I odds Occasionally you move. underlying allow the do reflect volatility. targets must market and overestimating stops are because, wider you is The positions period, This holding which reverse. chosen anticipated subsequently in the to situations the the at only with to of initially, up relative way period wind your far holding to move too the easy placed it’s extend period, are to holding parameters entry the of If point trade. the from far target very the reaching not to is prior level out 5:1 stopped a being 8:1! that of are realize seeks odds who the doesn’t timing trader if risk a the attractive to have, Assuming not relative point. do reward entry pros outsized greatest given the hitting any even of for that likelihood expertise level the downside mistake. reveal this a given would making seeks a often examination who is into historical trader likely simple take trade The A a noise. positions to in mere in level fails reward-to-risk on resulting huge This out market, stopped the stops. frequently of tight being volatility overly underlying the with account sizes position large markets. from away P&L—and focus on attention our our takes focus us that naturally calm throw losses of likely Large zone will saddle. a losses the in large from back, stay unplanned, to money to is some the ourselves goal exposing make our Conversely, focus, to If losses. hard altogether. their too extend it try and overtrade, loss, miss their undersize or by will frustrated opportunity traders subsequent traders, many to good loss, lead stiff next to a loss the after unplanned example, large, For a trading. for bad easy very is It impact. dry of plenty have and and planned drawdown back. are with coming losses for live that ammunition can sure we Making that started. ensures we known where to back get eae rbe cuswe rdr tep ocmest for compensate to attempt traders when occurs problem related A psychological their of because losses debilitating avoid to want also We oeie none h poiepolm lcn agt n stops and targets placing problem: opposite the encounter sometimes I www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 323 The mismanagement of know, I am an enthusiastic . Enhancing Trader Performance An exception to this principle would be the new, developing trader. Many traders understand this and realize the need to stay in the game, capital, which means consciously undersizing positions. For quite a while simulation to significant risk-taking is often a bridgetraders. too It far for makes developing sense to get one’s feet wet gradually in trading actual actual trading. Conversely, once onepaper has trading and made now their can rookieto sustain mistakes small profitability, positions in moving in actual from trading simulation is a natural step forward. Leaping from actual capital, it is preciselylearning for process. that If one reason cannot thatit follow it’s in a a simulation strategy useful mode, and profits step make surely in money will the from not follow during the rigors of prices but innew simulation strategies mode and learn allows from‘‘paper developing mistakes trading’’ while does traders preserving not to capital. simulate While test the out emotional pressures of trading advocate of simulation trading as a learning tool. Trading with real As readers of opportunity can be asmismanagement of detrimental risk to the long-term success of a trader as the a problem because, as wein saw markets. earlier It in is the preciselywe book, because no every need edge edge to has lasts capitalize a forever limited on shelf each life one that while we can. but make the oppositepoor mistake. job In of managing diligently opportunity. managingbets In and risk, other fail words, they to they do undersize capitalize a their on their advantage in the marketplace. This is work for you over time but atthat, any sized time too can large, lead can to ruin strings of our losing accounts. trades as our ability toincur anticipate a the risk future of is ruin imperfect, on we any cannot particular afford occasion. A to probabilistic edge will kings, but you could always losewhy if it the is other play imprudent has tomarkets a go can full all be house. That completely in is undone on by any a single single trade. catastrophic A loss. superior As long edge in Let’s face it: evena when given occasion. the You odds should are aggressively in bet your a favor, poker you hand with can three lose on is a motto that works for traders as well as physicians. Best Practice #8: Managing Opportunity as Well as Risk conducting historically grounded stressyour tests market so could that move you againstfor know you foreseeable how in levels far of your market chosen volatility. holding ‘‘Above all period else, and do no harm,’’ 324 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rddvr ml oiin nSYjs oaciaet inn and winning to I acclimate trading, to simulated just in SPY strategies in trading positions my small out very worked traded had I after o ag fe inn eid n o ml fe oigoe,traders ones, losing after potential. their small to too relative trading and underperform By systematically periods markets. winning in bad edge after reflect longer-term large necessarily and one’s too not winning of do erosion of and the strings chance or many trading by that ones. simply is losing occur course, after trades of size losing that, reduce with and problem trades winning The after market larger the trade in periods and losing and their winning becomes in overinterpret early edge to make is traders one’s development mistakes exploit common most to the of positions One of important. sizing proper the however, develop to time myself give confidence. and During but and trading returns consistency leverage. my my to greater maximize shocks to using minimize looking to and not rather was futures I eventually ES phase, and developmental the stride, my trading my found to I moved as size I in grew positions Those losing. o eeszdtosal nta atrseai,tetae strapped is trader the scenario, latter that In because small? unfulfilled, feel too you sized you the will were Will or size, target. trade, you winning your trading your hits your with and pleased favor with be your that, in moves Imagine immediately visualization. market different a and in stops our run edge. trading front our to trading erode likely further our and with we’re targets aligned alignment, not that are those Without emotions with plan. our uncomfortable that we’re know If we stopped losses. scenarios, being planned of undergoing scenarios rehearse and A mentally out success. limiting to truncates by is also failure practice it best but avoid losses, valuable to realized attempt limit to may This natural taking. be risk only losses Because will experience it traders losses. If failures, failure. as after trading; of in indications good inevitable necessarily are not so losses are they not however, game, and probabilistic a money is trading making after good trading bad feel with trading losing of equation netedvlpn rdrhsmvdt on fcompetence, of point a to moved has trader developing the Once h otcmo esnfrfiigt c nopruiy oee,i the is however, opportunity, on act to failing for reason common most The uewyt nwi er aln omng potnt st engage to is opportunity manage to failing we’re if know to way sure A ene taeist aaeopruiya ela risk. as well as opportunity manage to strategies need We e Takeaway Key ti nesadbeta traders that understandable is It . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 325 . Did you follow your own best practices, or One of my practices is to make my base case that, if I lose money in What you want to ask after both winning and losing trades is whether these a much larger market picture. That picture would have been clear to generates valuable insights.resulted from For my becoming example, so focused on one short-term cycles that losing I missed trade recently a trade, I’ve madehow a I came mistake. up I withany review the possible idea each to errors aspect how I of I may the managed have the trade, position, made. from to Very identify often, that review process trading review will enableyou you a to chunk catch of your capital. mistakes before they cost information forward into goals formoney but your traded subsequent well, dissecting trading. the If positiveoverreact practices you to will lost the help you lost not capital. If you made money but traded poorly, the did something wrong inDissecting these your areas, trades that enables becomesright you a and to takeaway wrong root as from out well. a precisely process what you perspective did so that you can feed that the idea, sizing thepositive position, takeaway and that you managing want the to trade, highlight that for becomes future a trading. If you were good trades or baddid ones you fall short? Whenusing you the trade dissect as a a winning learning tool. or If losing you trade, did something you well are in generating it was placed impulsively with excessive risk.occasion, It but worked was on that a particular complete failure from a process perspective. you managed the risk/reward equationthinking well. We of are losing not trades accustomed asfocus to on good outcome rather trades, than but process. A that winning trade is can because be a we bad one tend if to not necessarily an indicationlosing that trade you qualifies did as anything a good wrong. trade In if fact, the the odds were in your favor and As mentioned above, losing tradesitem can can occur purely hit randomly.be the A stopped tape news out just on after the resulting you noisy entered trading. a It’s position frustrating, and but it’s you will Best Practice #9: Dissecting Your Winning and Losing Trades losses that debilitate us, and wewe never eliminate want a to sense size positions of so achievement. small that in a lose-lose mindset:wins. unhappy Risk management if and the opportunityaspects management trade of are loses, trading psychological as but well not as financial happy ones. if We never it want to encounter 326 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES h oiin okn ako h rd,Iraie htIbcm so became I that realized I entering trade, to the prior on classes back asset Looking relevant all position. reviewed the properly I had me fwa a on ni oemresoe tes hsi unled turn in This their others. adjust over and markets markets by afforded some sets opportunity in the rethink on to them going understanding clearer was a what had they of that in realized money they they losing review, categories, consistently Upon that but of others. find markets, variety several will in a traders useful money by often making find were Very trades with traded. losing instruments work and the I winning including traders down break that to exercise is One markets. the about from alignment. came that returns for wait risk-adjusted what to understood greatest patience also the My having aligned but why. was happening and was head happening something my was felt when I occurred gut: markets my in strong with edge realize that me greatest have helped have should my trades losing that not that and something did winning miss my I Dissecting to obvious. process, likely been feel a more research on was my to more and relied able than understanding a I was had market when I I occasions, the that other when for doing On was trades. was It in, best market market. my were the place the we what in cycle of seeing the understanding market was of strong my I structure review patterns the thoroughly backtest for to and sense it time a that trades, develop utilized between indicators, had occurred I time because significant was When process. research to led results. trading best frequent the achieved amount More trading the trade. selective was prior more loser losses; the or the since winner Indeed, intervening a trade. was time winning trade of a a be whether to of likely predictor was markets best from it away trade, stepping losing after to trade a likely a following was placed it I trade, When winning trade. a losing after a surprising be soon somewhat trade a a a found reviewed placed and I I months well When of ago, pattern. as period while a practices over A best trades improvement. of our series performance feed at can efforts turn our in as patterns Those checklist. trading. the to our of allowed terms not in was opportunity I the risk. justify at could capital I my until place risk to take me for up line that to everything captured needed checklist time checklist pre-trade That longer a position. out another the fill entering to regarding before myself diligence requiring by due trade that corrected proper the I in rushed frame. engage I to that failed picture short-term and market’s the with enamored iscigwnigadlsn rdscnhl sietf atrsin patterns identify us help can trades losing and winning Dissecting iscigwnigadlsn rdscnas ec ssomething us teach also can trades losing and winning Dissecting extensive an on capitalized trades best my that was this for reason The www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 327 Key Takeaway You can’t improve it if you don’t measure it. In a well-known example, Ted Williams tracked his batting average The general best practice is to make sure we are spending time For example, I routinely find that some traders trade well in more Metrics are key tools in understanding our performance. Our memo- sweet spots. of getting a hit.performance Other helped him locations understand were which pitches farto to swing less avoid. at promising. His and which metrics Tracking enabled his him to more consistently function in his as a function of the locationlocations of pitches represented relative sweet to spots, the strike where zone. he Certain had a very high likelihood nuances of performance ispitcher essential into when a you’re game deciding versusto to pinch another, hit or send rather when one than you’re another. sending one batter games? How often doesin he clutch strike situations? out? How How often often does he does hit he for strike extra out bases? Knowing will turn to sabermetrics.left- What versus right-handed is pitchers? the Fastball player’s throwerspitchers? versus When batting breaking batters average ball are against in scoring position? During day versus night Best Practice #10: Collecting Trading Metrics When a baseball coach wants to understand a player’s performance, he learning machines so that we aredo ever right evolving, as benefiting well from as what from we what we do wrong. changes of market regime. studying our trading, not just studying markets. We want to become trading accordingly. Sometimes the dissection ofreveals winners correlations and in losers markets also andcorrelated. trades This can that be we important, did as not correlation expect breakdowns to can be signal volatile environments than less volatile ones; some traders perform our sweet spots lie and where they do not. ries can deceive us: We canfact think we we are perform biased well by inprovide a situations an few when objective instances in view that of stand performance. out They in tell memory. us Metrics as traders where 328 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rdr aetermnya eti ie ftetaigdyadls tat it lose and day trading the of times certain some at and money ranges; their in make up traders chopped get and conditions trending in admirably sgnrlbs practices: best general as whether us control deliver can bet. markets we we but week, much get, and how we and cards day the Each control cannot hand. We given hands. the a for likelihood with go the winning not and should odds of understand you players when professional and and poker, swing In back, good fences. hold a should take you should you when you help and when can swing metrics should your you knowing when Williams, determine Ted with As times. other ■ ■ ■ ■ ■ ■ ep o n ifrn ido we spot. sweet of kind performance different trading a best by find your clouded you to correspond helps not that levels is risk the vision Knowing pressure. markets their see when and nimble objectively more more isn’t are this sometimes but Traders opportunities, case. best the the always for reserved be should taking risk Ted the per example. opportunities profitability, Williams prioritizing with of inversely importance correlate the can issue, highlighting taken an trades is of overtrading number If the opportunities. among weeks selectivity and days more Other find positions. of number large a establish may trader the where trading. highlight of styles also our can for it lie and opportunities best, greatest trade we stocks and markets et.A oe bv,vltlt sotna motn eitrof mediator important an often is volatility environ- above, market noted certain As in condition best ments. function market traders of often, function range—Very a as Performance class asset and instrument of function a as Performance atclrpten curn nmres uha raotpten or patterns breakout as such setup markets, in of occurring patterns function particular a as Performance taking risk and sizing position of function a as Performance activity trading short-term of on function a money as longer. making Performance positions holding and quite when edge be points any lose might and entry but trader moves, strengths spotting a observe at instance, to For good unusual performance. not in it’s weaknesses frames, frame time time varying of for function a as Performance performance. htmtissol rdrclet eeaeafwta n helpful find I that few a are Here collect? trader a should metrics What Etisaeotnpeiae on predicated often are —Entries We rdr odpositions hold traders —When www.MyChart.ir Sm asadwes a weeks, and days —Some Uted downtrend, —Uptrend, Ti a elu the us tell can —This Tegreatest —The BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 329 —I know many traders —How does our trading performance (profitability, —In our physical state we can be energized or depleted, It’s a powerful combination when dissecting winning and losing trades Physical state confidence/fear; unhappy/happy) andgauges seeing of how performance those can providefactors vary that information contribute with about to the and detract emotional from performance. risk management, decision making) vary as astates? function of Keeping our emotional track of key emotional variables (frustration/calm; Emotional status Performance as a function of recent profitability useful information about the success of our position management. moving average crosses. Trackingentry performance setup can as help us a refinehow function our trade positions of execution. the performed Similarly, tracking following our exits can provide us with when we are in a positive versus negative physical state. Tracking our physical state sets themake stage different for decisions and our maintain cognitive different performance, levels of as concentration we rested or fatigued, comfortable or ingry discomfort, or healthy or filled, sick, toned hun- or out-of-shape, keyed-up or relaxed. Very often tell you whether recent winsdecisions. or losses might be biasing your trading who trade very wellwho in then a lose hole—when disciplineBreaking after they down they have your have lost future gone money—but on profitability a as winning a streak. function of P&L can ■ factors that are most connected toSome our of trading the successes more and important weaknesses. personal metrics follow: ■ as a function ofrequires our that personal we performance. collect Tracking a personal range metrics of information about those personal Best Practice #11: Collecting Personal Metrics Trading metrics are but oneimportant are side our personal metrics—how of our the trading performance performance varies equation. Equally ■ self-aware about the bets we make. better and more consistentimprove in or exploiting avoid strengths, weaknesses.tools and for Metrics, mindfulness. learn employed When ways we properly, know to our are sweet great spots, we can be more is blended with metrics-based reviews ofperformance performance. data The to goal help is you to identify use strengths and weaknesses, become 330 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES n’ oktr nomaigu ucs.I’ o taluuulfrtraders for unusual all seeing at not of It’s success. possibility meaningful the into turn and work one’s curiosity, intellectual the fast-paced making, the the decision challenge, independently, work competitive to the opportunity by the problem-solving, stimulated markets to come Traders typically positives. the outweigh to begin trading of negatives psychological can they setbacks, on dwell to begin slumps. we become Once and concentration, making. motivation, decision undermine future to All potential doubt. the and still have can uncertainty, these who performance, of trading flat traders loss, and have that of periods managers I know through portfolio times. go you successful at many time, overwhelming with of and worked confusing, length difficult, any frustrating, for be traded you’ve Markets If with Love in Staying #12: Practice Best ■ ■ a rvd swt ihdtbs rmwihw a nesadwhat understand can we which from successful. states database us rich cognitive makes a and habits, with emotional, work us physical, provide our maximize our can Tracking to and competition. respects choices, all of personal sustain in heat our to shape the needs in in that be functioning athlete to our any need Like we practices. performance, best peak trading as well as oeadls tue omresadterpatterns. are their and we markets which to in attuned situations less and to of more sensitive aspects become By various can act. with and we those unprepared, correlating feel performance, and we or states how mind prepared impacts our think tracking fuzzy, we How or negative? or clear positive closed, or open-minded epu tymnflo cain hnflgto-gtrsosscan responses flight-or-fight preparation. when market best occasions our of can undermine performance mindful our stay on us impact their help knowing and states physical our tts etn su o ucs rfailure. or success for up us setting cognitive and eating? states, emotional, worse physical, or our impact better greatly greater sleep, can lifestyles less research, Our or less more in exercise, or physical engaged more lesser we’ve review, or market when shorter perform versus we longer do How routines. preparation Preparation Cognitivestate h igebs rdco ftaigfiue ’efud cuswe the when occurs found, I’ve failure, trading of predictor best single The u forproa bevtos esol eal odfiepersonal define to able be should we observations, personal our of Out I’ o nsa o u efrac ovr ihour with vary to performance our for unusual not —It’s —Arewefocusedordistracted,optimisticorpessimistic, www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 331 In this sense, our relationship with trading is not so different from our A best practice is staying closely connected to the factors that initially At some point, the frustrations of trading can begin to exceed the becomes more about making moneypassionate than motivation loving needed one’s to work, sustain a killing high the level of performance. Similarly, traders who spend all theircan time lose trading contact and with watching markets what initially interested them in markets. Trading connectedness. Struggling to meet work demands, theand needs ongoing of household children, chores, a couplenurturing can fall the out experiences of that love simply brought by them not together in the first place. romantic relationships. We oftenfilled start with a the romantic wonders relationship ofdemands the in and other love, routines person. can Over blunt time, our however, passion daily and frustrations can eclipse learning, however, trading losesperformance suffers much as of a result. its appeal for me—and my are closed, I enjoyopportunity. the The research love process of and learningmight stay exceeds experience with positively any losing temporary focused positions. frustrations on If I I do not actively nurture that trading at various times, butprogram have to always find maintained fresh an sources active of research edge in markets. Even when markets but it is essential to derive gratification fromon our work. winning If outcomes, we cannot we count trading must process. focus I on have experienced what many wins setbacks for and us frustrations with in terms of markets, it became very difficult to sustain a learning curve. brought you to trading. Trading outcomes may not always be gratifying, talking with other traders. Herisk found and eventually a quit variety to ofnegatives pursue reasons of a trading for different began not career to field. taking overcome As the soon positives as that brought the him to gradually lost enthusiasmperiod for of trading performance during and a instead spent prolonged his challenging time on the trading floor Sometimes it occurs simply becausebecome the emotionally ups and exhausting. downs Onceeasy of that to performance occurs, sustain concentration it and is work no ethic. longer I so recall one trader who traders through the challenges of their often-extended learning curves. positives. This sometimes occurs because of the inability to make money. to start their career infatuated with markets,observing spending trading, much of tracking their ideas, time andon experimenting their with ideas. trades It based is that sense of being in love with markets that gets 332 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES lm,yurmi ihyeggdi akt,mvn orefforward yourself development. of moving and times markets, learning in in with engaged even highly shaping that, remain ensures in you enjoyable slump, role and satisfying large for day are a each that time activities Building plays states. physical that and emotional, and cognitive, greatly your experience, time your daily structure your you important of How something impacts performance. degree learning planned trading some of poor a bring satisfaction a should the are from is work activities it in if day these even Every that fulfillment, routine. daily ensure a and of trading part in interest and neet a aac otaigsrs htkesmo n performance and mood levels. keeps high that at stress trading personal to and balance family, a friends, has for trading interests grateful psychological feel can in and who mired trader energy, too The become slumps. satisfaction, to happiness, difficult to is it that contribute relationships, activities and includes energy week you find and give you day that in each activities of When make as satisfying. outside well you individually as life investments friendships, your and includes relationships in portfolio romantic well-being emotional of and That A diversified sources is periods. markets. pursue over portfolio market actively emotional trend bear your you careers sure challenging that make our own to as our is Even practice into best satisfaction. enter can or we returns much with time, of us provide way not do the markets in when times be will there practice, ways. wrenching less in trends in participate and example), to income for ourselves positions, fixed allow short we and into long diversifying of combination By (a assets difficult. a defensive quite over periods been market investment bear have violent great through would them a holding been but decades, have of that period trading when Stocks vulnerable our unstable. become When we becomes basket, risk. basket one lower in with are eggs more investment invest profit and our to smoothes us correlated highly enabling not curves, are that ways that assets in Owning appreciate portfolios. can for diversification of benefits the know We Diversification Emotional Creating #13: Practice Best h etpatc st lal dniywa rnsfn excitement, fun, brings what identify clearly to is practice best The smc sw a tyi oewt akt e h rvosbest previous the per markets with love in stay may we as much As lnfrpa efrac eursapa o rqetwell-being. frequent for plan a requires performance peak for plan A e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 333 blog, I introduced the idea of life as a gymnasium, with means that we either build our strengths or allow them Forbes blog is really a concerted push to develop the positives in our On the A common mistake traders make is to respond to difficulties in markets The goal of this best practice is to ensure that self-esteem and energy use it or lose it stations and equipment for every one of our strengths. Imagine getting expander: one who seeks to help us tap into our core competencies. A positive therapy isthat exercise—and one that expand—them. startsfunctioned If with the as strengths traditional a and psychologist ‘‘shrink,’’ the has the activities positively focused psychologist is an problems that crop up in relationships anddirected careers. No amount at of therapy problems,that however, we need can—in for itself—build elite performance the in strengths highly challenging career fields. on mental illnesses, conflicts,significant and strides problems—and, infrom indeed, helping has people drug made overcome and a alcohol variety abuse of to obstacles, emotional disorders to adjustment to atrophy. What I haveForbes termed ‘‘therapy for thelives, mentally rather well’’ than in minimize my negatives. Traditional psychology has focused Earlier, we saw that our strengths doof not exist in a vacuum. The principle Best Practice #14: Creating Workouts for Our Strengths drawdown. We want to ensure thatpsychological drawdowns drawdowns. of Emotional capital diversification allows don’t us become ups to ride and the downs of market participation without damage to our psyches. we can quickly become overwhelmed.least It rewards is that when markets weof provide want life. their to That means be that harvesting we rewards work from smarter, not other harder, areas when we go into effort will arrest theirfrom drawdowns. setbacks To is be absolutely sure,we essential focused double to effort down our to on development. learn activities If, that however, are not providing us with positives, by working harder, spending more time on trading, and hoping that sheer happiness, and lifemarkets satisfaction. keeps you Creating functioning well-beingbecome at debilitating a time distress. high outside level, so of that stress will never This makes it muchlearn from easier it. to A great weather wayregular to adversity time ensure and such for diversification hang the is by in nontrading scheduling activities there that to bring affection, energy, level do not wax and waneeggs with are profits and in losses. many When the baskets, self-esteem no one area of setback is overly threatening. 334 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES u etltuhes n u prtaiy uhawrot utlike just workout, creativity, a our Such focus, spirituality. to our ability and our toughness, love, to mental capacity our our of workout a examples: health. physical and emotional our in our and to relationships, closer in far work, us at move ideals would productively. workouts and such positively of more impact function cumulative us The ourselves helped extend extended that way to we one day, ones just every in loved if, with Imagine time connection. our and our closeness structuring enhance our as approach to such to way activities, meditation a become daily as also could such It clarity. methods and control use emotional exercise to we specific opportunity of which form an the in take day an sessions, could This be each capacities. would our make it of to some Rather, the grow all. commitment zones, for at life—a therapy therapy comfort talk to a our a approach Such be beyond muscles. not us would strengths well our push mentally exercise would to room, us weight requiring a in those ■ ■ ■ ■ ■ ahmnhcos nufmla edn htitoue st e topics new to us introduces that reading unfamiliar an choose month Each er e agaewt orcide n hnpa rpt utr that trip. culture the a to planning trip a plan language then that and children speaks your with language new focused a has Learn exercise typical your weights. if or flexibility running on and yoga date of to parts program neglected exercising been a trainer, have personal that a functions and with body gym the a of at in routine course workout new a a or Begin course cooking a be writing. might creative you’ve example what completely of good use is A practical make learned. that then and education learning the higher share to of expertise friend of institution area local your a outside at course and a you Take that experiences. shared area stimulating structuring unfamiliar toward about an eye learn particular to to like trip would overnight spouse your an select month, Each to have personal we or work reading, our in each life. employ can of who we end that someone takeaways of the several identify biography At a accomplished. or unusually philosophy is Buddhist world of work the a of read understandings our challenge that htmgtsm ftoewrot oklk?Hr r few a are Here like? look workouts those of some might What e orcidtahyuadbcm ate in partner a become and you teach child your Let . aetecus ihaprnro close or partner a with course the Take . lnteatvte oehr iha with together, activities the Plan . www.MyChart.ir o ntne emight we instance, For . o ntne start instance, For . BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 335 Key Takeaway Creativity is something we do; it is not a fixed trait. Creativity is not something we either have or don’t have. It is an Notice how each of these activities pushes us outside our comfort unusually promising. It wasopened looking entire at new old directions. indicators in new ways that series of buy and sell signals wereindicators. surprisingly This modestly led correlated to across my testingand trading sell models signals that as treated independent buy variables, some signals of which turned out to be proxy of market health. Thisthe led to measures observations of and discrepancies thedifferent among recognition facet that of each market indicator strength. was Moreover, capturing a I found that the time particular stocks or indexes I wasCharts trading. website When tracked I noticed all that stocksthe the giving major Stock indicators, buy I and realized sell that signals this for information each could of be used as a anew. I had longthe used Commodity technical Channel indicators Index such to as look at Bollinger the bands strength and and weakness of find fresh sourcesthe of ability edge. to That viewus places markets see a in new premium new, aspects on promising of creativity ways. markets and Creativity and helps also enables us to see old things We’ve seen thatis finding and not sticking enoughare to to ever-changing, an ensure we edge career must in be success financial able in markets to trading. adapt to Because them markets and continually Best Practice #15: Enhancing Our Creativity bias. In the biased mindset, we are imposing our views on markets. In the at market indicators in consensusopen, or inquiring novel mind; ways. it Creativity is requires an a powerful counterbalance to confirmation approach to ourconduct work a business and meeting in the a creative information or routine we fashion; we encounter. can look We can and experience others in fresh ways. Iffresh each mirrors activity that is enable a us mirror, to weIt see select is and difficult develop to new stagnate aspects if of we ourselves. are continually enriching our lives. zones, taking us out of routine and requiringBy us to making learn and those do activities new things. shared ones, we can also deepen relationships 336 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES nomto nnwwy oalwvest oet s o htreason, that For us. assembling to come and to information views allow new to ways accessing new in are information we mindset, creative eeaeafwwy oipeetabs rciei creativity: in practice best a implement to ways few a are Here information of pieces the assemble. among we patterns that sense we as as begin hunches, often insights intuitive Creative intuition. with aligned closely is creativity ■ ■ ■ ■ ■ areooi hmsta e pbodted ntemresyou markets the reflects in typically trends another broad up one set to that relative themes macroeconomic assets of movement term it because us implicitly. with know resonate already implicitly we will is what material crystallizes information new see we know—the times things and we Many many mind that encoded. are know open There don’t an you. not but for with have know chord work a you their strike whom conclusions Read which past. reputations the solid in with followed people from research that trades What find yours. you in might right scenario? Where are a world? such you from the and profit about views assumption say their the in that in with seeing would right Start are work. are they your they what them that out with share Find and you. markets from different but talented, nsc cnro o ol o rfi rmsc u o exits? for run a such from profit you for the could look that you How would scenario? assumption What a the trades. such crowded in with their exit Start to media. need will social herd and chats on ment thought consensus Track conversations new Generate olwdfeetmresadtm frames time and markets different ourselves. Brainwriting to Follow listening insight. of of ways effective gems different very a out are processed. braintalking with pick have and generated to you you’ve what you what to allowing hear listen perspective, or or read read will and you useful break Often, is a It take fashion. your stream-of-consciousness then speaking a to in braintalking: recorder through a You thing into sources. ideas same multiple the from accomplish perspectives integrate can Brainwriting you explicit. help knowledge implicit also make can to way brainwriting another Such yet down fashion. is jot stream-of-consciousness others, of in works thoughts the your read and others, with braintalking spoken research, and brainwriting in Engage material new Read o a emr ossetygnrt raieisgt nomarkets? into insights creative generate consistently more we can How rc lg,ohrsca ei ot,adwritten and posts, media social other blogs, Track . olwsnietmaue n rdrsenti- trader and measures sentiment Follow . akwt aktpriiat h are who participants market with Talk . www.MyChart.ir sntderir h longer- the earlier, noted As . neyuv eiwdyour reviewed you’ve Once . BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 337 Key Takeaway Self-talk is destiny. Per the earlier discussion, creativity requires immersion in new often sense andthemselves feel as trends. thematic shifts before they actually manifest thematic shifts that majorinteresting opportunities integration of can methods is present to brainwrite or themselves.markets braintalk multiple An and then read/listen to overlaps among your thoughts. We trade. By reviewing charts of different asset classesby and instruments tracking and strength andboth weakness themes across countries, and we shifts can among identify themes. It is when we detect those between encountering a setback and sustaining a slump. creative processing. Staying creative isin a great markets way and offinding staying feeding sources interested of our fulfillment in intellectual difficult markets curiosity. can make As the difference we have seen, lems. When we areconclusions—we confused—when often have solid a analyses problem lead that to can different become the focus of combinations and recombinations. An important ingredientcreative in successful thinking issolving. problem Unclear finding: market starting developments with can provide a worthwhile problem prob- worth information (or oldan information incubation viewed period of in playing new with that ways), information, followed generating by new action, I will respondfrustration and to anger. even normal reversals in my positions with and suspicion. That inand turn shape will the influence success how ofis I all my come about social across manipulated interactions. markets to If and others unfair my algorithms internal dominating dialogue price around us. If I tell myself thatof everyone is value selfish from and out me, to get I something will naturally respond to others with guardedness through an ongoing internalframes how conversation. we respond to How situations. In wea that kind sense, talk our of self-talk to lens becomes through ourselves which we view ourselves, others, and the world Self-Talk We maintain a continuous stream of self-talk, processing the world Best Practice #16: Tracking and Intercepting Negative 338 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ■ ■ ■ ■ ■ ■ oee,w a eoeimre nsl-akta oprsu with us compares that self-talk to in Often, relative immersed developing. become and stand learning can we are we we however, how whether us ones: tells internal That past. are the traders as ourselves ing trading. sloppy and management risk imprudent to score. big lead the can we making mode, This to attached a become such and In profits well. future things project see can turned and we’ve out, that things ourselves run figured tell corner, can a the we on trade, winning gone large we’ve a When score or information. our market derail of and processing exuberant sober become can self-talk sometimes but trading, of part is it panic, and threat thinking. generated catastrophic of is consider, by stress sense flight-or-fight-based to of a deal scenario with great A reasonable entertained catastrophizing. is a it be and if might reverses but profit?’’ usually market my and the out if threatening wipes ‘‘What very scenarios. Catas- generate worst-case anxiety. we unrealistic performance when significant occurs generate trophizing can we ceptable, opportunity on acting depression. from Such reinforces us matters. and keeps really talk do hopeless we in helpless, nothing defeatist, negative, that becomes message Self-talk the corner. sending the essence around are things bad that Catastrophizing erodes short Negativity falling constantly of sense also self-confidence. the but time, regret, of Over feelings done have’’ only self-blame. ‘‘should not reinforces we This that differently. ourselves things tell bias—and hindsight with Perfectionism Comparison confidence. our eroding Overconfidence mindset, victim stance a blaming in a us keeps Sustaining implicitly arousal trades. also the subsequent and fight/flight, with and anger interferes of often state a in us on. keeps blame so Such and distractions, environmental research, misleading We faulty software, banks, agents. central unfair external markets, of manipulators blaming those blame and might responsibility deflecting by comes Blaming hr r aydmgn om fsl-ak hs include: These self-talk. of forms damaging many are There Smtmsw elwt h rsrto fngtv out- negative of frustration the with deal we —Sometimes Smtmsw eoes icuae htw utassume just we that discouraged so become we —Sometimes Tems motn oprsn ecnmk nassess- in make can we comparisons important most —The Hr elo ako u cin nmarkets—often in actions our on back look we —Here Ngtv eftl ototnitree ihsound with interferes often most self-talk —Negative We eve omlavreotoe sunac- as outcomes adverse normal view we —When www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 339 . . We become part of the As a rule, we cannot change our self-talk unless we are aware of our self-talk When I first began experimenting with biofeedback—real-time mea- are doing. This reinforces a lackand of can confidence lead in to one’s particular ownstampeded frustration judgment on when any following rush the to herd exits. gets us others. This can lead to particularmoney frustration and when we others are are not. making of By our focusing on game others, and we can take ourselves put out on trades simply because it’s what others patterns and sustain our best thinking during trading. focused and reflective. Becoming awarepatterns of our helps self-talk us and break interrupting negativethinking with cognitive focused reflection. habits This and enables us replace to automatic avoid reactive trading interrupting patterns of destructive self-talk. Most self-talk thatwith interferes good trading is parttrue of appraisals a of habit situations—those pattern and that does we not would represent render our if we were self-talk is constructive or destructive.build The our journal mindful thus acts self-awareness, as and a it tool serves to as a practical device for day can become aself-talk great when way it tosituations occurs. recognize that In negative trigger a the and self-talk cognitive overconfident and journal, take a we hard can look at also whether identify that Keeping a cognitive journal and tracking our thinking during the trading ing a high degree of calm focus, traders were generally clear about sures of physiological arousal—during trading, Iinteresting. noticed When something the very biofeedback readings were ‘‘in the zone,’’ show- exits on losses actually representherd profitable when entries. we are caught up in the fight-or-flight reactions of the herd making. How many timesadverse do movement in we a reactpositions at trade, physically the only very and worst to time? emotionally It’s exit not to on so unusual panic to find and that a abandon trader’s our often suboptimal—action patterns. Seeing atrigger market move fear, against frustration, us and can regret,state all of action—precisely of which when we arouse need our to bodies be to focused on a good decision fight reactions to stressfulcognitive events. and Our emotional physiological arousal, arousal which then stimulates precipitates reactive—and Best Practice #17: Training Ourselves toand Stay Focused Calm Many of our worst trading practices are triggered as part of flight-or- 340 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES htmreswr on n a la lni idfrmanaging for consciously mind traders before in zone plan the clear left a readings had Those positions. and their doing were markets what evr oefli civn mtoa atr uigtrading. during The mastery can us. emotional journaling control achieving cognitive in them powerful of have very use be than and self-control rather physical bodies, of our demand, combination more on control mode efforts focused we calm, training a that enter our to so able making when be to zone, identify is goal the us The efficient. not—in helps are feedback are—and variability we rate Heart self-control. in and calm physically are we if decisions focused. rash been cognitively make had and are we We panic that centered. to ourselves images keep unlikely and the breaths, to deep summon few begin simply a take markets can rehearsing, breathing we when your us, Then, against deepening self-control. move and in training eyes, useful focusing your morning provides closing each images, minutes relaxing several Deep Spending on respect. focused. this us especially in be of keep can useful effect trading helps before the practice and as has performed arousal exercises This breathing overall breathing. body’s our deepen our con- and reducing make slow to sweating—we efforts increasing, mode—heart tension scious fight-or-flight muscle a entering up, are speeding As we rate that occur. aware are situations we problematic as soon when arousal physiological intercept for difficult it makes inspired with. that This begin plans to and lows. research positions to the or their with a likely highs stick to not new more traders is experienced to is less It move perspective, trade. every such a to lacking of react trader, life rookie the during The adverse expected threat. that be knows and can experience movement of price database deep a has trader veteran experienced than arousal that emotional found less traders. with who inexperienced situations (2002), market to less Repin responded the from Dmitriy traders research as and with arousal well focus Lo of very and fit Andrew levels This calm same traders. the talented to less show efforts experienced, to conscious failed positions made They When they themselves. pattern. talented them, different Several against very arousal. moved a of levels displayed they high however, time very thoroughly were traders, displaying the they zone, them, By the against trades. of going was out their trade in the that amiss saw clearly was anything that recognized nsc iutos ersodt htw nepe stras The threats. as interpret we what to respond we situations, such In smninderir ifebc a eavr sflto o training for tool useful very a be can biofeedback earlier, mentioned As to relaxation physical and breathing deep use to is practice best A www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 341 , with the added The Daily Trading Coach Key Takeaway performance. Our focus and concentration define the limits of our consistent peak A nice modification of the exercise is to keep the balloon in the air A best practice is to build our cognitive muscles by training ourselves The research mentioned earlier in the book regarding willpower finds Many times traders assume that they lose emotional control because benefit of building our cognitive muscles. move against us or being stoppedzone out even of when trades. we The idea faceexposure is challenging therapy to situations. I stay in This describe the is in a version of the to sustain concentration. while imagining frustrating market scenarios, such as having markets the balloon falls. Theground. It’s goal an is engaging app to for prevent children and the adults balloon alike and from teaches hitting us the Math that accompanies their em-Wave unita in which balloon the in user has the tomore keep air in for the zone, an the extended balloon rises. period When of the time. user falls When out the of the user zone, is to sustain focus for longerthat and is longer to periods. Oneincreasing use way time biofeedback to in not accomplish the just zone. I’ve to used enter a the software zone, program from but Heart to sustain is only a matter ofon time careful planning. before we become fatigued and less able to act periods of fatigue we are most likelyproblem to act for on traders impulse. This who is follow a particular markets intensively through the day. It that our ability tofatigued sustain after goal-directed action lengthy is periods limited. of We become cognitive effort, and during those we sustain both concentration and ato relaxed experience state a that state we of are flow. For mosteffective that likely tool reason, for biofeedback sustaining can our be a focus highly during trading. who experience attention deficits.measures, such It as heart turns rate variability, out do notIf that simply measure we relaxation. many are biofeedback relaxed but not focused, we do not enter the zone. It is when Best Practice #18: Sustaining Cognitive Focus An early use of biofeedback was to improve attention span among children they lack discipline or because they harbor deep, unresolved conflicts. 342 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES hylc steaiiyt uti ontv ou vretne periods extended over focus What cognitive case. sustain the to not ability is the often is that chapters, lack previous they the in seen we’ve As iloe,w a ete h otuepce n hlegn market challenging muscles and focus unexpected conditions. most our the build weather to can cognitive but we coaching, willpower, to or therapy vulnerable seek most to not are decisions. trading we when poor that is and It biases fatigued conditions. cognitive cognitively those the are under for effectively we us function prepare to while activities needed decisions Few multiple focus making uncertainty. time, and a can risk at trader hours facing active for The screens focus. to allows of glued work shifts be Most and respect. breaks that frequent in reasonably activity for unusual an is Trading time. of hyaegigt xeinels n rsrto eadeso the as of useful regardless particularly frustration markets, is in and What edge employ. loss an they experience with techniques traders. to trading psychological developing going not to are are useful traders they quite those be however, self-talk—can If, of focused stay is mindful traders sure, help need to and be above—ones To they outlined assistance. those what as psychological such that exercises just not is mentorship, experience and general teaching My traders. to hoping developing you’re plans the return if expected help positive of objective plans; be markets. an their won’t lack in discipline to edge trust on stick an world don’t possess the they truly in work don’t that the they is that discipline sense lack of they seemingly indeed, lack who The their losses. traders taken for having many after reason plans met trading I’ve their from extensively own. veering them discipline, their patterns with them worked canned make traders any and have to in others rarely validated been and by patterns way, those them systematic have to Rarely software. taught traders trading they for patterns from fact true on particularly in is rely when This who patterns. emotional random are purely experienced problems trading Less are markets. their in assume edge often an with traders traders and provide in coaching, in can of amount experienced itself, no problems of that is many me this to of for to reason answer The limitations clear markets. the from financial and a is far promise itself, over is by the It for coaching, significant. for that basis be sense can full-time good limitations a Those rather coaching. on a traders have coached I decade, has who someone As Mentorship and Coaching Integrating #19: Practice Best ti o htrao htItpclyd o usecahn with coaching pursue not do typically I that reason that for is It aytmstease otecalneis challenge the to answer the times Many www.MyChart.ir . ihincreased With . All BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 343 Can such integration of coaching and mentorship occur outside of There are many experienced traders who enjoy teaching and conduct A simple analogy makes the point. A developing tennis player needs valuable professional networks. skill development. Such mutualindependent learning traders, can also as occur traders online find among compatible buddies and create delivered by experienced traders whocan have be won quite a useful highEach in degree trader of helping becomes trust, traders both deal teacher with and challenging student, sharing situations. in learning and learning and addressperformance. both I skill have and observedon very a psychological useful trading aspects interactions floor of among when trading traders problems emerge. Such informal coaching, formal training programs? The tenniscan analogy be highlights of one great option value that efforts to to developing improve performance. traders: Such engaging peer trading coaching can partners leverage in traders’ ticeship, one receives teachingtennis and player. coaching, much like the developing to the training ofkey physicians—mentorship component through of apprenticeship the is learning. a Through the mechanism of appren- performance. The value andmentorship impact of program role cannot modelingcessful be in training a programs—from overstated. high-quality the When development of you master look plumbers at suc- can be a highly effectivetraders mechanism to for learn learning from as theon it their direct allows trading; example and developing receive of coaching a for psychological teacher; aspects receive of trading feedback mentorship programs as part of theirtors businesses. who Some contributed of these best are practices men- that you’ll be reading shortly. This coach addresses psychology on theno division court between in mentorship the (teaching heatpsychological skills) of strategies); and those action. coaching are There (teaching seamlessly is integrated. developing player off the courtaffect and performance talking would be about singularly emotional ineffective. factors The that successful tennis the course of thatfactors, work, but efforts this will is done bepractice, on made and the to court, not address in in the psychological a context consulting of room competition with and a psychologist. Taking the work on theirexample. ground The game, tennis backhand,on coach net drills, is strategy, feedback a and on teacher, serve, performance, focusing for and first and work foremost on fundamentals. In a best practicedevelopmental is process. integrating coaching and mentorship into a holistic 344 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES n ecigcnb ocigrltosi nwihtecahhlsthe helps coach the which in relationship coaching a be can teaching and h esetvso hs h aebe hr n oethat. done and there been have who and those from coaching of benefit and perspectives together curves the learning bringing their By accelerate involved can development. traders intimately mentorship, skill are and chess coaches—all of teaching Think voice in performances. however, own coaches, her trader, football or another his coaches, from from learning learning is integrated trader of always the Instead is mentorship coaching. that the so to with practices, best guide their the a be extend can and help becomes identify framework traders helps practices that can coach strengths-oriented best The success and the powerful. particularly where his/her trader is of This the performance. model future of a vulnerabilities perspective develop unique and trader a strengths has the coach The on himself/herself. from learn trader ra a o eeoigtaest er h uiesfo h ground the from business the learn to traders It’s developing guidance. for and way mentorship great providing a by members junior manager senior the the benefits and ideas and research contributing by manager senior portfolio. the into for themes insights trading and to become research leads that frequently and business of This ideas areas spaces. their their share within all the trends which the discuss of in are parts team meetings this other group for about valuable regular Particularly ideas members. receiving companies team to from still the industry within while manager developments follows, the and closely allows portfolio he This overall manager. the portfolio on focus the contribute who to subsectors expertise various have in their I specialists that of team consists long/short with that equity worked ideas One research unnoticed. contributes go it otherwise and would efforts traders, the and organize managers to portfolio helps of This and team. experience, the quantitative to knowledge, background programming and skills research bring fast-changing team of research. of top dives on deep the stay from traders benefit still helps occurs and management markets This portfolio contexts. and trading team which within in trend I’ve years, attending distinct the while a Over them seen releases. of data top and on developments, stay economic news, to to trader it single that any interwoven for and impossible complex is sufficiently are markets that Team seen a We’ve Building Team, a Joining #20: Practice Best o xeine,scesu rdr h da nerto fcoaching of integration ideal the traders successful experienced, For h euyo h emmdli httejno ebr eetthe benefit members junior the that is model team the of beauty The the of members junior that is building team for model common A www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 345 Key Takeaway The right teamwork multiplies strengths. Imagine a situation in which four experienced, savvy traders conduct As mentioned earlier, creating virtual teams—groups of traders Assembling or joining a team brings other benefits as well. Team of capital from their manager soand that they portfolio can work management onprofessionals their skills. even own as trading They they remain thus contributing team develop members. as independent up, as role modeling is embedded in dailyVery interactions and often, team meetings. once thewith their junior research members and generation develop of ideas, a they receive solid small level allocations of success and mentor each other. Each participant wouldideas receive and many times guidance more than if he or she operated in isolation. Teamwork devolve into distraction. weekly online meetings to share market research, review performance, provide insight, who benefit from yourto input, sharing and who as are you as are. committed Without such compatibility, teamwork can easily day and benefit fromway to running stay ideas actively engaged by inof trusted markets others. and colleagues. benefit The It’s from key the a experience is great finding compatible participants: ones who truly make collaboration fun and productive. TradingTwitter are blogs, excellent Stock platforms Twits, for and identifying potentialmany partners. I independent know traders who maintain chats throughout the trading identifying potential teamgenerates members, good as ideas, you who approacheswith can your markets trading, quickly and in who a discern shares a manner personality who and compatible work style that would who share ideas andindependently—can experiences be online a and powerful who waybenefit conduct to from their remain affiliating a trading solo with trader others. and Social still media is a powerful tool for learning to the group and development becomes exponential. when trading becomes difficult. Teamexperiences, members so also share that their theya trading learn team from develop each new other. skills As and the areas members of of expertise, they bring greater members keep each other focused on markets and support one another 346 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES sabs rciebcuei a eeaetebs rcie fmultiple of team practices the one, best other the every stimulates leverage member can team each it As because participants. practice best a is sawoebcmsmr hntesmo t at.Ta sapowerful a is That parts. its of development. sum and the learning than for engine more becomes whole a as h hnsi ieta o prcaeadta o’egaeu for. grateful you’re that and appreciate to you in that cued life you’re when in frustrated things and the discouraged health. feel and and to impossible appreciation, relationships, is gratitude, mood, It as to such significantly emotions, contribute tender tenderness, when the suggests children of psychology positive many own in that my their literature research with in The happiness things young. and were those of they warmth felt giving feel I’ve and not as appreciative to so presence—much impossible are is and They it them life. that rescuing special, better affection in is are hand a Pets a there into had cuddle. them rescued, you’ve or bringing when have play so to more we wanting even that perhaps them and of home one the and least challenge, in at excitement, always cats joy, us four bring With that things meaning. the into tap to to ways me keep that enabled sounds it’s the as with regard, filled station, that going. socket. me radio in electric virtual an boon own into major my plugged program a of been been state and I’ve has a mood if the Pandora in as turn be will almost can music around, I right energy the inspires. and also discouragement but and interest, fatigue my my grabs Something my to music. music of favorite area rest about my work the by did my office—accompanied and my moved laptop, from my I writing to when speakers changed high-quality attached That den, after work. chore—particularly at a days became the but pages long exciting, the was writing text actually the of for routine ideas the Generating book. this writing But us? friends. uplift and truly family activities love our and Yes, Do inspiration? enjoy inspiring. experience we are that we yes, that do routines and, activities work special daily our those living enjoy for and we over done left is things probably time getting you little people, time most like much day you’re average so If an inspiration? spend of during state time a your in of spent much is How question: quick a Here’s Routine Your Daily into Inspiration Building #21: Practice Best ui sol n oreo nprto,hwvr hr r many are There however. inspiration, of source one only is Music when challenge this of version a experienced I earlier, mentioned I As www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 347 —experiencing the artistic vision of a creator; —creating special moments at home and away by —turning routine exercise workouts into goal-oriented —spending time with people we love and admire; —tapping into deep sources of faith and meaning; sharing —reading about people, topics, and stories that we find —seeing new places and new cultures; experiencing the history The most basic determination I want to make longer term and shorter What are some other powerful sources of inspiration? The best practice is to build these activities into your daily and weekly focusing on each other and sharing special experiences Reading development, tracking our progress, and appreciating our growth Romantic activity meeting new people and learning from them Physical activity Social activity spiritual experiences with others Art and the performing arts eyes Religion Travel of new areas; meeting new people and seeing the world through their uplifting and energizing connecting with the meanings ofother plays, art dance, forms movies, paintings, and term is whether the market is trending or moving within a range—and time frames is extremelyperspective. useful Ideally, for we putting want to short-term haveAt movement trend the and into very momentum least, at we our don’t back. want to be fighting the market tide. focusing on short-termtrending setups moves. and Understanding then what markets getting are run doing over over by longer larger Best Practice #22: Going with theand Market Day Flow Structure One of the most common mistakes I see short-term traders make is ■ ■ ■ ■ ■ ■ ■ habit keeps our batteries charged, energizing our work—and beyond. have seen in this book howthat it require is energy important to with balancecognitive, those the emotional, that activities and in give performance life energy best. if Making inspiration we a are daily to be at our routines, so that you experience inspiration on an ongoing basis. We 348 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES a,svrlidctr r sfli agn strength: to gauging day in from useful look we are As indicators strength. several losing day, or gaining is market the whether ■ ■ ■ nodn a sgigt eatedvru ag a.Guigday Gauging day. range versus trend a be to going is day unfolding h ubro tcsmkn e ih rlw fe eidof period a one. from trending after a transition lows to a mode of or in range indication a important highs breakout an new a be can making see this consolidation, stocks we of when number Conversely, range the common. to most mode trending unusually are from by mode reversals led of sectors—that expansion numbers strong averages—often an significant or market as see weak to we same when counter the It’s moving not versa. a stocks is vice For highs and lows, reversal. new new to in of drop lead a for of immediately up market, movement necessarily markets rising the not set in divergences do that participate but note to reversal to as and failing important reversal, higher is It’s of index. are shares possibilities the the of prices to list index sensitive broad overall be the to the want where fail we day highs versa, new vice a see on we When expand lows. to new expand should market falling e ih/e lows highs/new New hi aia,ntptigfehcptlt oki usi ftrends. of pursuit in reallocating work are to capital participants fresh market putting that and not sign capital, strong their sectors good some a see markets it’s we be weak, when some to so tend rotation, sector markets feature Range that that noteworthy. indexes, often broad the is in move divergence a A buck As move. ETFs sectors. sector given stock when of a above, majority noted in great the participating move will sectors market of trending solid number the identify to is behavior Sector shares. the of to downticking sentiment and most in upticking contribute broad shifts who reveal participants—those steepening institutional and waning among flattening and as regard, growing valuable particularly that of is in line TICK measure cumulative the useful of slope and advance–decline The strength. an simple like a downticks, provides minus Keeping stocks. line, upticks of of list total broad running the across a pressure measure selling sensitive a and is buying shares of NYSE among downticks versus upticks of TICK NYSE netemre a pn,w att adcpteod htthe that odds the handicap to want we opens, day market the Once A etoe nteerirbs rcie h e number net the practice, best earlier the in mentioned —As Aqikadueu a fguigmre strength market gauging of way useful and quick —A Arsn aktsol xadnwhgs a highs; new expand should market rising —A www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 349 800 and over) early in the session + Key Takeaway relative to their openingabove prices. open) The on list uptrend days; will reddays; show (prices and below all mixed open) green for on downtrend (prices range/rotational days. see many very strong values ( with many more stocksprior closes. advancing The than downtrend day decliningrelatively displays balanced relative the advancing reverse. to and When declining their wemuch issues more see likely on to the be day, into we’re a track range, the rotational number environment. of I stocks also on my like watchlist that are rising or falling for the day sessionnumbers that ($ADD persist through on the day. e-Signal), The uptrend you’ll day typically see starts early extreme .NY-ST on e-Signal),50 percent you’ll on uptrend see days,and mixed the below (hovering 50 near number 50 percent percent) on onlook persistently at range downtrend the days. number days, Similarly, of above stocks if making you fresh($ATHI.NY-ST new highs for on the day e-Signal) session and the number of stocks registering reverse will be true for downtrendfor days. When the we see TICK, fewmarket. that extremes moderation often clues us intoweighted a average prices slow, (VWAPs) rangy for the day ($PCTABOVEVWAP for uptrend days and few if any weak values (–800 and below). The Understanding day structure sets up good tradesand for sets the short-term up trader good execution for the longer-term trader. What are some of the indications of a trend day? Several are particularly early strength or selling earlyConversely, weakness if is we not detect necessarily a a rangeand bad day, weakness we strategy. and want not to chasing be fading either. both strength structure—the shape of thetrade current execution. market If day—is we essentialseller see to early a sound trend in day, the we session will and want ride to the be a directional buyer movement. or Buying 2. If you look at the NYSE TICK as it unfolds over the session, you’ll valuable in the stock market: 1. If you look at the number of stocks advancing versus declining 3. If you look at the percentage of stocks trading above their volume- 350 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES oko ftemre iei unn ihyu gis o,o snot is or you, against you, with running helps is it all. tide broader at stocks, market running individual on the trading if depending know you’re outcomes to when different Even The very context. balanced. have market relatively can is setup influence same their sellers or whether buyers whether dominant—or about deal are great a us tell structure structure Day multiday orders. and placing considering are you which in period time the above the on moderate turn days weak or strong see we When 4. h te ok oeaietercvrg ftetpc.Ti rae a creates This topics. to the of move coverage then their and examine text to anchor books the you other in topics the relevant the The and about written. read interesting You well anchor most topics. and find an of selection find researched the and well guides books text unusually the anchor seems scan that quickly one to is text: process useful A finish. if side by side electronic them side. read the by and side than texts sitting I the are rather bookmark they researching, books to When easier print is cover. actual It to versions. the rather cover time, from from in one work book reading at typically single books this a many call across reading might topic than We single several. a always scouring about are other parallel: tossed there At with books fewer topic. but consultation are the office, there to of so the leads book, view a multifaceted turn writing a what not in I’m have see This occasions, I to topic. until texts books, the other other on the yet say to typically to go are I have books book, they read one those I in When to topics. interesting related next something on book, seat background a for window books writing reference the of was dozens On stages I various in read. while and bookmarked being office floor, the of home on books my 10 least into at see walk you’d to were you If Increase to Creativity Parallel in Reading #23: Practice Best h etpatc srcgiigcnet h aktato surrounding action market the context: recognizing is practice best The hnraigi aall o a ee ns okfo tr to start from book a finish never may you parallel, in reading When niaostrsit oeeteeraig,w fe r seeing are often the move. directional we in a readings, into moderation out extreme breaking losing When consolidation more market into consolidation. turns trend into indicators a going indicates and often strength moderation that measures, days. range/rotational for numbers extremes balanced see and you’ll days ($ATLO.NY-ST), trend session on day the for lows fresh www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 351 Reading a book is like having an expert visit your home for a Having worked this way for years, I’ve become unusually good at The inventor Thomas Edison filed over 1000 patents during his career. When you no longer encounter new and interesting material on a discretionary trader of forex, gold, and DAX. He sets a maximum loss Your Risk This best practice is offered by TraderFeed reader Vlad, who is a Best Practice #24: Developing Rules for Managing you with multiple anglesThis on enables a us topic to and synthesizeand a emerge new with richer views, fresh array as perspectives. we of integrate information. what we read reading in parallel isperspectives whether that you are come containedwhen in away reading becomes none from a truly of the creative the exercise. exercise Parallel individual reading with provides texts. That is conversation. Reading in parallelyour is home like and inviting a participating group in of their experts conversation. to The acid test for can cover more high-quality materialbecome than better the over time average at person. identifyingprovide You high-quality yourself also material, with so a that far you superior intellectual diet. worth reading in detail.or The online articles same on process a applies particular to topic. research This papers efficiency means that you topics. skimming books, identifying their main ideas, and deciding if they are expose ourselves to more ideas—andin generating then our have own. more Parallel ideas readingefficient to is and draw a effective on way best practice, to because develop it’s a an deep understanding of particular every 6 months. Byof churning achieving out at more least inventions,material a from he a few raised number of significant the books inventions. in odds a Similarly, dedicated time by period each reading day, we He held himself to a discipline in whichto he generate and his one assistants minor were invention required every 10 days and one major invention and relevant ideas thatdown. you Evernote encounter is a can great be tool bookmarked for saving and and written cataloging those notes. topic of interest, it’s time to moveboring to for the that next reason. topic. Once The you reading loseswitch never interest, topics, is you usually take returning a to short the break anchor and book. The most interesting virtual conversation among theeach authors, of as their we lenses. view the topics through 352 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES o i rdn.H xlis ‘hthsrmvdagetda ftestress the of deal great a removed has ‘‘That percent) explains, (10 month He and trading. percent); his (2.5 for week percent); (1.0 day per limit xetberno oigtae sulkl oipi oraccount—or your impair to unlikely you is If psyche. any trades your even. trade, each losing break on of capital to of run percent just 1 expectable where than money more point no the remaining lose to to your yourself get allow double likely will to you need trade, you almost each on will capital You initial ruin what? of your risk guess that survive year, losers. to consecutive able a five be and in losing four consecutive trades of strings five 50 encounter of certainly place odds percent you 3 If over trades. little consecutive a four and of odds trades; percent losing 6.25 odds trades; percent losing 12.5 consecutive trades; three losing of consecutive two of odds percent 25 have is do wrong. periods to markets inevitable getting need survive and to we trading us What poor allows of sound. that risk-taking quite of is 40 level trading the over concept define for my make basic limits to Vlad’s hitting loss even. had break setting I of to of where just months capital situation have remaining a the three I in on percent where want me place places not to most level in would downside at percent I unacceptable 10 Personally, of wholly loss worked. be A would Vlad. month from a percentages different set certainly time. over two returns optimize next will the certainly well-defined trade with almost we’ll ideas risk/reward of that three all good deal Trading are great nervously. more odds a and/or the lose smaller one, and first ideas the good impair on three to money tend have and we back us If set comeback trading. also of subsequent back pounds portfolio the many set worth that Losses is cure. drawdowns deep that of found I’ve prevention psychologist, a the As period. time or idea, bring trade, single any can for trades of series or trade one down.’’ no me that knowing trading, from edr rdn o eg ud,weecptli eee,wl almost will levered, is capital where funds, hedge for trading Readers possible losses the limiting management: risk is here practice best The oka tti a:I o aeahtrt f5 ecn,te o will you then percent, 50 of rate hit a have you If way: this it at Look ecntwntegm fw a’ tyi h game. the in stay can’t we if game the win can’t We e Takeaway Key fyualwyusl ols 0pretof percent 10 lose to yourself allow you If . www.MyChart.ir o edto need You BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 353 Risk management is the best psychological . It is very difficult to keep our heads in the game if markets Vlad’s point is an important one: Finally, loss prevention in trading is greatly aided by diversification. If One of the practices that has served me well over the years is to implement. This can provide you with meaningfultrading guidance business. for your own wisdom: You can’t win theexercise game is if to you network don’t with staybusiness traders and in find who the out have game. how they sustained A manage longevity great risk in and reward the and the rules they period of time, andinto each a portfolio positive help us habitgambling turn pattern. our good No future. risk trade management It’s idea been is said so good many that times, it but is it worth remains sound are handing our headssets to us us with up adverserules moves. for that Playing taking govern good full the defense risk advantage we of allot to offensive each opportunities. trade, Hard each trade idea, each management and captures the ideaof of life. keeping Enis yourself explains, in ‘‘I’ve peak found condition that in it all is areas crucial that I am physically, Best Practice #25: Keeping Yourself in PeakOur Condition next best practice in trading comes from Enis Taner (@EnisTaner) many fixed-income and otherthrow off yielding a investments, reasonable return for eachyear, year. example, we If would I that still were harvest to have income a from losing our trading larger portfolio. any one method is buffered by the returnscan from also the occur others. in Diversification the larger picture ofcapital our money is management. but My trading a fraction of our family’s total investment capital. We have you have two or more trading systemsexpected or returns methods and that are each relatively have positive uncorrelatedyou in can their create a return situation streams, where the expectable series of losing trades for that I can’t take normal and expectable heat against my position. moves against me become a threat.against If my I’m position sized can more offer moderately, further moves be opportunity. psychologically. That’s In a a great place position to trade, I never want to be sized so large in that trade. Keeping mylose risk less exposure money modest if initiallymy I’m enables position stopped me if out to my quickly, and scenario it unfolds allows as me planned. to If add I’m to sized maximally, enter longer-term trades with aI’ve fraction found of that, my maximum when position I’m size. wrong in a trade, I’m usually wrong early 354 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ffiigbfr h aei nse.Tetm etk o developing for take we time The risk finished. at be is will race it the properly, before maintained isn’t failing car of the If stops. pit effective more get to us enables time. That less condition. in sense running done makes our top it then in of in, ourselves quality we’re keep states the to the If of that. quality the into from fit follows physically, our efforts workloads prioritize envelopes our to our make is practice and pushing moments, best conditioning be leftover distinct A those to cognitively. hit energy and we emotionally, the time lack the generally By moments week. we leftover and to day conditioning the peak during for time leaving and workloads trading. of downs and ups energy normal the the sustain weather we to positivity that and ensures processes Creating performance practices. peak best personal own with captured our all be aligned could him from routines keeping Enis’s checklist, reserves how a see on in to superb difficult draws not in It’s trader life. work be successful of areas and must the practice athlete sharpness, skill an mental continuous as on with Just condition strength markets. and in aerobic performer peak a be mtoal,mnal,adsiiulyhatyi mt aeo the on take to down: it am breaks Enis I how if Here’s professionally.’’ trading healthy of spiritually challenges and mentally, emotionally, ■ ■ ■ ■ ihpstv hnigadlf etrhpoealt efutu o my for fruitful be well-being.’’ to spiritual overall own mentorship life people, and young thinking especially positive others, with helping found also I’ve grateful. be to week. per Spiritual: short- financial of correlations reading out indicators.’’ test on technical long- will term toward I time focus weeks, learning a Other investments. with my term transcripts call spend conference and will statements I weeks Some reduce Mental: week). to per found I’ve times methods observes. three best he stress,’’ than the mental of less one (not is basis conversation ‘‘Good regular a on gatherings Emotional: Physical: aea em elz hti sipsil ownwtotqikand quick without win to impossible is it that realize teams Racecar their prioritizing by is short fall typically others and traders Where to order in stress reduce to enough not it’s that is here idea key The ‘ r opatc rdn ehiuso utpetm frames. time multiple on techniques trading practice to try ‘‘I ‘ pn v iue ahmrigo e hnsfrwhich for things new on morning each minutes five spend ‘‘I 04 iue fhg nest xrie – times 5–6 exercise, intensity high of minutes 30–45 aigi ai ome red n/rfml o social for family and/or friends meet to habit a it Making www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 355 —Meditation promotes calm, and it promotes enough to wait. The fear of doing nothing can be so Through meditation we can learn to be OK during the We only need a system with a small winning edge to learn to achieve a clarityperceived and need calmness to which act. caninvestment allay Meditation a this trader could may well ever make! be the best system. Herein lies The Flaw.patient So many traders are justterrifying not that we feel a needinstant to relief act from to it. stop This the is fear the and core gain issue. necessary times where we need to do nothing but wait. We be seen as a mysteriousThis genius need, than born just from a successful aconfuse trader. false intuition sense with of ‘‘into reality, wishing.’’ can lead us to be a successful trader as long as we follow the rules of the We traders can be an insecure lot. We would rather at times Enhanced self-control focused concentration. Both enhancecontrol, so our that cognitive we and canpatterns become behavioral rather mindful than observers victims of ofpatterns our is those. emotional becoming The aware first of them step and in not changing identifying our with them. John rightly points to three key benefits of meditation: So how can we sustain an even mind frame? A valuable best trading 1. practice comes from Johnmeditation as Hope-Robinson an effective (@johnhr), tool in whoJohn conquering writes: describes a fundamental trading flaw. our states of mind andplanning body that shift, lead we to can our lose best access trading. to the thinking and missing out (FOMO) and chasing poorto opportunities. a They fear can of also loss lead overconfident and following premature wins and exiting lacking of in confidence positions. after It losses. Once is easy to become and state of mind thatof enables them market to action. make sound The decisions emotions in the of heat the moment can lead to a fear of Best Practice #26: Using Meditation toDecision Improve Making One of the most common challenges for traders is sustaining a focus ourselves, as Enis points out, isus our to maintenance fire time. on It all is cylinders what throughout enables the competitive trading race. 356 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 2. r owtsadteeoinladpyilgclaoslo experiencing of uncertainty. of kind and arousal reward, physiological a risk, and as emotional the we meditation able withstand more to of the are for of muscles, think focusing exercise powers our can stronger our of The we training. build kind willpower sense, to a that time is In over This concentration. us the still. at training ourselves muscles,’’ focus ‘‘focusing keep cognitive our we sustain we that that time requires same It practice: trading best 3. eoigorevsfo akt a eapwru a fremoving of markets. way of powerful trading reactive a perspective. the be fresh from a can ourselves with markets day—helps them from the approach ourselves and for Removing markets preparation from morning back a as step as meditation us well Using screens. break—as trading midday from a away occurs trading for time rfa.Agypol lymve nterha fcnrnainand both confrontation In of danger. something of head scenarios notice their with minds we in their anger fill movies people, their people play Fearful reinforce fearful revenge. people that or Angry scenarios on angry fear. dwell or at to look tend They a interesting: take we If Through Visualization Minds Our Reprogramming #27: Practice Best hr soeohrpwru eett eiainta ae ta it makes that meditation to benefit powerful other one is There oolr fti etpatc sta oeo h etpreparation best the of some that is practice best this of corollary A eiaini riigfrmn n spirit. and mind for training is Meditation elbig hc lo st c rmapsto femotional of position a from act that to suggests us strength. Research subjective allow and inaction. satisfaction fear which personal of the well-being, enhanced money, fear to losing lead the of can and meditation fear wrong, the moves, being missing of of fear the fear: ourselves. to listen to well-being us Enhanced enables that action. market stillness to a responses promotes markets, flight-or-fight Meditation for by feel drowned know. is gut we feel keen that that a know but possess not traders but experienced know, often, may Very we what to access intuition greatest to access Enhanced W anttaewl fw r oiae by dominated are we if well trade cannot —We e Takeaway Key I swe eaesilta ehave we that still are we when is —It www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 357 reframes the emotionally This image reminds me that jumping into the cold heart pumping fast. water/taking risk can actually feelspeaking, good. I More reframe technically thehabit imagining situation. this Since scene, I problemssystems executing have have been my made greatly trading diminished. it a few seconds and imagine it isvery summer. hot, The and sky I is am blue,I sweating. it I jump is am into standing the bya water a second. pool. headfirst. Then Then It it is feelscell a unbelievably in shock, my good, but body as and only I the for sense blood every pulses through my veins, my In German, the phrase ‘‘to jumpa into situation cold that water’’ refers is to Before entering new a trade, and I am visualizing unknown exactly thatto and situation overcome therefore fear and risky. procrastination. I close my eyes for a I have found that visualization can also be used very effectively prior Notice here how a situation that could be experienced as unpleasant A valuable best practice is using imagery and visualization to change mentally prepare ourselves to take the righttechnique actions. especially What effective makes is David’s that the imagery to the start of the tradingBy day as a walking way to ourselves mentally rehearse through trading plans. various scenarios via imagery, we can the exercise becomes a kindexercise of to self-hypnotic suggestion. enter David trades,reframe uses but taking the losses—or a any very other challenging similar situations exercise in markets. could be used to (risk taking) isinto transformed cold into water something on that a is hot refreshing day). (diving By making the visualization habitual, situations. TraderFeed reader Davidfrom his Spengler own offers trading: this best practice our thoughts, feelings, and actions asmethod traders. for Imagery reprogramming can our be minds and a reframing powerful challenging trading cases, they unwittingly program their mindstrouble with them. the Changing very emotions their that mindsreplacing requires negative a scenarios kind with more of realistic reprogramming, and constructive ones. of stopping out would become far less onerous. by imagining ourselves stopping outexperience, of and refreshing losing ourselves trades, for learning the from next the opportunities, the act trading situation. If we were to prepare ourselves at the start of the day 358 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES eri u huh rcse n hne u fot constructively. efforts our channel and processes thought our retrain tef ecntanorevst hn n epn nwy htbring that ways in respond distress. and and think stress than to rather ourselves plan success trading train minds. the as our can important of We as programmer be itself: may of act role to the preparation emotional take The and thinking stand to our need from we that back means it habitual, becomes thinking negative When 2 htcnId oipoeteeanswers? day? these the improve of to end do the I at can trading for? What my edge about an feel 12. have I didn’t do I How that there were 11. doubles many How 10. a after himself performance to and fact puts learning the Norbert continuous trad- from questions trading: of day’s of the comes process are review review a Here daily a anchor improvement. a such can of of it consists power that and The practice performance. Norbert best ing reader infor- TraderFeed a that from as performance. comes use Beckstrom trading subsequent and our our of better, in assessment corrections done The hands-on have make could to our we mation review what actively we assess that trading, requires practice deliberate trading structured routine into Turning practice expertise. performance deliberate developing that in essential suggests is (1996) Ericsson Anders improvement. from at efforts Research perfor- targeted evaluate make to continually evaluations we those use which and mance in process a is practice Deliberate Reviews Trading Regular Conducting #28: Practice Best .Hwmn rdsddIms oa eas antpyn attention paying wasn’t I because today miss a I missing did of trades fear many How of out 9. placed were today trades my of target? many profit How or stop the 8. before on same bail I the did trades under my of again many make How I 7. would trades today’s of doing? many was How I what of 6. mindful Why? I rules? Was my of any 5. trades? break conviction I my lose? Did in to size not enough 4. trade have I I did Did or win to 3. trade I Did 2. .DdIpto ihpoaiiy(A high-probability on put I Did 1. elcn eaiesl-akwt oiieiaeyi ra a to way great a is imagery positive with self-talk negative Replacing rwswrigo oehn else? something on working was or move? out? work that did How circumstances? of? out scared + rdsta olntb easily be wouldn’t I that trades ) www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 359 Studying your own past tradeslimited is perspective a of must, opportunity but cost—it it provides only a helps to with the answers to our review questions that determines whether Author and blogger Ivaylo Ivanov (@ivanhoff) offers a best practice Ultimately, the most important question is Norbert’s final one. Norbert’s review is geared to a discretionary day trader. Traders with Norbert adds that if he conducts this review in the morning before that can feed our creativity. Here’s what he suggests: in ever-changing markets. But how do wesources develop of fresh edge? trading ideas and One of the themes of thisdiscipline. book Success has in been markets that is not creativity so isto much the a a new function trading single, of rigidly unchanging adhering edge as continually finding fresh sources of edge Best Practice #29: Using Chart ReviewOur to Creativity Feed we do. Trading experience we don’t reviewmight is be lost the experience—and riskiest that loss of all. our experience turns into learningwe and review, development. then First we we redopractice; do, every based review then on pushes us what to we’ve make tangible learned. improvements Every in what trade is is necessary fordo deliberate practice, but not sufficient. It is what we Answering the questionsanswers is anchor specific only plans useful and actions to toward improvement. future Review performance if the would prod me toward further self-analysis. Theencouraging review us is to thus take helpful in freshof looks those at markets. markets and at ourselves as traders is that a losing trade meansand I idiosyncratic may in well have the missedanalysis. market. something Should This important the trading prods loss me result toward from not further following market my rules, that more about markets and less about makingtrades emotional are errors. based Because on my backtested rules and relationships, my first hypothesis different trading styles and traders working on differentlikely trading issues have will very different review lists. My review, for example, is much likely to avoid making trading mistakes.is In a that mindfulness sense, process. his Clearly review identifyingtrading process where helps he him could work improve on his those improvements in subsequent trading. the markets open ratherday, than the in answers the are more evening likely at to the be end fresh of in his the mind trading and he’s more 360 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES lblrts tsntsc ept ofo i xriet eiwof review a to declining exercise from his from resulting go shares to leap utility a in such rise not It’s the rates. or global wake weakness the in oil stocks energy of in breakdown the instance, early—for themes ol edtesle obctsigadpsil ytmtcipt into review inputs such systematic possible from trading. and discretionary good emerge backtesting yield to that to themselves likely patterns lend most could the are Indeed, that sectors setups. candidates. identify new setup to best learn him to His enables him trades. also enables It swing additionally for above setup’’ described ‘‘perfect practice his outlines Ivaylo book, (2014), his In nition. lossetta vyosbs rciehlshmietf market identify him helps practice best Ivaylo’s that suspect also I edr ilrcgieti sasrcue xriei atr recog- pattern in exercise structured a as this recognize will Readers atr eonto sacr rdn kl htcnb utvtdthrough cultivated be can that skill experience. trading immersive core a is recognition Pattern eet fti al exercise: the daily monthly, of this some daily daily, of are benefits a the Here frame. on through time stocks going six-month and performing is quarterly, best habits trader the practical a of most as charts the me of helped the One has about take. that nothing not you did tells you it trades took; you trades the analyze ■ ■ ■ ■ htaestigu o oeta breakout. potential a for up setting are setups—stocks that swing a anticipation with great me of provides flow screens constant the through going mere The gains. bigger deliver to down, likely break also or are don’t out but that break setups to on probability focus higher have to only helps it as traders swing for importance utmost of accumulation. is momentum under industry are Recognizing industries which working market, the currently the is in what approach of view to unbiased an ways provides It new for ideas me market. given has It skills. recognition setup my improved substantially has It h ieScest ihyPotbeSigTrading Swing Profitable Highly to Secrets Five The e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 361 .... I assess market uncertainty by educating myself on con- occurrence you have todays be are optimistic followed and by know sunshine. Always. that rainy sumer outlooks, job reports,have and direct international and events indirect that decide effects on if the we USMarket markets. are uncertainty I in then is a likealways be state the people speculating about weather of whether stocks in composureto are going go that or up there or panic down will in the future, but unless there is a drastic okay with this uncertainty,button. you Until are then, ready youanother might to Albert want Einstein hit to to that come start upand buy with prediction searching the of for perfect the theory future. The market goes upbeen and a down successful (crazy, trader Ithat because know) you I and cannot know I always that have preparelive, s**t for, you happens as learn, happens and in you life. move You forward. Once you become Jonathan has not been trading for long, but he has come to an A relevant best practice, submitted by Jonathan Frank, a 20-year-old Finally, the chart review is a best practice because it combats confirma- important and mature insight: How we trade depends on how we assess college student and trader,Jonathan is writes: the conscious acceptance of uncertainty. there is much about the futuremoment, that we we could don’t very know well and be that, wrong. at any given uncertainty. Even when athe trader random variation possesses around a thatof durable edge losing ensures edge trades. a Risk in meaningful management markets, begins proportion with the acknowledgment that to Accept Uncertainty Success in trading requires the ability to act decisively in the midst of likely to capture emerging patterns rather than impose our own. Best Practice #30: Training Ourselves tion bias. We may think that thereview market of is individual strong or stocks weak, will but actually aconsolidation. show thorough us By strength, allowing weakness, markets and to tell us their stories, we’re most patterns across global markets tobe attracting identify the the interest macro of institutional themes investors. that might 362 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES nanra n?I eha ete oeatpeitn rainstorm, a predicting forecast weather a hear we If or one? environment market abnormal normal an a experiencing we Are environment. the savr fetv a ftkn h eroto uncertainty. of out fear the taking of way effective very scenarios worst-case a for is planning have and really Defining we we uncertainty. then possibility accepted eventuality, that not the in through actions our thought planned consciously and wrong is not are preparation have what we is If however, because That, about. odd, failure. sound all for may planning This wrong?’’ it’s dead sense, am a I in if see to expect I would future. immediate the of uncertainty the to ourselves conditions, of sensitize set can present we the By under constrained. outcomes past more of are range they the examining times other variable; those highly Sometimes are random. outcomes are they sometimes the edge; for directional a sense outcomes contain a prospective get those can Sometimes, of outcomes. we forward occasions, gauge of similar variability all go useful examine then and and a today time I stands provide in market options. back the also where via at markets look markets we of When into uncertainty. analyses priced historical is that are volatility markets find much much uncertainty how volatilities—how gauge and implied also moving and can realized we at markets, looking In by world. the in precautionary uncertainty take of to decide well hatches. very the down may and batten we and pressure measures If, air alert, low dangerous. weather very and and a clouds ugly hear ominous truly very something notice we become however, possibility could small storm and some is appropriately the there dress that that We understanding outdoors. business, go our to about refuse go and panic not do we ossec.Cnrr opplrcneto,dsiln sntabout not us is give discipline what are conception, habits popular habits—and to into Contrary practices consistency. best turn what are ever-changing? are that markets achieve amid traders consistency can of How deliver levels consistently. so just high targets time don’t do their UPS they hit or they occasion; FedEx time; given like on a Businesses on game. every well football play, many tackle great every and so The block In feature. just businesses. common doesn’t a or team is teams execution sports in great consistency of cases, successes the of Think Practice Your Trading in Rule-Governed Becoming #31: Practice Best oahnmnin aarlae n nentoa vnsa indicators as events international and releases data mentions Jonathan n xrieta sueu hnpann rd sakn,‘‘What asking, is trade a planning when useful is that exercise One h nwri ytrigtaigpatcsit rdn ue.Rules rules. trading into practices trading turning by is answer The www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 363 and performing some backtests will helpto the expect trader so know they what areTo not approach surprised the by market normal without drawdowns. basis rules would on be a a daily mistake. or weekly light programming skills willshould also be comprised go of a specific rules long forfor when loss, way. exit to for Systems enter, profits, exit and size ofcan the match positions. These the rules trader’s personalityshould and be temperament. testable. They Although there are limits to backtesting, A trader or investor cannotworld. control markets All or the thather outside is reactions to under whatperceived the is to be trader’s happening happening in control inshould markets markets. is or be Therefore, what systems his applied. is Spreadsheets or can The work as best an implementation systems tool and some are often simple. Yet another tested rule that has been effective in guiding discretionary What I find in my work with traders is that many of the best work The idea of becoming rule-governed as a best practice comes to us or less volume than recently, which gives us an indication of likely adapting the day’s tradingFrom to the the opening level minutes, of we participation can being observe observed. if we are transacting more many losers. trading has been examining the market’s early trading on a given day and day of the breakout.he He only turned took these breakoutrules factors trades not that into scored only a highly checklist, helped on so him his that find criteria. Those winning trades but kept him out of reversed back into the prior range. He foundbreakouts several from factors differentiated fakeouts, including themove volume stood of with the respect move; to where longer the time frame activity; and the time of one trader Itended worked to with continue in years the ago direction examined of price the breakout breakouts versus that those that in a hybrid fashion.their They decisions make are decisions guided on by a explicit discretionary and basis tested rules. For example, from reader Markham Gross (@MarkhamGross),Anderson who is Creek the Trading, founder LLC. of systems He brings consistency explains to how trading: the use of rules and forcing yourself to do the righthabit thing. patterns It’s so that about no turning force right is things needed into to perform at a high level. 364 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES bev infiatyblwaeaevlm n eyltl uigor buying little I very If and market. the volume in below-average participation significantly directional of observe degree the and volatility eeiini h ohro ais n aisaetebcbn of backbone the are processes. robust habits ensure become to practices way and great best a that habits, is pressure. rules into of buying/selling strategies successful and mother Turning discipline. volume has the of same tracking is The my Repetition routinely. for implemented became case criteria were the the been and Eventually, habits actions. trading his guide sound to daily checklist the markets. slow in opportunity up on regarding chopped act rules being me The avoid help day. and participation that taking of trade skew in not directional to and opportunistic opt volume more I’ll more cases, much much many become and In profits. I location trade, trade of about minutes selective opening the in pressure selling eto tlo thwboedakcnhl saheeotmlcognitive optimal achieve us book, help the can biofeedback in how Earlier at stress. look trading at with took we dealing in biofeedback of use outlines who his Hunter, Daniel reader TraderFeed from comes practice relevant best A distress. and disorganization brings stress whether determining forfotlcrie,w yial ciaeormtraesadrisk and areas motor our activate activities typically thinking. rational before we the acting in is cortices, grounded It frontal be screen. to our trading need of most the we action from as deliberate coming just careful, are that, of ironic perceive way we the threats avoiding in the as gets when such often threats, but is physical car, with arousal oncoming an dealing Such for accelerating. that response outcome rate to adaptive heart an an threat and about tensing, a adrenaline with muscles perceive us care pumping, leaves we That action. we for when mobilize When bodies especially outcome—our typically threat. uncertain—and is stress is perceived as that to know we reaction that a response flight-or-fight body’s The Biofeedback with Stress Trading Managing #32: Practice Best hnta ale-etoe rdrfis eeae i ue,h used he rules, his generated first trader earlier-mentioned that When o eratt htw eciepasa motn oein role important an plays perceive we what to react we How ifebc satann olfrpyia n ontv self-mastery. cognitive and physical for tool training a is Biofeedback e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 365 in the market. It isas also a you fantastic fall practice asleep beforeimproved. bedtime, faster It is and basically your an quality objective meditation of monitor. sleep is much that I use during trading.program I provided use it and alongmy have with current the a state. computer visual, Ifbreathing starts real-time my to change, status emotions it alerts start of me,my often state. to before With I breathing waver realize exercises, I and canback bring my under my emotions control and focus on what is actually happening I am a scalper in theand forex apprehension markets, can so anxiety, creep excitement, intothis the with trading a day. device I thatdevice combat measures I heart use rate is variability. the The Emwave2. It has an earlobe attachment When we choose to trade, we elect to operate in an environment Because the monitor gives us real-time feedback about whether we processing large amounts of information at any given time. Many portfolio One of the greatest psychological challengesan of trading emotional, is one. a cognitive, It not is the challenge of bandwidth: our limitations in Best Practice #33: Building a LearningSocial Network Media via is a best practice becausefor maintaining it calm, serves focused as concentration. an alert and also as a training tool where there is risk and uncertainty.stress. That Our ensures challenge that is we to will turn experience stresscontrol into a our stimulus responses for rather self-mastery—to than allow them to control us. Biofeedback The key is becoming awarecorrective of action. those lapses, so that it is possible to take a state of flow andor-fight when we reactions. are Everyone responding falls to out markets of with the those fight- zone during performances. them in constructivetrading ways decisions. and The readings prevent fromus the them to biofeedback become from application observers enable to driving our our states, so next that we can see when we are in are in or outmindfulness. Once of we our are aware performance of our zone, stress it responses, we can can channel be useful as a tool for and emotional states. Here’s what Daniela has strategy to for say coping about with biofeedback stress: as 366 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES adit,icuigbidn u em ohl ihrsac and research with help their to expanding teams of out ways building developed including have with bandwidth, worked I’ve managers a eoeyu eua itnn n edn.O h ocs side, podcast the On reading. that and information listening of sources regular valuable week. your discover week the to become of each way links can and great popular a daily most is links the also highlights This of and selections. range podcasts curate broad top and selects a web offers financial the Returns on Abnormal content through comb that development community of McLaughlin. head Sean and Lindzon good Howard particularly range founder find via broad You’ll links a their information. offer for and postings analyses, links $STUDY observations, and of the tweets general, in sessions specific In select $STUDY want content. that Saturday valuable will feed the Twits you are Stock the information value from particular of Of sources network. value. high-value again. your and information often again high up are come with contributors tweets These certain notice of you’ll stream feed, the curated Via a is feed provides Twits that network a want You signal. value. and on signal posts, low high blog very noise, tweets, on via high A encounter is selectivity. we chat is commentary network the learning markets. of social deal into effective great insights an creating and who to observations and key input valuable The your with value you who traders provide peer also of network fresh a is about This thinking trading. sparks and markets on peers ears insightful opportunity. and of of sources network eyes focused the a to Cultivating adds sport. of into teams team trading out their virtual build turn to a can they afford however, trading cannot media, and a social color Through have market analysts. not for to do turn traders to independent floor Most traders. individual for we when to occasions focused. those us highly during be enables to information sport get need of team to range a way greater great into a a trading process is Turning vision markets. Tunnel in market? blindsided broader what I the miss have they in that times happening trades many particular is and their How on markets ideas. focused on so trading ears traders emerging observed and trading spotting eyes Turning of in number floor. valuable and the trading is increases ideas; the sport on team market a colleagues discuss into with to touch peers in savvy staying with connecting execution; oilmdai copihn eeigo h adit lyn field playing bandwidth the of leveling a accomplishing is media Social e nte lc obidyu erigntoki hog sites through is network learning your build to place another Yet Stock The Twits. Stock is network learning a start to place great A in practice best a is network learning social a building why is This www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 367 Key Takeaway and focusing on essentials. Once you’ve explored and expanded, success comes from simplifying The acid test for any addition to your learning network is that what you A very promising strategy for building a learning network is starting or her approach remains a relative novice, lacking cumulative learning. methods. This makesopportunity it or skill set very in markets. difficultno The lack ongoing to of deliberate focus ever practice: ensures that The master there trader is who any continually particular changes his to changes inpotential markets edges and in those markets. Verylosses who often, and cannot traders abandon become focus what frustrated and they with are exploit doing, their seeking ever better ideas and Trading Edge Two kinds of traders fail to find success: those who cannot adapt trade the opportunities you never see or hear about. Best Practice #34: Finding and Focusing on Your you can move from research to building amatter virtual how research team. emotionally It doesn’t controlled and disciplined you are: You can’t sources—but what is ultimatelycan’t valuable solve is fresh puzzles what unless feeds youget your have all the head. the right pieces You pieces. if you’re And locked you inside won’t your head. Through social media, read or listen toto actually must your contribute understanding freshsaid and and for useful trading entertainment—it’s perspectives of easy markets. to There get into is surface much readings to of be many those will also be sources helpfulcontacts to who you. can All be of useful those resources represent for potential your trading development. to this book and checksee, out find their out blogs who and they tweets. link If you to like and what follow: you The odds will be good that with traders who are committedstart to would be training to other look traders. up the An traders excellent who have contributed best practices The Big Picture site. An absolute treasure trovefinance of can writings be in quantitative found on Theselections Whole are Street also aggregator available site. from the Curated feed blog at Finviz.com. there are the offerings from Michael Covelinterviews and Barry with Ritholtz top that feature professionals inlinks finance. are Josh Other Brown excellent via sources The of Reformed Broker blog and Barry Ritholtz’s 368 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES @rshitae) edr ilrcgiehmfo h Crosshairs- the from him recognize will Readers (@crosshairtrader). n eeoigavr pcfi akteg n expertise: and edge market David’s specific very traders. markets in a training nonessential developing is in and what eliminating work focus: about ongoing all his is practice and best blog and site Trader nipratbs rciesbiso oe rmDvdBlair David from comes submission practice best important An ombgnt oklk a om ih oios two cases trading charts, monitors, printing our Eight for result, printers room. color a war two a TVs, As would big-screen like study. look he to to day us began for Each room topic business. new the a to have me introduced who flashlight a with hole black a it. in know traveled didn’t result I and a focus. were of lack which a of of all impatience, I and realized anxiety, by fear, I replaced confusion, years creativity, of few sponge, free devoid a monster could, a for a I created it be information sponging to After market otherwise. decided stock or the I all trading, up started soaking first I When osuyeeyhn rwthayhn te hntestocks list. the watch than my other on need anything the watch feel or longer everything no study to I I the prices. specialist.’’ manage stock ‘‘process future me of helps a uncertainty that opportunity. process become specific trade a have potential developed I have a words, is other there In when designed me specifically alert indicators to time of developed list two have watch a on and prepared have stocks trigger I daily. they and weekly method when the well-defined frames, trades a these have locating I for (2) trend. or previous trend previous the the reverse continue (1) from either breaking to stocks boxes for price look I wherein pattern price stand charts. much my to how added matter realizing or no important, learned predicted I so be were cannot thought prices stock I that things I the getting add, all by of to minimalism rid practicing continued began I partner subtract. my to began cycle As vicious intentions. a spoiled creating of added, we our more worse the the performance, performance, our worse the the added, was, we problem more The etc. manuals, seminar CDs, books, of uigteeyasIwstaigwt ate:afriend a partner: a with trading was I years these During ypoesnwivle eysml,es ounder- to easy simple, very a involves now process My www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 369 I analyze my stocks only afterhours, market hours. the During market focus isa lot only of on clarity execution. since This there way is there only is one task at hand at any A worthy best practice is organizing your workflow as a trader. Many successful physicians are not only specialists but sub-specialists. David’s methodology makes sense: Stocks trading in a box are ones trading workflow and how he separates tasks toHere maintain is his effectiveness. what he has observed: his workflow was not setting him up for success. TraderFeed reader Rahul Rijhwani describes the organization of his distraction, fatigue, and time pressure—none ofon which market helped him opportunity. focus His reducedto concentration silly early trading in mistakes, the which day in led turn built frustration. Quite simply, This occurred after a lengthyconversations commute into on the city the and tradingaround after to numerous floor figuring out on what he his was doing arrival. for the By day, he the felt a time mixture of he got and efficiency. I recently spokeshare with of a his trader market who review conducted immediately the lion’s prior to the New York open. We put thought into what we needthe to ordering get done, and but organization often don’t of reflectin what on our we do. workflow Relatively can simple yield changes profound benefits in our work effectiveness Best Practice #35: Improving Your Workflow a very helpful approachpattern, for you traders can as move well.opportunities. on Once to you others, master developing a a single diversified array of recognize when setups are not working and limit his losses. They find their ‘‘edge’’ by knowing one area in great depth. This can be his own, so that he willrequired. have Expertise the in confidence a to act particular decisively type when of that trading is also helps him quickly reduces distraction andbuilding enables skills a in a trader particularall, to kind of specializing become trading. in Perhaps a a most type true important of of specialist, trading enables David to make trades truly right side ofthe both market direction moves and hisof volatility. impulsivity. way, This Psychologically, but having not that a only it specific means methodology moves that like his this way with a degree that have consolidated. Both directionalitylevels. and He volatility identifies are opportunities at in reduced which breakouts place him on the 370 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES oto s hti ra scooia benefit. all, psychological doesn’t of great it a and Most is work energy. That our us. control give control we that that means between those workflow day and our at the organizing are energy during willpower rhythm require and a that concentration creates activities my workflow make when good will A times I levels. at work, high so detailed taxing do and are stressful I that tackle that I ones to sure day, not need trading I are If the activities stressful. in preceding and point the one that sure at make creative will and to open-minded be resort to to need need the without session. is trading clear-headed making the during stay decision moment. techniques the to psychological his of him that situation the enables ensure to reactive This helps not he and planned sizing, and details controlled and the and to level down markets price advance, following in of trades of his process preparing By the trades. from executing ideas generating of process raiainadpeaainfrtaigsces vnepan,‘‘The explains, Yvan success. trading for preparation and organization trading. called written in has important book trader, most full-time a is active, an what Byeajee, on Yvan us reader TraderFeed focus that activities are These the in participate to occasion. gears the psychological of meaningful. shift is significance we what ritual, on a us enter focus we to When apart time more set rituals are Rituals habits—they have funerals. mere and we than weddings, meal rituals; births, Thanksgiving as by events its special anchored have the such are for might perform services family we religious A that most time. and rituals; same meaning the special at has way that same activity an is ritual A Rituals Trading Developing #36: Practice Best h raiaino u iehlsu tymnal raie.I I If organized. mentally stay us helps time our of organization The the separate to workflow his uses Rahul that is here takeaway key The acntn etpatc ntaigi eeoigtaigrituals. trading developing is trading in practice best fascinating A ep hnoe h hr,cluaers/ead and favorable. risk/reward, is calculate risk/reward the chart, is if there the order alert, the open an punch then set I have price I beep. when where a day, point next a the the to in open close it comes is note market and the size When position diary. the trading calculate the them, on I based Then analyze points strategy. then price important watchlist, at my alerts set in and charts open I closed, thought clear executing. and and calm analyzing of when sense process a is there Also, point. given oepantepoesbifl,we h akt are markets the when briefly, process the explain To aaimShift Paradigm 21)ta tessteiprac of importance the stresses that (2014) www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 371 Success) = Positive Expectancy Model + Expectancy Mind usual. not only to learn something about the market’s behavior, but also read one chapter per day. day (scanning through hundreds ofexits, charts, position sizing, noting and possible risk management entries, parametersdecisions to during minimize market hours) followed by a 1-hour yoga session. watch the final hour prior toinitiate the new market positions close if and there I are look to any. close or save the charts of the setups I took or exited for later review. open any new swingany trading existing ideas ones and placed my orders to close news. out of any daytrades I took for the day. I also placed my orders to 5:30 AM–5:50 AM: Read my list of positive affirmations. (Positive Here is the daily schedule of rituals laid out by Yvan (all times Pacific): 1:00 PM–2:30 PM: Read journal, logs, and saved charts. The goal is 9:30 PM–10:00 PM: Book: Trading-related lectures. One chapter as 10:00 PM–10:20 PM: Meditation 9:30 PM–10:00 PM: Book: Trading-related lectures. I will typically 10:00 PM–10:20 PM: Meditation 1:00 PM–2:00 PM: I update my trading journal and trading log. I2:00 also PM–3:30 PM: Research and homework for the next trading 9:00 AM–12:00 N: I’m usually out during that time period for12:00 a N–1:00 run, PM: At that time, I’m back in front of my screen to 8:00 AM–8:30 AM: I read8:30 trading AM–9:00 blogs. AM: I listen to a trading-related podcast. 8:00 AM: By that time I’m usually done watching the markets. I am 5:50 AM–6:30 AM: Breakfast while glancing6:30 over AM: Market market opens. related Watch how price action unfolds. Monday to Friday: book is essentially a statement ofit the in work this ethic business. that Without is it,failure. required even I to the strongly make most believe robust that system this is applies doomed to to almost anything in life.’’ Sunday: Saturday: 372 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES h rcs,oesalse tatm,adterslswl aecr of care take will results the on and focused time, be a should at we step the themselves.’’ so small within expressing one implicitly, it are process, or with we the ritual, done verbally a be either in and participate beliefs, it we our time to Every stick routine, frame. their to of time part best set as their perform to try task should a them up they suits set that have they something Once find best. ultimately the same. and the do modify, to test, theirs expect should should They traders new so moment, the at needs httrsawrhhl rcieit ennflrta.Istrongly I ritual. meaningful a into practice consistency worthwhile that is a It activities. turns your of that consistency the out—is points he keep professional helps and personal his special—and to to period important development. devoted most time is purpose, what each sacred in mind anchored makes a Yvan This his has period cause. keep time valued how to Each a Note yoga shape. himself. and in on body meditation, or and affirmations, trading reading, his on uses either he work to time segments himself. screens on from work to away Yvan time enables and also hours planning and trading overtrading Such active prevents plans. use his to execute him simply allows to That hours. evenings weekend the his in during prepares homework and He extensive important. conducts very and before is night this the think trades I screens. trading he of time front much in how is striking Particularly processes. robust vnepan,‘M etpatcshv vle vrtm ofi my fit to time over evolved have practices best ‘‘My explains, Yvan Meditation. chapter. PM: One lectures. PM–10:20 related 10:00 Trading Book: PM: PM–10:00 9:30 chart previous of analysis (statistical Backtesting PM: PM–4:00 2:30 h iulsi seto vnsshdl srflce ntewyhe way the in reflected is schedule Yvan’s of aspect ritualistic The into practices best turned has he how of example great a offers Yvan orrtasmydfe rmYa’ u h motn takeaway—as important the but Yvan’s from differ may rituals Your orrtasdfieteesneo orsuccess. your of essence the define rituals Your ie htIddrgt htIddwog n hr ol have could I where and wrong, did I better. what done right, did I What mine: oe n osbenwmodels). new expectancy possible positive and my model of updating occurrences, their and patterns e Takeaway Key www.MyChart.ir doesn’t spend BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 373 The four parts are: the likelihood of each scenario; what The seven scenarios are: a bullish move that turns into a the charts and indicators will show towhat identify each is scenario; the likelyand near what term my directionscenario. reaction for should each be scenario; when faced with each trend upward; a bearish movedownward; that a turns bearish into a movedownward; long a that trend return turns to intoreverses; the the a mean most move likely short move where trend thatthe the I most market could dangerous experience; move and I could experience. rehearsals are crucial to gettingdecisions things in right the before heat we ofrehearsals face battle. before I the find trading I day. alsoscenarios I need with rehearse four to seven parts conduct for possible each one. long trend upward; a bullish move that turns into a short I come from a military background. Before an operation, TraderFeed reader Paul Landry has contributed a valuable best prac- of our best toolshis for routine: emotional self-control. Here’s how Paul explains Paul helps ensure that he willIt not is be surprised very by difficult marketanticipated developments. to and emotionally prepared overreact for. to In situations that that sense, we mental have preparation is one tice: a scenario-based preparationpossible routine. market scenarios By and clearly anticipating outlining how a he’d respond variety to each, of not just the performance—andever-higher levels that’s of performance. what enables them to move to to winning and the failure to prepareKnight that famously prepares observed for that failure. Coach many Bob have have the the will will to to win, prepare but to not many win. Elite performers love the preparation, Scenario-Based Preparation In trading, ascompetition in formally begins. sports, It’s the the preparation game for winning is that leads often won or lost before the Best Practice #37: Adapting to Markets Through suspect that Yvan’sperforms edge daily and in weekly and marketsrituals also that comes his hold ability emotional both to significance. turn from best practices the into work he 374 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rdr h aet aeed etfo o5: help to 9 that from meet strategies ends the make to of have who cheek—some traders in firmly done. be describes—tongue can with it job but your challenge, Balancing a trader. be a can career as trading or ropes hoped-for day the a your bring learn work to probably you need you while case, you job that but In night trader, now? a right here, as right yourself income develop in to want you if What Your Career with Trading Job Your Balancing #38: Practice Best hnsha pi ra a omk uew rd el eadesof regardless well, trade we way. sure our toss make may to market before way the actions great balls planning curve a and is Anticipating up Paul battle. heat As of things football. heat a the processing to thoroughly in and chess situation accurately on from count sports, cannot one and emphasizes, games competitive most preparation. effective more the and deeper on a time plans—results in are the more processing out of ways Spending both multiple on plans. drawing them responses; trading exercise—and writing processing desired and of single responses; and ways and a different scenario scenario through a the than out visualizing talking effective example, concretely more For but Preparing is situation. channel. important, that modalities is in multiple take that would through you situation steps a specific the visualizing rehearsing just not enabling outcomes. out, It’s likely play most day’s not the will for preparation others his and on fore focus to the Paul one to any certain come session, will day’s into the scenarios During locked situa- unfold. likely markets day as all flexible for market staying prepares tions, and the rehearses he start Rather, scenario. not particular does He mindedness. etpatc esetv oe rmSmAa,who Awad, Sam from comes perspective best-practice A ‘hti’ lnigi seta o nyi iiayatosbtin but actions military in only not essential is planning ‘‘What-if’’ important. is detail that is preparation of kind this with experience My open- in exercise an really is routine preparation Paul’s that Notice epelk e epewolv akt,aeinvigorated are markets, love who are people world trading me: the like of heroes people unsung real the mind, my In eere eoead hntaigsrs a minimal. was stress were trading decisions when the during beforehand, because rehearsed minimized second-guessing is been the trade the have Also, after I and before. because situation quality higher the of in and faster is making h eerashl ei w as is,tedecision the First, ways. two in me help rehearsals The www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 375 Over the years, I’ve become an expert at … monitor, and boom! You’ve just bought yourself valuable screen time! a software program thatplatform. looks It similar could to beanalytics, software your that trading or charts sales, productivity humidity or monitoring. Just in getused my everyone to in case, seeing your temperature those office and nice red and blue bars on your ensure you always have an excuse forday not work getting done, day-to- and youWhat look do like you do a when heroDon’t those volunteering. special concern projects come yourself due? that with day that comesMoney-Making right You. let It’ll now. be worth Future When it. You curse Present-Day, before your co-workers maytime to seem work like on anthe company rest opportune work, of the since day trading, youto but will research really and you’ll spend use generate this your time day’s trading ideas. Through it all, I’ve compiled quite a few methods by That’s right. We’re the guys who work 8 hours a day, 3. And this is the piece de resistance: If at all possible, find 2. Volunteer for special projects: This is the best way to morning support level during a conferenceall call; back and rolling given it the dice on Non-Farms on casual Friday. which to achieve Trading at Work mastery: 1. Negotiate an earlier starting time: Arriving at work Oh yeah, at the exactfor same the time love as of market thewe hours. game persevere. And and yet the dreamthis. of a I new, have free life, fadedMonday liquidity morning spikes meetings; whilepylons navigated yawning during forklift Fed through training; speeches caught a and lucky bounce off a capital against IvyPh.D. Leaguers, mathematicians and former computer scientists; and Division whojust are 1 nutty enough athletes, to do it—while at work. every day. And when do those 8 hours occur every day? by the intellectual pursuitmarket; people of who are extracting willing money to put from up their the hard earned Sam’s advice may not work well for job longevity, but it captures a challenge that manytrade. people When face when I they began are trading first intraday, learning how I to was teaching and running a 376 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES eeeggdi ore uigmrighus hc loe eto me allowed which hours, morning during students courses Fortunately, in school. engaged medical were a at program student-counseling e padrcr ti osbet aetaigfi noa xsigjob existing an into fit trading make to possible patterns is how career. close it see and by market recur, to it’s and the replay Whether up using at by set practice. decisions trading best making shorter-term a and rehearsing is or frame markets time learn your to extending do you work the practice to job. way your great either or jeopardizing a capital without your is mistakes from trading learn day. simulate and this patterns to market to new trading replay me observe market with charts, stuck of review have use that and The lessons print valuable also to learn was markets and hours I for patterns, loved. evening feel I use which a day, to gain the able to during work me practiced my permitted and jeopardizing That platform without my prices. on I real Once day with useful. market extremely trading the be replayed can I day work, market the finished replay to the ability the with day. and trading intimacy the unusual day for relevance an after its provided Day open—and market trade open. the early market of dynamics the the feel on following my intraday, focusing immediately trade of and I if at approach day, best trading this a To is setups. developed opening I traded day. only trading that the in early markets follow a eepoe uigtaighusaeabs practice. best a are that hours strategies trading self-control during why employed is be That can planning. initial us our take from can shifts far state very and our emotional, however, calm of arousal, situations physiological periods were stressful and During cognitive, facing we responses. not fight-or-flight if are with make we dealing and when never we easy would self-awareness, is lose we Self-control we focused. that Once decisions trading! make the neglect doing can and trading is on who focus to person easy the become can it hours, market During Day Trading the During Routines Self-Control Developing #39: Practice Best raieyitgaigtewr o ot rn napyhc with paycheck a in bring to do you work the integrating Creatively trading simulated where is hours working normal maintain to need The efmseyisl a emastered. be can itself Self-mastery e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 377 mind and refocus. Itechniques) also with do breathing some to EFTtake release tapping a negative (emotional break by freedom energy. walking I out sometimes of the trading office. lose 50–75 percent of intraday profits. deep breaths in and out inplan. order to maintain my focus and stick to my I take a breathing session break for 5–15 minutes until I clear my trail my last positionlow/high with to maximize one my tick profitsearlier below/above in profits. This the the strategy trade makes previous after mehelps less bar having anxious me pocketed to take hold profits my and good position risk management longer and allows with my alosers. winners to trailing be much stop. larger It than gives me market environment. following trade by adding tothe the market goes winners. in I my likestops direction, to and I start then add small scale to out and my at position if the using first buy/sell target and second target and then different time frames to try to evaluate whetherwhether the market is it tradable, is trendingtools or and choppy, setups to etc. use This and whether helps it me is worth decide tradingand which or see not. if I am in tune with the market and to get a feel for the overall monitor to measure my performance forscore. that session and I record my breakfast, and workout. I also ratelevel, my and physical overall condition, emotional distraction and mental state for trading. practice breathing meditation and orme TM focused to and clear aware my of mindthis my and emotions keep time, before I I start use trading. the During inner balance app with a heart rate variability Several self-control methods are offered by TraderFeed reader Gus 8. Once I hit my daily stop loss, I stop trading. I also stop trading if I 7. After closing my trade, if I feel any anxiety, regret, or discomfort, 6. During my trade, if I experience any anxiety or discomfort, I take 5. Once I start with a winning trade, I start increasing my size in the 4. I start my first trade with small size (1–2 contracts) to test the waters 3. Before I start trading, I look at market conditions and rhythms at 2. I go over my checklist to make sure I had a good night’s sleep, protein 1. I start my day with 15–20 minutes of meditation/mindfulness. I Joury, a short-term traderdaily of best practices crude that oil aid his futures. trading: Here are some of the 378 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES uha h rahn,wt ehd fmnymngmn.H attempts He management. money of methods with breathing, the as such ikadpaigrs/eadi u ao soeo h otpowerful most the of Controlling one period. is traders. losing favor to available our a interventions in after psychological risk/reward enough comeback placing have a and always mount risk you the that to major for ensuring A I powder back is year. week; come losing dry positivity a cannot and profitable ensure I optimism to a month that to have losing week aid a cannot a want never in I I much and that so month; day lose a to to want in want never never money I much previously, so mentioned lose I’ve As trading. in management clearly and a back pull not to control. is time regain great there a an when is overtrading. that particularly opportunity, reflects into articulated trade, and to often perceived morphs need break a easily notice a that we take Once trading and to around screens attachment especially the emotional day—and leave The efforts. to their trading refocus unwillingness and the worked equilibrium emotional I’ve on during regain traders focused midday—to of breaks stay number these him A utilize of help and P/L. All with them on size, day. focused of than modest trading all rather given and with markets any self-control, trades on of incur losing methods can are exit he losses trades, the winning regulate in stay to fachlaue n hnrdrc hmevst oeconstructive more consequences a to the themselves with redirect connecting then outlet. and emotionally abuse; by alcohol drink of to urge interrupt drinking; the to lead that triggers emotional and thinkin’’’ ‘‘stinkin’ consciously let to pattern, refuse then you. negative and control consequences, it the potential the identify to feel and doing, is acknowledge response you’re us. powerful what control surprisingly it pause trading—a let impulsive to negative or refuse of thinking and trading—patterns during it appear patterns stand control problem necessarily our We When we pattern. pattern, that a recognizing from interrupt is apart we pattern When behavior it. damaging interrupting any and changing in step first Behavior The of Cycles Negative Breaking #40: Practice Best u eonzsta oe aaeeti nesnilpr fself- of part essential an is management money that recognizes Gus control, emotional and physical for methods combines Gus how Notice Thisiswhatalcoholicslearntodointheirrecoverywork:Recognizethe www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 379 After answering these questions, I take a minute or two after I implemented this rule. can affect metrading later? rules? Did I do anything thataway violated from my the screenpoor to trades come that I back took was fresh. reduced The by more number than 70 of percent that I hadn’t accepted thefor loss a completely sort and of was revenge.five-minute looking After rule. understanding this, After I a addedminutes trade, the when I I close ask thehave system myself I for the done five following well questions:help for What with this later trade? trades? What Do can I I have take any away open to emotions that After reviewing myrepetitive trades. trading, By I this Iafter saw mean I that had that less closed a than I trade,this five I minutes had occurred was back after a in a a lot new one. losing Usually, of trade. This made me realize Notice that Eldad’s rule is actually a routine to develop mindfulness One implementation of this best practice idea comes from TraderFeed processes for previewing markets, viewing markets duringand trading hours, reviewing trading once the day and week are finished. Previewing It’s easy to become sothat consumed with we trading and fail preparingThe to for successful trading review—and money managers learn I’ve from—our worked with trading have performance. had structured Best Practice #41: Conducting Structured Performance Reviews time spent not trading that effectively prepares us for the next trade. bad trades. By institutingmindfulness—and the the break breaking after of negative everypattern. cycles—into trade, That a the positive provides habit trader both turns perspective and control. So often, it’s the markets) and ask himselfinterrupts key process any questions. negative The patternsand five-minute that break helps may ensure have that leaked into a his single trading bad trade doesn’t become a series of in the midst oftrade, the he trading is day. able By to taking stand a apart break after from closing markets each (and his reactions to reader Eldad Nahmnay, a daytrader who shares his five-minute rule: 380 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rmordcsosadtk ocigprpcie unn ordinary turning perspective, coaching a take and back decisions stand to our us allows from reviewing trading; to rigor and preparation brings ynWrh rnia tWrhCptl eexplains: He by Capital. offered Worch is at example principal One Worch, trading. Ryan your and yourself evaluate to review practice. deliberate true into performance oeflbs rciei odcigasrcue performance structured a conducting is practice best powerful A ewl otcnitnl eeo forlann sstructured. is learning our if develop consistently most will We eeso,o ulaktae.Teol a odetermine to way the only for mean The goals trades. or pullback working, set rewarded or are can being reversion, breakouts I is Sometimes this, what month. see From next to environment. hoping each I’m in worked. so, it why doing and assess worked By I what done. out is figure work and real trade the every where is This trades. my of all a create to observations. point and a goals make monthly I bogged of so series get an action to with day-to-day easy the operating It’s in I’m down picture. that larger the confident for be appreciation to want always I tpa gooiia vn,mntr oiyeet etc.)? event, policy monetary event, (geopolitical the play forces was at outside Were What like? environment downgrade)? market upgrade, surrounding (surprise, move to risked; each equity on gain/loss of percent etc. percent trade, gained/lost; loss; equity of vs. percent win average losers; trades. and feedback markets future a down in break is quickly me more helps This and information I trader reference. better recognized? a future be me makes for to that loop pattern this a of there all Is record What have? have? losers winners the the did did characteristics What process. each of markets. changing end staying ever the to to critical adapting at is and feedback engaged trade and every loop process down This month. breaking by is this tteedo ahmnh efr otaayi on post-analysis a perform I month, each of end the At rmaqaiaiesadon:Wa asdteposition the caused What standpoint: qualitative a From vs. winners percent are: examples quantitative Some this during questions asking and myself challenging I’m e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 381 below or Therefore I create a scan (using the free Finviz.com Moreover, I am also concerned about liquidity. Primarily Volatile enough with average true range of 1.5Priced or over higher $20 Price is above SMASMA 50 50 (for momentum (for down) momentum up) Liquid, with anmillion average or more volume traded per day of 1 ■ ■ ■ ■ version) described below tofor get the the next day. stocks The I stocks want must be: to look and momentum stocks are two groups I trade the most. a day traderthe and market makers a eat swing awayspread my are trader, two profits. silent I Slippage killers and for cannot huge short-term traders. afford to let My strategy is to findduring stocks a that choppy will market move day. the Therefore, most stocks even with news Screening for trading opportunities is a way of ensuring that we take Note that Ryan reviews both the market environment and his specific Ryan (@iamtrading) who describesstocks his and trades process for for the day locating session. promising Steve explains: the right kinds of risk in marketsfor and avoid screening marginal trades. as A framework a best practice comes from TraderFeed reader Steve When we place trades forfactors noneconomic that can reasons, undermine we performance. reinforce the very periods in markets but alsobasis undercut for our our judgment success. and Losing compromise tradesfuture the are inevitable; with no certainty. one can Bad predict trading, the on the other hand, is controllable. Think of overtrading as ais compromise selective, of delegating our risk best to trading. opportunitiesvalue. Good that When trading have we a lose positive that expected selectivity, we not only court losing trades and Best Practice #42: Screening for Market Opportunity can also help him take morehis risk in risk favorable in environments and murky pullregarding back markets ones. and The a tool structured for review improving trading is performance. both a learning tool trades. By seeing which tradesinto the are market that and can aren’t be fed working, forward into he future gains decisions. That insight insight 382 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES fee yBynLe ultm uue rdrfo aasa He Malaysia. from trader components: three futures into work full-time his divides a he how Lee, describes Bryan by offered its in factor major a be her failure. will or or business success his that runs of trader organization Each the each effectively. shop—and executing and on efficiently hinges functions shop those the of of success and The customers, finances. serving the and products, managing and selecting the for routines displaying processes to productive distinct merchandise, function has ordering in owner and shop these role solo A of one practices. from best each the are jump grounding because Traders you without succeed run. and another, not well risk; does not and trading developing is function positions times business researcher inevitably your Many the self-manager. of you are a manager then also You are business, manager. you a and ideas; trade worker as the trading both your as run you If Business Trading Your Organizing #43: Practice Best ierneo osbesok rmresit mle ubro valid a of culling number smaller screening, a at into markets better or opportunities. stocks ever session. possible day become of he’ll the range can wide that during we likelihood moves of the repetition, direction increasing With and screening, and magnitude his volatility/liquidity the in both capture favor places his Steve how in Notice trend that you. trades for the large on best a yourself are taken focused have and you overtrading trades list, avoiding that toward potential filter step further filter then and you screening Once on based opportunity. lesser from opportunity n iino raiigtetaigbsns sabs rcieis practice best a as business trading the organizing of vision One h etpatc eei aigarbs rcs o eaaiggreater separating for process robust a having is here practice best The en ha,cr,pl i,syenol t.M trading My etc. soy- oil, soybean futures, oil, Dow palm which mini corn, Asia, bonds, wheat, and bean, gold, US oil, the in crude markets includes futures several trade I ■ hehl,o h T ogtmr tc results. stock more get to ATR the or threshold, to stocks best Hourly, the day. Daily, next find the at to trade look charts I 5-minute and there, 15-minute, From night. every stocks p rblwSA5 frmm down) momo momo (for (for 50 50 SMA SMA below or above up) is 20 average moving Simple n a le h vrg oueprdy h price the day, per volume average the alter can One 210 and 150 between anywhere returns usually scan This www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 383 –This includes study of trading –I wake up at 5 AM (Malaysia time) to –The job of an auditor is to verify and audit all log with the statement sent by the broker. Auditor trades done for the day. Thisof is typically each done trading at the day.where end I many trade futures onhours. markets a I are wake GLOBEX open up platform, done at for for 5 almost the AM day. 24 and I check will for verify the all record the in trades the trading day data, they will onlythe generate market trading open signals each before day.signals Then as my trade job orders is intrade to the order is place trading triggered, the platform. I When amI informed a will then by jot the down platform. the time,information price, in lots, and my other trading trade logbook. methodologies and research,testing development, of and new back- trading strategies.the entire Risk portfolio management is for also includedTrade in Execution this section. run my trading system. Since my systems use end of Research and Development I perform three roles, a researcher, a trade executor, and I divide my trading into three parts: an auditor, all by myself,time. but I I can’t only be performsame time. a one This role researcher will at create and a conflicts a and affect trade my executor trading. at the 3. 2. are based onintegrate signals my generated own by riskproducts my in management trading my portfolio. algorithms systems. in I all the 1. approaches are long term trend following and swingMy trading. trading is system-based, meaning all trading decisions The key idea that Bryan highlights is that he clearly delineates the processes for each part of their business. It’s not merely thatdivide and successful conquer the traders many responsibilities follow of trading, a creating separate process. Rather, they for research and marketactually observation must trading be and separatefrom managing from time time positions—and spent spent working both on oneself must and be improving one’s separate performance. major functions ofdefined his processes—for trading each. andhis Although best has Bryan practice a applies is distinct to a discretionary time—and systematic traders clearly as trader, well. Time needed 384 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ucsflsl-aae?I o o’ aedsic iedvtdto devoted time distinct have don’t you If self-manager? successful A eladta en tedn oec oto ftebsns na in business the those of of portion each each in to manner. grow attending hands-on business and means trading that perform your running can well—and means you ultimately well that Trading unlikely functions. is it each, raigmvmn toeswrsaincnpoiemlil personal multiple provide benefits: can trading and workstation how one’s explains at He Garl. movement Scott creating reader TraderFeed movement from incorporate comes to trading way into effective particularly A practice. best ated frustration of periods enter we when and state body discouragement. our and or shift mind sedentary of to state difficult highly narrow it a a lack makes to The in restricted time. us a work at keeps and hours movement for traders of health screens watching most and of desks this, at seated number con- of fashion, improved a spite and has In well-being centration. exercise increased including that benefits, research emotional from know We Control Emotional and Achieve Cognitive to Movement Using #44: Practice Best htmksyuascesu dagnrtr ucsflrs manager? risk successful A generator? idea successful a you makes What sn oeett hf u ttso oyadmn sa unappreci- an is mind and body of states our shift to movement Using oloigt h aktfraction. for market breathing the prey to fall and and looking bored to active feel to physically impossible a nearly it’s so after And emotions deeply. while negative two into or spiral It’s stop-out to boredom. difficult of plain out trading just and trading problem two frustration alleviate to areas: helped per has miles now) 2.4 doing brisk I’m a (as at hour screens the but at to Staring upside, day. 2 per it the hours using 3 from to improvements exploded noticeable been have have say there results can’t trading I my workstation), sit-down that my supplement (to ago long. day all about sitting complain with associated traders problems some health that the know do I workstation workstation. stand-up sit-down traditional the a versus workstation of treadmill a and/or or benefits blog seen related the haven’t trading regarding other I resource any yet or blog simple, your absurdly on comment is practice best My ic ucaigatedilwrsainegtmonths eight workstation treadmill a purchasing Since www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 385 The Play- … Key Takeaway Additionally, I feel a significant creative boost, as I never gained muscle mass as a result ofreading also or using a evaluating dumbbell market while patterns. forget to do whileincrease sitting my for mood, some focus,treadmill reason. and has That creativity even helps even helped to to more. with tackle The many procrastination, to-do’s assignificant that I weight, normally tend get have put noticeably off. stronger I’ve abs, lost and have forget to turn on my Focusatwill.com feed, which I always Each Tuesday and Thursday at 1:30 PMfirm EST training we room meet in in our midtownBook Manhattan Checkup. for The PlayBook Checkup? What, is someone We can control mind and emotions by working on the body. A structured process for conducting checkups is a best practice from Scott’s combination of work and exercise keeps him energized while SMB Capital. They hold ajunior traders twice-weekly are checkup truly that rigorous helpsand in ensure Steve their describe that selection the of process trading that ideas. occurs Mike on their trading floor: Mike Bellafiore (@MikeBellafiore) and Steve Spencer (@SSpencer) from to talk ourselves intodo trades, we veering know from if we’re our trulychecklists edges aligned and in with checkups our markets. can best be How practices? very That’s helpful. where Best Practice #45: Creating Trading Checkups There’s a lot to be said for a periodic checkup from the neck up. It is easy Integrating movement into the actualthe trading next process level, takes keeping thatand us managing idea at risk. to peak condition as we’re making decisions cognitive and emotional control. Schedulingthe trading periods day of can exercise be a during great way to renew energy and reset our minds. become bored during thelapse trading into day. His negative insightimportant emotions one. that when Controlling it our staying is bodies can physically difficult be to energized powerful ways is to achieve an trading. His use of thehim Focus mentally At and Will music physically and active, the weights making also it keeps less likely that he will 386 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES .RaigteTape the Reading d. .Itaa Fundamentals Intraday b. .Intuition e. .TcnclAnalysis Technical c. .TeBgPicture Big The PlayBook a. SMB (the presentation their Template): for variables five edge. traders—their new our of trades up’’ favorite ‘‘check the I Here on execution. and preparation thinking, thereof, thereof, lack lack or of catalyst trade this a host selection, regarding I stock trader the room. to training questions tough our with in session learning traders other presents to he/she Then, a trade her. this or trade—of him PlayBook to sense SMB makes that form—an setup template in trade a edge. trading their maximize and identify helped has traders that our practice best a is traders This just traders. present; developing nurses and or doctors no are there No, sick? ■ ■ ■ ■ ■ ■ sessions: be and the wisely trade. choose their during defend to to scrutiny ready know present constructive They to Checkup. of floor. one PlayBook pressure trading choose the the they leave trades under they PlayBook before these them From to sense most hsi xcl h yeo rd o a ul career a build can you trade of type around. the exactly is succeed? This you let will what market trade, the a think for prepare you leaving properly makes to are going not You are you trade. If bigger. being this not in by table bigger the on be money to into have fan You Sox Red Boston a allow firm? we this did heck the trade? How that in bigger been have you could Where to that. going like not plays are trading You money again. make trade that make don’t Yeah, h uirtae rasdw aoietaeinto trade favorite a down breaks trader junior The prepares desk our on trader junior A works. it how Here’s oeprsshadi u riigro uigthese during room training our in heard phrases Some the made that setup a archive traders new our day Each www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 387 Key Takeaway our desk are set apro common learning experience peers deep dive into a specific trade setup and emotional capital their PlayBook Here’s what the PlayBook Checkup helps traders 7. Teaches them how to think8. through their Builds an setups opportunity like for us to bond, joke, and share a 4. Helps traders learn good risk/reward trades from their 5. Offers them a trade review by a6. trading partner Provides with a a forum where standards of quality trades for 1. Defines their favorite2. setups Eliminates setups not worth their intellectual, financial, 3. Guides traders to internalize their trading edge with accomplish: A trading checkup with teammates keeps us aligned with sound practices. This is a great example of how trading can become an effective team routine—and then make it routine—we exploitthem our automatic. strengths by making that comes close is takingare your successful—and best turning practices—what those youaccomplished do is into when through positive you the habit creation patterns. of This routines. is When we establish a Best Practice #46: Organizing Your Daily Routines There aren’t many hard-and-fast formulas for success in trading, but one conducts a checkup to make sure thecan patient be is effective healthy. ways Trading to checkups ensure that our trading is on a healthy footing. hone their edges, and learnengaging from in each such other. a Thekeep cumulative checkup each impact review of other each week honest is about significant, strengths as and traders weaknesses. A physician sport. Steve andprogram, Mike but institute this is the aor process checkup more that trading as any buddies. trader part It could enables implement of traders with to their one think about training their thinking, 388 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES raieteesneo h rdrsbs eiinmkn.Ago example good A making. decision best trader’s the of essence the organize a okefiinl n fetvl,alwn st eoeorattention our devote to us allowing we routines, effectively, sound and in efficiently grounded are work we When can flow. work to aid an as well charts. traders, reviewing other and with research, consultation reading including perhaps in preparation blocks, useful their different turn be organize to into in would found traders blocks have Other those I trading. that and of another activities preparation Each specific studies; on. of sequence so quantitative a and captures and planning; indicators, trade of involve block markets, describe would one aid would of trading, another to review own workout; sequence my morning my in my In capture business. placed would trading then routines the and of relevance running mutual the their on based process his routines: describes of who blocks @MPortfolios, as manager money from comes ahtae’ otnswl ifr u h fetv nscpueand capture ones effective the but differ, will routines trader’s Each Motoisosre htti raiaini scooia olas tool psychological a is organization this that observes @MPortfolios clustered are items to-do where routines, of blocks of idea the like I n cnpirdystascin dvdns nos with- notifications inflows, checking (dividends, transactions (1) day’s prior by: scan and complete] to transactions the up sets routine This actions. be. initial morning’s will following they are what alloca- positions and replacement maximum if indicated above determine and risen etc. any have levels, if tion any determine positions to if levels all triggered, stop of have rule’’ ‘‘by scan various a their perform vs. I where focused, agement practice. my synced managing routines, of of is priorities blocks the workday to or the routine, to organized component an beneficial having very a found I’ve h biu eeto en raie,i hti otr calm, making. fosters decision it systematic that is organized, being of benefit obvious the basis a approach.) as my of strength part relative large use a for (I underlying landscape. of the signs in for asset changes sectors of market charts and spread regions, macro classes, at looking (2) administrative and an from standpoint; plate my on what’s know to drawals) tr ydy[eodruiei i aemre open market have did I if routine [second day my start I man- investment is that routine day of end an have I ’efudta elyhlflbpouto hs besides this, of byproduct helpful really a that found I’ve www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 389 To improve execution, I provide our students with an components that are atthen the track base those components of in every awith trade good simple journal/spreadsheet Yes/No setup. values. It’s We important that we’remeasure able and to track each component objectively.we This can’t means include or track anything that relies on intuition. to execute that plan in real time. Execution Framework and teachValid them Trade The Idea. Anatomy Thetrading of concept methodology/strategy a here and is determine the to common break down the After working with numerouslenge traders, I’ve one noticed common is chal- thatsolid even understanding after of they the havestill market developed and struggle a its with mechanics,determine trade they the quality execution, of and a tradeafter can’t setup they’ve in objectively real developed time. a So, even good trade plan, they’re unable An effective way of ensuring that your trading truly represents sound in training over 1000building of traders, trading so skills. He he describestrade the execution has and framework worthwhile screen he for employs insights valid to trade into aid ideas: the their essential elements. This is(@eminiplayer), a best the practice co-founder offered and by CEO Awaisprogram of Bokhari and the the Open eminiplayer.net Trader trading training site. Awais has been involved understanding; the other reflects a need. trading is to construct a framework for your good trades that captures no building of pattern recognitionto skills. differentiate intuitive The knowing experienced from trader emotional impulses: learns One reflects pattern recognition. That doesn’tfeels mean, like however, executing that isexposure a any to good trade a trade! one field. Intuition Without is prolonged the immersion result and of study, extensive there is Too many traders justify‘‘intuition.’’ poor True, trading intuition and and overtrading by implicit appealing learning to are cornerstones of over our trading. Best Practice #47: Developing Your Trading Framework to the unique challenges that marketsorganization always seem of to the present. trading A day, modular dividingbest time practices, into is blocks an and unusually blocks powerful into way to sustain a sense of control 390 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 2. 1. idea: trade valid a up make that components key four 4. 3. 6. 5. o u iceinr rdn ehdlg,w follow we methodology, trading discretionary our For agrtm rm oto/is(trend) control/bias frame time Larger location. trade more your be with generally conservative should you momentum, that to trade counter a is entering When of targets. profit probability their higher reaching a have in momentum Trades of direction action. the price with conjunction in TICK NYSE Momentum the to with location. conservative trade counter more your is be should that you trade control, intraday a entering profit their When reaching targets. of intraday probability the higher of a previous direction have control the and in high/low, Trades high/low. overnight day’s control), of the (volume point to VPOC VWAP, relation midpoint, in high/low, trading hour is frame first market time day the the where on seeing control by in is side which a assess can at trade control/bias the Intraday to took you reason zone. support/resistance whether a predetermined answer determination, of objective simply an enough this you make be To trade. situations, can a many enter alone In important. location be trade to going is location location trade Good oetrn n rd.BcueRRi ujcieand subjective is R/R Because trade. any entering to Reward-to-risk favor your trade. in be every rule, should on a components As these out. favor, of working two your setup least in at the of stack odds you the these higher of the more The idea. trade trade conservative more Confluence at taken frame/trend location. be time larger usually the higher to should a counter again, are And, have that targets. in frame trades profit Trades time their reaching larger charts. of the probability daily control of and frame direction 30-minute time the the larger the on assess based we trading, day hs orkycmoet aeu valid a up make components key four These : eguemmnu ymntrn the monitoring by momentum gauge We : / sue safitradi prerequisite a is and filter a as used is R/R : o aoiyo rd eus trade setups, trade of majority a For : sottr ietoa is:We bias): directional (short-term www.MyChart.ir o h ups of purpose the For : BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 391 Key Takeaway to enter a trade.its own. It is necessary, but not sufficient on every single trade must meetrion our of minimum 2:1, R/R R/R crite- can never be used as the only reason We’ve found that this execution framework allows our it allows the trader to objectivelythe assess day. trades at the end of traders to bequality more of objective a trade and setup in quickly real time. determine Another the benefit is that The best way to avoid overtrading istrades. to clearly define the qualities of good One exercise I’ve found to be useful is to go back in time and identify Awais has created a guide to trade selection that can assist traders in and especially in real time. Why? Because the complicated equations more predictors to myan equations. in-sample Of basis, but course, completely that fell apart worked when just applied out-of-sample fine on the Power of Elimination When I first tried my handI at developing was quantitative impressed models by of the markets, seeming predictive power I could gain by adding Best Practice #48: Adding to Your Process Through be able to very clearly identifyis when what and why keeps to trade: youmovement Your rather honest framework than opportunity. during times when it’s tempting to pursue These repeated observations havepersonal greatly theories assisted regarding in whyturn the markets has generation greatly trend of aided and the reverse, selectivity of which my in trading. It is very helpful to the trades I ideallywith would respect have to the entered various measures and II examine follow. find I how with then those those contrast that the set appeared patterns during up the trades I regret having entered. execution into a positive habit pattern. real-time decision making and also facilitate reviewtrades. of By winning and applying losing theseinternalizes criteria the to basics all of good trades decision consistently, making the and trader turns excellence in 392 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES onwdt.Ta vrtigcetdaflesneo euiy The security. of sense false a adapt to created suited overfitting well not That thus data. and data new historical to the to fit custom were hre ecie i etpatc s‘eiiain’ n i nih fits insight experience: his quant and early ‘‘elimination,’’ subscribers. my as with of practice well groups best for his describes programs Charles mentorship conducts Kirk The and via daily Report markets follows He (@TheKirkReport). Kirk Charles sophistication. their They in the forward. simple going always were value predictive almost provide were to able predictors robust—most powerful most but fewer, with equations aubebs rciecmsfo ogiemno ftraders, of mentor longtime a from comes practice best valuable A eidweew d oefcosi u taey More strategy. our in factors through more go us add of we helped All where best. really very period that my a at things trading the was I on when focus me to could what I out so figuring path was eliminate the success accumulated that and profits realized I you greater eventually toward investing. thing but knowledge, and possible much trading every so about about studied imagine I can years 20 Over httuymtes h etpatc fal nm iw is view, my in all, elimination. of of practice on one best focus more to The far you matters. allow truly things and what be making to from need they you than complicated prevent away. will something else take anything rule time same add That the a never at can have you you unless rule you it a into once as works, addition, that In strategy that can necessary. you absolutely everything eliminate isn’t to is step next successful to the often trades, most you leads that need you information overcome. to you can for often obstacle and be another helpful may yet not that present are there reality out in factors but unhelpful interesting, and very noise of There lot else. a everything is eliminate to and courage actionable the are having which then and value add figuring truly is things well what that trading out itself of is complexity Much the that distraction. while, huge doing a a becomes with for it problem doing The been you’ve on. once to so people to and more screens to, review, more listen to use, research backtesting to more indicators run, more watch, to things neyuudrtn h tp o uttk and take must you steps the understand you Once www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 393 A valuable best practice in the cognitive process of trading comes from When we trade who we are, we reinforce who we are; we don’t The same wisdom holds true for how we present ourselves in public. Charles offers a great piece of insight when he points out that it of market information unless westrengths understand and our play information to processing those. One of the unusual features of WindoTrader processing system. Years ofplatforms experience in have developing taught effectiveinformation. trading Terry His key quite point a is that bit we about cannot maximize how our traders processing process Terry Liberman (@windotrader) fromthe importance WindoTrader. of He understanding emphasizes and owning your trading information each screen. Can traders reallyHow process all much that of information what inhow real appears much time? is on distraction? our screens truly is information—and quotes across many markets.development, No so the trader temptation wants is to to add miss screens a and fast-breaking add more data to The typical trader works fromcarries multiple multiple pieces screens of and information updated each inupdate of real charts; time. the Some some screens screens update news; some are for messaging; some track Best Practice #49: Maximizing Your Information Processing confidence. Placing bets againstmost corrosive our actions own we can best take. judgment is one of the of low self-confidence and low self-acceptance. undercut it. As Kirk wisely observes, that’s a great reinforcer of anyone and everyone. We mighttruly adopt ours, clothing or we or may attitudesof try that the to aren’t moment. adapt In our each presentation case, to adding the layers social of setting complexity is a confession we are—simply and straightforwardly.ourselves, If we we will add are layers to not our comfortable social presentation with to try to appeal to to commit—and then to put our money on that commitment. If we are comfortable in our own skin, we can present ourselves as to lean on thosethings exclusively. to Too add often, to when ourstrategies. we strategies, Stripping seek it’s down the because our crutches we performance of lack to confidence bare in essentials those forces us takes courage to eliminateto the nonessentials. have In confidence other in words, you the have few, essential components of your success 394 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rcs.I salaottkn ndt,asmln aait nomto and information into data assembling data, in taking about all is It process. ahsre ei eol oue ntedt otrlvn oortrading our to relevant most decision data our the on decisions? to focused would only cluttered essential we how if truly and be is screen employ each we screens would our screens many on How is making? what of processing. of much streams ongoing How the on based decisions making and insight, rdrcnvsaiepieato nsvrltm rmssimultaneously. frames time the that several so on another, action one price on visualize displays can information trader overlay to ability the is tyu rcsigsyei nraigyiprat ie h xlso of explosion traders: the to given available important, data increasingly is style processing your fit significant a provide can this processor, efficiency. cognitive information visual highly a For er ae eyipratpit rdn s tro,acognitive a root, at is, Trading point: important very a makes Terry sTrypit u,tebs rcieo temiigifrainto information streamlining of practice best the out, points Terry As nomto n etyu rtraa nomto,yunow you become information, as they criteria rele- your Once meet of and information applicability. filters and be your first importance, through must vance, and information information into not converted are data that recognize fit. and quickly applicability, usefulness, to requirements relevance, able our to be meets as to that information is the trade find who easily us and of impor- those The for Steroids. thing on tant Overload Information of this Era because the information is of shortage no is there know, we As nyu usi faheigyu olo ol.T read the To out check goals. provoking, or thought book goal as it well your from as achieving most fun something the of finally, gaining pursuit And and well your it you. in using as for for validity information specifics its the the and plan of overall validity content its the as both specifically and determine will Next, context time. it you in the benefit moment information the this at and the you it, provide with need you begin why it, need, process and require meets in it it criteria. on performance once act your to with then, going alignment you’re And how can decide it. you requirements, about your so decisions it of some understanding make some and knowledge have n a otikaotifrainpoesn sto is processing information about think to way One oices oraiiyt olc h nomto you information the collect to ability your increase To nomto Anxiety Information . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 395 Key Takeaway book, he emphasizes the importance of planning Abnormal Returns they do with any other sort oftrading business is endeavor. just However, like any otheroverhead, business variable in expenses, that etc. Trying it to has trade revenues, without off the a cuff plan or ais means a for recipe measuring for your disappointment. performance One of the problems novicetreat traders their have trading is with that the they same don’t rigor and seriousness that We can optimize our trading if we optimize our cognitive processes. The idea of planning as a best practice comes from an experienced In other words, they took the time to set goals, but didn’t drill down Streamlining our information processing forces us to think about our in trading and highlights the use of checklists in the planning process: observer of both markets andturns), author traders, of Tadas the well-known Viskanta Abnormal (@AbnormalRe- Returnsfrom blog. his In this excerpt they were working on their trading. to create plans for achievingwere to those achieve goals. their ideals How for likely the do year to you come? think Yet all they of them felt that year. None of them laid outtake concrete the plans learning that from detailed the how they previousnew would year year’s and goals. use it to work toward their the meeting everything theyAll had prepared of for them the broughtbrought new a lists year list of of what of trading. they goals had for done right the and coming wrong during year. the Most previous of them Best Practice #50: Planning Your Trading Business A little while ago, I met with some traders and asked them to bring to the efficiency as well as the effectiveness of our thought processes. best of our processing. Moreprocessing is not is better; many as times, importantorganizing fast what information to is on trading our screens as and how deep it is processing. displayed, we By can improve carefully thinking and follow our chainsdecisions. of Terry’s reasoning best in generating practiceoptimizing sound is trading our not thought just processes optimizing and our then screens; adapting it’s our screens to the 396 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ytm eoedvlpn n olwn neiec-ae treatment evidence-based an following patients’ and their developing check taking Physicians before plan. before systems flight systems well-laid-out all them a check used follow pilots and and off Airline checklists making. those be decision codified to guide claim not to truly have can’t you you if checklists—and via process-driven captured be can it unless aa ae e on ee o o’ aearbs rdn process trading robust a have don’t You here: point key a makes Tadas h hcls Manifesto of not Checklist author are Gawande, The Atul they As ensure way. the to along trade anything they missing when basis ongoing an on might plan an important. trade-by-trade as more a even important be, be individual as might And on plan portfolio. trading both overall overall losses an limit in more to and even trades strategy Maybe essential. a is is trades important will exit they and methodology enter the to and use trade, them, will trade they will instruments they the when out lays profits. that generating about plan go trading to A plan they how about think never served to well it are trading, traders However, of fire. catch world to seems the seemed really In plan disfavor. business into detailed gone have the to startups, the of in well, world to As wider ability conditions. market or changing creativity rapidly their to stifle react might it feel they because ahrte nueta htatae sspoe od actually do to supposed is trader a done what gets that ensure they except rather is, that idea, checklists.’’ Every one: instantly. almost by maw making up giant sucked companies, for the mortgages—gets up Internet idea sliced of in every tranches buying Almost money—investing how. more out slightly starved find like pounce to people well, hyenas doing an is for looks someone everyone If business, edge. money the In safely. land to aesetalftm htln oniesit lnthat plan else. a nobody into maybe ideas them—and down for works whittling lifetime a more spent have The time. over created. becomes her or be system his trading simpler can the trader, checklist the successful and a experienced that actuality the aytaesbl tteie ffruaigataigplan trading a formulating of idea the at balk traders Many oetaesfidi sflt aeacekitte consult they checklist a have to useful it find traders Some h alako eldsge rdn ytmmybe may system trading well-designed a of hallmark The . hclssdntdcaewa rdrdoes; trader a what dictate don’t Checklists rts ‘naito,eeyn wants everyone aviation, ‘‘In writes: , www.MyChart.ir … xeine traders Experienced BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 397 I do not review a huge amount of charts—only a handful time frames will vary from tradervary to is trader). that What we will can not ‘‘seed’’with our unconscious/sleeping something brains to work withsmall during advantage the for night sure—but that oursthe way. is ever A a so business slight of edge. hunting of printouts of thethe markets day, I that followed I traded very and/orsession. closely that I during I use intend 4 to time15 trade frames the min, for next 5 each market min—but (daily, these hourly, details are unimportant and the the last thing beforesignificant other sleeping, good except night). It maybe continuesthe kissing to material amaze your me thus how reviewed ‘‘sticks.’’about It how must our be brain something content consolidates during information sleep and (I am learned surebut others I have have written no about link it or article ready). Thinking back totechnique high that school often and providedbefore university me important with times, tests a one particularly the welcome important next material boost right morning before(and was I going mean to to right sleep review before the head hits the pillow, virtually A clever cognitive best practice comes from TraderFeed reader Daniel has found effective in his trading preparation: likely to stick if we rehearse it well. Martin Schulz from Hamburg. He describes a priming strategy that he can be very differentfrequently things. and That deeply is (encountering why theis processing information essential information in to more different cognitive ways) performance. What we need to know is most hard for big tests, onlyheads to during have the the exam. What material we theywhat process studied we in fly can a out calm, access of focused when their manner and we are hypercharged in flight-or-fight mode when you’re in practice mode will actuallyin stick the in the heat mind of when you’re battle. It is not at all uncommon for students to prepare Best Practice #51: Priming the Mind forOne Performance of the challenges of preparation is ensuring that what you’ve drilled plan. In both cases, winging itcatastrophic with consequences. unstructured decisions The would best lead tradingtrading to practices—and plans are those become grounded templates in for best best performance. 398 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES nefrnefo h rcsigo usqeteet.Rsac suggests Research events. subsequent of processing the from interference h atg on fifrainpoesn n nuain htcnbe can that From it.’’ incubation, traders. for and on advice ‘‘sleep processing a valuable information to with of advice faced point the we’re vantage hear the integration When sometimes the ideas. we and trading choice, studied fresh difficult information into of information mind. recall the that of the of seeding both of aid kind a can achieving This uses period, Daniel incubation problem. we that a which as in in sleep immersion process intensive incubation following an focus is our creativity relax of part important an that h oeo oraigi okn noeefa ela okn on working as well as oneself on working emphasizes in Shcharinsky journaling markets: Danny of reader role TraderFeed the journal. a taining expand of and expertise. experience essence from our future learn the we guide that captures per- ensures and cycle to elite practice three-part deliberate performance why That preparation. of is and reviews That practice practice/preparation; and activity. processes: performance; broad that three real-time from in engage apart always stand formers requires to performance improving ability but performance the peak activity, that an is in field immersion performance requires any of challenges the of One Journal Trading Effective an Constructing #52: Practice Best ailsrve taeyi fetv eas trdcsteipc of impact the reduces it because effective is strategy review Daniel’s e nrdeto httreodpoesfrmn rdr smain- is traders many for process threefold that of ingredient key A rdn ra:‘ctiglse’ r‘ltigpot run’’). with do profits to ‘‘letting has actual one or with This do losses’’ the to ‘‘cutting out nothing (read: stands has one that trading This one trading. is my there in basis, most daily a on recommend following traders routines and practices many the Among deaditiini ortaig ’ akn bu h real the about talking I’m your statistical trading, your of While in improvement intuition statistics. and the edge to general important of certainly bunch is analysis a platform trading out your mean no spit get don’t is you to also where there I journaling And that of this. is type about truth the go one to way the wrong always this, or do right will to practitioners how on market advise successful many journaling. While of type pen-to-paper-write-your-heart-out ol’ you htsrgt oraig Good journaling. right: That’s . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 399 .... Being Reviewing last night’s journal entry first thing in the consistently enough that itconsistent makes about a your difference journalingmore will clear flow lead in to the way afind you out better feel things and and about think. yourself You that willimprove, will also and allow grow you in to ways change, you have not imagined. ideas, and best actionsthinking that about for you the have pastis been week, practicing month, the year. and mother Repetition into of consideration, I Skill, wouldand right? add reviewed that Taking consistently. this all has Yes, of to every be the day, done above or at least excited, and inspired, but dopast it it on and paper, grow. so you can move morning (prior to starting your tradingin day) the would right put frame you of mindbe to done. do In whatever addition, it it is that would needs further to crystallize concepts, you had for breakfast.overwhelming In evidence a world that where ourand neuroscience physical mind has actions, shapes do you ourhave think bodies a it clear may record be of ago ahead, your good complain thoughts? idea about I the to losses, would get vote mad, angry, yes. happy, So hearty stuff —writing down your feelingstrade, about a pattern, particular general market, even right down to what Journaling at its best is real-time business planning. It is a way of As Danny points out, journals can be used in many ways: to vent and managing our trading business well. spending our time eitherthings doing worth doing, things we are worth most likely writing to be about productive and or successful— writing wrong); and concrete plans for implementing that improvement. observing our trading business and managing it effectively. If we are observe ourselves, but also guide ourselves.journals That that is contain why observations I am (whatfor a we improvement big did (extending fan right of what and we wrong); did goals right, correcting what we did had previously been stuck inin which our the heads. journal This helps createsas us a traders carry and kind on ourselves a of as conversation dialogue trading between ourselves coaches. Through the journal we can frustrations, prepare for theterm coming market day, views. and crystallizethoughts Reviewing and one’s journals experiences longer- from enables a fresh us perspective, as to we now encounter read what our 400 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES rdn n ssterve owr nhspromne ecie this describes worst performance, and his on best work spot to own asabestpractice: review to his the records detail uses video and in who trading Britton, video Chris reader the TraderFeed examining practices. and play each etPatc 5:Cnutn ie Reviews Video Conducting #53: Practice Best n h aineo atclreet.I sdfcl oefcieyreview trading! effectively our to recall difficult hindsight accurately can’t is as we It well if events. trading as particular our given emotions, of a our good salience for by into the rationale biased and went specific are our that memories forget factors Our even the trade. may all We trades. recollect day, a poor we will during and what actively we by trade that tainted we if unlikely be Particularly can it’s not. back do look plans we what our constructing and that and recall is trading reviews our those reviewing on of based limitations the of One Trading Your of h a prstasgtaon ht fcus,i yvdorecording video by is course, of that, around get teams sports way The ecntipoetedtiso u rdn fw o’ eiwortrading our review don’t we detail. if trading in our of details the improve can’t We htvrIfe a aea motn on.Te add or I missed Then I point. that important an trades make and may make feel that I I parts whatever important that the trades to video of the end consist down the cut At I like). day, the the or of Camtasia (using session trading my emerging for of watch depth to the chart watch levels. a support/resistance I from and action, support trading market with actual the market For for etc.). feel a vpoc, (yesterday’s getting low, high, levels area support/resistance value consists key analysis note pre-market identifying year My 10 of futures. the bond trade year I 30 and trader and day discretionary a am I h rc cin h re o ntedpho aktthat market of of depth context the the on flow I present order video trades the action, the many price in how the points on key depending The long, make. minutes from anywhere 30 I is to that video finished clues 10 The interesting missed. out or point on in that keyed video the on notes in htIfidhlfli on rd eiw srecording is reviews trade doing in helpful find I What e Takeaway Key www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 401 Finally, playback reviews during slow periods or on the Second, the trade reviews at the end of the day are How does this help me? First, the recording helps me me for the nextwatching these trading reviews, the session. dialogue in my Iinstructor-type mind takes role have on where an found I try thataction. to while explain the play-by-play remember what I did wrong. Thatto opened creep the in, which door makes for learning bias fromWith the mistakes the harder. recording, Iaccountability learned in that making errors. I can’t escape my own weekends actually help keep my mind sharp and prepare actually enjoyable. Evenwatching the if video. That is a becausemy in trade some depth way, I is of improve recordings, market a I reading dreaded loser, the skills. losing trade I Before reviews and I enjoy trying was to making resistance level andto compare trades the that order hadspotting flow a what from failed the those breakout.difference order The between flow the key two. element wasthen If is at doing my least that skills Iwhen have can’t made my the order explain the flow library it, reading to skills review will be in improved. the future for identify strengths and weaknesses inread my the ability to order correctly flow. Fromown that, ‘‘best I setups’’ have or built ‘‘avoidable acan pitfalls.’’ library For of review example, my trades I that had a successful breakout at some show why I entered (orwhy did I not exited enter), when and, I in did. some cases, If pattern recognition is a function of cognitive focus and amount of I particularly like Chris’s latter observation, where he notes that exposure to instances of patterns, then a focused, video-based review is and don’t merely harp on negatives. what could be doneimpossible differently to adds replicate with a a levelreviews retrospective of become journal. As detail enjoyable, Chris to because notes, they review the are that constructive—they is teach impact of self-coaching. Whencoach Chris reviewing goes game over film thethe with videos, video, he players. reviewing is Going the like elements to a of specific performance portions in of detail, and noting watching the videos places him in an instructor role. That reflects the 402 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES ra a oaclrt rdrslann uv.Tetae h has patterns on who focused trader then The and curve. session trading learning the trader’s during a markets watched accelerate to way great a ieta h rdrwofist odc eiw o htrao,the reason, self-coaching. that and For learning for review. tool of conduct powerful unit a to is per fails review exposure who video trader learning the more than has time simply review post-market in @secrsb fSBTaig i otn svlal nta it it: explains that Steve how in is valuable Here trading. is the and routine trader the His both Trading. prepares SMB of trading. (@sspencer_smb) not they’re when successful doing identifying are of they ways what the best observe to start the I is of either unprepared. traders one can or that we prepared maintained lax; means long or That have disciplined day. distracted; that day or for our focused start tone day we the is How day sets morning. the often the during during so routine routine trading sound sound a a construct ensure to to ways best the of One Morning Trading Your Organizing #54: Practice Best olwn ealdruiei etpatc rmSeeSpencer Steve from practice best a is routine detailed a Following b ili n a n ehia ly iesbsdo prior on based (ideas plays technical and day 2nd in Fill 6b. office: the at arriving well. dealing as and matters day nontrading my the with for as desk years the preparing few include personal to past own trading my the of over outside broadened me evolved have has responsibilities have open It both market AM. equities to 9:30 US the at designed into trade is walk to prepared I It and moment focused morning. the each from office begins that the routine a have I a pngm ln(omue oetrm rdn ideas). trading my enter to used (form plan game Open 6a. .Etraet o n a ly noG8rd ppup (pop Gr8Trade into plays day 2nd for alerts Enter 7. tools). trading (proprietary RT SMB to Login software). charting 6. (external eSignal Open 5. trade options any if platform); (options LiveVol Open platform). equities 4. (proprietary Gr8Trade Open to keys 3. the computer. of Restart one is 2. (hydration jug water my up Fill 1. eei h urn ito hnsId ahmrigafter morning each do I things of list current the is Here da,oe eae ee Iboxes. II Level related open ideas, alertness). mental lrsi tc rdsa e prices). key at trades stock if alerts preparation). and research www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 403 Key Takeaway community). are interesting. page. ideas for the day). meeting; input ideas into autoscriptsmarket to busy assist on entries open. if review process). play). So that is my entire morning routine. The thing that has The following items help bring me back into focus for 9. Complete game play sheet with Stocks in Play ideas. 8. Open SMB Scanner (research tool for finding stocks in support me on days where otherthe responsibilities desk. pull me off changed the most recentlyscripts is that my will abilitysetups allow during to busy market me enter times that to various Imissed. otherwise might trade I have find a thatentries variety in right of today’s at trading market,for the if the open, you rest it of miss the can certain day. impact The your scripts are risk also taking a great tool to 17. Discuss top trading18. ideas and plan Share via any audio. stocks/important levels from the chat that the market open: 15. Two minutes of16. breathing exercises. Put on RT microphone (audio feed for desk and SMB 13. Conduct AM meeting (discuss market and top trading 14. Enter orders for Stocks in Play ideas discussed at AM 10. Enter top trading ideas into journal (important for later 11. Ideas must include entries/stops/targets/risk12. amount. Options ideas are entered in margin at the top of the Disciplined trading begins with a daily discipline. Notice how Steve’s morning routine accomplishes two purposes. First, it organizes his day and decision making. He identifies and prioritizes 404 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES n eiieywe rdsstu.Scn,teruieealsSteve quickly enables routine act the to Second, able up. is set trades thus when and decisively preparation and his during opportunities tmr ieyta ecnfcso h etoe n aiiehsresults. his maximize and ones best the on focus can he that makes encountering likely that simply more traders—and is it most Steve than day, opportunities single trading a potential of more course the bring Over that conversations ideas. up sets him also but traders, other to ideas bring enables to preparation him His group. a in processing for and processing information them program and opportunities alerts). for and scripts screen preparation. (via his action to of much him concentrated for tools a enable custom in of These use information his of Note time. amount of large period unusually an process to cnro spr fpann o h rdn day: alternate trading building the of for planning value of the part out as scenarios points who India, from deryadav07) planning of lack which disruption. in trading emotional situation a and a frustration, violated it’s surprise, you that to which good led are in odds act situation the calmly a and to of plan entirely ability Think our planning. were stress reducing prior a that and on in perception events us our places by impairing surprise those of mode, surprised element In That are our possibilities. these. as We from foreseeable to follow preparation: respond events of trading would base lack contemplate to we we our overreactions to that on emotional how fail situation situations, focused we and a so bias—that scenarios for become confirmation alternate prepared we in be times, locked cannot Many case—and we anticipate. that not is do rule good A Planning Scenario-Based #55: Practice Best n titrsigta tv’ otn sacmiaino individual of combination a is routine Steve’s that interesting it find I sflbs rciecmsfo edrJtne aa (@jiten- Yadav Jitender reader from comes practice best useful A aigaln nr rtewrtcniin omk a make to breakout to conditions response our worst about imagine the can before We or see all. at to entry trade like long would a example, we making for conditions can, ideal We the occur. imagine regardless to day probability next actual out their play of can all about that imagine scenarios can possible we the day trading In the surprise. before the evening face to the ourselves of prepare course can costly. next we market’s be still sure action, to for know prove can surprises one these no Although Often catching guard. and actions the their off with us that us is surprise to markets fail the never of they characteristics interesting the of One www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 405 : Create regularly the images of the financial goal to Focused vision achieve. we can do it inetc. our free Again time like the duringafter markets the this scenario evening have building walk, exercise they their candifferent have own something in minds store and forscenarios actually us even plays but out, we then are ready if with one our plan. of our imagined failure or our plan of actiontake during a much short time squeeze. It to won’t think of so many other possibilities and 1. INNER DRIVE Note that such scenario planning requires an open-mindedness, as Here is Pier’s breakdown: Dividing trading into component processes as a best practice comes we remove much of the market’s ability to fill us with shock and awe. us to act decisively inplanning the that face allows us of to multiple make possible sound outcomes. decisions It in is the such heat of battle, as market scenario that weand fail plan to for step multipleperspective can back, possibilities. be assess Jitender’s an the observation ongoing entire part is of situation, that preparation such for trading, enabling during the day that seem unfathomablepossibly in retrospect: done ‘‘How that?’’ could Generally, I have suchof boneheaded becoming so actions focused are on the short-term result action and so locked into a single we can only anticipatepossibilities. a For range this reason, of scenario situations planningcognitive is if a flexibility. we great are tool It to open maintain is to very multiple common that traders will take actions regular implementation of the 24 performance elements.’’ 1. Vision (The Fund Manager) into two sub-domains and eachelements. of This those creates into a three catalog specificPier of performance explains, 24 performance ‘‘The daily functions trading of routine trading. is focused on a structured and from Pier Luigi Pellegrinodown (@PLPAR) trading from into four Paris, basic France. areas He and breaks then breaks down each of those what they do into components andof work those. on bettering themselves in each Who are we as traders?in The reality a is variety that we ofon fill activities. becoming many roles It’s better and rare traders. engage It’s to even find rarer traders to who see work traders diligently break down Best Practice #56: Elaborating Your Trading Processes 406 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES .Srtg TePrfloManager) Portfolio (The Strategy 2. .Eeuin(h edTrader) Head (The Execution 3. 10. 12. 11. 16. 15. 14. 13. ATR RECOGNITION PATTERN MASTERY ELITE OE MANAGEMENT MONEY OSSETROUTINE CONSISTENT LWESEXECUTION FLAWLESS 7. 6. 5. 4. 3. 2. 9. 8. otoi ranking Portfolio knowledge. intuitive and action Implicit mastery. reach to driven mastery to Rage winning. in Self-efficacy performance. of standards motivation Intrinsic win. to expectation purpose of Intensity ikanalysis Risk recognition. recognition Setup stocks. filtered the among monitoring Pattern tool. screening proprietary the rdn frequency Trading level). stop and (shares allocation Capital trades. intuition. implementation Trade trading. during state Zone routine. Rituals toughness Mental opportunity. elct ossetyasrcue n oeetdaily coherent and structured a consistently Replicate : ne ndmn oesaeo ou n concentration and focus of state zone a demand on Enter : c ihsl-ofiec n efefiayadbelief and self-efficacy and self-confidence with Act : efr u iiec n ikaayi fpotential of analysis risk and diligence due Perform : xct h rdn taeyb cesn implicit accessing by strategy trading the Execute : uti h ovcino en neieperformer elite an being of conviction the Sustain : cn eet n aktebs rn tcswith stocks trend best the rank and select, Scan, : eetpabo eustruhipii pattern implicit through setups playbook Detect : eeo togadcmeiiemindset. competitive and strong a Develop : rd nytebs euswt h greatest the with setups best the only Trade : eemn h aia loae otetrade the to allocated capital the Determine : oio rc cinadptendevelopment pattern and action price Monitor : elwt nest h ilt uce n the and succeed to will the intensity with Feel : en rvnfo ihnt ec high reach to within from driven Being : xct h rd alsl ihcaiyand clarity with flawlessly trade the Execute : www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 407 what you’re in detail : Correct weaknesses and repeat winning Key Takeaway : Debrief, monitor, and measure perfor- : Detect factors limiting performance and : Train key performance skills with structured : Utilize adaptive exit tactic with trailing stops : Focus relentlessly on your strategy and discard : Develop a mindset of continuous improvement : Isolate, rehearse, and integrate critical skills and actions. enhancing success. Feedback implementation and skill refinement. Continuous debriefing mance. Performance diagnosis deliberate practice Mental rehearsal optimal behaviors Laboring instinct Performance training Performance niche other methods. Order management and profit targets. PERFORMANCE ENHANCEMENT DELIBERATE PRACTICE 24. 23. 22. 21. 20. 19. 17. 18. Your breakdown of trading process might look different from Pier’s If you don’t break down whatable you to do replicate when the you essential trade ingredients well, you of won’t success. be Indeed, a breakdown such as Pier’s 24 performance functions could to look under thedoing performance well hood and and what could observe stand improvement. (mine would bepsychologist—less heavier geared on toward research sustainingprinciple processes positive still holds: mindset), and—ironically Dividing but trading into for the component actions a enables you 4. Feedback (The Performance Coach) tuneups. guide goal setting for the next daythat or embraces week. best That would practices: be a a continuous best practice set of trading diagnostics and anchor an effective end-of-day or end-of-week report card that would 408 BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES etPatc 5:Save #57: Practice Best 1. meaningful as a practices the make about can than thoughts few few whole: more a a a are you least Here at to trading. that your apply in good difference will are Some odds the practices. but best others, 57 seen just We’ve ■ best you’re times, lean the success. new for as your prepared change find to financially will too, positioned you’re income success, your If this when and result. day ever-changing, a the are for Markets saving pass. by shall game the in yourself keep curves. and learning traders relearning new their former of finance times become can’t they the traders because finance once-successful to save often, times don’t Too flush you adaptation. if the however, from become happen, money can can’t times the lean That The the wins. more. and after times once believe lean prosperous by you followed as be good you will as as times never bad flush you’re as never and You’re losses pass.’’ after shall feel too, ‘‘This, be, would it trading, financially. prepared not are pyramid they prepared and they not emotionally; are they and trading; their freely, mentally their when in prepared spend comes not are time They They the erodes. edge then money. trades—and ever-bigger their into winnings save rarely traders once was frustration. Then What and works. losses practice. longer brings and no now work reviews successful to for used what need and stop the change They feel markets forever. longer last will no it They believe adapting. often so traders success, with become When flush traders traders. struggling developing become seen traders successful have and have I traders I successful and important. years, most for the markets perhaps in but worked practice, best shortest the is This h etpatc st oefrtebs,pa o h os,adalways and worst, the for plan best, the for hope to is practice best The good promote to screen trading my on note single a place to were I If success, with flush that, is sad particularly scenario this makes What rdr iebs rcie nteeaes tsago e htteeare these that bet prioritize. good should a you it’s that areas, areas these in positive experienced practices many best so a cite If traders traders. maintaining for challenges and key are These trading, mindset. reviewing trading, themes organizing common the at Look Summary ayo h rcie eciewy of ways describe practices the of Many . www.MyChart.ir BEST PROCESS #4: DEVELOPING AND INTEGRATING BEST PRACTICES 409 . If there is one key theme to this best practices are those that extend best . You can’t work on everything at once. When strengths. Some of yourhelp best you avoid practices them, may but the the remedy best weak of you. areas or working and what is not.you One build process your improvement trading continuously atin and a a learn time deliberate from helps practice your fashion. experience Focus on strengths, not justbook, weaknesses it’s that success is a function of identifying and leveraging your Take one thing at a time you make multiple changes, it’s difficult to know precisely what is Your development as a trader is best approached as an adventure. It’s that’s the most fulfilling adventure of all. an opportunity to learnand from closer to every your ideals. day’s There experiencewithout is self-development. no and Working meaningful move on development of trading closer trading is working on you—and 3. 2. www.MyChart.ir CONCLUSION: FROM BEST PRACTICES TO BEST PROCESSES

‘‘Men are like grandfather clocks driven by watchsprings.’’ 411 Colin Wilson, The Black Room

Let’s recapitulate the major ideas from the book: 1. Markets are ever-changing, across every time frame. This means that success at trading is not a function of finding and exploiting a fixed edge. Rather, success comes from adapting to market changes and constantly renewing sources of edge. 2. Performance is a function of cognitive and personality strengths, inborn talents, and acquired skills. Elite performance requires concerted efforts to deepen our strengths. 3. The most neglected area of development among traders is creativity. We focus on executing trades and managing risk, but rarely work on expanding our creative capacity to generate ideas. 4. A best practices framework enables traders to identify their strengths in each facet of trading and join those practices into robust processes. We succeed when we turn our best practices into positive habits. 412 CONCLUSION: FROM BEST PRACTICES TO BEST PROCESSES ev dnie yABCD: by identified we’ve 3. 2. moving 1. started get basic to seven into want trading your you activities: divide processes, If best routines. to practices of best from set a following simply 5. 4. o hudb bet eeaeaflwhr htdsrbswa o do you what describes that flowchart it. each a do you with generate how to and trading, able rigorously, these of be define should you aspect If you be practices. each best can your for by you’ll that anchored processes Rather, sequence routines process. of a into sequences following them be follow link won’t You and religiously. form, followed checklist in practices 7. 6. ev enta hr smc oet rcs retto than orientation process a to more much is there trading that of facet seen each across We’ve practices best Developing creativity strengths D Cultivating personality and cognitive, emotional, social, C Building markets ever-changing to B Adapting that processes A best four in grounded been have pages previous The mrvn ortaigsat ihcetn ocato o o trade you how of best. flowchart your a at creating with starts trading your Improving o aho hs ra,takwa o obs,cpuetoebest those capture best, do you what track areas, these of each For rd structuring Trade generation Idea Research otoi/ikmanagement Portfolio/risk trades of out or into scaling management Position/risk ideas ra,lann rmgo n orpromne etn ol for goals those goals achieve setting to plans performance, following poor and performance, and future good from learning areas, management Performance making decision optimal for state physical across Self-management risk managing returns; trades smooth multiple and diversify to trades related gteigifrainrlvn omarkets to relevant information —gathering snhszn nomto notaeideas trade into information —synthesizing keigyusl napa etl mtoa,and emotional, mental, peak a in yourself —keeping fidn on ikrwr xrsin ftrade of expressions risk/reward sound —finding rveigpromnei aho h above the of each in performance —reviewing mngn tp,pottres rd sizing, trade targets, profit stops, —managing cmiigucreae rngtvl cor- negatively or uncorrelated —combining e Takeaway Key www.MyChart.ir CONCLUSION: FROM BEST PRACTICES TO BEST PROCESSES 413 .You use it or lose it . It’s not about discipline, and it’s not about robotically You can’t improve performance if you don’t clearly identify the drivers I wish you well in your trading adventure. Most traders fall quite short of creating flowcharts of best practices the inevitable setbacks anddeepest frustrations. values and Energized greatest by capacities, we tapping becomeclocks more powered into than by grandfather our watchsprings. We become truly self-sustaining. atrophy. Your work on your tradingis is the your work work that on brings yourself—and youBuilding ever that the closer best to within the us person gives you’re us meant energy, to allowing be. us to persist beyond What we’ve seen in this book is thateither everything cultivate in life your is strengths and leverage those or you allow them to how markets work and defining strategies that exploitIn that your understanding. trading business, you work on generatingaging ideas; you trades; work and on you man- work on managing yourself and your performance. over time. of your performance following setups that someone has taught you. It’s about understanding linked into best processes.strengths, That, adapt however, to changing is markets, how and you sustain build performance on success your www.MyChart.ir POSTSCRIPT

t is March 5, 2015, nearly four months since Mia Bella and I sat together Ias I constructed a new way of charting. Price remains on the y-axis, but the x-axis represents events—not time. The simplest example of looking at markets through event time rather than chronological time is point-and-figure charting. In a P&F chart, it is price movement that is the 415 event: You create a new bar every time the market moves by a certain threshold. But there are many potential events that can anchor the x-axis. Price change is an event, as is relative price change. Volume traded is an event; so are upticks and downticks and trades transacted. Once we free our- selves from the clock and define time in event terms, fresh relationships become clear. The stock market does not spend the same amount of days, months, and years rising and falling. Those who watch the market know that it typically falls quickly and rises more gradually. Suppose, however, we measure time in terms of price movement or transacted volume. Rises and declines begin to show more similarity in duration. Cycles appear with greater regularity. When Mia came home after having been rescued from the high-kill shelter in Kentucky, she spent a good amount of time exploring. She learned that standing on her back legs and placing her front paws on a door would open the door. So now, if I’m in a room with the door partially closed, Mia simply stands, opens it, and walks in. She explores, 416 POSTSCRIPT yt-ols sanwmaueo mle oaiiyta eoe the removes that volatility implied On of different. measure so not new are a traders is as list We to-do learns. my she and things, tries she i n gr u o ooe doors. we open if to like how that be out is we’ll figure eventually know and things, market I Mia enough at of All look won’t. and groups places others separate enough looking out, explore of of pan activity way will selling revised Some and participants. a activity and buying options; the combines index at that and sentiment equity of measure from new readings a volatility; realized of impact www.MyChart.ir REFERENCES

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Hoboken, NJ: Wiley, 2003. . Oxford: Oxford University Press, . Hoboken, NJ: Wiley, 2009. Motivation and Emotion (Hoboken, NJ: John Wiley & Sons, 2006): The 4 (2010): 57–65. (Hoboken, NJ: John Wiley & Sons, 2002): A solution- (Hoboken, NJ: John Wiley & Sons, 2009): A cookbook The Nature of Creativity The Psychology of Trading The Daily Trading Coach Enhancing Trader Performance Genius, Creativity, and Leadership 68(4) (2000): 615–623. Further Resources from Brett Steenbarger Creativity, and the Arts Attention to Positive Stimuli.’’ of Creative Output by a Priming Manipulation.’’ 1988, 43–75. ogy, psychology of markets, and more. And, of course, check out the resources offered by many of the contributors focused perspective on mastering performance psychology. of self-help methods for coaching yourself as a trader. Sternberg (ed.), by Mindfulness-based Cognitive Therapy.’’ Psychology 27 (2011): 383–388. and Lau, M. A. ‘‘Prevention of Relapse/Recurrence in Major Depression process of developing expertise as a trader. barger/: Positive psychology and peak performance articles. 2014. University Press, 1999. Zabelina, D. L., and Robinson, M. D. ‘‘Child’s Play: Facilitating the Originality Wadlinger, H. A., and Isaacowitz, D. M. ‘‘Positive Mood Broadens Visual to the best-practices section of this book! The Psychology of Trading TraderFeed blog, http://www.traderfeed.blogspot.com/: Trading psychol- Torrance, E. P. The Nature of Creativity as Manifest in Its Testing. In R. J. Teasdale, J., Segal, Z.V., Williams, J. M., Ridgeway, V. A., Soulsby, J. M., Steenbarger, B. N. Tang, Y. ‘‘Mechanism of Integrative Body-Mind Training.’’ The Daily Trading Coach Positive Psychology Forbes blog, http://www.forbes.com/sites/brettsteen Steenbarger, B. N. Steenbarger, B. N. ■ Enhancing Trader Performance Simonton, D. K. Steenbarger, B. N. ‘‘A Hard Look at Our Trading Edge.’’ www.MyChart.ir ABOUT THE AUTHOR

rett N. Steenbarger, PhD, is a Clinical Associate Professor of Psychi- Batry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, New York. He has worked since 2004 as a performance coach for proprietary trading firms, investment banks, and hedge funds. The author of three previous books on trading psychology and the popular 423 TraderFeed blog, Dr. Steenbarger has written over 50 peer-reviewed journal articles, book chapters, and books on the topic of short-term approaches to behavior change. He also writes a blog for Forbes that covers the field of positive psychology as it relates to peak performance. www.MyChart.ir INDEX

@MPortfolios, 387–389 Beckstrom, Norbert, 358–359 Bellefiore, Mike, 385–387 A Berkman, Lisa, 184 best practices, x, xv, 213, 277–283, Abnormal Returns blog, 250, 366, 289, 291, 295, 309–408, 425 395 411 Adams, Scott, 199 linking into best processes, 283–287, adapting to change, ix–x, xiv, 1–93, 290, 411 411 best processes, xi, xv, 213, see also best adding through elimination, 391–393 practices affection, 143, 148, 150–152, 156, biofeedback, 167–171, 174–175, 162, 166, 169, 180, 183–185, 339–340, 364–365 193, 305, 333, 346 heart rate variability (HRV), affinity groups, 188–189 see also 168–169, 171, 173, 340, 365 networking vagal tone, 173 Andreasen, Nancy, 240–241, 417 Blair, David, 367–369 anxiety, 27, 38, 42, 74, 138, 143, 155, Blanshard, Brand, 309 168, 173, 175, 305, 338, 365, Bokhari, Awais, 389–391 368, 377 Bollinger Bands, 229, 335 Argyle, Michael, 184, 188, 417 Awad, Sam, 374–376 breadth, 319–320 breaking negative behavior cycles, 378–379 B Britton, Chris, 400–402 balancing job and trading, 374–376 Brown, Josh, 367 Barber, Brad, 234, 417 Buckingham, Marcus, 106–107, basket of stocks, 309–311 112–113, 132, 417 Baumeister, Roy, 57, 76, 417 Byeajee, Yvan, 370–373, 417 426 INDEX C raiiy xx i-v 2 6 93, 86, 42, xiv-xv, ix–x, creativity, 367 Michael, Covel, 319–320 311–315, correlation, 87 33–36, motivations, core 143 97, contentment, 60–63, 58, 54–56, contemplation, 165–167, 149, conscientiousness, 231 30, bias, confirmation 417 151–152, 145, William, Compton, 335 Index, Channel Commodity 417 139, Geoff, Colvin, 339 journal, cognitive 384–385 control, cognitive 215 195–196, bias, cognitive 417 77, John, Coates, –344 342 coaching, 417 227, Evangelia, Chrysikou, 359–361 review, chart 411 54–74, change, 417 274, Ed, Catmull, 22 Henry, Carstens, risomn,2621 274 266–271, brainstorming, 235–237, creative, more becoming speech, and writing automatic 255–261 analogy, and 311–313 sectors, stock of 313–315 classes, asset of 66 56–61, and, urgency 65–66 and, translation 79 54–60, for, readiness 65–66 psychotherapy, in 67–68 and, motivation 68–70 and, mirroring 61–65 and, emotions 60–63 and, crisis 9,34 411 334, 297, 291, 275, 273, 270–271, 267, 207, 201, 199, 197, 193, 155, 143, 138, 134, 132, 96–97, satisfaction 79–83 74, 69–71, 66–67, 268 201, 169–170, 335–337 254–255 e also see life yls –,4–0 1–2,415 319–320, 49–50, 8–9, cycles, 225, 96, Mihalyi, Csikszentmihalyi, ere,Cteie 9–9,418 195–196, Catherine, DeVries, 139, 131, 129, x, practice, deliberate 347–350 structure, day 1 Charles, Darwin, Coach Trading Daily The D ukot,Agl,1,10 418 130, 14, Angela, Duckworth, 317–320 TICK, 418 Dow 151–152, 146, 96, Ed, Diener, 418 Mantosh, Dewan, 36–38, 30, 25, 9, 5, xi, ix, discipline, 155, 143, 74, 71–72, 38, depression, n eicto,230–231 verification, and 237–240 and, failure trading 244–247 and, modalities switching 219–222 strengths, and 240–244 and, problems reframing 350–351 and, parallel in reading 247–250 237, productivity, and 222–235 process, 230–235 finding, problem and 261–262 lifestyle, and 228–230 and, insight 337 225–227, and, incubation 235 and, immersion 271–273 263–266, groups, in 274–275 failure, and 210 207–208, entrepreneurship, and 275 discipline, and 215–219 of, crisis 337 250–257, and, combinations 359–361 review, chart www.MyChart.ir 3–3,28 418 248, 233–234, 6,4243 413 402–403, 367, 364, 362, 359, 351, 329, 341–342, 300, 297, 290, - 288 275, 267, 261–262, 253, 247, 239, 217–219, 211–212, 199, 176, 173, 165–166, 153, 149, 125, 114–116, 110, 107, 79, 100, 70, 92, 51, 47–49, 45, 43, 41, 338 305, 190, 166, 358 193, 167, 165, 142, ,17 173 167, x, , INDEX 427 well-being, subjective 148, 150–156, 160, 164, 166, 169, 180, 183–184, 188, 190, 192–193, 305, 332–333, 346, see also well-being 128–129 376–378, 385, 397–398, 401–403, 405–406 193, 418 139, 148, 158–159, 167–171, 173–180, 192, 225–227, 235, 256, 339–342, 356, 365, and self-talk, 72 Index Indicators, 229 information processing, 393–395 happiness, 76, 97, 134–135, 143, 146, Hammond, D. C., 173, 418 Heath, Chip, 30, 64–65, 68,Hope-Robinson, 418 John, 355–356 Hunter, Daniel, 364–365 I Ilmanen, Antti, 7–8, 419 Garl, Scott, 384–385 Gompers, Paul, 209, 418 Gottman, John, 191 Graham Capital, xi Grant, Adam, 39, 63, 418 gratitude, 189–193 grit, 14, 130 Gross, Markham, 362–364 H habits, 37–38, 42–43, 45, 71, 74, G Forbes blog, 333, 421 Fordyce, Michael, 154–155, 418 Frank, Jonathan, 361–362 Fredrickson, Barbara, 171–174, 183, frustration, x, 4–5, 8–9, 19, 42 functional fixedness, 6, 30 flow state, 167–168 focus, xv, 77, 105, 107, 109–111, 130, well- , x, 323, 421 see also 358, 418 being, subjective well-being 332–333, 346–347, 354, 370, 377, 385, 413, 70–71, 75–76, 80, 83, 87,124–127, 112, 130–131, 133, 143, 147–148, 150–153, 156–164, 166–167, 169, 171, 174–178, 180, 183–185, 187, 193, 237, 250, 298–299, 301, 305–306, 56–59, 61–62, 64–65, 67, 160, 418 and the brain, 194 strengths of, 207–209 traders as, 199–214 and startups, 209–211 roles of, 212–213 drains, 160–164 trading and, 15–16, 46–47, 54 commitment and, 10–11, 15 exercise, 153, 178–179, 222 exposure, 168 event time, xvii, 415 Evernote, 82 excellence principle, 126–128 Ericsson, K. Anders, 122, 129, 165, entrepreneurs, 5, 201 Enhancing Trader Performance finviz.com site, 367 flexibility, 8, 33, 43, 45, 50 F filtering noise, 186–188 energy, xv, xvii, 14, 18, 21, 34–35, 39, emotional experience, 79, 143–148 emotional intelligence, 50–53 emotional thermometer, 78 Emmons, Robert, 190–193, 418 emotional commitment, 27–28 emotional diversification, 332–333 E edges in trading, 91–92 Ehlers, John, 8 Duhigg, Charles, 37–38, 42, 70, 128, Dunker, Karl, 6, 30, 418 428 INDEX nenldaou,70–71,75 dialogue, internal 346–347 inspiration, oe 180–185 love, 420 188, 183, Shane, Lopez, Tony, Schwartz, and Jim Loehr, 419 75, Edwin, Locke, 419 340, Andrew, Lo, 419 209, Jessica, Livingston, 419 269–270, 266, Josh, Linker, 366 xii, Howard, Lindzon, 148, 143, 135, 76, satisfaction, life 393–395 Terry, Liberman, 419 201, Franziska, Leutner, 382–384 Bryan, Lee, 373–374 Paul, Landry, 419 130, Emilia, Lahti, L 419 13, Thomas, Kuhn, 419 63, 60–61, John, Kotter, 419 173, Bethany, Kok, 419 165, Melvin, Kohn, 373 121, Bob, Knight, 391–393 Charles, Kirk, 259 xi, ix, Trading, Kingstree 419 267–268, Tom, Kelley, 419 30, 25, Daniel, Kahneman, K 376–378 Gus, Joury, 419 165, Joshua, Jackson, J 419 359–361, Ivaylo, Ivanov, 419 7–8, Antti, Ilmanen, 68–70 isolation, 356 intuition, n akt,330–332 markets, and well-being also see 356, 332–333, 305, 298, 196, 190–193, 188, –184, 183 180, 169–170, 166, 156, 150–152, 5–6,12 420 162, 157–160, elbig subjective well-being, ewrig 97,9,16 365–367 196, 91, 69–70, networking, 420 153, Daniel, Nettle, 76 negativity, 378–379 Eldad, Nahmnay, N 384–385 movement, 82 motivation, 197 169, 75–78, mindfulness, 244, 241–242, 228, Michael, Michalko, 327–330 294, 119, metrics, 342–344 mentorship, 178, 174–175, 167, 76–77, meditation, 366 Sean, McLaughlin, 420 76, Kelly, McGonigal, 126, 124, 121–122, Mark, McClusky, 420 23, Michael, Mauboussin, 259 Profile, Market 233 Delta, Market 168, Network, Research MacArthur M vrofiec,29–33 overconfidence, 387–389, 382–384, trading, organizing 323–325, 83–87, opportunity, 389 Trader, Open O utpirefcs 3–4,150 139–141, effects, multiplier YETC,19 8,22 315–317, 222, 182, 179, TICK, NYSE 420 9, xii, Victor, Niederhoffer, 348 lows, and highs new oiieadngtv,80–81 negative, and positive 327–329 trading, 329–330 personal, 171–173 loving-kindness rfsinlntok n,184 and, networks professional www.MyChart.ir 420 420 402–404 381–382 also see 420 252, 249, 246–247, 355–356 1–2,348 319–320, fnt groups affinity e also see exercise INDEX 429 life satisfaction see 193, 197, 275, 411, 413 235–236, 247–248, 420–421 65, 90, 141, 156–157, 160, 176 232–233, 263, 265–267, 420 420 384–385 132, 138, 155–156, 420 non-strengths, 113–116 performance and, 101–102 character, 132–139 cognitive, 99–100, 411 education and, 102–104 engagement and, 117–122 identifying, 106–111 integration of, 135–139 Steenbarger, Brett, 421, 423 stock sectors, 311–313 Stock Charts, 335 Stock Twits, xii, 53, 216, 224,stop 366 loss, 43–44 strengths, x, 97, 100–126, 128, 135, Seneca, Lucius Annaeus, 277 Shcharinsky, Danny, 398–399 Simonton, Dean Keith, xiv, 96, 229, sine wave chart exercise, 11–13 sisu, 130–131 sizing positions, 321–323 small wins, 64, 68–70, 75 SMB Capital, xi, 385, 402 solution focus, x, 17, 24, 28, 35–36, 38, Spencer, Steve, 385–387, 402–404 Spengler, David, 356–358 Schulz, Daniel Martin, 397–398 Schwager, Jack, 13, 51, 58, 150, 264, Scott, James, 30, 420 Seelig, Tina, 241, 420 self-control, 130, 167, 355, 376–378, self-hypnosis, 173–176, 178 self-management, xv self-talk, 337–339, 358 Seligman, Martin, 64, 66, 70–71, 96, S satisfaction, saving money, 408 Sawyer, R. Keith, 222–223, 225–227, see also 251, 256, 420 well-being, subjective well-being flow chart of, 45–47 improvement, 306–309 review of, 301–306 driven trading, 287–301 trading style and, 51–52 rule-governed trading, 362–364 Root-Bernstein, Robert and Michele, Ryan, Steve, 381–382 Rijhwani, Rahul, 369–370 risk management, 321–325, 351–353 Ritholtz, Barry, 367 relationships, 184–185 relaxation, 169, 340 Ratey, John, 194, 420 reading in parallel, 350–351 regimes, 7–8 relapse, 75–79 R Rand, Ayn, 10, 95 Q quality improvement, 295 productivity, ix, xiv purpose, 39–43 Prochaska, James, 54–55, 75, 77,process, 420 214, 391–393, 405–408, 412 Posner, Michael, 166, 420 preparation, 373–374 priming, 397–398 planning, 395–397, 404–405 positive attribution bias, 31–32 positive psychology, 96–97, 106 positivity, 171–175, 196 personality Peterson, Christopher, 132, 138, 420 Pellegrino, Pier Luigi, 405–408 perfectionism, 74–75, 191 performance reviews, 379–381 P Park, JaeHong, 30, 420 peak condition, 353–355 430 INDEX tegh ( strengths wte,5,216 53, Twitter, xi ix, Corp., Investment Tudor 348–350 day, trend 165, 123, 74, 38, ix, blog, TraderFeed 370–373 rituals, trading 400–402 358–359, reviews, trading 398–399 journal, trading 389–391 framework, trading 367–369 22–23, edge, trading 385–387 checkups, trading 421 236–237, Paul, E. Torrance, 87–91 success, to threats 25–28 thinking, 367 blog, Street Whole The 367 blog, Broker Reformed The Trading of Psychology The 392 Report, Kirk The Coach Trading Daily The 367 blog, Picture Big The 421 76, John, Teasdale, 344–346 40–41, teams, 421 167, Yi-Yuan, Tang, 353–355 Enis, Taner, T 142–146 97, well-being, subjective 168 management, stress potnte n,88 and, opportunities 150–154 research, 148–150 personality, and 154–160 cultivating, 333–335 of, workout 116–117 weaknesses, as 123–126 strengthening, 8,3738 0,421 400, 397–398, 384, 381, 379, 377, 373, 369–370, 364, 358, 351, 309, 299, 262, 221, 219, 203, 186, 182, 178, 421 341, Continued ) ,17 173, 167, x, , ,1,421 17, x, , oku,177–179 workout, 369–370 Workflow, 379–381 Ryan, Worch, v John, Wooden, 325–327 trades, losing and winning 393 WindoTrader, 30 Anton, Robert Wilson, 411 Colin, Wilson, 300 176, 166, 76, 57, willpower, 166, 152–153, 148, ix, well-being, 421 172, Heather, Wadlinger, W 44–45 volume, 320–322 53, 44–45, volatility, 351–353 Vlad, 356–358 visualization, 395–397 Tadas, Viskanta, 400–402 reviews, video V 413 194, 170, 123–127, it, lose or it use 361–362 uncertainty, U aeia ay,27 421 227, Darya, Zabelina, Z 177–179 yoga, 404–405 Jitender, Yadav, Y 72–73 worry, fsokscos 311–313 sectors, stock of 313–315 classes, asset of www.MyChart.ir 356 196–197, 193–194, 191, 185, 180–181, 173–175, 171, 169, e also See ujciewell-being subjective WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA.