Almost every single day of trading, I start
off as a whiz-kid. I make oodles of dough in the AM but way too
many times, like 3-4 days a week, I give most of it back. I
just don't get it. Clearly I know what I am doing - or at least
I do in the morning. What happens to me? My CIO/mentor and CRO
have about had it. It's becoming crystal clear, through their
tone and their body language, that I am on a very short
-The Morning Guy
Ugh! Very very frustrating
problem. But guess what? Believe it or not, this is incredibly
common. And better yet, there are two antidotes you can
Psychological science research recently identified
something called "decision fatigue." It's now considered a
proven fact that our brains get tired. We can't make a bunch of
good decisions in a row, particularly in an environment as
fundamentally uncertain as the global markets.
Most shops think it's a good idea to keep their
PM's and traders "fighting for every tick" but they couldn't be more wrong. They are giving up
lots of alpha with this gladiator mentality. The shop that
starts encouraging people to leave, workout and, yes, even nap
(!) in the middle of the day is the shop where returns will go
up a few percentage points.
Alas, I know it won't be easy immediately proving
this to "the powers that be," so in the meantime, let's work
the psych angle.
When have you previously, in say college or high
school, snatched defeat from the jaws of victory? How many
interceptions did you throw at the end of games when your team
was about to win? Or maybe your pattern is to say just the wrong thing the moment a new chick is
about to agree to go back to your apartment? What I want you to
do is think about those old, albeit preferably forgotten,
memories. I'd bet your next winning morning that the feelings
you have now when you've blown another day feel exactly like
the time(s) you blew the game or the girl.
Yeah, yeah I know - every trader is afraid of this
stuff. Don't be. Matching up the constellations of emotions
from the two seemingly very different situations and then
articulating the fear of a repeat as it is
happening, is fairly close to a miraculous tonic for
circumventing the problem.
So think about what you're afraid will happen
("If I screw up another afternoon, I'll be let go, lose my
apartment, and my wife will leave me...") and write those fears
down. Articulating these fears - in the moment - will actually
give you a path around them. Even just saying your fears aloud
- NO EDITING - can oftentimes be enough to
dissipate some of the psychological energy that
causes our problems to repeat.
Your Late Game Cheerleader,
Readers are invited to write to
trading coach Denise Shull, a recognized expert in risk
psychology and author of Market Mind Games. Send questions to email@example.com.
Trading coach: Newly-minted PM asks "What's the