For those who don’t know me, I’m Jonathan van Clute and I’m the Community Manager for TRG (that’s Trading Research Group for those playing the home game!). I’m no psychotherapist, but I sometimes play one in our community, and some people have said they’ve gotten a lot out of my thoughts, so… consider this – Psych Saturday!

Let’s begin.

Trading is really hard work, I think most of us would probably agree with that. Especially when we’re starting out as new traders, I bet a lot of you who’ve been around a while can relate to spending hours upon hours poring over charts, reviewing patterns, calculating statistics, backtesting, reading trading books, and studying until you feel like your head is going to explode. Over time, provided you’re actually improving and developing a process and deploying an edge in the markets you trade, this workload should likely reduce as you narrow down on what you look for, and get better at seeing it and executing against it.

But here’s the interesting thing I’ve noticed again and again with traders I’ve known, worked with, and even myself. We often find it extremely difficult to work less! “Smarter, not harder” as it were. And I have a theory about why this could be. Allow me to elaborate:

When we decide we’re serious about trading, we discover that it is incredibly hard, and requires a huge amount of study. This leads to needing to learn whole new areas of things we never knew before like technical analysis, pattern recognition, risk management, trading platforms, using spreadsheets, and for some, even just general computer use! Then as our time in the profession increases, we realize we also need to work on ourselves, our self discipline, on forming (or breaking) habits, on process, emotional control, and on and on and on.

Then at some point, hopefully we begin to develop an edge. Maybe it’s one setup, or a particular pattern, etc. But something begins to work for us, and we start to find that trading is much less stress than it used to be. It requires less preparation, less time, less energy, less “work”. Dare I say it – it might even start to feel “easy” or “boring”.

It would be understandable for you to think at this point, that this is what all traders are aiming for. That this is “trader nirvana” and that they will just kick back now, work a few minutes or hours a day, make tons of money, and enjoy their life of leisure. Seems sensible right? But what I actually see happening, is that this is exactly the moment where the trader ramps up the complexity with what they’re doing. They change platforms (because “more edge!”), they add another product or setup (“more opportunity!”), they increase size (“more munnyz!!”), and they just all around cause themselves an immense amount of stress.

Does this sound in any way familiar? Have you seen this in yourself, or maybe in someone you know? I sure have. And I feel like I have a sense of why this happens. See, we are conditioned (at least in the US and I suspect most other “developed countries”) that the road to happiness and success is paved with hard work. Key word hard. Anything short of working as hard as you can, for as many hours as you can, is seen as lazy. Disrespectful. Even dishonest! “Idle hands are the devil’s workshop” is a phrase that comes to mind. But the effect this type of thinking has, can massively backfire on a trader.

As trading starts to require less work on our part, our subconscious mind is noticing this, and seeing that it’s a bad thing that we’re working less than we did before. At some point, it decides “enough is enough!” and puts a stop to it, by making us believe that we need some other piece of information, software, instrument, whatever. Which then of course completely blows apart the relative simplicity and ease which we were cultivating, and sends us back into full-blown “work hard” mode, and we begin stressing out again because our results tank, and the whole loop starts all over again. We can never get to “easy” because we equate this with “lazy” and we don’t want to be lazy now, do we? Lazy AND has money?? That’s like the worst of all possible worlds!! So the hamster wheel goes ’round and ’round.

So. Fine JVC, you’ve convinced me that working less is not actually bad. But if this is subconscious, WTF do I do about it???

I’m so glad you asked. I’m no behavioral psychologist but I have done a lot of work myself to combat this. One thing you can do is to make it conscious. Look deep inside your soul (staring deeply into a mirror is not required but if it doesn’t freak you out, go for it! 😉 ) and really see if you have noticed any of these tendencies in yourself. Do you make things harder than they need to be? Is your answer to a great day/week/month in the markets, to ramp up the number of products you trade? Or maybe to turbo-charge your platform with a new indicator, or try something completely different? Have you ever gotten into a nice consistent groove and then for some crazy reason, picked that precise moment to blow up your trading world in some way?

If you can relate to any of these scenarios (and undoubtedly many more like them), acknowledge them immediately. Even say out loud that you do them. Talk to yourself, out loud. I know it probably seems a little crazy but it’s important and makes a difference. Give voice to these things so they can’t just lurk in the shadows of your mind waiting to screw you up when you aren’t watching. It’s like turning on the lights in a dark scary room. The monsters all scurry away and you discover that they were really just furniture or whatever. OK so it’s not quite that simple, but the point is to make them conscious so they can’t hide.

Now that they’re conscious, try to notice them before they sneak up on you. Catch yourself starting to think about how great you’re doing, or how easy this has become, and watch out for ideas to change things. Your subconscious is sneaky though, it will do its best to make you think the idea was yours (because well, it was!) and that it’s a good one. And it knows all the little ways to get you to do things so it will be very, very convincing. All you can really do is remain vigilant against change for change’s sake, when things are running smoothly.

Now this is not to say you should never change anything. Certainly if you’re finding something is not working well, then you need to try and determine if it’s something that you need to change, or if it’s just part of the expected performance of your edge over time and you need to stay the course, and keep doing what you’re doing. This can be tricky to figure out at times, but definitely don’t just instantly change everything when you have a losing day. Sometimes change is exactly what you need, but as the saying goes “if it ain’t broke, don’t fix it!” (or to be less casual – “Don’t fix something that is not broken”)

That’s it for my first Psych Saturday post. If you enjoyed this (especially if you actually read it all!) please let me know in the comments. And if you have any thoughts on this or anything to add, please do that as well.

Until next time, good trading all!

Jonathan van Clute
Community Manager, Trading Research Group