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ADDICTION TO PERFECTION
by
Janice Dorn,
M.D., Ph.D.
One of
the great evils of trading is false exactness...Trading is a
fuzzy process and I mean fuzzy in the best sense of the
word. That is, as in fuzzy logic, as in the willingness to
accept the idea that things aren't exactly quantifiable and
to forge ahead anyway....John Bollinger (creator of the
Bollinger Bands)
Trading is not about perfection. It is about
probability and progress. All charts, analyses (fundamental
and technical) and trading plans are built on probabilities.
Why, then, do so many traders strive for perfection? Why do
so many traders miss trades, waiting for exactly the “right”
entry, and then beat up on themselves when it doesn't come
and the position runs away while they sit there scratching
their heads and condemning themselves?
Why are so many traders trying to turn a game of
probability into one of 100% certainty?
The answer lies in one of the cardinal sins of trading which
is PERFECTIONISM.
Perfectionism can be a great help to people in many
professions, but can be fatal to a trader. Perfectionists,
always trying to find the “Holy Grail” of trading, go from
one service to another, from one system to another, looking
for a way that they can be right all the time. They
think, “YES! Now, I’ve found it! It’s this trading room, or
this service, or this indicator! Wait... something is wrong
here. Not all of these trades are working, and I have draw-
downs! How can it be that this particular method failed and
I actually had to take a loss? Must be something
wrong. I will try harder and look for an even better system,
a more expensive service, a new and improved guru, some
absolutely no-fail software so that I can have ONLY WINNING
TRADES.”
This is perfectionism in action. Not only does this type of
irrational behavior and belief undermine and demoralize a
trader, but it takes away all the enjoyment and fun of being
in the markets. It leads to depression, with depletion of
psychic and physical energy, and leaves the perfectionist to
confront his/her basic and overriding fear: fear of failure.
In the extreme, it leads to physical and mental illness,
including addiction to prescription drugs, alcohol, or
illegal substances as well as other addictions. The pain of
failure or the haunting fear of failure is simply
overwhelming, and one turns to whatever works to “medicate”
the pain.
I want to share something of my personal history with you,
as I believe that many of you can identify with me, and
learn from some part of this story. (And if you do, please
let me hear from you.)
My parents were seriously ill from the time that I was born.
I truly believed that if I were absolutely “perfect,” scored
the highest in school, did the best at music and dancing and
elocution and debating that I could make them better. So I
did that. I had no life outside of study and learning. I was
the “perfect little daughter” and even became the “perfect
little doctor” for my sick parents, even though I was only
13. Shortly after this, while I was still in my teens, both
of my parents died. I was not “good enough” or “perfect
enough” to make them better. So, I tried even harder and
studied more and more, to the complete exclusion of any
personal or social life whatsoever. This time, I was going
to be “perfect” for my dead parents, to show them how
wonderful I really was and how much they should be proud of
me. This reached absolute culmination when, after receiving
two doctorate degrees, I still had to continue with more and
more exams and more and more training. Can you imagine
anything so ridiculous? Even after my parents died, I was
still trying to get their approval by showing them how
brilliant and talented I was.
Many years later, I suddenly became critically ill, stopped
breathing and lapsed into a lengthy coma. This was the
culmination of years and years of unrealistic internal
demands that I set on myself and which were manifested as
addiction to perfection. It was only when I awakened from
coma that I started on a new road and a new path. I was not
superwoman; never was and never could be. Yes, I would
continue to work hard and to achieve, but I could never be
“perfect.” I am not and you are not. So, when I tell you to
"Get over yourself" I mean that I had to get over
myself. I had to address the demons of perfectionism and
move past them. I accepted that I am a flawed human being,
and acknowledged that I have certain real and wonderful
strengths. I chose to concentrate on the strengths, and stop
beating myself up for the weaknesses.
Life can be lived forwards, but can only be
understood backwards... Soren Kierkegaard
What does
this have to do with trading?
This is what happens with perfectionists. Perfectionists are
made, not born. We are taught from an early age by demanding
(and often well-meaning) parents that we have to be the
best in order to win their approval and the approval of
others. Unfortunately, this is totally upside down.
Perfectionists share a belief that absolute perfection is
required in order to be accepted by others. The reality is
that acceptance cannot be gained through performance or any
other external factors. Self-acceptance is the root of
happiness, and the true beginning of personal evolution.
If you have a perfectionist mentality when trading, you are
setting yourself up for failure, because it is a "given"
that you will experience losses along the way. You must
begin to think of trading as a game of probability. Your
losses (which you hope will return to break even) will kill
you. If you cannot take a loss when it is small ( because of
the need to be “perfect”), then you will watch that small
loss grow into a larger loss, and so on, into a vicious
cycle of more and more pain for the perfectionist. Trading
on hope does not work. The markets can remain irrational for
a lot longer than you can remain solvent.
The object should be excellence in trading, not
perfection. Moreover, it is essential to strive for
excellence over a sustained period, as opposed to judging
that each and every trade must be excellent. This is a
marathon, not a sprint.
The greatest traders know how to take cut losses and let
winning positions run. Perfectionists often do exactly the
opposite. They get in at the wrong time, stay in too long
and then get out the wrong time. Perfectionists are always
striving and never arriving. The market will find the flaw
in a perfectionist trader and exploit that flaw day after
day. The market is your greatest teacher and your most
demanding critic, so take this wonderful opportunity every
day to learn about yourself and make yourself strong.
If you see in yourself this trait of perfectionism rearing
its ugly head, it's okay to get angry at it and even yell or
curse at it. Do whatever it takes to acknowledge it, and
then find a way to fix it.
Here
are a few suggestions:
· Try
to appreciate and enjoy the process as well as the outcome.
Set more achievable and realistic goals for your trading.
· Remember
that your self-worth, and your worth as a human being to
those who love you, does not fluctuate from day to
day, depending on if you win or lose that day.
· Focus
less on achievement and more on enjoyment. Trading is
serious, but it should be fun and not something which one
approaches with fear and dread.
· Lighten
up. Laugh more (especially at yourself).
· Learn
from your mistakes, and forgive yourself and make peace with
your past. Strive to be better, not perfect;
just an amazing human work in progress.
If we
were always to wait for the most favorable combination of
circumstances, no enterprise would ever be undertaken. There
can be no end without a beginning. There was never an
enterprise in which everything fitted into place perfectly,
for chance plays a leading part in the affairs of all men.
Obedience to rule does not ensure success, but success, on
the other hand, furnishes a canon---a rule of
conduct...Napoleon Bonaparte.
You need coaching if you
feel like
every time you enter a
position,
you are getting your head
handed to you
Call
me and let's talk? It's
10
minutes, it's free
and it's just you and me!
CALL OUR OFFICE
NOW! 480-325-0230
Personal/Group
Consultation, Speaking, Lectures,
Seminars, Radio, Television.
A Personal Message From Dr. Dorn
about coaching!
Every single person is unique. No two people think alike or trade
alike. It is this immense diversity in thinking, feeling, and
executing trades that makes markets move. Emotions move the markets
because the markets reflect the feelings and beliefs of millions of
people as they buy and sell.
I have been a brain scientist for over 40 years, a practicing
psychiatrist for 25 years and a trader for 11 years. I also
graduated from Coach University in 1997 and spent three years
coaching coaches. What have I learned from these experiences?
There is no "one size fits all" coaching program. Each trader or
investor needs a program tailored specifically to his or her unique
trading personality. Of course, there are general things that every
trader and investor must know in order to understand the
fundamentals of how markets work. However, from there, it is a
highly personal journey to go from unconscious incompetence to
conscious competence in trading.
I pride myself on tailor-made and highly individualized coaching for
each person. It is my trademark and it is what has made me
successful by making those I coach successful and increasingly
profitable year after year. I expect you to work as hard as I do,
because trading is hard work. If it were easy, everyone would be
doing it successfully.
Dr Bruce Hong said...
Outside of Dr Brett Steenbarger, a
psychologist, Dr Alexander Elder and Dr
Janice Dorn, psychiatrists, I don't know of
too many writers, trader's coaches or other
"Gurus" who have written competently about
"trading psychology." Mostly I find rehashed
platitudes about the need for discipline and
the need to "control your emotions." Even
worse, I see pseudoscientific formulations
about things like "fear of success."
In terms of importance, it's not that I
think that these concepts are not important.
Instead I think that there is a misplaced
emphasis on these concepts. If you're a
lousy trader, then controlling your emotions
will not make you a better trader; you may
be calmer perhaps, but you're still a lousy
trader. Trading is not easy and it's a
difficult skill to master; one that too many
people fail to acknowledge.
The emphasis, in my view, should not be
directed at the symptom - reacting
emotionally while trading poorly - but at
the disease: trading poorly. The
prescription is too not rush into trading
with minimal or no preparation, but to
rigorously school yourself in the basics -
knowledge of the markets and of your trading
plan. The emotional control will come with
the development of competence.
Sorry for the long answer, but I hope that
my blog, read in its entirety, will help to
develop these ideas further.
Dr. Hong’s brief bio and trading psychology
blog are here:
http://www.blogger.com/profile/07308255459665509164
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Dear Dr. Janice:
For the last 2 weeks I have made around
$6000.00. I had a good day today and made
around $2000.00. Before the last 2 weeks I
had lost somewhere around $1000. Overall,
since I started trading on ES I have made
around $7000.00. I can send today's
transactions sometime tomorrow or later
this week.
I changed my strategy to incorporate
behavioral trading. Every day I review the
Pivot, Intra-day supports/Resistance and
Overnight support/resistances. After
identifying these points, I basically have
been taking positions either long/short
where I can see the squeeze/fades happening
between 9:30 and 11:30 ET. Also, I monitor
the opening price and wait for the
squeeze/fade to happen (there has been
errors quite a few times) at specific
times. I have been placing the stops and
then exit the positions either during
morning or let my stops control and take the
run for the remainder of the day with stops
(or until I lock in a good profit or price
action determines my exit point during
different times). I have been pretty
good with identifying the direction and how
the market moves to take the weak
traders and putting my stops. I can see how
the market moves to take the stops before it
makes the bigger moves and this has helped
me a lot to lock bigger profits.
I haven't held any position for more than a
day. Most of my trades I am entering with 1
position and then scaling in or out. I have
observed how I trade when I have 1 position
and more than 1 position. Usually I get
nervous (or panicked) when I have more than
1 position and the market goes against me
and get stopped out. I have started
observing my behavior when I trade more
positions and when I enter trades when there
is panic/over-reaction and how I control my
stops. My personal behavior tells me to
enter/exit trades many times.
I haven't been scalping much but I position
for within a day when I get good entry
points and those positions have given me
pretty good profits. With scalping my
profits have been minimal.
It seems like I am doing pretty much
position day-trading and some scalping.
Please review and let me know what you think
and advise.
V. K.
Coaching Student
*This
exchange occurred during August 2007 |
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Doctor Janice
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