Evaluating your emotional portfolio

Thanks for being here. And thanks for all your comments and your suggestions. I appreciate the feedback. I think the show gets a lot better when the audience is engaged. It’s probably true for all forms of entertainment, but it means a lot here, because then at least I know I’m addressing issues that I know you’re thinking about. So for homework today and this weekend, I think a good exercise could be if you took a diet or a time block, for example, of all the things that you do during the day and all the feelings that you get from doing those things, then take a look at all the things that you like to avoid and put right down the emotions that go with those. So then you could start to investigate. Why, why do you want to avoid those feelings?

What would it say to you? What would it mean? For example, if you took risk home overnight or over the weekend and you lost money, what would that say about you? Probably nothing, but you might have some hangups about it. So that this way you can conquer your fears, especially for the crowd that loves to watch Jocko Willink and David Goggins and they’re like, “just do it,” “make this shit happen,” “we’re running shit here.” Like that sounds great from a sloganeering standpoint, but not if you’re going to go home and shy away from your fears. So you have to go towards your fears and see what they’re trying to teach you. Just like you have to go through the hubris that you have after you have a winning trade and you’ve gotta post it on social media or call whatever love interest you’re chasing and this and that.

Like look at all of those feelings, because they’ll teach you a lot about yourself and it’s all good. There’s no judgment here. It’s all good. We’re all human beings. So by definition we’re all emotional beings at that point to say that systems trading and this and that and rules based trading can remove emotion. That’s not the case. If you go back and listen to my interview with Bill Dunn, he’ll say “I had all these emotions running my in through my body.” And this is a guy who was purely systematic, who over the – he’s retired now – but over the course of his whole career, he had one discretionary trade and that’s from 1974 to, I don’t know when he retired I think somewhere between 2010 and 2015. The point being is that you can feel strong feelings, but not subvert your own efforts by acting out on those feelings.

You can just stick to your rules. So that’s typically what happens with most folks who have a rules based methodology is that they feel all the strong feelings. They just don’t let those undermine their activities or what they would consider good trading. Again, if you listen to, or what I had said earlier in the week. You just want to stick to your rules and your powerless over the outcome of any particular trade. The best you can do is just stick to your rules day after day after day in a very monotonous and boring manner.

So this exercise of lookin at your emotional constitution will help you because chances are the feeling of fear. Doesn’t just come up in risk management for you. It could be in other areas of your life and by journal. I don’t want to say journaling, because that could mean a lot of things to a lot of people. But if you just took notice of it and became aware of it, whatever you could eventually become aware of and then measure you can improve upon. Because I think it’s realistic to think that people of all shapes and sizes and ability have moments of fear and greed and everything in between, they have moments of hubris and moments of say lack of confidence. But if you study those things in the situations where they arise, you can really learn a lot about your behavior because it could be your subconscious.

That’s putting you in those situations in the first place. And then by becoming aware of that you’re really off to the races. Anyway, folks, please consider subscribing because I get some really good data. Plus you’ll have every episode at your fingertips. And then two, if you’d like a free copy of the book I wrote in 2011, for The Financial Times / FT Press – The Inner Voice of Trading – you can get the audio book version for free at MartinKronicle top right corner. It’s on me. No strings attached. So thanks for being here. Folks have a great weekend. I’ll see you Monday.

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