Short Explanation of Brief Therapy

My work in coaching professional traders has been shaped by my experience in the field of brief therapy, a collection of short-term techniques for accelerating change processes. Having taught brief therapy for many years to psychology interns and psychiatry residents--and having co-written a standard textbook in the field--I've been steeped in brief therapy as a philosophy, not just as a mode of helping. Here's how that philosophy impacts the actual process of working with traders:

* Seek Targeted Change - Change efforts are most likely to be effective if they are targeted to very specific changes in thought, feeling, and/or behavior;

* Stay Active - Change occurs from *doing* things differently, not just by talking to someone or by writing in a journal;

* More is Not Better - Brief therapists emphasize intermittent helping, leaving people on their own to practice and apply newly learned insights and skills, not encouraging dependence on a helper;

* Build on Strengths - People have many positive, adaptive qualities. Building on those reinforces health, confidence, and self-efficacy;

* Efficiency as Well as Efficacy - Brief therapy emphasizes time-effective methods for change, keeping the helping process affordable and not too burdensome;

* Strike While the Iron is Hot - Work on problems while they're occurring; changes are most likely to stick if they're rehearsed in realistic settings and situations;

In practice, this philosophy has me working very intensively with people for relatively short periods of time, using very hands-on techniques for altering problem patterns and applying those techniques to many situations. Weekly or monthly interactions are simply too infrequent to sustain the momentum of change; once progress has been made, then it can make sense to space meetings out over time to encourage the long-term internalization of the changes and guard against relapse.

To encourage this intensive interaction, I do not charge people for time spent on the phone or interacting by email (a far cry from the practice of coaches who run the meter at every possible opportunity); I want no barrier to regular contact. But once that contact leads to change, the goal is for the trader to sustain the process himself/herself, not meet for unlimited interactions with only a vague focus and agenda.

There is much in the brief therapy philosophy that traders can apply when they're acting as their own coaches. That will be the focus of my next post.

Handbook of Clinical Psychology, Brief Therapy, and Coaching

from Dr. Brett--
I just received my copy of the 2008 Handbook of Clinical Psychology, a two volume reference set that covers the major topics in adult and child psychology, respectively. The first volume, covering adult psychology, consists of 33 chapters that tackle such topics as psychological assessment, research on temperament and personality, studies of psychological change processes, health psychology, and various approaches to therapy. While the reference volume is hardly light reading, it effectively summarizes a wide range of research and practice within psychology. I'll be referring to a few of the chapters in upcoming posts, as I apply the material to trading and human performance.

My own chapter in the Handbook covers the topic of "brief therapy". One of the topics I cover in the chapter is the thorny issue of who can benefit from short-term change approaches. It turns out that the effectiveness of brief interventions is partly a function of the person receiving help (their motivation and readiness for change, their lack of severe and chronic problems) and partly a function of the methods used to promote change (active, experiential, focused). The chapter is relevant to the trading arena because much of what goes under the rubric of "coaching" is actually efforts at short-term emotional and behavioral change.

That means that the issue of who can benefit from brief therapy is not so different from the question of who can benefit from performance coaching, including the coaching of traders. In an upcoming post, I'll draw upon my chapter to offer some guidelines for effective coaching.

RELEVANT POST:

A Consumer's Guide to the Coaching of Traders

Brief Therapy and Philosophy -- a Primer

from Dr. Brett-
My work in coaching professional traders has been shaped by my experience in the field of brief therapy, a collection of short-term techniques for accelerating change processes. Having taught brief therapy for many years to psychology interns and psychiatry residents--and having co-written a standard textbook in the field--I've been steeped in brief therapy as a philosophy, not just as a mode of helping. Here's how that philosophy impacts the actual process of working with traders:

* Seek Targeted Change - Change efforts are most likely to be effective if they are targeted to very specific changes in thought, feeling, and/or behavior;

* Stay Active - Change occurs from *doing* things differently, not just by talking to someone or by writing in a journal;

* More is Not Better - Brief therapists emphasize intermittent helping, leaving people on their own to practice and apply newly learned insights and skills, not encouraging dependence on a helper;

* Build on Strengths - People have many positive, adaptive qualities. Building on those reinforces health, confidence, and self-efficacy;

* Efficiency as Well as Efficacy - Brief therapy emphasizes time-effective methods for change, keeping the helping process affordable and not too burdensome;

* Strike While the Iron is Hot - Work on problems while they're occurring; changes are most likely to stick if they're rehearsed in realistic settings and situations;

In practice, this philosophy has me working very intensively with people for relatively short periods of time, using very hands-on techniques for altering problem patterns and applying those techniques to many situations. Weekly or monthly interactions are simply too infrequent to sustain the momentum of change; once progress has been made, then it can make sense to space meetings out over time to encourage the long-term internalization of the changes and guard against relapse.

To encourage this intensive interaction, I do not charge people for time spent on the phone or interacting by email (a far cry from the practice of coaches who run the meter at every possible opportunity); I want no barrier to regular contact. But once that contact leads to change, the goal is for the trader to sustain the process himself/herself, not meet for unlimited interactions with only a vague focus and agenda.

There is much in the brief therapy philosophy that traders can apply when they're acting as their own coaches. That will be the focus of my next post.

Emotions and Trading: Understanding Anxiety

from Dr. Brett:

Because trading involves risk taking in an environment of uncertainty, it necessarily engages us emotionally as well as intellectually. In this series of articles, I will review emotions common to trading and their significance for trading performance.

In this and the next post, we’ll take a look at a family of emotional experiences related to anxiety. These include nervousness, tension, stress, fear, and worry. All represent a response to perceived threat. They are part of the “flight or fight” response that enables us to deal with dangerous situations.

No two traders experience anxiety in the same way. For some, it is primarily a cognitive phenomenon in which thoughts become speeded up and worry sets in. For others, the cognitive component is joined with physical manifestations: a speeding of heart rate, tensing of muscles, and increasing of shallow breathing. Sometimes the manifestations of anxiety are primarily physical and not even consciously noticed by the trader. This most often occurs when muscle tension is the main way in which the anxiety is expressed.

Because anxiety represents an adaptive, flight-or-fight behavior pattern that is hard-wired, it prompts us for action. Regional cerebral blood flows engage the motor areas of the brain, bypassing the executive, frontal cortex responsible for our planning, judgment, and rational decision-making. For this reason, we can make decisions under conditions of anxiety that are not ones that we would normally make if we were cool, calm, and deliberate.

Note that anxiety is a response to perceived threat. Such threats may be real, or they may be ones that we create through our (negative) ways of thinking. For instance, two traders with the same account balances may go through a losing month. One views it as a normal drawdown and experiences little fear or tension. The other questions his trading ability and responds with significant anxiety. It is not just reality, but our interpretations of reality, that mediate our flight or fight responses.

The two immediate challenges for traders experiencing anxiety are to become aware of the manifestations and to determine whether threats are primarily real or perceived. Knowing our unique manifestations of anxiety is invaluable in interrupting the flight or fight response and returning ourselves as early as possible to the cognitive state in which we can engage our sound, executive capacities.

Most of us have signature “tells” that reveal our states of nervousness and fear. A characteristic pattern of muscle tension, a typical sequence of negative thoughts, a hollow feeling in the pit of our stomach, shakiness, a surge of worried thought: all of these are common “tells”. Our initial goal is simply to become aware of what we’re feeling as we’re experiencing the emotions. We cannot change something if we are not conscious of it

A good practice is to periodically during the trading day make note of our thoughts, feelings, and physical sensations and correlate those to market behavior at the time and to our trading decisions and outcomes. Over time, you will notice distinctive patterns: certain constellations of thoughts, feelings, and sensations that recur under challenging trading conditions. Once you observe your own anxiety-related patterns and actually see how they’re interfering with decision-making, you’re in a much better place to interrupt and change those patterns. Some ways of altering those patterns will be the topic of the next post in the series.

RELATED POSTS:

Biofeedback for Performance

Brief Therapy Techniques

Three Steps for Breaking Patterns of Frustration

from Dr. Brett:
In my recent post, I recounted the example of Rick and the frustrated thoughts that were interfering with his trading decisions. A major idea from that post was that Rick's thought and behavior patterns were not really overreactions (as he thought they were); nor were they signs that he was "crazy" or "immature" (also things he called himself). Rather, Rick's patterns represented conflicts from his past that were triggered by events in the present, setting off old (and out of date) ways of thinking and behaving.

Research that I recently cited finds that "willpower" is much like physical energy: it can be depleted with effort. When we expend effort on following markets and containing emotions, our reserves of self-control dwindle. This, in turn, leaves us ever more vulnerable to those situations in which present events trigger automatic thoughts and actions from the past.

It is for this reason that "controlling" or fighting emotions is not helpful for the trader. Even if we succeed in keeping a lid on feelings, we take ourselves out of that performance "zone" in which we'll make our best decisions. Only by removing ourselves from the trigger situation and putting ourselves in a different physical and emotional state can we short-circuit the negative patterns (make them less automatic) and enable ourselves to re-enter that decision-making "zone".

So let's break this down: the first steps in changing negative, automatic patterns are threefold:

1) Recognizing the triggers for our patterns - Typically, there are a limited number of situations that set us off. For Rick, for example, a trigger situation was one in which the market moved suddenly against him. This set off feelings of frustration, which then triggered self-talk about markets were "rigged" by the "big guys". Those thoughts, in turn, triggered efforts to fight the big guys, leading Rick to double down on his now-losing trades. This sequence can occur relatively quickly, but notice how there are many points at which Rick could interrupt the cycle. One technique I've found consistently useful is having traders keep a journal in which they look back on periods of frustration and identify the triggers. Reviewing this journal helps us become more aware of--and sensitive to--our triggers. This brings us to our second step.

2) Recognizing that the patterns are occurring - This means monitoring your state of mind and your physical state at regular intervals during the trading day. One tool I've used with traders is a simple picture of a thermometer, in which traders can fill in the time of day and their "stress temperature". The idea is to recognize frustration *before* it triggers ongoing, negative, automatic patterns of thought and behavior. (One trader I worked with stayed hooked up to a biofeedback unit while trading for this very purpose. He stopped trading temporarily when he exited the "zone" to a significant degree). The idea is to generate a mental red flag when we recognize that frustration has been triggered. A journal can be helpful here, as well. In this case, the entries would be in real time: How am I feeling right now? What am I thinking? What is the state of my body? Such a journal strengthens our ability to act as an observer of our patterns, reducing the likelihood that we will become lost in them. This, in turn, brings us to our third step.

3) Taking the break from trading and entering a new state - Once you exit the situation that is triggering frustration, you can engage in an activity that greatly shifts your physical state. The odds are good that this will also move you to a different cognitive and emotional state. A quick round of active exercise (such as jogging on a treadmill, calisthenics, or push-ups and sit-ups) can work very well. Conversely, you may find it more effective to listen to very quieting music and then perform a meditation exercise: vividly imagining yourself in a peaceful location while you rhythmically breathe very deeply and slowly for a few minutes. If you use biofeedback, this would be the time to engage in one of the biofeedback routines. One unit I use, for example, (em-Wave) includes on-screen "games" in which you keep a balloon aloft by staying "in the zone". The idea would be to only return to the trading station once you've kept the balloon aloft for a few minutes. That completely short-circuits the negative behavior pattern. It will take some creative experimentation to find the specific activities that work best for you in shifting your state. In many cases, just taking a break, putting on some music, getting a bite to eat, and walking around are enough for me to clear my head and start fresh.

Notice that the most important step in the above is the decision that a trader makes to not buy into the frustration and the resulting negative self-talk. The market is not the problem. Other traders are not the problem. "My terrible luck" is not the problem. The problem is buying into negative thinking and letting it control trading decisions. That is why the most important step of change of all is the decision to actively fight these automatic patterns. They--not you, not trading--are the problem. Once they're triggered, your sole priority is to interrupt them and prevent them from controlling your behavior. With each interruption, you distance yourself from the patterns and make it easier the next time to extricate yourself from them.

If you find that you cannot identify the triggers and recognize them as they're occurring, you may want to try some of the techniques highlighted in the two chapters in the Enhancing Trader Performance book devoted to cognitive and behavioral methods. I wrote these chapters specifically as self-help mini-manuals for traders. If you find that even self-help methods are not working for you, that's the time to consider professional assistance. Here's a reputable website that offers referrals of licensed professionals in various geographic areas.

That having been said, my experience is that the most common reason that self-help methods don't work is that traders don't stick to them. Patterns that have been acquired over a period of years and reinforced by years of repetition will not go away simply by talking with a coach or trying an exercise a few times. If traders faithfully carried out the three steps above every day for a month, I'd expect to see significant progress in the vast majority of situations. What happens, however, is that traders don't see progress after a few days and give up. It's not the time with a coach or counselor that generates change--it's the consistency of hands-on efforts day in and day out to interrupt and change our patterns.

For my last post in this series, I will outline a specific routine that I use to work on myself. It will illustrate a different aspect of working on changing our automatic patterns: preventing them from occurring in the first place.

RELATED POSTS:

Brief Therapy Techniques for Traders

A Framework for Rapid Behavior Change

Solution-Focused Change

Brief Therapy for the Mentally Well: Programming Our Own Experience

from Dr. Brett-
A bit over a week ago, I described short-term applications of psychology as "therapy for the mentally well". The goal of such work is to make positive changes, not necessarily eradicate pre-existing deficits. For that reason, the first step in the change process is having a vision of the changes you wish to make. By linking these positive changes to distinctive emotional, physical, and cognitive states, we are able to become the play-actors of our ideals.

Allow me to expand on a metaphor I used in the Psychology of Trading book. Consciousness is like a radio dial, and we operate on many frequencies. Each spot on the radio dial is a particular state: a blending of our experience of our bodies and minds. The test anxious student has a spot on their dial that combines negative thinking, increased arousal, shallow and rapid breathing, and diminished access to retained information. Other spots on the dial may combine much more positive thinking, alert concentration, erect posture, and fuller breathing. When operating at those frequencies, the student has full access to the information studied and performance on the test is excellent. What we know and who we are is relative to the frequencies of consciousness at which we're operating.

The problem is not that some of the spots on our personal radio dials are programmed with negativity. Rather, the problem is that we lack full, intentional control over the dial itself. We change stations, so to speak, without intending to. What the brief therapies accomplish is a greater control over selecting our own frequencies: they give us a hand to turn our dials. The idea, after all, is to become our own trading coach: to develop our own ability to reach our goals.

What creates the "radio stations" that make up our dial of consciousness? Two things: repeated experience that becomes habit patterns and powerful emotional experience that is processed as a trauma. Just as some radio stations on our car radio dials are faint and others generate a powerful signal, some of our states are weak and some dominate the dial. The more repeated the experience--and the more powerful the experience--the more it becomes part of your spectrum of consciousness.

As I emphasized in the Enhancing Trader Performance book, one reason so many traders fail is that they create repeated, negative emotional experiences for themselves. Indeed, this is why I included self-help manuals for cognitive and behavioral change techniques as two chapters within the book. Quite simply, traders can find themselves operating on frequencies that they don't want to be experiencing: their dials change without their consent or control. And all it takes to shift our frequencies of consciousness, very often, is a simple shift in one element of our frequency: a few negative thoughts, a change in our patterns of posture or breathing, a fleeting emotion. Those become triggers that diminish our control over our own experience.

While the aforementioned cognitive and behavioral techniques are extremely valuable, it is also important to be able to program our own new, enhanced spots on our dials of consciousness. The way to do this is to rehearse positive patterns of thought and behavior while you are in a distinctive emotional and physical state. This is one of the quickest and most reliable ways to generate change.

For instance, let's say your desired behavior is to hold onto winning trades longer. You might mentally rehearse market scenarios of holding onto trades--emphasizing how excited, happy, and profitable you'll be by achieving this goal--while you are pushing yourself during a strenuous treadmill exercise. By setting the treadmill at an incline and a good speed, you will be jogging at a brisk pace and elevating your heart rate. With repetition, you will begin to associate the goal--and its emotional benefits--with your body's pumped up state. It will become an increasingly powerful signal on your radio dial. Then, before trading and during trading breaks, all you have to do is get back on the treadmill. Triggering your body's shift in state will trigger the desired shift on your dial of consciousness. You will access the behavior you desire by intentionally triggering the cues associated with the behavior.

Making changes entails far more than simply engaging in positive thinking or getting positive images in your head. If you don't change your state of consciousness--and your ability to shift your own consciousness--you'll be listening to the same programming day after day. Learning how to shift out of negative states is a huge achievement. Where dramatic growth occurs, however, is in learning how to create new, positive states: in becoming the programmers of our own experience.

From Problem Patterns to Solutions: Brief Therapy for Traders

from Dr. Brett:
An experienced trader writes to me:

"I am having a good year trading but today marks the THIRD TIME this year that I've made a critical error which goes against my whole philosophy of trading.

I am a trend trader. That is how I make very consistent gains regardless of what the market is doing...I was buying a stock at levels where I believed it would bounce...of course the stock didn't bounce so I added more at lower levels and more even lower...

I got out of the trade on a rally, but it cost me the next two weeks of average profits...

I knew it was stupid when I was doing it, yet I continued to compound the problem. I didn't necessarily want to be right and make money on the trade, just minimize the losses (by buying more at lower levels)...

What I am not comfortable with is WHY I engaged in such risky behavior...what is the root, how do I find it, eradicate it?...The other two times were similar trades with similar results."

This is a very typical scenario that I help traders with. In this post, I'll walk you through how I view such problems and what I typically recommend.

The framework that I operate from, broadly speaking, is one that is known as brief therapy. These short-term approaches accelerate cognitive, emotional, and behavioral change by emphasizing hands-on skills building and the creation of powerful, new experiences that change how we view things.

Brief therapy is not appropriate for all people and situations, particularly those with chronic (longstanding) emotional problems that significantly interfere with areas of life functioning. Fortunately I know my writer and can vouch for the fact that he does not suffer from any significant emotional disorders.

So what is the key to his problem? What one feature stands out in his presentation? Take a moment and look over his words. What most strikes you about the difficulty?

One such key is that this has happened before in very similar ways. That tells us that it is likely a cyclical problem. Something initiates the pattern (sets it off); something keeps it going (even though he knows it is "stupid"); and something later kicks in to get him out of the pattern.

Most cyclical patterns are there for a reason: they serve a function. The trader's intense desire to find the problem and "eradicate" it is probably part of the problem pattern itself--much as the desire to eradicate insomnia can keep a person awake all night or the desire to eradicate fat can lead a bulimic person to binge eat.

In short, fighting the pattern is a mistake. The challenge is to understand the function of the pattern and then rehearse a different way of satisfying this function. Instead of viewing the problem pattern as maladaptive, the brief therapist views it as a form of problem solving that no longer works for the individual.

Let's take a simple example: Bill grew up with a mother that was anxious and overbearing. Conflicts at home were very unpleasant, so Bill learned to avoid conflict by minimizing communication with his mother whenever she sounded upset. This worked well throughout his childhood. Now Bill is married to Susan, who at times feels overwhelmed at work and reaches out to Bill. Much to Susan's dismay, Bill withdraws at those times and fails to offer support. She feels as though he doesn't care about what she's going through. Bill feels guilty about not being there for Susan and tries to make it up to her, only to fall short the next time she is worried or frustrated.

One might imagine Bill saying the same thing as our trader: "This is the THIRD TIME I've let my wife down...I know it's stupid when I'm pulling away from her, but I continue to compound the problem." It's a cyclical problem that represents a past, overlearned response to a stressful situation.

So how do we help Bill? We don't try to "eradicate" the problem--that hasn't worked. Rather, we get him to *talk* with Susan when he's feeling uncomfortable with her emotions. Step by step, we coach him through such a conversation, opening up about his thoughts and fears instead of pulling away. For example, we teach him to say to himself, "I'm not really uncomfortable with Susan; this is my old fear of my mother cropping up again. How can I tell Susan about that?"

As it turns out, just about anything Bill says to Susan in the situation about his experience will be helpful, because it will disrupt the old pattern and show her that he truly is listening, that he really cares. That sets the stage for the two of them to develop new patterns. Instead of trying to eradicate and bury his feelings, we use them as an opportunity for Bill to connect with Susan.

So back to our trader. He has a cyclical pattern in which he adds to losing trades, eventually taking outsized losers. This is frustrating to him (note the all-caps when he describes the THIRD TIME he's experienced the problem this year), and it is something he wants to get rid of. But what is the function of the pattern? Our trader perceptively notes it himself: "I didn't necessarily want to be right and make money on the trade, just minimize losses." So there it is: our trader is trying to avoid loss by averaging down. This is his way of fighting against failure, falling short.

In a subsequent communication, the trader revealed to me, "Each of these bigger losses occured after a period of very good trading. I didn't feel cocky, but my actions were. I cannot increase my relative risk tolerance after a period of success." This is a very good observation. The problem pattern is NOT triggered by a losing trade. It is triggered by success! After a winning period, our trader becomes emotionally attached to winning: he wants to eradicate losses. This has him resisting taking normal losses at his stop points and instead averaging down to minimize the loss. It's not that he's trying for a home run trade: he doesn't want to stop winning.

So there's the trap. Once the trader hits a winning streak, he wants to keep winning. This makes even normal losses feel threatening. So what can he do? Ironically, the answer is to purposely engage in guided imagery exercises before the trading day starts in which he mentally rehearses honoring his stop levels and taking normal losses. These exercises would be doubled following winning trading days. Just as we had Bill talk with Susan about his discomfort, we encourage our trader to openly confront his need to keep winning. Fighting the pattern hasn't worked; by facing the problem head on, he can keep a level head even when he's in his best winning streak.

I don't know our trader very well, but my guess is that there's more to his drive and desire for success. Perhaps he's *needing* to win instead of passionately *wanting* to win. There's an important difference. Once we're in the "need-to-win" mindset, losses become threatening and we try to avoid them by doing "stupid" things. By rehearsing an "ok to lose" mindset, we interrupt the need pattern and set the stage for initiating new patterns of trading well.

I enjoy trading and I find markets endlessly fascinating. But it's working with people and helping them make changes in their lives that really makes my day. Once we stop viewing patterns as "problems" to "eradicate" and simply discover fresh ways to meet the needs underneath those patterns, we eliminate many of our blocks to success and happiness. And isn't that what coaching is all about?

RELATED POSTS:

Therapy for the Mentally Well

Using Brief Therapy to Become Your Own Coach

The First Steps of Brief Therapy

Brief Therapy With a Solution Focus

Using Emotions to Change Emotion

from Dr. Brett -

In my recent post, I suggested that many of us avoid emotional upset by substituting action for feeling. This is a pattern that lies at the heart of many impulsive trading decisions, including many lapses in trader discipline.

Let's take a common example: a trader is working a bid a bit below the market and suddenly a ferocious sell program takes the market five ticks lower. The trader's order is filled and, in an instant, the market is several ticks against him. He reacts first with shock, then with anger at people who "manipulate the market". In a flash, he buys more contracts, even though this sizes his position much larger than his plan allows. It's a classic revenge trade: he's going to get even. The market moves a few ticks lower, and he is forced out at the worst possible price with a much larger loss than his initial trade planned for. In remorse, he makes a note in his journal that he needs to be more disciplined in his trades.

As long as the trader views "discipline" as his problem, he is sunk psychologically. He sets up a condition in which he is split: part of him is impelled to do something under particular conditions, another part attempts to exercise control by dictating what *should* be done. This is how anorexic and bulimic patients fight with food intake; how addicts fight with drug abuse; how many of us fight with sticking to diets and exercise regimens.
We cannot substitute thought for emotion: shoulds cannot overcome emotional impulses.

The key to moving past an emotional reaction is to experience it fully and then substitute a different emotional experience. Psychologists such as Leslie Greenberg and Robert Elliott have developed emotion-focused techniques to accomplish just that. The basic principles and techniques are straightforward, well-supported by research, and described in detail in a growing professional literature.

What is happening with the trader in the example above is that he first experiences hurt and disappointment. He might also experience a fleeting sense of failure and loss. These are too painful to feel, so he has learned to respond to hurt with anger. He transforms sad to mad and then acts on the angry feeling. What appears to be the problem--loss of discipline--is his way of coping with the *real* problem, which is vulnerability.

Suppose, however, I ask our trader to go more deeply into the experience of having his order taken against him. As he talks, I notice an unhappy look on his face and a slight slumping of his shoulders. I point that out and ask him to give voice to what he's feeling. He talks about how it seems as though nothing is working in his trading, how he and his wife just bought a new house, and how they're concerned about making the payments.

When I ask what that's like, feeling as though he can't support his family, he acknowledges, "I feel like such a loser". Then, however, he speaks with a different voice: "But I know I can trade. If I would just stop trying to catch exact tops and bottoms with these orders, I can ride moves once they happen."

"So when you're working orders in the book...", I begin.

"I'm being an idiot," our trader interrupts. "I know I shouldn't be working orders that close to the market. It's too thin."

"But you're trying to catch a top or bottom to feel good and help your family," I offer.

"Yeah," he acknowledges. "But I'm f*****g it up."

"So it all starts with you feeling concerned about your family. You have to get something going in the market to make some money, so you throw an order in the book to catch a turning point," I suggest. He nods.

"Could you pretend your wife is in the room right here, right now and talk to her about that concern and what you want to do about it in the market?"

We set up an exercise where our trader talks aloud his concern for his family finances. He has no problem telling his wife that he needs to be patient and trade well in order to regain his success. By the end of the exercise, there's no hint of the angry revenge trader. In its place is the direct experience of facing his worst fear--his feelings of inadequacy--and emerging with a different emotional experience: empathy for his wife (and for himself).

Greenberg notes:

"People can recognize that a feeling is not helpful to them once it has been accepted fully. The paradox is that, if the feeling is judged as not acceptable--as "not me"--it cannot be changed, because it hasn't been accepted. Only when a feeling has been accepted can it be evaluated and changed if necessary" (Emotion-Focused Therapy, p. 93).

Doing can be a way of avoiding feeling, and that keeps people stuck in problem patterns. Ironically, the solution is to deepen the feeling that is being avoided. At the other end is a very different--and usually quite constructive--emotional experience.

RELEVANT POSTS:

Brief Therapy Techniques for Traders

What Works in Trader Coaching

Becoming Our Own Trading Coaches: Part 1

From Dr. Brett:
Beginning with a review article that I published in 1992, I focused my career on brief therapy: techniques for accelerating emotional, cognitive, and behavioral change. My co-edited textbook on the topic has become a standard training text for residents in psychiatry, and I've written articles for traders to teach them some brief change techniques. Most recently, my book on Enhancing Trader Performance contains two chapters with self-help manuals to help traders become their own short-term cognitive and behavioral therapists.

Many trading problems related to emotional disruptions can benefit from short-term work, but not all of them. How you trade affects your emotions just as much as emotions affect trading. This is why it is important to distinguish when frustrations are the cause of trading problems and when they are the result.

When I tried to summarize my reasons for writing my first book for traders, The Psychology of Trading, I emphasized the neurophysiology of risk and reward. Quite simply, when we encounter conditions of uncertainty and risk, the blood flow patterns in our brain facilitate our "flight or fight" response patterns. Blood flows away from the frontal cortex, our executive center, and toward motor areas and lower brain structures. That means that we are least likely to activate our judgment, planning, reasoning, and analysis when we most need it.

Brief therapy techniques help people remain grounded in their executive cognitive functions under conditions of high emotional arousal. Stated otherwise, these short-term methods help you stay calm and focused during situations that normally evoke anxiety, impulsivity, negative thinking, or greed.

This series of posts will introduce some of the basics of brief therapy in hopes that you can become your own trading coach. I often stress to traders I work with: my goal is to get fired. I want you to be your own counselor, not to become reliant on me. With practice, any trader can learn techniques for short-term change that have been validated by scores of outcome research studies. My hope is that this series of posts can begin the process for interested market participants.

Becoming Our Own Trading Coaches: Part 2

from Dr. Brett:
In my first post, I introduced the idea of rapid change of patterns of thought, emotion, and behavior. This post will focus on three principles to guide traders in becoming their own coaches.

Consider a trader we'll call John. He has been successful in the markets over different market conditions and demonstrated a profitable edge in his trading. He is now at the point at which he wants to grow his size and take fuller advantage of his edge, but he is concerned about the risk and pressure of growing larger. How can he overcome his emotional reluctance?

This is a classic pattern that can be addressed with short-term behavior change techniques. It is not the result of a chronic emotional disorder, and it is not the result of poor trading practices. The best patterns to work on using brief therapy techniques are ones that are situational: ones in which you want to change how you deal with specific scenarios.

Which brings us to our first principle:

1) When you are working on yourself, carefully target the changes you wish to make. Don't try to alter your entire personality or your behavior overall. Rather, focus on a single situation that you would like to approach differently and concretely identify a goal for that situation. If you don't know what you're seeking, you almost certainly won't find it. Many times, it's helpful to conduct a review and examine occasions in which you have dealt effectively with your chosen situation. One of the first questions I'd ask John is whether there have been any times in which he has successfully raised his size, even just a little. If so, we might use that success as a foundation to build upon. Many times, we're so focused on our problems that we fail to recognize the solutions that we've stumbled upon. Start your work on yourself by trying to do just one or two things differently. Set yourself up for success and build upon that.

Our second principle is very important to setting proper goals for change:

2) Problems are something you do, not something you have. We sometimes talk about emotional or behavioral problem patterns as if they are viruses: something we've picked up and have to get rid of. The reality is that problem patterns are usually efforts at solving a problem that simply aren't working--but are the best we know to do at the time. John's reluctance to grow his size is his way of managing risk and the emotions associated with perceived risk. The "problem" serves a function and meets a need ; he won't change that pattern unless he has another way to satisfy the need. If I were working with John, I would help him measure risk in percentage terms rather than absolute dollars. I'd encourage him to grow his size very slowly, but steadily, to manage the psychological aspects of risk. I'd also help him define methods of risk management that he might not have thought of, such as using his edge to diversify across non-correlated positions. You can grow your trading size without growing the size of your individual positions: just trade more than one thing and make sure the trades are independent of each other and preserve your edge!

Our third principle is perhaps most important of all:

3) You cannot rapidly change a pattern unless you face that pattern in real time. Talking about a problem does not, in itself, resolve that problem. People learn from new experience. John will feel comfortable getting larger by actually getting larger, not by discussing his insecurities. Accordingly, I might start John on a simulator and have make some practice trades with larger size. I would teach him some basic cognitive and behavioral skills for staying calm and focused and encourage him to use those skills while placing his simulated trades. Once that goes well, we would raise his size just a small notch and have him trade live--again using the skills he's learned. Only when that's gone well do we ratchet up the size another small notch, and another, and another. John will internalize the repeated experience of success; over time, he'll think of himself as a larger trader.

These principles hold true whether you're working on trading discipline, marital arguments, or a fear of heights. Your work on yourself will be successful when you find a safe context to be the change you want to make. Changing by enacting solutions rather than discussing problems is a powerful way to develop yourself as a trader--and as a person. How to do that will be the topic of the third and final post in this series.

Becoming Our Own Trading Coaches: Part 3

In the second post of this series, I laid out three principles to guide traders in working on patterns of thinking, feeling, and behaving that might be interfering with sound trading decisions. The first article in the series introduced the notion of brief therapy techniques as relatively rapid and effective tools for self-change. In this final installment, I will outline a process for utilizing these tools.

Let's say we have a trader named Chris who is struggling with a problem of impulsive trading. Although Chris has a general idea of a trading plan, she finds that she takes many trades that don't meet her criteria. This is costing her money, both in added commissions and in trading losses. How could she begin to help herself with the problem?

Recall that brief methods for changing problem patterns are effective when those patterns are situational. The first question Chris should ask is whether she is impulsive and undisciplined in other areas of her life, outside of trading, and whether she is experiencing negative consequences from this broader impulsivity. If the answer is yes, that's evidence that this is not just a situational problem. Rather than try to tackle the problem on her own, she should seek a professional to help her figure it out. Perhaps it's an addictive problem; maybe it's a problem related to attention deficits and/or hyperactivity. Perhaps it's the result of a mood disorder. An objective evaluation is in order.

If, however, this is a recent problem limited to trading, the odds for success with self-help are much greater.

What Chris needs to answer is the following: "What is the problem that she is trying to solve with her impulsive trades?"

My earlier post noted that what we label as problems are actually attempted solutions to situations that bring unwanted consequences.

In Chris' case, she may be trying to manage a specific fear: one that trading coach Doug Hirschhorn refers to as the "fear of missing out". She is afraid that the market will move without her being on board.

Her real problem is in her definition of opportunity. She equates opportunity with movement in her market. Movement, however, in itself is not opportunity. Opportunity comes from anticipated movement. Behind her impulsive trades is a kind of thinking that says, "I should be able to anticipate movement. I don't want to be wrong."

In a very real sense, Chris is trading to avoid self-blame. It's her self-blaming and her faulty definition of opportunity that are the real problems. Impulsive trading is simply her way of trying to cope with these problems.

Once we frame the problem in this manner, it is not difficult to find solutions. I review Chris' trading performance with her and identify times in which she was *not* impulsive and traded well. I ask her what she did at those times that seemed to work for her. She tells me that she made a conscious effort to stick with one or two setups, wrote those down, and taped them to her monitor.

I tell Chris that self-blaming is a good thing if we're focusing on the right behavior. A person without self-blame would be a sociopath. Chris should blame herself if she doesn't trade her setups; those are her real opportunity. If a market moves without her setup, she can always research the move after the fact and see if there's opportunity in a different setup. For now, however, her opportunity is what she knows how to do best.

We perform mental rehearsals before the start of the trading day in which Chris visualizes herself trading her setups and focusing on her opportunity. I also have her visualize the "old Chris" and imagine herself correcting her errant ways. This talk of "new Chris" and "old Chris" helps cement the changes in her mind. Then, at the end of each trading day, we give her a report card based, not on P/L, but on her ability to pursue true opportunity.

In one sense the change has occurred quickly. But in another sense, no change at all has occurred. Chris is simply more consistent in doing something she already knew how to do. By focusing on solutions rather than problems, we turned self-blame and the obsession with opportunity into virtues. While, to an outsider, it appears that she's become more "disciplined", in fact she has simply redefined what it means to pursue opportunity.

Brief change occurs in four steps:

1) View the problem as a solution and ask yourself what this pattern is accomplishing. What real problem am I trying to solve by thinking, acting, and feeling the way I do?

2) Find exceptions to your problem pattern. Once you understand what your underlying fear or concern is, go back in your trading performance and identify occasions when you've successfully dealt with that fear.

3) Create a pattern out of those successful occasions that you can become part of a market routine. Do more of what you've been doing when you've been trading well.

4) Keep repeating your solution pattern until it becomes automatic. It's not enough to initiate change; you want the change to become part of you.

Additional resources are available on the Articles page of my personal site. My Psychology of Trading book goes into greater detail about solution-focused techniques for change; my latest book on Enhancing Trader Performance details cognitive and behavioral methods you can use to shift problem patterns. My hope is that these tools help you become your own trading coach. If so, you'll have developed skills to last a trading lifetime.