Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
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"Like a circle in a spiral
Like a wheel within a wheel
Never ending or beginning,
On an ever spinning wheel
As the images unwind
Like the circles that you find
In the windmills of your mind"...Michel LeGrand, Theme from The Thomas Crowne Affair
Trading is a mirror of almost every aspect of your life. If you are thinking or behaving in an undisciplined or unorganized way when you are not trading, you will trade in an undisciplined and unorganized manner. Without discipline and rigorous attention to detail, you will not be able to trade successfully. This is also true if your personal life and relationships are not going well, as you will not be able to give complete focus to your trading and you will fail.
If you spend a lot of time daydreaming about making a financial "killing" that will take you away from your internal suffering, you are trading on hope and you will fail. Take the time you spend daydreaming and turn it into something which will make you stronger, such as rigorous exercise, yoga, meditation, centering and clean, healthy eating. This is a marathon, not a sprint and it takes strength and endurance and good health to stay the course and win the race.
If you are depressed, hypomanic, hung over or rely on substances to alleviate your anxiety or medicate your feelings, you are in a situation where your brain chemistry is altered to the point where you cannot make logical trading decisions. If you do not feel good about yourself, if you lack self-confidence and a winner's mentality, you set yourself up to lose. This is not a conscious decision, and you might never admit it to yourself...BUT...when you are down, depressed or going through real life struggles, you will do things to punish yourself just to re-affirm that you really are worthless and deserve to suffer. The unconscious desire to fail is every bit as powerful as the conscious desire to succeed. Get in touch with that dichotomy at all times, and you will see a side of yourself that you never knew existed.
Treat each trade as a possible winner or a possible loser. There is absolutely no such thing as a "sure thing" in trading, Trading is a game of probability, and the goal is to make more than you lose. If you are in a strait jacket of perfectionism where everything has to work all the time, and you have to get just the bottom or just the top, and you cannot tolerate even one downtick, let alone a drawdown, then you are not suited to be a trader. Good traders know that you only get one opportunity in your life ( if you are inordinately lucky) to pick the exact bottom or the exact top of traded entity. Strive for moderation and balance, and eschew perfectionism, as it will be one of your greatest enemies.
Never make a trade in a market that just completed a major move if the only reason for making the trade is that you just saw a major move and missed it. Do not chase and always let price come to you. The market offers opportunity every day, but most are blinded by it, as the Market Mistress can be very harsh, and does what she can to deceive, seduce and unbalance you.
Winning traders and losing traders experience the trading environment differently. It makes them feel different and as a result their actions vary in a consistent manner. In psychological terms, they interpret the market differently because they have a separate belief system in the way that they see themselves relative to the stock market. Change your belief system from the reactionary emotional beliefs of most losing traders to a more proactive unemotional approach of a successful trader.
Know when NOT to trade. This skill is just as important as knowing when to pull the trigger. Part of being a great trader is being a keen observer of what a stock is telling you. By committing to observe objectively, you give yourself permission not to trade until the conditions are right.
Don't trade for excitement or entertainment. Avoid the highs that come from quick profits or the lows that can appear after losses. If you have a sound system, it does not matter whether any particular trade makes a profit or a loss. What matters is that the probabilities over time are in your favor. You must remember that no system is perfect, and prepare for losses along the way. You should measure yourself on whether you followed your rules and executed your system, for both winning and losing trades. The process of trading is much easier when you focus on execution of a system rather than on whether each individual trade was right or not, because you take your ego out of the process. This makes you more rational and less emotional, which leads to better investment performance.
It is critically important to protect your psychological capital by not overtrading or playing for excitement instead of profits. This can cause you to be emotionally "drawn down", and sit there in exhaustion and despair, usually as a move just begins that could have been a big opportunity. Yet you miss the new big trend because you were financially and emotionally eroded by overtrading in a tough market. As a result, you can't see through the negative emotions because you feel beat up by the markets. Managing your internal psychological state of mind is equally important as managing your financial position.
Be careful not to overreact to intraday news and the endless stream of cacophony which comes to you through your eyes and ears every day. As 2002 showed, there were many whipsaws where the opening occurred in one direction but was then reversed with a close in the opposite direction. Make preparations for each day's trading in advance after the previous day's close, so that you have some idea what the market structure looks like heading into the next day's trading. This allows you to move from a reactionary state to a more proactive posture, and position your mindset to capitalize on news-driven intraday volatility. Ignore 99% of what you see and hear during the day, and focus on your positions and your trading plan.
Accept total responsibility for the results of your trading. Even if you authorized someone else to trade on your behalf, or took the recommendation of someone, it was you who made this decision - nobody forced you. Remember losers always look for somebody else to blame. Winners look to themselves--- particularly if they have to take a loss on some trades, as is inevitable for all traders and all systems. When you accept total responsibility, you commit that in any market environment you will find the way to win.
There is so much more that I want to tell you, but time is short right now. I will write more later.
Just remember this: You will ALWAYS feel the most fearful when you should be the most greedy and vice versa. If you are watching every tick, hanging on every piece of news and noise that comes to you through the media, vacillating on a minute to minute basis between fear and greed, in a state that you cannot sleep or are in terror, or so elated that you know your position will just keep going up and up, you really need to get a grip and GET OVER YOURSELF! Sit down, take stock of yourself, ask yourself why you made the trade, why you bought, why you sold, why you did not sell, what your plan was, what your fail-safe strategy was, etc. Look to yourself at all times. YOU are more powerful than you will ever know. YOU can be a successful trader.
YOU can learn to ride the waves of the market and hold yourself firm and steady in the most turbulent times.
YOU are the master of your trading destiny. YOU CAN DO IT!!
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