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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It has been a while since I have spoken with you and John has asked me to be with you for in the Trading Room for the first two hours of the market on Thursday morning. Naturally, I said "Yes!" Why? First, because John very much needs to take time out to deal with matters which have been occupying him and adding un-needed stress to his life. In order to trade and guide you effectively, he needs to take some time away, and the early hours of Thursday are just what his Doctor and dear friend ( Moi!) ordered!
Additionally, I have selfish motives. I want to see dearly-missed old friends again, and to meet many of you for the first time. I want to hear from you about how you have been doing this year, the challenges you have faced or are facing, your successes and what you want FOR YOURSELF as an awesome and consistently profitable trader.
The market is about to enter a particularly challenging time. This is not to say that the markets are not always challenging....they are. But this time of year is has a reputation for taking many by surprise and finding a lot of people leaning the wrong way. Will you be one of them? Are you already one of them? If so, why, how did you get to that point and what are you doing or going to do about it?
I want to spend time talking about not WHAT you think, but HOW you think. In trading, it is always about HOW you think and what it is about your brain that subserves your thought processes. Opinions are a dime a dozen but your bottom line tells the true story. Your bottom line is your true capital, and it means financial, mental, emotional, physical and spiritual capital. It is the true essence of who you are as a person, and who you are as a person reflects directly on your ability to trade in a consistently profitable manner.
I want to make this an open forum where everyone is free to be heard without judgment or condition. I hold each of you in unconditional positive regard. In order to do that, it is necessary for us to be rigorously honest--first with ourselves and then with others. Nothing is accomplished by misleading yourself and others or pretending. The only way to get to the essence of what it takes to be a successful trader is to shine a laser beam onto yourself and not be afraid of what you see. You are every trade you make. Every trade you make is a reflection of the sum total of who you are as a person at that moment.
In preparation for Thursday morning, please read, study and be prepared to ask me questions about any of the Trading Wisdoms on the www.trending123.com site, including the most recent series of The Biggest Blunders Traders and Investors Will Make In 2006-2007.
Please make a promise to yourself and to me that you will do this? OK?
Let us look forward to a different kind of trading room for the first two hours on Thursday...one where each and every one of you will have the opportunity to share your experience, strength, hope, frustration, anxiety, greed, anger, stress, and everything you have learned about yourself as a trader this year. Let us learn and grown together. Ask me anything you wish. Those of you who know me know that I will answer even though they might not want to hear the answer. Be prepared for some probing questions back from me and please do not be afraid because it is through this type of experience that you will evolve as a trader and see the truth within you.
The markets will find every single chink in your armor. Everyone gets what he or she wants and needs from the markets. This is your chance to tell me what you want and need and allow me the privilege of helping you find the way to get it.
Here is an article I wrote a week ago, which I trust will provide some food for thought and discussion tomorrow:
LOSS AND HOPE
Pain is what you walk through. Misery is what you sit in.
Take an old pair of jeans and cut a hole in one of the front pockets. Now, start pouring sand into that pocket. What happens? Sand runs down your leg and to the ground. What do you do? Keep pouring until the sand is up to your ankles? Your knees? Your waist?
At what point do you realize and act on the fact that no matter how much or how fast you pour sand into the empty pocket, you have a hole in your pocket? At what point do you come to the conclusion that you either have to stop pouring sand or just take off the pants and run away as fast as you can?
There are many who will keep pouring until, eventually, they are up to their neck in sand. Suddenly, it begins to feel like quicksand and they are trapped. Can't get out now matter what they do. It is now too late since there is just too much sand all over them and they are trapped. Then the feeling changes to one of being drawn downward into the quicksand, unable to breathe, choking and suffocating into the murky slime all around.
This is how it feels to lose. The hole in your pocket is the losing position. The sand is your mental, emotional, physical and spiritual energy just pouring out until you are drained, have nothing left to give and are literally sinking in the sand of your own creation.
I spoke with a trader yesterday who told me that the instant a position went against him, he cut it and moved on. I spoke with another trader yesterday who told me he was down nearly 50 of his entire portfolio on two positions which he had been holding for nearly five months and that he could not cut it because it was too late, too much money lost and he was trapped. Perhaps you can identify with one of these traders, and perhaps not. Most certainly, if you have been trading for any period of time and you have not employed a rigorous stop loss discipline, you have felt your physical and psychic energy going into a losing position.
The trader who cuts his position immediately is out the commission and the (usually very small) drawdown. The trader who is holding a 50% portfolio loss does something that is quite common and damaging. The trades almost immediately went against him, but he did not get out. He stayed with them, holding and hoping and turned two losing trades into investments! The mind has a unique way of playing such tricks on us. Since he could not take the losses or honor stops, he played every manner of brain game with himself and decided that the positions would "come back one day" and entered onto the slippery slope of hope. If a portfolio is down 50% what percent does one need to make in order to recover back to break even?
How does loss of psychological and physical capital with focus on a losing position manifest itself? Irritability, sleeplessness, continual searching for something or someone to affirm the losing position, anxiety and dysphoria, tick-itis (the toxic habit of watching every tick of the position day after day), rumination, self-deception, impairment of social and family activities and a litany of other unpleasant emotional and physical states. Perhaps the worst aspect of this is the spiritual deterioration which is manifest by self deception and, often, deception of family and friends. One is rarely capable of owning true feelings of guilt, shame and inadequacy and shifts into a mind morph where a trade becomes an investment. Holding and hoping then set in.
Of the panoplies of emotions that flood traders and investors on a daily basis, the most risky is hope. It becomes a passionate hope that, once the Market Mistress has seduced us, she will, one day, become kind to us and love us.
The most rigorously honest thing that I can say in response to this type of thinking is: Abandon hope. As extreme as this may sound, it is the only way to be consistently successful. Attachment to a losing position is a recipe for more unhappiness and illness than any one of you deserves. Eschew complacency and mediocrity in trading and life. Cut losers quickly and do not sit around waiting for The Mistress to rescue you.
Who can say what is waiting for you at the bottom of the slippery slope of hope? Get your head out of the sand and get out before it is too late. Suffering is optional and you are in control. Take the power and use it to make yourself strong and to live and breathe with freedom to play another day.
The trouble with most people is that they think with their hopes or fears or wishes rather than with their minds... Will Durant ( American Historian and Philosopher...1185-1981)
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