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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One of the most valuable things we can do to heal one another is listen to each other's stories…Rebecca Falls
Many years ago, during my medical training, I learned a valuable lesson. There was a patient who came into the Emergency Room with a somewhat mixed bag of complaints. The doctors did some tests and could find nothing wrong with her, so they sent her home. Two weeks later she came back with the same symptoms. Once again, the doctors put her through a variety of tests and could find nothing wrong with her, so they sent her home again. The third time she came into the emergency room with the same symptoms, she was sent to see one of the oldest doctors on staff, Dr. Nelson.
Dr. Nelson always had a group of aspiring medical interns and residents around him, as he had a reputation for having the best diagnostic ability of all the doctors in the hospital. Dr. Nelson looked at the woman, who was obviously suffering and confused that no one could tell her what was wrong with her. He studied the records of her previous visits to the Emergency Room. He stood there quietly and shook his head. You could hear a pin drop as the younger doctors waited for his pronouncement. Instead of speaking to the medical trainees, Dr. Nelson asked the patient a number of questions about her day-to-day life. After about 10 minutes of these very personal questions, he took the patient’s hand and asked her calmly, “What do you think is wrong with you?”
Tears welled up in the eyes of the patient as she gripped tightly to Dr. Nelson’s hand. She lowered her head toward the ground and then, after what seemed an interminable silence, said, "I’m pretty sure my husband has been feeding me some kind of poison.” That was all Dr. Nelson needed to hear. Immediately, appropriate tests were ordered, and the patient’s self-made diagnosis was confirmed. She was suffering from low-level poisoning with arsenic.
What I took away from this and have never forgotten is that behind every patient with a number and a wrist band is a real human being with a real life, a family, friends, animals, spouses and lovers. Unfortunately, in these times of faster and faster forward, this is all too often forgotten. Sick people are commoditized, and the medical system is broken because so many physicians do not know how to ask the most important question of all: What do you think is wrong with you?
I use this example today because I have found one thing through self-analysis and working with over 600 traders. That is, with the proper gentle and loving questioning, the trader will tell you what is wrong. A good coach is able to hear with a third ear and see with a third eye, but it is the trader—one who is able to open up and be rigorously honest with the coach—that provides the ultimate answer to why they are winning or why they are losing.
There was a magnificent example of this last week posted on the Trending123 Message Board. This woman, Rose, had the courage to look deep within herself, tell the truth about her trading and, in return, receive valuable insights from other traders. Of all of our subscribers, only about 170 have read the entire thread. There is a lot of wisdom there, and I recommend that everyone take a few minutes and look through it.
Contained in this story are vast lessons to be learned about trading and life, and time does not permit a complete analysis and discussion of them. One thing is absolutely clear, however. This subscriber had the insight to recognize that she possesses what I believe to be one of the most dangerous of all the cognitive biases. First, I will show you the letter, and then I will briefly tell you about the self-attributional bias that she diagnosed in herself. Here is the original post:
I was going to send you a private email Dr. Janice, but decided to post it here instead because I know I am not the only one having this problem. I am frustrated and struggling with my lack of discipline when it comes to having a trading plan and trading that plan. I often let my losing trades get away from me, and also fail to take profits when they are there, to only have the trade turn and my profits diminish. I know that this is a discipline problem, but what baffles me is that I am a very disciplined person in all other areas of my life. I eat healthy, exercise regularly, my house is organized and tidy, my finances are healthy, I'm always on time, etc, etc. ... Why do I struggle so badly to be disciplined in my trading?
I am a relatively new trader (1yr), and new to T123 (2 mos). When I decided I wanted to learn about the markets and trading I spent the first 2 years taking some classes, observing the market and reading everything I could get my hands on prior to making my first trade. I told myself I was going to treat it like a job. I get up every morning at 5am (I live in California) study, and prepare for the day, spend a good amount of time observing during market hours, and often find myself winding down the end of the days studying or reading something related.
If I have such good discipline to try and learn, why is my discipline so poor when I'm in a trade?
Cap gave us a daytrade yesterday. It was KBH. I entered the trade @ $2.00. It was a Put and he also gave us a price to exit the trade if the trade wasn't working. Well, we hit that price a couple of times during the day and came back down. I didn't exit. I just felt that due to the news on the stock that this trade would go in my favor. I held it over night, and closed the trade today @ $2.50 with a profit. Sure, I'm happy that I have a profit. It was a good little trade for me. But did I really win???? There's a little voice deep down inside of me saying, "Yes, you were lucky enough to win on this trade, but once again, you cheated yourself out of the opportunity to have the discipline and follow your plan.
Of the wealth of lessons and information contained in this post, the one I would like you to learn today is called the self-attribution bias. The reader diagnosed it herself, and this is how it works: All humans tend to have relatively fragile senses of self-esteem. One of the major ways we shelter and protect our self-image is through self-attribution. In essence, this is a thinking (cognitive; brain-based) bias through which we attribute good outcomes to skill and poor outcomes to hideous bad luck. This bias prevents the trader from acknowledging mistakes as mistakes and thus limits learning. A key concept in learning is that we embrace our mistakes and do everything possible not to repeat them. It is critical for the trader to appreciate those trading circumstances in which he or she is skillful and those where he or she is lucky.
Here is visual diagram of this bias:
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Good Outcome |
Bad Outcome |
| Right Reason |
Skill (could be luck!) |
Bad luck |
| Wrong Reason |
Good luck |
Mistake |
Only by keeping a thorough, accurate and radically honest trading journal and reviewing it constantly can a trader cut through this self-attribution bias. Winning traders keep trading journals. Winning traders are honest and open with themselves and others. Winning traders realize that the only way to learn is to embrace mistakes as mistakes and not enter into trading insanity by doing the same thing over and over again.
Thank you for your courage, Rose, and for sharing your experience, strength and hope with all of the members of www.trending123.com! I applaud you!
What lies behind us and what lies before us are tiny matters compared to what lies within us…Ralph Waldo Emerson
Until Next Time,
Good Trading and Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
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