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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Live a balanced life—learn some and think some and draw and paint and sing and dance and play and work every day some…Robert Fulghum
In the last Trading Wisdom article on stress (Stress: Part 1 of Many), the foundations were laid to understand the biological underpinnings of this condition and to introduce you to the concept of complex adaptive systems. In any complex adaptive system, be it the financial markets or the human body, there are times when overload sets in. In the markets, this is seen as extremes of price, parabolic moves (both up and down) and herding, among other things. In the human body, extremes are manifest as too much or too little of something. Examples include, but are not limited to, too much or too little sleep, food, exercise, quiet time, socializing and working. Extremes of any kind are not well tolerated, and the body will do whatever it can to bring itself back into balance.
In the markets, this is seen as reversion to the mean or correction. Such an example was seen this week in the commodities markets when precious metals went almost parabolic to the upside. Everyone who was long was rejoicing, and those not long were scrambling to get in. As part of the herding phenomenon, the news flow was "all commodities, all the time." Open interest and small speculator buying was at an extreme, and this condition marked what is known as a "top" in the precious metals market on Monday.
Since that day, the precious metals markets have corrected viciously, and now the theme is "commodities are finished." What a difference three days makes, as everyone is selling out of the positions they loved three days ago and now don't want to ever look at them again. Too many people leaning in one direction in a closed adaptive system is a recipe for failure and a sure sign that a correction is imminent as the markets attempt to find equilibrium.
In the human body, the situation is very similar. As many of you know from reading my book or past articles, I underwent a severe personal correction in 1989. What happened to me is what happens to a lot of people who are so completely invested in their work that they let every other aspect of their lives fall away from them. I was on a parabolic trajectory upward in my career. As a practicing psychiatrist, I took on more and more patients, worked longer and longer hours, slept only two to three hours a day, did not nourish my body properly, and was in a state of complete mental, emotional and physical exhaustion. There was nowhere to go but down.
On New Year's eve of 1989, I stopped breathing and remained unconscious and on life support for 5 days. Even when I woke up after those five days, I stayed on life support and in the intensive care unit of the hospital for over 30 days. Despite numerous tests, the doctors were never able to tell me what was wrong with me. They gave it a name—Adult Respiratory Distress Syndrome—but could not tell me the cause or the cure for it.
As hideous as that whole experience was, it taught me more about myself than all the previous years of my life combined. I needed to go into that degree of imbalance in order to find myself again, to bring myself back into equilibrium and to live life in an entirely different manner. In a way, it is like the financial markets that—after months and months of going downhill—finally find a bottom. Human beings hit a bottom in the same way that markets do. The damage starts slowly, then creeps into and through the entire system. After weeks or months of continual downdraft in the market (or wearing down all the systems of the body), a bottom is forged.
From that bottom, the market or the person begins anew and starts to climb slowly and surely out of it and into a new life and a new comfort zone. It is not the same, nor do we expect it to be. Something changed within the system, and now it goes through a gradual recovery process.
What has happened? The system was under extreme stress and collapsed. It had to collapse in order to reconstitute itself for the next upward movement. The vicious volatility we have seen in the financial markets in 2008 (with more than 30 triple-digit days so far) has shaken the core of many traders and investors. Even those who have been in the markets for decades have never seen anything like this.
This is what happens when complex systems go into breakdown mode. There are streaks of good days and streaks of bad days. At some point, the good days and bad days come in such rapid succession that the system cannot tolerate the stress. It has to make a move one way or the other in order to avoid the unbearable pain of what can best be called manic-depression or bipolar activity. In the case of a market bottom, the move will be to the upside, but it will not come all at once. It will be a gradual recovery because that is what is needed to repair the internal damage. The same applies to a stress-related breakdown in a human being. The move will be to the upside, but it will take time and effort and the realization that something significant has happened. In the markets and in life, it is not uncommon for reality to bite—and bite hard. It is the internal strength and conviction of the markets or the human being that will lead the way into recovery and a new way of living.
My wish for each of you today is that you pay attention to how you are treating your bodies, minds and spirits. You have one life. This is now, and this is it. The choice is yours: Either live life in as much balance as possible, or be prepared to pay the toll for not doing so.
The best and safest thing is to keep a balance in your life, acknowledge the great powers around us and in us. If you can do that, and live that way, you are really a wise man…Euripides
Until Next Time,
Good Trading and Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
P.S.—Take a sneak peek at my new book, Personal Responsibility: The Power of You, published in January, 2008, at www.personalresponsibilitybook.com.
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