If you’ve hit a rough patch in your trading, it may be time to do a little house cleaning. I’m talking about the influences on your market participation. I thought I’d share an exercise that I do with clients (did a similar exercise as a therapist as well) when they’ve either become stagnant or underperforming for some time. I’d send them an email that would read something like this:
“To keep in the vein of trading as a business I’d like to go through an exercise at the executive level. This exercise is designed to aid in helping you see who/what is impacting your trading decisions. Like all successful businesses, your trading business has a board of directors. On a sheet of paper I’d like you to draw the actual table where your board of directors meets and then place each of the board members around that table.”
I’d do my best to keep the directions as open as possible to not lead them. I want to see what they come up with or what they don’t come up with on their own. It’s fascinating how unsure some people can become without written out, step-by-step directions.
I’d almost always get an email or call asking for more clarification with the majority asking for examples of board members. Looking at their MAP, those who scored high on both the anxiety and self-consciousness facet of the neuroticism scale were those that couldn’t create a board without hand holding. Furthermore, these same individuals showed low scores on the agreeableness scale. Those that only needed the minimal directions in the email tended to score high in extroversion, conscientiousness and openness. They were also more likely to have fewer issues processing the board later.
Here’s an example of some board members that were either already on boards or removed from boards:
2. Moving averages (or other technical indicators)
3. Significant other
6. “Gut feelings” or instinct
7. CNBC/Bloomberg/Wall St. Journal, etc.
8. Options (derivatives)
Surprisingly, very few would include themselves as board members. Quality discussion surrounding why they left themselves off typically led to great insight.
What’s truly amazing is that over the nearly 10 years I’ve used this exercise, every single client has found something useful to improve their market participation. Some would remove indicators that were creating noise while others would find greater success by limiting strategies for setups.
The exercise itself is more about processing the board of directors rather than the actual creation of it. Interesting, to me anyway, because it was the actual creation were most would get hung up.