Sunday, August 27, 2017

Turning Trading Anxiety Into Growth

Here is a powerful psychological technique that I learned from a wise therapist I saw when I was in graduate school.

Identify clearly what makes you nervous, uneasy, fearful, or anxious.  Typically, those will be situations that you find yourself avoiding.  Anxiety is a form of psychological pain. No one likes pain, and so it's often easiest to avoid the situations that make us uncomfortable.

A good trading example would be bumping up your trading size and hence your risk-taking.  You've been doing well in different market conditions and would like to take greater advantage of your edge in markets.  Increasing the size of your trades, however, will increase the P/L swings for each trade, each day, and each week.  That is not necessarily comfortable.  So we may find ourselves making excuses, avoiding the situation that makes us nervous.

The therapist I met with in Kansas specialized in dream interpretation, so much of our discussion centered on my dreams from the past week.  One dream was that I was on a playground, climbing a tall slide.  At the top of the slide was a lever.  You could set the lever anywhere from 1-10.  I realized that the setting would determine how fast you went down this large slide.  I decided to be prudent in the dream and selected a "5" setting.  

Now I should mention that the issue that brought me to therapy was feeling "blah" in my life.  I didn't feel all that much excitement about what I was doing and felt that the resulting malaise was keeping me from doing my best in all situations, from school work to relationships.

The therapist quickly perceived that the dream image of the slide with the lever was a creative metaphor for my life at the time.  I was going down the slide, but keeping my descent safe and predictable.  Perhaps it was time to try a higher setting on the slide.

That's when the therapist offered a keen perspective.  She said that, if you're not a person with an actual pathological anxiety disorder, your fears point the way toward your growth.  We grow by embracing and pursuing what makes us anxious.  The reason for this is that we always grow by extending our boundaries, by going beyond our natural comfort zones.  Whenever we forge new territory and push our self-defined limits, that's scary, that's the unknown.  

The implication is profound:  we tend to avoid what makes us uncomfortable, and our discomfort tends to occur in those areas where we most need to grow.  If you find yourself procrastinating, avoiding, nervously setting your life's challenges at a comfortable "5", those are the areas to pursue. In mastering those fears, we find the person we're meant to be.

And the ride down life's slide becomes a helluva lot more fun.

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