Chapter 1: Change
Lesson 4: Change Your Environment, Change Yourself
Many traders desire to change their ways when things are not working. However, I’ve noticed that these same traders continue to repeat their mistakes as if they are processing a software program they cannot escape.
For example, I know a trader who was continuously getting stopped-out of good trades. I told him to decrease his position size, increase the distance to his stop-loss point, and plan trades rather than working on the one-minute time frame. Strangely, he simply could not bring himself to change his ways. Thus, he continued to get stopped-out and lose confidence.
In Lesson 4 of The Daily Trading Coach, Dr. Brett explains that “it’s the mental routines — the mental environment — that we most need to change to break unwanted and unprofitable patters of thought and behavior.” Many traders make the mistake of changing their physical environment to break negative patters, but our mental environment follows us everywhere we go.
For this lesson I chose to apply one of the four exercises Dr. Brett recommends: Seek Out Divergent Views. This exercise states: “Conversations with traders who trade differently from you — different time frames, markets, styles — can often help cement your views or question them. Similarly, reading materials from fresh perspectives puts your ideas in a different light and pushes you to question your assumptions.”
I recently watched a video by Rick Dugan which explained how to categorize traders in TweetDeck. I used Rick’s suggestion and created some new TweetDeck categories based on trading styles. My goal was to separate traders by style, then start focusing on one different style at a time until I understood the new framework. I knew this would help me diversify my trading strategies as well as learn new insights about my primary strategy (i.e., trading reactions to key levels of support/resistance).
I am a more risk-averse trader. However, I believe I can learn some valuable things from higher risk traders. For example, trader Kunal Desai is a very disciplined higher risk trader who I respect. He performs thorough due diligence similar to mine. Therefore, I know I can learn something from him (and hopefully reciprocate ideas to him). So, I created a TweetDeck category called “High Risk” and added Kunal to this category so I could focus on his stream of twits. Since I started this exercise, I am already learning more nuanced information about how to work with out-of-favor sectors which are showing signs of resurrection. I am also working on challenging my more risk-averse conditioning.