Chapter One pointed out that we cannot change our thoughts and behaviors--and certainly cannot renew our lives--unless we shift our views of self and world. That requires a radical change in our state of awareness: one that liberates us from daily habits, routines, and ego concerns.
But how can we make the transition from old patterns to new possibilities? Can we reverse the process, so that doing new things actually changes our perspectives of ourselves and markets? That brings us to a very different gateway to the soul, where our actions shape who we become.
How Doing Transforms Viewing
The cognitive tradition in psychology suggests that we change behavior by altering our thoughts about ourselves and the world. For example, if I can stop talking to myself in critical ways, I can feel less stress and perform better in life.
Less well appreciated is that doing also transforms viewing. We can change our experience of our self by behaving in new ways.
This is worth exploring.
At one time, I was nervous about sharing my writing with others. I finally decided to take a leap by submitting an article to a regional academic journal. It was published and the feedback was positive. This was followed by other articles, giving me the confidence to take a larger step and submit a manuscript to a well-known national journal. The article was neither accepted nor rejected. It was returned, covered with cross-outs, corrections, and suggestions for change. Blue pencil filled every page.
Discouraged, I called the editor and asked why the reviewers didn't like what I had written. He was stunned. "Of course they liked it!", he exclaimed, "That's why they put so much time into revising it. Make the changes soon, so we can publish it right away!" It was my turn to be shocked. Like a hurt child reprimanded by a teacher or parent, I hadn't considered that the corrections and guidance were signs of caring.
Fast forward and I published that article followed by several more. Then I was asked to be a reviewer myself and a little while later I was elected to the editorial board. By that time, I truly felt like a writer and enjoyed giving feedback and helping other writers develop. Never again did I feel nervous in submitting a manuscript; not even when I wrote my first book.
So what happened?
A transformation occurred: In writing and receiving ongoing feedback about my work, I internalized the sense of being a writer. The doing changed my experience. In taking a new role, I cultivated a new identity.
George Kelly developed an entire approach to psychological change--fixed role therapy--based precisely on this notion. He believed that all of us operate with constructs: belief systems that define who we are and how we interact with the world. He described the taking on of a new role as "a rousing, construct-shaking experience." In other words, the right roles are corrective emotional experiences.
The key to making changes is that the new role must be truly new, providing a fresh mirror for experiencing ourselves. Too often, we operate with broken mirrors, caught in roles that provide fragmented views of our selves. The best roles are intact mirrors, reflecting something of our soul, our essence.
Let's go back to the example of the alcoholic joining A.A. Initially, he experiences a state of regret and repentance. He feels that he has ruined his life and the lives of others. When he attends meetings, he gradually assumes a new role: that of a recovering person. As someone in recovery, he not only receives help from others (mirroring the experience of being worthy of receiving help); he also provides help to others (mirroring the experience of being of value). In the heightened state of shame and disgust, the alcoholic internalizes these new roles deeply.
Entirely new patterns of thought and behavior spring from the fresh role. That is renewal. New mirrors enable us to perceive ourselves differently, catalyzing innovative patterns of thought and action.
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How Our Goals Can Transform Us
I recently wrote a Forbes article about how physical activity can greatly impact our psychology. In that article, I cited two noteworthy examples: Emilia Lahti and David Goggins. Both were not distance runners and yet decided to tackle very difficult long-distance runs. This forced them to train in ways that redefined their limits. In doing so, they found that acting on these outrageous goals increased their mental toughness--and their capacity to tackle other life goals.
Lahti and Goggins are clear that it's not the goals themselves that transform us, but our actions in pursuing those goals. We experience ourselves differently when we tackle and overcome one limitation after another. Big goals provide us with new roles, and those serve as mirrors that shift our self-perception.
When I entered college, I was socially shy and not especially confident around others. I took on the role of social chairperson for our dormitory, which forced me to interact with peers and make sure that our parties were a success. Similarly, in graduate school, I wasn't especially comfortable speaking in front of groups. Through my academic department, I took on the task of teaching an introductory psychology course to an auditorium full of undergrads. By the time the semester was over, I actually thought of myself as a public speaker!
In undertaking challenges that push us to do more than we think is possible, we learn--first hand--that we can transcend our self-limiting assumptions. Most of all, we cultivate what Lahti identifies as sisu: the ability to access hidden energy and persevere in the face of daunting odds. It is through the pursuit of great goals we become able to experience ourselves greatly.
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Here's a unique example. When our Siamese cat Naomi came to us as a kitten, she had been neglected and quite possibly abused. She was so frightened in our presence that she cowered under the bed, shaking violently. When the usual cajoling didn't work, we enticed her with food and placed her in the bathroom, where she couldn't find hiding places. Gradually we brought her treats into the bathroom and moved closer and closer to her. Eventually we were able to pet her and place her on the bed, where she kept a wary distance.
The breakthrough occurred when Margie and I placed our hands under the bed covers and moved them around. Naomi's eyes widened and she pounced on our hands. We played the game and, for the moment, Naomi forgot to be afraid. Play became a new role, allowing us to hold her, pet her, and comfort her. With repetition, the new role took hold. To this day, she remains playful and affectionate, sleeping on Margie's pillow at night. What was once threatening became a safe haven.
Notice how the new role brought out a hidden facet of Naomi's personality, allowing her to be a normal, curious kitten. Through the medium of play, she experienced us as sources of fun, no longer as threats. The doing--the play--changed her viewing and gave her access to her hidden kitten strengths. Forever.
That is radical renewal.
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The Power of Not Doing
Notice something subtle but profound in Naomi's development. Before we got to the stage of play--the new role--we had to place her in a setting where she could not fully act upon the old role. In the bedroom, she could hide. As long as she hid, she could never experience safety with us. By placing her in the bathroom, we took away her hiding places. She could not fully enact the role of scaredy-cat. This gave us the opportunity to create initial experiences of safety--feeding her, petting her--that set up the new play role in the bed.
Not-doing preceded doing.
Abandoning the old role shook up the system enough to pave the way for the new role.
One of my teachers recently explained that we cannot go from yesh to yesh without ayin in between. To translate the Hebrew, this means that we cannot go from one level of being to another level without a period of nothingness between the two. Before I can take on a new role as a recovering person in AA, I have to stop drinking. Before I can become a physically fit human being in the gym, I have to stop lounging in front of the TV in my free time.
We stop the old, create a bit of discomfort and arousal, and that prepares us for the new. It is the way of all change. So often, the ability to change is a function of the courage to face the nothingness between our old and new ways.
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Tapping Into the Power of Roles
No doubt, we could have helped Naomi become less fearful simply by feeding her, cajoling her, and providing a safe environment. That would have been normal psychological change.
What occurred with play, however, was transformational. In an important sense, she became a different kitten. This gets at the heart of renewal and how it differs from usual, incremental psychological change.
Why was Naomi's change so dramatic? It was because she was able to tap into a source of motivation greater than her fear. By themselves, new roles do not necessarily lead to transformation. If we took the alcoholic and gave him a new role as a sales clerk, for example, nothing positive would necessarily be mirrored by this new experience. In A.A., however, the alcoholic finds an affirming mirror that taps a fresh, powerful source of motivation: the motivation to be valued--and to provide value to others.
Naomi wasn't so traumatized that she couldn't be a kitten. She just needed a new role--a new set of activities--to tap into her hidden strengths. As a hurt cat, she could not trust. As a kitten, she could play. Similarly, my fresh experience of the review and editing process helped me tap into a drive for self-expression that overcame the initial fears of editorial rejection.
When our daughter Devon was a student in middle school, she found it difficult to complete her school work. She procrastinated--and didn't like herself for procrastinating. She felt like a failure and more than once cried over the agony of doing homework. Prodding her to get her work done or threatening disciplinary consequences only made the problem worse, keeping her in the "failure" mode.
The breakthrough occurred when I thought of the medical students I worked with and how they studied in groups at Wegmans in the local grocery cafe. What if I treated Devon as a medical student and not as a lazy, struggling sixth grader? We went to the cafe amidst the medical students and formed our own two-person study group, accompanied by drinks and snacks. The studying suddenly became fun! Dev liked the idea of being a medical student, so we began a tradition of working together. That collaboration lasted through high school and even into college. By college, however, she had joined a sorority and found new friends who became fun study partners. The student who felt like a failure graduated college on time with a respectable grade point average--not because she became such a phenomenal student, but because she found social roles that enabled her to tap into her hidden academic abilities.
Like Naomi, Devon underwent a radical change. In the new role, she was no longer a self-doubting procrastinator. She found a (social) motivation greater than her self-doubt. That opened the door to new experiences and a renewed sense of self.
To sum up: New roles are powerful when they provide fresh mirrors that elicit hidden strengths, values, and interests. This is the essence of the corrective emotional experience: the right roles allow us to internalize new identities. Our egos are wrapped up in old roles, old identities. The experience from fresh social roles bypasses the ego and serves as a gateway to the soul, to our strengths. Between the old role and the new one is the nothingness of setting ego aside. We embrace new roles out of humility, not egotism. We empty the self before filling it anew.
Constructing Our Selves
The role of roles in change suggests that radical renewal is fundamentally a social process. Who we are is continually constructed--and potentially reconstructed--in the roles we assume, from romantic relationships to careers and beyond. When we assume roles that provide new experiences of ourselves, our doing changes our viewing. It is no coincidence that the workout areas of health clubs are walled with mirrors. Those enable us to see ourselves becoming stronger, fitter. With enough mirroring, we actually experience ourselves as buff and healthy--and that becomes part of our ongoing identity and motivation.
If life itself is a gym, where we either use or lose our strengths, social roles are our mirrors. We don't change by motivating ourselves or journaling ever more New Year's resolutions. Like Naomi, like Devon, we change by doing new things--and by doing old things in new ways--that draw upon powerful but dormant strengths. But this means that, in life's gym, change depends upon our willingness to break a sweat. We cannot grow if we do not push beyond routine, beyond comfort.
So how does this relate to trading??
In my early years of trading, I viewed the market as one big puzzle. My role was to analyze the pieces and figure out that puzzle. I tested many indicators and patterns, looking for the predictive information that could provide me with an edge.
That approach, for the most part, was interesting and challenging, but provided only limited benefit, limited edge.
My turnaround, captured in my first trading psychology book, came when I viewed market price action as communication. I literally took the stance that the market was talking to me and my job was to understand what it was saying. Well, that was a familiar role! As a psychologist, my job is not to predict or figure out anything. My role is to listen and understand and then find the right moment to intervene with helpful methods. If my client is talking and I can't figure out his or her issues, no problem at all. I simply ask different questions and evoke different conversation. Eventually things will make sense and I'll know how to help. The key is empathy. If I don't feel what that other person is going through, there is no way I will respond helpfully.
In viewing the market as a set of communications, I changed my trading role. The focus was no longer on prediction, but on understanding. For example, in recent trading, the overall stock index (ES futures) moved to a new high, but stocks in several sectors (financial, housing) lagged significantly. Small caps also couldn't make new highs, and the day's advance-decline line lagged. I watched and watched and felt that this was not a trending move. Stocks were labored; many were rolling over. The idea came to me that bulls were trapped and we would test the morning lows. That turned out to be a successful trade.
What was powerful about that trade was that it wasn't about me whatsoever. In the role of market predictor/analyst, my ego was caught up in the calls I made. Making money on trades was a reflection of my analytical and predictive prowess. Once I viewed the market as a client and me as a therapist, I knew how to sit back and wait for things to make sense. I wasn't afraid of missing opportunities or getting something wrong. I just needed to be in a receptive mindset: one in which I'm open-minded so that I can make sense of an ongoing flow of communications.
Even though I was trading solo, I found a new social role for my trading, one that drew upon my greatest strengths. Predictions were from the ego and ultimately frustrated me. Understanding comes from the soul, and that is the essence of who I am and what I do. I renewed my trading by entering into a different relationship with the market.
The implications are monumental: We cannot radically renew our lives (and our trading) as long as we remain stuck in roles that do not tap into our souls: our core motivations and strengths. If no one plays with us--and indeed neglects us--we cannot develop into playful kittens. If we structure study as a socially isolating process, we will fail to reach our potential as students. Expanding our social roles in ways that bring out the best in us creates new mirrors in life's gym. Through those fresh roles, our doing revolutionizes our viewing--and completely changes our identities as traders.
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Resources
One of the powerful developments of the past few years has been the explosion of online trading communities that provide mentoring, education, and support. These communities also provide forums for social interaction among traders. It turns out that one of the unappreciated benefits of being part of such a community is the opportunity to create new social roles by teaching others and learning from others. The philosophy of "each one teach one" makes everyone a valuable participant--even when they are not making money. Among the online groups I'm most familiar with are Bear Bull Traders; Edge Trading Group; Futures.io; Investors Underground; and My Investing Club. There are many other communities and forums associated with particular trading platforms and products. This is a powerful way to develop new mirrors as a trader.
One of the common pieces of wisdom we hear in the trading world is that traders should find the market patterns that fit their personalities and trade those. In my work with successful daytraders at SMB Capital, I've been struck by the precise opposite: the consistently profitable traders talk about each stock having its own personality. Good trading means adapting our actions to the personality of the stock, not imposing our personality preferences onto the market. This is a great example of moving past ego. It's also a great example of how doing can change our viewing. When we approach each stock as having its own personality (just as we approach each person we meet), we place ourselves in an open-minded mode, enabling us to see what makes each instrument unique.
Some of the current research in psychology that I find most fascinating is being conducted by David Bryce Yaden at the University of Pennsylvania. He describes his work as a "21st century update to to William James' Varieties of Religious Experience." His research site provides valuable insights into self-transcendence and the psychological experience of awe. When we cultivate religious and spiritual experience and actually do spiritual things, such as pray, celebrate, and meditate, we experience ourselves in new ways and cultivate a new identity.
By the way, when you find an interesting writer or researcher like David Bryce Yaden, it's worth checking out their Twitter accounts. Very often, you'll discover not only new insights, but also new people worth linking to. Also check out videos from these interesting people, such as this one of David's that discusses the role of mindfulness in the science of spirituality and this course in positive psychology. There are online communities devoted to growth and spirituality that, like the trading communities mentioned above, provide opportunities to learn, share, and generate new experiences. For example, check out the Thich Nhat Hanh foundation, which develops communities devoted to mindful living.
Here's a worthwhile perspective on training the mind for transcendence that cites the practice of the Dalai Lama. This concept is largely absent in traditional psychology, which focuses on training our thought and behavior patterns, not our capacities for self-renewal. A great example of using our actions to change our selves is loving kindness meditation.
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How entwined is your ego in your trading? If you entered a romantic relationship focused on your ego needs, how lasting and satisfying would that relationship be? Why should your relationship with markets be any different? In drawing upon roles that provide access to our strengths, we can create different trading experiences--and healthier results. Our actions in markets should mirror a self that inspires and energizes us. How we trade, day after day after day, ultimately helps shape who we become. That doing changes our viewing: sometimes for the better, sometimes not.
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KEY TAKEAWAYS: What we do shapes who we become. If we want to become more disciplined, inspired, or insightful traders, then we must exercise those functions throughout our lives in our various roles as family members, workers, friends, etc. The right trading makes us better as people; the wrong trading makes us more self-absorbed and ego-filled. Our experience of ourselves during our trading will impact our future trading.
PRACTICAL EXERCISE: Create four columns on a piece of paper. In the first column, list the various roles that fill your life: roles as a spouse, as a parent, as an employee or manager, as a community member, etc. In the second and third columns write down your most positive and negative experiences in each of those roles over the past year. In the fourth column, write down the single improvement that you could make in each role to maximize the positives and address the negatives. These become your goals in each of your major life activities that will filter into your trading. A great way to work on your trading is to identify the changes you'd like to make and then pursue those in all the other areas of your life. The idea is to consistently be the change we want to see.
