Lessons from the Pros

Specialty Skills

Comparing Can Disrupt Your Trading Process

Comparing…we do it all the time. We compare food, drinks, cars, clothes, houses, TV shows and actually anything and everything. In fact, when we compare we are placing a “value judgement” on those items to be ranked or in some way categorized. The Oxford Dictionary – short internet version – defines compare as a verb, meaning to

  1. estimate, measure, or note the similarity or dissimilarity between for example “individual schools compared their facilities with those of others in the area”… synonyms: contrast, juxtapose, collate, or differentiate
  2. Form the comparative and superlative degrees of (an adjective or an adverb) for example “words of one syllable are usually compared by “-er” and “-est.””

The Oxford Dictionary – short internet version – defines judge, as in “to judge” as a verb, meaning to

  1. Form an opinion or conclusion about as in – “scientists were judged according to competence” synonyms: form the opinion, conclude, decide, consider

Now when you consider the two definitions, although they are not exactly the same they are qualitatively quite similar. On the one hand both are creating the conditions for discernment and discrimination based on your sensitivity to and regarding what degrees of difference and their meaning; hence a “value judgement.” For instance, you might look at a Bollinger Band® and weigh its merits versus a Keltner Channel (these indicators are both used to gauge volatility) or a relative strength index (RSI) versus commodity channel index (CCI), two popular technical oscillators that serve as different methods of spotting extreme price behavior. The point is that this type of valuation is not only oriented to service your trading, it is arguably necessary as you measure, weigh, consider, contrast and identify the strengths and weaknesses of particular strategic approaches to your trading. In other words, trading contexts and content are in competition so-to-speak so that you can choose among those best suited to your trading style. Now, on the other hand; and let’s hope I haven’t buried the lead too deep; this type of approach, of comparing and judging yourself as a trader to someone else, can lead to dismal results.

Free Trading WorkshopComparing is judgement and judging things or processes or strategies or whatever, is human nature. But unfortunately, all-to-often it extends to judgment/comparing yourself to someone else. This inevitably brings up limiting beliefs like I’m better or worse, good or bad, and in some cases I can’t or won’t. In turn limiting beliefs lead to thoughts of superiority or inferiority that can prompt you to feel sanctimonious and sexy or reviled and rejected. Judgement is a favorite pastime of humans…we do it all the time and for all manner of personal interactions; and that leads to fear, anger, anxiety, jealousy and envy, to name a few. All of which are like dry rot to your trading results. It’s OK and in fact recommended to have role models and mentors to use as examples of how to become consistently successful traders, but you are not in competition with them or anyone else … only with you. The fear of rejection is alive and well and to defend against this vile emotion people often revert to using one-upmanship, as in pointing out someone else’s mistake or failure to inflate their own lack of self-esteem as an over compensatory measure to mask the inner anxiety of being “found out.” Or, they withdraw into confusion and self-doubt ramping up performance anxiety and fear often resulting in rule violations like freezing at the trigger.

If you have been trading for any length of time then you have experienced the disruptions that negative emotions like those above can wreak on your trading process and execution. It is important to manage your emotional state; and attaching your confidence and self-esteem to whether or not you can “keep up with the Joneses” is not in your best interests. Additionally, it is not in your best interest to harshly judge yourself either. Using condemning language to describe yourself or your results, like “I’m such an idiot for doing that” or “I can’t do this right” is counterproductive and destructive to your ability to competently assess the situation and determine the appropriate response to correct or get back on track after a rule violation or commitment failure.

When immersing yourself in the trading trenches it is crucial to not only manage your trade but manage yourself in order to remain on the right side of the order flow. Comparison and judgement in most cases only lead to problematic internal states that don’t support your ability to remain on target, on task and on purpose in your trading. This is what we teach in “Mastering the Mental Game” Online, On-location and XLT courses. Ask your Online Trading Academy representative for more information. Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Traders.”

Happy Trading

Dr. Woody Johnson


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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