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Doing the Same Thing and Expecting a Different Result

There is a common quote that has become somewhat of a cliché.  It is, “The definition of insanity is continuing to do the same thing and expecting a different result.”  No doubt you are aware of it.  It might be a cliché but that doesn’t mean it’s not affecting thousands if not millions of traders every day.  Are you struggling with this issue?  Are you continuing to say that you are not going to chase a trade, inappropriately move a stop, double down on a loser, etc., but still falling into that trap?  Are you finding yourself saying that you will create a trading plan, or construct a micro plan for each trade, or document your trades; but finding that you are consistently not following through with your commitments?  This is a self-discipline breech that if uncorrected will bleed your trading account dry.  This is why people ask themselves, “Why do I keep doing this?”

The first thing we must remember is that habits, which are actually patterns and programs that have become “automatic”, are difficult to break.  What has happened is that you get caught in a pattern of thinking, feeling and doing, which is contrary to getting the results that you want. This pattern is “triggered” by something that you, for example, see in the charts or hear on the news that you ascribe a meaning to that is usually negative and therefore the pattern is negative.  In fact, you may often be oblivious to the fact that you are caught in the pattern until you have committed the violation.  Consider this:  Sally winced hard as if her skin had been pierced by a deep dull needle.  She had sworn over and over that she wouldn’t do it.  But here she was, again caught in a web of self-induced seduction driven by greed and fear.  “Why is it so hard?” she thought as she looked at her trade.  She had input a limit order to buy 3 contracts of the NQ as the price action was about to hit a demand level on the 60 minute chart.  She had meticulously determined from her daily and weekly charts that a significant demand zone was about to be retested.  The lines had been drawn and her plan; as it usually did, outlined in precise terms her entry, rational, targets and scale points.  Actually, the plan was flawless as evidenced by the fact that the price action did exactly as she had foreseen.  And, if she had not exited the trade prematurely the market would have proven the plan to be correct.  But, alas, she became more and more frightened as the price action breathed till it became unbearable whereby she gave into the pressure and exited the trade for a miniscule profit only to watch it take off like a towering green bamboo shoot rising from her exit.  In this instance, like so many times before, she had let herself down; and, she felt stupid, depressed and desperate to know how to stop this madness.

Humans are creatures of habit.  Doing the same thing in the same ways fosters a level of familiarity and is comfortable…even those habits that are not in your best interest.  Comfort and pleasure are what you seek and by the same token you want to avoid discomfort and pain.  Now, what is paradoxical is that in your determination to avoid discomfort and pain you’ll actually cause it; as did Sally, by succumbing to an archaic ego-driven defense mechanism that had been created ostensibly when you were quite young and that is now running roughshod over you to make sure that you don’t “get yourself into trouble.”  How does this happen?  Well, when you were young, let’s say a toddler and you broke something that mommy really liked, you were yelled at and felt shamed. Or in early elementary school and you were called upon to answer a question and you didn’t know the answer prompting cruel laughter from your classmates and a stern disapproving look from the teacher, you felt humiliated.  Then, your all-protecting ego would say, “…see, you are bad because you made mommy angry so you mustn’t play or you’ll get hurt,” or “…you are not smart so you must be quiet so that you don’t get hurt again.”  These experiences and others like them create what is called a neural network of encoded sense stimulations of these experiences/events; in other words everything that you saw, heard, felt, smelled and tasted along with thoughts and emotions become connected.  This neural network of brain cells are connected electromagnetically and electrochemically to these sensory stimulations and will “fire” every time a similar experience/event happens in your life.  So, as you grow similar things happen, you break something, or people laugh at you, or you do something that otherwise incurs the ire of those in authority or that you look up to.  Then your ego says, “…see, I told you, that is not for you to do because you are not good enough, smart enough, talented enough or deserving, or whatever else it might have associated to this original experience.  These become unconscious conversations that lurk below your awareness level and that conjure up all manner of additional negative emotions like disappointment, rejection, anger, frustration and many others.  This is how neural networks get connected to other neural networks and they form very strong barriers between you and effectively challenging yourself in order to grow.  These neural networks that continue to fire together will “hardwire” together meaning that they become like a well worn trail or a deep rut or cavernous scratch in a vinyl record.  When that happens the default behavior then becomes avoidance and anxiety-based.  You are then operating from a position of fear.  This type of default behavior strives to remain in the comfort zone where there is no growth.  You cannot grow in your comfort zone, you must get out.  Growth requires stretching, tearing, and breaking out of old tissue physiologically and old psychic constrictions psychologically.

To put it another way, as you grow from a child, you form relationships with everything around you: people, places, things, creatures and the like.  Each one of these relationships has an internal depiction or (neural network) that is represented by all the chemical reactions in your brain that represent that relationship including the feelings and emotions.  If you change that relationship then the network breaks and reforms.  Think of how it feels to break up in a relationship with someone.  It is quite painful and fraught with emotional turmoil, and that is a good break-up.  That is how change occurs on any level of your thinking, feeling and doing and when you break a habit you are “changing.”

So, when you find yourself asking “why am I continuing to do this?” you must identify first the underlying pressure that is motivating your thoughts, which are usually limiting beliefs.  In other words, you’ve got to find out what the issues are so that you can address them and get to the root cause of the pattern.  Remember, your best is the only game that will do in the trader trenches and you must be proactive and self-aware as you delve into the execution of your plan.  Don’t allow yourself to get caught in the vicious cycle of “doing the same thing over and over and expecting a different result.”

Happy Trading.

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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