Radical Acceptance: The Key to Emotion Control
Greg is a control freak. Everything has to be perfect. He plans every aspect of his trade, and expects everything to fall precisely into place. Today, he is upset. He planned a trade to perfection, yet one unexpected adverse event happened after another. He got up late. His main computer crashed. His DSL line went down, and when he tried to use a dialup connection, his telephone line went dead. He tried to open a position according to his trading plan but got a poor fill. Then, to his surprise, matters worsened. An analyst starting talking down his stock, and the price fell hard. Greg is extremely frustrated and angry. But his feelings are understandable. Things have gone horribly wrong, and he is upset. How should he feel? Actually, if he practiced "radical acceptance," even a slew of unexpected setbacks would not faze him.
It's natural to seek out control. Every time you make a trade, you put money on the line, and to a novice trader, money represents house payments, school tuition, and food on the table. You don't want to make a mistake and lose your hard-earned, valuable assets. When things go wrong, it's understandable to feel bothered. That said, a cold, hard fact of trading is that you'll see more losses than wins, especially when you are first starting out. It's a game where losses are the rule rather than the exception. Feeling that you need to be perfect, and expecting everything to go your way is not only unrealistic, but it can create so much psychological stress that you'll have difficultly focusing on the trades that actually will produce a big profit.
Just like Greg, we often want to believe that if we analyze the markets long enough, we'll have perfect knowledge and we can trade to perfection. But striving for perfection can do us more harm than good. Such beliefs are unproductive. They restrict our actions, and often cause unwanted stress. And when we are overly stressed, we have a strong desire to avoid actively dealing with problems. It is much more useful to examine your assumptions, realize that they may be faulty, and change them. For example, many people work under the assumption that they must be thoroughly competent, adequate, and achieving in everything that they do. Working under this assumption, however, produces fear and anxiety, which for traders often produces hesitation and self-doubt. The development of this belief is understandable. As we grow up, whether it is at home, school or work, we often face adverse consequences for not being scrupulously proficient, and we begin to believe that we must be thoroughly competent, adequate, and achieving in everything that we do. We pay a price for this belief, however. If we believe that we must always be competent, we will expend all our precious psychological energy mulling over the negative consequences of failing, rather than focusing on what we are doing in the here-and-now to implement our current trading plan.
A more adaptive approach is to realize that it's impossible to be thoroughly competent, adequate, and achieving all the time. Sometimes, you just cannot trade perfectly. You can't control all circumstances. When things go wrong, practice radical acceptance: "I can't control everything. I am going to accept the cards that fate has dealt me today. I'm going to accept what I cannot change, and be grateful that matters aren't even worse." Rather than have unrealistic expectations of success, it's wise to approach trading with a healthy sense of skepticism. Things may go wrong, and that's all right. If you anticipate problems, and actually expect them, you won't be bothered when things go wrong. Try it. It really works. If you accept the fact that you aren't perfect, and truly believe that you can't control the world, you'll feel better most of the time. You won't waste time getting angry. You won't beat yourself up. You'll feel calm, creative, and ready for action.