Staying Objective

Discussion in 'Psychology' started by Joe Ross, Feb 15, 2011.

  1. When your money is on the line, you can't help but feel a little uneasy. What if you lose? It's hard not to put some of your ego on the line with your money, and when you lose, feel hurt. Winning traders, though, keep cool. They don't ride a rollercoaster of emotions, feeling euphoric after a win and beaten after a loss. They take losses in stride, but if you are a novice trader, it's hard to stay objective and completely unemotional.

    The perspective you take when you look at a past setback, such as a major financial loss, can dictate how you feel about it, specifically the intensity of the emotions you feel. A study by Dr. Ozlem Ayduk and colleagues shows how the way people look back on, and think about, a past event can influence the emotions they experience (Kross, Ayduk, & Mischel, 2005). Past research studies have shown that if people emotionally distance themselves from past events, they remain relatively unemotional, and are then able to look at events more abstractly and rationally. For example, you could be self-immersed in a past setback by going back in your mind to the specific time and place where the setback took place and relive it as if it were happening all over again. If you try to remember the experience vividly, you are bound to start intensely feeling the same feelings you felt during the original experience. If you thought about how you put a lot of capital on a "sure thing" and lost it all, you may find yourself unable to execute properly.

    In their experiment, Drs. Ayduk and colleagues asked participants to recall a past setback in which they felt extremely angry. Some participants were asked to recall the event by taking a self-immersed perspective while others took a self-distanced perspective. They were also asked either to take a "what focus" or a "why focus" regarding their emotions. While they thought about their emotions, participants using a "what focus" tried to think about what specific emotions and sensations they felt; they intensely focused on the emotions they experienced at the time. Participants using a "why focus" thought about why they felt what they felt, in other words, the reasons that were behind their emotions.

    What's the best way to review a past setback, according to these study findings? First, you don't want to immerse yourself in your emotional past. You want to look at the past from the vantage point of a detached observer. Look at your past as if you are completely indifferent, as if it is merely a fictional character in a book or a movie that you just don't care about. Second, don't focus on what specific emotions you are re-experiencing. Instead, while you look at yourself as a detached observer, focus on the reasons that the "emotionally distant you" is experiencing specific emotions. The worst thing you can do, however, is to become immersed in the past. When people try to relive a past event, they feel upset, regardless of whether they focus on what specific emotions they experience or why they experienced them. In addition, even if you take a detached perspective, focusing on the specific emotions you experienced, instead of focusing on why you experienced them, will make you uncomfortable.

    Setbacks are commonplace in trading, but you don't have to let a setback upset you. Emotionally remove yourself from the situation. Look at it all from the perspective of a detached observer, and rather than focus on what emotions you are experiencing, focus on the reasons you are experiencing them. If you can stay detached and logical, you'll stay calm. You will take losses in stride, recover quickly, and think of creative solutions to tough, complex problems. And in the end, you'll trade like a winner.
  2. it is very easy to stay objective if you make a conscious decision to act and react when necessary. too many people think about too many things and all they do is confuse themselves and have no clear vision of what it is exactly they are trying to achieve. every worthwhile endeavor requires a measured and achievable approach. the people who take the time to think before they act (and more importantly act after they think) will find trading a very rewarding and enjoyable career. to stay objective you must first become objective.
  3. Redneck


    Stay focused on trading, not much else gets in the way... or is able to distract you

    Hell, most days I wonder where the time went


    Aside I read in another thread, where someone said focus is heightened emotion (or something to that effect)

    Imo – staying focused is how you negate / counter act emotions

    You can focus on trading…, or your emotions

    You can focus on trading…, or your PnL

    You can focus on trading…, or your opinion

    You can focus on trading…, or your last trade

    No one can do both simultaneously

    Don’t believe me – think about (focus on) an orange… and an elephant – at the same time

    Best we focus on trading..., and let every thing else take care of itself

    imho of course

  4. oraclewizard77

    oraclewizard77 Moderator

    You need to trade without emotion. You need to identify your emotional state before you place a trade, during a trade, and after a trade.
  5. whilst it may be difficult to think about an orange and an elephant at the same time it should be no problem to think about an orange elephant. every difficult situation can be simplified if one uses the correct approach. therefore the focus must be on the correct approach as opposed to the situation itself. there are many cliches that can be used to define this common fact. seeing the wood from the trees. etc. etc.

    for a person to advance in the financial markets it can be very beneficial to spend some time and go beyond the common cliches. there are many unknown words that can make a big difference if a person but takes the time to reflect and work out what they really mean. by questioning what is common it is possible to see the alternatives that really do exist. for example. everyone is aware of how many traders speak about consistency.

    many say be consistent in what you do whist one other has rightly said (Don't be 'consistent,' but be simply true).
  6. it is impossible to trade without emotion as emotions can not be suppressed. it is possible to control our emotions by understanding what it is exactly we are trying to do and how best we can do it. the only reason a person should have to trade is to make money. if a person has other reasons to trade then they might just find it very difficult to make money. one such other reason is seeking justification for being right or wrong.
  7. Redneck



    Reading your post – they have a vaguely familiar tone – I wonder….



    I personally find the cliché – wash, rinse, repeat – to be a quite profitable one

    Hard to beat doing what works…

    btw; an orange elephant.. is not the same as an orange... and an elephant

    Same in trading - try and take the wrong short cut - you will get cut short, and deep

    Welcome back if you are who I think you are


  8. Just think of an elephant eating an orange.
  9. Or an elephant balancing on top of an orange.(Small elephant or big orange) :D
  10. #10     Mar 17, 2011