Addiction to Perfection

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stickman

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Thursday, August 31, 2006 - 09:51 am:

One of the great evils of trading is false exactness...Trading is a fuzzy process and I mean fuzzy in the best sense of the word. That is, as in fuzzy logic, as in the willingness to accept the idea that things aren't exactly quantifiable and to forge ahead anyway ---John Bollinger (creator of the Bollinger Bands)

Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.

Why then do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry, and then beat up on themselves when it doesn't come and the position runs away, while they sit there scratching their heads and condemning themselves?

Why are so many traders trying to turn a game of probability into one of 100% certainty?

The answer lies in one of the cardinal sins of trading, which is PERFECTIONISM.

Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading, go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it...it's this trading room, or this service, or this indicator! Wait...something is wrong here. Not all of these trades are working and I have drawdowns! How can it be that this particular method failed, and I actually had to take a loss? Must be something wrong. I will try harder, and look for an even better system, a more expensive service, a new-and-improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES.

This is perfectionism in action. Not only does this type of irrational behavior and belief undermine and demoralize a trader, it takes away all the enjoyment and fun of being in the markets. It leads to depression with depletion of psychic and physical energy, and leaves the perfectionist to confront his basic and overriding fear---fear of failure. In the extreme, it leads to physical and mental illness, including addiction to prescription drugs, alcohol, or illegal substances, as well as other addictions. The pain of failure, or the haunting fear of failure, is simply overwhelming, and one turns to whatever works to medicate the pain.

I want to share something of my personal history with you, as I believe that many of you can identify with and learn from some part of this story.

My parents were seriously ill from the time that I was born. I truly believed that if I was absolutely perfect, scored the highest in school and did the best at music and dancing and elocution and debating that I could make them better. So I did that. I had no life outside of study and learning. I was the perfect little daughter, and even became the perfect little doctor for my sick parents, even though I was only 13. Shortly after this, while I was still in my teens, both of my parents died. I was not good enough or perfect enough to make them better. So---I tried even harder, and studied more and more, to the complete exclusion of any personal or social life, whatsoever. This time, I was going to be perfect for my dead parents to show them how wonderful I really was, and how much they should be proud of me. This reached absolute culmination when, after receiving two doctorate degrees, I still had to continue with more and more exams and more and more training. Can you imagine anything so ridiculous? Even after my parents died, I was still trying to get their approval by showing them how brilliant and talented I was.

Many years later, I suddenly became critically ill, stopped breathing and lapsed into a lengthy coma. This was the culmination of years and years of unrealistic internal demands that I set on myself that manifested as addiction to perfection. It was only when I awakened from coma that I started on a new road and a new path. I was not superwoman...never was, and never could be. Yes, I would continue to work hard and to achieve, but I could never in a bazillion years be perfect. I am not and you are not. So, when I tell you to "Get over yourself," I mean that I had to get over myself. I had to address the demons of perfectionism, and move past them. I accepted that I am a flawed human being, and acknowledged that I had certain real and wonderful strengths. I chose to concentrate on the strengths, and stop beating myself up for the weaknesses.

Life can be lived forwards, but can only be understood backwards ---Soren Kierkegaard

What does this have to do with trading?

This is what happens with perfectionists. Perfectionists are made, not born. We are taught from an early age by demanding (and often well-meaning) parents that we have to be the best in order to win their approval and the approval of others. Unfortunately, this is totally upside down. Perfectionists share a belief that perfection is required to be accepted by others. The reality is that acceptance cannot be gained through performance or any other external factors. Self-acceptance is the root of happiness, and the true beginning of personal evolution.

If you have a perfectionist mentality when trading, you are setting yourself up for failure, because it is a "given" that you will experience losses along the way. You must begin to think of trading as a game of probability. Your losses (that you hope will return to breakeven) will kill you. If you cannot take a loss when it is small (because of the need to be perfect), then you will watch that small loss grow into a larger loss, and so on into a vicious cycle of more and more pain for the perfectionist. Trading on hope does not work. The markets can remain irrational for a lot longer than you can remain solvent.

The object should be excellence in trading, not perfection. Moreover, it is essential to strive for excellence over a sustained period, as opposed to judging that each trade must be excellent. This is a marathon...not a sprint.

The greatest traders know how to take cut losses and let winning positions run. Perfectionists often do exactly the opposite. They get in at the wrong time, stay in too long and then get out the wrong time. Perfectionists are always striving and never arriving. The market will find the flaw in a perfectionist trader, and exploit it day after day. The market is your greatest teacher and your most demanding critic, so take this wonderful opportunity every day to learn about yourself and make yourself strong.

If you see in yourself this trait of perfectionism rearing its ugly head, it's OK to get angry at it, and even yell or curse at it. Do whatever it takes to acknowledge it, and then find a way to fix it.

Here are a few suggestions:

Try to appreciate and enjoy the process as well as the outcome.

Set more achievable and realistic goals for your trading.

Remember that your self-worth, and your worth as a human being to those who love you, does not fluctuate from day to day depending on if you win or lose that day.

Focus less on achievement and more on enjoyment. Trading is serious, but it should be fun, and not something which one approaches with fear and dread.

Lighten up. Laugh more (especially at yourself).

Learn from your mistakes, forgive yourself and make peace with your past. Strive to be better...not perfect...just an amazing human work in progress.

If we were always to wait for the most-favorable combination of circumstances, no enterprise would ever be undertaken. There can be no end without a beginning---there was never an enterprise in which everything fitted in perfectly, for chance plays a leading part in the affairs of all men. Obedience to rule does not ensure success, but success, on the other hand, furnishes a canon---a rule of conduct ---Napoleon Bonaparte

Janice Dorn, M.D., Ph.D

Trade to Learn, Not to Earn.

when you lose,don't lose the lesson.

susieq

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Thursday, August 31, 2006 - 10:20 am:

Stickman

Another wonderful post- thankyou for putting into words so succintly the journey and expereince of trading and for your openness in sharing your own personal journey.

I rarely save posts, perhaps one every six months or so, but this is a real beauty and "goes straight to the pool room"

(I cannot quote Kirkegaard, Soren or even Napoleon but I do know my pulp fiction and that one is from The Castle)

kind regards

SusieQ

stickman

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Thursday, August 31, 2006 - 10:30 am:

HI SusieQ

The story is from
Janice Dorn, M.D., Ph.D

cheers

Trade to Learn, Not to Earn.

when you lose,don't lose the lesson.

peterloh

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Thursday, August 31, 2006 - 11:00 am:

Good story and illustration, stickman.I always believe trading like management is an art and not a perfect science. We deal with probabilities and the sooner we appreciate this point the less frustrated we get.In trading short term and if we limit our risks to a percentage per trade we can get away using a mechanical system and not need to understand the fundamentals at all.However trading for the long term and the turnover of trade is less, we tend to concentrate on a selected number of shares, an understanding the fundamentals of a company is important.Confirmation of the direction that nothing has gone wrong through technical analysis increase the probabilities of our success rate.Today our long term trade is influence by the bottom line for various reasons such as franking credits,CGT considerations, structure adopted(individual, partnership,corporate,superannuation fund or trust)etc.As there are so many variables involved,the perfect trade is a myth!

-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

susieq

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Thursday, August 31, 2006 - 11:07 am:

Stickman

Was this then from a website or a book written by Janice Dorn? I would be keen to know.

thanks

SusieQ

stickman

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Thursday, August 31, 2006 - 01:01 pm:

HI Here is the link -www.thetradingdoctor.com i hope it's okay to post it Colin ??

cheers

Hi Peterloh- it's taken a while to sink in but in one word
for me it's all about probabilities as you say .

cheers

Trade to Learn, Not to Earn.

when you lose,don't lose the lesson.

spider

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Thursday, September 14, 2006 - 01:48 pm:

Hi stickman,
I love reading the stuff you post that comes from Dorn.

But, you would add to my excitement if you would add your take on the material, how does it relate to your experiences of trading?

spider.

stoian

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Thursday, September 14, 2006 - 11:02 pm:

stickman and others,

precisely, exactly like i also told you some years before. I quote from your text by Janice Dorn:".........Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities."

Janice is fully right!
It`s ALL about THE DYNAMICS OF THE MEAN IN TIME, INSIDE THE GAUSSIAN PROBABILITY FIELD, AND ONLY AFTER THAT YOU WILL KNOW THE MOST PROBABLE LEVEL=PLACE OF THE INDIVIDUAL VALUES WHO WILL BUILD ANOTHER MEAN IN TIME FURTHER!!!!!
And THIS MATTER IS NOT AN ART=A PROFANE SCIENCE, BUT THE HOLY KNOWLEDGE ITSELF INDEED!!!!!!
The whole Forecasting Methodology, the whole knowledge realising prophecies, is working with BOTH VARIABLES AS ONE:A PART OF TRUTH-HISTORICAL CERTAINTY and A PART OF ERROR-UNCERTAINTY FOR THE FUTURE = WHOLE TRUTH.
It is very, very easy, even with a very HIGH GUARANTEE OF SUCCESS, to do a forecast when you are permanent consciously=aware about EVERY MEASURE IN PART OF THE BOTH: CERTITUDE AND UNCERTITUDE EVOLUTIONS IN TIME.
And THE EYE OF CHORUS, OR THE GAUSSIAN CHART=FIELD OF PROBABILITY OF HAPPENING OF CERTAIN KIND OF EVENTS, together with THE HOLY GRAIL=THE OVERTURNED GAUSS`S BELL is teaching you everybody, how a good forecast=profecy is to be done with it.
It`s not a joke! A profane chart, is exactly like a human eye, with a better or a worse eyesight. But TO SEE INTO THE FUTURE FOR AN EVOLUTION YOU WILL NEED ANOTHER EYE, like THE EYE OF CHORUS, CALLED ALSO THE GAUSSIAN PROBABILITY FIELD.
Regards,
Doru Stoian

(Message edited by stoian on September 14, 2006)

stickman

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Saturday, September 16, 2006 - 09:59 am:

Hi Spider

Iam a man of few words, in short i could see myself in her material that she puts together,

cheers

Trade to Learn, Not to Earn.

when you lose,don't lose the lesson.

stoian

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Saturday, September 16, 2006 - 05:14 pm:

thanks for your attention stickman!

stoian

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Saturday, September 16, 2006 - 05:45 pm:

Some other kind of "intelligence" for you, from Janice Dorn,
quote:
" If you cannot take a loss when it is small (because of the need to be perfect), then you will watch that small loss grow into a larger loss, and so on into a vicious cycle of more and more pain for the perfectionist. Trading on hope does not work. The markets can remain irrational for a lot longer than you can remain solvent." (please, look for such a situation, at the evolution of the price=quotes in time, for the title Australian Ethanol)

As a perfectionist, even for that reason, i do not accept and take a loss, even when is small, because that small loss CAN VERY, VERY PROBABLY grow into a larger loss, and NOT INTO A WIN!
And a loss=a hole=a minus, remains for ever a loss=a hole=a minus, no matter small or big, that you have to patch it up with a win........... BUT ONLY IF YOU WILL FIGHT FOR THIS WIN, EVEN WITH YOUR OWN LIFE!

I hate any pain, and therefore I FIGHT AGAINST THE PAIN every time. Pain is a part of the devil, and devils are to be destroied.

But you have to wonder, especially on the stock market, HOW A LOSS CAN CHANGE ITSELF INTO A WIN!!!!
But for me, such transformations are fully nonsense.
It`s a devilish paradox for profane people!
Would you accept such paradox finally?
I tell you, yo can live=survive with it, but you will be NEVER A WINNER INDEED!
Survival is only for faint, feeble people, and not for humans!
Advise: Please, tend all the time to be perfect, and do not accept any losses.
Regards,
Doru Stoian

(Message edited by stoian on September 16, 2006)

(Message edited by stoian on September 16, 2006)

(Message edited by stoian on September 16, 2006)

(Message edited by stoian on September 16, 2006)

stoian

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Thursday, December 14, 2006 - 02:58 am:

My dears,

I am telling you again, that i am a perfectionist indeed, and i am very proud about!

Life hurts, and perfectionist are very intelligent people indeed, because they don`t forget easy, and therefore they are not repeating THE SAME MISTAKE in their life!!!

This is the job of a perfectionist: TO AVOID THE RISK (with the help of the Statistical and Mathematical Analyse on Chart) TO MAKE A WIN POSSIBLE!!!

As i made the FORECAST VALID FOR THE NEXT 200 DAYS, on the 04 September 2006, the quotation of the title Oxford Biomedica listed on the LSE was only 27 pounds, and today is 37 pounds!!!

Example of another VERY GOOD FORECAST done with the SMAC:
If you want to see the chart better, please navigate and registrate as a member (to can see charts also, not only text) on
http://www.forumbursier.ro/index.php/topic,1071.30.html

(Message edited by stoian on December 14, 2006)