the-daily-trading-coach-101-lessons-for-becoming-your-own-trading-psychologist-brett-steenbarger-_2009_-a23

100 THE DAILY TRADING COACHif we’re not aware of its existence. Very often in brief therapy, the firsthomework exercises involve self-monitoring. Just as observing marketpatterns precede our ability to trade them, becoming aware of our ownpatterns is the first step in changing them.One of the most common ways to monitor oneself is through the use oftrading journals. Active intraday traders might make entries during a middaybreak and at the end of the trading day; others might simply write inthe journal at the end of each day in which they are making trading decisions.The key is to catch your patterns as soon after they occur as possible,rather than rely upon fallible memory.Note that self-monitoring is not a change technique in itself, but itoften leads to changes. Once you see your patterns with crystal clarity—including their costly consequences—it becomes much easier to interruptthem and prevent their future occurrence. At other times, selfmonitoringmay alert you to patterns that you didn’t know were present.This is exceedingly valuable, as it lays the groundwork for change thatotherwise would have been impossible.Any time you systematically review your performance over time—andthe factors associated with successful and unsuccessful performance—you’re engaging in self-monitoring. For example, I reviewed my recent tradingresults trade by trade and found that I was taking larger point losers onsmall trades than on my larger ones. This review led to the realization that,when trades were quite small, I was not as vigilant in setting and stickingto stop-loss levels. Although the total dollar loss for each small trade wasnot huge, over time the small losses added up. This led me to establish anew routine for setting and sticking to stop-losses with small trades by explicitlywriting out my risk/reward ratio for each trade before I placed theorder. The self-monitoring made me more conscious of what I was doing,which in turn kept me trading well.Self-monitoring is the foundation on which all coaching efforts arebuilt.My experience is that the best predictor of failure in the trading professionis the inability to sustain self-monitoring. This inability leaves tradersunable to clearly identify their problem patterns, and it prevents them fromreflecting and learning from their efforts at change. Goals without selfmonitoringare but mere good intentions; they never translate into concreteactions to initiate and sustain change.Why would a trader, seemingly desirous of success, not sustain effortsto monitor her own thoughts, emotions, and/or trading performance?