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

76 THE DAILY TRADING COACHcorresponding yields on (taxable) Treasury instruments and certificatesof deposit. Our plan was to lock in these positions as investments, notas short-term trades. Over time, we felt, we would benefit from attractiveyields and possible capital appreciation as tax-free yields fell into line withthose of taxable instruments. We could make this investment comfortablybecause it represented less than 10 percent of our savings. Our remainingcapital was diversified in other investments, working for us even as ourbonds might move against us in the short run. We could stay focused onour overall investment plan because we were so diversified that we didn’tneed any one position to perform wonderfully.Diversification, in life and markets, reduces performance pressureand allows us to become immersed in what we are doing.Similarly, a trader who risks a small portion of her account on a tradecan stay focused on executing an overall trading plan, because there is noacute need for that position to work out—and no acute threat if it fails towork.This is a psychological paradox: To best focus on any single performance,it helps to be diversified among performances. If I have a successfulexperience as a father, husband, and psychologist, I don’t need mybooks to sell well or my trades to make money. It is precisely that emotionaldiversification that enables me to stay focused on my writing andtrading and achieve satisfying returns from them.As your own trading coach you don’t need to spend more and moretime, effort, and emotion on markets. Indeed, if you place all your psychologicaleggs in the trading basket, it is a sure way to burn yourself out andstay out of a performance zone. Rather, you can best coach yourself by ensuringthat trading is one among many fulfilling activities within your life.Other eggs might go into the baskets of spiritual interests, artistic activities,athletic pursuits, social life, intellectual life, family, community, andhobbies. If your life is full in those ways, you are best able to weather upsand downs in trading performance. You no longer need trading to workat any particular point in time, so you become more able to focus on theprocess of trading and generate and execute good trades.So this is your assignment: Give yourself a grade for how much interestand satisfaction you’ve been achieving from the areas of life mentionedabove. How diversified are you in your sources of well-being? Then selectone area for cultivation to improve your emotional diversification. Not onlywill you find a new source of enjoyment and accomplishment, you willalso lay the psychological groundwork—the inner sense of security andfulfillment—to find and stay in your performance zone.