Hey traders, let's chat about something that could seriously improve your trading mindset. Borrowing from Raymond Prior's insights in "Golf Beneath the Surface," there's this idea about A-shaped and V-shaped thoughts that's all about how our brain works during high-pressure moments.
But it's not just for golfers; this stuff applies to us too. Here's how it works...
A-Shaped Thoughts:
Imagine your thoughts forming an 'A' for anxiety. This is when your brain goes into overdrive with worries like "What if I lose money?" or "I'm not good at this." It's all about the negatives, the potential pitfalls, and the fear of failure. This mindset often leads to negative outcomes
Breakdown relating to sport:
Anxiety-Oriented: These thoughts tend to focus on worry, fear, or negative outcomes. The "A" in A-shaped thoughts can be thought of as standing for "anxiety."
Characteristics:
Negative self-talk ("I'm going to mess this up.")
Fear of failure ("What if I miss this shot?")
Overthinking the mechanics ("Don't swing too hard.")
Focusing on what could go wrong rather than what could go right.
Consequence: These thoughts can lead to tension, over-control, and performance anxiety, often disrupting the natural flow of one's golf swing or general performance.
V-Shaped Thoughts:
Picture your thoughts forming a 'V' for victory. Here, you're focusing on what you can achieve, like "I'm well-prepared for today's trades," or "I know my strategy works." Instead of dwelling on what might go wrong, you're visualizing success, sticking to your plan, and seeing each trade as part of a larger journey towards your trading goals. This mindset encourages proactive, confident decision-making.
Breakdown relating to sport:
Victory-Oriented: These thoughts are centered around success, confidence, and positive outcomes. The "V" can represent "victory."
Characteristics:
Positive affirmations ("I've got this.")
Visualization of successful outcomes ("I see the ball landing on the green.")
Process-focused thinking ("Stick to my routine.")
Emphasizing what you want to happen rather than what you don't.
Consequence: V-shaped thoughts can enhance focus, reduce stress, and promote a state of flow, which can improve performance by allowing muscle memory to take over without conscious interference.
Prior's concept can be applied beyond golf into various areas of life where mindset impacts performance. The idea is to cultivate V-shaped thoughts to improve outcomes by fostering a positive, focused, and confident mental framework.
Here are some strategies to transition from A-shaped to V-shaped thinking:
Mindfulness and Meditation: To become more aware of your thought patterns and redirect them when they become negative.
Positive Visualization: Mentally rehearsing success in detail.
Cognitive Reframing: Changing the narrative from negative to positive or neutral.
Routine Development: Establishing consistent pre-performance routines to decrease anxiety and increase confidence.
This approach encourages athletes (and anyone else) to train their minds as diligently as they train their bodies, recognizing that mental conditioning can be just as crucial for peak performance.
Now I hear you asking, how can this be applied to trading psychology more specifically to the thinking process?
Certainly, the concepts of A-shaped and V-shaped thoughts can be directly applied to trading psychology, particularly in managing the mental aspects of trading. Here's how:
Example of A and V Shape Thinking For A Trader
A-Shaped Thoughts in Trading:
Negative Self-Talk: Thoughts like "I always make losses" or "I'm going to lose all my money today" can lead to hesitation, missed opportunities, or even impulsive decisions to cut losses prematurely.
Fear of Loss: Constantly worrying about potential downturns, such as "What if I lose today?", can lead to paralysis by analysis, where a trader might avoid taking any position at all.
Overthinking: Focusing too much on past losses or worrying about future can cause traders to second-guess their strategies, leading to overtrading or holding onto losing positions too long in hopes of a recovery.
Confirmation Bias: Seeking out information that confirms one's fears or negative outlook, thus reinforcing anxiety.
Impact on Trading:
Increased stress and emotional trading decisions.
Trading based on emotion rather than strategy.
Potentially exiting winning trades too early or holding onto losing trades too long out of fear or hope.
V-Shaped Thoughts in Trading:
Positive Affirmations: For example, "I've done my analysis, I trust my strategy," which can build confidence in one's trading decisions.
Visualization of Success: Imagining successful trades, the process of making wise decisions, and the discipline to follow through with stop losses and take profits.
Outcome Focus: Concentrating on the process and the likelihood of positive outcomes based on statistical or historical data rather than immediate results.
Embracing Risk: Understanding that risk is inherent in trading but focusing on risk management strategies rather than fearing loss.
Impact on Trading:
Enhanced decision-making under pressure, keeping emotions in check.
Better adherence to trading plans and strategies.
Improved discipline in sticking to rules for entry, exit, stop loss, and position sizing.
More resilience in the face of inevitable losses, viewing them as part of the trading journey.
Application to Trading Process:
Pre-Trade Routine: Develop a routine that includes visualization of success, setting clear goals for the trading session, and mental preparation to enter V-shaped thoughts mode.
Mindfulness and Reflection: Regularly engage in mindfulness to recognize when A-shaped thoughts creep in, and use journaling to reflect on trades, focusing on what was learned rather than just on profit or loss.
Education and Self-Improvement: Continuous learning to reinforce that one's knowledge and skills are growing, which supports V-shaped thinking.
Stress Management: Use techniques like deep breathing or short meditation sessions to manage stress, especially after a losing trade, to avoid letting one bad trade spiral into more losses.
Cognitive Reframing: When negative thoughts arise, consciously reframe them. For instance, instead of thinking, "I'll never get this right," one might think, "Each mistake teaches me how to improve."
So, there you have it. By becoming more aware of your thought patterns and consciously choosing to foster V-shaped thinking, you'll be able to handle the ups and downs with confidence. Remember, while you can't control the market, you can control how you react to it, and that's where your power lies.
About Alan
Alan Edward (aka The Divergent Trader) is an impactful speaker, author and high performance expert. A Full Time Trader by profession. Alan is the founder and CEO of Divergent Trader a private financial firm that educates, coaches and supports traders.
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