Trader and Human Patterns – By Robin Dayne

While coaching and noticing human behavior one of the most common challenges facing trades is when a bad pattern from their normal life slips into their trading.  Patterns are a common cause for repeating bad behaviors.

Let me give you an example. Let’s say a trader always feels anxious when they have to wait in a line at the movies, or in traffic or crowded supermarket and their impatience gets the best of them and they start complaining and may even cause a scene.

If this happen on a regular basis than there is a good chance they will lack patience while they trade as well.

Or in the day to day world the person is fearful when trying new things or hates to lose at sports.  When these events happen there is a good chance the person will go into avoidance. This could show up in their trading as emotional blocks of fear, apprehension, and uncertainty.

So why does this happen? Our Patterns of Behavior.

We all have built within us, an automatic sub-conscience addiction to patterns. This is understandable when so much around us also has patterns. Think about it patterns are in all forms of nature, the wings of a butterfly, snowflakes, right down to cellular structure, and in all markets we trade. We look for patterns to reoccur.

Our brains have a passion for patterns and install them whether we want them or not.  Patterns provide us with some wonderful benefits like security, certainty, stability and the bottom line is they make us feel good.  The problem is our internal unconscious desire for patterns, has a small “glitch”…..it can’t distinguish between a good pattern and a bad one it just likes and holds onto any pattern.

Think of your favorite restaurant and the last time you were there. You were handed the menu, you even asked for the specials, but you ordered the same thing you did on your last visit!  Patterns! Think of the way you drive home, same streets same direction or when you get dressed in the morning you go to the closet and pick out your favorite shirt, pants, shoes, drink, all patterns. Most likely they were the same ones you wore not too long ago.  They provide you comfort.

Well patterns are great for our normal lives but they can really mess up ones trading. When we trade over and over and we begin to lose over and over our bodies “lock in” to the pattern and it says: “Yippee I feel good here comes a pattern, I can do this again.”  It just doesn’t care you have just lost money or even that you have lost 3-4 times in a row. It just LOVES the pattern and hooks onto it.

I can’t tell you how many times a trader will call and say the same exact thing, “I can’t take a winning trade, when I took the last 4 trades I lost, doing the same thing over and over.” I ask: “Do you know specifically what you did wrong?”  They say: “Sure” and give me a list of things they have done to make the errors.  My standard reply is “Than stop doing those things.” They say, with all the intelligence they have “I can’t.”  WHY? Because their mind has locked in and craves the pattern, even if intellectually they know it’s wrong.

This is the premise detectives go on when catching criminals, they work to identify their patterns of behavior, and because they know eventually the criminal will repeat the same patterns time and time again.        

So, to stop this and make some changes it’s important to be aware of when the pattern is happening whether good or bad. Then make the decision if it’s a pattern you want to keep or get rid of.  When trading the ones you want to repeat are when you have a great trade.  Identify all you can about the trade and work to repeat it when you can.  Repeating the good patterns will help to establish disciplines as well. 

When one losing trade follows another losing trade be aware that the third time may be a sign you are locking in a bad pattern, and it will repeat if you don’t make a change, quickly.    

Do the three strikes your out technique.  If you repeat a losing trade three times in a row, make it a RULE to stop, and change the approach BEFORE you place the next trade.

Second, ask the question: “What is the pattern I’m in?” What other approaches can I take on the next trade to be profitable?” Come up with a few approaches.

Third, you might want to consider reducing your size till you try the new approach and find the one that works.  Working to get back on track is the key and take a break if it’s necessary, till you have your composure.

Let ONLY the good patterns be your best friend.

If these suggestions don not remove the bad patterns than you should seriously consider coaching as an alterative to the problem.

In the meantime great trading!