***Warning*** — A challenge is about to be issued.
That’s because there are traders who read this and STILL believe that the psychological aspect of trading isn’t that important.
There are many distractions that can keep us from being truly thankful.
We All Know Gratitude Is a Good Thing but… Can We PROVE it?
Robert Emmons is perhaps the world’s most prominent researcher in the study of gratitude. In one of his early papers, he defines gratitude as “a felt sense of wonder, thankfulness, and appreciation for life.” Most discussions or articles on gratitude become, for me, an exercise in anecdotes and platitudes. Happy anecdotes and platitudes, mind you, but somehow unsatisfying. We all seem to know intuitively that what our grandmas told us is true: saying “thank you” is a good thing.
Now, thanks to Dr. Emmons and his contemporaries, we have a sound scientific footing that proves the usefulness of showing gratitude.
The early studies from Emmons (and his various co-authors) showed that people who are consistently grateful are happier, more hopeful and more energetic.
In addition, they are less likely to be neurotic, lonely, anxious or depressed. While these early papers did not conclusively show causality, subsequent studies have done just that.
In a study designed to get at causality, a group did an exercise similar to the one outlined below.
The results showed significant improvements versus the control group in both outlook (feelings of happiness, optimism and satisfaction) and physical health (reduced incidences of everything from acne to headaches).
The same exercise was given to both young and older people with chronic illnesses. Similar results were achieved for the “gratitude group” including getting more hours of quality sleep.
Okay — Psychologists Proved Grandma Was Right.
So How Does This Help Traders?
Digging deeper into the work on gratitude, Dr. Sonya Lyubomirsky summarizes eight reasons that practicing gratitude is useful. I’ve added to each on how they are applicable to us as traders:
1) Grateful thinking helps us savor positive life experiences.
I’ve known too many traders who beat themselves up over losses or bad trades and then could never stop to appreciate a well-executed trade. Such imbalance actually pushes us toward bad trading behavior just so we can feel something. Enjoying the process of trading, “the game” as it were, is a key to longevity in the business.
2) Expressing gratitude bolsters self-worth and self-esteem.
During tough periods, traders can go into a downward spiral where their confidence plummets. It’s almost impossible to trade well when your confidence is shot.
3) Gratitude helps people cope with stress and trauma.
Traders are certainly exposed to stressful situations more than most. Anything that can be done to cope better with the stress and uncertainty of the markets should be embraced!
4) Expressing gratitude promotes moral behavior.
Here, the researchers translate gratitude to mean kindness, helping others etc. In a business that is the ultimate meritocracy, thinking outside of one’s self is a good thing.
5) Gratitude can help build social bonds (don’t use people as means to an end).
Trading can be a singularly lonely endeavor. Building a social network, especially with other traders, is useful for breaking out of the “me against the world” mentality.
Also, combining #4 with #5, trading is a cut and dried win or lose proposition.
It’s easy in such an environment to see people as a means to an end.
Do you have useful information for me? If not, then away with you!
Practicing gratitude helps us to see every person we meet as a unique and valuable creation instead of as a binary entity — useful/not useful.
6) Expressing gratitude tends to subdue individual comparisons with others.
If you go around comparing yourself to Soros’ 40% annual compounding for decades, or to Paulson’s or Seykota’s records, you’ll have a long, tough go of it.
7) Practicing gratitude diminishes negative emotions (anger, bitterness, etc.).
It’s plain tough to do any cognitive processing while harboring negative emotions.
8) Gratitude helps thwart hedonic adaptation (just wait, it’s better than it sounds).
Here’s a quick summary of hedonic adaptation: in simple terms, humans act with an emotional thermostat, returning to a near baseline state after an outside change.
So when we get a bad news, we are able to make the mental adjustments to adapt and carry on instead of feeling low or being out of commission for long periods.
That’s a good thing in most cases.
Unfortunately, the same thermostat is at work in our reaction to positive events. When something good happens, this mechanism guides us over time back down to near our “happiness set point” that we had before the event.
In short — gratitude helps us keep that positive (and usually more productive) mental state for a longer time.
And now for the Challenge!
So the evidence is clear that giving thanks or being grateful is not just a good idea, it’s a way to live a fuller life.
Does science also give us ways to grow our “gratitude muscle”?
Thankfully, the answer is yes.
So here’s my challenge: complete both of these projects, and you will get two benefits.
First, you’ll find yourself in a happier, more productive state more of the time.
And secondly, your trading will improve (largely because of the previous benefit and the eight listed above).
Project Number 1: Weekly Gratitude List
Every Sunday night, for the next 10 weeks, follow this simple exercise (from Dr. Lyubomirsky): “There are many things in our lives, both large and small, that we might be grateful about. Think back over the events of the past week and write down up to 5 things that happened for which you are grateful or thankful.
It’s important that you only do this once per week! Research shows that more frequent repetition diminishes the effect. The researchers believe that a more frequent requirement turns the project into a “chore” instead of remaining fresh and meaningful.
Project Number 2: Express Gratitude Directly to Another
Think of someone in the field of trading for whom you are grateful. Perhaps a mentor,leader,coach, model trader, etc. If this is someone you know, great.
For some it may be someone you know only through their work or reputation.
This works equally as well.
Within the next seven days, write this person a letter of gratitude telling them exactly what they have done that has impacted you in a positive way.
Also write the specific change it has made for you.
If possible, deliver the letter in person. If not, mail or email will work as well.
Don’t be shy about asking your gratitude recipient for a response. This will complete the gratitude circle and add to the experience.
It’s hard to imagine that anyone would not receive a positive experience from these two activities.
I hope that you’ll accept the challenge and reap the benefits.