Friday, September 17, 2010

Mental toughness, part 4

Readers who have been following my posts on Graham Jones’s Thrive on Pressure will recall that people who want to develop mental toughness must learn four skills: “staying in control under stress, channeling your motivation to work for you, strengthening your self-belief, and directing your focus to the things that really matter.” Today, in the last post of the series, I’ll look at the skill of focusing on the right things.

Traders are often told to focus, and many people interpret that to mean that they should stare harder at a chart or at least never take their eyes off the screen. Jones offers a different perspective, admittedly directed at the business leader but with relevance for the trader as well. Here are some guiding principles: focus on what you can control, focus on processes, focus on the present, focus on strengths, focus on positives, and focus on staying calm. (pp. 186-87)

Of course, in order to focus on anything you have to manage the inevitable distractions. Some are predictable and hence controllable, others—potential derailers--can come out of the blue. You lose connectivity in the middle of a trade or, much worse, you are in a trade during a “flash crash.” (I’m assuming that “the” flash crash will not be a unique event.) How do you stay on track? Jones suggests that you engage in “what ifs,” working out how you would respond to these situations before they happen.

Finally, Jones reminds us that we all have a life outside work that should be even more important and that we need time to recharge. “Relentless pressure will take its toll in the form of mental fatigue and reduced power of concentration. It becomes increasingly difficult to focus over sustained periods, and the only answer is a time-out.” (p. 194)

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