Tuesday, July 26, 2011

Toghraie, Trading on Target

For those who are struggling with self-sabotaging problems that undercut trading profitability (and isn’t everybody?) Adrienne Toghraie’s Trading on Target: How to Cultivate a Winner’s State of Mind (Wiley, 2011) offers advice. The advice isn’t revolutionary, it’s often perfunctory, and I’m not even sure it’s always sound—at least not if one believes some recent psychological studies. But it is far-reaching, so the reader will most likely find out something about himself that he didn’t realize before, something that is holding him back from reaching his full potential as a trader.

The book is divided into five parts: obstacles to becoming a top trader, letting go of emotional states, taking right action, stretching and expanding yourself as a trader, and modeling top traders. Many of the discussions are illustrated with case studies. Let me start with my favorite, meant to lend color to the claim that “a detailed mental image is one of the most powerful tools that a trader can have. An individual with a clear vision of himself as a trader, with positive detail and without misgiving, is truly a trader.” (p. 217)

The author attended a party where the host’s children entertained the guests with piano performances. The oldest girl sat down at the keyboard with tremendous confidence, performed brilliantly, bowed, and identified the piece she had just played. Her younger brother went through the same motions and, although he was not the equal of his sister, played the best that he could. “The third child to entertain us was another girl, who was only four years old. She approached the bench with the same confidence as her older brother and sister. She paused before her performance and with focus that was equal to her older siblings, raised the pointer finger on her right hand and pressed the key of Middle C. Then, she stood up, bowed with a flourish and announced, ‘The name of my piece is “Middle C.”’ We all applauded her enthusiastically because she had also done the best she could.” The author continues: “The best for her was the knowledge that the picture she had in her mind would manifest itself in time.” (p. 214) Well, maybe yes and maybe no, but she sounds like a corker who will probably make her mark somewhere.

Toghraie's book addresses difficulties that traders at all levels of experience and competence face. Take “The Happy Monkey,” for instance. Rex (who really should have been given a different name) spent a long time developing a trading system and paper trading it before he finally committed money to it. Six months into his trading he was doing very well; two months later he was “second-guessing his system and losing money.” (p. 175) Rex the tinkerer was bored. He lamented that he felt like a mindless monkey who simply pulls the lever when the signal tells him to pull it.

The author suggests two paths for Rex. First, he can re-channel his need to tinker, either by working on an alternative system (presumably after trading hours) or finding some intellectually challenging outlet outside of trading. Second, he can become the happy monkey. That is, he can create a new internal model that redefines his role, goals, and rewards. “The new picture was of a person who had accomplished the tinkering in the past, but now had permission to follow his rules. The picture comes with the understanding that there is a prize out there for following his rules. That prize is that he will be the person who adds value when he has mastered his technique and can use his intuition as a new filter. Having permission to use intuition in his trading is a treasure, indeed, because it allows Rex the ability to use his mind again in a way that is constantly challenging and new each time. However, he cannot use the intuition filter unless he has mastered his technique and mastered his own psychology.” (p. 178) The trick, of course, is to differentiate between using intuition and second-guessing.

Adrienne Toghraie is a trader’s coach who, on her website (tradingontarget.com) advertises her home study course, seminars and workshops, and private coaching—all on the expensive side. For most traders who want access to her ideas, I suspect reading Trading on Target will suffice. For those in search of a coach, the book is an easy way to decide whether Toghraie belongs on the short list.

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