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Saturday 8/22 Memo: Trader's Psych Part 2

Each morning, I write a 420-word memo because writing is one of the best way to focus your thinking & effect some change you desire. It is a physicalized version of what is going on inside your mental environment.


Psychological Repair & Self-Valuation

It is not all that difficult for an individual—who is not even an experienced trader—to place a trade, experience a price increase, and earn profit. It is incredibly difficult, if not impossible, for many individuals and traders alike, to hold on to their profits.

The skill of accumulation depends on a trader’s level of self-valuation, as well as their beliefs regarding results. Traders with low self-valuation unknowingly prevent themselves from accumulating profits because they don’t believe they deserve the profits, or they didn’t earn the money in the typical sense.

Many of us employ a similar belief system regarding our standards & expectations of results—how much time, effort, and/or expertise was required to achieve the reward. If a trader experiences a big profit in a little time without seemingly any effort, they view the resulting profit as something they can’t take proper credit for, something that doesn’t in fact belong to them. And it’s easier than anything in the world to rationalize a loss because you were playing with the house’s money anyway.

Traders, speculators, and gamblers engage in these rationalizations & justifications on a regular basis, and yet, it is hugely detrimental to their bottom-line. Rationalizing an outcome—justifying reasons & explaining factors—means that you have not accepted the outcome. Denying the reality of the outcome leads to perceptual distortion. You have altered, distorted your perception of the event to accommodate this new rationalize of this outcome. It is thus forthwith & forever through this semi-distorted perception that you filter all subsequent news and information. And you will continue to distort movements, changes, news, events, and information this way unless you begin to actively conduct psychological repair in your daily life.

Psychological repair requires first releasing yourself from feelings of inadequacy, guilt, and shame, then identifying & repairing residual psychological damage, and finally, revising & replacing inappropriate habits and learning more appropriate skills.

I have a theory about self-deprecating humor, and how so many of us operate on a basis of low self-valuation. I think maybe this might be the beginning of a symptom of our inability to cope with rapid technological change. We are altogether too aware of our flaws, a most self-conscious generation.

Self-deprecating humor, which is a common (even overused) genre of nonfiction writing. It is “the act of reprimanding oneself by belittling, undervaluing, or disparaging oneself.” We use self-deprecating humor to ease tension, as a coping mechanism.

The whole idea of the thing sits on a foundation of low self-valuation. A person of high self-valuation does not belittle themselves under any circumstance, not for the benefit of others, and certainly not as a way to cope with uncomfortable subjects, issues, or situations.

My theory is that inadequacy, the feeling of not being good enough, leads to seeking acceptance and validation from others, and one of the common ways of acquiring acceptance or appealing emotionally to others is by using self-deprecating humor.

To deprecate means to express disapproval of something. So we express disapproval of ourselves, ironically, to gain standing with others.

With some people, it is very obvious when they are making fun of themselves that they are actually bragging. I know, because I did that unconsciously for a number of years. I still do it, but I’m becoming more and more aware. That’s what this mental training process is all about.

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