Stock Doc: Facing Fastball Pressure

Facing Ambiguity

These thoughts and feelings I had at the plate remind me of a young trader who came to me for performance coaching last week. "Roger" was working on a thought log during the week, trying to drill down on self-defeating ideas and control emotions that had been hampering his disciplined trading strategy.

He struggled on specific trades requiring quick decisions and fewer data points. He was pressing because he wanted to improve his very average profit/loss. Roger was a good trader, but when trades became ambiguous to him, he pulled out of his positions prematurely, costing him his much needed returns. He was correct more times than not, but on two recent trades involving Vonage and Amazon, he froze up, feeling overmatched by some early obstacles.

I offered him a mental tip for remaining focused, poised and confident, even when the adversary seems to be very formidable and the situation seems uncertain.

Reach for an Anchor

Whenever clients face an ambiguous trade that they feel only 40% confident about, I ask them to focus on two things in particular. Specifically, I urge them to pin down their history with similar trades or positions, and use those past experiences as an anchor. Then, we identify the type of emotion or physiological sensation that they experienced when they were ready to pull the plug on a trade prematurely.

It is important for them to conjure up ballpark statistics regarding their success/failure ratios on similar types of trades or positions. Ironically, on recent ambiguous trades, Roger was successful 70% of the time.