Alex had been working for 3 years as a hedge fund portfolio manager, his performance at the fund, though adequate, was well short of what he felt it should have been. Despite an excellent track record previously at a tier 1 investment bank, he felt his performance at the fund could have been a lot better. As if to make the point, Alex kept a record of his actual trading activity, and a separate record of the ideas and plans which he had intended to do. He called his intended performance his 'virtual performance', the table below summarizes this.
After struggling in this third year, Alex was recommended by a colleague to come and see me. I work as a performance coach with traders. I will point out at this stage, that I am not the ‘One Person’ referenced to in the title of this article. However, during the coaching programme I did introduce Alex to this person. An introduction which was to have powerful consequences for Alex’s performance.
Alex's Dilemma
Before I reveal the identity of that person, I would first like to explore Alex’s dilemma a little further. His record of actual versus virtual performance perfectly captures the challenge many traders, as well as people in other professions, face in trying to achieve their goals. Uniquely trading, as exemplified by Alex, allows one to potentially keep score of that challenge. Trading is an ongoing and constant calibration process. This process involves analysing situations and information, contextualising and conceptualising this, creating scenarios as to what one believe will happen, making plans of action around these scenarios, and then acting (or not acting) upon these plans. Timeframes for this process can vary from seconds, to potentially weeks or even months. During this process people believe they are considering things rationally, however, in real time, these assumptions and scenarios get sorely tested. Let me explain this through what I call the ‘Iceberg Analogy’.
The ‘Iceberg Analogy’.
When you look at an iceberg what do you see?
What you actually see, is this, the tip of the iceberg. In trading terms this represents the visible, conscious, and tangible aspects of one’s work. Analysis, planning, execution, position management, risk and money management, views, opinions, conduct, and many other tangible aspects.
However, this visible part of the iceberg is not the whole picture, this is the full picture:
Alex's Dilemma
Before I reveal the identity of that person, I would first like to explore Alex’s dilemma a little further. His record of actual versus virtual performance perfectly captures the challenge many traders, as well as people in other professions, face in trying to achieve their goals. Uniquely trading, as exemplified by Alex, allows one to potentially keep score of that challenge. Trading is an ongoing and constant calibration process. This process involves analysing situations and information, contextualising and conceptualising this, creating scenarios as to what one believe will happen, making plans of action around these scenarios, and then acting (or not acting) upon these plans. Timeframes for this process can vary from seconds, to potentially weeks or even months. During this process people believe they are considering things rationally, however, in real time, these assumptions and scenarios get sorely tested. Let me explain this through what I call the ‘Iceberg Analogy’.
The ‘Iceberg Analogy’.
When you look at an iceberg what do you see?
What you actually see, is this, the tip of the iceberg. In trading terms this represents the visible, conscious, and tangible aspects of one’s work. Analysis, planning, execution, position management, risk and money management, views, opinions, conduct, and many other tangible aspects.
However, this visible part of the iceberg is not the whole picture, this is the full picture:
90% of the iceberg is hidden beneath the surface. This represents a trader’s invisible and intangible aspects. This includes many factors which combine in various ways to skew and distort perceptions. These include innate behavioural biases, personality preferences, emotions, ego, the effect of social pressures, neuro-biological factors, and a whole host of other factors which interrupt rational decision-making processes.
The invisible aspect of trading has a huge influence on people’s performance. However, most traders fail to appreciate the degree these factors have on their decision-making. They also fail to take adequate measures to address this. Compare this to any professional sportsperson, if a golfer is having trouble with some key aspect of their game, could you imagine them not seeking help to address this. This may have been the way pre-1990s, but in this day and age, most professional golfers would probably have a team of coaches. My own experiences and work with traders highlights the value of seeking outside professional expertise. However more about this later. - With regard to Alex, he had been attempting to correct his own problems himself. He had built up a compendium of the errors he felt he was making, and was trying to adjust for these in his trading. However, Alex was actually focusing on the conscious and visible aspects of his trading, dealing with the symptoms rather than understanding the causes. I am familiar with this this from my own trading career. I spent 23-years as a professional trader and I too put a lot of effort into trying to adjust my behaviours and actions, all to no avail. Fortunately, in 2001 I had the good fortune to be introduced to the same person, who I later introduced Alex to.
Meet the ‘One Person’ who has the power to transform your performance.
After 15 years trading I was starting to tread water. I thought my best years were behind me and I was fighting not to go backwards. As fortune had it, my firm offered me the services of a top performance coach. This turned out to be the pivotal moment of my career. Over the next 6 months, I had a series of sessions with the coach. We talked about me, my trading, my style, my approach. We explored many aspects and angles of my trading, including my thought processes, my risk and money management processes, my analytical practices, and my decision-making. Throughout the coaching, in a very subtle way, the coach gradually introduced me to someone who I had never truly met before, but who I had known my entire life, ‘My Self’. Over the months I began to know and understand ‘My Self’ more. I learned how ‘My Self’ was affected by outside influences, and how ‘My Self’ reacts both in positive beneficial ways, and destructive self-defeating ways. Soon I was gaining greater clarity on how ‘My Self’ makes decisions and choices in volatile, uncertain and challenging environments. – This new ‘self-awareness’ was a revelation. After a while my ‘trading self’ started to turn a corner. As this growth continued, so I found I had greater confidence in ‘My Self’, I started to trust ‘My Self’ more, and crucially I started to believe in ‘My Self’. The years after this experience, were by far my best ever trading years. ‘My Self’ had been the major part of the iceberg that was hidden from me. – The ‘me’ I knew was the bit of the iceberg visible above the water line, the ‘self’ below the waterline was a part of me I had never really known that well, and certainly not fully understood or valued.
In 2009, after the most successful trading period of my career, I decided to hang up my gloves and become a ‘performance coach’ myself. I now work with traders, and I have people who come to me who I subtly and carefully introduce to their ‘Self’. When Alex came to me, he was frustrated and angry. He was admitedly sceptical that the coaching could help him, but equally he was willing to give it a try. That first year of coaching saw Alex achieve his best ever trading performance, the following year he bettered that in what was a very challenging environment. Given the size of capital at Alex’s disposal, these improvements added up to tens of millions of dollars’ worth of extra revenue for his firm.
As a coach, it is a wonderful experience for me to see change and transformation in people who have a real desire to progress and improve. Alex pointed out that the coaching had also positively affected many other aspects of his life, including working relationships and private family relationships. This sort of feedback has been made to me by many of my clients, amongst whom include investment managers, business managers, salespeople, analysts, teams, and whole groups within organisations. The table below highlights just some of the performance transformation, in terms of profitability, that I have seen in trading clients through this process in recent years.
The invisible aspect of trading has a huge influence on people’s performance. However, most traders fail to appreciate the degree these factors have on their decision-making. They also fail to take adequate measures to address this. Compare this to any professional sportsperson, if a golfer is having trouble with some key aspect of their game, could you imagine them not seeking help to address this. This may have been the way pre-1990s, but in this day and age, most professional golfers would probably have a team of coaches. My own experiences and work with traders highlights the value of seeking outside professional expertise. However more about this later. - With regard to Alex, he had been attempting to correct his own problems himself. He had built up a compendium of the errors he felt he was making, and was trying to adjust for these in his trading. However, Alex was actually focusing on the conscious and visible aspects of his trading, dealing with the symptoms rather than understanding the causes. I am familiar with this this from my own trading career. I spent 23-years as a professional trader and I too put a lot of effort into trying to adjust my behaviours and actions, all to no avail. Fortunately, in 2001 I had the good fortune to be introduced to the same person, who I later introduced Alex to.
Meet the ‘One Person’ who has the power to transform your performance.
After 15 years trading I was starting to tread water. I thought my best years were behind me and I was fighting not to go backwards. As fortune had it, my firm offered me the services of a top performance coach. This turned out to be the pivotal moment of my career. Over the next 6 months, I had a series of sessions with the coach. We talked about me, my trading, my style, my approach. We explored many aspects and angles of my trading, including my thought processes, my risk and money management processes, my analytical practices, and my decision-making. Throughout the coaching, in a very subtle way, the coach gradually introduced me to someone who I had never truly met before, but who I had known my entire life, ‘My Self’. Over the months I began to know and understand ‘My Self’ more. I learned how ‘My Self’ was affected by outside influences, and how ‘My Self’ reacts both in positive beneficial ways, and destructive self-defeating ways. Soon I was gaining greater clarity on how ‘My Self’ makes decisions and choices in volatile, uncertain and challenging environments. – This new ‘self-awareness’ was a revelation. After a while my ‘trading self’ started to turn a corner. As this growth continued, so I found I had greater confidence in ‘My Self’, I started to trust ‘My Self’ more, and crucially I started to believe in ‘My Self’. The years after this experience, were by far my best ever trading years. ‘My Self’ had been the major part of the iceberg that was hidden from me. – The ‘me’ I knew was the bit of the iceberg visible above the water line, the ‘self’ below the waterline was a part of me I had never really known that well, and certainly not fully understood or valued.
In 2009, after the most successful trading period of my career, I decided to hang up my gloves and become a ‘performance coach’ myself. I now work with traders, and I have people who come to me who I subtly and carefully introduce to their ‘Self’. When Alex came to me, he was frustrated and angry. He was admitedly sceptical that the coaching could help him, but equally he was willing to give it a try. That first year of coaching saw Alex achieve his best ever trading performance, the following year he bettered that in what was a very challenging environment. Given the size of capital at Alex’s disposal, these improvements added up to tens of millions of dollars’ worth of extra revenue for his firm.
As a coach, it is a wonderful experience for me to see change and transformation in people who have a real desire to progress and improve. Alex pointed out that the coaching had also positively affected many other aspects of his life, including working relationships and private family relationships. This sort of feedback has been made to me by many of my clients, amongst whom include investment managers, business managers, salespeople, analysts, teams, and whole groups within organisations. The table below highlights just some of the performance transformation, in terms of profitability, that I have seen in trading clients through this process in recent years.
The goal of this article was to help people understand how there is so much more of themselves which they can learn about. Getting to see, know and learn more about your ‘Self’, and developing a better relationship with your 'Self', can be incredibly empowering. It is not a magic cure however, it takes hard work and commitment. But with effort, time and continual improvement, and ideally through the use of a qualified third party, you too can improve your chances of success and help significantly enhance your life and your work.
If you have enjoyed reading this article and would like to know more about our 'Behavioural Performance Coaching' work with Traders and Investment Professionals, please click on the below image. Alternatively email at: steven.goldstein@alpharcubed.com or visit the website www.alpharcubed.com. Also Join the flourishing Linkedin Group ' Behavioural Trading'. and follow me on Twitter.
If you have enjoyed reading this article and would like to know more about our 'Behavioural Performance Coaching' work with Traders and Investment Professionals, please click on the below image. Alternatively email at: steven.goldstein@alpharcubed.com or visit the website www.alpharcubed.com. Also Join the flourishing Linkedin Group ' Behavioural Trading'. and follow me on Twitter.
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