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Richard and Group,
My story is similar to your story Richard except I knew of REBT "Rational Emotive
Behavior Therapy" before I was married and when we started having problems I dove head
first into a more intense study of the discipline for assistance. That effort was what
essentially saved the marriage. My wife and I have both changed. I stumbled on REBT in
my 20s by accident looking for books on positive thinking. REBT was invented in 1955 by
Albert Ellis. It is used in business, mental health, sports, trading and on and on.
People repackage it under different names with their own variations I suppose. If one
thinks about it, the more rational we can be at any endeavor the better we will do. When
studying REBT one of the first things one learns is it is impossible to be 100% rational
all of the time no matter how hard we try and to try is irrational in itself. The reason
is simple. We can't know all there is to know let alone make these new beliefs a habit.
REBT is based off logic, philosophy, scientific research principles, and medical
discoveries. It is constantly evolving and improving through ongoing studies. Atually I
had a few sessions with a Marriage counselour and it turns out he studied with Ellis for
a while. I have forgotten a lot of what I learned about REBT.
The trick to trying to use REBT without a therapist is first understanding it then in
applying it figuring out the beliefs that are causing the problem and finding better
beliefs which are more helpful. That is essentially why I emailed the list for
assistance. That effort has already started to pay off. Bilo mentioned something
interesting. "Standard biological response to live threatening situations. It can only
be controlled by training. [Check your pulse when pulling the trigger, if it's up to
over 80 you are reacting biologically]. I read several of the REBT professional books
during my self study. I remember Ellis stating that studies have shown there is a close
link between beliefs and body reaction essentially being one in the same. Changing the
beliefs HABITS must occur first before the body response can be retrained. Apparently
understanding this is important because some people mistakenly believe that because the
body is reacting frightened then the situation must be threatening. Again this in itself
is a belief that effects our success. Once the beliefs are set up correctly then one can
proceed to eventually train the body to settle down. This takes work. If one believes
that work is awful or life should be easy then one is not going to put out the work
People who are highly motivated have belief habits that make them that way.
>From my research I would say the markets are extremely repetitive. Markets are a human
invention and humans are habitual.
John.
TaoOfDow wrote:
> Dear John & Group,
>
> I'd like to make a few personal comments about your note, belief therapy, and the
> effect of beliefs in my trading.
>
> To some degree due to my inability to make money trading, my 25-yr marriage
> collapsed circa 1992. I had begun therapy several years before, realizing that I
> was on shaky grounds individually and in my marriage and wanting to do what I could
> to save both. Although I was very angry about it at the time, the therapy for me
> made it clearer and clearer that my marriage indeed was going downhill, and after
> several years, it did finally collapse, my then wife and I separated, I filed for
> divorce, and the actual divorce became final a couple of years later.
>
> I moved and in the process changed therapists. My new therapist was a belief
> therapist, and the majority of time in my therapy sessions was spent discussing and
> analyzing my beliefs, and specifically looking for and analyzing what he called
> "mistaken beliefs." Upon finding a putative mistaken belief, he had a system of
> subjecting it to confirmation, in effect, my homework for our therapy sessions.
> After several years, I got more and more back on my feet and eventually left
> ("graduated from") therapy, which I want to say I found quite helpful for many, many
> reasons.
>
> An incidental result of all of this was while I had not concentrated on discussing
> my trading beliefs and activities in therapy, I thought "Well, if this therapeutic
> method works as well as it has for me individually, let's give it a shot re my
> trading." One of the therapist's maxims was "You gotta believe it to see it." Now,
> for me, a died in the wool student of the scientific method (BS from MIT, PhD from
> Caltech, ex-member of Caltech faculty), this maxim had given me a little cognitive
> dissonance from my firmly held belief "You gotta see it to believe it." So, I
> thought, simply for the sake of doing experiments in my head re trading, what would
> happen if I adopted the notion "You gotta believe it to see it", asked my "What are
> my fundamental beliefs about trading?", and turned those beliefs on their head (as
> if they were "mistaken beliefs")?
>
> One of my fundamental beliefs was that the market is at bottom random, in other
> words, that there is no fundamental structure to the market, structure sufficient
> for any prediction of future market behavior to be made based on that structure ---
> basic belief: markets display Brownian motion. (I'm not talking here about
> trendiness and leptokurtosis.) Maybe the problem was not that there wasn't market
> structure but that I hadn't believed that there was market structure. On the notion
> that I had to believe it to see it, I adopted the belief "Markets are structured ---
> their movement is not entirely random" and set forth to see if I could find any
> observations consistent with that belief, and if so found, if I could determine any
> pattern to those observations.
>
> What I did on a daily basis for the better part of a year was to print out a 2-tick
> chart for that day's S&P and spend hours daily looking for repeating patterns in the
> price action. It took me several months before I began seeing them, but see them I
> did and verified that what I saw occurred in other markets besides the S&P. And
> then it took me several years thereafter to find some underlying basis for them,
> sufficient to make a foundation for a trading program. And that's what I have used
> to inform my trading ever since.
>
> Well, what can I say after all of this?
>
> With some humility, some of the engrained beliefs that I had adopted as a scientist
> "I've got to believe it to see it" had gotten in my way as a trader. When I began
> questioning these beliefs and adopting beliefs inconsistent with them ("I gotta
> believe it to see it" & "The market has fundamental structure" & "I can identify
> that structure and use it to inform my trading"), that led me to work in which I
> eventually found evidence consistent with those beliefs. That evidence led me to
> develop a trading approach that was both qualitatively and quantitatively more
> successful, both subjectively and objectively, than I had even employed before.
> Furthermore, I don't know of anyone who is doing anything similar to what I am doing
> in my trading. That leaves me thinking I'm looking and acting "away from the pack",
> and I feel good about that, both in relation to my trading and about me as an
> individual.
>
> Now, for the last few days, we've been discussing the ways we as traders relate to
> the market. And I'd like to share a quote that I heard several years ago that I
> have found true for me --- I still have the little bit of newspaper containing the
> quote that I keep in a little box of junk on my trading desk. This quote was from a
> review of a book dealing with being a writer of fiction, but I think it has
> applications to activities such as trading too. "What's nice about finding your own
> voice is that it puts you out of the competition. This is who you are and you trust
> that and you're no longer competing with other people in subject matter or anything
> else because you can't do what they do and they can't do what you do."
>
> Now, at bottom, I'm no computer wizard (a la Mark Brown) or floor samurai (a la Tom
> Baldwin in the US pit or Lew Borselino in the SP pit) but I believe I have "found my
> own voice" and I no longer see myself as in competition with any of you or anyone
> else on the floor or in the markets in general. The markets do what they do. I do
> what I do. I do my "thing." I've convinced myself there's something to it, and I
> trust it. I don't know anyone doing anything like it. They do their "thing." I
> presume theirs works for them. Mine works for me.
>
> I attribute all of this to my having worked with this therapist, and the hours we
> spent discussing mistaken beliefs. The irony for me of all of this is that I don't
> think I ever would have gotten there but for the breakdown of my first marriage and
> its eventually dissolution, much of which arose due to my then wife's exasperation
> (as well as mine) with my spending hours, days, weeks, months, years in compulsive
> activity "going nowhere" (and certainly not making any money trading), expending
> great "heat" and producing no "light." What a "gift" she gave me!
>
> Life goes on. My best to all of you and your own trading.
>
> Peace be with you,
>
> Richard
>
> John Bowles wrote:
>
> > Regarding the above topic and noticing an exerpt from Mark Douglas's book
> > "Immediately below" I thought I would add something. It may be of interest to
> > those still having problems after reading the recommended books for traders.
> >
> > Mark Douglas (2000): If you believe that anything can happen and that you don't
> > need to know what is
> > going to happen next to make money, then you will always be right.
> >
> > Mark uses "If you believe" a lot. In my original post I mentioned I know a
> > therapy called REBT. This stands for "Rational Emotive Behavior Therapy". It is
> > a cognitive therapy developed by Albert Ellis in New York. It is essentially
> > Belief Therapy. Beliefs are habitual and subconsious. Therapists in this most
> > practical of all Therapies use a technique called "Inference Chaining" to
> > determine what the beliefs are that are causing the emotional upset (fear,
> > anger, sadness, whatever). The therapists know the beliefs but they direct the
> > client to find the problem beliefs on their own. This is not the couch therapy.
> > This is very active and the therapists fully explain what is going on "educate".
> > Once the problem beliefs are uncovered new ones are developed and exercises are
> > given to install the new beliefs so they become habitual. Part of the work
> > involes "Just do it" or what they call "invivo exercises". Another technique
> > called flooding is simply "Just jumping in with both feet and doing it a lot in
> > rapid succession". In the case of trading it would be taking a lot of small
> > trades for as long as it takes. The reason for this is the belief habits become
> > so fast and automatic they get tired in with muscle responses. One has to adjust
> > the beliefs and just do it to get proper results. Again this isn't sit on the
> > couch and listen to the therapist talk stuff. It is get off ones ass and just do
> > it stuff. Part of the reason I thought the extract of Mark's book was good is
> > because it emphasizes "If you believe" all over the place. As I mentioned above
> > the therapists extract the bad beliefs and get the client in the habit of
> > replacing the bad beliefs with rational beliefs. Reading a book is not good
> > enough. One has to have an active program to adjust the belief habits and it
> > takes time. Doing provides feedback which reinforces the beliefs "Yes, I lost
> > money but I did not die therefore the belief must be true". "Yes I had a win
> > after a loss therefore the odds in my system are likely to be true". If one
> > tries to tippy toe into the problem there is a hidden subconsious irrational
> > belief under that being this "It's awful, I can't stand it, I have to build up
> > gradually". Studies have shown that this is completely false. If is more
> > efficient to believe that flodding isn't awful and that it is more efficient and
> > as a result just get in there and set up a special exercise to get rid of the
> > irrational belief as soon as possible through active work and move on.
> >
> > John.
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