Long Posts

The Day I Learned To Trade

All of men's miseries stem from not being able to sit alone in a quiet room ~ Blaise Pascal

I’ve been trading since 2006. For A Living! Not as a hobby…

The implications are very different. The inner battles (at least their intensity) are not the same. Definitely not!

At the beginning, I’ve struggled a lot. It’s no secret… (I shamelessly recount everything in my book, Zero To Hero)

But at one point on my journey, I experienced an altered state of consciousness that changed everything. And, as is often the case, this direct experience occurred quite unexpectedly.

Long periods of winning streaks were punctuated by massive drawdowns. That was my reality.

The year is early 2012; it was just getting dark on a cold, somewhat damp and gloomy wintry evening.

I was on an intensive silent meditation retreat (my first one ever) and I was on my 8th day of sitting.

What led me to this retreat were my repeated failures in trading. For some reason (obscure at that time), despite having a proven system, enough capital to give myself a fair chance of success in trading, a library full of trading books (on system, risk management, and psychology), I , somehow, couldn’t successfully manage to part ways with some ingrained patterns of compulsive reactions that led to repeated trading errors.

Long periods of winning streaks were punctuated by massive drawdowns. That was my reality.

So, five years into the endeavor of full-time trading (from 2006 to 2012), I found myself at an all-time low — emotionally and financially. I was in a very bad place psychologically, and, long story short, I ended on this meditation retreat sitting on a cushion in a cross-legged position.

Take a random guy on the street and pit him against Conor Mcgregor in a UFC match. That’s how I felt sitting there amongst all the “pro-meditators” on that retreat.

If anything, meditation is certainly not about competition nor it is about achieving anything. It’s precisely about letting go of those thoughts – and others. But I didn’t know that back then. I felt I had someplace to reach; a goal to attain; a purpose to fulfill; a race to win.

With no real prior experience with the practice, sitting from 4:30 a.m to 9:00 p.m every day had placed my body in a very difficult position. And my mind was bubbling up. I was literally on the verge of a major breakdown.

I reluctantly agreed to stay a little bit longer…

One morning, I woke up and I had decided that I couldn’t do it anymore — the physical pain around my knees and lower back being too afflictive. So, I packed my stuff and went to the assistant teacher to inform him that I was leaving.

After a long conversation, he convinced me to stay one more day and to observe how much of that physical pain was mental – stories that my mind created rather than actual physical pain.

I reluctantly agreed to stay a little bit longer… “One more day!” I thought to myself. And I stayed, and observed.

As the day progressed, so did my pain and it came to a point where I started crying in the middle of an Adhiṭṭhāna sitting [Pali word commonly translated as “resolute determination” used in some meditation retreats to signify a meditation session where the meditator is highly encouraged to be completely still].

I stayed still, and my eyes were closed, yet drops of tears slowly and quietly ran down my face. Sounds dramatic. In retrospect, it sure seems as though I was some kind of precious little snow flake unable to go through hardship.

Rest assured, growing up in an abusive household, I knew what hardship was! But I hadn’t developed a mind that can withstand anything. Big difference.

Yet, this was the turning point. As I sat there on my cushion, overwhelmed with pain, something began switching in my mind.

I discovered that my mind was indeed creating stories which, in turn, intensified my physical pain.

Suddenly, my perception started shifting. Rather than being the thoughts in my mind and the pain in my body, it was as if I was a third person watching them. I was, as if, detached from all this chaos and I was a peaceful observer of those conditions – a spectator.

At this moment, it became clear to me: I discovered that my mind was indeed creating stories which, in turn, intensified my physical pain.

The assistant teacher had a point.

Inherently, there are no labels to physical sensations. Good, bad, right, wrong, it’s the mind that creates stories, labels, and reasons which give simple bodily sensations a whole different dimension – i.e., pain and this is bad. And then the mind just blindly reacts with clinging (Oh, I like this sensation) or aversion (Oh, I hate this sensation).

In this fresh moment of observation, in a very real way, these thoughts were no longer me. I was merely an observer of my thoughts, and I was witnessing their arising and passing with tremendous stability (equanimity).

And then, the physical pain,… well, it wasn’t pain anymore. Pain or discomforts, no matter how intense and sharp, when decorticated, are merely vibrating, tingling, pulsing, hot sensations – arising and passing with different intensity. Without the mind interpreting the pain/ discomfort (i.e., this is good, or this is bad), that’s all they are.

As insightful, fascinating, and wonderful (full of wonder) that experience of detachment (from my thoughts and my body) was, it didn’t end there. It went deeper.

Thoughts eventually stopped completely and the “Me”, the witness of thoughts, sensations and sensory inputs want blank.

Complete emptiness.

But at this point, that is not important for you to retain. So let’s back up a little bit…

I was merely an observer of my thoughts, and I was witnessing their arising and passing with tremendous stability.

The discovery I made – and one that changed the course of my life – that I want to again draw your attention to is this: Your thoughts are not You. Your emotions are not You. But mindlessness makes you think that they are. But they aren’t! They can’t be!

Thoughts and emotions and sensations are by their very nature ever-changing and impermanent. But because of the differences in their intensity and the speed at which they arise and pass, you falsely assume that they must be you.

It’s akin to watching a movie and being so immersed in it that you forget that you’re watching a movie.

In truth, the experience of body (sensations) and mind (thoughts) are both byproducts of neurophysiological and neurochemical processes which we are unconscious of; which are conditional, out of our control, and impermanent. [Fun fact: even though science is now confirming this, Buddhists have known this for thousands of years. Read anatta on Wikipedia to learn more.]

We are the context in which thoughts and feelings and sensations take place.

But then, you might say, “If I am not my thoughts and my emotions, and my body, then who am I?”

Frankly, I haven’t figured that out yet. What I do know (for certain) is that we are the context in which thoughts and feelings and sensations take place. Beyond that, I know nothing…

Our real problem as traders (but more broadly as individuals) is that most of us spend our lives living in a state of mindlessness – lost in thought and taking them to be “I.” Unfortunately, this creates most of our miseries.

On the other hand, when true mindfulness is accessed and tapped into, one begins tunning into an open and expansive awareness of everything unbounded, uncolored, unlabelled…

While thoughts and emotions may still arise, no sense of “I”, “Me”, “My”, “Mine” is derived. Without that feeling of being an entity that owns things and that is separate from everything, suffering can’t happen.

This state, when accessed, even for brief moments at a time during the day, can be extremely powerful because first it is relieving, and second it points out at a deeper truth about our lives that is unavailable to us in ordinary circumstances.

Nothing is as important as you think it is when you’re thinking about it.

For the uninitiated among you, everything I said so far may sound like some spiritual jumbo-jumbo, woo-woo nonsense.

“He’s going nuts!”… you might be thinking…

I get it.

But I urge you, if you can crack open your mind just a little bit; if you can realize that nothing is as important as you think it is when you’re thinking about it, then this is a glimpse of the deeper truth I’m alluding to.

And if you change your relationship with yourself, you will begin to experience that truth, and not just know it superficially.

Your lack of self-knowledge is affecting your performance in the markets. It’s a fact. It’s making you compulsive, impatient, and unable to delay gratification. What’s more, it’s making you head on an emotional high whenever you win, while making you depressed when you lose.

It’s O.K to feel all those things, after all, emotions are part of the human experience. The problem arises when we don’t learn to create some space between what’s happening in our mind and body and what’s truly happening beyond that.

If we don’t learn this [awareness and detachment], thoughts and feelings, no matter how they come, and whether they’re wholesome or not, end up shaping our behavior.

With awareness, we can begin to notice when this is happening, and with detachment, we can instead cultivate the quality of wise discernment – the capacity to choose to act on wholesome thoughts and feelings instead of the unwholesome ones.

When I first realized this (experientially at the retreat), I felt a sense that a concrete answer was available to my recurring problem behaviors in the markets.

I had pierced one of the deepest mysteries of my mind and my behavior.

I moved from consuming trading books to exploring the realm of philosophy, psychology, and science in general.

My initial experience at the retreat was so eye-opening that what was supposed to be an 11-day retreat ended up turning into a 54 day stay there — serving and meditating.

Following this experience, when I got back from the retreat, the focus of my reading completely changed. I moved from consuming trading books to exploring the realm of philosophy, psychology, and science in general.

And over following years, I began attending many other retreats and had the good fortune to meet many masters in meditation, in different traditions.

This immersion into the esoteric science of mind provided a logically compelling view of life and the world that made great sense to me. And it certainly provided me with the tools to understand my behavior and my mind, in and out of the market.

That one of a kind guidance, coupled with my daily practice helped develop me into the person I am today. And eventually, my trading got better. A lot better!

So much of the endeavor of trading is psychological in nature

I briefly told the story of my meditation journey for one reason: It is to show you that so much of the endeavor of trading is psychological in nature, and if you struggle to make the necessary changes in your mindset like I did, there is a solution.  But you have to be willing to seek help.

And no, you don’t have to head on an intensive silent meditation retreat. You could and it would certainly be beneficial, but you don’t have to. For a small investment, a good teacher who actually walks the talk can help you lessen your learning curve,  and make the appropriate changes, and fast, thus saving you time, energy, and money. All of this in the comfort of your own home.

But you have to take the leap of faith…  

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Yvan
I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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  • SwissTrader

    Hi Yvan, I am private day trader from Switzerland and normally I don’t comment articlels about trading. With all respect to your methodology I completely disagree to your point that psychology is all what matters. I wouldn’t say that you don’t have to be patient and wait for the best opportunities to get into market or that you can’t experience some psychological issues,which can impact your trading, BUT if you don’t have an edge in ever changing environment, you won’t be consistently profitable trader…no matter how good you can control yourself…
    and that’s what trader should focus on: to build their trading skills like a pro does it in a peak performance area.
    all the best

    • Hey, thanks for the comment. I appreciate you taking the time to share your opinion. I think, if i express my thoughts a little bit better, we can find agreement at bottom.

      I don’t know how long you’ve been trading but I’ve been doing it for over 10 years now. After all is said and done, what I’ve noticed is that the endeavor is purely psychological in nature. And I agree in part with what you said, that a trader needs an edge ( a proven system that fits into a proven method). Still, mindset determines whether or not you trade that system the way it wants you to trade. It determines whether or not you control your risk and take your signals when they appear.

      So in that sense, mindset precedes everything else because it is what you bring to the game. You have it or you don’t have it but in any case, it can be worked upon and strengthened.

      And I’m not just talking about patience. Being a good trader entails a whole lot of other qualities of mind — resilience, flexibility, wise discernment, discipline, etc.. If you don’t have those, then you can have the best edge in the world but you won’t be able to apply it successfully.

      I hope this clarifies my thoughts further.

      Cheers,

      Yvan

  • Al S

    Yvan: I have been working my way through your site and blog, it’s a wonderful experience! I have a very good setup to trade and needed more encouragement and guidance in getting to mindfulness. I’m working my way backwards through your blog posts, I have a gold mine of incredible benefits and practices ! You really have found the holy grail, for those with an edge and a good system, and I say this meaning you are loudly and proudly proclaiming your ideas to be a fundamental leg under the stool that a successful trading career stands on.
    You have put some incredible work into your site and thought process and I want to thank you for that. To hear my thoughts starting to enter my mind in the last few weeks, has been a profound experience, helping me move forward with being comfortable with the discomfort of our chosen trade ( pun intended )
    My wall of trading reference material and books, means so much more with your guidance and ideas. I’ve been frustrated at times at not achieving what I feel my system can produce, standing in my own way and knowing it. I needed help to get outside of myself, and a simpler method of practicing mindfulness, formal mediation has been difficult for me. Using your music recommendations and being ok with whatever happens got me over the hump.
    All the Very Best to you on this gray, almost snow, west coast afternoon !

    • Hey, thank you So much for the kind words. I’m so glad you’re finding the content useful. Trading can be easy. The real problem is the worrying, the expectations, the delusions, the inability to let go… For those reasons, it’s not. But if you can find a way to manage that, you’ll do good in this field. I’m so glad that you’re slowly figuring out what works for you. It’s a journey and, although not always easy, it’s a beautiful one because it’s full of learning and growth.

      I wish you all the best.

      • Al S

        Thank you for that, I agree with your words, 100%. I found your 5 part series on Stoicism very interesting and helpful, a new area for me. I made a little booklet for my kids to read over, one I keep close to review and re-engage with daily. Your mentions of trading being mediation is another helpful notion in working to let the unconscious mind feed powerful help through it’s integration of the charts, signals, correlations and all the etc we use to delve into the rotations and trade locations.

        You’ve outlined above the various traps I’ve found to keep me from using the the very help I need and want, essentially learning to get out of my own way. and let my system run.
        I hope this post encourages a student of the game to work through your site and mine the gold contained in the many articles a references you have posted for our benefit.
        May I recommend Market Mind Games by Denise Schull for your reading list ? It’s a well researched and documented proof from her work with the larger hedge fund size firms, that we as single entities, experience the same issues and for the same reasons and those running other people’s money.
        Wishing your many followers the patience and tenacity to see it through. Thank you for everything. On my way to the library to pick up 2 reserves on crowd behaviour.