In an earlier post, I described a pattern of self-talk that is surprisingly destructive. Our internal dialogues are a large part of our self-management: how we talk to ourselves will shape both how we feel and how we respond in trading situations.
Three types of self-talk are especially corrosive:
1) Victim Self-Talk - Here we tell ourselves that others have created our problems and are responsible for our setbacks and losses. Even when people legitimately have been victimized, it is not helpful to wallow in victimization. Such talk robs us of a sense of control over our destinies. How do we feel energized and optimistic about life if we're telling ourselves that positive outcomes are out of our control?
2) Hopeless Self-Talk - Sometimes those losses and setbacks become so frequent or seem so overwhelming that we doubt whether we'll ever find success and happiness. Hopeless self-talk is an important component of depression. Many times, it is accompanied by self-blaming talk, where we direct our anger and frustration at ourselves over disappointing outcomes. The result is a gradual leaking of optimism and energy, where the dominant mood can be expressed by, "What's the use?"
3) Perfectionistic Self-Talk- When we acknowledge our successes, we reinforce self-efficacy and confidence. Our victories are psychological confirmations that we can, indeed, achieve our desired ends. Perfectionism robs us of victories by setting standards of success so high that they cannot be met. It's not enough to have a winning trade; we missed the high or low tick. It's not enough to make money on the week; we lost money on Friday. In a dangerous way, perfectionism snatches defeat from the jaws of victory, cutting us down just as we need affirmation.
How do we overcome such negative self-talk patterns? One valuable initial step is to make our self-talk explicit: to talk out loud what we're saying to ourselves implicitly. As I detail in The Daily Trading Coach book, cognitive techniques that make use of journals can be especially useful in this regard. The idea is to identify problem situations as they are occurring and write down both how you are thinking and how you're feeling in those situations. This builds self-awareness, so that you can become better at thinking about your thinking and catching yourself in the process of undercutting your own optimism and confidence.
Further use of the journal actually intercepts negative thought patterns as they are cropping up and replacing those with more realistic and helpful ways of viewing situations. It is very difficult to act in destructive ways when you're interrupting negative talk and rehearsing constructive conversations with yourself.