For investors or traders to make important money-risking decisions, they must possess the ability to focus on the important tasks at hand. To focus, you must have a quiet place where only you, your rules, and the execution of an opportunity exist. This formula sounds simple. But, in the Twenty-First Century, we live with myriad distractions that enter our lives on a second-by-second basis. Distractions arrive through our mailboxes, over our televisions, by way of our cellular telephones and, of course, “You’ve got mail.” With this chaos surrounding us, it can feel miraculous when we do make intelligent, profitable decisions. For most investor/traders, the problem of distractions is even worse when you are working from home than if you are investing and trading from an out-of-the-home office. That is the reason I have listed the five most common distractions and strategies for handling them.
The Biggest Distraction
The biggest distraction to sound decision-making in investing/trading is your own self-talk. Of course, this distraction is present at your office, but it is even more intrusive when you are in your own environment and surrounded by all of the cues that can trigger thoughts about the problems and issues in your life. Your self-talk is that voice in your head that interprets everything that you are feeling and doing and everything that is happening around you. Self-talk can be positive, as in “That was a really good decision,” or it can be negative, as in, “How could I have been such a fool?” While other people are talking to you, self-talk can be running in your head at about 125 words per minute. But, when they stop, it can hit top speeds of up to 400 words a minute. If your self-talk is filled with a lot of emotion, it can be very, very distracting.
Imagine that you are investing with a money manager. If you could hear his self-talk, and he is saying, “Maybe I should wait on this trade, suppose it goes against me, suppose I lose money on this trade, I know it will come back!” Would you want this person to handle your money? Of course not, you would pull your account very quickly from a so-called money manager who thought in this way. But the fact is you are letting your investments be handled by a money manager who thinks like that and that individual is you. When you engage in negative, conflicting self-talk, you distract yourself from making sound decisions. Trading/investing cannot be profitable if you are not willing to look at the big picture of winning. This big picture is the motivator toward positive thoughts and actions. You might lose a battle or two along the way to making money, but you will never win the war if your thought distractions prevent you from taking action.
Dealing with Self-Talk
Notice what you are saying to yourself and when you are saying it:
- What are you saying? “Ah, a good opportunity but is it a false signal? I’ll wait a bit. Should have taken it before. Maybe it’s too late. No, it’s still a good opportunity. But suppose it reverses itself? Better wait for the next opportunity. Oops, should have taken that one. I would have made $6,000.”
- When are you saying it? Is it first thing in the morning or later in the day?
- Are you comfortable with the risk you are taking?
Strategies for Dealing with Self-Talk
If you took all of your money-making opportunities, what would the results be? If the results were positive, remember that many good methodologies lose at least 50% of the time and you say to yourself: “All opportunities in my methodology will lead me to a win.” If you do not believe you will make money, proceed to Strategy #2.If you were to take only 50% of the best opportunities, what would the results be? (This could be any percentage)
If the results would be positive, say to yourself: “I feel confident that when I take ___ % of my opportunities, I have predetermined that the probabilities of making money are in my favor.”
If your analysis does not have a profitable outcome, go back to the drawing board and rework your rules. If your negative self-talk occurs mostly in the morning, you need to prepare more either the night before or earlier in the day. Run through scenarios to mentally rehearse taking signals as a result of positive thinking. In addition, low adrenal function can prevent you from sleeping properly and can lead to a feeling of exhaustion and hopelessness as you begin your day. If your negative thinking occurs late in the day, you could be tired and your neurology could be protecting you from making wrong choices. Take time during the day to rejuvenate by taking a short nap or meditating.
How much are you risking at any given opportunity? Are you comfortable with that risk? You might want to adjust your risk based on how you feel about the probabilities of the investment going in a profitable direction. Regardless of your risk choices, they must be based on your predetermined criteria. It is important to be consistent. Consistency gives you a base for improving your criteria for opportunities. Negative self-talk is your way of protecting yourself when you are not comfortable about the risk you are taking. If you cannot handle risk, give your money to someone who can, employ a coach, or give up investing.
But It’s Ringing!
Did you ever notice how people give immediate priority to a ringing telephone over anything else that is happening in their lives? How many calls are actually that important for us to answer? Not many. Should answering the telephone take priority over making important decisions about your money? It is interesting how most people complain about interruptions from telephone solicitors, relatives, friends and associates when it is unlikely that there is an emergency, but they still continue to answer the telephone immediately when it rings.
Strategies for Dealing with the Phone
Sometimes the most obvious actions for improvement must be stated to make the changes, so here goes: Let your answering machine screen calls. Ask people not to call during certain times, unless it is an emergency. Have two separate telephone numbers: The first number is for everyone, including telephone solicitors. The second number is only for those whom you need or want to hear from and who respect your time. If a telephone solicitor is calling you on this line, you usually can hear a click and relevant noises in the background. Just say, “Sorry, no solicitation” or simply hang up. Solicitors are usually on a rotary dialing system and move on to the next call. Arrange for someone else to screen your calls.
Honey, It’s Just 10 Minutes
Your spouse is running to the store, the school, or the neighbors, shouting from the door as you hear the rattle of keys, “Honey, would you take care of the baby for ten minutes?” or “Honey, could you entertain the guys while I run out for ten minutes to buy some beer?” Ten-minute requests always seem to come at the same time as an opportunity for making money. And, the time spent is very seldom ten minutes. After all, you don’t really have a job, so why should it be a big deal for you to take the time to help someone out for ten minutes? This is how many people view traders/investors who work from home. Here are some more 10-minute distractions. I’m sure you can identify with them:
- Your mom just dropped by an wants to say “hello.”
- The kids want to ask a question about their homework assignment.
- The cat just wants to love you.
- Your husband just wants a kiss.
- Your daughter needs you to ‘baby-sit’ the grandchildren for the morning.
Aren’t these excuses all good reasons for taking breaks from the task of making choices in your investments?
Dealing with the 10-Minute Time-Grabbers
Have a meeting with the people in your life who are the potential time-grabbers. Share your goals with them and tell them what cooperation you need from them. Establish your rules for interruptions. Put a sign on your door that lets them know that you are at work and are not to be disturbed unless there is an emergency. If you prefer to keep your door open, arrange hand signals that indicate when you will get back to them or how involved you are. Reward the people who support you in following your rules. For example, provide attentive time later or a special dinner at their favorite pizza place at the end of the week. Make sure you thank them often for their cooperation.
The People in the Know
All day long, interruptions arrive in the form of predictions, suggestions, tips and announcements on the television, on the computer, and in the mail from authorities supposedly making money in the markets. How could you possibly ignore them? They are there to help, guide and give you the best advice available. After all, they have access to more knowledge and better technology than you do. Who are you to disregard their advice? Who are you to make your own decisions?
Dealing with the So-Called Experts
If what you receive in the mail, see on television, or any other outside influences tend to take you off course, save it for the end of the day or avoid as many of the outside influences as you can. If you need to use some of this outside information, have someone screen it for you and only look at what you need and want. If you do take advice from an authority that you trust, run the advice through your own criteria for making choices. Remember, in the final analysis, you are responsible for your own decisions and results.
Is the refrigerator beckoning? Are clean-up and organizational projects screaming for attention? Do your other businesses demand attention? Is the sun shining just to get you out on the golf course? When you are bored, unhappy, or unsure of your-self, everything will take priority over your investing/trading.
Strategies for Dealing with Environmental Attractions
First, you need a business plan! Next, you need a monthly plan that organizes all of the activities in your life. Make certain that you give attention to all of your activities. It is important to stick with your plan as much as you possibly can. The more you stick with your plan, the more your neurological system and the people around you will support you. If you do not enjoy the process of making money, you must either develop a strategy for enjoying it or give it up. Otherwise, you will sabotage your efforts.
You can allow any of the countless distractions in your life to draw your attention away from the tasks at hand. However, if you plan and manage these potential distractions with some of the guidelines I have listed, you will not only be able to manage them but yourself, as well. This exercise is a good one to use when developing the discipline necessary to become a top investor/trader.