Trading Psychology – The Truth About Trading Errors and Winning Trades

In sport and in trading, we often think that it is the ability to make the big winning shots and big, home-run trades that separate great athletes and traders from the rest of us. That is not really true.

A very interesting shot-by-shot analysis of the Basel 2010 Tennis Championship reveals much about how elite tennis is played and how elite trading can also be mastered.

Background: The tennis match was the final between Roger Federer and Novak Djokovic. Djokovic won this tournament last year and took Federer out of the US Open in the semifinals in September. Despite Djokovic’s psychological edge, Federer won this match, winning his 65th ATP title and breaking Pete Sampras record for most major title won.

You might be thinking that Federer must have made many spectacular winning shots, firing off winner after winner overwhelming his highly skilled opponent. Not so. Every shot was assessed and the match analysis revealed some surprising statistics (match analysis link below).

Important Findings: Two things jump out of this unique analysis. First, there were many unforced errors made throughout this match. An unforced error means a lost point due to a poorly hit ball that the player should have been able to return back to his opponent. In this important match, 40% of the points played ended because of an unforced error. The take away message is that even the very best players in the world make a lot of mistakes!

The second important finding of this analysis is that only 5% of all shots made were clean, winning shots that were untouched by the opponent. There were 709 shots made during the match and only 36 were clean service aces, returns, overhead smashes, ground stokes, or volleys. These untouchable winners accounted for about 20% of points won. In other words, 4 out of 5 points were won on longer rallies, unforced errors, and solid court-play. There were very few spectacular shots.

What It Means for Trading: For active traders, the take-away message is clear. Being a winning trader – even an elite performer – is not based on making huge, home-run trades. It’s about grinding out small wins day after day. Occasionally, we will get lucky and have a large winning trade, but this happens only rarely – only a small percentage of the time as in the low percentage of spectacular shots made in this tennis match. Being a competent trader is not based on making big wins; it’s about making small wins consistently.

The other take-home message is that errors are OK. We all want to be error-free, but being human, that’s just not possible. The key is to recognize when you have made an error and immediately cut the loss short, no matter what. Then, avoid trying to make it all back with a big winning trade. That’s another unforced error. Instead, focus on making the next small winning trade, and the next, and the next…

The Psychology Behind Japanese Tattoos

The art of Japanese tattooing has gained great popularity over the years. From the days when it was associated with the Yakuza, it has come a long way in representing the whole of Japanese culture and tradition. Japanese art always has something for everyone. Whether you want a cherry blossom design or wish to go for a fierce dragon, you will find it all in different styles, colors and designs. Ranging from a koi fish to a mortal combat scene, Japanese tattoos have a variety of meanings associated with their art.

History and significance of Japanese tattoos

There is a rich and strong historical background behind all Japanese tattoos. There are designs inspired by old figurines on tombs and some historical documents indicate that Japanese men used to have their faces and bodies decorated in various colors and styles. Then later in Japanese history when Chinese culture left its influence on Japan, tattooing became taboo and was reserved for criminals and outcasts. Traditional Japanese tattoos used to symbolize different types of character in people. Currently, Japanese tattoos are famous for ranging from small tattoos to brilliant large-sized designs that can cover an entire arm of the person having it tattooed.

Japanese tattoo designs and symbolism

There are various types of Japanese tattoo designs that are famous among people for their special significance. Some of these are the following:

Cherry Blossom: These are symbolic of life and are also known as Sakura. Though cherry blossoms are fragile it is considered to be their beauty that they are able to survive and bloom even in harsh conditions. Japanese culture believes that life should be lived to the fullest and the awareness of death should govern good living. That is the power of a cherry blossom tattoo, and one should take good care of it when it is tattooed onto the body.

Koi Fish: Koi fish are brightly-colored fish that are related to the spiritual significance of the Japanese culture and are very famous in tattoo designs. It is believed by Japanese people that koi fish go upstream to reach the gates of heaven where they become dragons. Koi fish are representative of power, ambition, strength, luck and individuality. If a tattoo has to symbolize a person’s struggle in life, then a koi fish tattoo is the perfect way to do that.

Dragons: Being an important part of the culture of Japan, dragons symbolize wisdom, strength, freedom, power and courage. They even symbolize supernatural powers at times. It is important to choose the right colors for dragons, though, as each symbolizes something different. So, you can get dragons designed in a variety of ways after checking their significance with your artist.

Hannya Masks: This is a traditional design where the meaning of demonic masks comes from kabuki plays. These tattoos represent good luck and are believed to ward off evil.

There are several other Japanese tattoo designs that you might like, but make sure you know their meanings and significance before getting any of them tattooed.

Discover How Positive Psychology Can Transform How You Teach

Do you see the best in your students now? Or will you be so focused on classroom management there is only time to get the job done each week?

Do you teach online and see a group of anonymous students you may never really get to know? Or do you take the time to learn what you can, through discussions and feedback, to help students with their developmental needs?

Teaching students is not always a matter of showing up for class, disseminating information and instructions, facilitating class discussions, and providing feedback. It is more about the instructional approach you take and its effectiveness when utilized. This is especially true for online instructors who teach in a technologically enabled environment. Your classroom presence as the assigned instructor, or lack thereof, determines how students respond to your involvement in class and whether or not they engage with you.

More importantly, your choice of an instructional strategy will influence how well your students make progress throughout the class. Their continued development depends upon you more than your instruction. There is an additional strategy you can use, one that can encourage progress, which requires only a change in your focus and choice of wording, and it is called positive psychology. This is centered on the enhanced well-being of your students and it helps to renew their self-motivation.

The Importance of an Online Presence

An online class may seem like a cold and uninviting environment; however, the involvement of an instructor can change all of that through visibility and engagement on a continual basis. It demonstrates to students the instructor is engaged and fully invested in their class. But there is more to being present than logging into the class and checking off required duties. There must be substantive engagement and the discussion board is one of the most crucial interactive elements of an online class. This is where the instructor can work with students and provide help when needed, guide them when they are off track, and prompt their knowledge retention, critical thinking skills, and intellectual involvement.

Working with Online Students

In a traditional classroom the instructor has control in how the class proceeds. They conduct a lecture and a lead the students according to a specified plan. With an online classroom the playing field, so to speak, is leveled. Students may cooperate and work with their instructor, or they may simply ignore them, complete the required work, and believe somehow they will pass the class. In this environment instructors must gain the cooperation of their students and nurture a productive relationship. Credibility and trust are both built through one interaction at a time. It can be easy to engage some students, especially the overachievers, while others may prefer to remain hidden behind the anonymity. But if you set high expectations for students and they aren’t responsive, it means they have shut you out.

Positive Psychology Basics

There are three phases commonly used to describe positive psychology and includes well-being, happiness, and optimism. Martin Seligman is generally credited with bringing positive psychology into practice and the purpose was to help individuals recover from depression through a positive perspective. As you learn more about this particular branch of psychology you will find that it is much more than positive thinking. It is also a strengths-based approach to human development. When positive psychology is utilized in treatment programs, not only is there a focus on strengths, there is also attention placed on positive emotions. The goal for this type of program is to create hope and restore a sense of well-being within the patient. While this is a simplistic overview, it shows there is another approach to bringing about change within adults.

Appreciative Inquiry and Distance Learning

Positive psychology aligns with appreciative inquiry, which is also strengths-based and the focus of my work as an online educator. I took appreciative inquiry and translated it for distance learning, as an instructional strategy, and called it appreciative andragogy. Andragogy is a theory that addresses how adults learn and is distinguished from the theory of pedagogy or the instruction of children. The basic premise of andragogy holds that adult learning occurs through a process of action and self-reflection.

Appreciative andragogy emphasizes the positive nature of adult learning and the enhanced view of self that will occur through supportive interactions with an instructor. Through the use of appreciative andragogy as an instructional method, the instructor may have a tool that can build nurturing relationships and increase the instructor’s presence within an online classroom environment. With a positive approach to student development the student is likely to experience a greater sense of motivation, engagement in the classroom, and improved performance overall.

Deciding to Implement Positive Psychology

As an educator you will develop a routine for how you manage a class and the many responsibilities that come along with it. For example, you develop a standard approach to how you interact with and communicate with your students and over time you may not question or examine it. As a faculty trainer, I have seen patterns of facilitation and found many instructors who put time and thought into their instruction. It is evident because their communication is done with purpose and their feedback is focused on a balance between guiding and correcting students. That approach to instruction is the easiest for adding in elements of positive psychology. It would be a matter of building from students’ strengths and coaching them, encouraging them, and offering resources for their developmental needs. The purpose of taking this approach is to help students create positive emotions so that they are encouraged to continue making progress.

The other pattern that I have seen as a faculty trainer is that of facilitation on the fly, or being reactive instead of proactive, and trying to keep up with the work while often missing some of the important instructional requirements. The feedback returned to students is generally quick and to the point, and there is minimal substance provided. For this type of instructor, they will find implementing positive psychology can be overwhelming and any attempt to use it will seem disingenuous to students. This instructor will need their own professional development before utilizing any new instructional method of this nature.

Positive Psychology Strategies for Instruction

I recommend a student-centered approach to teaching, which will allow you to focus on the best of your students. When students are the center of the learning process, they are transformed and the class is transformed into an engaging and dynamic environment. The following is a list of my strategies and what I recommend when I train faculty.

#1. I will work to prompt student engagement. This applies to their participation in discussions and involvement in the class. I want students to know they are encouraged to try and supported in class for their efforts.

During class discussions, I will try to respond to every student at least once and when I do, I will ask direct follow-up questions which help to promote higher order or critical thinking skills. If I discover students are not involved in discussions, or there are some who are absent from class, I will reach out and check in with them.

#2. I will encourage the effort made by students. Students need to know that even when they believe their effort has fallen short, you still recognize the attempt made.

When I provide feedback for assignments and learning activities, I will use the sandwich method and begin the feedback with something positive. Then I’ll address a developmental need and conclude with a positive statement. If I have a student who is struggling, I can always encourage them based upon the effort made as it will determine if they will continue to make an effort. If they are making an attempt and only receive negative feedback, they can easily become discouraged and give up.

#3. I will encourage reflection through self-assessment. Any form of reflection must be taught as a productive exercise, one in which the student is looking for possibilities and opportunities, not failures, if it is to be implemented successfully.

If I can teach students to be reflective it will help them learn to self-assess their progress in class, rather than believe they have no control over their outcomes. I can also suggest self-assessment techniques such as a one-minute paper which will help them review what they know about a subject. Through the use of reflection and self-assessment I can help students take ownership of their involvement in class, which aligns with the theory of adult learning.

#4. I will work to be an example for students. As an online instructor I need to establish a highly visible and interactive virtual presence, which is also referred to as a social presence according to the Community of Inquiry framework.

Being visibly present means I am actively engaged in the class and class discussions, and students develop a perception I care about the class, which translates into the level of attention they will likely receive from me. I have found students follow my lead and if I am active and responsive, there is a good possibility they will be too.

#5. I will leverage my subject matter expertise. I want to create an inclusive, informative, and safe environment for the exploration of course topics.

Providing engaging feedback and discussion posts requires the use of my own background and knowledge. As we know, students can benefit from the inclusion of examples from our experience and expertise. How I share this is through the class discussions, when I provide real world context, along with weekly feedback, as it can help guide students as they attempt to comprehend the course subjects.

#6. I will always try to consider the perspective of the students. I need to engage in my own self-reflection to make certain I understand the needs of my students.

As I reflect upon the progress of my students, I will ask myself: What are their developmental needs? Are the instructions provided clear and concise? Is the feedback a true reflection of their progress and does it help to guide their thinking about the topic they have written about or discussed? When I provide feedback, I will think of students individually and provide personalized guidance rather than canned general comments.

#7. I will try to lead the way to application of what was learned. With a student focus and concern for the student experience, I can also help students learn by making the course relevant to what they are interested in.

In other words, as self-directed adults who are taking courses for a specific purpose, they need something more than reading about subjects in a textbook; they need to know how to apply what was learned so they can use it, whether in their personal lives or careers. When students are provided with a context for what they are reading about they are more likely to retain that knowledge in the long term and they will develop a perception that they have actually learned something in their class.

Potential Challenges and Benefits

There are many benefits to adding a positive or strengths-based approach to your facilitation. For an instructor who already demonstrates care and concern, coupled with meaningful interactions, this will be another tool and a natural fit to their instructional approach. Students will likely respond in an enthusiastic manner because it will create a sense of hope as it is tied to their continued well-being. Of course, not all students will respond to this approach and some will keep their distance. With online learning you really do not have an opportunity to approach them in class and engage them in a conversation. You can certainly extend the courtesy of an outreach attempt but it is dependent upon their perception of what it means to them.

Overall, that is the point of this approach as students who have positive experiences in the class with their instructor will be encouraged to participate in the learning process. By taking a strengths-based approach you can teach students to develop persistence and self-confidence, as they have skills and abilities to draw upon no matter what learning activities they are required to complete. The use of a positive psychology frame of reference also creates a feeling of satisfaction for the instructor. I can state this from my own experience working with appreciative inquiry. I’m not a subject matter expert in either field but I know how it has helped the continual development of my work with online students and online instructor. You can also experience this through the use of a positive facilitation instructional practice. When you focus on the best of someone, it encourages hope, elicits positive feelings, and creates a sense of self-renewal and self-determination, which is vital to student and faculty success in the online classroom.