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Weekend reflection process
a depiction of Sun Wukong wielding his staff (Photo credit: Wikipedia)
RJ: the asker of great questions, asked:
Hi Ken,
Do you have anything written on a weekend review process for a trading journal and trade chart markups?
Double loop learning requires review of work but I don’t have a well-defined process for weekend reviews.
I searched the chatroom and your essays but either didn’t use the right search terms or just didn’t find anything written.
Could you recommend some reading or anything else so I can develop an effective weekend process?
Thank you.
RJ
I replied: Try this on: this is what i find myself doing, over and over until someday I get it right:
0. Center ourselves on who we are and feel gratitude for the gift of life and consciousness to reflect on the wonder that is our Self and the world around us
1. Accept who we are and our desire to improve
2. Review what we aim to know, to do, to be (review goals and objectives)
3. Review the facts about what was done, including detailed performance stats as part of our ongoing study
4. Observe the slope of the trendlines and the volatility of our performance (all our trades and all our actions and all our feelings)
5. Review the forms and checklists to ensure discipline was performed; what did we overlook, where did we take shortcuts, and why?
6. Look for moments arising from the facts that seem to be important, trusting in our intuitions to nominate reflections
7. Follow the trails of reflection, connected to facts
8. Identify the A HA! moments
9. Conduct the 4 part learning journal exercise (A Ha moment, Reflection, Commitment to action, Results)
10. Commit our spirit and self to the next cycle of the wheel of improvement which continues to turn
this is what happens when i start writing after reading from the book of tales of Sun Wukong (The Monkey King)
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Approaching trading as a High Reliability Organization (HRO)
Logo of the United States National Wildfire Coordinating Group. (Photo credit: Wikipedia)
We know from scholarly and popular literature that 90% of new businesses fail in the first five years as an additional 90% fill in the next five years and yet there are groups of organizations that are remarkably successful while operating the most difficult of circumstances when you would expect failure to be the norm. These organizations which thrive in high risk, high uncertainty environments in which failure is catastrophic are collectively known as high reliability organizations (HRO). Scholars have taken a number of different approaches to the subject of HR role in the literature. They have approached it from the disciplines as diverse as: neuropsychology, civil engineering, organizational psychology, sociology, naval aviation and nuclear propulsion.
My own research on decision-making under conditions of uncertainty led me to the scholarly literature on high reliability organizations(HRO) through the approach of social psychology where the two most influential writers are Weick and Sutcliffe from the University of Michigan. They had identified five qualities of HR role that lead to exceptional outperformance and the development of organizational resiliency. Resiliency is an important topic for traders because it describes strategies and resources that help the trader endure through emotionally challenging and training times. Because traders operate under high stress and uncertain conditions all the time, it occurred to me that perhaps the principles of HRO might have some pay off for traders. I was happy to find the important connections that can be of benefit to traders in developing robust trading plans and emotional resilience.
Weick and Sutcliffe identify five qualities of HRO’s which distinguish them from traditional organizations which traders might seek to develop in their own trading plans:
1) Preoccupation with failure: To avoid failure we must look for it and be sensitive to early signs of failure; not to lay blame but to ensure the plan does not further unravel
2) Reluctance to simplify: Labels and clichés can stop one from looking further into the events; consider the evidence for your beliefs carefully and don’t oversimplify.
3) Sensitivity to operations: Systems by nature are dynamic and nonlinear; it can be hard to know how the different pieces fit together and how quickly things may change.
4) Commitment to resilience: you must be able to perform during periods of high stress. This means you have to be able to absorb strain,, recover from difficult situations, and then learn and grow from previous episodes.
5) Deference to expertise: This means respecting the evidence of the results and having confidence in the quality of your justified conclusions. These are more important than platitudes and conventional wisdom.
Firefighters are an example of an HRO in practice that traders can learn a lot from. The National Wildfire Coordinating Group (NWCG) has developed a set of 10 Standard Fire Orders, which are a logically organized set of rules that have been keeping firefighters alive and successful in their mission since 1957. They are to be implemented systematically and applied to all fire situations. They also have identified 18 watch out situations that represent known conditions of especially high risk. These apply equally well to traders as I tried to show below.
Professional Trader Behavior (adapted from the NWCG: http://www.nifc.gov/safety/safety_10ord_18sit.html)
1. Keep informed on market conditions and forecasts.
2. Know what your market and target are doing at all times.
3. Base all actions on current and expected behavior of the market and target.
Market Safety
4. Identify escape routes and safety zones and make them known.
5. Post lookouts when there is possible danger.
6. Be alert. Keep calm. Think clearly. Act decisively.
Organizational Control
7. Maintain prompt communications with your brokers, partners in the market.
8. Give clear instructions and insure they are understood.
9. Maintain control of your trades, orders and decisions at all times.
If 1-9 are considered, then…
10. Trade the market aggressively, having provided for safety first.
The 10 Standard Orders are firm. We don’t break them; we don’t bend them. All traders have the right to a safe environment is.
The 18 Watch Out Situations
1. The market and your target not scouted and sized up.
2. You haven’t planned for or rehearsed this situation.
3. Safety zones and escape routes (protective stops) not identified.
4. Unfamiliar with market and sector factors influencing price behavior
5. Uninformed on strategy, tactics, and hazards.
6. Instructions and assignments not clear.
7. No communication link between traders, brokers and partners
8. Entering trades without predetermined exit points
9. Trading without stops.
10. Chasing a runaway breakout
11. Not being aware of critical states
12. Unaware of broader market condition.
13. Unaware of potential market turning points
14. Price range begins to expand in short term time frame.
15. Change in broad market volatility.
16. Ignoring signals of changing market conditions.
17. Difficult to judge where to play safety stop.
18. Feelings of physical, mental or emotional fatigue.
Note that these are just my own quick interpretations; yours might vary. The exercise in translating from firefighter perspective to that of a trader is definitely worth doing on your own as well. Give it a try!
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Dr Kenneth Ginsburg on resilience
just listened to a brilliant and human presentation on resilience and children by Dr Kenneth Ginsburg, and what we can do to help them weather life storms, deliberately and intentionally. Directly connects how I go about coaching my youth soccer teams, using athletics as the vehicle for important life lessons. his work is definitely worth your time
the engineering approach to problem solving
The hybrid approach you referred to I think reflects the sense of the sociotechnical process. I can’t imagine why people and organizations would not intentionally adopt that as the default position when considering organizational issues, and yet I see people polarizing around either or approach all time in my organization.
It seems to me that the engineering approach really appeals to people who think they have a good handle on the situational assumptions in the problem area he can rely on rules of cause and effect and planning factors lead them to a efficient and effective solution. The simplifying assumption that sociology doesn’t have a major effect and what they’re about to do can sometimes be warranted but is often the assumption that we come to regret later.
Digital workspaces and the atomization of human communication
If we are social animals, and workplace networking and interaction is an important part of our psychological well-being, what are the implications of an increasingly telecommuting workforce?
It’s a well-known phenomenon that people are mean to each other over the Internet in their blogs and discussion board comments. E-mail is well known for being misinterpreted. People are well known for sending e-mails with words they would never say face-to-face.
Doesn’t that add up to an atomization of social interaction with with important negative potential consequences?
What kinds of policies could that drive organizations to develop with respect to official communications? Especially when people have a hard time distinguishing between personal and professional use of IT resources? Don’t these very policies serve as a source of irritation between the people and their organization?
And in different cultural norms across global communities and you can see some of the challenges of creating a digital workspace to take advantage of IT
George Lopez staying classy
Free speech is free. You get to judge it’s value. In the interest of fair play and equal opportunity, Lopex will turn his attention to the “authenticity” of Obama’s heritage, I guess, or whatever the point of his riff was.
In the same interest of transparency, democratic pundits are calling for Barack’s birth certificate, and college records just like they are calling fr Romney’s tax records and SEC filings
Being young in America means you get to pay
Upholding Obamacare means young people now get to learn what its like to pay for everyone else’s healthcare and not just their Social Security now. Maybe this is why we don’t teach them math skills, so that they dont understand what we are doing to them
Advice on preparing for the defense
My good friend Tonya asked for some advice on preparing for her dissertation proposal defense.These were my thoughts on the dissertation defense (I misheard her). For the proposal defense, the focus is more on the procedural and methodological questions
They should ask you, and you should be prepared to give answers to these questions:
- What did you study?
- How did you find it?
- Where did the passion come from?
- Why do you care?
- Why should we care?
- How did you study it?
- Why was that appropriate?
- What did you find?
- Why is the analysis persuasive (qualitative) or positive (quantitative)
- How should we interpret it and fit it into the larger body of knowledge?
- What should we do with the knowledge?
- What will you DO with the knowledge?
- What was unique and original?
- What are the limits of your findings?
- Who else needs to know or should care?
- Where should we look now that you have found these things?
- What’s next?
- How did this journey affect you?
- How did you change?
- How do you feel?
They wont let you defend unless you are ready; It will be your coming out party, so enjoy the moment, don’t dread it.The most natural feeling is to feel like you aren’t ready ; that’s the doctoral humility we feel whenever we remember how little we know
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Budget cutting by reducing farm subsidies
budget (Photo credit: 401K)
I see liberal commentators like Cenk Uygur applauding the reduction of 280B from the proposed budget, as an end to corporate crony capitalism. As if that’s not going to have an effect on the price of food, which is a disproportionally higher percentage of the budgets for the poor than the rich.
Cut 280B from subsidies, and prices will rise about….280B. That works out to about 3K per person per year in the US. Families currently on the margin will then need assistance to make ends meet. The cost of assistance will be passed on to the middle class, who always pays
The response will naturally be to increase the funding for food stamps, and more firmly connect the people to an all powerful natioanl government that provides for all necessities. Who could trust local and state governments, or betterm families and churches to take care of their tribes. What an odd notion these days
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The importance of alone time: solitude and innovation
Image via Wikipedia
A long snippet, but it has important things to say about solitude, inquiry, creating new knowledge, innovation and scholarship: the importance of “alone time”
Games, consultants Tom DeMarco and Timothy Lister compared the work of more than 600 computer programmers at 92 companies. They found that people from the same companies performed at roughly the same level — but that there was an enormous performance gap between organizations. What distinguished programmers at the top-performing companies wasn’t greater experience or better pay. It was how much privacy, personal workspace and freedom from interruption they enjoyed. Sixty-two percent of the best performers said their workspace was sufficiently private compared with only 19 percent of the worst performers. Seventy-six percent of the worst programmers but only 38 percent of the best said that they were often interrupted needlessly.
Solitude can even help us learn. According to research on expert performance by the psychologist Anders Ericsson, the best way to master a field is to work on the task that’s most demanding for you personally. And often the best way to do this is alone. Only then, Mr. Ericsson told me, can you “go directly to the part that’s challenging to you. If you want to improve, you have to be the one who generates the move. Imagine a group class — you’re the one generating the move only a small percentage of the time.”
Conversely, brainstorming sessions are one of the worst possible ways to stimulate creativity. The brainchild of a charismatic advertising executive named Alex Osborn who believed that groups produced better ideas than individuals, workplace brainstorming sessions came into vogue in the 1950s. “The quantitative results of group brainstorming are beyond question,” Mr. Osborn wrote. “One group produced 45 suggestions for a home-appliance promotion, 56 ideas for a money-raising campaign, 124 ideas on how to sell more blankets.”
But decades of research show that individuals almost always perform better than groups in both quality and quantity, and group performance gets worse as group size increases. The “evidence from science suggests that business people must be insane to use brainstorming groups,” wrote the organizational psychologist Adrian Furnham. “If you have talented and motivated people, they should be encouraged to work alone when creativity or efficiency is the highest priority.”
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