VIVIENDO DEL MIEDO

Diego Joachin

La expectativa de daño es lo que etiquetamos como “miedo”. Ese ya mero,

pero todavía no del daño, puede causar ansiedad o puede nublar por completo
la capacidad de reaccionar sensatamente. Así como para un deportista una
lesión limita su desarrollo, percibimos que el miedo limita, inevitable e
irreparablemente, el bienestar de nuestra vida.

En este ensayo quiero proponer una visión diferente. Con una mentalidad
utilitarista con disfraz de audacia pretendo explayar que, el dolor, lo que
subyace detrás del miedo, es un indicador exótico que apunta hacia algo.

Contrario al deportista lesionado, el miedo y el dolor en nuestra vida no es una

limitación, sino la aparición incomprensible y prematura de algo nuevo y
bueno. El dolor es la manifestación de la vida que quiere seguir viviendo, que
no cede y por eso avisa de forma sonoramente una realidad nueva.

Para ello destacaré tres escenarios donde tengo evidencia para sostener esta
visión de la realidad.

Vida personal

A mediados del 2010 fui asaltado en la puerta de mi casa subiéndome al carro.

A punta de pistola fui expropiado de mi teléfono y, según yo, mi carro también,
pero solo fue el teléfono. Esa vez me sentí frustrado por varias horas ya que no
tenía dinero para reponer mi teléfono además de los costos de trámites de la
licencia y cedula, más la humillación de ser sorprendido con una pérdida que
es totalmente posible en mi país. Mi hermana Rita me prestó dinero esa tarde
para ir al día siguiente a realizar los trámites. En esta ocasión me ofrecieron un
blackberry, el cual me parecía un aparato innecesario en mi vida y hasta cierto
punto demasiado común. Adquirí este teléfono. La reducción en el costo
unitario del minuto, el acceso permanente al correo electrónico y los beneficios
como cámara fotográfica, de video, el chat global gratis y la agenda magnifica
han hecho de que, post facto, me siento satisfecho de haber sido expropiado
del antiguo teléfono, con el cual hoy estaría pagando minutos más caros y no
podría llevar la cantidad de actividades que he llevado recientemente de forma
organizada: por ejemplo incluir la secuencia del E140 dentro del teléfono y
compartirla con la administración y la cocina fue una tremenda audacia que
me permitió cumplir con la organización y puntualidad del EPJ.
Mi cuñada Rita, desde que la conocí, quería cambiarse de trabajo por
incentivos financieros. Una mañana de sábado en la universidad le tome una
foto, con el blackberry, a un cartel de una institución educativa en búsqueda de
maestras que coincidían con los estudios de Rita. Se entrevisto y fue
contratada entusiastamente, sobre todo porque la institución era muy acorde a
la religiosidad de ella.

Después de muchas semanas de stress y frustración, fue despedida. No duro ni

un semestre. A pesar de las advertencias iniciales sobre los peligros de dar
clases en un ambiente como el de ese colegio, fue inevitable que fracasara en
el intento de trascender en ese trabajo.

Seis semanas más tarde ha sido contratada por una universidad donde
percibirá ingresos mucho mejores y además tendrá un contacto más a la altura
de sus expectativas, como lo son jóvenes universitarios.

El miedo de recibir un balazo o perder el carro como la frustración de un

despido fueron indicadores que avisaban de forma prematura una realidad
nueva, y mejor.

Mercados Financieros

He descubierto que es posible encontrar oportunidades rentables tomando

como parámetro la volatilidad del mercado.

Standard & Poors 500

Este indicador es una cifra, que actualmente está es 1315, la cual sube cuando
las 500 empresas más importantes del mundo esperan recibir más flujos de
dinero. Cuando cae quiere decir que las condiciones están empeorando por lo
que las expectativas de recibir flujos de caja es negativa.

En esta grafica tenemos el S&P500 (eje izquierdo, en múltiplos de diez) junto al

indicador de volatilidad, el vix.

S&P500 Volatility Index

Este indicador es una cifra que aumenta cuando la variabilidad del S&P500
sube. Si en un periodo de tiempo el cambio de la cifra del S&P500 es agitado,
el indicador de volatilidad, llamado VIX, aumenta. Así también cuando el
S&P500 está en “tendencia” la volatilidad baja porque el mercado está definido
en tal dirección, puede ser para arriba o para abajo.
Cuando sube la volatilidad, es posible ganar dinero. Una inversión de mil
dólares en 1997 se hubiera convertido en 20mil dólares diez años después, si
compráramos el S&P500 cada vez que la volatilidad subiera de cierto nivel.
Aunque habrían pérdidas eventualmente, la probabilidad de ganancia
permanece robusta, arriba de 66%.

Como diría George Soros, el sultán de la especulación, el alquimista de las

finanzas, el problema de las ciencias sociales, como la economía, es que se
componen de seres pensantes. Y cuando existe este tipo seres es inevitable
que generen incertidumbre y provoquen confusión y desviación de la verdad.

Por eso Soros indica que no es adecuado aplicar el método científico a las
ciencias sociales porque los seres pensantes son demasiado inciertos ya que
son capaces de manipular los propios métodos diseñados por ellos para
entenderse a ellos mismos1. Soros cita a Freud: “Freud maintained that
people’s behavior was determined by drives and complexes of which they were
not even conscious”.

Cuando existe este tipo de incertidumbre es cuando surge la volatilidad, y en

las finanzas, esto, según Soros, es un cambio de dirección del mercado y él se
ha ganado el apodo de sultán de la especulación porque toma posiciones
concretas cada vez que observa un patrón de volatilidad.

Teología

En la revelación cristiana al revisar sus textos bíblicos del antiguo testamento

se identifica un patrón: cuando el Dios de Israel se manifiesta, la realidad
cambia. Cuando saca al pueblo de Egipto y lo lleva a la tierra prometida,
Moises sufre la volatilidad del pueblo infiel e intercede ante Dios. La tierra
prometida es una esperanza que los israelitas podían imaginar solo con la
lucha contra el pueblo enemigo. De ahí la escritura de Josue al decir “no tengas
miedo, yo estaré contigo”.

También en el nuevo testamento cuando Jesus empieza a revelarse a los

judíos, sostiene varios diálogos intensos documentados en la buena noticia del
evangelista san Juan. Repetidas veces enfrenta situaciones donde está a punto
de ser apedreado después de un intenso debate con los ancianos y expertos de
la Ley.

Cuando el Dios del amor se manifiesta, empieza con una transformación

radical de la realidad.

1 A esto Soros le llama “Reflexivity”, concepto que tomó de Karl Popper.

Por esa razón el sacramento de unción de enfermos, en vez de ser un funeral,
propone una actitud de mentalidad flexible hacia el cambio en su versión más
hostil y exótica: dolor. Ante esa experiencia de ultimidad y esa rebelión contra
un futuro inaceptable, no se trata de consagrar al dolor con un un disfraz
religioso, sino que se le dice al enfermo que el ha sido llamado a la vida de
modo que este signo eficaz de la unción busca darle la iniciativa de
sostenimiento y animación para conocer en un punto de vista diferente la
victoria de la vida sobre la muerte.

Vivir del miedo se trata de una actualización a la perfección. Así como la

naturaleza es perfecta porque ella misma se regenera, así nosotros podemos
ser perfectos porque tenemos la libertad de salir mejor de una situación
incómoda, dolorosa y horriblemente desahuciadora.

Brett Steenbarger

Trading Success, Fear, and Endurance

"What makes a great endurance athlete is the ability to absorb potential
embarrassment, and to suffer without complaint. I was discovering that if it
was a matter of gritting my teeth, not caring how it looked, and outlasting
everyone else, I won. It didn't seem to matter what the sport was--in a straight-
ahead, long-distance race, I could beat anybody.

If it was a suffer-fest, I was good at it."

Lance Armstrong
It's Not About the Bike
p. 23

"You can lash out at people, you can get mad at yourself--you can even end up
hating yourself without ever realizing that fear is the interference, the block in
the road of progress. Fear only causes me to react. Fear only causes me to
wait. Fear moves me away from effective action. When you find yourself acting
like a jerk, stop for a second and just ask yourself, What am I afraid of here?"
Richard Machowicz
Unleash the Warrior Within
p. 61

What do you fear most as a trader?

Embarrassment of loss?

Being wrong?

Losing a dream?

How does your fear manifest itself?

What negative trading behaviors do you engage in to mask your fears? Getting
mad? Walking away?

There's much to be said for trading as an endurance sport. One of the things
successful traders learn to endure--and overcome--is fear. And that starts with
a simple question: What am I afraid of here?

Three Steps for Breaking Patterns of Frustration in Trading

In my recent post, I recounted the example of Rick and the frustrated
thoughts that were interfering with his trading decisions. A major idea
from that post was that Rick's thought and behavior patterns were not really
overreactions (as he thought they were); nor were they signs that he was
"crazy" or "immature" (also things he called himself). Rather, Rick's patterns
represented conflicts from his past that were triggered by events in the
present, setting off old (and out of date) ways of thinking and behaving.

Research that I recently cited finds that "willpower" is much like physical
energy: it can be depleted with effort. When we expend effort on following
markets and containing emotions, our reserves of self-control dwindle. This, in
turn, leaves us ever more vulnerable to those situations in which present
events trigger automatic thoughts and actions from the past.

It is for this reason that "controlling" or fighting emotions is not helpful for the
trader. Even if we succeed in keeping a lid on feelings, we take ourselves out of
that performance "zone" in which we'll make our best decisions. Only by
removing ourselves from the trigger situation and putting ourselves in a
different physical and emotional state can we short-circuit the negative
patterns (make them less automatic) and enable ourselves to re-enter that
decision-making "zone".
So let's break this down: the first steps in changing negative, automatic
patterns are threefold:

1) Recognizing the triggers for our patterns - Typically, there are a

limited number of situations that set us off. For Rick, for example, a trigger
situation was one in which the market moved suddenly against him. This set off
feelings of frustration, which then triggered self-talk about markets were
"rigged" by the "big guys". Those thoughts, in turn, triggered efforts to fight
the big guys, leading Rick to double down on his now-losing trades. This
sequence can occur relatively quickly, but notice how there are many points at
which Rick could interrupt the cycle. One technique I've found consistently
useful is having traders keep a journal in which they look back on periods of
frustration and identify the triggers. Reviewing this journal helps us become
more aware of--and sensitive to--our triggers. This brings us to our second step.

2) Recognizing that the patterns are occurring - This means monitoring

your state of mind and your physical state at regular intervals during the
trading day. One tool I've used with traders is a simple picture of a
thermometer, in which traders can fill in the time of day and their "stress
temperature". The idea is to recognize frustration *before* it triggers ongoing,
negative, automatic patterns of thought and behavior. (One trader I worked
with stayed hooked up to a biofeedback unit while trading for this very
purpose. He stopped trading temporarily when he exited the "zone" to a
significant degree). The idea is to generate a mental red flag when we
recognize that frustration has been triggered. A journal can be helpful here, as
well. In this case, the entries would be in real time: How am I feeling right now?
What am I thinking? What is the state of my body? Such a journal strengthens
our ability to act as an observer of our patterns, reducing the likelihood that we
will become lost in them. This, in turn, brings us to our third step.

3) Taking the break from trading and entering a new state - Once you
exit the situation that is triggering frustration, you can engage in an activity
that greatly shifts your physical state. The odds are good that this will also
move you to a different cognitive and emotional state. A quick round of active
exercise (such as jogging on a treadmill, calisthenics, or push-ups and sit-ups)
can work very well. Conversely, you may find it more effective to listen to very
quieting music and then perform a meditation exercise: vividly imagining
yourself in a peaceful location while you rhythmically breathe very deeply and
slowly for a few minutes. If you use biofeedback, this would be the time to
engage in one of the biofeedback routines. One unit I use, for example, (em-
Wave) includes on-screen "games" in which you keep a balloon aloft by staying
"in the zone". The idea would be to only return to the trading station once
you've kept the balloon aloft for a few minutes. That completely short-circuits
the negative behavior pattern. It will take some creative experimentation to
find the specific activities that work best for you in shifting your state. In many
cases, just taking a break, putting on some music, getting a bite to eat, and
walking around are enough for me to clear my head and start fresh.

Notice that the most important step in the above is the decision that a
trader makes to not buy into the frustration and the resulting
negative self-talk. The market is not the problem. Other traders are not the
problem. "My terrible luck" is not the problem. The problem is buying into
negative thinking and letting it control trading decisions. That is why the
most important step of change of all is the decision to actively fight
these automatic patterns. They--not you, not trading--are the problem. Once
they're triggered, your sole priority is to interrupt them and prevent them from
controlling your behavior. With each interruption, you distance yourself from
the patterns and make it easier the next time to extricate yourself from them.

If you find that you cannot identify the triggers and recognize them as they're
occurring, you may want to try some of the techniques highlighted in the two
chapters in the Enhancing Trader Performance book devoted to cognitive and
behavioral methods. I wrote these chapters specifically as self-help mini-
manuals for traders. If you find that even self-help methods are not
working for you, that's the time to consider professional assistance.
Here's a reputable website that offers referrals of licensed professionals in
various geographic areas.

That having been said, my experience is that the most common

reason that self-help methods don't work is that traders don't stick to
them. Patterns that have been acquired over a period of years and reinforced
by years of repetition will not go away simply by talking with a coach or trying
an exercise a few times. If traders faithfully carried out the three steps above
every day for a month, I'd expect to see significant progress in the vast
majority of situations. What happens, however, is that traders don't see
progress after a few days and give up. It's not the time with a coach or
counselor that generates change--it's the consistency of hands-on efforts day in
and day out to interrupt and change our patterns.

For my last post in this series, I will outline a specific routine that I use to work
on myself. It will illustrate a different aspect of working on changing our
automatic patterns: preventing them from occurring in the first place.

The Fear of Missing is the Fear of Dissing

A reader recently asked me about a problem he was having with "the
fear of missing". It appears that he front-runs his setups, getting into trades
before he gets proper signals. This fear of missing opportunity has hurt his
performance, as it has placed his capital at risk during periods of low
opportunity.

At the very least, the fear of missing signals can result in poor execution.
Instead of buying on pullbacks or selling on bounces, you chase the market
higher or lower. The several ticks of retracement typically incurred add up to
quite an opportunity cost over time.

I'll be addressing the fear of missing trading opportunities in detail in my new

book. (One chapter will be devoted to the "ten most common problems" of
trading psychology and how to deal with them using psychodynamic, cognitive,
behavioral, and solution-focused coaching methods). For now, however, let me
focus on one aspect of this fear: the fear of oneself.

Let's say you *do* miss a golden trading opportunity. What will happen? Fear is
a response to perceived danger. Where's the danger? What's the threat?

Very, very often the consequence of a perceived missed opportunity is a bout

of angry thinking turned inward. After missing the good trade, the trader
launches into self-blaming and a beating up process that mixes guilt with self-
directed hostility. "How could you be so stupid?" and "Look how much money
you could have made!" are among the common self-recriminations.

It is in this context that the fear of missing is really a fear of one's own negative
thinking process.

Let's face it: we *always* miss potential opportunity. If you don't hold trades
overnight, you miss possible opportunity. If you don't trade your maximum
size, you miss potential opportunity. The reasonable trader knows that it's not
about taking every conceivable opportunity: that would be impossible. Rather,
it's about limiting your risk, while taking advantage of the best opportunities.

But if the result of missing trades is going to be an avalanche of self-criticism,

the danger is not financial risk, but the risk of feeling worse about yourself.

If you don't have a negative, self-critical thought process, there's nothing to

fear in missing. We always miss the very top and bottom ticks; we always are
away from the screen when something is happening. No, it's not about the
markets. Most often, the fear of missing is the fear of dissing oneself. The links
below, as well as the chapter on cognitive techniques from my Enhancing
Trader Performance book, should be helpful in dealing with this problem.
Trading and the Brain: Trauma and the Amygdala
An interesting research report suggests that a particular brain region, the
amygdala, is highly involved in loss aversion: the fear of losing money. It's
interesting that the amygdala has also been implicated in post-traumatic stress
reactions. As a fear center for the brain, the amygdala helps us recognize and
recall danger. That is adaptive when our lives are at stake, but it can inhibit
normal decision making when memories and reactions from past anxiety-
producing events intrude into daily life.

An important insight that I came to when first working with traders was that
many of their emotional reactions were similar to those who suffer from mild to
moderate degrees of traumatic stress. This includes people who have been the
victims of physical abuse, violent crime, or life-threatening accidents. It
appears that threats to one's money and livelihood may be as emotionally
impactful as threats to significant relationships or even threats to physical
security.

If that is true, then many of the self-help techniques that we read in the trading
psychology literature may be not very helpful for traders dealing with
exaggerated responses mediated by the amygdala. Writing in a journal, talking
with a coach, or visualizing positive outcomes would not be sufficient for
reprogramming traumatic responses and overcoming emotional reactivity and
loss aversion.

How could traders identify and address such problems? I will be dealing with
this issue in upcoming posts.

Trading, Investing, and Trauma

Proper risk management is not only a cornerstone of good trading and
investment; it is essential to trading and investment psychology.

When traders and investors are exposed to excessive risk, the magnitudes of
the gains and losses generate large emotional swings, which then interfere
with sound planning and judgment.

This is a common challenge for traders looking to increase their size: they
bump up their risk in a large increment and then have difficulty emotionally
weathering the larger P/L swings.

It is also a common challenge for investors, particularly those who were "all in"
the stock market during the 2008-2009 collapse and now also face declines in
their home values. The impact of such losses can be traumatizing, making it
difficult to later take normal, prudent risk.

Jon Markman recently interviewed me on this topic and put together an

excellent article for the MSN Money site. His point is well taken: many
individual and professional traders and investors have been left behind in the
recent rally because of their lingering fears from prior losses.

It is the nature of trauma to leave us forever fighting the last battle. That
leaves us vulnerable in markets when the battlefield changes. Sound risk
management is the best therapy of all, because it is preventive. When others
are traumatized, the prudent risk taker can be poised to seize opportunities.

Moving Beyond Fear and Anxiety

I had the pleasure of running into Dr. Doug Hirschhorn this past week, and he
was kind enough to pass along a copy of his new book "8 Ways to Great".

The book is subtitled "Peak Performance on the Job and in Your Life" and offers
worthwhile insights that go beyond trading.

From the book's section on keeping your cool:

"Everyone gets scared, even the best of the best. In fact, sometimes being
scared is the most rational reaction to a given situation. There's no shame in
that. It's when people give in to those feelings that they get into trouble. As I
frequently say to my clients, 'Feeling fear is okay so long as you don't act
afraid or make a decision because you are afraid.'" (p. 80).

The distinction is important. It is not a problem to feel fear; the problem occurs
when we allow fear to drive decision-making. Success is not banishing anxiety,
but learning to tolerate and contain it. Indeed, one can even learn from one's
discomfort, as I recently highlighted in a post. It is that resilience that enables
traders to overcome loss and find opportunity from the losing.

Ironically, it is in embracing one's fears that we learn from them--and prevent

them from reactively driving our decisions.