A trader I coach predicted this as the best positioning for Brexit : Short the pound, short the S&Ps, long gold and short oil. This is John B. – a guy with 20+ years of very successful experience and a recent history of working on separating instinct from impulse through coaching.

We speak three times a week. When we got on the phone during the last hour of trading on Thursday he confessed however to being “all twisted up” from Wednesday when he had gotten short then long and then short again! While he had arrived at the right positioning, on the way he got jumbled up. He really couldn’t tell what he felt and even if he did identify a feeling, he thought he felt the opposite a short time later.

The ReThink Group

A trader in the midst of a psych cap drawdown

Given the work he had been doing, his internal tornado was aggravating him more than the market. And /that/ is always a sign that the feelings run deeper than the trades.

When feelings are strong, they virtually always connect to issues or meaning that came before the current problem. As we explored, he realized that on one hand he feared being afraid – i.e. he didn’t want to get flat for fear of being weak and on the other hand, he feared being stupid  – i.e. he wanted to get flat because he didn’t want to be wrong and feel like an idiot. The intensity of the previous jumble had been over having to choose between feeling weak versus feeling stupid – a choice he often felt as a boy. In other words, an echo of the past or what in my book Market Mind Games, I identify as the fractals of psychology.

Immediately upon recognizing the connection to these earlier feelings, he got clear. He was then able to make a risk management decision that has left him quite happy today. He feels neither weak nor stupid. He has more confidence in his market reads and his month doesn’t look so bad either!

 This story exemplifies what it means to “Leverage EQ into the X Factor”.