I was just reading this article in The New Yorker and I am impressed by it so much so that I'd like to log this in my trading journal.
The article is about a simple study done in the 60's with hundreds of kids being asked to resist the temptation to a table-full of candies while waiting for the researcher to come back into the room. Years later, the researcher find that those that is able to delay instant gratification are more successful later in life.
I've read about this study before, but this article is a lot more comprehensive than what I've seen. Anyway, read the article for the details.
So what's so special about having self-control? The article and the researcher puts it poignantly. > For decades, psychologists have focussed on raw intelligence as the > most important variable when it comes to predicting success in life. > Mischel argues that intelligence is largely at the mercy of > self-control: even the smartest kids still need to do their homework. > ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWhat weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re really measuring with the > marshmallows isnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t will power or > self-control,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? Mischel says. > ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s much more important than that. > This task forces kids to find a way to make the situation work for > them. They want the second marshmallow, but how can they get it? We > canÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t control the world, but we can control how we > think about it.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? And how are some of these 4-year-old doing it? > At the time, psychologists assumed that childrenÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s > ability to wait depended on how badly they wanted the marshmallow. But > it soon became obvious that every child craved the extra treat. What, > then, determined self-control? MischelÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s conclusion, > based on hundreds of hours of observation, was that the crucial skill > was the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œstrategic allocation of > attention.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? Instead of getting obsessed with the > marshmallowÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â?the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œhot > stimulusÃƒÂ¢Ã¢â€šÂ¬Ã‚Â?ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â?the patient children > distracted themselves by covering their eyes, pretending to play > hide-and-seek underneath the desk, or singing songs from > ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œSesame Street.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? Their desire > wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t defeatedÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â?it was merely > forgotten. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œIf youÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re thinking about > the marshmallow and how delicious it is, then youÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re > going to eat it,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? Mischel says. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe key > is to avoid thinking about it in the first place.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? So what does this have to do with trading? > In adults, this skill is often referred to as **metacognition**, or > thinking about thinking, and itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s what allows people > to outsmart their shortcomings. (When Odysseus had himself tied to the > shipÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s mast, he was using some of the skills of > metacognition: knowing he wouldnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t be able to resist > the SirensÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ song, he made it impossible to give in.) > MischelÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s large data set from various studies allowed > him to see that children with a more accurate understanding of the > workings of self-control were better able to delay gratification. > ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWhatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s interesting about > four-year-olds is that theyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re just figuring out > **the rules of thinking**,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? Mischel says. > ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe kids who couldnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t delay would > often have the rules backwards. They would think that the best way to > resist the marshmallow is to stare right at it, to keep a close eye on > the goal. But thatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s a terrible idea. If you do that, > youÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re going to ring the bell before I leave the > room.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â? In other words, we need to identify our psychological issues in trading and react to them before they destroy our accounts! One way I'm doing this now is using [a set of clear and objective rules].