Fear(less) log Nr 8 - Steve Goldstein.
Steve Goldstein. "Fear goes with the territory."
Hi Everyone
New episode of the Fear(less) log, this time again a bit different. Not so much as in the topic we are dealing with, but in how the answers came about. Instead of doing the Q&As online, I met Steve Goldstein in person in London, and we sat down for an hour to talk about everything fear-related.
Now if I would work at a TV channel, this would be called an EXCLUSIVE, but given that it involved me recording the call on my (not so modern) iPhone and having never done interviewing before I'd say that would be a self-charming exaggeration.
Anyway, I did my best. Below, you will see my attempt of summarizing that one-hour conversation with Steve. I hope I am able to bring the most relevant points across to you, and that you can benefit from it.
Steven Goldstein (Coach & Trader)
Not that he needs a big introduction here, my guess is that 9 out of 10 people in the trading world have heard about Steve. He is co-host of The AlphaMind Podcast (a jewel and free education tool for every trader out there!). Steve is also a performance coach and in this role he regularly talks to all kind of traders, from big Hedge Funds and Institutions to the home-made retail trader.
Here is the link to his Twitter profile and to The AlphaMind Podcast.
Oh yes, Steve also told me that he is in the end-phase of finalizing his book. Something I think we can all be looking very much forward to!
Ok let's go. As it is the case when you sit down and chat you hardly follow the script 1:1, so the answers might be a bit longer than in the last Fear(less) log with Tom Basso. Good thing is that Steve's role as a trading coach provides us with the benefit of learning from both his personal expertise and his interactions with 100s of traders.
When did you first become aware of fear while trading? Was there a particular trade or situation that triggered it?
“I started trading in 1987. My first week of trading was the Stock market crash. That's when I suddenly became aware of 'what this is'. The crash effected every market, there was a rush to liquidity, a rush to cash. It polarized me. I didn't know what I was doing anyway, but this event made that fact even clearer to me.”
What specific fears did you experience while trading? How did they manifest? The most common fears include fear of losing money, fear of being wrong, fear of losing out on the dream, fear of not being respected, fear of keeping up with expectations, or just fear of losing.
“Fear of being inadequate. When you are running your own positions, you become suddenly very conscious that your name can be attached to a loss. It was never the fear of losing money. It was the fear of being inadequate, being a loser, being the weakest member of the party, getting fired. I didn't know back then that this was my fear, but after many years, on reflection it was that. You know, that triggered fear, that you have as a child that everyone is laughing at you, that you are the last one to get picked for the football team, that really deep human gut-level feeling.”
Steve then referred to his work as a coach and what he finds very often.
“It's like the imposter syndrome, it's the same thing. Successful people often think this is all just gonna fall apart. It can be people managing huge Portfolios, top Hedge Fund traders using language such as 'I am not as good as people think I am…I am going to be found out'. They are catastrophizing. Everyone is the same, everyone has these doubts, they all don't want everybody else laughing at them. Same insecurities, same fear.”
How did you initially deal with those fears? Did you try any specific techniques or methods?
Here Steve talks mainly about his experience as a coach with traders:
“Often it is verbalizing it, just talking it out. There is no magic. People hold it in so often and it stays in there like a poison. A lot of it is realizing of what is happening to them through evolving conversations. It is looking inside rather than outside.
A coach can hold out the mirror but you have to do the work yourself. Ask yourself:
What am I doing? How am I doing it? What can I do better? People call me up and say 'Steve, this is really helping, I am doing much better'. The answer I give is, 'I haven't done anything'. They have talked about it, they are reflecting, they are having internal conversations. I make suggestions, and often the response is that they can't believe what they have been doing. You see them visually change, you see a light in them, relationships improve, trading improves.”
Did you seek out mentoring or support to help you deal with your fears? If so, what kind of support did you receive?
“No, I actually rejected it. One of my former bosses offered me to get some coaching, but I said that I wouldn't need it. It was even for free, but initially I rejected it – can you believe it? I finally decided to take the coaching, and it was the best thing I ever did! People don't want to be questioned, they don't want anyone to look into their process, maybe finding out that they need to change.
I have a >1bn USD client who told me recently: 'Why wouldn't I want coaching? I take any help that makes me better.'”
Were there any resources (books, courses, etc.) that helped you better understand and cope with your fears while trading? If so, which ones?
“I always had a quote on my desk. It was by Babe Ruth (American baseball legend). 'Never let the fear of striking out, keep you from playing the game'.
Many years later, I came to realize that this is exactly what I was doing all the time. The very fact that I had the quote there…I was not living the quote. The quote reflected what I was doing. It is kind of ironic but often the quotes you read, the books you seek are all part of that mirror, they will reveal things for you. If you keep going for books of a certain type, you very rarely actually improve. They rarely make you going inside yourself. They are more a reflection of what you do, but it's very hard for a book to get you inside yourself. Everyone might have a book that does a little bit of opening up.
Philosophical books are good. Man's Search for Meaning by Victor Frankl, or the work of Nassim Taleb always makes me think very deeply. 'The body keeps the score' is a great book as well.”
Have you ever paid attention to your body signals, such as heart rate, while trading? If so, how did you use this information to manage your fear?
“I have an Oura ring now. But never when I traded. My colleagues used to give me feedback. Sometimes I kicked the desk.
My colleague would say: 'Steve, you are doing it again. That thing when you start beating yourself up'. I would ask him what he is talking about, but after reflection I realized that making money from trading, that's a pretty special skill. I am an alchemist, and yet I am beating myself up. It's an ego thing. I had moments when people pointed out how I am, and these moments woke me up.
My mood was awful (in these moments). If you have a marker for bad mood, it can be helpful, as it usually precedes a period of underperformance even if you know where the market is going.”
What advice would you give to someone who is experiencing fear while trading? Is there anything you wish you had known when you first started dealing with fear in trading?
“Fear goes with the territory. It is nothing unusual. The more you know where it comes from, the better. If you fear losses, you are never going to trade. Losses are going to happen, if you don't have them, you are never going to win. Give yourself mantras: 'The next 1000 trades', 'Learn to love your losses'.
If you think of each trade at the start as a loss, then you gonna love them, you can control them. That is why sports people are so great, they understand that you have to lose in order to win. Every great sportsperson loses, every actor fails auditions, every comedian gets heckled.
How many people turned down Elvis or the Beatles? They didn't stop. Trading is a performance activity. Get used to losing, accept it, embrace it, come back from it. Overnight successes take years to get there.”
Did we miss anything? Use this space for anything you think would be important but hasn't been addressed by the questions above. If there is nothing left to say just leave it blank :) Thank you!
“Some of the best traders take years to become break-even. Actors, singers, they work in coffee shops or restaurants so they can keep trying and failing.
I talked to many great traders, some of them in the latest Unknown Market Wizards book and I did ask them at which point in your career did you feel that you could do this for the rest of your life sustainably and they pretty much said, 5-6 years, that's the point where it starts to happen...”
References
Stock Market Crash: Black Monday 1987
Man's Search for Meaning by Viktor Frankl
The Body keeps the score by Bessel van der Kolk
Final Word
I learned so much from this conversation.
One thing that Steve mentioned over and over again, but it didn't really 'fit' into any of the questions above, is that in his work he tries to make traders understand and answer this question:
What are you good at? What is your process?
We often don't actually know when we are doing it.
Observe yourself and find out when you are most productive, what type of market you like, what style of trading, mean reversals, directional, short-term or long-term. Where do you actually add value?
Quoting Steve again: “Lionel Messi doesn't say I'm good at sport, so I am gonna play rugby tomorrow. He goes past everyone quicker than anyone else. That's where he is at a different level, so that's what he does.”
He knows where he is good at.
Find out where you are exceptional.
Thanks again to Steve for sharing his insights. He can be found on Twitter @AlphaMind101 and on the Alphamind site.
Have no fear!
Chris
crk@traderistic.com
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