The most painful sports phenomenon to watch is choking. I can get almost nauseous when I see a skilled, highly practiced athlete fall apart in the last minute. Imagine- he’s been ahead the whole way and yet manages to snatch defeat from the jaws of victory. We know that the stress in these situations is huge but no one wants to choke under pressure.
A couple of days ago, I was fortunate to attend a lecture by Sian Beilock, a professor of psychology at the University of Chicago and the author of Choke. The book is about how our brain reacts to stressful situations and how we can mitigate the pressure that comes with it. Her research encompasses a variety of fields and has broad implications for managing stress and preventing choking.
Are there parallels for people in the markets? Of course there are. After all, we are also striving for peak performance under stressful conditions. What can we do differently in the markets to become peak performers and to avoid choking?
Let’s start by looking at how our brains act very differently when confronted by stress as compared to everyday situations. This explains why even top athletes can choke if the stakes become high enough—their brains are literally not working as they normally would. Unfortunately, because stress impacts us in the emotional nervous centers of the brain, we are always going to be vulnerable to it. The key is to find ways to prepare for and mitigate stress.
Dr. Beilock discussed the three ways that stress impacts us:
- You focus on step-by-step details and not on the end goal. For instance, hitters in a protracted slump will devote their focus to a variety of minute details, including the weight of their bat and how they’re wearing their pants. However, that distracts from their overall goal, which is to get a hit—and the most important things to getting a hit may be totally different. We need to stay focused on the end goal and flexible about how exactly we get there. Choking comes when we stop focusing on the overall goal and get bogged down in minor details—think of the golfer waggling his club 100 times before putting. One of the reasons that people narrow their focus to minor details is because when we feel threatened by stress, we retreat to something that we can control. We start to feel better once we can control something, even if it doesn’t actually improve our results. Heightened stress will just intensify this reaction, and soon we’ll be rearranging our deck chairs on the Titanic.
- By hurting our creativity. Beilock said that stress causes our brain to narrow our range of choices and to dampen our creative thought processes. The practical result is that we could lose sight of what options we have and just shut down. You see this often in sports, where at a critical moment someone won’t see the wide-open pass or will do the same-old play. It’s because they are coping with limited creativity. In addition, higher stress in one area of our life can dampen our creativity in other spheres. If you have a stressful home situation, it could hurt your creativity in the markets, even if the markets themselves are stable.
- Reduce our emotional control. As anyone who’s fought with their spouse can testify, our emotional regulation drops when we become stressed. This means that our personalities can become more volatile, more fearful and erratic. The flip side is that maintaining the same level of emotional control takes much more of our energy, leaving us drained. In the markets, we obviously can’t afford to have our emotions creep too much into our decision-making.
We know the pitfalls that come with stress and how stress causes us to choke. The key question: how do we not choke? Beilock has studied the topic for years and assembled a list of tactics that can help us.
- Reframing the stressful incident. Reframing means changing the meaning and interpretation that we attach to something. For instance, if we get into an accident and total our old, beat-up car, then we could look it as a complete disaster—or as a blessing and a chance to acquire a new, better car. Similarly, if we fail, we want to view it as a learning opportunity, not as the end of the world.
Beilock recommended exactly this approach. Drawing on research from Canadian swimmers, she said that we shouldn’t dwell on past failures like choking in an important meet. Rather, the best swimmers took those failures as a chance to identify what areas needed more practice or more attention, giving their minds something productive to occupy themselves with. Instead of replaying stressful movies in their mind, they tried to get a little bit better, one thing at time. This is actually the same method that I prescribed in a blog post entitled How to Bounce Back From Failure. This focus on improvement meant that next time they came to competition, they would be less likely to suffer from an anxiety response and thus less likely to choke.
In her talk, Beilock pointed out that our coristol levels (a chemical associated with stress) fluctuate depending on what meaning we assign to events. If we view a bad trade as proof that we are destined to failure, then our cortisol levels will rise with market volatility—but if we just think of it as a small bump in the road on our path to success then we won’t experience nearly the same stress in the markets.
- Meditation and brain training. There is a wide body of scientific research that supports the value of meditation in boosting our mental faculties and in reducing stress. Beilock mentioned that as few as eleven hours of meditation have been shown to alter the brain physically, leaving it better equipped to handle stress. The real value seems to be in our ability to control our focus, as we can learn to be attentive when we need to be and to relax otherwise. The periods of letting our attention wander, like daydreaming, are highly beneficial for our brain, as it gets a break from being constantly engaged. This prepares us better for when do we have to be completely engaged, like in the markets.
She cited being in nature as something that can really help to manage our attention, allowing us to switch off from stress and the constant tug on our attention span from smartphones, work, etc. Being in nature, or even just looking at pictures of nature, have been shown to boost our overall resilience to stress.
- Practice under similar conditions. Part of the stress of a performance situation is that it is unfamiliar — and much harder than what we are used to. We can practice throwing a football with our friend in the yard and do it well, but it’s a new challenge when we have four huge guys getting in our face and trying to sack us or block the pass. The second would be much more stressful … if we hadn’t practiced it. Unfortunately, most of us prepare for game time by doing the first, leading to stress and choking when the difficulty increases dramatically.
Beilock recommended practicing under similar conditions to what we will experience in the game. She cited the example of Southern Utah University, which shot up the NCAA rankings for three throw percentage by changing how they practiced free throws. Instead of shooting a few in a drill before practice started, they started to practice free throws in the middle of games—with penalties if they didn’t make them. By practicing under more stressful conditions, they were no longer surprised and stressed during real games—it was something they had already learned how to deal with.
- How we hold our body and our physiology. How we feel can impact our physiology and how we carry ourselves. If we’re having a bad day, we can be dragging a bit or slump deeply into our chair. If we are feeling great then we will stand tall and puff out our chests a bit. We all know that our moods will change our physiology—but the remarkable thing is that the reverse holds too. As Beilock tells us, how we hold our body can have a big impact on our moods. Thus, some of the ways to deal with stress should include changing our posture. While it depends on the environment, we should still try to sit or stand straight; to adopt the so-called “power posture” where we are standing with our shoulders back and our feet spread apart; and making ourselves smile, whether or not we feel happy, because it will boost our mood.
- Journaling. Beilock identified journaling as an activity to do before an event, to reduce the anxiety attached to it. It gives us a chance to address our anxiety head on, by dumping out our thoughts about said event and hopefully realizing that the stressor isn’t as intimidating as we had previously feared. For any potentially stressful situation, it’s important to hold empowering thoughts, like realizing that failure won’t be the end of the world and that we have practiced over and over for this. Such thoughts lift a huge emotional burden from our shoulders, making it more likely for us to succeed.
This is Beilock’s advice and it’s all solid. I think that we would be helped by doing any one of these, especially practicing under the most strenuous conditions possible. We can most likely attribute most of the success of great athletes like Michael Jordan and Jerry Rice to their famously grueling practice regimens, which more than prepared them for game-time conditions. Jerry Rice summed up his philosophy about exceptional practice by saying that “Today I will do what others won’t, so tomorrow I can accomplish what others can’t”.
Is there anything else that can we do to prevent choking? The popular and academic literature on peak performance places a large emphasis on mental practice as a helpful supplement to regular physical practice. A famous study by Alan Richardon demonstrated that visualizing free throws was as effective as actually shooting free throws. While it may sound fanciful, it works because mental practice utilizes the same brain circuitry as regular practice, thereby strengthening the existing neural connections. The more that you reinforce these neural pathways, then the more automatic your behavior becomes—and the less likely it is that external stress can disrupt you. I have written an extensive guide on mental practice and visualization for traders to help you.
What are the lessons for traders? We need to bring all of Beilock’s lessons to bear in the markets. My takeaways would be as follows:
- Adopt a growth mindset. As Carol Dweck discussed in her wonderful book, Mindset, there are two mindsets: growth and fixed. A fixed mindset assumes that our abilities are inherent and largely fixed and that our success or failure at a particular task is a just a reflection of our innate ability. On the other hand, a growth mindset assumes that success at a particular endeavor is a reflection of effort, and that we can keep working to improve and conquer obstacles. A growth mindset is much more conducive to success, because it encourages us to keep working and doesn’t take failure personally—we view failures as temporary setbacks, rather than as a reflection of a complete lack of ability. By viewing failures as temporary, we give ourselves permissions to fail, lowering the emotional stakes. It also makes it easier to reframe and bounce back from any setbacks, as we will concentrate on making the necessary changes and doing the work to get better. Remember, a muscle must be broken down and will hurt before it grows again. This is the lesson we should take from Bielock’s points about reframing stressful incidents.
- Perfect practice makes perfect. Everyone has heard the rule of thumb that 10,000 hours of practice are necessary to achieve mastery. I think that a better rule would be that we need 10,000 hours of perfect practice to achieve mastery—as bad practice is of no help at all.
For trading, we need to do all of the things that look like practice and to do them at the highest level. Practice could include our daily preparation before the markets open and on the weekends; a careful and regular review of what we’ve been doing in the markets. If we are not actively trading, then perfect practice could mean following the markets and paper trading before we start risking real money, in order to simulate the experience. As our practice gets better and more conscientious we will be better prepared for any experience and our actions will become automatic. This is the only way to prevent choking.
- Mental practice. As I just highlighted, mental practice is another way to work out the same mental circuits that we use in doing the activity for real. Mental practice provides us with a way to simulate events and to rehearse possibly stressful scenarios which we can’t actually practice—like hitting the game-winning shot at the buzzer.
- Rest and relaxation. Since trading is mostly mental, it can be mentally fatiguing and we need to recharge our batteries. Just as Beilock highlighted about relaxing our attention span and enjoying nature, we need to find ways to rest and to relax. They could involve spending nature time in nature, or running, or reading a good book that completely absorbs you. Whatever you favorite type of R&R is, find a way to incorporate it into your life regularly, such as every day after work or when the markets aren’t open. Your brain needs to recover from the stress, otherwise it will be too worn down to perform at its peak. If you don’t have enough focused attention left, then you will end up choking exactly when you don’t want to.
- A journal for traders and investors can take many forms, including keeping track of positions, market thoughts, etc. It’s important to discuss some of your thoughts and feelings related to the markets. As Beilock highlighted in her talk, the mere act of getting them onto paper or the computer screen will help you to crystallize what’s going on and to relieve some of the tension. Usually, when you can see them written down, you’ll realize that some of your anxiety is not warranted—and to help take a different, more constructive viewpoint. Make a place in your journal to get your thoughts, feelings, frustrations on to paper. It will help you to cope better.
Choking can be a terrifying experience, but it doesn’t necessarily have to happen. With proper preparation and ongoing management of stress, we can get ourselves in the right state, so that we are always performing at or near our best. By integrating the advice of one of the world’s experts on choking, we can take our performance to the next level.
No relevant positions
By Bruce Bower | E-mail: Bruce [at] howoftrading.com
Blog: www.howoftrading.com | Twitter: @HowOfTrading