Shrink Rap: Escaping the Perfection Trap (Part 1)
By Steven Hendlin, Ph.D.
Special to TheStreet.com
06/26/2002 06:58 AM EDT
There is a certain perfection in accident, which we never consciously attain.
-- Henry David Thoreau
Dr. Hendlin, I enjoy your column very much. It is very informative and helps me in my trading tremendously. Personally, I have been exploring "the need to be right" and have stumbled on other aspects such as the need to control and the fear of things being out of control. I was raised in an alcoholic family setting, and I guess control has been a way to cope. Will you shed some light on how these things determine my behavior and the effect on trading?
-- D.P.
Shrink Rap: Doing justice to your question requires more than the "swallow all-in-one gulp so I can get back to trading" short column that traders and editors tend to favor. I could write a whole book on this topic of needing to be right and perfect. Wait a minute -- I did write a whole book on it! In addition, I devoted a long chapter to perfectionism in The Disciplined Online Investor.
So I'll do the next best thing. In a series of articles, I will give you a flavor for the issues of perfectionism, with reference to how it may affect your trading and investing.
Pop Quiz: Are You a Perfectionist?
Do you think you're a perfectionist? You may be, if you find yourself answering "yes" to the following questions:
Are you motivated, not by the desire for improvement, but by the fear of failure?
Do you tend to view the world in all-or-nothing terms?
Are you tough on yourself, judging yourself harshly when you don't measure up?
Do you jump to negative conclusions quickly without waiting for adequate information to make a judgment?
Are you often critical of yourself and others for things that are out of your control?
Do you tend to be obsessive-compulsive, becoming uncomfortable when things are not just the way you think they should be?
A perfectionistic trader is one who thinks that anything short of perfection in his trading is unacceptable. It is not so much that you say to yourself, "I want to be the perfect trader." It is more that your thinking and behavior reveal this to be an underlying desire. In addition, you may blur the important distinction between perfection and striving for excellence.
Perfectionism and Trading Types
The trading types that I recently described in a series of columns all may show perfectionistic tendencies. For example, the obsessive-disciplined trader, of all the types, is most likely to suffer from perfectionism, with fears of loss that hamper reasonable risk-taking and the willingness to make mistakes. While they exhibit many of the positive, disciplined behaviors required for good trading, they also are susceptible to ritualistic habits and compulsive behaviors. These rituals may, at least, lessen their effectiveness, and, at worst, paralyze their trading.
The timid-doubter type is unsure, always wanting more data, never comfortable making trading decisions based on incomplete information, even when complete information may never be available. They are timid because they can't take decisive action. And they are doubters because they can't stand the thought of making a mistake. Perfect investors, they think, don't make mistakes.
The gambler-impulsive type jumps in headfirst and always at the deep end of the trading pool. They are trying to prove to themselves and to others how good they are, and to satisfy their need to be the "best" by making the biggest splash and the most money. At least they aren't afraid to get into the water and get their feet wet.
The optimist-gullible type wants to believe that positive, wishful thinking will translate into being a good investor. Then when they realize they aren't going to be perfect, they try and find a money manager or investment guru who might be.
Striving for Excellence
Is it wrong to try and be perfect? Of course it is!
Why? Because you're shooting at something which is impossible to achieve and can only create misery for yourself and those close to you. But there's nothing wrong with trying to strive for excellence. The person striving for excellence is:
Able to accept less-than-perfect trading performance without feeling inadequate.
Able to derive satisfaction and joy from a good-enough performance.
Able to appreciate and enjoy successive steps achieved toward their investing goals as significant in themselves, rather than focusing only on the end goal of a specific return.
Able to transcend making their identity and self-worth exclusively dependent on personal performance and accomplishments.
Able to overcome depression and feelings of anxiety, hostility, anger and resentment when they don't come out ahead.
Able to enjoy their accomplishments without having to boast or put others down, demonstrating a sense of humility.
In Part 2, we'll look at other characteristics of perfectionistic thinking and how it interferes with investing and trading. |
