Introduction to Improv Improvement for Traders

Improve your trading with improv! 

Are you embarrassed by your mistakes? Can you react quickly without analysis paralysis? Are you able to reprogram habituated responses?

What if traders took improv acting classes?

I started attending an improv theater training group with the CSz School of Improv. What struck me immediately and totally surprised me was the exercises and concepts that we can learn as independent traders.

What? What in the world would improv theater have to do with a trader's mindset?

These two contexts have nothing to do with each other. In fact, you could say they exist in opposite worlds. Training is all about money. Improv theater is all about entertainment.

But here is what blew me away.

The exercises that we did are great training for traders. Why?

Because they retrain your brain to act and act NOW and move on.

Are we conflicted when executing a trade? 

• When we are about to execute a trade, do we want more confirmation? 
• Are we afraid of losing money? 
• Do we feel the tight stomach recalling the last losing trade? 
• Do we judge ourselves for every trading mistake? 
• Do we jump in too early out of fear of missing out? 
• Do we hesitate and get in too late, increasing the risk and reducing the reward?

Improv is about fast execution and moving on from mistakes.

When in front of an audience, there is no time to dwell on mistakes. Your partners need to keep moving. The audience needs you to keep moving. 

In trading, the market prices just keep rolling along.

Trading is about fast execution and moving on from mistakes.

These exercises have nothing to do with P&L or trading systems. However, human nature is such that you will notice your P&L. Do you feel better if you are profitable? Notice that experience without judgment.

Exercises you can play with.

Here are exercises that I adapted from my improv training that you can use to improve your improv lighting execution. These exercises are about retraining your brain and releasing you from constraints, stress, conflicts, judgments, and hesitancy.

Speed

Improve Your Speed Exercise: 

In this exercise about 20 people formed a circle and a sound and motion were to be passed along to the person next to them. The goal was speed. Just pass fast. Don’t anticipate but pick up the motion and the sound just as the person next to you completes the process and passes it to the next person. 

In other words, instant reaction without thinking. We were told by the instructor we would double our speed by the end of the class. Hard to imagine but it is happening..

How does Speed relate to trading?

For day traders, we need a game that emphasizes speed of execution. If A, B, and C exist execute, NOW.

What are the anchors that prevent you from executing your strategy? This exercise will create new neural connections that then can be applied to demo trading or live trading.

Journal your experience. What did you notice?

1. What did you notice in your body such as breathing / posture / heart rate / muscle tension?
2. What emotions did this generate such as excitement/fear/depression/resignation? 
3. What thoughts were going through your head such as criticism/anticipation/denial?
4. Since no money was at stake did this free you up from internal stress, or did you feel a similar stress to real trading?
5. Were you able to increase your execution speed to an automatic reaction?

Market shifts

Improv Exercise:

Chose a secret number between 1 and 5. 

In the next exercise, we were asked to choose a number one through five and keep it private. We were then invited to circulate among the group, introduce ourselves with a handshake and pump our hand the number of times of our selected number. If the number matched with the other person we would know they are the same number. 

If someone kept pumping your hand beyond your number, you would resist it. Then you would know at what point they stopped shaking and started resisting and have a pretty good guess as to what their number was.

The goal of this exercise is to get everybody shaking hands with the same number of pumps. 

You could change your number at any point during the exercise. I was determined that my “number four” would prevail. At first, I shook hands with three people who had also chosen the number four. 

But then I got resistance from a number of people in a row. I noticed that number three seems to be emerging. I shifted to number three pumps and within three minutes the group of 20 improv students was all shaking hands with three pumps.

How does this relate to trading?

We decide ahead of time how many “pumps” the market is going to give us. Sometimes, the market agrees with our number. Other times it does not. 

So the question becomes, do we hold onto our number of pumps as the market gives us contradictory information, or do we shift? 

That is to say, do we go along with the other players in the market and the patterns that they are creating for us to see?

Repeating this exercise over and over again liberates us to make shifts from our preconceived notions easily and smoothly.

Journal your experience:

What did you notice?

1. What did you notice in your body such as breathing / posture / heart rate / muscle tension?
2. What emotions did this generate such as excitement / fear / depression / resignation / frustration? 
3. What thoughts were going through your head such as criticism/anticipation/denial?
4. Once you decided on market direction, how did it feel to add to a position or how easy was it to reverse a position?
5. Do you hold on to your beliefs or do you change them with a tick?

Lightning Reprogramming

Improv Reprogramming Exercise: 

Create a “break state” fast.

In this exercise, we were given five physical arm positions. (up, down, in, out, and diagonal.) One person in a circle would display two arm positions, only misname the second.

We were to replicate the arm position of the description, not the example then give two arm positions to the next person. 

With the name and the position being different, our brain wants to follow the words, not the example. This creates a “break state” in our brains. It is amazingly difficult to do, especially when the emphasis is on speed.

How does reprogramming relate to trading?

This is what I call a “break state.” As traders who have been trading for some time, we have a built-in response. As improv students, we also have a built-in response to words and repeated behaviors. 

In the improv theater, however, you are working with a group and the flow of that group. If you hang onto a concept and respond within your own context, the group dynamics fall apart.

What would happen if we as traders mixed up our signals in a way that avoided the neurological synapses from firing automatically? What silly thing we could do, just like we did as improv students, to create a “break state?” 

• For example, what would happen if we turned our monitors upside down? 
• Do we assign a little bit of gravity to the candlesticks on the chart? 
• Do we have a prejudice about being long or short? (I always preferred being short over being long.)

What “break state” can you come up with that would invite you to look at your charts or your decision process without the habitual context that you normally use? Send me your creative ideas.

Journal Your experience 

1. What did you notice? 
2. What did you notice in your body such as breathing / posture / heart rate / muscle tension?
3. What emotions did this generate such as excitement/fear/depression/resignation? 
4. What thoughts were going through your head such as criticism/anticipation/denial?
5. How hard was it to change trading systems every few minutes?

Mistakes

Laugh and move on. 

Make a goof and we laugh and move on. If we goof with the group, the group goes “aroogah!” The exercises push us to our response limit where the speed increases to the point where we make mistakes. 

Improv exercise/experience 

Improv training is designed to push our reactions to the limit and beyond. The result is obvious, we screw up…again and again. 

This is the point of the training, to reframe “mistakes.” When in front of an audience, continuing the flow is critical. The pace is hyper-fast with no time to think. 

In fact, thinking or planning is discouraged because no one, I mean no one knows where the scene is going (just like the market).

Since speed is essential, screw-ups happen. The remedy is to remove the stigma of mistakes. When a mistake is made, the group makes a uniform sound like “aroogah.” Then we move on.

How does this relate to trading?

In trading, executing a trade when the setup is right requires an immediate response. We can wait for more confirmation and have a worse entry or miss the trade entirely. 

“I am afraid I will make a mistake” is a common explanation I hear from my clients. 

Trading is unlike most careers in that the “mistakes” are part of the system. My most consistently profitable traders have a win ratio of under, that’s right UNDER 50%. 

Yes, the risk-to-reward ratio overcomes this statistic, but a good trader will experience as many or more unprofitable trades as profitable trades.

A client recently went on “tilt” after a month of consistently executing a profitable strategy and gave 25% of his capital back to the market. 

He had an excellent self-awareness and grasp of the triggers, emotional responses, and childhood traumas that contributed to his emotional trading. 

He wanted to analyze his motivation and I simply said, “So what?” 

“So What?”

“Yeah, so what? As you move to increasing your trade size with success you are going to do this same behavior over and over again".

He looked shocked. “No, I have to stop.” 

We discussed specific steps he could take to reduce the chances and severity of going on “tilt.” Again, I said, “So What?”

“If you keep increasing your size, at some point it will trigger a terror like you have never experienced when your account goes up or down by $100,000. At that level, you will again be challenged by Mr.Tilt. But, you also will become aware of Mr.Tilt sooner and sooner and his impact will be less and less.”

Make a trade, make a mistake, acknowledge it, and move on. Make a trade and move on.

Journal your experience:

1. What did you notice as you celebrated your mistake as a step to mastery? 
2. What did you notice in your body such as breathing / posture / heart rate / muscle tension?
3. What emotions did this generate such as excitement/fear/depression/resignation? 
4. What thoughts were going through your head such as criticism/anticipation/denial?

Next steps: take action: