Mass Media and Trading Psychology

· 11 min read
Mass Media and Trading Psychology

A Sweeping Statement

I always find it funny when someone goes onto social media .... to knock social media. And yet here we are.

I don't have any major issues with the privacy aspects, if people want to willingly give away their data - it's up to them, more so the dopamine response loop that social media creates similar to that of most addictive (and destructive) drugs. Simply, put, if you don't have a hold on a bad habit, more than likely, it has a hold of of you. Dependency 101.

The impact of media/social media on our trading and investing psychology is quite profound but also hard to spot.

When your mental real estate determines the investment decisions you make, the influence of social media and it's message via your sub-conscious can lead to some very real issues or disconnects. I'll get more specific on why and what can be done to redirect this energy and create better habits more aligned with your own psychological make-up.

Trading psychology is complex at the best of times, glazing this complexity with addiction can create some real issues. Waking up to the impact of social media on trading psychology is not only important but can save you from financial devastation.

So How Does this Relate to Trading Psychology?

To frame why trading psychology and perception is important, we need to identify what skills and qualities typically determine good trading decisions.

Constituents of well aligned trading psychology include:

  1. Focused attention - executing a predefined plan without hesitation
  2. Conscious and decisive idea formation - through screening criteria and processes
  3. Self-Awareness and presence of mind - to ensure these are in fact the processes. Are you driving decisions or are they being driven?
  4. Independent and critical thinking - not taking other's word for it
  5. Accepting loss and fear as part of the process and being at peace with it

Now if we relate this to what we see on social media or media in general, even more pervasive in the 'Fintwit' side of social media we see vivid imagery of:

  1. Instant gratification and 'big money'
  2. More is better - Rolex, yacht and overnight success, insert generic picture of M5 BMW with tattooed forearm and big jewel infested watch
  3. Everybody is winning, so you must feel inadequate if losing
  4. The world is going to end! The other side of the coin is doom and gloom merchants

There is a constant battle for your attention to get you on a course, or make you believe you need someone's help to become a decent trader. True, you need knowledge, but seldom does it come neatly packaged for $999.95 with the trading system that "Guarantees free money".

This tug of war for our attention ends up in doubting trades, switching from a day trader to an investor (holding losses) and creates dependency on others to make decisions. It's totally natural to be jolted into submission by fear or greed but it won't result in money.

Maybe this is not as subtle as we though. The impact on our trading psychology is heavily impacted by this tug of war for our attention.

Loading up our Subconscious

Trading psychology is not what appears on the surface but is created through what we put in our mental funnel.

We have a real disconnect or cognitive dissonance of this person we are trying to create, namely an objective, decisive professional trader vs someone who is 'making it big' and living the ultimate Instagram lifestyle. The real goal is to see through this illusion.

Although at a conscious level we may disregard all of these high octane, big money, massive tits ideas. The imagery and effects  linger far longer in our mind chipping their way into the conscious thoughts through the subconscious. Over time, we begin wanting things just because we see other people having them.

The lust for more perpetuated by these images eventually is how we measure our "self-worth" and we have no choice but to pursue the car, perfect 10 'chick' and 7 figure bank roll. Seldom do people stop and ponder - all of these social media channels are free. why is that?

Like a Lamb to the Slaughter

The harsh truth is that social media is free because you are the product.

A company let's you run around looking at some plastic girls, exotic cars and tropical island holidays to sell other companies (or governments) your mental real estate. This isn't a theory, think Facebook and Cembridge Analytica. The more you click, the more they know who you are, in many ways, better than we know ourselves. I wish I could use this data for my own trading psychology as it would be very insightful! I am sure I could buy it on the Dark Web if I looked hard enough.

We are put in hamster mazes and fed metaphorical sugary treats to see how we respond, the giant mesolimbic experiment. Based on how we respond, they can push products to us that prey on our deepest insecurities or wildest dreams. While this process goes on we need to make rational and objective decisions. How can we expect to separate this imagery from what is real or not? Our brain perceives it as real so what's the difference?

Trading psychology 101 is avoiding bias triggers and precursors - social media and media marketing is to create bias to get us to part with our money. This seems like a real paradox in pursing trading success. Our mind is being pulled from one extreme to another. This emotional drain manifests in so many ways which we explore in a minute.

Expect Internal Conflict

A mental battle ensues. As we try to figure out what it is we want, A.K.A to be a successful trader or entrepreneur vs what we are being spoon fed in copious amounts with contradicting information. Psychologically, this can create lifelong damage as we further carve into our minds some insane ideals that ironically keep us from actualizing our own authentic wants. The doom loop ensues and we are back on social media to distract ourselves from ourselves to find something that doesn't exist.

This is fucking nuts! Think about it, we login every day and lay another brick of psychological destruction, and we think it makes us feel good? This is literally addiction in it's most insidious and dangerous form!

Authenticity will Try and Escape

Eventually though,  an authentic self-image tries to emerge, learn how to build real skills and develop an awakened sense of self vs someone who feels inadequate constantly and uses consumerism to fill a void created by the very act of constant consumption. This is when things get interesting and decisions are made about pursuing mastery and waking up, or going back to autopilot and being mediocre at everything. nobody can make this decision except you. It means total accountability.

At one or another point, we have to confront our perpetual feeling of 'want'. The internal conflict is a great signal, maybe there is something bigger than this?

How it Shows up in Trading

In my experience (documented objectively by a trading journal), this kind of 'mental chop'  leads to a number of peculiar behaviors that ruin your trading account and soak up your mental real estate.

In trading when I look at my journal, some common themes linked to social media and/or media:

  1. I take completely random trades from ideas out of the 'blue' - I am looking at you Twitter ;)
  2. The number of times I buy and sell the same stock shows massive indecision - usually when I am scared out of a position by gloomy news and make assumptions
  3. I see other traders making money and feel useless when I am not winning, even though they don't have audited accounts!
  4. Impulse decisions are far more common because I don't want to miss out

A common psychological pattern here is impulse decision making based on fear of some kind. Fear of not being good enough, fear of being wrong and sustaining massive loss. Ironically, focusing on fear leads to decisions made in that state of mind.

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You See Fear in Your Trades

When journal-ling, the result from all of these conflicts shows up in the following format:

  1. You buy and sell the same stock way to many times, never sticking with original stops and moving the goal post too often
  2. Stop losses are put up too quickly, choking off the trade before it could be a winner
  3. Moving stop losses down and breaking risk rules because of confusion and things you heard about the stock
  4. Most losing trades are completely outside of your plan and you have no idea why you took them at all!
  5. Winners are sold too soon because some 'Twitter Pro' has scared you shitless

The worst part of all of this, is that some people don't know why they are losing! It's masochistic to continue losing money by following tips or living an perpetual neurosis. Yet this is the path some will maintain for their entire trading career before they give up.

If this doesn't sound familiar please tell me your secrets. I have not found one Spock like trader who does not get caught up in their ego whilst trading. Do you think social media grows or shrinks the ego and it's tendencies?

All of these pulls, ideals and illusions are the absolute blue pill for your trading psychology, it's like being asleep while you're alive.

As in Trading as in Life

The very thing about trading is it is objective and offers a fantastic mirror (see article reflection in trading). The same parallels to social media toxicity run true in 'normal life':

  1. We compare ourselves to insane ideals and go crazy trying to live the life others want for us
  2. There is a constant craving to see and want 'nice things' - tip of the hat to marketing in the 21st Century, nice monopoly
  3. Nothing we do is ever good enough. The perpetual race with our neighbors leaves us permanently wanting
  4. Using our comparative nature and wiring,  we go deeper into the rabbit hole the more we get - a great resource on this is the free course "The Science of Well-Being" from Yale Psychology

So by letting social media into our subconscious, we are not only creating incredibly idiotic, neurotic standards and unattainable standards -  we are seeking more of it! Like any fantastic drug, while your on it and it's hitting the sweet spot, it's great, but reality always comes back.

There have been moments in my life where I made more money in one day than one year of work and felt amazing, only to worry 2 hours later that even if I became rich, I would still be...... me.

Knowing What You Want

A quick digression here is that knowing what you want is really the missing link. A common quote on the matter:

If You Don’t Stand for Something, You’ll Fall for Anything

Finding what you want out of trading and having specific objectives is step #1. If you derive this step from media sources who have vested interest in your dependency, it may be hard to find anything that resonates with you.

This is why trading psychology is so profound and even spiritual, dialing into awareness can be challenging when we've lived with blinkers on practically since birth.

Professional or Tourist

The above is nothing new to anyone. Just like smoking, even if it gives you cancer, you will keep smoking - your illusion about smoking is stronger than the reality of dying because you don't feel like you are dying when you smoke. The same happens in trading.

You don't see however, Usain Bolt lighting up another ciggie before the 100 meter dash. Likewise, you do not see the absolute cream of the crop traders spending 6+ hours on Instagram or Twitter - unless contributing or better yet, selling their own service.

The absolute truth of creating real money in the stock market is that it is FUCKING hard. And to re-iterate, the absolute goal of a trader is to tip odds in your favor and live life in the same way. The more you live with the successful odds playing out over time - the more likely you are to be profitable and eventually wealthy. Trading psychology should almost be branded trading philosophy.

A decision needs to be made, will you cut out the external influences and really develop yourself, doing the deep work, or remain a tourist trapped on the outskirts in perpetual mediocrity.

If you are going to be mediocre at trading, it will be a huge time investment for very little financial reward. Not being able to switch off the news and social media will keep you on the outskirts - no matter how 'smart' you think you are (ego), science might have it's own statistical edge on you in this regard.

Tuning Out Media

So knowing the truth about social media/media and it's influence on your trading or investments, the next steps should be clear:

  1. If at all possible, dump ALL social media! As an experiment in this regard, my friend manages my Twitter account now, I have no access. Best decision I ever made for my trading psychology.
  2. I told my actual friends I will be leaving Facebook, out of the 1000 "Friends" I had about 10 were kept - just like screening for high quality stocks, this helps me screen for high quality relationships. If you didn't get the message, hopefully this clarifies any uncertainty.
  3. If you can't tune out, block it. There are tons of apps that block social media.
  4. Replace it with books and high quality knowledge or activities. I am re-reading all my favorite books and finding new gems I missed the first time, as perspective changes, so does the message we get from trading books.

Tuning Into Reality

Once the media and consumerist madness subsides from your social media PTSD you may rediscover that there is more depth to your life than you think. What you craved last month looks and feels distant perhaps?

For every trader/investor, if you can get to the point where you use objective tools to develop your skills ie. maintaining perfect trading records, system development and testing etc - you have crossed a boundary that not many do.

It is no longer about trader Chads making 'six figs' per trade.  It's about you, how you relate to trading produce profits in line with your objectives.

Without "Weapons of Mass Distraction" in your ear it becomes obvious that the only way you will learn how to trade is to fully develop, own and test your own systems mathematically, create rigid rules and then trade with discipline.

The same applies in every day life but this is far more forgiving. In a job, people will still tell you something is great when it isn't, in trading, if it isn't working, you lose money in percentages or dollar amounts. I believe there is no better feedback mechanism available than the stock market with money on the line.

Take Control of Your Trading Psychology

If you know that there is statistical and objective evidence which indicates an inverse relationship with social media consumption and trading psychology/results, what decision will you make around this?

Good trading boils down to individuals making decisions about what values truly drive their behaviour and being okay with them or changing them to an authentic self-image. If value and self-image are derived from media abstractions based on distorted perceptions of reality - to make them profit and us broke - how ever can we find out what works?

Suspend it, delete it, park it. Find out what matters to YOU and if trading is in that renewed healthy self-image - it's time to get to work and reduce the noise! Leave the social media and news to those who want to be distracted while you figure out a way to make money.

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