Rewarding yourself

[torero]

I was reading John Carter's book about rewarding himself in the trading plan section. The mentions how he rewards himself for following his plan with a new car, country farm, etc. It's a bit on a high end for me but I wanted to know how traders reward themselves when they follow their plans in losses and wins.

For me, the reward is withdrawing cash from the account for winning trades upon following my plans to the letter. For losing trades but still following the plan to the letter, I reward myself with an ice cream or a music CD or buy a CD rack. I think the withdrawing cash reward ties in with money and it's a no-no but I think it's also an incentive and a reminder why I should follow my plan.

How do you guys reward yourself?

[nosast]

Very interesting point, torero. In my opinion rewarding yourself is very important to grow as a trader. Having money on the account is nothing but figures. You need to reward yourself and spent some money from the gains to train your brain that when you are doing things the right way - you can fulfil a great wish. This is described as a positive reinforcement by pavlov (Operant conditioning) - Wikipedia, the free encyclopedia.

I'm lightyears away from buying a country farm from trading gains like JC mentioned, i am aiming for these very expensive things in 10 years or so, but still have them in my trading plan as a far end goal with a lot of minor little goals before the big one.

Currently i am rewarding myself with spending a great weekend with my girlfriend in a wellness hotel, going out for dinner, buying some clothes or doing a short weekend trip in a city i like to see.

It is helping me a lot because i can say that e.g. this weekend was completely "sponsored" by my trading wins and it supports me in doing the right things in the future to have this great feeling again.

nice weekend
Norman

[brownsfan019]

Good thread tor!

All traders, esp those new to trading, could learn a lot from the info we share here.

Here's my basis for doing what I do before I explain the specifics - I found that much of what I learned and was taught while a stockbroker translates very well into full-time trading. As a new stockbroker, you are taught that many, many hours, months and years of hard work are required to get the elite level (just like trading). We were also taught that if you follow your 'plan' you NEED to reward yourself, regardless of the commission screen (or P&L). My goal as a new broker was to contact 25 people per day and offer them some sort of investment service. I was taught that as long as I did this, the commissions would soon follow.

And you know what? They were right! My first month I made $60 in gross commissions. I could not believe I was working 10-12 hr days and took home a whole 60 bucks gross (good thing they also paid us a monthly salary for 12 mo's). But you know what? I stuck with the plan and each and every month that number increased till I got the point where it was a matter of much $$$ could I make that month...

And towards the end of my tenure as a broker, I just laughed when I thought about the tough times of working all day and all week and making very little.

What does this have to do with trading and rewarding yourself? Everything.

As long as you follow your plan, you need to reward yourself, no matter how little it may seem now. You have to program your brain to think that if you just follow ABC then you will be rewarded with XYZ. Just like training a dog - as soon as your dog realizes that it gets a treat when it shakes hands, it will shake hands any opportunity it gets. I know, that's a very simplified explanation, but the idea holds true.

Here's where I think many traders fall short - as an individual trader, most do not have that structure in place (like a corporation) that tells you over and over again to just follow the plan and you will make money. None of us have that luxury. And had I never been a broker, I probably would not see the difference either. I had so many tough days as a new broker and when I called another broker, went to training, etc. it was drilled into my head to just keep doing the work and the $$ will come. And it did. Traders just do not have that service available at all b/c 1) many doubt their trading systems to begin with and/or 2) if it does work, many aren't sure that it does b/c there is no reinforcement.

It's a very tough situation in my opinion. If you do not come from a sales career, bridging to trading is difficult in my opinion simply b/c you do not have the knowledge and experience of what is expected of commissioned sales people. And trading is no different - we are not working for commissions, but we also do not make a penny unless we do our job. And even if you do your job, you still may not make any money. That's a difficult hurdle for many.

Sorry that I digressed here, but I think the topic is a great one tor and everyone needs to reward themselves for doing their job b/c no one else will.

[TinGull]

brown....PERFECTLY said! I, too, came from a sales gig where I was 100% commission except for the first 3 months. It was HARD! I had to move out to a new state (whole new part of the country) with my girl and start a new life. They, too, taught me...do ABC and you'll get XYZ. I did ABC for hours upon hours a day, day after day, week after week until I was the one new guys were asking questions of (when I was 6 months out). It didn't take me too long to become one of the higher paid guys there (the highest for my tenure there) and holy moly does it translate into trading. When I had a big sale...out to dinner I went 2 big sales in a week? Went out for dinner, twice in a weekend! haha (my town is so boring all there is to do is go out to dinner)

So, I agree completely that coming from a sales background helps bridge the gap between the former job and the new job of trading.

Just thought I'd add.

[brownsfan019]

tin - that's cool that we have similar sales backgrounds before entering trading. Until you've actually been on 100% commissions and trained by a company that knows what they are doing, it's hard for others to understand. When I decided to make the jump to full-time trading I did not expect so many things I learned at the firm to translate over to trading.

[TinGull]

	Quote:	brownsfan019
	When I decided to make the jump to full-time trading I did not expect so many things I learned at the firm to translate over to trading.

like the lack of instant income? hehe Thats the most major thing that I think is tough for people who don't come from sales backgrounds to grasp. I knew it was gonna be tough, and it still is. But I know that by following the plan, it's gonna be OK. Then...I get to reward myself

[brownsfan019]

	Quote:	TinGull
	like the lack of instant income? hehe Thats the most major thing that I think is tough for people who don't come from sales backgrounds to grasp. I knew it was gonna be tough, and it still is. But I know that by following the plan, it's gonna be OK. Then...I get to reward myself

Good point. When you come from a background where you learned to accept fluctuations in income, transitioning is a little easier to trading. It also helps to have come from a position where earning 'good' money was expected. What I mean is that if you think that 5 or 7 grand a month is good money, you may be leaving a lot on the table. Don't get me wrong, 5 grand a month is a nice income from trading, but coming from a position where you would be fired for earning that, it can light a fire under your butt.

[torero]

Is there or should there be a different reward type/level for following the plan perfect that resulted in a loss and a win? I believe they both should be rewarded equally but the final result (monetary) makes it a slight difference, at least in my reward system. I think this is where the difficulty for news traders to grasp, you obey the rules and still get negative response (a gain) AND sometimes you get a positive response (a loss) even when you don't follow your rules. This create in the end a confused mesh of reinforcements that screw up everything in the end. Agree?

[TinGull]

Hey T...I totally agree that whether you make or lose money, as long as you're following your plan to the letter that you oughtta reward yourself in some way. Maybe it's just something as simple as getting that pint of your favorite ice cream and indulging a little...which I've been known to do. Or maybe you lost some money on a beautiful day weather wise and you decide to treat yourself by being outside for an extra long walk. That's free and you get to be out with nature for a little longer than usual. that's always a beautiful thing.

[brownsfan019]

	Quote:	torero
	Is there or should there be a different reward type/level for following the plan perfect that resulted in a loss and a win? I believe they both should be rewarded equally but the final result (monetary) makes it a slight difference, at least in my reward system. I think this is where the difficulty for news traders to grasp, you obey the rules and still get negative response (a gain) AND sometimes you get a positive response (a loss) even when you don't follow your rules. This create in the end a confused mesh of reinforcements that screw up everything in the end. Agree?

tor - great points. The problem all traders face is that until you know for sure that you can trade profitably, it's hard to reward yourself for losing money. And it becomes even harder when you stray from your rules and make money. You've just taught yourself that you can stray and make money; whereas your actual rules lost you money (at least on this particular day).

It boils down to knowing if you can make money following your rules or not. Until you are 100% confident, there will always be a game going on in your head.

That is the biggest challenge I have seen coming from an environment where everything was laid out in front of you, all you had to do was what you were told. We do not get that luxury in trading. Sure you can buy books and manuals, but there is no guarantee those even work. After years in the stock business and now years in trading, I can tell you that trading is much more difficult, esp in the beginning. And that is due to simply having to create your plan yourself from scratch and then see what works and what does not work. And hopefully you can stick around long enough to find what does work... It's a challenge to say the least.