Key Points:
- Cognitive dissonance emerges when actions conflict with intended goals, causing internal tension.
- Sean introduces three trading ego states—approval seeker, risk avoider, and status chaser—as part of self-awareness in trading.
- Exploring mindfulness and ego states helps manage emotional impulses and enhances decision-making.
Summary:
In this open Q&A, Sean and the SoundPerformance Psychology community discuss managing cognitive dissonance—precisely, the frustration that arises when traders make choices contrary to their plans. Sean frames this issue as a clash between our impulses and conscious intentions, highlighting it as a core area in trading psychology. This session explores the root causes of such internal conflicts, with participants sharing experiences of impulsive trades that defy their strategies.
Sean explains cognitive dissonance by describing the “fight, flight, or freeze” ego states as they relate to trading: the approval seeker (freeze), the risk avoider (flight), and the status chaser (fight). He elaborates on how schemas tied to these states often drive self-sabotaging behaviors. For example, a trader with a strong “approval seeker” state might avoid risk to seek validation, while a “status chaser” may take excessive risks to prove themselves. “Knowing which of these states is in the driver’s seat,” he explains, “can make a big difference.”
Sean emphasizes using mindfulness to stay present and manage impulses, suggesting that traders who detach from outcomes and observe their ego states gain clarity. One member shared, “I immediately recognized myself in the ‘risk avoider’—that fear of taking risks keeps me out of trades I’ve planned for,” underlining the importance of ego-state awareness. The session touches on related practices, such as mindfulness and self-assessment, to ground traders in the present and keep them resilient.
C.L.E.A.R. Mindset Connections:
Connect to the present moment and enhance your self-awareness with practical techniques.
- Practicing mindfulness in daily activities can help traders know which ego state influences their decisions.
Loosen your attachment to thoughts and emotions, and cultivate mental clarity and resilience.
- Recognizing impulses and viewing them as natural responses rather than fixed truths builds emotional resilience.
Embody your core values and align them with your actions to foster authenticity and purpose.
- Aligning trading decisions with personal values, rather than chasing validation or status, helps maintain long-term authenticity.
Accept all the present moment offers, whether wanted or not, and find peace and strength.
- Accepting that some days will be more complex than others without judgment can help traders stay calm and avoid impulsive decisions.
Respond with decisive, informed action, transforming challenges into opportunities for growth.
- Recognizing ego states enables traders to respond mindfully, choosing actions aligned with their trading plans instead of acting on impulses.
Actionable Strategies:
- Practice regular mindfulness to increase awareness of ego states while trading.
- Identify dominant ego states and reflect on how they may impact trading behaviors.
- Apply the C.L.E.A.R. mindset to manage impulses and align trading decisions with long-term goals.
Act Accordingly:
Self-awareness is not just beneficial; it’s essential in trading. By understanding cognitive dissonance and recognizing ego states, traders can better manage their impulses, ensuring their actions align with their goals. This session highlights the path to a mindful, self-aware trading approach where success is defined by consistency, resilience, and an authentic connection to personal values.