The Control Freak Trading Disorder

Causes, Symptoms & Treatment

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Control freaks are the kind of folks who really want to control everything in any situation, plan way too much to avoid surprises, and notice every little detail – nothing slips past them.

Being busy is how they feel best because they associate their self-worth with productivity and control. And when that control is taken away, they feel powerless.

In group projects, these are the people who just can't trust anyone else to handle things. They take over the whole project, not giving much room for others to have a say.

When control freaks start trading, their desire for absolute control over outcomes can have terrible impacts on their performance. There’s big work to do in detaching their self-worth to control and learning to embrace uncertainty.

In this newsletter, we'll dive into the symptoms, root causes, and strategies to overcome this issue head-on. Through four real-life case studies of traders I've worked with, you'll gain a vivid understanding of how over-control plays out in trading.

If you’re trading under pressure, seeking to control the market, and treating every trade like a make-or-break deal, you’re on your way to disaster. It's time to step back and make a serious change. Let's get your transformation started!

Symptoms

Control freaks normally trade in an uptight manner.

These, are the overthinkers, overanalyzers, and overly anxious traders. They monitor every detail and fear unexpected outcomes. Their need for control can make them inflexible when market conditions change. If a trade isn't going according to their plan, they struggle to adapt.

In an attempt to regain a sense of control, control freaks might engage in overtrading to compensate for the uncertainty. They believe they have 100% control over the result of one trade so they do everything in their reach to get that winner. If an entry they feel highly confident about doesn’t work out, they get confused because the cause-and-effect relationship they seek is not present, hence the sense of lack of control gets amplified.

These can be people who did extremely well in other ventures - the corporate world, performance skills, business, etc. - and they started to trade thinking it was just another challenge like the many others they succeded in. But that’s a costly assumption. In the past, they got rewarded for this over-control behavior which made it even more ingrained. They're used to being the ones who make things happen, the "never give up" minds.

When control freaks start trading, all the habits that helped them succeed before, come into play. They might think they're starting from level zero, but they're actually starting from a disadvantage. These habits hurt their trading because they try to control everything, not just in the market but in their whole routine: morning rituals, technical (over)preparation, meditations and breathing techniques, workouts, and data collection. They believe that if they do everything right, they deserve to win. They think, "This is it, today I'll win," and it hits them hard when they lose. They treat each trade as a step toward their goal, forgetting how random the market can be in the short term. This is what I call self-focused trading when it really should be market-focused.

Root Causes

The tendency to be a control freak can stem from a combination of personality traits, life experiences, and psychological factors. Too often, the need to control everything comes from a place of fear. This fear takes many forms. Let’s explore them:

Chasing Perfection - Fear of Unworthiness

Certain personality traits can contribute to a heightened need for control. Perfectionism, for example, often goes hand-in-hand with the desire to control outcomes to ensure they meet high standards. Perfectionism is looked at as a personality trait and gets rewarded in society in everything we do. This leaves us in a position where we see the rewards of perfectionism (and they exist, don’t get me wrong) but are blind to see where it often comes from and the negative impact it has on the perfectionist.

Perfectionism often comes from a need to prove your worth and competence. Why do we feel this need? Many people who strive for perfection also struggle with feelings of not being good enough. Trying to do everything perfectly becomes a way to cope with these feelings. When they can't achieve perfection, it leads to frustration.

Upbringing and Family Dynamics

The family environment plays a significant role in shaping one's behavior. People who grew up in families with strict rules, and high expectations, or where control was emphasized are likely to adopt similar tendencies in their own lives. The same is true for families who reward results over execution.

Studies demonstrated that praise for intelligence - praise involving telling a child they’re smart, talented and good at picking something up easily - had more negative consequences for students' achievement motivation than praise for effort - praising persistence, effort, dedication… etc. Fifth graders praised for intelligence were found to care more about result goals relative to learning goals than children praised for effort. After failure, they also displayed less task persistence, less task enjoyment, more low-ability attributions, and worse task performance than children praised for effort.

The consequences? Later on, the child might have difficulties focusing while performing - the overthinking, and self-talk going on in their heads don’t let them focus to deliver their full potential. When these people grow up and start a trading career, they find this mind interference to be more destructive than ever before, hence, the need to fix it at a later stage in life - the awareness trading brings us is inevitable.

Shifting the narrative towards effort instead of a label can help you perform better by detaching your identity from the uncontrollable results.

Anxiety and Fear

People who experience high levels of anxiety or fear are more likely to seek control as a way to manage their emotions and reduce uncertainty. Control can provide a sense of stability in an unpredictable world. This can come from past trauma which leads us to the next cause.

Past Trauma

People who have experienced trauma or situations where they had little or no control may develop a strong need for control as a way to prevent similar situations. This can be seen as an attempt to regain a sense of safety and agency. In the market, after a big loss, a blown account, or another traumatic event, traders usually seek to control the price as never before. This wasn’t the way they performed before, but after going through trauma their perceptions of the market changed. Being in control becomes a coping mechanism for dealing with the anxiety and powerlessness created by the traumatic event.

This past trauma can also translate into a lack of trust. People who were betrayed in the past might have issues trusting others. One trading loss might feel like a betrayal. They may seek control in the market as a way to minimize the possibility of disappointment.

Low Self-Esteem

Low self-esteem can drive traders to seek control as a means of validating their worth. By meticulously managing situations, they may believe they can prove their competence and value to themselves and others. People who lack self-confidence often feel immense pressure to prove their worth, leading them to approach trading as a way to fulfill emotional needs.

In a previous newsletter, I talked about how your trading performance is like a reflection of your self-image.

Fear of Failure

Fear of failure can drive traders to control market situations to minimize the risk of making mistakes. This fear can be paralyzing, leading them to overthink decisions and avoid taking risks. These are the insecure traders who often look to feed both sides: they might hesitate to make a trade due to a lack of confidence, but if they do take a trade, it's often with a small risk. If it turns out to be a winner, it never makes up for the previous losers. The fear of failure doesn’t let them trade freely.

Perceived Lack of Control in Other Areas

If a trader feels they lack control in other aspects of their life, such as personal relationships or other events, they might compensate by seeking control in trading.

Notice that all the causes described are related to the individual and how they see themselves. Exploring the connection between your self-image and your behaviors is crucial if you want to start this change.

Case Studies

The following stories are real-life examples from traders I've worked with, referred to as traders A, B, C, and D to maintain confidentiality. Despite sharing a common issue - overcontrol - their causes are different.

Do you relate to any of these?

Trader A: Overly Analytical Perfectionist

Trader A has an intense need to control all variables in his trading process, often to his own detriment. He spends an excessive amount of time analyzing market data, news, and technicals before the market opens. He constantly seeks more information in an attempt to make the perfect decision leading him to hesitate on entries - analysis paralysis - and miss out on a lot of opportunities. Even when he does make a good entry, the exit becomes the problem - he ends up turning possible wins into losers, waiting for price to reach the perfect target.

Trader B: Risk-Averse Micromanager

Trader B is a risk-averse micromanager who struggles to let the market breathe. Trader B sets extremely tight stop-losses, in an attempt to minimize losses at all costs. The execution timeframe of his strategy is the 5 minute, but he just can’t stop himself from switching to the 1 minute with the feeling he’s missing out on important information to get him that great entry with a tight stop. As a result, he gets stopped out multiple times to watch the price reverse in his direction afterward. His obsession with short-term price movements prevents him from accessing the big picture and he ends up missing the main trend. Although he never has big losses, the accumulation of small losses leads to substantial drawdowns that his occasional wins cannot compensate for.

Trader C: Inflexible Plan Follower

Trader C likes to feel highly prepared when the market opens so his morning ritual is based on preparing his technicals. While preparation is key, the issue arises when he describes over-detailed scenarios not just based on high timeframe levels, but also on short-term movements that are unpredictable. When the market conditions deviate from his pre-established plan, Trader C is unable to adapt. It’s similar to someone giving a public speech with every word meticulously memorized. If a single detail slips his mind, it disrupts the entire speech. Aside from this, he never plans for all possible market scenarios which makes him overly biased. Trader C's inability to adapt leads to missed opportunities and large losses from widening the stop loss in the hope his perfect plan works out.

Trader D: Overtrading Control Freak

Trader D enters and exits multiple trades in one minute. He believes that by constantly being in control of his positions, he can minimize risk and maximize profits. He cannot let go of this control because that means powerlessness. During coaching sessions, I often emphasized that he has all the power in the market - the power of choice and trade selection. Our primary focus was reshaping his relationship with the market. We worked on shifting his perspective from one of authority to a more transactional approach. Given his excessive number of trades per day, sometimes reaching up to 60, trading commissions and spreads consumed his profits. He felt exhausted by the end of the session which is not a surprise. After all, battling against the uncontrollable is draining!

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How To Let Go Of The Need To Control?

No matter how many in-chart methods you apply to solve your obsessive need for control, nothing will work without a change in the background root belief.

This shift involves replacing the concept of power with managing what's within your reach and accepting what isn't.

For this, the trader needs to take small steps in letting go of control and experience positive feedback as a by-product. You not only need to believe that you can be profitable without controlling the uncontrollable, but you need to experience that (including the patience required to be able to testify it).

As you saw, there a many different causes to this trading problem, and some of them might require different approaches. However, there are key actions that apply to all of the causes. They are mindfulness and self-regulation, which clear the path for letting go, forgiveness, and embracing the present moment.

I often meet many traders who have no idea about what mindfulness is about. Many believe it's synonymous with meditation and end up dismissing it because they’re not "meditation people."

Let me clarify: Mindfulness can be practiced in various ways, and meditation is just one of them.

Actually, if you have a meditation routine but fail to practice mindfulness in your daily life, it’s kind of worthless. Mindfulness is simply the practice of being present and fully aware. In our fast-paced lives, being truly present is rare. Our bodies may be there, but our minds are often in the past, leading to depression, or living in the future, creating anxiety.

The problem isn't the over-control, it's our incapacity to be present.

Like any skill, mindfulness requires practice.

No one's born a mindful expert, and our busy lives don't exactly encourage us to slow down. There’s a need to fill out our schedules with activities that keep us busy and many times we fall victim to them, ending up rushing around, doing stuff that might not even matter. But that’s wrong, we don’t need to be in the rat race of productivity to feel good about ourselves. We do need to be picky about where we spend our time.

Before setting your schedule for the week, question every activity, and ask yourself: Does this activity put me closer to my goals directly or indirectly? Working out might not be directly related to your trading goals but it allows you to be in a better mental shape to hold good trading performance. If the activity doesn’t help you directly or indirectly, then you can skip it and prioritize other things.

A Simple Rule for Balance

I've got this simple rule I follow to keep my week in check. It's about building a schedule that satisfies these 3 different dimensions:

1. Information Absorption (from out to in)

2. Energy Release (from in to out)

3. Pause (no stimulus, no input or output)

I always try to find a balance in these 3 fields with activities like reading, listening to podcasts, and watching documentaries for the information absorption domain; working out, journaling, and talking with a friend for energy release; and meditations and long walks with no phone or earphones for pause.

I find that in these walks, I come up with a lot of new ideas to implement in my life, trading, relationships, and business. I’m passionate about it and wouldn’t change this pause moment for anything. When I neglect one of these 3 domains, I find feeling somewhat off-balance. If I don’t pause for many days, I feel confused and overloaded. If I miss my workouts, I’m less motivated and energized. If I skip reading or learning new things for weeks in a row, I find myself without inspiration and ideas for this newsletter, for example!

In our daily schedules, we all need a space to connect with ourselves; a moment when we don’t do anything but be in our presence. This allows our brain to create space, better organize ideas, and make new connections that lead to new ideas we would never think of otherwise.

I strongly believe that there comes a point in everyone's life when they grasp the importance of mindfulness. For some, it might not click just yet, and that's okay. But if you want to dig deeper into this understanding, make a conscious effort to live in the present moment - practice mindfulness in your daily routines! How?

• Devote 100% of your attention to everything you do.

• Avoid multitasking, it’s a killer for focus!

• Pay attention to the details of each activity, whether it's tasting a meal or completing a task.

You can integrate mindfulness into everything you do.

I hope these small and simple tricks help you to better organize your schedule to live a life with a purpose where you control all the variables!

Task Of The Week

Build a weekly schedule that promotes your well-being and the 3 domains of information absorption, energy release, and pause.

Ask yourself:

• What can I remove from my calendar?

• Is there anything on my calendar that isn't urgent and important? (We often mistake urgent for important).

• How can I get off the computer more?

• How can I maximize my mental health?

• What activities give me physical, emotional, mental, and spiritual energy?

• How can I include in my schedule more of these activities?

Second task: Draw a line on a piece of paper and write down on the left side all the things you control in your trading and, on the right side everything you cannot control. Go over this list before you start your trading session and align your expectations with the reality of the market!

Final Words

Rather than just focusing on managing time, we should also consider the quality of the energy that we invest into that time. When we do activities that energize us and contribute to our well-being, our trading performance and quality of time improve significantly. This helps you achieve the zone faster so there’s no interference between you and your ability to deliver your full potential.

Recommended Reads

If you're curious and want to dig deeper into the connection with your self, here are some books you might enjoy:

• "The Power of Now" by Eckhart Tolle

• "The Untethered Soul" by Michael A. Singer

• "Way of the Warrior" by Erwin McManus

And some of my past posts that will help you get started:

• Liberating Yourself from Limiting Beliefs

• The 4 Step-Process to Heal from Trauma

• 3 Essentials To Focus On The Process

With love,

Sara

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