Should we seek to be happy all-the-time as a trader? No, says the research.

Eric Barker, at his Barking Up the Wrong Tree blog, asks a question:

“Should we try to be happy all the time?”

It’s a good question and he answers it with one word: no.  Now, he isn’t knocking happiness. He’s only pointing that context matters and that, as he quotes from Top Dog: The Science of Winning and Losing by Po Bronson and Ashley Merryman, “What’s good for your well-being is not necessarily going to be effective in a competitive context.”

Here’s a key takeaway (once again from Top Dog):

“When the object is to compete, positive psychology becomes a handicap. Its Panglossian ban on negative thought denies the value of critical thinking about past performance, which is necessary in order to learn from one’s mistakes and alter strategy going forward.”

Apparently it’s better to be an 8 on a happiness scale from 1-10 and not a 10.

When individuals complete happiness surveys that use a one to ten scale, those scoring around an eight often tend to fare the best in achievement. Why might the eights of the world outperform their friends and neighbors who are nines or tens? It could be that eights benefit from the creativity and energy of happiness, but also maintain a touch of worry that helps to motivate them… Similar results can be found in an analysis of a huge sample by Shigehiro Oishi, who analyzed the satisfaction scores of over 100,000 respondents from all over the world. Those who scored well on happiness – the sevens, eights, and nines on a ten-point scale – had higher incomes and more advanced educations than both the tens and those who were unhappy.

So if you are not happy all-the-time as a trader this may not be best for your mental health but it may be for your P&L.
Mike Bellafiore

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