How the Johari Window Can Help Your Trading

In 1955, two psychologists revealed a new tool for helping individuals better understand their own emotions - the Johari Window. Since that time, hundreds of thousands of people have used this framework to create awareness and strengthen their mindset.

On the outset, it may seem unnatural to link success in trading to something as seemingly abstract as the Johari Window, but in reality, every successful trader, whether they realize it or not, puts these principles to work. 

The Johari Window

The Johari window is a technique used to help individuals better understand their relationship to themselves and to others. It consists of 4 quadrants, and each represents a different portion of internal and external relationship.

The Arena

The upper left quadrant is out in the open.  Everyone sees. You know it about yourself and others know it about you. We call this "The Arena" because it is out in the open and there are no unspokens.

For example: "Everyone knows Bob drinks Jack Daniels from the time he wakes up to the time he goes to sleep".

If Bob drinks all day AND Bob knows it and everyone else knows it, then it's in the arena. 

The Blind Spot

The upper right quadrant is hidden from self - things others see about you, that you do not see about yourself. We call this the blind spot. Others can see it clearly, but our own self-awareness may not be tuned-in to this area.

For example: "Bob has a co-dependancy with alcohol and he needs to get some help."

Bob may realize he drinks all day, but he may not realize he is an alcoholic. This is an example of a blind spot. Everyone else sees it, but Bob can not.

The Mask (The Façade)

The lower left quadrant is hidden from others - things you know about yourself, that others do not know about you. We call this the "mask" or the "façade". These are things that most people want to keep hidden and not let the world know about.

For example: "Bob has been suffering from a deep depression ever since his children were all 3 killed in a tragic accident."

What other's may not know about Bob, is likely the cause of his destructive behavior. It is easy to judge from the outside (when looking at a blind spot) but very difficult to empathize with someone who is hiding behind a mask. 

Unknown

The lower right quadrant is unknown - things you do not know about yourself, and others do not know about you. We call this part the "unknown" or also "untapped potential". 

For Example: "If Bob were to get help for his co-dependancy on alcohol, his depression would lift and he could better function in life". 

Often times the unknown to either those around you or yourself is the key to finding real solutions.

General Application

In general, to have a better quality of life, we want to move the line. We want the "arena" to be as big as possible and we want to minimize things that are hidden. 

The only way we can truly thrive is to get the unspoken things out of the closet and get it into the open. Individuals need to learn to recognize their blind spots. Individuals also need to be more open and allow people who care to see their weaknesses. Others, on the outside, very often have solutions that will help us resolve those things we can hide behind our mask.

Unknown, or untapped potential, is where answers you and the people around you never realized before. Often times, the solutions and answers we are looking for are not in our blind spot and not behind the mask. Often times the answers are in an unknown area that we must uncover.

There are typically two ways to uncover these unknowns:

  1. Current resources
  2. Additional resources 

Current Resources

We can broaden the arena by letting down the masks. When we let others know the things that are hidden, often times those around us can give us great answers. We can also broaden the arena by simply listening to others and letting them point out blind spots. 

Additional Resources

Sometimes we need to get outside of our current environment and stimulate other inputs. It might be something as simple as watching the news or something educational on TV. It may look like making some new friends and/or expanding social environments.

One great way to discover the unknown is by attending conferences and seminars. For more than 10 years I have made a habit of attending at least 2-4 seminars every year. Some are obviously better than others, but these seminars have expanded my thinking and made me aware of things I would otherwise have not known. 

Applying the Johari Window to trading

So here's the million dollar question - how does this all help my trading?

Most people do not realize that trading is actually an emotional game. And yet, if you were to interview the top 100 traders in the world, you would discover that every one of them has learned to master their emotions.

The Johari window concept can apply to anything. One could apply it to marriage, to general self-awareness, to job performance.  And yes, even to your trading.

Many times in a class I will be working with a student. We walk through the analysis and everyone agrees on the trade direction. Often times EVEN THE STUDENT! Let's say for example the trade is bullish - everyone agrees it's bullish - but then I will ask the student which way they should trade and the student will say "bearish".

HOW?!?!?!?!?!?!

It never ceases to blow my mind when I can hold someone's hand through a trade setup and that person along with all of their classmates can agree on the setup, yet the person is determined to trade the opposite direction. It blows my mind! And yet, if you have been around many of my Trading Labs or other classes, you have watched this happen many times.

I finally realized it's because of the Johari window!

For all of us, we get biases in our head that blind us to the reality of our situation. Let me offer a couple of examples: 

Trading Blindspots

Many times in our trading we have blind spots. For some, it may be a bias about a market direction. For many, it's a bias about how the market should be traded (i.e. always buy on dips or trade based on fundamentals). Regardless, we all have trading blindspots. 

The good news about blindspots is they are easy for others to spot. If we surround ourselves with others who will be kind enough to give feedback, often times our blindspots can be identified and corrected. The key to correcting blind spots is an attitude of humility and a willingness to become better. 

Trading Masks

Masks are a little bit more difficult to deal with. It takes humility to be willing to receive blindspot feedback, but it takes a certain meekness to be willing to take off the mask. 

Masks are dangerous. They represent a certain denial of reality. But when we take the masks off, the opportunity for progress and growth rises to the top. 

Let me give a couple of example masks that come up in trading:

Often times in one of our live classes I get questions to "do an analysis" on a certain stock. What often does not come along with that analysis request is the information that the person who made the request, actually has a position currently in that trade. This represents a mask.

As an instructor, I need to know that you have that position. By "pretending" to be neutral but not revealing that you have a current active position, there is a lack of forthcoming that changes the lens through which the analysis needs to be done.

Another example of the mask: Many times students have suffered great financial losses. Those losses build emotional walls that cause extreme biases. Yet, without revealing that history, others can not help reveal the appropriate blind spots. 

Masks are an innocent intention to protect ourselves from being embarrassed. But masks also prevent us from making progress. If we want to make progress we have to be willing to drop the masks and put it all in the arena kaufen cigarette. 

Wrap Up

Being a successful trader is very rewarding, but it's not without work. One of the toughest things traders have to learn to do is manage their own psychology. The Jahari window is one tool that traders can use to help bring awareness to some of the unknown issues plaguing their trades. If you learn to uncover blind spots, and take off the masks, the arena will continue to expand and your profits should expand with it.

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