A Trader Journal

Cognitive distortions are simply ways that our mind convinces us of something that isn’t really true. Dr. Aaron Beck, the “father” of cognitive therapy, first proposed the theory behind cognitive distortions. We all may suffer from these occasionally, but when they come to be how we see and interact with the world, they can prevent us from seeing things as they are and limit your growth and success.

1. All or Nothing Thinking: We think of things in “black-or-white” or rigid categories. If something is less than perfect, we see it as a total failure — there is no middle ground. If our performance falls short of perfect, we see our self as a total failure.
•  e.g. You manage well 6 trades and not manage well 2 trades. You believe this is terrible.
2. "Should's": We believe we must live up to certain perfectionist expectations. We may have perfectionist expectations of others. 
• e.g. I must do this, or I am inadequate. (“Shoulds” directed at yourself may result in guilt feelings.) 
• e.g. They must do this, or they are inadequate. (“Shoulds” directed at others may result in anger or resentment.)
3. Over Generalizing: We think of a single negative event as a never-ending pattern. If something bad happens only once, we expect it to happen over and over again.
•  e.g. You miss a trade or mismanage it and believe you are a clumsy, stupid loser in general.
4. Mental Filtering: There is reality, and then there is our interpretation of reality. They are always different. With this cognitive distortion, imagine seeing, hearing, and experiencing the world through a special filter that highlights negative details and filters out all of the positive details. There is always a silver lining, but for folks with this cognitive distortion, they just can’t see it.  
• e.g. You made a trading mistake but you were also disciplined and made multiple good trades. 
• e.g. You ignore all the instances where you are disciplined and made good trades and view it as a total failure.
5. Disqualifying the Positive: We reject positive experiences, …“they don’t count”. We maintain a negative view in spite of contradictory evidence. 
• e.g. Several colleagues ask you for tips on delivering good speeches, telling you they want to emulate your excellent public speaking ability. You still believe that your shortcomings outweigh your abilities, and distrust your colleagues’ motives for asking you for help.
6. Mind Reading: We arbitrarily conclude that someone is reacting negatively to you, and don’t bother to check this out with them. 
• e.g. A party guest is looking elsewhere as you are talking to her. You assume she is bored and wants to get away from you, so you leave. (Another friend later tells you that the party guest was hoping to exchange phone numbers with you, liked you very much and wonders why you left so abruptly).
7. Fortune Telling: We anticipate that things will turn out badly, and feel convinced that our prediction is a fact. 
• e.g. You forecast market will do something and feel convinced your forecast is a fact.
8. Catastrophizing: We believe the worst-case scenario will happen no matter what. 
• e.g. Someone turns you down for a date. You are convinced you will lead a life of loneliness.
9. Magnifying or Minimizing: We exaggerate the importance of certain things (such as our mistakes or other’s successes) and minimize other things (such as our own desirable qualities or other’s imperfections).
10. Emotional Reasoning: We believe that what we feel must be true automatically. If we feel stupid and boring, then we must be stupid and boring. You assume that your unhealthy emotions reflect he way things really are — “I feel it, therefore it must be true.” 
• e.g. You feel inadequate and fatigued, and assume that things are useless and require too much effort.
11. Labeling/Mislabeling: “Over-Generalizing”. Instead of describing an error, we attach a negative, generalized label to our self/others. 
• e.g. Instead of recognizing that you made a small error, you label yourself a “Loser”.
12. Personalization: We assume we are responsible for events around us that we had little/no responsibility for. We believe that everything others do or say is some kind of direct, personal reaction to us. We also compare ourselves to others trying to determine who is smarter, better looking, etc. 
• e.g. “You were late to the dinner party and caused the hostess to overcook the meal. If I had only pushed my spouse to leave on time, this would not have happened.” 
• e.g. A woman behind you at a store knocks over a display, and you apologize for possibly contributing to the incident.
13. Always Being Right. We are continually on trial to prove that our opinions and actions are correct. Being wrong is unthinkable and we will go to any length to demonstrate our rightness. For example, “I don’t care how badly arguing with me makes you feel, I’m going to win this argument no matter what because I’m right.” Being right often is more important than the feelings of others around a person who engages in this cognitive distortion, even loved ones
14. Compensatory Misconceptions: The belief that we need to inflate our achievements to be socially successful. 
• e.g. Telling people you graduated from Harvard, when you did not. Believing that you are inadequate as you are.
15. Control Fallacies: There are two types of control fallacies: externally controlled and internally controlled. Externally controlled means that we view our behavior and success as something that is beyond our control (i.e., not from within but something external from ourselves). In other words, we are helpless victims of fate and happenstance. The internal control fallacy is the belief that somehow we are responsible for the pain, happiness, failures, and successes of everyone around you.

We cannot solve our problems with the same thinking we used when we created them ~ Albert Einstein