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thetradingdoctor

SFO Magazine Article

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Hi to All! I just noticed that my article "This Is Your Brain On Trading" has been published in July SFO magazine. I wrote it as a scientific discourse to get people to begin to think about their brains and the way that the brain messes with trading. People are writing to me that they have never seen or read anything like it. That's good ( I think but I am not sure!) They are also telling me it is too dry, too scientific and lacks passion.

 

I really meant it to be scientific and something totally different from what I usually write. Apparently, people want less science and more passion.

 

Here's the link: http://www.sfomag.com/homefeaturedetail.asp?ID=1182172548&MonthNameID=July&YearID=2007

 

Thanks!

 

Janice

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I LOVE the article!

 

The human brain is very very interesting and it's nice to see someone put together an article like this. I could go on and on since this article makes me excited but I won't, I will say though that it makes me want to dig up some of my notes I took a while ago on the human brain.

 

For a long time I wanted to invest on the side and become a neurosurgeon simply because the brain is so interesting. Great article, I hope you do a follow up!

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Very interesting article, yes more scientific, but I don't see it as a negative. It's a good comparison to see how different traders make their decisions.

 

I do have a question. Speaking of synapses being created and strengthened every time a new experience and reinforcement of that experience is done, so when traders move from one trading system to another, these never get strong enough to be reinforced properly. But the biggest thing is the association of money and losing and winning strategy. How does one go about disassociate them and build synapses to reinforce that? Any thoughts?

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Well through synapses your brain will know if it's a winning or losing trade, it's basically creating a memory. That's really what it boils down to, think of it as walking I guess. You do it over and over and eventually you learn what works and what doesn't work, so your brain focuses on doing what works (your brain wouldn't teach you how to walk where you fall down every step). Granted your trades don't work 100% of the time, but you get my drift.

 

I hope that's clear, it's been a while since I've read up on this but that's kind of how I see it. If I'm way off then I apologize.

 

You can dig very deep into this subject, and it would get very interesting. For some reason when I think of this it reminds of me the movie What the Bleep do We know (down the rabbit hole). Once I start thinking like that my mind just gets scattered and I can't possibly put it all to words in an organized fashion. But if you have seen the movie you might be able to understand why I think the two could be related.

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awesome article dr. i'm going to print this out and put it on my wall:

 

"The average time and effort required to achieve expertise in trading is 10 years and 10,000-20,000 hours of practice. It takes much falling down, making mistakes, learning, re-learning and getting up again to make an expert trader. Most of all, it takes pure passion and total commitment to the process."

 

what i get from the article is that its paramount to review your trades. i would think if your not reviewing its almost blind luck if you are not only not strengthening the correct connections, but almost certainly strengthening the connections you don't want to be stronger.

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Thank you all so much for your comments on my article. I am thrilled that you like it and find it helpful! In reponse to the questions posed, if you learn one trading system and trade it repeatedly ( and assumedly with success) your synaptic connections will become what is called "entrained." This is a fancy way for saying that your brain learns that a certain system works and makes money. If you change systems, you must relearn and re-entrain those new pathways. In terms of making money, this is a bit more complicated because of the "old brain" pathways ( amygdala and other areas) which produce dopamine and are activated by the thought of monetary reward. If possible ( and this is not always easy) one is advised to develop a system which is backtested and shown to be profitable more than it loses. For the best traders, money is really a byproduct of trading properly. This is a concept which is not highly appreciated but is critical to understand. It is difficult to divorce the dopamine high of making money from the actual trading of the system, but it can be done and I think it is done, by and large, by experienced traders.

 

By the way, the article printed in SFO was only part of the original manuscript, so if anyone is interested in the full manuscript, please let me know?

 

Thanks Again!

 

Janice

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Great great article Doc ¡¡... really very interesting and I would like to have access to the full manuscript if posible...

 

Here I have a question : Taking into acct all the process that it takes to the brain to get trained for succesfull trading, we can asume that if you trade several diferent setups at the same time, he obviously has a much more complex work to do... It happens to me from season to season that I trade up to 3 setups at the same time, then I feel very stressed on so much information processing and I like to come back down to one setup, making my life more easy... would you recomend really getting good on ONE setup ? and let the brain be really focused in that one strategy and not confusing him with so much overwhelming information... cheers Walter.

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HI Walter,

 

My immediate answer to your question is to try trading one setup and see how you do for one month, compared with trading three setups. Because I don't know what you trade or your success rate, I am likely speaking too generally to you and I don't mean in any way to give an off the cuff answer that would diminish your profits. However, I have coached over 600 traders and many of them do well year after year trading the same setup and doing it so well that it really is entrained. Stuff can happen, however- the market changes, program trading comes in, etc, that may force you to change this. However, if you are stressed to the extent that you appear to be during trading I do suggest you simplify and make it easier on yourself. If you don't feel good immediately about going to one system, try reducing to two and see over the month what your equity curve looks like. If you woud like a copy of the full paper, please send your e-mail address to: janice@thetradingdoctor.com.

 

Thanks!

Janice

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hey Doc, can you post the manuscript as a pdf on here? I'm sure a bunch of us would love to read it.

 

This really is one of the most inspirational things i have read, i already have your quote on my wall in front of me. I attached the graphic i made thats in front of me with that quote on it.

trader.png.b05c7b09c795c9f6dfd098b219a03937.png

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HI Walter,

 

My immediate answer to your question is to try trading one setup and see how you do for one month, compared with trading three setups. Because I don't know what you trade or your success rate, I am likely speaking too generally to you and I don't mean in any way to give an off the cuff answer that would diminish your profits. However, I have coached over 600 traders and many of them do well year after year trading the same setup and doing it so well that it really is entrained. Stuff can happen, however- the market changes, program trading comes in, etc, that may force you to change this. However, if you are stressed to the extent that you appear to be during trading I do suggest you simplify and make it easier on yourself. If you don't feel good immediately about going to one system, try reducing to two and see over the month what your equity curve looks like. If you woud like a copy of the full paper, please send your e-mail address to: janice@thetradingdoctor.com.

 

Thanks!

Janice

 

Thanks Janice for that advice.... and yes I think I am more confortable on the one setup scheme, what happens is that sometimes I get kind of curios about new methods and I love to experiment new things... now I had always been profitable on my old one unique method... so I asume that one is "entrained"... thanks for this valuable information ¡¡ cheers Walter.

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hey Doc, can you post the manuscript as a pdf on here? I'm sure a bunch of us would love to read it.

 

This really is one of the most inspirational things i have read, i already have your quote on my wall in front of me. I attached the graphic i made thats in front of me with that quote on it.

 

The 10000 hours and 10 years estimate mirrors exactly the results of research - subject of a TV documentary- on specialist music schools such as The Yehudi Menuhin School.

 

It was found that the children who went on to become successful professional musicians and international prize winners were the ones who were not only talented but put in the most hours of practise.

 

Within this group the majority were Asian/Oriental and it was cited that the work ethic and discipline inherent in these cultures was an advantage.

 

How many contemplating trading would consider it if they were aware of these statistics?

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Hi Doc

 

Your article is spot on.

 

Money is not the only reward and source of motivation.

Getting your thinking sorted to the stage where it is effective, is rewarding motivating and calming, there is an internal reward system working within the brain that thrives as it progressively finds better answers, one on top of another. Learning how to learn effectively, a pity it isn't taught in school, perhaps that day will come.

 

The reverse also applies to those who fail. It is not just money that is lost, the brain also implodes in dissonance, there is recognition that the ladder of thinking and testing was not climbed correctly, somewhere a wrong step was taken and not corrected. There is a punishment on top of any financial pain, it might become an aversion.

 

I repeatedly experienced major flip flops in my view of the market while attempting to learn. At times the brain offered me two largely opposing views of market reality and said choose between the two because you can't have both. The dissonance thing and the bouncing to higher and higher cognitive levels for consonance are as you describe. This is presumably where 90% fail, a brain blockage sets in.

 

At school there were some subjects I could not do, total blockage, fortunately I was able to get ahead on the subjects that I could do. Einstein and Winston Churchill had similar problems so lack of intellect is not the sole cause of the problem, though that is how we tend to interpret it, taking it as a personal failure when perhaps we should see it as a challenge.

 

If I had that time over I might have sat down with those teachers and questioned them until I found out what thinking process their subjects depended on. As I get older I simply follow the paths that are still open to me while they are still open and worry less about the paths that seem closed to me. Life is too short. The ancient Greek ideal that a man should excell at all things assumes that a man will live long enough to learn all things and still have time left to do something constructive, it is no longer realistic, perhaps it never was. Selective ignorance is something of a necessity, even if it isn't a virtue.

 

"Because the human brain has an infinite capacity to change, organize and reorganize itself, progression to trading excellence is possible."

 

It also has a remarkable ability to beat the c##p out of itself when it repeatedly tries and repeatedly fails. If that happens, seek a calm time to re-examine things from the ground up, let the realities do the speaking, keep the wounded ego out of it, keep it impersonal, keep your preconceptions a little to the background and be prepared to abandon them because that is the goal of the exercise. Let market realities reshape your conceptions little by little.

 

Doc, you are attempting to teach people how to learn.

If humanity ever gets that sorted, physical realities would be our only barrier.

Its the one thing we should be teaching in schools, yet its the one thing we don't teach, apparently because we are still struggling to learn it. It seems like a simple question with a simple answer that is somewhere near our fingertips if only we could grasp it.

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Shouldn't attempt to do posts (or trade) at 4am...

The internal reward is along the lines of the "Eureka Experiance", after a Greek that jumped out of his bath and ran down the streets naked shouting "I have it" after inspiration struck during quite thought, it happens :)

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Thank you all for the wonderful and extremely insightful and thought-provoking reponses to my article. I am moved deeply. It makes all of this worthwhile for me to know that I have helped one person in this way. I am seriously grateful. If you would be kind enough to send me an e-mail, I will send you the manuscript. I released it to my subscribers and coaching students on Friday and sent a copy to another person on this board who was kind enough to write to me. I prefer to do this on a one on one basis right now rather than a general post, as it will allow my coaching students and subscribers to receive it and study it before I do general posting. Thanks for asking and for understanding! I love the way you set up the messsages on your trading screen, Darth. Walter, Pyenner, rolange, darthtrader and everyone on this board who is here to raise him/herself to trading excellence, I am in awe of your courage. It is a privilege for me to be here with you and I thank James for this opportunity.

 

 

Janice

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