Money Narrative: the Hidden Agenda That Rules Your Trading Performance

[Rande Howell 10]

"Dale grew up in a hard working farm family in Arkansas. His parents, while growing up during the Great Depression, had nearly lost their farm. That experience really changed them. They hoarded what little money they had and came to believe bad things can happen if you can’t be certain about the future. And Dale was born into this legacy.

 

Leaving the farm for greater opportunity, Dale became a banker in a trust department of a bank where he protected the value of assets placed under his care. He was a natural at his job of maintaining certainty in the face of threats to his clients' capital. As time went on, the bank was gobbled up and Dale was fed up. In a career change, he moved into day trading. He learned a proven methodology to control risk well and was prepared to trade. What he was not prepared for over the next several years was the hesitation and anxiety he experienced, and could not overcome, when he risked capital."

________________________________________

 

The brain, memory, pattern, and the unconscious mind make unlikely partners to your trading methodology. Like Dale in the case study above, after investing a number of years learning and tweaking a methodology that should provide an edge, traders often discover that something is still missing that limits their success. It’s not their methodology, they conclude – it’s them. Though they strive for success, they keep falling into the same self-limiting patterns over and over again. No matter what they try, who they train with, or who they listen to – they stay stuck and they do not know why.

 

If they want to make money and are willing to invest the time and energy into learning, you would think that they would achieve their goal, even only by perseverance. It is as if something seizes control of their mind and their capacity to dispassionately trade their plan is hijacked. After the smoke clears, and they come to their right mind, most traders feel as if their bodies and minds were kidnapped by unseen forces. If you have ever thought this – you are not alone.

 

What Really Drives Your Perception of Money

 

In a capitalistic culture such as ours, our sense of personal worth, adequacy, meaning, and power get woven into our perception of money. As an example, a trader (who has not been successful for several years) is at a cocktail party. He strikes up a general conversation with an unfamiliar man. And the man asks, “What do you do?” Right there, the trader’s identity is tied to trading. The next question is, “Can you really make money at trading?” Though the trader has yet to be able to support his family on his earnings from trading, he answers, “Yes.” Then the trader proceeds to create a fiction that paints a rosy picture of his life as a trader.

 

Actually the trader feels shame erupt and he feels “less than”, so he lies to cover up his embarrassment. The trader’s notion of being a successful human being and his sense of mattering in the world is so tied up to how much money he should be making that he finds himself lying. His worth, his importance, and his social standing are tied up in his relationship to money. Money has become the yardstick by which he measures his value as a human being.

 

And as long as his perception of money is the measuring unit by which he gauges his worth, he will continue to struggle with finding success in trading. External validation by performance in trading becomes the judge of his character. His ability to make money in trading moves from competency of performance in a certain domain (where mistakes point out where he needs to learn in order to become better) to judgment of his worth as a human being. Where does this come from?

 

We Are Born Into a Money Script

 

Go back to the case study of Dale. Dale is born into a certain history and his brain adapts him to the conditions of that environment. His parents had been devastated financially by the Great Depression. Life had become very uncertain for his family’s financial survival. They were scared that they would not have enough money to put food on the table and a roof over their heads. Money was scarce, and they could not afford to lose anymore. This was the mantra by which they lived. Like many of their generation, they became savers and avoided risk at almost all costs. They were risk-averse and had developed a way of seeing the world as a dangerous place where things that could go wrong - and did, in fact, go wrong. This became their mindset. And it governed the way they saw life.

 

Their mindset for managing the uncertainty of life was that of a victim of circumstance beyond their control. And into this mindset their son Dale arrived. He was born into this perceptual amalgam of risk, money, inadequacy, powerlessness, and possibility. His brain adapted him to this circumstance. No one noticed that this way of seeing the world had taken over their perception. It was like water to a fish. It was a set of assumptions that had become so familiar, so true, that they were never questioned. And these assumptions of risk, capital, power, and worth became woven into the neuro-circuitry of Dale’s brain and mind – and became his beliefs. This is the money narrative.

 

The Money Narrative All Grown Up

 

Like many people who eventually become traders, Dale grew up and came to trading as a second career. He, like other traders, physically left home and never realized that he was taking the money narrative rooted in this history with him into his adulthood (think about the first career he drifted into). And into his trading.

 

Most traders, just like our friend Dale, have never questioned their beliefs about money – the money narrative. Understand, you do not have a money narrative – rather, a money narrative has you. It is not yours – you belong to it. In particular, traders rarely ask themselves, “What is money to me? What does money mean to me? And where do these beliefs about money come from?” Money will form a certain symbolic representation that connects your sense of power/powerlessness, your sense of adequacy/inadequacy, your sense of mattering/not mattering, and your sense of personal worth/worthlessness into your personal money narrative. And all at the pulling of the trigger where capital is put at risk.

 

In Dale’s example money was connected to his sense of power/powerlessness and to his sense of adequacy/inadequacy. He had avoided confronting these carefully hidden self-limiting beliefs about himself until he started trading. He came face to face with this money narrative (what money and risk means) every time he attempted to pull the trigger on a trade. His money conversation of losing everything and being powerless (that he was born into and adapted to without his knowledge or consent) came rushing into the forefront of his awareness like a ton of bricks every time he attempted to pull the trigger.

 

By becoming aware of this hidden money narrative, he began to alter it. The biggest problem with traders is when they resist acknowledging the presence of the power of their personal money narrative. Most traders are not so fortunate as to be born into a thriving money narrative that balances capital with risk management. Most grow up in families that attempt to avoid uncertainty and risk by not making mistakes. Yet, a money narrative that incorporates management of the risk of uncertainty is vital to successful trading.

 

Finding the Hidden Money Narrative

 

What’s your historical money narrative? One of the most effective ways of discovering the assumptions that have become self limiting beliefs that drive your trading is to ask two simple questions:

 

First - what personal assessments, criticisms, and judgments do you have when you beat yourself up after a loss? This will tell you how your worth, mattering, power, and sense of adequacy is connected to money.

 

Second - observe your personal assessments of yourself when you are on the winning end of a trade. Notice how your performance becomes a yardstick to measure your worth, your sense of value as a human being, or your personal sense of power. Money has become a symbolic representation of who you are. (Confusing net worth with self worth.) The problem is that this narrative has you, you belong to it – and you are its captive.

 

Enormous freedom becomes possible as you learn to be mindful of your financial narrative. It no longer has to control the way you connect money, performance, value, and adequacy as you begin to de-construct the narrative to which you were born. The most powerful part is that at this moment, you can begin constructing a much more empowering narrative about money, worth, meaning, power, and possibility. And your trading just becomes a performance to assess and improve, rather than a judgment of your being.

 

Rande Howell

[SRspider 10]

Great post. The outcome of your trade has nothing to do with who you are as a person. Neither does the outcome of your trading day. The sooner we BELEIVE this the sooner we can start looking at our methodology ina an objective way and learn to improve each and every day.

[Rande Howell 10]

Great post. The outcome of your trade has nothing to do with who you are as a person. Neither does the outcome of your trading day. The sooner we BELEIVE this the sooner we can start looking at our methodology ina an objective way and learn to improve each and every day.

 

Bingo. Our brain organizes our perception to "see" the world we see. These are our beliefs. I am constantly amazed by how two different people, sitting side by side in a trading room, can "see" vastly different worlds. Two different belief systems are engaging the the trading world. One allows the trader to experience the trading world from a position of impartialty, while the other sees the trader see the trading world as place where he could make a mistake and get hurt. The know the one who wins consistently and the one that loses consistently.

 

Rande Howell

[Enigmatics 10]

 

We Are Born Into a Money Script

 

Go back to the case study of Dale. Dale is born into a certain history and his brain adapts him to the conditions of that environment. His parents had been devastated financially by the Great Depression. Life had become very uncertain for his family’s financial survival. They were scared that they would not have enough money to put food on the table and a roof over their heads. Money was scarce, and they could not afford to lose anymore. This was the mantra by which they lived. Like many of their generation, they became savers and avoided risk at almost all costs. They were risk-averse and had developed a way of seeing the world as a dangerous place where things that could go wrong - and did, in fact, go wrong. This became their mindset. And it governed the way they saw life.

 

Their mindset for managing the uncertainty of life was that of a victim of circumstance beyond their control. And into this mindset their son Dale arrived. He was born into this perceptual amalgam of risk, money, inadequacy, powerlessness, and possibility. His brain adapted him to this circumstance. No one noticed that this way of seeing the world had taken over their perception. It was like water to a fish. It was a set of assumptions that had become so familiar, so true, that they were never questioned. And these assumptions of risk, capital, power, and worth became woven into the neuro-circuitry of Dale’s brain and mind – and became his beliefs. This is the money narrative.

 

This particular section really hit home with me. It's what I'm trying to re-wire.

[jaysmith124 10]

"

Finding the Hidden Money Narrative

 

What’s your historical money narrative? One of the most effective ways of discovering the assumptions that have become self limiting beliefs that drive your trading is to ask two simple questions:

 

First - what personal assessments, criticisms, and judgments do you have when you beat yourself up after a loss? This will tell you how your worth, mattering, power, and sense of adequacy is connected to money.

 

Second - observe your personal assessments of yourself when you are on the winning end of a trade. Notice how your performance becomes a yardstick to measure your worth, your sense of value as a human being, or your personal sense of power. Money has become a symbolic representation of who you are. (Confusing net worth with self worth.) The problem is that this narrative has you, you belong to it – and you are its captive.

 

Enormous freedom becomes possible as you learn to be mindful of your financial narrative. It no longer has to control the way you connect money, performance, value, and adequacy as you begin to de-construct the narrative to which you were born. The most powerful part is that at this moment, you can begin constructing a much more empowering narrative about money, worth, meaning, power, and possibility. And your trading just becomes a performance to assess and improve, rather than a judgment of your being.

 

Rande Howell

 

 

The negative feelings and the negative outlook surrounding money is the biggest road block and limiting belief. Most of us are programmed by people who didn't have any money.

 

For some,(me) I would add a third question.

 

Who is the caretaker you most identify with? How does he or she view money? How do they view rich people? Sometimes it is easier to see yourself through others.

 

P.S. Be mindful

Every journey into the past is complicated by delusions, false memories, false namings of real events.

Adrienne Rich

Edited June 6, 2011 by jaysmith124

[Rande Howell 10]

This particular section really hit home with me. It's what I'm trying to re-wire.

 

You and many people. Trading has a way of forcing the issue. One of the most powerful ways of re-wiring our belief systems is by using self compassion to engage our self limiting beliefs. Remember that those beliefs were constructed when the brain was simply adapting and being developed by your emotional environment. And it is compassion that opens up our sense of worth to re-organization.

 

Rande Howell

[gosu 10]

Trading has a way of separating incompetents from their money. This does not require a "hidden agenda." The path to being competent is to understand how markets work and to organize oneself to behave in accordance with that understanding. Behavior can be modified through drills. Knowledge, skill, and experience are the results.

 

The common problem facing an incompetent trader is that he is unaware of the magnitude of his incompetence. What he is conscious of is his fear, stress, anxiety, anger, etc. Therein lies the opportunity for vendors such as yourself, who are also unaware.

[Rande Howell 10]

Trading has a way of separating incompetents from their money. This does not require a "hidden agenda." The path to being competent is to understand how markets work and to organize oneself to behave in accordance with that understanding. Behavior can be modified through drills. Knowledge, skill, and experience are the results.

 

The common problem facing an incompetent trader is that he is unaware of the magnitude of his incompetence. What he is conscious of is his fear, stress, anxiety, anger, etc. Therein lies the opportunity for vendors such as yourself, who are also unaware.

 

After being witness to numbers of traders become mindful of and deconstruct self limiting beliefs -- and then reconstruct more empowering beliefs about the self and world -- I find your deterministic ways of viewing the journey of a trader into competency short sighted. Maybe even elitest.

 

Fear will always drive herd or tribe behavior until the person learns how to emotionally regulate both meaning and motivation of the emotion. Until that time, there will be a transfer of capital as you speak of. Most people did not arrive at trading's door with a genetic pre-disposition for risk managment. Most adapted to the world of uncertainty by avoidance of discomfort (this is called trading not to lose in trading). This particular organization of the self (the mindset) has to be re-organized where uncertainty and fear are de-coupled and a person's value is de-coupled from his performance. Then a trader develops emotional competency to go along with competency in his methodolgy.

 

These are not skills learned by behavioral modification. They are learned as we learn to be mindful of our beliefs, not as who we are, but only as a range of possibilities that we became stuck in -- and they can be reinvented.

 

It is true that fear based traders create a market for trader psychologists. And it is also true they can learn emotional competency and enter the journey toward mastery. It is a journey where we can reinvent the possibilities of our lives. I will leave judgment to its own devices.

 

Rande Howell

[gosu 10]

There are beliefs about trading and then there are truths. Aligning the former with the latter is the foundation upon which knowledge, skill, and experience can be built. You are trained to deal with the former.

 

A person who feels anxiety because he doesn't know what he is doing while in a trade is being quite rational. There is nothing to emotionally regulate, as you would say. His emotions are working fine and in actuality being helpful. They are telling him he has no business being in the market unless he intends to make a donation. No amount of professional therapy to "de-couple" what he's feeling from what he's doing changes that fact.

 

If what I say is short sighted to you, it may be because I do not make trading out to be more than what it is to sell to people. You do state a truth that no one at the start is fully equipped to extract. It is also a truth that most will never become equipped regardless of how many hours they spend on a therapist's couch.

[Rande Howell 10]

There are beliefs about trading and then there are truths. Aligning the former with the latter is the foundation upon which knowledge, skill, and experience can be built. You are trained to deal with the former.

 

A person who feels anxiety because he doesn't know what he is doing while in a trade is being quite rational. There is nothing to emotionally regulate, as you would say. His emotions are working fine and in actuality being helpful. They are telling him he has no business being in the market unless he intends to make a donation. No amount of professional therapy to "de-couple" what he's feeling from what he's doing changes that fact.

 

If what I say is short sighted to you, it may be because I do not make trading out to be more than what it is to sell to people. You do state a truth that no one at the start is fully equipped to extract. It is also a truth that most will never become equipped regardless of how many hours they spend on a therapist's couch.

 

We certainly come from different positions. I hold that truth is in the eye of the beholder. Or what I call the observer. We do not see reality, we see shadows cast -- and there is always an observer interpreting what it is experiencing. Traders come to hold certain assumptions about the market. Some of these assumptions have been worked out and have become an effective way of dancing with the market. Yet, the market does not care what assumptions you attempt to place on it, nor does have awareness of the truths placed upon it by men.

 

The people I work with usually have traded for a number of years. And they are successful in sim trading. They know HOW to trade a methodology what works in a classroom. It is when risk of capital is put in play that their "truths" about the market are challenged. It is at this point that I make the grounded assessment (not truth) that the trader is not separating uncertainty from worry or fear. This situation is highly trainable. The assumptions of self that have become hardwired as self limiting beliefs (their unexamined truth) are not failing because they don't know how to trade, but because they are not trained to operate in an environment of uncertainty. People will have to re-organize their beliefs about operating in an environment of uncertainty and their skill to manage it, but it is highly possible if that trader accepts full responsible for outcome.

 

You're right in my estimation about "years of time on a therapist's couch". Being a licensed therapist myself, I came to the conclusion that most therapuetic approaches fall short of transformation of the self. They are good about getting through certain passages, but not about how to equip yourself to design a life worth living. This takes an expanded view of human potential.

 

Fundamentally, I teach traders to use a set of skills and tools by which they do brain surgury on their belief system. Not a whole bunch of time on the couch. Trading becomes a great place to see up front and close the trader's beliefs about self in action. There is no hiding from the "truth" as it has been organized within the self. Yet most find that their "truths" are only unexamined assumptions about the world that drive their perception. It is at this moment that the assumptions behind the self limiting beliefs can be observed and re-constructed. Building your beliefs into a manager of risk rather than an avoider of risk is then the possibility. Anxiety at this point can be regulated and listened to, not from an avoidant observer, but from a disciplined and impartial observer. Very different outcomes. The "truth" they see allows them to be present to their trading very differently. The gap between sim trading and live trading narrows as they train their state of mind to embrace uncertainty from a perspecttive of discipline, patience, courage, and impartiality. A far cry from the anxious state of mind that had them hesitating and impulsing as fear sweep their thinking capacity away.

 

By the way, thank you. You have helped me write my next article.

 

Rande Howell

[mslk 10]

Great post. The outcome of your trade has nothing to do with who you are as a person. Neither does the outcome of your trading day. The sooner we BELEIVE this the sooner we can start looking at our methodology ina an objective way and learn to improve each and every day.

 

amen! great post ... it is so hard to separate the two but the ones with discipline will get the spoils. professional athletes, in particular golfers, have learnt to do this well. its all about the process - mslk

[Rande Howell 10]

Here is an interview by Karen Gibbs on MoneyShow.com where the money script is explored. MoneyShow.com: Video

 

Rande Howell