Managing Fear: the First Step in an Effective Psychological Plan

[Rande Howell 10]

Until you understand the power of fear over thinking, it will dominate you.

 

What You Need to Know About the Impact Fear Has on Your Trading

Poised to pull the trigger on the trade, Carl held his breath and hesitated. A current of uncertainty swept him away into second guessing his decisions. Spontaneously thoughts began to rapid fire in his head, “Should I really take this one, what if I’m wrong, what if I lose again?” His confidence was melting like snow in a desert and was being replaced by his fear of losing – again. “Should I push through my fear or should I back off this trade?” he asked, trying to gather his wits. To no avail he gazed into his screen and tried to summon all the psychological tricks he had learned. But all he could hear was the continuing battle going on in his mind. And this was not the first time. It was déjà-vu all over again. Reaching for his antacid to calm the knot in his stomach, Carl realized that he found himself in this situation all too many times.

 

The Biology of Fear and Its Impact on the Psychology of Trading

What’s going on here? Carl is a conscientious trader. He uses a proven process and has his daily plan in place. Unfortunately he does not know how to effectively deal with the impact of his emotions on his personal psychology. Nor does he have an understanding of how emotions, particularly fear, impact perception and performance. Since 90% of trading is a balance between a trader’s emotions and his thinking, understanding the impact of emotions is an essential part of achieving success in the inner game of trading.

 

The complicating problem here is that Carl (like most traders) does not know how to effectively regulate his emotions and consequently, does not know how to produce a peak performance state of mind specifically for trading. And this blind spot is the difference between success and failure (profit or loss) in trading. And until Carl learns how to deal with his emotional nature, his fear, self doubt, greed, and impulsiveness will dominate his thinking and performance.

 

Thinking is EmotionalState Dependent

 

Why can’t Carl, or any trader (including you), just push his emotions aside? It is because our bodies, our brain, and our emotions are woven together and are inseparable. If you are breathing, you are experiencing emotion. And they dominate the way we think and perceive – whether we acknowledge them or not. Deeply rooted in human evolution, emotions (including fear and greed) create our capacity to survive. To become a successful trader, managing your emotional nature is far more profitable than attempting to ignore or be consumed by your emotions.

 

Taking it a step further, all thinking is emotional-state dependent. Emotions are biological (not of the mind) – and they overwhelm thinking and states of mind. The way we think and reason comes from the emotional state or mood in which we live. Thinking does not create emotions on a biological level. Rather, emotion determines our thinking and our perception of the world. Therefore, only to our detriment can we push emotions aside.

 

Can you see why learning to managing the biology of fear is so important to successful trading? As an example of this principle, take a look at our friend Carl’s situation. Everything seemed okay until Carl was ready to pull the trigger on a trade – the moment where money entered the game. Suddenly uncertainty and fear clouded his judgment and his thinking got consumed by self doubt. The truth is that Carl had pushed his fear away from his awareness until the moment of commitment. Then it flooded forth and ambushed him.

 

Not having the skill sets in place to deal with his fear, his emotional arousal generated his self doubt and indecision. Depending on personal history and adaptation, other traders in this situation could have resorted to impulsiveness and grandiosity instead. In either case the emotional ground from which behavior arises is fear of loss. Often traders jump impulsively into a trade decision to remove themselves (temporarily) from uncertainty. Others get consumed by a sense of grandiosity (false courage) to escape the fear of uncertainty.

 

Pushed by the emotion, all these personalized adaptations to fear tend to divert us from trading our plan and sticking to methodology. Until we learn to regulate the fear our brain associates with uncertainty, our desire for a calm, dispassionate, impartial emotional state (essential for effective trading) is hijacked by our lack of skills to deal with fear of loss.

 

The Trader’s Brain on Fear

 

The brain is organized around fear – the most primal of survival emotions. To the brain any threat is a threat to life, whether it is a saber tooth tiger flashing his 6 inch canines at you or your fear of losing money. It is one and the same to the survival brain. It does not distinguish between biological fear (the saber tooth tiger) and psychological discomfort (the fear of losing money). Once the threat activates the emotion, fear sweeps away your capacity to think rationally and impartially – which is absolutely vital for trading effectively. Once triggered, the chemistry of fear is coursing in your body in .003 seconds while your ability to react to the emotion takes more than .5 seconds. For effective trading, this is too late.

 

The trader, like Carl in the example, then finds himself in fear-based thinking (obsessive thoughts of self doubt, focusing on negative outcome, trying to make up for losses, and an urge to avoid the stressor). And until Carl, or any trader, learns how to effectively deal with and separate the biology and psychology of fear, he will not be able to produce long term success in trading.

 

The Trader’s Brain Turns Avoidance of Fear Into a Self-Fulfilling Prophesy

This is where well intended psychological techniques, without being grounded in emotional intelligence, fail. The biology of fear simply overwhelms the thinking process and creates a biological pattern based on the avoidance of fear. This is what has happened to our friend Carl. He has triggered a biologically wired pattern of avoidance based on fear. Until you can manage the fear, thinking is simply hijacked by the primal power of the emotion. Thinking is not king, emotion is.

 

The point here is that the brain wires patterns of perception based on emotion. These patterns become so familiar to us that we do not see them. Yet, they are there – producing a self-fulfilling prophesy that dominates how we create the world in which we live. And once the brain creates the pattern, the pattern starts creating us. In Carl’s case, his fear now dominates his thinking and his expectations of the future. Out of this state of mind come his negative expectations of the future, his focus on the negative, his self doubt, and his growing impulse to avoid further stressful thinking – a vicious cycle.

 

Managing this aspect of our biology that deeply influences our emotions, perception, and our trading is the first step to long term success in trading.

 

So, How Do You Stop Fear From Taking Over Your Thinking?

 

In a successful psychological plan for trading, the trader will establish a sense of calm authority before he begins to trade. He does this by first managing his fear before it can contaminate his thinking. If you imagine fear as a freight train, the first thing you want to do is to stop it from getting a full head of steam. If it gets beyond that, the best thing to do is to simply stop trading until the emotion has run its course through your body, brain, and mind.

 

However, it is better to learn to interrupt fear’s capacity to cloud your thinking before it causes problems in your trading. Fortunately, because fear is biological in its nature, it will have an individualized physical signature for each trader – which the trader can use to begin to manage his emotional state. That signature is composed of several components including (a) a breathing style that supports fear and its escalation and (b) specific muscle tension. It is these two areas on which we will focus.

 

A Little Experiment

 

The following is a very simplified process that can be developed into a skill set. It is only for illustration and not intended to be a trick or tip that will change your trading on a short term basis. Think of a time when you were trading when you experienced fear, stress, anxiety, or self doubt. Really focus on the memory. Build it up for a moment so that you can feel the tension in your body build. Feel your mind begin to race. Build it up more. Notice what happens to your breathing. Now, while it is still fresh in your memory, write down how you were breathing and where the tension was concentrated in your body. Also write down your predictions of the future (or prediction of trading outcome) while in this state of fear. All of these combined are your individualized fear signature. Now let’s learn how to disrupt it for more effective trading.

 

Most people find that they either hold their breath or breathe rapidly when they are in fear states. This is part of the biology of the emotion and is a barometer of the emotional state you are thinking from. These breathing styles maintain and accelerate the emotion’s momentum. Also notice where you experience tension in your body. The neck and shoulders, gut, and chest are common – particularly while holding your breath. The breathing and tension are parts of the physiology of fear. Also it is vital that you notice the connection between your emotional state and the kind of thinking you had (your predictions of trading outcome) while in the state of fear.

 

This is where you can disrupt the fear and can manufacture a calm state of mind instead. The first objective to a successful inner game of trading is to disrupt fear-based states of mind and replace them with a calm state of mind. Out of a calm state of mind you can think and perceive the market impartially – rather than having your thinking clouded by fear.

 

Let’s take the experiment a little further so you can see the difference in perception between fear states and calm states of mind. This time you will use diaphragmatic breathing as you bring the memory up. In this style of breathing, you will first pull air into your belly or abdomen and then let the air expand to your upper chest. To make it easier to learn, you can imagine that you have a bellows in your belly and that you are pulling air down your windpipe into your abdomen and allowing it to expand into your upper chest.

 

Practice breathing diaphragmatically a few times and then bring the stressful memory back into your mind. Keep focusing on the memory and notice how easy it would be for the memory to influence your breathing. But continue pulling air into your abdomen and then letting it expand into your upper chest. Stay focused on your breathing so that the memory does not activate the fearful breathing style. Continue doing this for a few more moments.

 

What do you notice about your ability to manage the emotional state and the resulting thoughts? Most people experience emotional regulation of the fear. They can feel the fear, but it never sweeps them away. And after a few minutes, they are able to establish a calm state of mind. It is this calm state of mind that you are looking for.

 

From this calm state of mind, your perception of the market changes. Which is more effective - observing market data from a fearful state of mind or a state of calm? Notice how your decision process changes as you are able to interrupt negative fear-states and the thinking that comes from them. And notice that as you are able to establish and maintain calm states of mind, you are better equipped to think from an impartial and objective state of mind. Which is better for your trading?

 

Moving beyond the First Step

 

This aspect of emotional regulation is only one part of a successful psychological plan for trading. The calm state of mind is like a launching pad. Once you establish skills to regulate the biology of an emotion, the door is opened to much more. New skill sets become possible for your growing success out of this first step. Successful trading is a journey – and biologically being able to interrupt fear-states from sabotaging your trading plan is an essential part of that journey.

 

This new skill, once developed, opens the door to increased realization of your trading (and human) potential. It will not work by itself. What it represents is a way for you to recognize fear dwelling within you (before it sabotages your efforts) and to mechanically disrupt fear’s hold on your thinking. Once you learn this skill set, you can begin to learn how to call up emotional states (calm impartiality and courage) as part of your inner resources that move your trading psychology beyond fear – and into peak performance.

 

Rande Howell, MEd, LPC

http://www.tradersstateofmind.com

[gosu 10]

What if Carl could be shown what it's like to trade competently by an expert who is solely interested in successful transference?

 

The first thing the expert might do is make an agreement that he will do the following: (1) the expert will make up any losses in Carl's account when trading together; (2) Carl may keep all profits. In return, Carl agrees to (1) start an account with an amount equal to trade the minimum number of contracts in say the ES ($5000); (2) obey all instructions from the expert without fail; and (3) after the account has been tripled ($15,000), Carl will go off on his own and duplicate the result again using one contract prior to adding additional contracts.

 

The expert will not charge any money and will terminate the relationship if Carl fails to obey all instructions.

 

Once the agreement is understood, Carl will monitor the market with the expert and be shown the rudiments of price continuation using the monitoring setup the expert uses. The expert's monitoring setup is a complete display of the market that rules out all surprises. Carl will first learn to anticipate price continuation and then participate during low to no risk periods. The first skill to learn is the fundamental one to participate without risk, not to extract profits. The instruction is to enter the market and exit at breakeven. This is called the wash drill. Initially, the expert will call out the monitoring elements and continuation sequence. When Carl sees and hears "point 3" he will know he must execute. After entry Carl continues to monitor and looks to wash the trade.

 

At no time is Carl instructed to monitor his breathing or regulate his emotions. If he wastes energy and misplaces his focus on those things, he would not be following instructions and be told to go home.

[Rande Howell 10]

What if Carl could be shown what it's like to trade competently by an expert who is solely interested in successful transference?

 

The first thing the expert might do is make an agreement that he will do the following: (1) the expert will make up any losses in Carl's account when trading together; (2) Carl may keep all profits. In return, Carl agrees to (1) start an account with an amount equal to trade the minimum number of contracts in say the ES ($5000); (2) obey all instructions from the expert without fail; and (3) after the account has been tripled ($15,000), Carl will go off on his own and duplicate the result again using one contract prior to adding additional contracts.

 

The expert will not charge any money and will terminate the relationship if Carl fails to obey all instructions.

 

Once the agreement is understood, Carl will monitor the market with the expert and be shown the rudiments of price continuation using the monitoring setup the expert uses. The expert's monitoring setup is a complete display of the market that rules out all surprises. Carl will first learn to anticipate price continuation and then participate during low to no risk periods. The first skill to learn is the fundamental one to participate without risk, not to extract profits. The instruction is to enter the market and exit at breakeven. This is called the wash drill. Initially, the expert will call out the monitoring elements and continuation sequence. When Carl sees and hears "point 3" he will know he must execute. After entry Carl continues to monitor and looks to wash the trade.

 

At no time is Carl instructed to monitor his breathing or regulate his emotions. If he wastes energy and misplaces his focus on those things, he would not be following instructions and be told to go home.

 

What If covers a lot of group. If Republicans and Democrats could simply think clearly and act from a calm discipline mind, then we would not be having the problems we are having today in the US. Maybe we should send them home. The premise that people are rational is the problem.

 

Getting beyond fear and into the state of mind you suggest would be ideal. The evidence is that that is not going to happen. Learning to manage emotion and mind is possible. First you have to recognize where the problem is -- it is the mindset that you bring to trading. Not the coach.

 

Had a trader teacher explain that to me at Dallas Expo. He said that even when he barks out the trade, traders will do the exact opposite. Should he send them home. He would have an empty class. Should the trader train mind? it can be done if the trader is willing to let go of his preconcieved notions and reorganize himself.

 

Rande Howell

[gosu 10]

Politics aside, the object being discussed is learning how to trade, is it not? This is not so difficult to understand on its own that we need to resort to analogies that miss the mark. You state that there is a problem of rationality as a premise. This is no problem for me because I do not adopt the premise that people are rational. However, I do know that people CAN be rational. Regardless, we can agree that when learning to trade it is good to be rational at all times.

 

As I understand you, the ideal conditions I described rules out fear for the learner. Everyone is aware that such an ideal situation is uncommon. That is beside the point. The point is, treating the symptom (fear) does not cure the problem for the learner. For you, the problem is the “mindset” that causes fear. For me, the problem is being clueless about how to go about learning to trade. You say the coach is not the problem. I say the coach may not be THE problem but certainly he can exacerbate it if he himself is clueless.

 

The learning situations that actually occur are so far from ideal that it is little wonder that so few people become operational. Your story of the “trader teacher” at the Dallas Expo is typical of what's available. Should he send his students home? Yes, with full refunds, if he had their interests at heart. We know that doesn't happen because the one who would lose out the most with an empty class is the “trader teacher” who might then have to support himself with his trading profits.

 

Yes, to learn to trade, one must train the mind. To learn to fail, one must train the mind too. Most people are learning failure and do not know it. A corollary is some people are teaching failure and do not care. The fact that people are paying to learn failure is of little consequence. Left to their own devices, they would likely have lost the fee in the market. In the larger picture, the vendoring industry, of which you are a part, is just friction.

[Rande Howell 10]

Politics aside, the object being discussed is learning how to trade, is it not? This is not so difficult to understand on its own that we need to resort to analogies that miss the mark. You state that there is a problem of rationality as a premise. This is no problem for me because I do not adopt the premise that people are rational. However, I do know that people CAN be rational. Regardless, we can agree that when learning to trade it is good to be rational at all times.

 

As I understand you, the ideal conditions I described rules out fear for the learner. Everyone is aware that such an ideal situation is uncommon. That is beside the point. The point is, treating the symptom (fear) does not cure the problem for the learner. For you, the problem is the “mindset” that causes fear. For me, the problem is being clueless about how to go about learning to trade. You say the coach is not the problem. I say the coach may not be THE problem but certainly he can exacerbate it if he himself is clueless.

 

The learning situations that actually occur are so far from ideal that it is little wonder that so few people become operational. Your story of the “trader teacher” at the Dallas Expo is typical of what's available. Should he send his students home? Yes, with full refunds, if he had their interests at heart. We know that doesn't happen because the one who would lose out the most with an empty class is the “trader teacher” who might then have to support himself with his trading profits.

 

Yes, to learn to trade, one must train the mind. To learn to fail, one must train the mind too. Most people are learning failure and do not know it. A corollary is some people are teaching failure and do not care. The fact that people are paying to learn failure is of little consequence. Left to their own devices, they would likely have lost the fee in the market. In the larger picture, the vendoring industry, of which you are a part, is just friction.

 

It's an interesting world you live in. The analogy works for me. Dem's and Republicans are so ingrained in their ways of thinking of the world and their fear of the other that new ways of being and doing in the world together are locked out. This is called cognitive dissonace. Pretty much the same way the historical mindset that a trader brings to the management of uncertainty in trading keeps him/her bound to inconsistent success. The brain is organized around fear and has to be re-built to create a mindset suited for trading. I call this mindlessness, rather than clueless.

 

People come to trading with skill sets that they have learned in other endeavors. Many of those skill sets that worked adequately in other domains, simply do not work and are counter productive in trading. They have to be re-tooled for the particular rigors found in trading. Some of those skills are cognitive and emotion. Without re-invention, they are at a real disadvantage. Learning new skills, including mindset, are necessary for most. If this is friction, so be it.

 

Rande Howell

[zdo 20]

Gosu,

 

Student had nailed the setup, entry, etc in the big S&P. Position had moved into profits

Teacher (me, circa 1993, but I remember parts of this like it was 15 minutes ago): something to the effect of “What are you thinking now?” or “What are you going to do now?” If I had been really good, I would have asked something to the effect of “What are your options now”

Student: “I’m thinking of taking profits”

Teacher (me): “What on this chart is showing you shouldn’t be/ stay long?! It’s given you some space now, did you consider moving your stop up past breakeven and see where it runs to?”

Student: “I’m getting out” speed dials broker. He was ‘emotionally hijacked’ at “… market”

Price dallied around a few minutes then took off… How to turn an eleven hundred dollar trade into a two hundred seventy five dollar trade…

 

Now in this case the coach may have been, as you say, “clueless” – after all we are talking about zdo, yo even worse a young gun, long ago and far away zdo, … anyways in the case above I don’t think it was the quality of the teaching. Rather, I can almost categorically say it was the student’s ‘physiology’ gettin’ in the way of his larnin’. I also know because, to be honest, pre date and post date that ‘lesson’, that same basic dialogue was acted out more than once intra-self with an inner ‘teacher’ and an inner ‘student’. Rande’s ‘emotional’ reasons ring a dam sight more true than the above students not having been “shown what it's like to trade competently by an expert who is solely interested in successful transference…” The student was sharp, well read, and good with charts. In my own case, by that time, I had been trained by 5 or 6 well known (at the time) teachers, Hank Pruden (being the best, long term), Larry W., Larry P. etc…

 

 

You said “For me, the problem is being clueless about how to go about learning to trade.” Not sure why are you’re arguing. ??? If a learner cannot get into state where he can learn, he’s for fkn sure to stay clueless about how to go about learning to trade – no matter how good the teaching context and content is. I was recently talking with a nuclear engineer and he described how with the vibration / turbulence sensors in a reactor they had to run algorithms measuring both the turbulence itself AND measures of whether the sensors were functioning correctly or not. We’re dealing with a similar situation here. We have the actual reality of the trade risks and we have the physiological processes / emotions that can be roughly seen as threat sensors. Rande is talking about the ‘algorithms’ measuring the accuracy of the sensors. You are talking about the ‘algorithms’ measuring the actual trade processes.

 

Instead of yipping at his heels off topic, please open a different thread with contributions on “learning how to trade”, “training the mind” , staying “rational” etc. They are needed and would be appreciated.

 

Be careful of falling into the 'if I don't experience it that way, it can't exist' trap... “… because fear is biological in its nature, it will have an individualized physical signature for each trader”. He is serving the portion of the population you would be sending home “Yes, with full refunds” - because their sensors are malfunctioning and giving maladaptive feedback…

 

All the best,

 

zdo

[gosu 10]

It's an interesting world you live in. The analogy works for me. Dem's and Republicans are so ingrained in their ways of thinking of the world and their fear of the other that new ways of being and doing in the world together are locked out. This is called cognitive dissonace. Pretty much the same way the historical mindset that a trader brings to the management of uncertainty in trading keeps him/her bound to inconsistent success. The brain is organized around fear and has to be re-built to create a mindset suited for trading. I call this mindlessness, rather than clueless.

 

People come to trading with skill sets that they have learned in other endeavors. Many of those skill sets that worked adequately in other domains, simply do not work and are counter productive in trading. They have to be re-tooled for the particular rigors found in trading. Some of those skills are cognitive and emotion. Without re-invention, they are at a real disadvantage. Learning new skills, including mindset, are necessary for most. If this is friction, so be it.

 

Rande Howell

 

@Rande Howell: I live in the same world you live in. It's called planet Earth. Come down and join us. The nexus between us is trading. We think about it from different orientations. My orientation is that of extracting from the markets. Yours is that of extracting from those unable to extract from the markets.

 

I'm 100% in agreement with your statement that people come to trading with skills from other fields that are unhelpful in learning to trade. Extracting from the markets is counter-intuitive. It is not easy to explain, but an explanation is unnecessary to anyone who has taken all the various paths that conventional wisdom says leads to the pot of gold and found them to be side trips. Obviously, my opinion is that what you offer is a side trip. It's a newfangled side trip that purports to deal with anxiety arising from uncertainty while trading, but still a side trip nonetheless.

 

My final comment to you is that the way to deal with uncertainty is to not trade when you don't know what's going on. When a trader does not know the position of the market with certainty, the risk of loss is high. It is the same for the expert trader as it is for the greenest of the green. The difference between the two is that when the expert knows, he knows that he knows. Lacking knowledge, skill, and experience, the greenhorn does not. It is amusing to me that you harp on the qualification that your clients are successful simulation traders using a method learned in a classroom and thus somehow only missing the mental skill you can provide. This is like the counter-intuitive thing mentioned earlier: There's no point in explaining, you just have to experience it to know.

 

In any case, I'll address no further comments to you. Much success to you in your vending business.

[gosu 10]

@zdo: I did read your comments addressed to me. None of my earlier comments were directed at you. There's no comparison between my description of an ideal learning situation and your experience with your student.

 

If any of my statements struck a nerve, that's something I can't help you with. I recommend that you not take my posts seriously. I'm here to bullshit mostly and entertain myself.

 

All the best to you.

[Rande Howell 10]

@Rande Howell: I live in the same world you live in. It's called planet Earth. Come down and join us. The nexus between us is trading. We think about it from different orientations. My orientation is that of extracting from the markets. Yours is that of extracting from those unable to extract from the markets.

 

I'm 100% in agreement with your statement that people come to trading with skills from other fields that are unhelpful in learning to trade. Extracting from the markets is counter-intuitive. It is not easy to explain, but an explanation is unnecessary to anyone who has taken all the various paths that conventional wisdom says leads to the pot of gold and found them to be side trips. Obviously, my opinion is that what you offer is a side trip. It's a newfangled side trip that purports to deal with anxiety arising from uncertainty while trading, but still a side trip nonetheless.

 

My final comment to you is that the way to deal with uncertainty is to not trade when you don't know what's going on. When a trader does not know the position of the market with certainty, the risk of loss is high. It is the same for the expert trader as it is for the greenest of the green. The difference between the two is that when the expert knows, he knows that he knows. Lacking knowledge, skill, and experience, the greenhorn does not. It is amusing to me that you harp on the qualification that your clients are successful simulation traders using a method learned in a classroom and thus somehow only missing the mental skill you can provide. This is like the counter-intuitive thing mentioned earlier: There's no point in explaining, you just have to experience it to know.

 

In any case, I'll address no further comments to you. Much success to you in your vending business.

 

We all live in different worlds based on the set of assumptions that we bring to the act of observing the world. There is no one world "out there". If my service to traders is characterized as a vending business, then may may my nourish and grow their minds strong. Peace be with you.

 

Rande Howell

[zdo 20]

@zdo: I did read your comments addressed to me. None of my earlier comments were directed at you. ...

If any of my statements struck a nerve, that's something I can't help you with...

 

Nothing taken personally. My post was actually to raise the awareness for everyone of that dual issue of needing to attend to both the situation and 'sensor' accuracy.

 

I recommend that you not take my posts seriously. I'm here to bullshit mostly and entertain myself.

I understand. 'Traditionally', TL has not been a place for that. Please desist. May I suggest ET or TTW...

 

the way to deal with uncertainty is to not trade when you don't know what's going on

OK guys, want to stay securely ensconced right there in the middle of the herd – then do that. Here’s the challenge – learn to trade in ever increasing levels of uncertainty. Learn to embrace less and less confirming / corroborating evidence. Learn to use each uncertainty to tweak your risk... ultimately there is simply not enough time, etc. for an individual to wait for certainty.

[gosu 10]

@zdo: Thanks for the laugh. "Please desist"? Get a grip.

 

"Learn to trade in ever increasing levels of uncertainty"? Have you tried flipping a coin to enter and exit? That's pretty uncertain. Carry on.

[zdo 20]

... Thanks for the laugh. "Please desist"? Get a grip.

Seriously, if your intention is to help yourself and others develop in trading then you are welcome. And it's great if you enjoy yourself and have a few laughs along the way.

If your intention is escape, diversion, fun at others' expense then -

You're welcome for that laugh, but now cease and desist in here. Go play in ET.

I'm pretty sure all the admin and all but a few of the members herein would agree.

 

"Learn to trade in ever increasing levels of uncertainty"? Have you tried flipping a coin to enter and exit? That's pretty uncertain. Carry on.

Using a random and unrelated decision process can actually go a long way in reducing certain components of the totality of uncertainty... :confused:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two students show up at the same time at Ass Jack’s DamNearPerfect Trading School. One is Nervous Nelson. The other is Iron Will. When they finish, who does better? Neither!!

 

What most likely will happen to Nervous Nel has been described above.

 

Iron Will is able to generate state that allows him to minimize and ignore critical inner issues. In class Iron Will’s progress is such that ideal “transference” is assumed by students and teacher. But back home, past certain levels of intensity, vaguaries, speed, etc. the state doesn’t hold up – feelings, judging, and fear (what?!) break through. It takes six months, but he finally (and correctly btw) concludes that this method is not for him. He also concludes (and correctly btw) that ‘transference’ is impossible.

 

Should either of them get a full refund? Hel no!

Can both of them still turn it into money well spent? Hel yeh!

But only if …. ???

[gosu 10]

@zdo: Instead of you playing the role of mall cop, how about we let the site owner handle anything that might violate the terms of service I agreed to when I registered. I'm too used to doing as I please, when I please, how I please to change now.

 

If you continue to have issues with my posting here, I recommend you seek out Rande Howell who can help you regulate your negative emotions. Who knows, he might also help your trading as your purpose is to trade when you don't know what's going on.

 

This is my final post to you. Good luck.

[zdo 20]

Can both of them still turn it into money well spent? ... But only if …. ???

 

"But only if …. ???" was a serious, real question. I haven’t come up with a high quality answer yet. But a partial answer would have something to do with if they experience it as perfect, dependent origination. An answer from a more ‘western’ world view would go something like “...being clear that we must learn to view ourselves accurately, and yet without negative judgment before we become free to move ahead or make any self sustaining changes in our lives.” Kurt Wright.

[Rande Howell 10]

"But only if …. ???" was a serious, real question. I haven’t come up with a high quality answer yet. But a partial answer would have something to do with if they experience it as perfect, dependent origination. An answer from a more ‘western’ world view would go something like “...being clear that we must learn to view ourselves accurately, and yet without negative judgment before we become free to move ahead or make any self sustaining changes in our lives.” Kurt Wright.

 

This is interesting. "Money well spent" would depend on whether either the nervous one or the bull in the china shop wakes up to their self deception. One person I have come to admire lost $500,000 before he cracked his self deception. It was a very painful wake up call, but he finally listened. He's had to go back to work to build his capital back up and plans to reenter trading at that time. But it will not be the same trading. He is a very different person now. He has developed a different set of eyes when he was forced to take personal responsiblity and confront his demons. As the Buddhist say, "You never step in the same stream twice." Arrogence is gone, a humility rooted in inward confidence in its place. This would be "money well spent". Otherwise you stay in self deception.

 

Rande Howell

[johnw 10]

"Managing Fear" an interesting thread as always Rande.

 

But what if the the Title "Managing Fear" brings fear to the already fearful ...

a bit like "managing" pain or "managing" cancer or some other life threatening or debilitating situation.

 

It is almost as though a person has constricted themselves to the challenge and thereby forms a strong acceptance to a limited outcome.

 

And how does this play out when attempting trading ...

 

Well, I read a post here at TL where someone wrote that they had assembled a good trading plan but now they needed to improve their physiological approach in order to trade it.

 

How can this be ...

Are they two different people existing within one shell.

Surely when they remove themselves from the confines of their fearful shackles,

their new plan and their ability to trade it will become one and the same.

They cannot split themselves across a set of invisible tracks

 

Why is it that I am left with the feeling that people want to change JUST enough about themselves to be successful at trading but to remain who they are.

 

What are they afraid of becoming.

 

It is as though not only "fear" is a negative word, but the state that exists beyond fear holds even greater negative consequences for many people.

 

Perhaps the inclination for people to ferret into the detail of everything before they grasp the big picture, is over playing it's hand.

 

Perhaps an improved appreciation of the enormity of fear as an energy both individually and collectively, will better assist people to "move beyond" fear rather than just "manage" it.

 

Imagine this for a moment ....there are two sincere opportunities on offer.

 

The first is to be Mentored so that we can trade to a level of living comfortably.

The second is to be Mentored to a target of USD100K each and every day

 

What is the difference in mentoring in each case.

And what are People's first REACTION to the two offers.

Edited July 27, 2011 by johnw

[phantom 16]

I read a post here at TL where someone wrote that they had assembled a good trading plan but now they needed to improve their physiological approach in order to trade it.

 

How can this be ...

Are they two different people existing within one shell.

Surely when they remove themselves from the confines of their fearful shackles,

their new plan and their ability to trade it will become one and the same.

 

Curious, isn't it?

 

I once read that Jack Schwager (Market Wizards author) could trade other people's money very effectively, but couldn't trade his own account to save his life...

 

Inconceivable?!

 

 

Phantom

[SIUYA 11]

Are they two different people existing within one shell.

Surely when they remove themselves from the confines of their fearful shackles,

their new plan and their ability to trade it will become one and the same.

They cannot split themselves across a set of invisible tracks

 

Why is it that I am left with the feeling that people want to change JUST enough about themselves to be successful at trading but to remain who they are.

 

What are they afraid of becoming.

 

Absolutely they can be two different persons within the one shell.......it happens all the time in other real life situations.

The upstanding business man who skims from his clients, the professional soldier who seems emotionally in control in high pressure situations but cant handle day to day life, the politician who stands firm on high moral values who visits prostitutes and snorts coke off their butts in their spare time...

extreme maybe, but I think this has a lot to do with the money narrative Rande talks about and then a recent post by nHallet on visualization......

 

Often we see ourselves as a struggling trader and like the idea of us against the world.....and so it becomes such. We want sympathy for our losses, and yet brag abuout being a big trader. Who has seen adds for retail investors teasing them to play with the big boys.....

Or we feel there is less pressure managing other peoples money because ultimately its not yours, you were only followoing a mandate, so long as you out perform a benchmark its all right....etc.

 

There are lots of other scenarios, and thats why its important to not only work out who you are, but what you want to get out of the markets, what you perceive your image to others to be, and also to yourself.....how often have people been embarassed to say they are a trader/speculator in front of others???

 

and so they may secretly want parts of being a trader and are afraid of other parts. In changing enough about themselves usually is not enough unless its the right things in the first place.....and maybe its not about even facing up to the fact that there are certain aspects of being a trader that are not great.

[johnw 10]

Absolutely they can be two different persons within the one shell.......it happens all the time in other real life situations.

The upstanding business man who skims from his clients, the professional soldier who seems emotionally in control in high pressure situations but cant handle day to day life, the politician who stands firm on high moral values who visits prostitutes and snorts coke off their butts in their spare time...

extreme maybe, but I think this has a lot to do with the money narrative Rande talks about and then a recent post by nHallet on visualization......

 

Often we see ourselves as a struggling trader and like the idea of us against the world.....and so it becomes such. We want sympathy for our losses, and yet brag abuout being a big trader. Who has seen adds for retail investors teasing them to play with the big boys.....

Or we feel there is less pressure managing other peoples money because ultimately its not yours, you were only followoing a mandate, so long as you out perform a benchmark its all right....etc.

 

There are lots of other scenarios, and thats why its important to not only work out who you are, but what you want to get out of the markets, what you perceive your image to others to be, and also to yourself.....how often have people been embarassed to say they are a trader/speculator in front of others???

 

and so they may secretly want parts of being a trader and are afraid of other parts. In changing enough about themselves usually is not enough unless its the right things in the first place.....and maybe its not about even facing up to the fact that there are certain aspects of being a trader that are not great.

 

 

Very thoughtful post Siuya.

 

But can a Trader manage a sufficient quantity of his fears to turn in a consistently good performance or will the sum of all his fears eventually drown him.

 

Should a Trader analyze his fears and deal to them as such, or should a Trader accept that pretty much all fear will reveal itself eventually and he knows that he has the strength to overcome them on a "first come first served" basis.

 

One might say that the underling issues should be dealt with first and that is more than likely the professionally correct approach.

 

But what if our Trader, knowing that the fear is his and his alone, decides that the honest course of action is best, and that he will never unwittingly present himself with a challenge that he is not ready to overcome.

In other words he is quietly confident that he can cope.

He just doesn't know what previously untapped reverses he will need to call upon.

 

When we look at the journey through this set of eyes, the actual task of trading consistently profitably seems relatively straight forward.

[humble 10]

Imagine this for a moment ....there are two sincere opportunities on offer.

 

The first is to be Mentored so that we can trade to a level of living comfortably.

The second is to be Mentored to a target of USD100K each and every day

 

What is the difference in mentoring in each case.

And what are People's first REACTION to the two offers.

 

Interesting questions.

 

I don't know what the difference is in the mentoring, but obviously the results being offered are worlds apart. I would question the ability of the first mentor because if their method is sound and can get you to a level of living comfortably, then getting to a level of 100k/day should simply be a matter of scaling up size, assuming of course a sufficiently liquid instrument is being traded. Since that is not being offered then my assumption is that there is some flaw in the method or the mentor is not willing to share everything. After all, we should not be in this game just to be living comfortably.

 

Then again, if the 2nd mentor is offering the opportunity of 100k/day I would question their motive for sharing such a method. While it is not something that I am yet capable of, it is something that I do believe is very possible, but why would someone just give that away?

 

That being said, my first reaction...Sign me up for the 100k/day!!

[SIUYA 11]

Should a Trader analyze his fears and deal to them as such, or should a Trader accept that pretty much all fear will reveal itself eventually and he knows that he has the strength to overcome them on a "first come first served" basis.

 

One might say that the underling issues should be dealt with first and that is more than likely the professionally correct approach.

 

IMHO - I think this is the sensible approach, however most people do the opposite, which is throw themselves in and blow up or loose money and then search out a plan and a method and then try and understand what to do, it might explain a lot.

Would you try and practice the law or surgery without studying for years the basics....?

 

But what if our Trader, knowing that the fear is his and his alone, decides that the honest course of action is best, and that he will never unwittingly present himself with a challenge that he is not ready to overcome.

In other words he is quietly confident that he can cope.

He just doesn't know what previously untapped reverses he will need to call upon.

 

I think this then becomes the next step for a lot of traders after they realise that while it seems simple, it is in fact simple with an evil twist. Being quitely confident is probably the wrong approach as the confidence usually comes from other aspects of ones previous life and the assumptions of other areas of success. Where as when it comes to trading you virtually need to say right from the start and then almost every day - I know nothing, everything I am thinking and deciding is possibly wrong and after that you are open to possibilities (a bit extreme maybe but i think its better than thinking I know what i am doing only to be proven wrong a lot of the time).

This I guess means you are constantly trying to call on un tapped resources (and possibly previously unbeknownst resources) but with an open mind. (This might be the zen, inner being hocus pocus, secret, voodoo, whatever people finds works for them is cool)

 

BUT...before all this, rather than analyzing fears, as most of these actually only develop after trading, beginners should work out what it is trading will give them, why they are doing it and understand the lies and marketing spiel from sellers of systems etc; implant a false reality of dreams and idealistic trader fantasies....this is what needs to be eliminated from the mind and then once dealing with reality, a lot of the fears dont actually cause a problem or exist, or even manifest themselves.

(one of the big fears that get implanted is that if these other guys are making money, playing with the big boys and they say its easy - why cant i do it - so you search for another easy fix.....what other industry charges so much and delivers so little of reality?)

 

 

When we look at the journey through this set of eyes, the actual task of trading consistently profitably seems relatively straight forward.

 

after the circular journey above do we then often get back to where we started - but with a whole encyclopedia of knowledge that is purely subjective and changeable - and accepting that it is changeable is important, and that there is no one way or 100% sure way of doing things correctly.

Once you let go, you dont really think in terms of fears etc, I think you just do it - that whole subconscious, conscious thing....

[Rande Howell 10]

Very thoughtful post Siuya.

 

But can a Trader manage a sufficient quantity of his fears to turn in a consistently good performance or will the sum of all his fears eventually drown him.

 

Should a Trader analyze his fears and deal to them as such, or should a Trader accept that pretty much all fear will reveal itself eventually and he knows that he has the strength to overcome them on a "first come first served" basis.

 

One might say that the underling issues should be dealt with first and that is more than likely the professionally correct approach.

 

But what if our Trader, knowing that the fear is his and his alone, decides that the honest course of action is best, and that he will never unwittingly present himself with a challenge that he is not ready to overcome.

In other words he is quietly confident that he can cope.

He just doesn't know what previously untapped reverses he will need to call upon.

 

When we look at the journey through this set of eyes, the actual task of trading consistently profitably seems relatively straight forward.

 

By our nature we evolve as we adapt our belief system to the challenges the world, or we resist evolving due to our nature to produce certainty. This is what biological systems, whether conscious or not, do in their dance with the world of uncertainty that we are immersed in. We develop "fears" that allow us to avoid the ambiguity of the uncertainty of change. These fears are in response to uncertainty. And at one time in our not so distant past, uncertainty and fear were glued together as part of our survival.

 

It is the management of this ambiguity that must be faced head on in trading. In untethering uncertainty from fear, you open the door to the reorganization of the self in a purposeful direction. In this sense, trading becomes the labotorary of the design of self fulfilling beliefs about self and the world that we are part of. When we learn to face our fears from a position of calm assertiveness, trading becomes much easier. We are no longer living in our histories, but are creating our futures.

 

Rande Howell

[SIUYA 11]

I saw a great t-shirt at the beach today on it was written - ""everything you know is wrong""

I also reckon he could have written under it if he was a trader - ""So I assume I know nothing""

[MightyMouse 12]

What are the fears that everyone has?

 

Fear of loss?

 

Fear of failure?

 

Fear of success?

 

Fear of having to back to a 9 to 5 job?

 

Fear of death?

 

What else?

 

Personally, I have narrowed it down and the fear I have can never be realized in the market. I therefore do not feel fear in the market when I trade.

 

Early on I was duped into feeling fear when I traded, but how many times can you hear "BOO" and be startled before you begin to anticipate the "BOO" and expect to hear it?

[steve46 12]

Our fears are an expression of our native intelligence..To the extent that you "have no fear", by extension you may be lacking in intellegence and unable to learn how to trade...that is a limiting factor that no one can help you with.

 

To find good candidates to train I used a simple test...I put students in a situation where they were likely to be fearful and gave them options that allowed them to re-define their fears (if they chose correctly) so that the fear they experienced became an asset to them and allowed them to find good entries and to stay on the right side of the market...

 

Those that could not step back from their fears and look squarely at what they feared, did not do well and were not accepted into the class....those that took that opportunity found that eventually they were able to transform their fear into an ally, and interestingly they were able to make a profit right away.

 

Every day.....we have the same opportunity to re-define our fears and overcome our limitations, but generally we choose to stay where we are....to the extent that you back away instead of choosing to overcome your fears, you are likely to become embittered and angry or simply complacent...

 

If a person were simply to go back and re-read the posts, the underlying frustration, anger and/or complacency become obvious..