Dan shook his head as he checked again.  No matter how many times he looked he still saw the same numbers and what it boiled down to is that he had lost again.  A small voice inside kept telling him that this loss, along with the many others, meant that he had failed, that he must not be smart enough or else he wouldn’t lose so much, and that the market is out to get him.  He felt like a loser and a failure even though deep down a part of him knew that this was not true; but it didn’t matter, he believed it anyway.

This scenario plays our across the planet of traders daily, over and over again.  Your unconscious mind makes up stories about events in your life and these stories represent the meaning that you have determined in that interpretation.  Now, events are always neutral, you provide the meaning.  In fact when an event happens, and an event is anything that gets your attention, you ask yourself three questions each and every time.  Additionally, these three questions are asked unconsciously much of the time.  These questions are:  What is it?  What does it mean? And, what am I going to do about it? Every time you derive a meaning from a set of circumstances (an event) you are keying into your belief system.  Beliefs are very powerful and will either be beliefs that empower you to get the results that you want, or they will be limiting beliefs that debilitate and diminish your efforts.  One of the ways to change a story, myth, or unsupportive meaning is to reframe it.  When you change the content or the context of a thought, myth or story about an event you change the meaning,  If you change the meaning it will also change your perception of that event as well, which will affect your emotional response.  In the vignette above, Dan has attached meanings to the concept of losses that don’t serve him and that are not aligned with reality.  He is not a failure, he is above average in intelligence and the market is a neutral representation of all the individual trading decisions at any giving moment – the market is not out to get you.  Let’s take a look at an example of how the concept of losses can be reframed: Thought – I have failed again; Reframe – I have received additional feedback toward my education.  Thought – I’m not smart enough or else I wouldn’t lose so much; Reframe – My intelligence is not in question; losses are a part of doing business.  Thought – The market is out to get me; Reframe – There is no pain, risk or punishment in the market, it has no intention for anyone.

Reframing: The Power of Controlled Perception

Reframing is an important trading lesson involves shifting your thinking around a particular concept so that the emphasis changes from negative to positive, from constriction to expansion, from weak to empowering, from non-supportive to supportive.  Reframing is also a Neuro-Linguistic Programming (NLP) technique where an undesirable behavior or trait is transformed into a positive premise or intention. Alternatives to satisfy the positive intent are found, followed by negotiations with (parts of) self to resolve conflict, check for ecology, and to implement the new behavior. Reframing can also be used in NLP to describe changing the context or representation of a problem. More precisely, one of the techniques for achieving almost any desired change in NLP is the “Six Step Reframe.”

The Six-Step Reframe

Humans have a personality that is made up of sub-personalities.  These sub-personalities or “parts” are created by various experiences as you live life.  Some parts are created by very important positive experiences and some of the parts are created by pain and traumatic experiences.  In the following six steps we will look at your parts as though we were talking about people working on a problem and aiming to reach consensus about the problem.

1) Identify the behavior or pattern X to be changed; example, doubling down when in a losing position.  It can be any behavior that you either want to stop or start.

2) Establish communication with the part of yourself that is responsible for the pattern – (this is like talking to another person).  This is based on the assumption that all aspects of you are valuable parts.  In other words, these parts are trying to achieve a goal for you; for instance protection and safety.  Let’s look at the example of fear of success, which can come from a part that has an underlying intention to “protect” you from the pain of rejection when the internal myth of being “not good enough” is challenged.  The important question is: Will the part of me that runs pattern X (the bad behavior) communicate with me in awareness?   If the part of you that is responsible for the bad behavior is willing to communicate, it will cause a sensation or feeling (a signal) in your body.  This might be a tangible feeling coming from anywhere in your body—your muscles getting tense, your stomach getting fluttery, etc. Establish a “yes-no” meaning for this signal by declaring the following: “If this feeling means yes, then increase the sensation.”  Of course, your conscious mind (your awareness) cannot choose which communication experience will work.  That would be like answering for the other person in a conversation, until they say something you don’t know.

3) Distinguish between the behavior, which is pattern X, and the intention of the part that is responsible for the behavior.  Ask the question “Would you be willing to bring into my awareness the intention for the behavior or what you are trying to do for me by pattern X?”  After asking, then just as before, remain open to the feeling or sensation that already has begun in 2 above.  If you get a “yes” response, ask the part to go ahead and communicate its intention.  This communication can be in the form of a thought or picture in your mind. Then when the intention has been communicated determine if that intention is OK with you?  For instance; “I am doubling down in order to mitigate my losses.” Once the intention of the part causing the behavior has been discovered, and you are aware of it, it is important that the specific method it uses to replace the behavior is acceptable.  You may not like the way it goes about accomplishing pattern X (the doubling down), but do you agree that the intention (to mitigate losses) is something you want to have this part do for you.  When that happens, there is congruency between the intention of the unconscious part causing the behavior, and your appreciation of  it.

4) Create new alternative behaviors to satisfy the intention.  At the unconscious level, the part that runs pattern X communicates its intention to your creative part, (another part of you that can take responsibility for coming up with alternatives) by asking as in the above.  Then the part that runs pattern X can select from the alternatives that the creative part generates.  Each time it selects an alternative, it gives the “yes” signal.  So, go inside and ask your creative part if it would be willing to undertake the following task: go to the unconscious level (the part that runs pattern X) and find out what that part is trying to do for you.  Then have it create alternative ways by which this part of you can accomplish this intention. It may create hundreds of ways to get that outcome, and it’s to be really random in this. The part of you that is running pattern X will evaluate which of those ways it believes are more effective than pattern X (the bad behavior) in getting what it’s been trying to get for you.  It is to select 3 ways that it believes will work at least as effectively as the pattern of behavior it’s been using up to now. After three choices have been identified, then go to step 5.

5) Ask the part that caused the bad behavior (in this instance doubling down): “Are you willing to take responsibility for generating the three new alternatives in the appropriate context, since you have three ways that are more effective than the old pattern X?” You’re making sure those new choices actually occur in your new behavior.

6) Ecological check (a system wide congruency as in all parts are in agreement).  Ask, “Is there any other part of me that objects to the three new alternatives?”  If there is a “yes” response to this question, recycle back to step 2 above.  This step is what makes this model for change really elegant.  The ecological check is your explicit recognition that you are a really complex and balanced organism.  It takes into account all the consequences in other parts of your experience and behavior that would be foolhardy.

In psychotherapy, after irrational beliefs have been identified, the therapist will often work with the client by challenging negative thoughts on the basis of evidence, and reframing experiences in a more realistic or positive light. This can help clients to develop more rational beliefs and healthy coping strategies.  Reframing occurs in life regardless of NLP, and is a common way that meanings get created, either deliberately or by chance.  For instance, Jamie does not like to be criticized and tends to get angry at unsolicited advice.  Her thoughts in the past have been: “This person is trying to control me.”  Jack, a friend and fellow trader, is someone Jamie respects and admires.  Jamie recently had a deep drawdown in her account due to making similar mistakes in her technical analysis.  In a conversation with Jack, she did something that she does not normally do, out of frustration; she explained her strategy to Jack.  Immediately, he noticed the trouble, but rather than blurt it out, he gently questioned her about her strategy and slowly and deliberately uncovered from Jamie her underlying misconceptions that led her to misinterpret the charts.  Due to Jack’s calm and respectful approach, Jamie was able to remain focused on the process and therefore could “hear” Jack.  She got it and the interaction greatly helped her clarity about the charts.  As a result, she was able to reframe the thought:  “People who give criticism are trying to control me which drove the feeling of irritation and anger to a new thought – some people are open to help and willing to support me.”  This is an example of how reframes can happen in everyday life.

Reframing is a tool to keep in your tool belt, honed and ready to use.  It is very helpful in supporting you to attain, maintain and sustain your A-Game.  Bringing your A-Game to your platform and keeping it out and available is critical to consistent success in the markets.  You must always put yourself in a position to access and activate internal and external resources and focus them on what matters most in your trading.