Debra winced hard as if her skin had been pierced by a deep dull needle…right through her heart. She had sworn over and over that she wouldn’t do it. But here she was, again caught in a web of self-induced seduction driven by greed and fear. “Why is it so hard?” she thought as she looked at the mockery that had just a few moments ago had represented her trade. She had input a limit order to buy 3 contracts of the NQ as the price action was about to hit a demand level on the 60 minute chart. She had meticulously determined from her daily and weekly charts that a significant support and demand zone was about to be retested. The lines had been drawn and her plan; as it usually did, outlined in precise terms her entry, rational, targets and scale points. Actually, the plan was flawless as evidenced by the fact that the price action did exactly as she had foreseen. And, if she had not exited the trade prematurely the market would have proven the plan to be correct. But, alas, she became more and more frightened as the price action breathed till it became unbearable whereby she gave into the pressure and exited the trade for a miniscule profit only to watch it take off like a towering green bamboo shoot rising from her exit. In this instance like so many times before she had let herself down; and, she felt stupid, depressed and desperate to know how to stop this madness.

Change, as Debra and many of you who are reading this article have experienced can be difficult. But, why is it so hard to just do that, which you say you want to do and not do that, which you say you don’t want to do. Firstly humans are creatures of habit. Doing the same thing in the same ways fosters a level of familiarity and is comfortable…even those habits that are not in your best interest. Comfort and pleasure are what you seek and by the same token you want to avoid discomfort and pain. Now, what is paradoxical is that in your determination to avoid discomfort and pain you’ll actually cause it; as did Debra by succumbing to an archaic ego driven defense mechanism that had been created ostensibly when you were quite young and that is now running roughshod over you to make sure that you don’t “get yourself into trouble.” How does this happen? Well, when you were young, let’s say a toddler and you broke something that mommy really liked, so you were yelled at and felt shamed; or in early elementary school and you were called upon to answer a question and you didn’t know the answer prompting cruel laughter from your classmates and a stern disapproving look from the teacher, you felt humiliated. Then, your all protecting ego would say, “…see, you are bad because you made mommy angry so you mustn’t play or you’ll get hurt,” or “…you are not smart so you must be quiet so that you don’t get hurt again.” These experiences and others like them create what is called a neural network of encoded sense stimulations of these experiences/events; in other words everything that you saw, heard, felt, smelled and tasted along with thoughts and emotions become connected. This neural network of brain cells are connected electromagnetically and electrochemically to these sensory stimulations and will “fire” every time a similar experience/event happens in your life. So, as you grow, similar things happen, you break something, or people laugh at you, or you do something that otherwise incurs the ire of those in authority or that you look up to. Then your ego says, “…see, I told you, that is not for you to do because you are not good enough, smart enough, talented enough or deserving, or whatever else it might have associated to this original experience. These become unconscious conversations that lurk below your awareness level and that conjure up all manner of additional negative emotions like disappointment, rejection, anger, frustration and many others. This is how neural networks get connected to other neural networks and they form very strong barriers between you and effectively challenging yourself in order to grow. These neural networks that continue to fire together will “hardwire” together meaning that they become like a well worn trail or a deep rut or cavernous scratch in a vinyl record. When that happens the default behavior then becomes avoidance and anxiety based. You are then operating from a position of fear. This type of default behavior strives to remain in the comfort zone where there is no growth. You cannot grow in your comfort zone, you must get out. Growth requires stretching, tearing, and breaking out of old tissue physiologically and old psychic constrictions psychologically.

To put it another way, as you grow from a child, you form relationships with everything around you, people, places, things, creatures and the like. Each one of these relationships has an internal depiction or (neural network) that is represented by all the chemicals reactions in your brain that represent that relationship including the feelings and emotions. If you change that relationship then the network breaks and reforms. Think of how it feels to break up in a relationship with someone. It is quite painful and fraught with emotional turmoil, and that is a good break-up. That is how change occurs on any level of your thinking, feeling and doing.

Have you ever found yourself in a trade that later you wondered, “who was controlling my mouse? This happens because there are other “parts” of us that can emerge and they lurk in either side of our brains. As you probably know, we have two brain hemispheres that make up what can be termed “the dual brain.” The dual brain has two distinct brain systems in which one analyzes piece-by-piece, detailing changes and the other makes an overall update and applies it until the next change. This dual function might well have offered a greater advantage: A) That there would be redundancy in checking conclusions about the nature of events and plans for possible action. And, B) Two very specialized ways to deal with the world.

Brain development is like city development, often, early growth was without a plan; it developed as result of water, or a spur from a train, or where most people laid their roots. Consequently, brain growth like that of the city can be haphazard and lack organization which promotes smooth processing and can greatly impact your analysis of the price action.

Below is a list if conventional wisdom’s hemispheric attributes

LEFT (Analytic)                                 RIGHT (Global)

Successive Hemispheric Style                        Simultaneous Hemispheric Style

1. Verbal             1. Visual, tactual, kinesthetic
2. Responds to word meaning             2. Responds to word pitch, feeling
3. Sequential             3. Random
4. Processes information linearly             4. Processes information in chunks
5. Responds to logic             5. Responds to emotion
6. Plans ahead 6. Spontaneous
7. Recalls people’s names             7. Recalls people’s faces
8. Speaks with few gestures             8. Gestures when speaking
9. Punctual             9. Less punctual
10. Prefers formal study design                  10. Prefers sound/music background
11. Prefers bright lights while studying      11. Prefers frequent mobility while studying

Now that we have taken a look at some of the functions of the left and right brain and the general importance of each to your trading success, let’s take a look at one of the right brain’s most powerful tools to healing and change—metaphor.

Metaphor is the language of the right brain and it permeates our lives. In order to get something done we “step up to the plate.” With difficult choices, we’re “doing heavy lifting.” We “grab the bull by the horns” to “break the ice.” The lexicon is replete with metaphor, and it is powerful. Metaphor can be riveting, motivating, captivating, enticing, mesmerizing, elegant, simple, elaborate, and highly effective. Emotions are activated on unconscious levels through metaphor due to the rich symbolic association with concepts, both painful and pleasurable, in our subconscious. Metaphors tie into the images of our unconscious and solicit hopes, fears, and longings.

Carl Jung spoke of the strength of the archetype. In Jung’s psychological framework, archetypes are innate, universal prototypes for ideas and may be used to interpret observations. A group of memories and interpretations associated with an archetype are a complex, e.g. a mother complex associated with the mother archetype. Jung treated the archetypes as psychological organs, analogous to physical ones in that both are morphological givens that arose through evolution. Milton Erickson, the grandfather of clinical hypnosis in the US used metaphor and stories to speak directly to his patients’ subconscious and initiate unconscious resources to bear on issues that presented obstacles to them. His storytelling manor both relaxed and put at ease patients’ conscious mind as he began to engage them on an unconscious level.

Metaphors can be life affirming or a denying metaphor that would present as a mental/psychic structure that embodies the individual’s rules for living, and for our purposes, her rules of trading. As in “the market’s out to get me.” Also, to create substantive change, it’s important to identify and reframe/restructure/redefine and alter the underlying metaphors that drive our stories about what’s going on in the price action. As discussed in earlier chapters, we have in our MAPs, paradigms and mental models symbols that embody rich and complex structures of metaphor. For example, when we think of things like love, war, birth, death, success, marriage or money, the dynamic is multi-varied with associations and cross associations relating both directly and indirectly to our sense of self, relationship to others, familial bonds, fears of success, and fears of failure. And, through the global interconnectedness of the markets, when we participate, we are putting and pitting all of the psychological and cultural variables that impact upon our psyche as a “trading persona” against it. Furthermore, as we move and shift our paradigms surrounding these underlying metaphors that are not working for us, it is important to identify and then transfer the cultural/organizational/personal lessons, and this happens most steadfastly through metaphor modifications. For example, “I am a loser if I don’t make money on this trade.” Metaphors establish the door to creativity as in pictures, sounds, physical feelings, tastes and smells, which can be woven together or individually focused as metaphor or symbols that define who we are and what we do. 

Right-brain mediated exercises help with strengthening intuition, development of right brain analysis and communication between the two brain/minds. Some of these exercises are:

• Role play
• Letter writing
• Dance
• Poetry
• Ritual
• Trance
• Hypnosis
• Guided imagery

Change comes from facing fears, and doing things differently. Using old and ineffective strategies to address new challenges is like using your old boxcar to go on the freeway. Identify a state—like the state of intense focus, or the state of relaxed detachment but fully present, or the state of curious fun as in doing a crossword or playing chess—one that is new or novel and like that of having taken a test when you received a very high grade. You embodied a relaxed focus and you were tuned into the flow of the questions in such a way that it was pleasurable but aligned. Begin to research and study trading patterns in this state. Develop a routine with a set of steps that does not waiver. Ensure that this state is nurtured and used for “every” period of study and paper trading by shifting gears consciously for each trade simulation and actual trade. Repeat until it seems out-of-the-ordinary not to do it. Old habits and patterns must not only be interrupted but also replaced with new patterns that have been reinforced through repetition. In this way you bring the power of “both” sides to your trading.

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Derek’s eyes got wide as he looked pensively at the charts displayed in his trading platform. He had entered a counter-trend trade on the ES and it was not working out as hoped (his first mistake – hoping is not for trading). He had his trading plan well in tow and the analysis that it was based on did not actually come from him but from an opinion piece in Bloomberg that said that markets were going to go up, even though the price action told a different story.   After he heard that “bit” of information from Bloomberg, he impulsively entered the trade as he was moved by an internal bias that was based upon something external to him and that eventually had turned against him and ended in a loss. He felt like he had been cheated, he had believed that they were right. After all, this was the news and even though he chose to “listen” to the opinion piece without doing his own homework he still emotionally thought that he should have won and “it was their fault.” Actually, if he were honest with himself, this type of trade went against the philosophy of his rules which pointed out that counter-trend trading was not a high probability endeavor; and therefore he should have lost, but he was having none of that type of thinking. So, here he was, feeling betrayed, sick to his stomach and stupid because he had let an outside opinion unduly influence his behavior.   The internal bias that he responded to has a name, it’s called a Confirmation Bias (the tendency to search for or interpret information in a way that confirms one’s preconceptions).   He went on a preconceived notion that the news was correct simply because it was the news…he believed. Once he began to look at the charts his preconceived belief; i.e., his bias, distorted his perception of the information on the chart.   In other words, he began to look for confirmation of the preconceived belief as based upon what he heard.

Humans have many biases that are for the most part out of awareness; but biases are not inherently negative. There are many biases that can serve you, for instance having a bias that looking at multiple time frames is supportive to having a sufficient amount of information. However, biases are often limiting in nature and therefore become limiting beliefs. Beliefs are extremely powerful because to a large extent they operate below awareness, which necessarily means that they are part of the subconscious or unconscious. See, the mind is analogous to an iceberg where the tip of the iceberg is awareness and all the huge remainder of it is underneath the surface or subconscious. What you are aware of is called your conscious mind; and all the rest is your unconscious mind, which has the overwhelming share of beliefs, thoughts, emotions and yes…behaviors that are out of awareness. That’s why it’s so important to uncover your biases, to become aware of them so that you can determine whether or not they are reflecting something that serves you or reflecting a limiting belief or thought. Some of the more prevalent biases that are at play in your thinking and trading are:

• There is a tendency, especially for the novice trader to fall prey to the “Bandwagon Effect”, which is doing or believing something because so many others are doing or believing it. This is also related to what is called “a herd mentality.” For instance, an extended rally where buyers are jumping onboard is susceptible to a severe pull-back or reversal because the bandwagon is finite.
• If you see yourself as less biased than others you are exhibiting a “Bias Blind Spot.” For example, if you believe that an economic report is going to go in a certain direction and you disregard the volatility of the markets which often follow then you have a bias blind spot.
• Seeking out information even though the outcome will not be affected is an “Information Bias.” If a significant resistance level has been hit and you are stopped out, but you go back to determine how “significant” that resistance level was then you got caught up in an information bias.
• There is also “Framing Effect”, using a description of a situation or an approach that is so narrow that the context holds a meaning that doesn’t serve you. An example of this would be the concept of losses. The unsupportive frame might go something like this: Losses are for losers.
• “Loss Aversion” is another. We are much more opposed to giving up something than we are drawn to acquiring it. Losses tend to be twice as powerful as suggested by research, as gains. This bias can cause one to be immobile in the face of pulling the trigger to enter a trade or to move a stop when it is threatened by the price action.
• And, “Negativity Bias” – illustrated by giving more weight and paying more attention to negative rather than positive experiences. If you’ve had five trades in a trading session, as exhibited by following your plan and keeping your rules; and you had only one loss but find yourself focused not on the good discipline or the four winners but only on the loss then you have been influenced by a negativity bias.

The above bias examples are but a few of a long list of tendencies to think and do in pre-formed ways. It’s not a bad thing to experience a bias, everybody has them. The important thing is to become aware of your biases especially limiting beliefs and begin to change them if they are not serving you. One of the ways to become aware of your underlying limiting beliefs, thoughts, emotions, and unconscious conversations (yes, you have conversations with yourself that are out of your awareness) is to use a Thought Journal. Thought Journals are powerful tools to begin to uncover and in many cases root out those subconscious motivations that are driving behaviors and causing results that you don’t want. Most traders are aware of Trade Journals or logs. Trade Logs are also extremely important because they track and document all of the external or mechanical data associated with the trade; i.e., news, analysis, indicators, entries, exits, stops, etc.. This is how you develop market knowledge and support your skill-building. However, it is just as important to track and document the internal data that is affecting and driving your behavior; that is, your thoughts, emotions, beliefs and behaviors. If you don’t know what your internal data are, and how your internal data – your thoughts, emotions and beliefs – affected your execution you can’t change them. You can’t change what you can’t face, and you can’t face what you don’t know. You must begin to use your thought journal for all negative results, rule violations, emotional upheavals and behaviors that don’t serve your trading.

Commit yourself to finding out what is keeping you from getting the results that you want and deserve. Learn the tools to bring your A-Game to the trading platform. Your D, or C, or B game is not enough; and you know that, based upon the results that you’ve been getting.

I just got off the phone with a delightful couple, Jeffrey and Felicia. I was asked if I would speak to them briefly because Jeffrey, the trader of the couple, had been consistently losing money for months and as they were trading with the last of their retirement, it was now imperative that they do something differently to begin getting the results that they wanted. After chatting for a while, I asked Jeffrey why he traded. In other words, I was asking whether or not he had a “compelling reason” to trade. There are droves of traders out there who when asked would say… “I want to make a lot of money.” This seems so obvious to so many, but the cold water truth is that money is a poor “reason” to trade…and it’s a poor motivator. Studies have shown that with job performance as with most other performance based behaviors, money “as a motivator” begins to wane quickly. Real sustained motivation is tied to things like quality of environment along with sincere recognition. Additionally, motivation intensifies when tied to things that matter most in their lives; to be more specific, intrinsic rewards that leave you feeling love, security, and fulfilled. Well, back to my story, Jeffrey did have a compelling reason; a point for him, but it was framed in statements like, “… I don’t want to live where I’m living anymore.” And, “I don’t want to be stuck doing things I don’t want to do.” And, “I don’t want my wife to have to work when she doesn’t want to.” If you’ll notice, these statements all have one thing in common; they are all based upon what he/they want to get away from not what and how they would like to experience reality. In other words as Stephen Covey has said, you want to “…Begin with the end in mind.”

Paying attention and placing focus on what you don’t want as opposed to what you want is to envision and therefore attract to you the exact experience that you don’t want. What is much more powerful is to write down in detail what you want to experience (at the end of your effort) and focus your intention and attention around and on that. This is also called a Results Orientation. Results orientation is about envisioning what you really want as if you stepped into the future and got it. This is towards thinking moving proactively towards what you want by beginning with the end in mind. For instance, moving to a new house because you found that perfect one you wanted; moving to a new job because you loved the opportunity; or identifying what you want in a broker and finding those features in one and making the move. Another is exercising to be fit, and reducing stress because you enjoy feeling relaxed and focused, or cleaning the garage because you truly enjoy having storage space and being organized. Consider the difference:

• I want to be in good health versus I don’t want to be poor health
• I want to be strong and physically fit versus I don’t want to be weak and run-down
• I want a clean and organized garage versus I don’t want a dirty and cluttered garage
• I want to be in control of my emotions when I trade versus I don’t want to be out-of-control and full of fear and greed when I trade
• I want to exercise good money management versus I don’t want to mismanage my trades
• I want to enjoy greater happiness and centeredness in my life versus I don’t want to be unhappy and fragmented in my life

Moving toward a goal creates focus by increasing the energy around the desired condition; your energy flows where your attention goes. Consider the statement: “Don’t think about an elephant!” For most people, this suggestion is impossible to follow because you must access an internal picture of the elephant in order to “not” think of it. Additionally, your subconscious mind has difficulty recognizing negatives. When you tell yourself not to worry or not to make a mistake you must actually access “worry” and “mistakes” to negate them; you are actually programming yourself to do just that. However, if you program yourself to think about being calm or getting things right, you are dramatically increasing the chances that this is how you will be.

Achievers, especially sports figures or other physical performance oriented individuals have mastered self-programming. They know if they are on the tee or the green and they let their thoughts wander to “not” choking, that is exactly what will happen. They know if they start worrying about hitting the ball out of the court that is what they are programming themselves to do. Even if the bulk of their thinking is positive, they know a fleeting negative thought can make the difference between winning the point and losing it. They have modeled themselves on excellence.

How often have you said to yourself, “I mustn’t do that” only to find yourself doing it? Jeffrey, in a personal conversation, told himself when the price action is accelerating on volume to be careful and breathe when he wants to enter and “Don’t enter until the candle closes.” Well, the very next time he gets into that situation, what do you think he will do? He enters as soon as he sees the candle beginning to blast off and gets filled at the top only to see it decline way back down right after he enters.

Results-oriented-thinking is about identifying what galvanizes your focus and your passion. It is about creating a sensory-rich vision around which you can build the fire of desire for what makes your heart sing; in other words, identifying that which you “really want.” Results oriented thinking is beginning with the end in mind.

Trading is a purely mental game, and if you don’t fully recognize and appreciate that, you are tossing your fate to serendipity, and you are gambling. And, you know what happens to gamblers in the long run, they lose – who do you think paid for those casino palaces in Vegas.