It has been my experience that not everyone appreciates the importance of trader psychology. Unfortunately, it’s not a very sexy form of information and framework of self-discipline. This is due to the fear that it generates in so many traders and/or the belief that he or she doesn’t “need” trading psychology.   Actually, I remember when I first was apprised of the crucial nature of using psychology to the trading process.   I had just begun to learn how to trade and pooh-poohed learning about self-discipline as a waste of time (of course you get the dripping irony here of a psychologist that didn’t appreciate the necessity of knowing and using tools to support trading execution). I thought that all I needed was to learn the “right” strategies (the longs & shorts of making a deal work) and then the money would start rolling in. Needless to say that is not the way it works. In fact, my experience with blowing up accounts fits quite well with anecdotal and statistical data on newly minted traders across the planet. Newbie traders fall into a couple of buckets with regard to their early trading. The first is either they don’t recognize the need to have focus and follow-through strategies to maintain rules and keep commitments; or they know that they need to have strong self-discipline but because they don’t know how to acquire it they continue to flounder and lose money.

But here is the bottom line; it is a requirement to getting consistent successful results that you have a substantive awareness of how you think, a mind-set that appreciates focus, follow-through and keeping commitments, and a set of strategies for changing your internal states from frustration, confusion and fragmentation to being centered grounded and purposeful.   So, whether you think that trading psychology is at the top of the what-matters-most list or not, what is painfully clear is that you’ve got to have mental and emotional tools when you’re trading. If you don’t that’s like driving a car without a steering wheel. You will not only “lose” your way, you will crash and burn without that steering capability brought on by mental and emotional tools.

One of the ways to acquire mental and emotional tools is to become self-aware and in the moment with an appreciation for that moment being the most important.   That is because each moment stands alone in its connection with the present. All past moments are history and no matter how much you may desire it to return and get another chance to do the right thing, it is gone forever. All future moments are mysteries and cannot be accessed until they make it to the “Now.” Also, when you are in the moment you have a much better prospect of being aligned in body, mind and emotions to go in the same direction and for the same goals. If you are not aligned then you will be highly susceptible to internal conflict…one of the main destroyers of being attuned and on alert to what-matters-most. Additionally, when you are self-aware it becomes much more likely to monitor your thoughts and emotions so as to increase your awareness of what is taking place in your mind-set. You’ll remember that in the above we indicated that one of the most important cogs to becoming a consistently successful trader was fundamental awareness of how you think and how your mind-set is firing. You can’t change what you can’t face and you can’t face what you don’t know. Armed with this data on where your issues stem from you have a fighting chance to begin to address and eventually change them.

Psychology is the study of mind and its functions especially those affecting behavior in a given context. How you think determines your emotions and those feelings drive behavior. In other words what and how you think controls what you do and what you do directly causes the result. It’s all about your mind and how you are managing what goes on in it.

Stress is a natural part of living; but when you are caught in a highly stressful situation your brain begins to release a number of neurotransmitters, hormones, peptides and other chemicals that can hold you hostage in that moment. Neurotransmitters are messenger molecules that pass information to other nerve cells and parts of the body in order to coordinate a specific function. Some of them are dopamine, serotonin, and melatonin. There is a whole family of neurotransmitters. Whether you feel anxious or aroused, depressed or delighted, the action of the peptides produced in the brain is responsible for how you feel at any given moment. On another level, the Sympathetic Nervous System (SNS), which is part of the Autonomic Nervous System became engaged. The other part of the ANS is the Parasympathetic Nervous System (PNS)…the SNS speeds you up, and the PNS slows you down.

Unchecked stress compromises not only your thinking, emotions and behavior in the moment; it can also greatly compromise your immune system and your overall health if it goes on chronically. It is important to recognize when you are in the throes of a stress attack and as well when you have been under “chronic” stress. Stress is cumulative, meaning that when you are above the stress threshold (the limit beyond which you are going to experience negative issues) the longer you are above the threshold line the more your system is going weaken. That is why you must be self-aware as much as possible in order to recognize when you are overly tense, caught in negative emotions, experiencing negative self talk, and generally revved up to an over-the-top RPM. You must anticipate when your stress levels are going beyond the threshold by managing your stress on an ongoing basis. Some of the ways to do that are through eating lots of fresh fruits and vegetables, getting enough rest, using meditation, positive self-talk, exercise and identifying mental/emotional tools and techniques that can help you shift from stressful states to empowering states.   Your “internal data” the T + E + B (your thoughts, emotions and behaviors) comprise a critically important component of your A-Game. You must attend to your internal data when you trade just as you must attend to the mechanical data (everything having to do with the markets). We will teach you mental and emotional tools to bring your A-Game to the platform and keep it there and in the process manage stress levels. Trading is serious business and you must be prepared with the best that you have in order to do battle in the trading trenches.

Thought are things and the way you think affects your body, your trading and your life. The relationship between thoughts and the physical body have been researched well. The growing field of psychoneuroimmunology has demonstrated the connection between mind and body. Simply put, whenever you have a thought you produce a biochemical reaction in the brain. The brain then releases additional chemical signals that are transmitted to the body as messengers of the thought. Because of the chemicals released by the brain that were produced by the thought activate feelings in the body as a direct result of the thought connected chemicals; you feel in the body exactly how you were thinking a moment ago. This is why depressed, fatalistic, worrisome, angry and fearful thoughts have a corresponding physical response as in tired, rundown, and compromising the immune system so that your resistance to disease and illness becomes quite low.

When the body responds to a thought by having a feeling, this initiates a response in the brain. The brain, which constantly monitors and evaluates the status of the body, notices that the body is feeling a certain way. In response to the way the body is feeling the brain generates other thoughts that produce corresponding chemical messengers and you begin to “think” the way you are feeling. This produces a continuous cycle of thoughts producing feelings/emotions and feelings/emotions producing thoughts. This cycle creates an overall state that can and does become pervasive. If it is a negative state, then that affects everything that you do negatively; your communication, your interactions and of course your performance – especially trading. The more you think the same thoughts, which then produce the same chemicals, which cause the same feelings, the more you physically become modified by your thoughts.   What you think about and the intensity of those thoughts ultimately influences your health, the choices you make and your quality of life.   While in this continuous negative state, it is virtually impossible to get different (positive) results in your trading. The reason is that in order to get different results you must behave differently. But, your behavior is a direct byproduct of your thinking. So, to change your results you must change your thinking … your state.

You must begin to pay constant attention to what you are thinking, especially automatic thoughts that are tied to limiting beliefs. What you will find is that many of your limiting beliefs and automatic thoughts are “not true.” But, you have come to believe them over time and they have profoundly affected your state or overall attitude. Actually, one of the questions that you can ask yourself when you are experiencing lack and limited thinking is, “…is this thought true, is it absolutely true?” In this way you begin to challenge to underlying premise of your state or attitude and gain insight. You also must fight against the notion that they are uncontrollable. One of the beautiful aspects of your brain is that it has neuro-plasticity meaning that it has been designed to change. Once you start to first examine each thought, then purposefully modify or root out the wrong and untrue limiting beliefs then you can begin to change them one thought at a time.

I’ve often talked about the importance of the Thought Journal for your trading. I hope this brief explanation helped to shed a little more light on why thoughts are so important and why you must manage your thoughts before you can manage your emotions. Changing results depend upon dealing with the whole “internal data” equation; Thoughts + Emotions + Behavior = Results. Each point in the equation is critical and contributes to the results that you are getting. This is what we are committed to, that is to support you in gaining insight into your negative thoughts in order to begin to manage them and thereby manage your emotions. We are here to help you to master your mental game to bring your A-Game to your platform and keep it there throughout your trading session.   In this way you will begin to make better choices and decisions, and you are more apt to follow through on those choices and decisions, which means that you are in a better position to get the results that you want and not the results that you’ve been getting.

The Universe is based upon cause and effect. If you set a cause in motion there will be a corresponding effect. For example, if you have tried to lose weight you might think that you “should” weigh something different from your current weight. But, how could you? You ate just the right amount of food (junk or otherwise), you vegged out on the couch just the right amount of times, and you exercised (or not) just the right amount of times to be exactly the weight that you are…you should be that weight. Why, because you are. Any thought that you “should” be different is a rejection of reality and a failure to accept what is fact.

The dictionary defines accountable as being held to account for an outcome. Additionally, if you were to look up responsible, it would define this term similarly. I take a different view. Allow me to explain. To be responsible is to accept or have someone anoint you as the person who “can” respond to an event, issue or situation. On the other hand, to be accountable is to be held to actively “account” for the results that have transpired. I can be responsible for a trade going sour. But, that does not mean that I will necessarily do something to ensure that I’ll use the feedback to adjust and do better next time. Conversely, if I am held “accountable” for these results then I am more likely to be emotionally and cognitively invested in that outcome so that I will adjust my behavior accordingly to achieve the desired results. In my mind, one is more passive in nature – responsible; and the other is more active in nature – accountable. So, what does that mean for you and your trading? Everything!

You are responsible for your trades. If you execute it, then you own it; but that doesn’t mean that you will “accept” responsibility or hold yourself accountable for the results. Many traders blame everything and anyone for their results. These traders also continually seek outside themselves for the answers to their issues and shortcomings. What’s more is that they crowd their charts with so many indicators and tools that the price action can barely be seen. These are symptoms of a lack of alignment and integrity in trading. It is also indicative of a failed approach to achieving long term objectives.

In order to be consistently successful you must be self-aware while in the trade; that means you are focused with intention on what matters most in the trade. It means that you are in the moment, for the moment, fully available and in the now of the trade. Self-aware also means that you are tracking your thoughts, emotions and behaviors because these internal variables are what drive your execution. It doesn’t matter how much knowledge you have, if your internal data is conflicted, confused and confounded, you are not going to execute according to plan while maintaining your rules. That requires that you be diligent and vigilant about what is going on both inside of you and outside. You must be accountable for your thoughts, emotions and behavior at every juncture of the trade. You must be active in this pursuit if you are to be deliberate and trade by design in a “rule based” protocol. If you hold yourself accountable you are more prone to identify what is working and what is not working both internally with regard to issues that surface in your trading and with your strategies, set-ups and procedures (protocols). What’s more, you can’t identify what is working or not working unless you are documenting your mechanical data (everything that has to do with market information) through a Trade Log; and documenting your internal data (thoughts, emotions and behaviors associated with the trade) in your Thought Journal. This is true accountability.

So, take control of your process first by holding yourself accountable for all of your results. Remain self-aware in order to weed out and root out negative issues that are caused by limiting beliefs and unruly emotions that lead to conflicted executions and rule violations. You can’t change what you can’t face and you can’t face what you don’t know. If you do this you will get closer to your A-Game, which is what you must do if you want to begin to get the results that deep down you know you can and deserve.

One thing that you must come to grips with is that the change you seek cannot happen until and unless you become aware of your issues and problems. Yes, you may be aware of the fact that you are getting results that you don’t want, but that is not enough. You must become aware of your underlying self-sabotaging thoughts, emotions and limiting beliefs that drive what you do. If you don’t you will continue to do the same thing and you’ll get the same result. You must increase your ability to be “self-aware.” I have often talked about the critical importance to being in the moment, for the moment, fully available, fully present and in the now; in order to be in the now you must be cognizant of where you are, what you are doing, how you are doing it and what is going on inside of your body and head. You’ve got to be sensitive to changes in your feelings, not just your emotions. Emotions like anxiety, fear, greed and anger are not always known to you. They can be triggered by an unconscious thought, such as; “…if I lose in this trade that means that I am stupid.” This unconscious thought might give rise to a surge of anxiety initially and after the loss, self-loathing; but the emotions may not be identified by your conscious mind (your awareness) because you are not in touch with them. Rather, what you feel, for instance, is a tension in your gut, a pressure in your head, or a pain in your back. These feelings are directly related to the unconscious emotion, but you are not aware of the connection. So, you barrel ahead feeling something in your body, which itself may or may not be in your awareness, and for the most part oblivious to the pattern of behavior that has been initiated like turning on a switch to chainsaw that has no handler – it can cause a lot of damage.

So, when we talk about increasing the awareness of your issues and problems, it is more than that. You must develop sensitivity to the signals that your body and mind are sending to you that something is wrong and requires your attention. For example, when you are about to enter a trade and you feel a knot in the pit of your stomach, it may not just be that undigested pork sausage sandwich that you ate for dinner last night. In fact, it probably isn’t most of the time. Your subconscious attempts to communicate with you early and often as it relates to engaging in important efforts (like trading) where you are out of alignment and working against your best interests. Actually, when you feel any discomfort, it is usually connected to a part of your inner self that is attempting to express itself. Your personality is made up of a number of distinct parts, which is why you are often in conflict. This conflict is a reflection of differing notions, belief systems and values that are vying for expression. How often have you “decided” upon a plan of action in your trading only to “second guess” and renege on the plan…then to find that the second guessing caused you to lose. Or, how about making a decision to lose weight, get up early, or put together a Macro Trading Business Plan and part of what you tell yourself is that “you either don’t really need that” or “that you’ll do it as soon as you get a “round tuit” (I’ve got some of those for sale by the way – they are in high demand).

Becoming more sensitive to the signals (internal thoughts, emotions, feelings, etc.) means that you must stop and “listen” to your body. It means that you must be willing to invest the time and energy to get to know you. It means that you must be willing to get outside of your comfort zone and be uncomfortable in the service of your highest and best goals and your A-Game. I remember one of my students decided not to involve themselves in an exercise in one of my classes. When I asked him why he had not done the exercise he said that he didn’t want to “remember” the trade and go there. I told him; “…but, that is exactly the point!” You must be willing to confront the unpleasant thoughts, emotions and memories to find out what is at the core of your conflicts, bad patterns and limiting beliefs. What you resist persists. Using mindful practices like self-reflection, introspection, meditation, and just asking the question “why” after each answer to the question “what is going on with me right now?” will help you immensely in your quest to connect with your highest and best trader.

We are here to help you reach and sustain your A-Game. We teach you tools to help you become more sensitive and self-aware so that you can change the bad behavior and begin to get the results that you deserve.