One of the things that come up often from books and market gurus is the notion that a trader must become a robot. Perhaps you’ve come across this adage as well. Unfortunately, it is not true nor is it possible. When you think of robots, what may come to mind is the iconic “Data” that was the anthropomorphic robot on Star Trek; and the not-so-mechanical but still robot-like “Spock” the character that was devoid of emotions. The fact of the matter is that emotions are an inextricable part of being human. Emotions cannot be taken out of the trading equation no matter how much you would like it to be so. But, I would submit that even if you could “trade like a robot” that is, devoid of emotions, you would not want to. If you were devoid of emotions it’s true that you would not be plagued by fear, greed, anger, anxiety, doubt or worry which are some of the main culprits that cause erratic behavior like rule violations and breaking commitments. What is also true is that you would not have the advantage of emotions like determination, inspiration, joy, passion or love which are positive emotions that actually support decisions and choices that are in your best interest.

The evidence has been piling up throughout history, and now neuroscientists have proved it’s true: The brain’s wiring emphatically relies on emotion over intellect in decision-making.   The research has shown that about 90% of all of your decisions are based upon how you feel – not logic. Additionally, choices and decisions directly impact upon follow-through and keeping rule commitments…the crux of the trade.   Furthermore, those pesky adverse emotions do take a heavy toll on your trading results because they directly affect behavior in very negative ways.

Now, you can put some distance between your emotions and your trading. This can be done through mental training.   The same type of training that astronaut, military, special agents and world-class athletes go through. They learn step-by-step protocols and practice over and over again until the sequence of steps has been assimilated into unconscious control.   At that point the fear of failure, although not fully eliminated has been systematically desensitized meaning that the individual is able to focus with greater intention on the task at hand without the potentially overwhelming specter of fear and/or other debilitating emotions mucking up their process. In other words they may feel a level of fear and still do what they must because the training has developed the capacity for emotional strength and endurance regarding the process.   It is the same with your trading; mental training or developing and incorporating a strategic protocol then practicing until it has been integrated into unconscious competence supports the trading results that you desire. Over time you will build the skill necessary to traverse the pitfalls that loom on the trading horizon. This also involves creating consistency in your approach, analysis, planning, and follow-through along with consistency in your ability to remain aligned, calm, grounded and centered to develop the capacity for emotional stamina and durability in the trade.

Training yourself by doing mental and emotional push-ups is essential to building the persistence and perseverance necessary for becoming a consistently successful trader. Just like training for a marathon or other grueling physical challenge, you must remain diligent throughout the early baby steps while keeping your eyes on the purpose of it all…your BIG why. Then on into the longer strides as you expand your proficiency and strategic accuracy one trade at a time.   All along the way you will with each valuable mistake and failure gain more and more evidence on not only what does not work, but as well what does work thereby fueling the bonfire of your resolve to take another step further and get one trade better one trade at a time. You can do this!

Many of you who have experienced that change 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; 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.

There are far too many traders that are losing large percentages of their trading portfolio in the markets. They know that they are in trouble; they know that they need to change, and they find themselves doing the same thing over and over and experiencing the same exasperation and pain. Furthermore, many don’t have a clue as to what is driving the behavior that is producing the unwanted results. Also, a significant number of those that are losing in this way are in denial; in other words they know that they are in trouble but aren’t willing to dig deep to find out the problem. They hope and wish for a magic bullet or Holy Grail in the form of an indicator that will change “everything.” Well, there is no tooth fairy, and there is no “outside” force that is going to make it all better. It is all “inside” you.   You see, you must first be aware of your issues, improvables and weaknesses before you can effectively address them. Hence, you can’t change what you can’t face, and you can’t face what you don’t know.

In order to seize the results and outcomes you want, you must have clarity of thought, clarity of vision and consistent effective behavior. And, of course, your prior programming has enormous importance to the rubric of daily activity you wade through to achieve those results. But, before you can think, see and do with effectiveness, you must be aware of your underlying self-sabotaging rules. One of the ways to become better acquainted with yourself, especially some of those deeply held myths and unconscious beliefs that drive your thinking, perception and behavior, is to write about your experiences using a thought journal. A thought journal is designed to identify your internal trade date (thoughts, emotions and beliefs), this is different from a trade journal, which is designed to identify the mechanical data of your trade (charts, technical analysis, news, etc.). Through the thought journal, you gain insight into “why” you have not developed a coherent trading business plan or haven’t followed the plan that you’ve created. The thought journal reveals why you violated your rules or why you haven’t established any. You’ll have a better understanding of “why” you haven’t established a money management strategy or aren’t following it when oversized positions are entered leading to the mother-of-all-draw downs. Once you learn the why, you will be in a better position to change your behavior. That doesn’t mean that you can’t change faulty behavior unless it is completely analyzed and laid out; yes, there are those who only need an example of effective behavior, and they are off and running. If you are that person, then my suggestion is to run, don’t walk, to your nearest successful mentor. However, many if not most traders are plagued with errant emotions; that is, the abject fear and rampant greed that hogties so many traders that know what to do but can’t do it because of those same emotions and faulty thinking.

Once you have identified and recognized a faulty mental model or MAP (the underlying beliefs and values driving the emotions), it’s time to evaluate the extent to which it disrupts your perception of reality. Next, you must restructure or modify the mental model or mythology in order to “see” clearly. Results on any one trade must be evaluated from a new point of view. Otherwise, you can’t know with certainty that you properly executed the trade based upon the chart. If you don’t know what went wrong, you can’t change it, and therefore you can’t duplicate positive action or prevent negative action. Of course, you want to accumulate profit, and that is best done over time by skill building and learning to do more right things than wrong things, as well as possessing the knowledge to know the difference. It’s important to redefine how you measure results. It’s not about making money in any one trade; it’s about remaining consistent with what matters most and that is your rules and your trade plan and consistently following them … religiously. If money is made by accident, it’s nearly like taking a loss, because you didn’t learn from the trade and therefore you can’t duplicate the behavior.

If evaluation of the trade is based solely P & L then the value has been placed on a transient result and not a principle. In and of itself, money is only a medium. It is not grounded in a consistent truth or foundation. It is dependent upon consensus for its value. Conversely, processes based on principles, that is, a guiding fundamental truth, promote a deep common denominator forging a pathway for creating consistent results. And what are principles? They are market knowledge, a trading business plan, a plan for each entry, money and risk management, appropriate position sizing, and of course discipline. Processes based on principles produce the kind of results that stem from accurately identifying the reality of the chart or price action in order to be on the right side of the order flow. For instance, the principle of self-disciplined learning and awareness of how closely you accurately perceive the reality of the trade (a market principle) as opposed to the inconsistent distortion based upon seeing what you want to see (an ineffective behavior based upon internal mythology).

If you are anything like me then the passage of time seems to be speeding up; as in just a few weeks ago it was December, 2012! And, so we are in the early throes of 2017, can you believe it! But, of course, we are grateful that we are still here alive and relatively well because whatever situation may challenge us, know that it could always be worse. Given that, the New Year holds much promise for us as another opportunity in every part of our lives; it all depends on you and what you are willing to give and persevere for the results that you want, either in trading or in life.

As this is the New Year, many of you have identified a list of resolutions to that you have sworn to maintain. Every year millions of people make lists of resolutions and are gung ho for about 2 weeks…if that long, towards keeping them. Does this sound familiar? Now, if they actually kept their resolutions and commitments to better health, losing weight, writing a book, or putting more time into their trading these folks would end the year way ahead of the game and would have achieved a great deal and perhaps would have actually turned the corner to becoming a better trader. But, how do you do that? How do you ensure that after you make a resolution you’ll follow-through? Well, there are ways to deal with errant and inconsistent follow-through in order to keep those commitments. The answer is to develop potent routines that become habits towards your resolutions in order to realize those goals.

New (positive) habits begin with an intentional behavior that’s repeated, over and over; in other words a routine. After the goal has been identified, break down the item into objectives and tasks and. For each objective make a list tasks that need to be completed; then prioritize those tasks. What you have created is a prioritized checklist which then becomes your hourly, daily, weekly and monthly routine. Routines are the building blocks of habits. An intentional routine is a regularly scheduled behavior, but you still must consciously think about it because the behavior has not dropped into subconscious control. Habits are automatic behavior patterns that you have done so

many times that the action is controlled by the unconscious. In other words, you’ll do what is best for you without thinking!

“Psycho-Cybernetics” was written by Dr. Maxwell Maltz in 1960; a ground breaking book in which he described the power of the mind and ways to harness that power. A major part of his treatise had to do with the creation of habits. He also stated in the book that it takes about 21 days to instill a habit. Actually, when you want to establish a strong habit for your trading it is much more effective to engage the behavior every day for 60 to 90 days. You want a strong habit because bringing your highest and best trader to the platform in order to access and activate internal resources is crucial to your trading. To illustrate, you need an appropriate blood sugar level to support a clear mind, a hydrated body so that your internal physiological system communicates cellular information efficiently, a focused intention that comes from being centered and grounded and an emotionally stable demeanor that is connected to confidence. Furthermore, you need to be aligned in body, mind, and emotions in order to handle potential conflicts that could and would be distractions. By developing a foundation in the morning consisting of a powerful morning routine you’ll support your “internal data” meaning your thinking, emotions and behavior; and you’ll support your “mechanical data” that is, the market information, news, charts, and indicators. These intentionally repeated actions will after 60 to 90 days become unconsciously driven behavioral patterns of deliberate goal oriented strategies leading to much better trading results. The reason you make resolutions about your trading is due to the frequency with which you experience being out-of-control and breaking trading rules, but you would go a long way to getting back in control if you created a routine and checklist that you could follow, which would after a short while habituate and set the stage for building your skill levels.

Routines create new habits and if you identify and write down a routine/checklist for the beginning of your trading session, you‘ll initiate a device for optimal capability to “see” the reality of the price action and the order flow. It’s not enough to prepare only for the mechanical data. You must also prepare your internal data if you want to have any chance of becoming an elite trader and maintaining your “A” Game to the platform. Design how you are going to trade by learning and using mental and emotional tools to consistently trade “as” a winner. Also, read my book; “From Pain to Profit: Secrets of the Peak Performance Trader.”

Have you ever emerged from a trading session in a fog and found yourself looking over the trading carnage of violated rule after violated rule; and heard yourself say, “Who made those trades?” And, as the fog lifted it became clear that you had been trading like a crazy person?   It was like someone had control of your mouse and you felt as if you were in a trance; a negative trading trance to be exact? Well, if this or something similar has happened to you then listen up…you are not alone. I call this situation a “negative trading trance” because it happens when you are caught in a series of bad patterns. These bad patterns of thinking,(ex. I got to take this trade even though I’m chasing it), feeling (ex. anxious and impatient), and doing (ex. impulsively entering without a setup or plan) are like pre-recorded tapes that frequently are out of your awareness and therefore once they’ve been triggered you lose sight of reality.   Now, the bad patterns grow out of programming from negative events (pain filled experiences where you had been shamed, humiliated, neglected, etc.) in your life going back as far as childhood. The programming is also connected to mental states (emotions, thoughts, and memories). These programed states, for example, the state of fear, are not just emotions but include fear based thoughts, memories, and responses that all get triggered together. When enough of these patterns fire together long enough, they also can be the foundation of a “sub-personality” or “part” of yourself that reflects a way of “showing up” when a trigger (something that happens in the present that resembles a wound from the past) initiates the program or pattern… like losing in a trade.

Did you know that you don’t have to be mentally ill to have different personalities? Actually, it is quite normal to have various “parts” that emerge at different times depending on what is going on at the moment. If fact, these parts speak different languages (as in negative thoughts vs. positive thoughts) and see different things as well; which is why you may have wondered how you made that bonehead trade after seeing the chart’s reality in the wake of a loss. This kind of personal and emotional volatility can play havoc on your trading account.

The market is continually sending messages; messages about volume, momentum, and volatility. But, those messages are best captured by first attending to your own volatility so that you can see the charts as they are. The successful trader can “feel the markets” through insight and intuition that has been developed through countless hours of observing market charts; but she does not get lost in those feelings. The successful trader has an intimate understanding about the importance of emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits. They focus on doing the “right” things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it…and their trading life does depend upon it. In this way they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering the right things. This represents the development of a “positive trading trance.” The “positive trading trance” becomes a “Zen” of trading by losing the ego attachment and using mind management tools that engage the subconscious to work for them rather than against them. This is accomplished by redefining your relationship to the trade. As in a business transaction with another human being, the objective is to be in the flow; that is, a detached interaction where (even when a profit is involved) you are not attempting to aggressively bleed the situation dry but come away having done well.

To be and stay in the flow of the “positive trading trance” you must be fully conscious and “watch” what you are doing. You want to activate the “internal observer” and this is accomplished by relaxing at every opportunity and creating the habit of “being in the now of the trade.” In this way you can then access and activate internal resources that can shift you from a state of fear, frustration, irritation, and stressful tension to a state of relaxation, mental clarity, and self-confidence with focused intention on doing the “right” thing in the trade. You have numerous resources inside, many of which you may not even be aware. But, it is very difficult to be available to accessing and activating internal resources without activating the internal observer.

Activating the internal observer can be accomplished by doing the following:

Change physiology

• Change your physiology, stand if sitting or sit if standing
• Straighten your body
• Take a good stretch
• Take a few deep breaths, in this way you are oxygenating the blood in your brain and muscles, which in turn helps you to relax. By breathing deeply you slow things down and initiate a “Relaxation Response.”

When ego investment and emotion rise, trading becomes a reflection of the ego, in other words defensive reactions to negative triggering events that really distort reality. Overly invested egos create a sort of delusion, and consequently, what we thought was a great trade was in reality a “fake out” or something that came from internal bias not the objective reality of the charts.

So, my friend, your ego is not your amigo. You’ll want to get the internal observer involved early and often as you aim to create a positive trading trance. And, you’ll want to use mental and emotional “state shifting” tools that can shake you out of that delusion. Remember; as you aim to develop a positive trader trance you will be intentionally honing your focus on what matters most in the trade. It could save you from a lot of loss.