Carla leveled a deep sigh as she looked away from her screen.  Actually, it was more like a moan; a moan that belied the pain of having violated another rule that she promised herself she wouldn’t.  When she looked back around, there it was, still, an option trade that she had exited prematurely against her plan after becoming gripped by fear.  It was a bull-put credit spread that had gapped down causing her to panic.  Of course, as is often the case, the price action retraced and filled the gap after she closed the trade, then proceeded to move another dollar above her planned target.  Due to prematurely closing the trade she had a hefty loss rather than a nice profit and she felt sick to her stomach; she had let herself down.  Not so much because of the missed profit, but because here she was again.  She felt out-of-control.  It was something that happened all too often and she didn’t know what to do.  On the other hand, she thought, Monica, a well rounded and disciplined trader/instructor with Online Trading Academy often taught the importance of allowing the market to prove your trade plan wrong.  Carla whispered to herself; “…If only I could be more like Monica.  What Carla didn’t know is that she actually could be like Monica, by using a process called “modeling” she could decode the strategy that Monica used to plan and execute trades in a disciplined way thereby getting results that she wanted.

Modeling is an extremely effective strategy for pursuing success in the wild world of the markets.  As the saying goes, if someone can do it, anyone can learn it.  Modeling is a way to meld curiosity and selflessness along with a desire to listen to, watch, respect, and learn from others; and as well yourself.  Additionally, modeling is an interest in process over content.  Process or the “how” something is done is arguably more important than content or the “what.”  The process is where skill is focused to create the end result.  There are countless ways to do anything, extremely effective ways, and there are time-and-energy wasters that might get you to the same result … eventually.  There are also ineffective strategies that are full of superfluous and meaningless behaviors associated with them that make achieving the goal(s) all but impossible.  Furthermore, modeling can take many forms.  Some of your most fundamental skills have been acquired through modeling others, like for instance, walking and talking.  Babies and young children are expert modelers.  Only when they start learning by more traditional methods do they begin to lose this instinctual skill.

You can model anything as long as you identify the behavior components in someone who does that thing well; for instance:

• Motivation to keep your personal commitments
• Getting the knowledge
• Achieving a personal best
• Trade Planning and organization
• Technical analysis
• Managing risk
• Persistence and Perseverance

Equally, you can model excellence in your ability to:

• Gamble in your trades
• Violate your rules
• Worry
• Put on too much size
• Leave your trade plan
• React impulsively
• Freeze in the face of fear

With conscious awareness you can choose to do something differently and break the cycle of continuing to do the same thing and expecting a different result.

Modeling also involves mentoring; that is, finding and “sitting next to an expert (or someone who has demonstrated an ability to what you’d like to do well).”  This is an excellent way to model skillful behavior.  The subject being modeled can also benefit by learning from feedback on how they structure their experience; just because someone does something well, doesn’t mean that they necessarily know how they do it.  With this awareness the “unconscious competent”; that is, the one who doesn’t know that they know, can achieve even greater consistency in the skills they have by bringing all of their important behaviors to awareness.

You can also apply the modeling process to yourself by identifying a skill in another area of your life, breaking down the strategy, and replicating it in your trading.  For instance, you may be methodical, self-assured and cautious in another part of your life, but highly anxious, impulsive and unpredictable when it comes to trading.  This is a common occurrence for many in the markets; and traders will tell you how their rules “went out the window” as soon as they felt the pain of a position going against them.  Traders finding themselves in that situation often moved their stop, or double-downed, or violated their rules in some other way.  Additionally, they became paralyzed by panic when the tick went against them and impulsively exited what looked like a losing trade only to see the price action move in their favor just a few bars later and would have turned what appeared a loser into a winner, just as Carla did in the above example.

Uncovering the strategies involves observing personal program(s) that are sequences of mental and behavioral codes.  For instance, how you do what you do when you walk, talk, drive, read, or laugh.  Normally you don’t think of how you do these things, but they constitute a code of behavior that you have established.  The programs that make them happen are managed on your behalf by your unconscious mind.  These are known as strategies.  When you have the strategy for how someone manages his or her experience, you have the key to reproducing that experience for yourself.  Trading has context specific patterns that produce excellence around things like effective planning, rules setting, position sizing, money management, technical analysis and fundamental analysis among many others.  There are ancillary aims, concepts and frames-of-mind that indirectly support your success.  Often you will hear really successful traders share that they have a consistent pattern for selflessness—a notion of giving back, which reminds them that they are a part of a larger community and that this perspective helps them to maintain a viewpoint of remaining grounded in the face of greed.  Secondly, they have a larger reason or purpose that illustrates why they desire to be successful, one that is not money driven.  They have a skill in using metaphor and visionary thinking.  Winning traders are able to create a sensory rich vision of success that creates a subconscious passion for remaining focused on what matters most; that is, keeping rules, and following their plan. They also have a dedication to sequential and purpose-driven protocols, i.e. the development of effective routines that give way to the development of strong habits leading to skill-building around rule based methods of success.  These are additional strong concepts that are incorporated in many highly skilled and successful traders.

Modeling, along with the other success oriented strategies above helps you to identify, bring and keep your A-Game at your platform; which is exactly where you want it.  Maintain and sustain your A-Game so that you can and will resonate with what matters most while remaining in the now of the trade.  Your A-Game will help you to minimize the distortion and distraction (the internal and external noise) that plagues traders’ day in and day out, just like it plagued Carla.

Childhood emotional traumas, wounds, and scars create the crux of your mental models of the world.  How you see the world is influenced by the way you bonded with your parents/family in the first 3 to 5 years of life.  A secure bond or attachment means that you experienced a nurturing upbringing, complete with plenty of affection and limits, as well as room to explore.  A secure attachment is one of two main constructs that form the foundation of your mental model of the world.  The remaining types of attachments all fall under the “insecure” type and indicate that your caregivers/parents/family were erratic, inconsistent, withheld love and may have even been abusive.  These two bonding strategies are formed by your earliest relationships.  If those relationships were good, your outlook for life would be mostly positive; if those relationships were painful, then your outlook is likely more negative.  These mental models from early childhood continue to play out over and over again, triggered by associations and reminders of the past or by strong emotions such as anxiety and fear that activate internal states.  

When you begin to participate in the market trading time machines can happen at any moment when the relationship with the market goes sour and these time machines can activate feelings of envy, jealousy, betrayal, abandonment, anger, guilt, desperation and depression, to name a few.  At these times, the trader is caught in a time warp where old image tapes begin to play and the trader is seemingly held in the clutches of those old recordings.  To get out of the abyss brought on by these states, the resources of the right brain—where these emotions are lodged and largely held unexpressed to the conscious mind—must be flushed out and purged by shedding light on these dark spaces through mental and emotional tools.  Trading becomes a mirror for life’s relationships.  When money is at stake through immediate pleasure-pain dichotomies of trading, old negative strategies are activated.  State bound negative strategies formed out of old traumas create patterns of coping that work against the trader.  These negative strategies are patterns of thinking and doing that emerge from learned limitations and belief systems.  In order to override these patterns, they must first be interrupted, and the distortions created by the original beliefs must be shown to be the illusions that they are.  

When psychological trauma takes place, the system mobilizes to defend against both the event recurring and the thoughts and emotions associated with it.  It’s an attempt to defend against fear, depression, and emotional pain.  Maladaptive coping strategies are designed by the unconscious to help, but this ends up causing immobility, overcompensation and a mixed bag of negative emotions.  In fact, it can get quite complex.  For example, not only can there be fear, but the system can develop fear of the fear.  This fear of the fear can be illustrated by the way “triggers” work.  Triggers are cues in our internal or external environment that trigger a response.  If you had an abusive father who yelled at you and said you were incompetent and would never amount to anything, you might be surprised how these old tapes can affect the trade.  In the heat of a trade, if the price action goes against you significantly, your subconscious might replay those old tapes about being incompetent, prompting a severe anxiety reaction accompanied by the dread and fear of taking risk.  Later, in another similar trade, you may remember the anxiety, fear and self-loathing you felt before and, by just considering the same type of trade, you may experience a fear of having those feelings again.  When you “split” from your calm, normal, focused self to an anxious or agitated state brought on by these tapes, it can cause impulsive and compulsive behavior (rule violations), which are methods used to defend against the emotions elicited by the triggers.

When you get caught in these emotional time machines you’ve got to embrace the anxiety, greed, fear, anger, frustration, guilt, shame, or procrastination.  At this point you can use mental and emotional tools like for example Stop, Challenge and Choose to examine the unconscious faulty beliefs that are motivating the erratic feelings that in turn drive bad behaviors creating results you don’t want.  This is a great opportunity to also use your thought journal and bring yourself closer to awareness of the story that’s on those tapes.  Within those emotions lie the treasures of your growth.  You can’t change what you can’t face. 

After using your thought journal to explore what happened in your unconscious thinking and emotions that drove you to break your rules, you can then establish new behavioral strategies to trigger and reframe old mental models that were the cause of the issues.  You can do this by another technique called “reframing,” which is a powerful tool that creates a turnaround for an ineffective mental model.  For instance, you can “reframe” the meaning of failure.  If you change the meaning of a concept that is driving your thoughts, emotions and beliefs you will also change your behavior.  A failure does not mean that you’re incompetent.  Everyone fails.  Rather, it means that you’ve had another opportunity to learn.  Failure is only feedback.  Most successful traders will tell you that they lost many times and blew up several accounts before they acquired the knowledge, experience, and set of effective habits that took them to success.  Through reframing you can get a new set of lenses with which to “see” the issues.  New lenses are ground out through identifying and challenging the mythology of your old mental models and creating new ones; but, you can only do that if you’re willing to do the exploration work by having and using a thought journal to uncover your limited beliefs and faulty thinking.    

Mardi Horowitz, a trauma researcher, wrote about what he calls mastery.  He wrote about the importance of “working through” the issue when difficult emotions arise.  This process of “working through” is what we have been discussing.  It involves confronting, increasing awareness, reframing, and establishing behavioral strategies.  Or, you can continue to do what you have been doing and get the same results you have been getting.   Another tool that is quite helpful when you have uncovered an unconscious limiting belief that is driving unwanted results is to use positive self-talk.  Donald Michenbaum’s language of healing works well as a way to positively self-talk when dealing with impulsivity and compulsivity.  It is designed to help you “write yourself a new narrative for effective trading results.”  Positive self-talk is initiating the coach within.  Aside from helping to maintain focus, it also engages the parasympathetic nervous system (which calms and relaxes the body) and redirects attention from the distractions of negative and counterproductive thinking and emotions to those that empower and support goal oriented decisions.  You’ll want to construct affirmative statements on your ability to cope and to demonstrate resilience and courage in the face of trades that have gone against you.  Here are some examples: 

• You demonstrate the ability to reframe events from failures to lessons.
• You are able to see your trade and strategy through a new set of lenses.
• You resist the temptation of feeling fear, greed, self-repudiation, self-loathing, and self-hate, anger and wishful thinking that distract you from your plan and strategy.
• You author your plan and keep your rules.
• You demonstrate the ability to maintain proactive and effective routines.
• You make choices based upon reality.
• You realize that you have boundless opportunities to trade.
• You decide to develop a more comfortable relationship with yourself.
• You create and maintain a strong purpose and mission for your trading business.
• You leave behind those things that should be left behind.
• You take initiative to continue to update and follow your rules.
• You take back your power when you feel an urge to violate your rules.
• You get rid of the excess baggage of ineffective programs.
• You liberate your trading from the lack and limited thinking.
• You notice a calmer more patient you 
• You catch yourself entering and exiting your trade exactly according to your pre-targeted plan.
• You realized many of your strengths, powers and capacities by keeping your commitment to your rules.
• You develop a winning strategy.
• You recognize that the most important point is not whether or not you made a profit, but whether you kept your rules.  

Once you have identified the affirmative statements you can then use self-hypnosis to implant suggestions that are focused on one or two of the positive statements at a time.  This is a very effective and powerful process to engage the subconscious to begin to work for you rather than against you.  

• Motivation to keep your personal commitments
• Getting the knowledge
• Achieving a personal best
• Trade Planning and organization 
• Technical analysis
• Managing risk
• Persistence and Perseverance 

• Gamble in your trades
• Violate your rules
• Worry
• Put on too much size
• Leave your trade plan
• React impulsively
• Freeze in the face of fear

Have you ever sailed along in your trading for weeks doing everything right and then one day it happens…a fog descends around you and you lose all touch with reality; and before you know it you’re trading like a wild person smashing rules like cars in a demolition derby?!?  And when it’s all over, you take a look at the carnage on your screen and wonder who was trading your account…while at once realizing that it was a “negative trader trance” where a couple of tough trade losses sent you spiraling downward until you lost connection with your highest-and-best trader and began to revenge trade…totally out of control?  Even though part of you recognized that you were spinning towards that brick wall you simply disregarded any semblance of good judgement and barreled ahead until the last trade was closed to another loss and your self-esteem and self-respect lay in a debris-strewn heap on the floor of your platform.  

If this scenario in the above was you, then don’t beat yourself up, I was there once as well.  In fact, many,  many traders get caught in a spiral of issues that are driven by a bad pattern of thinking, believing, negative emotions that cause them to become inconsistent and they end up feeling like nothing can be done about it.   You can’t change what you can’t face and you can’t face what you don’t know.  You must gain awareness of your unconscious limiting beliefs that drive unconscious conversations, which motivate behavior that is not in your best interest.  The fact of the matter is that you are only aware of a small part of what is going on in your brain/mind.  The largest part of your thinking is out of your awareness, or unconscious.  See, the mind is like an iceberg, the tip is the only part that can be seen above the water line and comparatively speaking it is a very small part of the whole.  The rest of the iceberg is huge and it is below the water line.  Your consciousness is very similar.  Your conscious thoughts are but a small portion of the mind, the overarching part of you that controls all of your involuntary behavior like breathing, heartbeats, cell function, growth, immune system, etc., is the sub-conscious, totally out of your awareness and so holds much of your thinking and beliefs.  That is how it’s possible to have unconscious conversations that are driven by unconscious limiting beliefs.  These limiting beliefs, for example, “I’m not good enough or I don’t deserve to win;” drive unconscious conversations like “… I shouldn’t enter this trade – but I want to because it might go in my direction – and I’ll be right– and I’ll make money– and I’ll feel good.”  You’ve got to root out the limiting beliefs that drive the unconscious conversations by becoming aware of them through self-reflective journaling and introspection, uncovering level by level to find what’s lurking under there.

One of the practices that can help is called the Three “D” Process.  The first D is for Discovery.  After you have identified an issue, like chasing trades; you can ask yourself: a) what emotion am I feeling?  b) When this happens what am I telling myself?  c) What belief is causing this emotion and/or feeling?  After you have identified an answer, don’t stop there, keep inquiring and pulling back layers by posing additional relevant questions. Asking good questions is a valuable routine and use of your time as it uses journaling, appreciative inquiry and good personal research.   

The next D is for Decide.  Once you have the information about your internal thoughts, emotions and beliefs that are driving behaviors and in turn creating results that you don’t want, it’s time to analyze and decide on tools that could be instrumental in helping you to overcome and resolve these issues.  For instance, there are many reprogramming tools available to you like hypnosis, changing beliefs tool (a Neuro-Linguistic-Programming method), emotional Freedom Technique ( a tool derived from acupuncture that can help you lower and in most cases neutralize emotional tension), and anchoring (another Neuro-Linguistic Programming tool that uses your own powerful experiences to handle errant emotions in the moment).  All of these tools and the people who teach them can be found on the internet or in your bookstore. 

The last D is for Design.  Most people live by default; that is, they just allow their thinking and therefore their doing to just happen.  Also, when negative things happen, many people react automatically, which usually means that their behavior is driven by negative thoughts and limiting beliefs.  When you do things automatically from negative thoughts and limiting beliefs, rarely do you get positive results.  It is much more powerful to live and trade by deliberate design.  Trading deliberately means that you identify what you want to accomplish; which in this instance involves personal change and addressing issues, then design your response by considering the tools you have available to you.  Next, make sure that you know how to use the tool.  Then devise a strategy for both the tools and when you will apply them.

Measuring your trading process as with anything where you want to excel, is a requirement; and it can’t be overstated.  There are measurements of Mechanical Data (indicators, price action, time frames, money management and risk management, news, etc.) and as well, you must measure your Internal Data (your thoughts, emotions, limiting beliefs, biases, values and behaviors) both of which must be tracked and managed.  All too often, traders focus most if not all of their efforts on mechanical data and miss the fact that whatever you do begins with what and how you think.  Negative thinking and uncomfortable emotions have a way of throwing monkey wrenches into your trading works.  So, the Three D process is a very important way to keep your trading on target.