Brene’ Brown, PhD, a Sociologist and Researcher gave a TED talk, (Technology, Entertainment and Design) which garnered over 8 million viewers and of those about 2.5 million on YouTube.  Her talk was about vulnerability and shame.  She has been studying and writing about these topics for many years.  She gave an inspiring speech that led me to share some thoughts designed to help your trading

I often talk about courage and the need for courage in your trading.  But what is courage?  Often, people think that “bravery” is courage, and of course acts of bravery can involve courage; the firefighter who runs into the blaze on the momentum of her training; the police officer who stops criminals in the act just doing his job; the soldier who fights for his country… these are examples of bravery.   But, courage is something that can potentially happen to each one of us every day.  In other words, the person who is shaking in her boots in her church, synagogue or mosque to give a welcoming speech and feels terrified, but does it anyway; courage is the nerd at a mixer who is standing in the corner, sees an attractive woman and despite his feelings of social inadequacy goes over and introduces himself; courage is saying I love you first.  And, courage is the trader who despite his strong desire to give in to the urge to move a stop, chase or prematurely exit the trade, but, instead takes a deep breath and remains invested in learning and keeping his commitments.  Courage is standing up for something important and feeling fearful to the point of immobility but doing that thing despite the fear.  Courage is also embracing ambiguity in the service of curiosity, growth, vulnerability, risk and exposure.  What greater example of the risk to self-esteem, ego-involvement, the need to be right, the fear of being wrong and the shame quotient than trading.  It’s about “daring greatly” and its inextricable connection to successful trading and life.  You’ve got to be clear about your intention setting, uncovering your limiting beliefs and clarifying your values which must be brought into the mix if you are going to muster the strength to be willing to fail.

But, how do you muster that courage?  How do you move into the face of potential failure and the subsequent shame?  It’s through the willingness to be vulnerable.  And, to be vulnerable is to be courageous.  They work hand-in-hand.  Identify what matters most in your life and put it in the service of what matters most in the trade.  Stand up to the possibility of ego involved disaster and the  catastrophe of loss due to the uncertainty and remain “connected” to the roots of your passion; that is, your family, your friends and/or a community cause that captures your imagination and your heart.  The connection is where the rubber hits the road for us as human beings.  Whenever we stay connected and remain cognizant of the importance of that connection; that is, the connection to your spiritual beauty, connection to your loved ones, your connection to life we then are embodying our true selves, we are then developing the capacity for courage.  Brown says that we must “get into the arena” be willing to embrace the uncertainty and the possibility of failure, in order to be able to experience the exhilaration of success.  The interesting thing about success is that it is very expensive.  I’m not talking about the expense of hard work, or determination to keep practicing, or the investment of time and energy in the preparation.  No, the cost that I am speaking of is the cost of putting it all on the line and accepting the risk in the heat of battle and that you may fall on your face and…fail.  This is the cost that so many are unwilling or unable to accept.  This is the cost that immobilizes the trader in the face of their plan, strategy and set-up where they fail to pull the trigger and stand back in the sidelines and watch the price-action hit what would have been their target.  This is the cost that keeps you from letting your winners run, or allowing the market to prove your plan right or wrong.  This is the cost that sustains mediocrity and robs you of those moments when after venturing into the arena, scared to death, you throw caution to the wind, fight your hardest, remain steadfast to your rules in the trade, and…”win.”

Yes, vulnerability is very scary and uncomfortable.  Unfortunately, most people will use blame to assuage their shame at not following through.  They blame the dog, the spouse, the kids, the markets, the news feeds; everything and everybody but themselves.  They are unwilling to take responsibility and be accountable for “their” actions or lack thereof.  What they don’t realize is that they are using blame, as a way to discharge the pain and discomfort that comes from the shame.  In other words…”it’s not my fault.” But, know that even though it does not feel like it at the time, vulnerability is not a weakness; It is powerful.  Actually, emotional risk and uncertainty are the most accurate measures of courage.  Vulnerability is the birthplace of creativity, innovation and change.  Consider for a moment how hard change is.  One of the reasons is that in order to change you must be willing to venture into the uncertainty of trying something different; that is, something that could be a bust and at that moment the ego is saying…”You’re going to do WHAT?  Are you kidding?”  So, we maintain the status quo and keep doing the same thing and hoping for a different result.  And, even further in the back of their minds are the limiting beliefs of, …”I’m not good enough and/or who do you think you are?”

Brown shares that shame breaks down along gender lines.  For women, they must be organized, do it all, do it perfectly and do it now.  On the other hand, men must not be seen as weak, so of course vulnerability is out of the question much of the time since it is interpreted as a weakness.  Also, we can see it in how guilt and shame is approached in the language.  With guilt we say “I’m sorry I made a mistake.”  With shame the underlying often unspoken comment is, “I’m sorry, I AM a mistake.”  One way to counteract shame is through authentic connection and empathy.  In fact, Brown says that empathy is the antidote to shame and when we are in the struggle of the arena the two most powerful words that someone can say are…”Me too.”  There again, it is the critical importance of connection that is operative.

Over and over again, fear, doubt and anxiety while trading are driven by the false evidence appearing real.  It is when our stories about what it means to lose and the mythology that swirls deep in our ego entrenched beliefs about ourselves cause us to interpret events in ways that have us running to the hills in order to dodge the shame of failing.  At those times we are deathly afraid of the very thing that will help us to eventually learn, grow, and thrive in our trading and that is our ability to be vulnerable and embrace the risk of failure.  At that fork in the road we have a choice, to either go to the left, give into the fear and attempt to sidestep the shame (which cannot be avoided with that choice) or go to the right and choose to be open and embrace the risk, to be vulnerable and with that also embrace the potential for victory; a victory that can only be experienced through that choice.  So, my challenge to you and to us is to pledge to be accountable in that moment and be courageous through the power of being vulnerable…be willing to be uncomfortable in the service of your highest and best trading goals and keep your A-game at the platform.  So as Brown says “dare greatly.”  The most terrifying is joy… because you’re waiting for the other shoe to drop.  When we lose our tolerance for vulnerability,  joy becomes foreboding.  We try to beat vulnerability to the punch, so many put off joy because they are dress rehearsing tragedy, we become afraid to experience the joy because of our fear that it may be taken away.  The antidote is to practice gratitude.  Be grateful and thankful in and for this moment … and every moment…this trade and every trade.

Have you ever heard someone comment on another person’s behavior by saying that they have a big ego?  What does it mean?  Generally speaking when someone is saddled with this label it means that the individual is perceived as conceited, self-centered, perfectionistic, having to always be right, having difficulty accepting criticism, self-absorbed or arrogant.  Of course they may exhibit all or none of these negative traits, but more than likely they may have an inflated opinion of themselves that gets between them and healthy relationships; one of which being their relationship with the market as they trade.  The person in question may be a good guy overall, it’s just that they may be so caught up in self-protection (defense mechanisms that thwart an honest interaction with the environment)  or self-promotion (inflated notions of one’s importance over others) that they become distracted and begin to distort data.  Often, the individual that suffers from ego inflation issues also has a part of themselves that is not only aware that there are issues, but actually attempts to override the self-sabotaging behavior that develops as an outcome of self-defeating emotions like anger, fear, anxiety, stubbornness and impatience.  It’s tantamount to having different parts of yourself show up in challenging situations that make mindful execution of the trade all but impossible causing impulsive entries, chasing trades, moving stops and other unwanted rule violations.

You don’t have to be mentally ill to have different personalities reside in your body?  Actually, it is quite normal to have various “parts” of yourself emerge at different times depending on what is going on at the moment.  If fact, these parts of the self speak different languages and see different things as well; which is why you may wondered how you made a glaring mistake after becoming seduced by your illusions of what the charts were really showing in the wake of a loss.  This kind of personal and emotional volatility can wreck your trading account.  Similar to the market, personal volatility is a direct reflection of the emerging emotions of the masses as they trade furiously, impulsively, compulsively and at times capriciously.  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 financial markets are neutral representations of an all the hopes, fears, and decisions of everyone executing a trade.  When you trade you slip metaphorically into the skin of the market and see yourself in its reflection.  And, of course every blemish, character flaw and weakness that you have is in that reflection, because you “express yourself” while in the markets.  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 of the delicate balance between emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits and tracking the mechanical data of the markets.  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 this process of focusing on what matters most.  It 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 the relationship to the trade.  Your relationship to the trade becomes accentuated as in a business transaction with another human being; the objective is to be in the flow.  Being in the flow means that you develop a detached interaction where you are not attempting to get each and every tick of a move, but on the contrary aiming to come away having executed well with a good return.  To be and stay in the flow you must be self-aware and “watch” what you are doing.  You want to activate your “internal observer” and this is accomplished by relaxing at every opportunity and creating the habit of “being in the moment; fully present and in the Now of the trade.”  In this way you can maintain a fierce focus on what matters most and promote a shift from fear, frustration, irritation, and stressful tension to relaxation, mental clarity, and self-confidence.  Doing this you will be better positioned to do the “right” thing in the trade.  There are many, many internal resources that you have, some of which, you may not even be aware.  Internal resources like for instance, the ability to discern chart details, see the big picture of the trade, initiate a mindfulness regarding supportive beliefs and others.  But, it is very difficult to access and activate internal resources without first ensuring that your internal observer is online.

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 initiating the parasympathetic nervous system.
• By engaging the parasympathetic of the Autonomic Nervous System you dilate blood vessels and increase oxygen to the brain and muscles slowing things down and initiating a “Relaxation Response.”

When ego investment and emotion rise, trading becomes a reflection of the ego, in other words defensive reactions to neutral events and inflated self-seducing illusions that really distort reality.  Overly invested egos create a sort of delusion, and consequently, what you 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.  For example, Jack, a novice trader, while in a position on the YM E-mini futures, violated his rules and failed to maintain a hard stop.  It was on a day when the YM lost over 300 points.  The second rule that he violated was to “think” that the ATR (Average True Range) had been breached and that since its average daily range was violated, it would “come back.”  The third rule he broke, after finally closing out of the trade for a significant loss, was to believe that increasing his position size and essentially “doubling down” would bring him back to break-even in another trade attempt.  Now this is a prime example of delusional, ego fueled thinking.  The analysis was distorted by the emotional upheaval taking place after incurring the original loss.

So, your ego is not your amigo.  You’ll want to get the internal observer involved early and often by being self-aware and wary of ego driven tendencies that come from unsupportive thoughts and emotions.  Trading with your highest and best interests in mind is critical to your success.  This hinges on promoting a mindset that uses mental and emotional tools and techniques that are designed to shake you out of that self-sabotaging delusion.  Remember; as you trade it is important to identify what part of you is showing up to trade your account.  Is it the strong, healthy, grounded, centered and focused part; or is it the fearful, frazzled, and fragmented part that is torn by ego driven thoughts and emotions?  Monitoring your ego can keep you from getting your trading into trouble.

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.