- Find a voice recorder and record your stream of consciousness through the sequence of two to three trades or decisions.
- Do this in sequence
- Write down five to ten memories from before you were 18 years old.
- From that list, pick three that stand out from the rest. Maybe they still have an emotional charge, maybe you even think of them every once in a while.
- For these three memories, write the story of what happened, in the form of a kind of news report on who, what, where, why, and when.
- Take these stories and look at them from a different point of view. Ask what the other people in the story were feeling or what it seemed like they were feeling.
- Last, write down how the situation made you feel in the moment and what you told yourself about the situation.
- Then set the writing and the recordings aside for a few days or weeks. Just let both simmer in the back of your mind.
- Keep a bedside notebook and jot down your thoughts and feelings from your dreams right away. What matters is the sequence of feelings and emotions in the dream; or, in other words, those feelings that you wake up with in reaction to the events in the dream.
- Now summarize the following using the data of your memories
- What do I expect for myself?
- How do I expect things to turn out?
- How do I seem to feel about myself?
- What kind of labels do I talk about myself with?
- What fears come up?
- How do I react to others?
- How do I react to being told something other than what I want to hear?
- Go back to your trading recordings and summarize what feelings came up during your decision-making moments. We are looking for the themes and feelings that repeat themselves across market and decision sequences. Compare his information with what you discovered in the previous steps. What seems similar? If it doesn’t immediately click, let it rattle around in the back of your brain for a few weeks.
Archives of “consciousness” tag
rssConcentration
You can be super motivated to trade, filled with deep optimism, have millions of trading capital available, and a solid trading strategy, but if you don’t devote your full concentration to the trade that you have on at the moment, you will lose money.
It’s essential that you learn to concentrate while executing a trade and scrupulously monitor the market action during a trade
Why is concentration difficult? While in school did you have trouble studying in a noisy library? It’s easy to concentrate when we are in a quiet room and when we are calm and at ease. But trading is often chaotic and full of stress. It’s easy to become shaken and lose your ability to concentrate. When you aren’t fully focused on your ongoing experience, it’s easy for self-doubts to creep into your consciousness. You may start having second thoughts and may want to sabotage your trading efforts.
The more you can stay focused on your ongoing experience, the more you can trade effortlessly and skillfully. But how can you concentrate more easily? (more…)
One Liners for Traders
- “The paradox is realizing that being in control is about letting go.”
- “Even if you give your investments to others to manage, you are wholly responsible for that decision.”
- Letting go of your ego doesn’t create self-esteem. In order to trade soundly, you must lose your ego AND replace it with sound, prepared, professional judgment.
- The conscious mind assembles the data. The unconscious mind notices the patterns, makes the connections and guide your judgment.
- “The depth of your emotional resources is as important as your finances.”
- “The market is a collection of beliefs.”
- There is no content, only context.
- “If we ever fought battles, the main opponent was ourselves.”
- “If you persistently adopt someone else’s view, expect their performance. In that case, why don’t you just put the money into one of the thousands of funds and crystallize your implicit delegation of responsibility.”
A Bird’s Eye View of Yourself
When did position management enter my consciousness? I think it stems from experiences that gave me an appreciation for the psychology behind our behavior. Sure, I had read the classic from Edwin Lefevre, and believed in William O’Neil stop-loss rules. The image that still sticks with me comes from a tiny book I read in 1994 that doesn’t get the pub it deserves.
In his tiny 1930 classic, Fred Kelly gives the example of the farmer who had 12 chickens in a cage, and one slipped out. So he propped open the door and set food out in an attempt to lure the chicken back. Of course, 2 more chickens now escaped. Surely, he can’t accept having only 9 chickens when he just had 11. His repeated efforts to get back to “breakeven” left him panicking to salvage 2 at the end…sound familiar with anyone’s early trading efforts?
The lessons stayed personal until managing an order desk stamped those lessons as universal. Seeing these episodes play out over and over among traders led to a true appreciation of the human wiring that wreaks havoc with our trading. These observations led me in the late 90′s to step outside of myself on every trade and ask if I was that person. Am I holding a short against a wave of strength that will sweep me away tomorrow anyway? If so, why not cover now instead of panicking with my fellow (wrong) shorts later? It was in those moments that I realized the power of anticipating group emotions. I already had a respect for taking losses, but I gradually moved from exiting in panic, to exiting in fear, to exiting when the slightest bit of hope creeped in.
Remember this…if you’re hoping a position bounces back to being a winner, you’re not alone at that moment. Hope is said to be a good companion, but a poor guide. Turn that on its head by realizing that you have a chance to act in defense of your equity by taking your loss before the other “hopers” are forced by emotions to act. Sure, you’re putting yourself in a position of huge regret if the position then recovers, but you’re also preventing the possibility of acting in a panicked state later. Stops can be great teachers…if you find yourself repeatedly getting stopped out just before your idea gets recognized, then you need wider stops. Been there…I now operate with smaller positions and wider stops, giving myself room to be right but not putting my equity at undue risk.
If the image of the farmer doesn’t do it for you, consider 2 traders, Roger and Andy. Both are caught in a bad situation, hoping for the best. Andy decides to come clean and admit his mistake. Roger decides to dig in and show he’s right. Bad idea. A small lie today will be a bigger lie tomorrow…rip the band aid now. Any idea who played that trade right?
It’s OK to be wrong, not OK to stay wrong…that’s the difference between champ and chump. The longer we stay in a trading range, the more explosive the resulting trend will be, and there will be no place for hope. Be ready to trade today’s ego hit for a chance to play again tomorrow, and you give yourself a chance to replace any negative episode with your best one yet.
12 Habits of Highly Successful Traders
– Preparedness
– Detachment
– Willingness to Accept Loss
– Taking Controlled Risk
– Thinking in Probabilities
– Being Comfortable with Uncertainty
– Consciousness of Abundance
– Optimism
– Open Mindedness and larity of Thought and Perception
– Courage
– Discipline
A Study in the Psychology of Gambling- Written in Year 1873
In a 1873 letter to The Spectator entitled “A Study in the Psychology of Gambling” Saxon-les-Bains describes his gambling experience in Monte Carlo.
And what was my experience? This chiefly, that I was distinctly conscious of partially attributing to some defect of stupidity in my own mind, every venture on an issue that proved a failure; that I groped about within me something in me like an anticipation or warning (which of course was not to be found) of what the next event was to be, and generally hit upon some vague impulse in my own mind which determined me: that when I succeeded I raked up my gains, with a half impression that I had been a clever fellow, and had made a judicious stake, just as if I had really moved skillfully as in chess; and that when I failed, I thought to myself, ‘Ah, I knew all the time I was going wrong in selecting that number, and yet I was fool enough to stick to it,’ which was, of course, a pure illusion, for all that I did know the chance was even, or much more than even, against me. But this illusion followed me throughout. I had a sense of deserving success when I succeeded, or of having failed through my own willfulness, or wrong-headed caprice, when I failed. When, as not infrequently happened, I put a coin on the corner between four numbers, receiving eight times my stake, if any of the four numbers turned up, I was conscious of an honest glow of self-applause…
Evidently, in spite of the clearest understanding of the chances of the game, the moral fallacy which attributes luck or ill luck to something of capacity and deficiency in the individual player, must be profoundly ingrained in us. I am convinced that the shadow of merit and demerit is thrown by the mind over multitudes of actions which have no possibility of wisdom or folly in them, granted, of course, the folly in gambling at all, as in the selection of the particular chance on which you win or lose. When you win at one time and lose at another, the mind is almost unable to realize that there was no reason accessible to yourself why you won and why you lost. And so you invent what you know perfectly well to be a fiction, the conception of some sort of inward divining rod which guided you right, when you used it properly, and failed only because you did not attend ‘adequately to its indications.’
Gut Feelings
We’re all quantitative traders, but we still have gut feelings. The body has a self awareness of its internal conditions. The stomach has more bacteria than human cells. The stomach has more seratonin receptors than the brain. When nervous you can feel the butterflies. You get gut feelings about things that govern conscious decisions. I have a theory that dreams are the sleeping brain receiving feelings from the body and stomach during the night. Gut feelings are distinct from the amygdalian flight impulses. I’ve never heard of any studies or information about gut feelings other than anecdotes. How often has a gut feeling saved you, or how often does it lead to wrong decisions?
Dr. Janice Dorn a former list member, wrote a book, in which she and her co-author argue that your gut feeling is not programmed for market risk, but market risk will give your gut the opposite reaction than you should take. When I tried trading the stronger my gut was scared the more I knew I should trade and vice-a-versa the more passive I was about my position the more I knew I should be out. Rather than honing in on this “skill”, I would suggest a more palatable method, nerves were my undoing as a day trader. I suspect Dr. Brett S. would say something similar.
Simple Things For Creating A Great Trade
Research is showing how powerful our mental context is in making risk decisions. But the thing is, most traders think mental context is about what they know – their insights, their indicators and their experience. In reality, it goes much further and deeper than that.
Recent experience that seems totally unrelated to trading counts. For example, if you work on a desk, then the adminis-trivia and in particular, its effect on your attitude will influence your trading. If your boss or colleague seemed to criticize – or compliment – you, it will influence your trading.
College students have been shown to walk slower after hearing the words gray hair, glasses, knee replacement. Interviewers have shown they can feel differently about a candidate depending on the temperature of the coffee cup they just held. Our unconscious sensory and information machine is working all of the time. It pays to make it an asset and not a liability. (more…)
The Hard Problem of Consciousness -VDO
What is consciousness?
“I THINK, therefore I am.” René Descartes’ aphorism has become a cliché. But it cuts to the core of perhaps the greatest question posed to science: what is consciousness? The other phenomena described in this series of briefs—time and space, matter and energy, even life itself—look tractable. They can be measured and objectified, and thus theorised about. Consciousness, by contrast, is subjective. As Descartes’ observation suggests, a conscious being knows he is conscious. But he cannot know that any other being is. Other apparently conscious individuals might be zombies programmed to behave as if they were conscious, without actually being so.
Video after the jump
3 Steps For Traders
So – are you ready?
Are you ready to unlock the greatness that you have within you to succeed as a trader?
Are you doubting that you have what it takes to succeed in the world of trading?
Well, we all have the same ability to succeed, you just have to know how to tap into it. Firstly, you need to understand a little about how you have ended up in the situation you are in now.
….. and let’s assume you are not where you really want to be, right?
Let’s get right to the point and identify what 3 things are influencing EVERYTHING in your life and giving you the results you currently have. (more…)