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Trading Psychology and How The Mind Works (III)
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Trading Psychology and How The Mind Works (III)

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Trading Psychology and How The Mind Works (III)

Have you guys ever heard of, fear of success?
Isn't that one of the biggest enigmas and ironies that's out there?
It's like trading right! I mean how crazy is that?

I do want to make money, I love money, I love trading! But I'm still loosing money.
What we're experiencing here is a conflict between the conscious mind and the subconscious mind.

Remember, who the real you is! You're actually the sum of all your programming. Funny thing right? We got a lot of programmers in here!
So, being the sum of all your programs, and by the fact that your subconscious mind has the role of protecting you. There you got it!
It doesn't allow you to make money. Because somewhere in the programs you've got a bad experience that has a negative charge, and it keeps holding you back from getting hurt "again".

For instance let's say that you've been brought up by your parents (and they by their own parents), with a small simple value, such as "In order to earn money, you have to work hard".
It has probably been put there, somewhere between the age of 0-7. After that it has been amplified every time you've been in and out of social contexts containing those values.
Unfortunately, our parents becomes parents without getting any instruction manual on how to raise kids, plus that we have the social construction as well in the picture.

What does all this lead to?
Your parents are starting to train you in order to fit into the social construction. By doing that, they forget about unconditional love, and they start to introduce two things, punishment and reward.
They punish us when we're not following their instruction and reward us when we do as we're told. The kind of reward we get is, acceptance.
When we get that acceptance, we then fulfill one of our basic needs. Remember?; the need for security.

That creates here an association, with an equation that says "In order to earn money, you have to work hard" equals "SAFETY".
We grow up, and start to work, and eventually we find out that, working hard equals earning money. And the safety need is fulfilled.

No problems here right?
Everybody's happy !

Til you get into situations that can make you money easy, without having to work hard. That's when you blow it!
Take trading for instance. You've gone all the way. You've gone through all the phases (learning, experience, indicators etc). You're a complete trader. But you're still loosing money! By now, trading is easy for you. Doing it is easy, acting upon it is easy.

Suddenly we've got a new equation into play. "Earning money is easy" equals "NOT TRUE". Why? We do not want the money!
Life is not about money. Life is about safety. We live in societies, that has told us that we can reach safety through money. Money is just a tool, nothing else.
We want safety, and if that isn't met by the information we got in our subconscious minds we do whatever there's in our power to go for that.
And if the real you is, the sum of all your programs, there's simply no place for that there!

Scary thing right! It scared the hell out of me, the first time I realized that's the way things are working. I refused to buy the concept. And it took me a while before, I finally had the courage to face it, and to understand that, it doesn't matter how I take it or perceive it, by my conscious mind. The subconscious plays the lead here.
And no matter how much I refused to accept that, it wasn't that way. That I do love money, and that money is easy to earn, and that I love being all that trading is giving me. It just laughed back at me by decreasing my account.

Do you now understand how fear of success works and why it works that way? This was of course a very basic example. Every case is unique with it's own ingredients, but manly is built on the columns explained above.

In the next article, I'll write about what to do about it. Hang in there guys, there's hope!

To be continued...


Last edited by George; June 30th, 2009 at 03:32 PM.
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George View Post
Suddenly we've got a new equation into play. "Earning money is easy" equals "NOT TRUE". Why? We do not want the money!
Life is not about money. Life is about safety. We live in societies, that has told us that we can reach safety through money. Money is just a tool, nothing else.
We want safety, and if that isn't met by the information we got in our subconscious minds we do whatever there's in our power to go for that.
And if the real you is, the sum of all your programs, there's simply no place for that there!

Scary thing right! It scared the hell out of me, the first time I realized that's the way things are working. I refused to buy the concept. And it took me a while before, I finally had the courage to face it, and to understand that, it doesn't matter how I take it or perceive it, by my conscious mind. The subconscious plays the lead here.
And no matter how much I refused to accept that, it wasn't that way. That I do love money, and that money is easy to earn, and that I love being all that trading is giving me. It just laughed back at me by decreasing my account.

Do you now understand how fear of success works and why it works that way? This was of course a very basic example. Every case is unique with it's own ingredients, but manly is built on the columns explained above.

In the next article, I'll write about what to do about it. Hang in there guys, there's hope!

George, thank you again for your contributions.

Fellow Traders! Attention!

The mental aspect of trading is far and away more important than your trading platform and indicators. How much time are you spending on new indicators? How much time on tweaking your chart? And how much time perfecting your trading rules?

I know that dealing with these mental issues is not fun. Indicators are like porn, they can get you all excited! But at the end of the day, wouldn't you like to be excited for having made money instead of being excited because your chart is pretty?

You can have the best indicators the world has ever seen, the most beautiful chart that makes you feel "oh so proud". And guess what, you can lose money. Lots. You need to start analyzing yourself, not your chart.

I've been preaching the "less is more" mentality for a while. I am still in the process of reducing the number of indicators on my chart. For the past few weeks I've been using three charts with a total of three indicators (1 per chart). I think I can safely cut that down to 2 indicators. And guess what? Trading is easier and more clear than ever before.

The important thing is to reflect on the losing trades. The winning trades are easy to deal with. Your time and energy needs to be focused on the losing trades. I assure you, the market is not out to get you. So you need to look at why the trade was a loser, and I think most of the time, the fault will be with your execution of the trade -- not the indicators.

Your goal is to be able to have a losing trade and have made no mistakes. Yes, think about that. A losing trade that you executed perfectly. Those are the acceptable losses, because you did everything right and the trade did not work. That's life, that's the market! Don't worry, they won't happen often if you have truly done your homework and been honest with yourself.

If you've read the entire post then you get a cookie

Mike

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I love George's posts and I love that he takes the time to write and post them...

I can accept the idea that 'easy money' a la optimizing trades is counter to those values taught to many of us by either the depression-era parents, the "Harriet & Ozzie"-era parents, the overly-ambitious parents... I'm gonna think some more about how this creates a "Fear of Success".. that is something of a leap for me... I don't see the connection yet. I left out the 60's Hippie parenting... I wonder if those are the better traders among us.

On the issue of "punishment and reward", "cookies" and "good trade" comments from the gallery when our good trades are posted and commented on... unfortunately I don't like this practice... I think it serves to reinforce the concept that DOES tie into what George wrote, which is "if I make a good / smart / clever / profitable trade, Mommy will give me a cookie... or Daddy will pat me on the back.". That practice, in my view, only serves to reinforce and enable the very behavior that is holding us back... continuing to try to please the "now" internalized parent figures rather than to meet our goals and objectives as the adults we are.

I far more appreciate a considered and thoughtful critique... something more profound than "I can't see the price for all your indicators" I'm far more interested in something like "you went long there, but don't you see that the sellers are still in control? Look here... this is what a chart looks like when sellers are in control". That type of comment recognizes me as an adult capable of self-reflection with an intact ego which is fully able to take a critical look at myself and my actions - out of which, I can learn and change my behavior.

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George View Post
"In order to earn money, you have to work hard".

God knows how hard I fight with this crap inside me. I realized some time ago that I have this sort of psychological imbalance like fear of making money. I just was not sure what the reason for that and where it comes from.

I have just one trading rule attached to my monitor that says "Do not sabotage!".

Thank you for your post George.


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Big Mike View Post
Your goal is to be able to have a losing trade and have made no mistakes. Yes, think about that. A losing trade that you executed perfectly.

Totally agree. In fact I feel good about myself in such situation:
1. I entered the trade the way I should, according the plan.
2. I managed the trade the way I should, according the plan.
3. I have another feedback from market to analyze.


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Saroj View Post
I love George's posts and I love that he takes the time to write and post them...

I can accept the idea that 'easy money' a la optimizing trades is counter to those values taught to many of us by either the depression-era parents, the "Harriet & Ozzie"-era parents, the overly-ambitious parents... I'm gonna think some more about how this creates a "Fear of Success".. that is something of a leap for me... I don't see the connection yet. I left out the 60's Hippie parenting... I wonder if those are the better traders among us.

On the issue of "punishment and reward", "cookies" and "good trade" comments from the gallery when our good trades are posted and commented on... unfortunately I don't like this practice... I think it serves to reinforce the concept that DOES tie into what George wrote, which is "if I make a good / smart / clever / profitable trade, Mommy will give me a cookie... or Daddy will pat me on the back.". That practice, in my view, only serves to reinforce and enable the very behavior that is holding us back... continuing to try to please the "now" internalized parent figures rather than to meet our goals and objectives as the adults we are.

I far more appreciate a considered and thoughtful critique... something more profound than "I can't see the price for all your indicators" I'm far more interested in something like "you went long there, but don't you see that the sellers are still in control? Look here... this is what a chart looks like when sellers are in control". That type of comment recognizes me as an adult capable of self-reflection with an intact ego which is fully able to take a critical look at myself and my actions - out of which, I can learn and change my behavior.


Saroj,

You're never going to see the connection between the conscious and the subconscious mind. It won't work. If we were to see the connections, then we could be brainwashing ourselves in the right direction. Actually, that is possible

On the other hand, we're all able to feel the connection. Remember that's where our feelings lie, in the subconscious mind. So when ever you think of something, let's say in the right direction (that is, in the desired direction, for i.e. I want to make loads of money), and you get a bad feeling in your gut. That's when you become aware of IT!

What's happening then is that, the information that's in your subconscious mind, doesn't match the thoughts in your conscious mind. And it communicates that to you by feelings, good or bad. Just feel it.

Go ahead, pick a thought (take a goal or something you wish to have or complete in your life), and put your focus on your gut (the chest, stomach area -that's our feeling center), and see if how it feels. If it matches, then the both minds are in sync. If not, that is, if you get a bad feeling. That's your subconscious mind telling you, NOPE, we don't like that information, we don't accept it, and there's no place for it in here!

Try it out, and see.

/George

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Eternum View Post
God knows how hard I fight with this crap inside me. I realized some time ago that I have this sort of psychological imbalance like fear of making money. I just was not sure what the reason for that and where it comes from.

I have just one trading rule attached to my monitor that says "Do not sabotage!".

Thank you for your post George.

Eternum,

Congrats!, You've taken a huge step towards becoming aware of yourself.
Now this may sound very, very abstract and ironical, but you have to stop fighting it.

The best way to get rid of a fear, is by embracing it. I'll be giving out the tools very soon in the next article!

/George

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George - excellent series; thank you for sharing these priceless concepts. I couldn't agree more with the ideas you have presented so succinctly. So the practical consideration is, of course, how do we effectively and efficiently replace those subconscious programs that are always running in the background, that are not useful, and often detrimental to our personal transformation? Affirmations, meditation, visualization...and the self help industry is booming. I am very much looking forward to your next article. I would love to be able to consider it over the weekend if you have time to post before then.

Eternum - I appreciate your acknowledgement and effort in self mastery. What struck me was the negative trading rule that stares at you each day. Please correct me if I am mistaken, but the subconscious doesn't acknowledge negatives well, and focuses on the action or thing that is attached to the negative. So in your case, it focuses daily on the word 'sabotage'. My understanding is that it would be more useful to have a note that states, "I will follow my trading rules", or something similar. Maybe George has a comment about that. My apologies if I am off base, but that phrase just jumped out at me. I wish you and everyone here much trading success and continued growth in this journey.

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Thank you George for all of your insight and knowledge you have shared. I am in the middle of taking a course called "The Disciplined Trader" which deals with training the subconscious and other aspects of trading. It is a six-week intensive course and I have found it very beneficial. I started seeing results immediately. The information you have provided here goes hand in hand with that program.

Regards, NMTrader
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NMTrader View Post
Thank you George for all of your insight and knowledge you have shared. I am in the middle of taking a course called "The Disciplined Trader" which deals with training the subconscious and other aspects of trading. It is a six-week intensive course and I have found it very beneficial. I started seeing results immediately. The information you have provided here goes hand in hand with that program.

Very interesting, here is the site:
The Disciplined Trader

I scanned the testimonials on the site. It is always so nice to see when other people have this type of revelation. I learned most of this the hard way on my own, and it was extremely costly (not just financially, but emotionally).

Naturally, I am still learning ... you never stop ... but what continues to amaze me is how much time I have spent in this area, and how little time everyone else has. Many traders totally ignore this area. They think creating a trading plan is all that is required when it comes to mental discipline, and then they move back to their charts, looking for that better entry or new indicator.

Look at this forum for instance. The General Discussion and Programmers Paradise sections get nearly 100 times more traffic than this Psychology and Money Management section (looking at Google Analytics). People are too caught up in holy grails and only a very few select individuals ever realize that the mental aspect to this "game" is far, far more important.

NMTrader, I'd like to learn more about this course. What more can you tell us about it? How is it presented (online, ebook, in person, live video conference?). I congratulate you for finding him and taking the course, you are now leaps and bounds ahead of the majority

I also want to say that I am really looking forward to volume IV in George's teachings, I am anxiously awaiting it.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
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