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The secret to how your brain works
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The secret to how your brain works

  #11 (permalink)
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For anyone interested in this sort of thing, I have recently been listening to a gentleman by the name of Krishnamurti (RIP) who has some fantastic videos on youtube related to mind. Very insightful stuff.

Here is a good starting point. The video is only 4 minutes and gives you an idea of what his experience was all about.

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The mind loop

In most cases you have no free will. The purpose of your brain is to store data so that every time you are presented with a situation, memory is recalled and processed, in order that you can make the best of the immediate situation.
Without your memory of past experiences you're going to make the same choice over and over again. Clive Wearing completely lost his short term memory so every moment to him was a new one. He was basically stuck in mental purgatory because his mind had nothing to recall and compare against so therefore he was stuck in a hellish groundhog day scenario.

Listen to this and you will understand just how memory plays a role in every single decision that you make.


Quoting 
The main problem with the question of free will is that it's an emotionally loaded question. Obviously people want to be "free", they don't want to be a slave or a robot, and that puts an immediate bias on the question. There's an immediate knee-jerk reaction to answer "I have free will", that often people don't take the time to, or refuse to, consider the converse.

So, Im wondering why I repeat trading mistakes when I have good recall of the prior negative outcomes?
Lets consider moving stop loss levels and inevitably eating bigger losers than you should have. The memory is there, I know it will cause pain, yet I move my stop. The pain of the memory is being over ridden by something else more powerful. What is it? A desire/stubbornness to be right? It is an irrepressible recursive loop that presents as soon as price goes against me. Most times it can be over ridden when Ive eaten my vegetables and had a good nights sleep but when discipline is lax in the other area of my life I know that I will be making weak trading decisions.

I dont know but I think it is an interesting question and worthy of deeper exploration.

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There is not much difference between a mechanical reaction and 'free will'


Quoting 
A hunter may run toward a tiger when trying to kill it, or run away from the tiger when he discovers his gun is jammed.
This variability of response is because there is a mind building a model of consequences.

So how does this automatic subconscious processing influence a trader?

I personally have 2 elements. I will get my perfect sinewave setup as per the screenshot. When price gets to point D we are 'go time'.
But 2 things need to be addressed by concious mind (free will?) before I pull the trigger:

1. I dont know how far up this rally is going to push (Past experience is causing a fear response and is disabling me in this instance)
2. Decision: should I take info risk trade or price risk trade? (Ive already planned this trade but now mind is desperately trying to confuse me to avoid the fear of entering on uncertainty)

This is a typical cause-effect scenario that all new traders are confronted with.

How does one deal with it? Ignore the inevitable response and trust in your analysis. I used to get pissed at myself for not taking trades, entering too late etc etc ad nauseaum.
Until I got it. Its a normal function of mind to react in that way. It is automatic. Mechanical. There is nothing you can do to stop it (millions of years of evolution is there to protect you not harm you). Nothing. Your only possible way out of it is to accept thats how your mind works and then you will learn what is real and what is fake.

Good luck

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Is the CPU hot because of bad hardwiring or because of software?
Are we chemically or genetically inclined to be depressed and have anxiety or are this simply the effect of our thinking?

Anxiety is a mind condition most frequently caused by cognitive disorders. Simply stated, during your life time, through observation of certain events, you come to take certain "rules" for granted through thinking and belief. They become the software of your brain, running in the background.

These rules might be observations such as "Everyone else has this figured but I dont" or "My trades never go to target", or "I never get a break". Your brain will then take these cognitive observations and use them to chemically optimize your body's processes to live up to the observed challenge. For example, when you're thinking "I never win", your brain kicks your heart into gear, which will make you sweat, anxiety builds, over time you start becoming despondent. Or when you say "I never get a break", your body tenses up and you become angry, you reflect on all your past failures and you get pulled further into despair.

By silently verbalizing falsehoods, you turn them into automated background software to run in your mind forever; until the day of the conflict in this theatrical play (depression) when you need to wake up to automatic thinking, and challenge your assumptions.

So, you go to a doctor, you end up being prescribed medication for anxiety and depression. For some conditions this makes sense. For many conditions, this is simply misdiagnosis and mistreatment. Medicine frequently jumps to treating the effects of anxiety and depression, not its causes.



your mind's software glitch:
The subtlety of cognitive disorders (of which anxiety is one) is that we end up not realizing the transition of these observations into automatic subconscious thoughts. In other words, your brain is usually so smart that it can automate things for you without your awareness.

For example, when you discover how to stabilize yourself on a bike, you're not thinking in logic; you're delegating decisions to the motor cortex of your brain, which acts on thousands of sensory input signals. The brain does the same kind of subconscious learning for repeated observations: it starts saying the sentences in the back of your mind, without you having to use your mouth! It's critical for you to realize this: you're actually saying things to yourself in the back of your mind, without so much as a peep. "I doubt if that's really true?!" you think to yourself. See, you just proved the point.

Debugging the brain:
Here's the kicker: The subconscious part of your brain, which is responsible for automating your thoughts and forming your personality, has evolved a long time ago. So long ago in fact, that it's childish in its level of intelligence. You let it hear from you "Gosh, why can't I catch a break in life" and its childish response is to think "Oh! Master is tired. Master needs a break ... let me turn on ALL the machines under my control to get everything done as quickly as." BOOM - your heart is suddenly in high gear, your muscles are tense or otherwise fatigued, you're hyper-ventilating, you're having a panic-attack and eventually if this pattern repeats itself frequently enough, you're giving up on life completely and going into depression. Why? Because the subconscious brain has the IQ of a moron, and you're feeding the moron confusing information. This confusing information enters your subconscious mind and gets mis-interpreted. This mis-interpretation is called Cognitive Distortion. Its a software glitch.

And to reverse it, you must restructure the way you talk to yourself. If you are feeling anxious then odds are that you are causing it through your automated thoughts.
There are some brain hacks to help you overcome the software glitch.
To be continued...

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All or Nothing Thinking:

Do you frequently catch yourself using sentences that start with "always", "every", and "never"? Language is a powerful medium. People understand what you mean when you say "I'll always be miserable". It's an understandable exaggeration. But your subconscious doesn't understand it. It lacks the processing power of your conscious mind. It interprets such False Dilemma messages as True Dilemmas, which then kicks in all the wrong sub-systems in your body.

The key hack here is to recognise that if there are shades of grey in between, you should train yourself to speak verbally with those shades of grey included so that your subconscious childish mind hears the right messages. When you catch yourself thinking (i.e. saying in the back of your mind) "I'm always miserable at work", you should respond to that thought with "That's not factually true. I have had many days that have been quite good. Some days have been really hard, but I also have good days." Instead of "I'm always miserable at work", you should train yourself to think in terms that are instead factually true: "a few days per month I've had difficulty dealing with the workload". To you this might not sound very different, but to your subconscious mind, it's the difference between an emergency and an inconvenience. Your subconscious is dealing with these two messages like so: "always miserable? alert! alert! initiate melt-down so that we can remove ourselves from this situation" vs. "some days it's tough? okay, has today been tough yet? no? okay I don't have to do anything, carry on!"

Credit: Amin Ariana who agreed to let me share this. I share because it has been hugely beneficial to me and hopefully it will benefit those that take the time to carefully read, ponder and implement what is being said.

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Thank you for sharing

@Grantx

Your last two posts are really good. Understanding in these areas seem to be the key to overcoming the knee jerk mental “reactions”. It still seems the assimilation within ones self is not as quick but seeing slow changes. Thanks for sharing.

Simplicity is the ultimate sophistication - Leonardo da Vinci
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Mental Filters
Are you the type of person who hears a bunch of encouragement and some criticism, and you completely tune out during the first part and only focus on the second part? This is called a mental filter. And it becomes automated. So later when you're thinking about that same feedback while sitting alone, all you remember is the criticism. Then your subconscious braces for defensive manoeuvring, i.e. let's not spend any energy on anything because we are focusing on the negative feedback. And boom, you're sitting on the couch, fatigued from lack of energy, and sobbing because life sucks and the day is passing by. Why? Because you've gotten yourself into a routine of just looking for flaws.

The trouble is that those encouraging messages you dropped on the floor are necessary for your subconscious mind to reward your body for having gotten you closer to your goal.

The key thing is to realise it's not up to you to decide what part of the feedback is important. You should relay it fully to your subconscious. And you do that by focusing on BOTH the encouragement and the criticism, and mentioning both when recollecting the memory, not just one and not the other.

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Undeniable observations of mind

Your mind generates all kinds of theories in order to explain experience. Mind has a deep compulsion to explain and the incessant inner dialogue you experience is a function to satisfy this need.

I see it everywhere, so much explanation and reason for why price did this thing or that thing. Losing trades in particular, mind is reassured once an explanation has been attached to a losing trade.

You must learn to see past this function of your mind because it is holding you back. Try it next time you lose and you hear the inner dialogue starting up with reasons and excuses. Get into the habit of not attaching anything to a trade, it was either a winner or a loser – that all there was to it.

Your mind will see according to what it expects: If you have trained yourself to avoid getting into bad trades then you are focused on bad trades.
Mind clings: If you attach to the idea of avoiding losses then your focus is on loss.
Mind is a classification supercomputer: It categorises automatically. Certain things are important and others are to be ignored. Find out what these are because you could be missing out on a world of opportunity especially when it comes to your beliefs about trading.

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Indomitable human courage

Dashrath Manjhi

We all face a mountain at some stage of our lives but Dashrath Manjhi went through the mountain. This man, on his own, carved a path 110 m long, 9.1 m wide and 7.6 m deep through a hillock using only a hammer and chisel.
What prompted him to do this??

While at work, Manjhi’s wife, Falguni Devi, used to bring food. One day, she slipped and seriously injured herself. The nearest medical facility was nearly 55 kms from Gehlaur. Owing to the steep mountain, it was impossible to reach there in time and eventually she died.

Manjhi was deeply hurt by this. Using only a hammer and chisel, this landless farmer, decided that he was gong to carve a path through this mountain so that his village could have easier access to medical facilities.

When he started, people mocked and laughed at him. Eventually the villagers, seeing the progress he was making, started giving him food and support.

He worked day and night for 22 years until he had broken that hill.

He was interviewed and one of his quotes went something along the lines of: Don’t rely on the universe to provide because you don’t know if the universe is relying on you.

https://en.wikipedia.org/wiki/Dashrath_Manjhi

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I realised something about myself last week which was a fantastic realization and I would like to share it here.
It all started when I watched this incredibly insightful video on the mind. It needs to be watched a few times because it is heavy going but what I like is it is solely focused on scientifically verifiable data. Im not going to summarise the entire thing but one part I really enjoyed was the mechanics of fear. Fear has been my biggest hurdle so that is why I focus on it.

Your brain chemically (norepinephrine) triggers a defensive state when we feel that our thoughts have to be protected from the influence of others. If we are then confronted with differences in opinion, the chemicals are released in the brain, are the same ones that try to ensure our survival in dangerous situations. In this defensive state, the more primitive part of the brain interferes with rational thinking and the limbic system can knock out most of our working memory physically causing narrow-mindedness. On a neural level it reacts as if we're being threatened even if this threat comes from harmless opinions or facts that we may otherwise find helpful and could rationally agree with.

On the flip side, when we express ourselves and our views are appreciated, the defence chemicals decrease in the brain, and dopamine activates the reward neurons, make us feel empowered and increasing our self-esteem. Social validation increases the levels of dopamine and serotonin in the brain and allows us to let go of emotional fixations and become self-aware more easily.

Then I read an article on daylymail this morning about a chap on a dating site who became more interested in the ‘narcissistic kick of virtual admiration than finding a meaningful relationship.’ This dude got hooked on social validation instead of his original intention of finding a partner.


Im sure you can work out what this means to you personally. The real tricky thing with our brains is that we can very easily be deceived into doing something and then asking ourselves afterwards why the hell we did it. You have almost no control over the chemical processes in your brain but you do have knowledge of the processes and this is where you have to focus your attention. The whole mindfulness fad is about being self aware and ‘gurus’ make a big fuss about how to mediate and know yourself and quiet mind etc. ad museum but honestly you don’t have to go down that path. Its too hard and takes too damn long.

How does this relate to trading? I started to understand myself better by observing my mental state before and after entering into trades. When in a trade, I fear losing. I am in a pain zone, and looking for reasons to exit the pain. WHY? Because that is just how it works for me. I see myself as a provider to my family and anything that takes away my ability to fulfil that role is a threat. The problem is that this natural function doesn’t only get in the way of objective thinking...it completely disables it. Once you are aware of this process however, you can take steps to overcome this debilitating pattern.

Here is a fine example of a trade from this morning, as I type this in fact (which ended by me closing the position a few ticks shy of target). I had the urge to close that trade out on a few different occasions. My mind was coming up with all sorts of reasons to exit early. So what happened to rational mind that had a clear and articulate view of how to play this range? He got steamrolled by irrational mind as soon as price action started zig zagging. But the thing is .... I know this process now. It happens every time. Im not surprised by it anymore and I know its coming. And that simple knowledge is what helps me deal with it.

This knowledge might help you too. Get to know yourself and your pain thresholds and what happens to your mind when you push through into that pain. This is important if you ever want to figure out why you keep making the same mistakes over and over again.

The video:
https://www.youtube.com/watch?v=x2baCg8SHGM

Good luck.

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