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

  #1 (permalink)
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Trading Psychology and How The Mind Works (II)

All right guys, here comes part two!

The subconscious mind. The primitive mind. That's where the Holy Grail is
Well, how does is work then?
As mentioned before, it perceives about 40 million bits of information per second. That's huge. And it's never dormant. In fact it has been awake and recording since the time you were a fetus.

It's divided into three sub sections:

1. The Memory Mind. It has recorded all your memories, all events, actions, everything that ever happened in your life since the time you were a fetus. Think of it as a video camera with five senses. All of your memories, since ever are there and they are there constantly in every moment of your life.

2. The Emotional Mind. It's the part that contains all of your emotions. Whenever we act, react on an emotional basis, the subconscious mind is involved. Have you ever thought of that situation when you reacted so silly, and you asked yourself later, why in the whole world did I react like that, or why did I say that? It's because of the emotive information that's stored in your subconscious mind. Remember, what was in the conscious mind. Those two sub minds are not involved then -the rational, and the analytical mind-.

3. The Protective Mind. It has the role of protecting you against what it perceives as dangerous. Let me give you the classical example of why people starts smoking in order to explain the protective part.
One of our primary needs is the need of security. When we become about, 13-14 years of age, we start to flirt very much with what's outside of our home. Our parents are not that cool anymore. The gang, the group is more important, so we start to flirt with the group. Now, in order to get in the group we have to be accepted. If the group is smoking, and we don't, we've got a problem. We start to feel insecure, because we've put our security outside of ourselves, it's in the group.
So we start smoking, and the group accepts us. Even if it tastes bad, and we're very well informed about the dangers, we get our needs of security fulfilled. The protective part has done it's job and has led into a situation in order to make us feel safe. We belong to the group.
This example can actually be translated into many situations that has to do with belonging, groups, and actions that are against our "own free" will.


It actually has one more role, it's the lazy mind. Think of it as a playing device that has recorded something and it's playing it all over again. It refuses to accept new information. Whenever new information is send to it, it does a check. Say that I make the decision of, let's say start jogging every morning at 5.00 am. It takes in the information, does an analysis, chews it, and spits it out, saying; Nope, we don't recognize that idea, thought. We haven't done that before, and there's no place for something that's bothering our protective laziness.


So, it's a playing device that's playing every event that you've experienced in your life, from the time you were a fetus, til your present moment.
It's basis is created from day 0 of your life til the age of about 7. That's because, your brain waves, in that period are in a kind of hypnotic state. They move very slowly, and your whole subconscious is very much completely open. You lack the critical factor, (-analytical and rational mind).
And that means that every litle thing that's put there, not that it stays there, but it creates the fundamentals of your character, and your outcomes in life.

Who's putting in the information? Well, most of it comes from our parents. They are the ones in charge of our lives. Let me give you an example in order to clarify it more.

Remember I told you that, one of our basic needs is the need for security. Normally, when a baby starts crying, it is taken up by the mother, it continues to cry. The mother checks the diaper, changes it. The baby keeps on crying. The last step, -the one that always works-, is to bring the baby to the bosom, and stick a bottle in its mouth or feed it with breast milk.
That's when the baby finally stops crying.
What's actually happening? The need for security is fulfilled. Being brought up to the bosom, the baby, feels the warmth and care from the mother and the need for security is fulfilled. The only problem, is that it creates an association. The brain creates that association to food. In other words, when I get food, then I'm secure.

You grow up, and every time, you had a stressed day, you feel depressed, etc. etc. You find yourself putting something in your mouth. If you start to abuse food, you give birth to obesity!
But remember it has to do with the need of fulfilling ones security.

This is just one example. Other quick examples are, those very classical as well. Just think of how many parents out there are telling their children, things like "you're not worthy", "you can't do that", "you're bad", "you'll never be able to" etc., etc..

You guys get it now?! How many of those thoughts, are you own? I confess, they're part of my package all. And I believe I'm pretty normal.

So those thoughts are not even put there by ourselves. They're put there by our parents and by society. Free will ha?!
Just take a look at your internal self talk! If you're being honest to yourself you gone find them there. And you gone notice that you are just as bad to yourself as your parents were to you.

I have to mention that, we do have the contrary picture as well, and that contains a very nice self talk, which is there because of that nice program instead.



Does the picture start to take shape now!?


In summation of all this. It's pretty basic now, right? The real us, is our subconscious mind, because we're spending there about 95% of our daily lives. The subconscious mind is this device playing on and on the program we got, in there. The program is put there by our parents and by society.
What does all this has to do with trading then?

We'll get to that in the next article.

Till then trade well, and may the Trend Gods be with you all!

/George


To be continued...


Last edited by George; June 30th, 2009 at 02:33 PM.
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Thank you George! I am looking forward to many more insightful posts. I personally believe I cannot spend enough time on the mental training side of things when it comes to trading.

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Thank you George! I am looking forward to many more insightful posts. I personally believe I cannot spend enough time on the mental training side of things when it comes to trading.

Gary,

You're a brave man! It takes a lot of courage to accept that!

/George

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OK, be nice to myself, my trading system, my every trades and my life. thank you.

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Some little wrinkles on the various minds you mentioned thrown in for fun from Asian perspectives of yore:

Memory: memory is stored in different complexes, each of which is 'ruled' by one of the five major visceral organs (not the brain btw).

Long-term memory: heart;
Emotional memory: stomach-spleen;
Short-term/immediate memory: kidneys.

In terms of subconscious mind: far more data of those millions is processed in the 'enteric' brain - which has more synapses, than the cerebellum/head brain. This is something modern scientists have only recently begun to investigate because for them the mind is produced in the head brain and that's it. Evidence to the contrary, or if not contrary than conflicting, is gradually coming in viz. the roles and functions of the 'enteric brain' which is not a specific location but a network based in the torso.

Will power is based in the kidney energy complex, where also short-term memory is held. Short-term memory is what very old people start to lose: they forget why they were going to the fridge in the first place, or what day it is. Meanwhile, they remember as clear as day things that happened decades ago (in the heart). Will power is what takes you through a major battle without running away etc., but it is very immediate, not long-term.

The spleen-stomach 'brain' where emotional memory is stored is also the zone which likes to feel comfortable and when under stress feels anxiety, the stomach knotting up etc. That is one that gets churned around a lot during trading if the longer-term goals and other analysis is not clear.

In any case, I think there is much validity in the classic Chinese medical approaches of identifying different types of mind (and memory) with different visceral complexes and not getting sidetracked into lumping anything to do with mind into the head brain and everything else to mechanical physical processes as we in the West have been tending to do the past century. The evidence just isn't there for it, but also it ignores/discounts too many other aspects of experience, including the emotional, which clearly have very physical ramifications which in turn effect mind in no end of important ways.

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hi,
what about a lack of attention, adhd, when it comes to trading. i have found i need to develop the "cat watching the mouse hole" mind set, a patient waiting for right setup to appear, but what happens is i get bored, distracted, start surfing, checking email, doing anything else but.... and then the setup has come and gone...

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hi,
what about a lack of attention, adhd, when it comes to trading. i have found i need to develop the "cat watching the mouse hole" mind set, a patient waiting for right setup to appear, but what happens is i get bored, distracted, start surfing, checking email, doing anything else but.... and then the setup has come and gone...

You have to treat trading like a business. Overtime you can do more things at once, but in the beginning you have to focus on just the one customer in front of you, hold their hand, get them exactly what they want to buy. Over time you have many customers in your store all shopping at once and you can help several at the same time.

Picture this: If you were at "the office" in a real day job, you wouldn't allow your wife and kids to call you every 5 minutes right? You wouldn't surf the internet. You would work. Or else you would be bad at your job.

Trading is the same way. Eliminate distractions. Tell the family you are at work, and it's off-limits until you exit your home office/room each day. Focus on charts. I want you to participate in the forum, but I want you to focus on charts more then later you can participate when you aren't trading.

Mike

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when it comes to distraction it is only me.
what i am doing which does help is give myself a set time, like from 9am to 10:30am, for example, that i will watch the market action with out distraction. that way i have a specific goal and limit that i can acheive. this is opposed to watching all day until my attention span is bored, exhausted and my mind starts to wander.

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Psychology and Money Management

George and Mike,

Indeed, these are the most important assets to build when one starts trading:

- the trading plan
- the trading journal

There are several good coaches in these space and some of their offerings are quite affordable:

- Adrienne Toghraie
- Norman Hallett
- Van K. Tharp
- Janice Dorn

and a good money management rule in Alexander Elders books - 2% or lower of available capital

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This really struck a chord with me George! THANK YOU!


"Excerpted from Georges thread intro"
"It actually has one more role, it's the lazy mind. Think of it as a playing device that has recorded something and it's playing it all over again. It refuses to accept new information. Whenever new information is send to it, it does a check. Say that I make the decision of, let's say start jogging every morning at 5.00 am. It takes in the information, does an analysis, chews it, and spits it out, saying; Nope, we don't recognize that idea, thought. We haven't done that before, and there's no place for something that's bothering our protective laziness. "


I'm an expert at stopping smoking.I've done it dozens of times.After a few days without smoking I would begin to start feeling smug about how easy I was finding it to quit.I believe that what you call the "lazy mind"(which perceived me to be a smoker) would put whatever stupid idea into my head it would take to restore my proper status as a practicing smoker.
The excuses I (or rather my subconscious) produced, and I consciously fell for, seem so absurd, once out from under this spell, it's embarrassing. Examples would be,"Well you quit for 2 weeks, it's obvious you can quit any time you want,so you might as well start again", or, "take a drag to remind yourself how awful it tastes".
The way I finally quit for good was that I realized if I never took another drag,I couldn't start again. I'm nothing, if not stubborn, and after about a year with this new approach, the cravings and idiotic rationalizations stopped and I knew I was no longer (even subconsciously), a smoker.The "STRUGGLE" was over and the idea of me starting again
has been preposterous for 20 years now.
Smoking is a black & white issue. You either do or you don't.Trading obviously has a lot more nuance, and my knock em down drag em out battle with my subconscious over smoking won't work on my trading demons.My smoking experience tells me you, (George) are right about the illusion of free will, and the formidable power of your potential ally or foe. Best we pull on the same end of the rope.
I certainly intend to try the methods you offer in part IV of this thread and thank you for providing even a potential solution to this problem.

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