Building a Rock Solid Psychology for Facing the Doubt of Trading

After you learn how to trade, why is it so hard to stay focused, to stay disciplined? When the money's real.

It wipes out many, many, many really good technical traders. But suddenly, when that money's real, something happens. They discover that the brain they brought, the mind they're engaging uncertainty with, is not rock solid anymore. It can't produce the discipline. Something's wrong. What is it? First of all, understand this is that we carry a brain millions of years old. This thinking brain that we associate being human with is really kind of the servant to a much more powerful element called the emotional brain. And unfortunately, it got designed not for trading, it got designed for survival. When we were on the African savannas, when we were in caves and there was a lot of danger around us, matter of fact, it became very biased to assume danger even when there wasn't any there. It aided and abetted us to become the species that we are, that have dominated the world. However, as successful as that is, when we took that brain, so successful at survival in a very primitive world, and brought it into the world of probability of trading, it found itself in its worst nightmare. Your brain is organized to be right. It wants to survive. It wants to control the environment, control outcome. It wants to make things happen. Right now. It doesn't want to be wrong, because being wrong back then meant that you were somebody else's meal. We don't want that.

And it got to the point where it could really predict movements and things like that. It was really useful for things like weather, things like hunting. When are the animals going to show up? However, we take that same thing and assume that it's going to work in trading, but it's completely different model.

So we're asking our brain to do something that it's just simply not equipped to do. That's the way it works now. The question is, if you understand that it's just simply responding to threat. Your brain doesn't know about money. It sees money as a symbolic representation of power. The ability to control outcome, the ability to make things happen, the ability to be seen, safe, okay, and never be wrong. So if you get it, okay, that's what the brain's built to do. You, you put it in trading, where you don't have control over outcome, where everything is in fact, pretty random. You see small patterns within that randomness, but you're going to be wrong a lot. And every time you do that, every time you're wrong, you take a loss.

What happens is you're triggering ancient emotional patterns that perceive that loss as A threat. And what is it going to do? Fight flight. It's either going to try to flee, avoid. If you've ever tried to get in a trade but just simply found. I want more confirmation. More confirmation you've experienced flight avoidance. If you've ever gotten to the green finally and then taken your profits right then that's it too. It's scared that it may not reach. It could lose. Oh, my God. And losses. It's not loss of money, it's loss of life. Then, okay, you've got that. Or it could fight. I took a loss. I'm going to get it back. I'm going to beat that animal up, beat the markets up. Crazy. But that's true revenge trading. Or I'm going to aggressively go in there. I'm going to make things happen. Okay. That trait was really good for a group of guys going out and hunting down a woolly mammoth where life was pretty dangerous and you had to really believe. But if you brought down the woolly mammoth and you fed the community, you got great status, you were respected. And you also had first in the breeding rights for perpetuation of the species. Strong drivers. You can also understand how alphas come in there. They want to make things happen. They want to be in control. And then what they do is they get into trading where there is no control.

And blow up. They blow up accounts. So that's what you're up against.

You're up against this brain that has created patterns that were intended to keep us safe, alive another day by just knocking out, losing and having to control the outcome. Okay. And then, you know, it was a way of identity too, because you had status if you make money. And yet what you discover in trading is the goal is not making money. The goal is performing. That leads us into. If we understand that this is an evolutionary problem, we have an evolutionary psychology that just simply isn't up for trading. How do you go about retraining that brain.

So that it can engage uncertainty with a disciplined, impartial mind? Well, the first thing is you have to understand what an emotion is. It's not psychological. It's a biological action potential whose purpose is to coordinate action between the environment, which could be really dangerous, and the organism that would be the traitor. And what you're seeing is. Oh, beyond that, what you get is that all thinking is emotional state dependent. When you're looking at your charts, it really depends on what emotional background is there as to how you perceive and think about that market. Yeah, yeah. All those squiggly lines Are representations of threat, of opportunity, of emotions. So the very first thing is we have to begin to recognize what is an emotion. It's not what I thought it was. It's not psychological.

It blows out psychology. Because the psychology, the thinking, is following the emotional lead. The emotion is the locomotive. The thinking is a caboose and the engineer driving that locomotive. That, my friends, are your beliefs that you have about how you can manage uncertainty, Whether or not you believe you can or whether or not you're scared. And it presents itself as a threat. So once you get that into the background, you go. The first thing that has to happen is you have to learn how to regulate emotions.

Fortunately, the emotions are biological action potentials. Therefore, you can alter the emotion simply through altering the way the body is handling the situation. That's why breathing, diaphragmatic breathing, bellows, breathing is the first thing I teach.

In calming that down. You alter the emotion.

When you're having problems. My promise to you is what's happening is that the emotion is threatened and it's either attack or a void. So what you're doing, you're saying by breathing and breathing alone, I can actually get that emotion to calm down. Yeah. So that it doesn't wipe me out. Yeah. So you have a hope of being disciplined and actually trading your plan. Now, beyond that, though, there's more. You have to become mindful. You have to recognize that you and your thoughts out there, you and your emotions, you and your beliefs are not one and the same. What you call you, the beliefs. The world you see has been created by the brain, okay? The world's not out there, it's in here, okay? And the brain's creating something for short term survival when you need a mind built for long term prosperity. Big difference. So the first thing is in mindfulness, you're stepping back out of that and you're beginning to recognize, oh, this is just one organization of potential. I need to reorganize it. The next thing is you have to really acknowledge that dark side living within you, that there is an inner critic. That there is someone judging you, criticizing you, saying you have to perform and make money in order to matter or I'll never make it. I'll never make it. That's not you.

That is an aspect of your being called the inner critic. It's highly destructive. There's also an adaptive voice within you that's in a dance with that inner critic. That adaptive voice is something that your emotional brain has learned about your ability to manage uncertainty. And most people, when they get to trading, find out that they do not have the core foundational beliefs about the cell. To be able to engage uncertainty, that has to change. Then you're going to have to find much more empowering parts of the self and being able to pull them up and to summon them and to create the mind from those emotional programs rather than the emotional programs that were poured into you through evolutionary psychology and your family of origin.

In doing that, you build a mind that can be disciplined and can be impartial, that you can calm yourself, okay, and you can think clearly and you find the courage to look at the stuff inside your head that you don't want to see, that you've been denying. No, what you realize is the whole key, that dark part is where the light's at. And you learn to say innocent. In mastering my own personal darkness, my fears, I bring forth a much greater light, a much more empowered mind to engage the uncertainties of trading, of life.

The last thing you're going to have to do, not only you're going to have to summon that mind, build that mind, you're going to have to actually engage the uncertainties of life, the challenges of life, the uncertainties of trading with this new mind where losing just means that you landed on the wrong side of probability, it's not an indictment about you. In fact, losing is the way the brain learns. If you're winning, it's not learning. The other thing is you're going to have to learn that winning is not a big deal. It's only landing on the right side of probability. When you get that, you realize, oh, the deal of minded trading is being able to build a mind that can engage uncertainty, okay, and focus on performance.

Because if you have an edge in your trading plan.

What you have to do is you have to build a psychological edge that can drive that plan. That's where it comes together. You build a mind that engages the challenges of living and you believe.

That you can master your destiny. Not a performance, your destiny. You can master the mind you bring to that performance that gives you the best odds of success. But what you're doing is you're also becoming a really good loser. You're keeping them small. You know, you're not panicking. You're realizing that's not about you.

It's about landing on the wrong side of probability. You have an edge. You can invoke it, you can power it. And that edge is going to extract more capital out of the markets than it puts back in. That friends, is the mind that you need to build. Come and learn, come and learn.

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