Interview with Rob Booker

All right, Randy. So I've done. By this time, when they come into the podcast, I've done an introduction, so they've heard a little bit about you. They know you wrote the book. They know that I love the book. They know that there's some specific quotes in the book that I really appreciate. What I'm interested in, to start things off, is this concept of mindful training, and it seems to have its roots, or at least.

The taste of meditation. Is there a connection there?

Yeah, there is a. There is a connection. In Zen Buddhism, they are taught. In Zen Buddhism, you are taught to be mindful of thought. You were taught to stand as witness and watch thought rise, have life and recede, and you stay as witness, but you're still in stillness from there. At the same time, in mindfulness, a lot of people throughout time have always been able to be aware of thought.

And they begin to realize that they and their thinking are not the same.

And you go, well, who is this? It's kind of like Pink Floyd has a song. There's somebody in my head, and it's not me.

Dark side of the Moon, greatest rock album of all time.

Yep. And that's what you realize, that there are powerful forces living within mine.

Well, let's talk more about that, because as I quiet my own mind with respect to trading or relationships or anything else for that matter, I do notice that, let's say the moment that I'm about to take a trade and at the moment that the price is the best bargain that I could possibly get on Apple, for example, it looks the crummiest. And there's this voice in my head that's like, don't be an idiot. What are you doing? You know, Is that one of those voices?

Yes.

Is that one of those people?

That's one of those people.

Well, not one of those people.

Let me define.

Maybe for me, it's what I mean.

Yeah, I know, I know. But I have to be fairly specific when I'm doing this is the brain creates programs that solve problems. They become automatic, they recognize pattern, and you fall into pattern. It just so happens that those programs are given voice in the mind because we're human beings. Those are the people running around in the mind.

Are those programs created from our life experiences in the past? In some part, yes.

And more is that your brain adapts you to the circumstance, and it teaches you, for instance, you will adapt to any number of circumstances. And what you'll do is you'll become like a victim, or you'll become a Bully or you'll become a peacemaker. Those are adaptations.

And you start living out those patterns and you start seeking people on the corollary side of that pattern. However, the brain also will find very successful survival patterns over eons of time. And what it will do there is it will not only be adaptive, it will burn it into DNA. Oh, wow.

Wow.

Yes. And so the programs are there now. I call those, and Carl Jung would call those archetypes. These are the things that you want to wake up. These are the things that can be there. You darn well know they're there, rather than the current organization of mind that you are when you're trading.

Well, I read Young in college and frankly I didn't understand a darn word he said, but I got the word archetypes out of it. Let me describe a scenario that traders that listen to the podcast might go through and maybe you tell me if this is one of those archetypal situations. So a trader that I've worked with for a number of years, for example, keeps getting the trading account up to $100,000 and every time they get right to the verge of $100,000, just self sabotages.

Yes.

And I ask now from an outsider looking in at that, they might say, they say, what's wrong with you? Or they say, what are you doing? Or why did you do that? Is there something underneath the surface going on that this trader might not be aware of even.

Oh, most likely.

These programs that the brain creates end up in the back of the mind. They are so familiar. And what the brain does is it takes anything familiar and it pushes it to the back of mind. You don't see it's there. It's so familiar. It's like a fish doesn't know it's in water, Right? We don't know we're in air, but you take us and put us in the water, you take the fish into air and all of a sudden, wow, are we aware of that? That's how these programs work. What you're talking about there is the money narrative. I was actually working with a woman this morning and what she discovered very clearly is that she grew up in a Norwegian family in North Dakota and there were farmers and everything was scarcity. Everything was scarcity. They never had enough money. She grew up in this soup, right? And the brain, never having enough, right?

Never having enough protecting what you have, you know, the loss of one small thing is a struggle.

It's the floodgate that's open up every.

Now we're all going down tubes.

Right. Wow. That's the adaptive function. So she's taken on this function and what she was discovering, you know, years later, she's done very well in different things. She gets into trading and there she is in scarcity. And she's blowing herself up, by the way, every time she actually moves from six figures to seven figures.

Okay, so this is a lot of money.

Depending on who you are.

I guess I grew up in a household where that's a lot of money. So there's my archetype going through.

Yeah.

So every time she was going from six figures to seven figures, and did she even recognize that that was playing out? No.

Wow. What we had to do is we ended up taking history. And I said, well, this sounds like a problem with zeros.

Oh, adding a zero.

Yeah, adding a zero. And fundamentally what happened was that she was scared to lose what she had.

Steve Cohen of SAC Capital, who's probably now under investigation for some untoward behavior in the financial markets. But that's beside the. Famously, when interviewed by Jack Schwager for New Stock Market Wizards or whatever, said the most difficult thing to do is to teach a trader to trade a larger account.

And of course, there is no discussion of psychology, but you gotta. You think of. You read that. And that's dripping with an invitation to talk about psychology.

So when you're talking about fear of trading or fear entry, you're not really talking about fear of ebay or fear of the euro. You're talking about the fears that come from somewhere else deep inside.

Yes.

What about euphoria? Does that have any application as well?

Oh, huge.

Understand each emotion has a feeling component. The feeling component is not touchy feely. It is literally the chemistry of the physiological component. It is the chemistry of the emotion in the body and the brain. It is also what contaminates or creates the kind of thinking that you have. And a feeling produces a belief in the certainty in whatever direction the emotion is taking you.

Produces a belief and the certainty that the good times are going to roll on forever.

Forever.

When a trader wins, he goes, oh, wow, this is so cool.

Is that why when a trader wins, there's a tendency to just dramatically increase the trade size?

Yes.

Yeah. Because now I'm here, I'm a winner.

I'm a winner. I'm gonna do it. I can do it. It's like these gamblers here at Caesars. You know, the thing is, they want you to up the size because they're going to take it, they're going to take it back because you get euphoric and you think, I'm going to win the jackpot. Euphoric.

Now when you're down at Caesars, you think, I got nothing left to lose. I'm a terrible person. I'm gonna just, I'm gonna go for broke. And that's also equally destructive.

Equally destructive.

It sounds like we're walking a tightrope in the world of trading where you can't escape from who you really are, that who you really are comes out like with other areas of your life. You're like, you know, you drive a nice car up for a date and you can, you can put on a show for quite a while.

You can be a fraud. Yeah.

But in the world of trading it's like that stuff comes out.

I actually have a saying that the speed of life is so much slower than the speed of trading. You can sit in self deception for a lifetime before the consequences show up and catch you in trading. You don't have to worry about your dragons avoiding them because they're now stalking you. It is impossible to get away from them.

It's a, it's a never ending battle for individuals who are not interested in diving into the complexities of their own histories and the psychological components. But for the individuals that are willing to take that journey and face those demons, is there hope?

Enormous.

So someone who's really struggled, I mean the really bad ones that have a terrible psychological approach to the markets. I've heard people say, listen, it's never going to work for some people. And maybe that's true, but it sounds like what you're telling me is that in your work with traders that have struggled with some of the darkest things in their past that influence the way they trade, there is hope for someone to make a change.

Oh, if they're motivated, it can be done. Unless they have a really organic problem in their brain, it can be done. No doubt about it.

I got all kinds of organic problems in my brain. Let's not even go there. But let's say that, I mean your book's mindful trading and I've seen people at a show before I knew you, Randy. I've seen people at a show come up to me and come up to. I've seen them come up to you and they've got a dog eared, underlined copy of this book. Are some of these topics that we've had a few moments to discuss? Are they covered in part in the book?

Oh God, yeah. In great detail. That book actually are the vignettes and it's all driven by vignette of traders who are either current clients of mine or former clients of mine. And it takes them from where they're a bull in a china shop. They have no idea why they're crashing and burning themselves. And it's a process of learning how to manage that, waking up to it and recognizing these forces that live within itself, learning how to master them and reorganizing the mind that trades so that they can trade and trade effectively.

There's a somewhat famous modern Zen saying from the author of Zen Mind, Beginner's Mind in which Suzuki says, if the cart's not moving, do you beat the cart or do you beat the horse? And I find that in trading we often will beat the trading system. But we just, you know, we're untouchable. We don't approach that. We don't stop to think, well, maybe, maybe it's me. And it sounds like what you're saying is to a great degree it is us.

Once I want to tell you trading is a very complex, very difficult endeavor. It is like getting a post doctorate degree. You really have to know your methodology. You really have to understand that. But that's. It's kind of like on the PGA Golf Tour. Everybody there can drive the ball, everybody there can putt. The difference between champions and the also rams is the state of mind that they bring to the game. And same thing occurs in training.

Yeah. Or the heart medication that they've been taking. You read about that?

No, I haven't heard of that.

There's a story out recently that the PGA pros have been prohibited from taking certain heart medications because they have a calming effect on the physiology of the body. And so there's a few of them in particular have been prohibited from taking these medications because what it's done is it's calmed their nerves in difficult pressurized moments and no one knew that's what was going on. And I've had friends over the years who were traders that relied on Adderall or Concerta or essentially adult riddling to stay concentrated. And I don't even think that's just gaming the system or whatever. I think it's destructive to avoid some of the deeper issues that are going on. It's a cover up on the.

I would say it's highly destructive. Not on the physiological level, but I also don't believe that's the kind of mind you want to bring to trading.

Right.

When you take a look at the mind, a peak performance mind for trading, say versus American football, American football. What you want is high levels of euphoria, high levels of energy, high levels of adrenaline. What you want to be able to do is you want to conquer stuff. In trading, if you get that arousal going, it's going to kill you. Trading is much more akin to chess or to bridge. There is not physical activity you do not want to crank. It's cerebral. Yeah, it's all, you know, I mean, think about how much exercise a trader is really doing.

It's pressing a button.

It's pressing a button.

If you even do that now. Right.

And it's all mine. And so if you're going to do something that's really cognitive, you want very low arousal rates. I promise you, an amphetamine is going to crank arousal rates up.

Yeah, I've never been accused of having low arousal rates.

No.

I bet not.

You know, Randy, it is a pleasure to talk to you. And where can people get more information? Get the book, download the materials. You've got some guided meditation programs, you've got some things on your website. Can you give the website to us right now?

Sure. It's www.tradersstateofmind.com and it's all one word and that's two S's in the Traders state.

Well, we'll put a link on the show. Notes for the Traders podcast. You've been a great guest. This has been episode 102. My guest is Randy Howell. Thanks, Randy.

You bet it.