This is a short spoken presentation (YouTube) by Randy on how traders experience strong emotions around money and loss. Randy defines emotion as "any disruption to a standard sensorial pattern the brain has already established," argues that emotions hijack thinking, and breaks an emotion into component parts (naming arousal, feeling state, and motivation while stating there are five parts). He gives trading examples (frozen entry, taking quick profits from FOMO) to show how emotion compromises decision-making, and teaches that the first practical skill is breathing and relaxation practiced in the pressure of trading to disrupt the biological signature of emotion before addressing beliefs or thought patterns.
Chapters
When it comes to money.
Or the loss of money, all traders are emotional beings. And not just emotional beings, very emotional beings. There is no absence of emotion. There is no freedom from emotions. But there can be freedom of emotion. But first, what is an emotion? Why do people get so hijacked so often in trading?
The trader doesn't understand the emotion. If they understood the emotion better, they'd be more prepared for the trials, for the emotional trials and dramas that happen in it. But by pushing the emotion away, they don't see the emotion as it's sitting there and building. For instance, have you ever felt pressure to win? I mean, real pressure to win or pressure not to lose? That's an emotion. You're pretending as though it's not an emotion. You're not there, but you feel the pressure. That pressure to perform, that pressure to win is the emotion.
So if we want to learn how to manage that, how do you do it? The first thing is you come to an understanding of what an emotion is. An emotion is not a feeling. It's not touchy feeling. An emotion to a neuroscientist is any disruption to a standard sensorial pattern that the brain has already established. Any disruption. What that would mean is that when you're looking at screens and no setup has really occurred yet, and it's just homeostasis there.
The moment that setup start forming, you start getting confirmation. That's a change in status to the brain. Automatically an emotion erupts. It's only the matter of which one. This is the way it is. The pressure is what I'm asking you to look at what the emotion is and not like something out there, not something in the head. It is in the body. The next thing is you go, well, okay, Randy, it's any disruption to a standard sensorial pattern that the brain's already established. Okay, I get that. I get that, that it takes over psychology.
But to go from a little bit of knowledge to how to use this thing, we broke an emotion, we break an emotion down into five component parts. The first part is, once the triggering of emotion happens, that disruption, it starts revving up. That's called arousal. That's the pressure. You can feel it in your body. The tenseness, the holding of breath, all that. The panning, that's the revving up. And that is the place where intervention needs to happen sooner rather than later. The second part of an emotion is the feeling state. Feelings, again, not touchy, feely feeling is the actual chemistry of. Of the emotion in the bloodstream in the brain, altering Thought, okay, big time. When you feel that knot in stomach, when you feel that hard in throat, that's the feeling. That's the internal sensation you have of the emotion and it's telling you the chemistry. Whether or not it's cortisol with anxiety or testosterone for something like euphoria, it's already there. It's already beginning to compromise thinking. That's why it's so vital to get that section under management with emotional regulation. Next comes motivation. What's the emotion telling you to do? In fight flight work, what happens is that the thinking circuit's hijacked and you immediately go to either fleeing, avoidance or attacking. That would be anger and fear. Unless you can reroute that, unless you can slow that brain down, your mind's going to be compromised and you're going to be doing really dumb, stupid things. For instance, let's take a couple examples. It's like a lot of people have difficulty at the moment of entry pulling that trigger. And what they're going to do is they're going to see that and suddenly instead of like a standard sensorial pattern, all of a sudden it's dangerous. You could have a loss right there. Uncertainty has now been linked to ambiguity, to confusion and fear that was linked many millions of years ago. And there you are, it's triggered, it bypasses thinking and suddenly you're hijacked and your finger freezes. You can't move it like that. That's one example. Second example is, you know when you have this fear of missing out and you get a little bit of profit on the table after being whipsawed all around in a trade, you suddenly say, well, I'm just going to take, I'm going to take what profits I can get right now. And you can feel the building, the building, the building, the building and then the surging. And when the moment of hijacking, it makes all the sense in the world to get out of that trade. Okay, that's because all thinking is emotional state dependent. And then when you're doing a review and you're in a more settled state of mind, you look back and go, what was I thinking? What overcame me?
The emotion overcame me. And if you feel the pressure, the emotional pressure to win, to lose.
You are being seized by the emotion, right? Then that's the time to act. And in this, what happens is the first fundamental skill, the first fundamental skill I teach is breathing and relaxation in the context of trading. Not in the yoga studio where it's easy. No, in the context of the pressure of trading, you have to be able to disrupt the signature of that emotion, the biological signature, the breathing, the tension, the pulsing rate that has to be disrupted before you ever get to the door of the mind.
That's the thing about emotional regulation. It doesn't solve the problem. But without it, you never get to the problem. You never get to the door of the mind to look inside at the beliefs that are causing the compromised thinking. You have to get to the biology first. You have to get to the biology of the emotion first. With breathing, relaxation, you can do that. Then, friends, the world opens up. You come to a moment where suddenly you look inside the mind, and with a calm mind, you get to look in very differently and you get to find out what the compromising beliefs are. But first, understand what we've done in this piece here. We've talked about emotion, about what it really is. We've taken an emotion and dissected and says these are the elements. And then I've shown you in two different kinds of places where these show up and how they show up and what you got to do to start really mastering that. That's what has to happen before mastering the mind. You have to master the emotion. And that'll be next month. Take care, my friends. I've enjoyed being with you.
