The Invisible Force that Keeps Crashing Your Trading Potential

Hello. You know, recently.

A client came to me, a new client came to me, and it was an interesting case, and I wanted to share it with you because it reveals so much about the struggle to become profitable in trading. First of all, this client has been trading for, oh, gosh, over 30 years. He's done it professionally. He's been at the top end of the game on Wall Street. He's done all that. But he was always, always wagering other people's capital. When it became his capital, there was a dynamic that changed, but it gets more interesting. This guy also is a serial successful entrepreneur. He's got four businesses right now that are super successful, and he seems to just be able to make things happen. He just is the alpha. He's a winner. He doesn't like to lose, and he can make things happen. And then at the same time, though, he's done that in athletics. Now, he's not a young fella anymore. But the thing is, for a guy in his late 40s, 50s, he's competing in athletics and absolutely knocking him dead. And he is the type of guy who can be behind in a race and just reach down and get that another level and just pull and make himself prevail. I want you to see that. The other piece that I want you to understand about this guy is he comes from a highly competitive family where winning was everything. Losing just simply was just a bad deal. Those are the elements I want you to see because this formed him. And in this formation, what we're talking about is the way you train the emotional brain versus the way you train the thinking brain. Now, when you take a look at this guy from a thinking perspective, he honestly knows how to trade. Yet what he does, he gets into trades. And invariably what he'll do is he'll come to a situation of where he knows on a cognitive level that this trade needs to be gotten out of at a small loss, but.

He can't take the loss. He'll sit there and he'll try to do everything he can to be able to force that loser into a winner. And you know the rest of the story. Things go bad, okay? And he loses money right and left. And he's perplexed because he's such a darn good entrepreneur, he's such a darn good athlete. You look at it and go, why isn't he able to translate his talents from one domain, well, two actually, business and athletics, into trading? That's the big deal. The key here is most of us never realize that we're trading with an emotional brain that has a completely different operating system than our thinking brain. Every one of you most likely have been trained incredibly well. From the thinking part of trading. You know how to do this work, you know how to have the rules. You know how to plan your trade and then trade your plan. You know, all that knowledge is not enough friends. Very few people with that knowledge become successful traders. What they don't recognize is that the thinking, what we call the thinking brain, the neocortex, actually came out and started emerging as a tumor out of the emotional brain many, many, many, many millions of years ago. And as it did, a communication network flowed from the emotional brain, all concerned about survival in the moment, into the thinking brain, all about thinking impossibilities, probabilities, and things like that, to the point where you really got it, where there was this intricate, intricate set of communication going from the emotional brain into the thinking brain. But there were two little 19th century telegraph lines going back from the thinking brain into the emotional brain.

Now.

Let'S take the next step and really look at this guy's problem. The key is that the emotional brain, you would never know it's there.

You'd never know, sits in the background. And what it does is it produces limbic learnings. It turns on and off in.003 seconds, nanoseconds. You don't see it in operation, but it's sitting there scanning the environment for threat. What's happening with this guy, as successful as he is, what he's doing is he's experiencing threat of real loss. And when he hits that threat, guess what, the alpha just rises.

That's a cognitive bias. He doesn't know he has the cognitive bias. He just knows that he's going to make that thing happen. He doesn't see, he can't see that logic will never solve this problem.

What he's experienced is the emotional brain's survival instincts taking over on a level of bias.

Okay. And just absolutely pushing the thinking brain out of the way. This is the way it's going to happen. Until you learn to integrate the emotional brain with thinking brain. You'll think you've got it together until you experience the pressure, the stress, the challenges of engaging uncertainty with capital at risk. Then all bets are off. You're back in the caveman brain right then and there with those biases that are not thinking, they are feeling states that trigger immediately and they don't have thought as a component. What happens is the emotions simply fire and it creates a mind.

Okay, I want you to Hear that? The emotional brain from the emotions of survival create the brain, create the mind that then engages. And like with our friend, what's happened is he's under threat of losing. He's been drilled since he was three years old that losing is bad and so he doesn't want to lose. But the thing is, is it's not just that he thinks he shouldn't lose. It's like at a limbic level, it's a bias that he knows he can't lose. It's not, it's not allowed.

For survival, short term survival sake. And all of a sudden what you see is, you see these survival instincts take over and you would see him revenge trading, you would see him making up for prior losses, you would see all the gambits. What I want you to understand.

Is that the behavior that the client's expressing, adaptive, it's not wrong, there's no reason to get pissed off at it. It's highly adaptive to the world that he grew up in. The problem is it's not adaptive. Now that's the problem with the emotional brain. It carries these adaptations, these learnings from wherever you learn them. And that's from your, usually from your family, from your history, circumstances. And you understand we're pulling this stuff from hundreds of thousands of years. And as long as it's successful in avoiding short term threat, it's going to lock in and be there. The thinking mind would never know it's there. And all it would know is that it's just absolutely swept away. And this thinking mind just simply comes back online after the damage is done. That's what happens with this guy. Now is there a way out of this? Yeah, absolutely. You can teach yourself how to calm the triggering of the emotion. You can teach yourself how to go into the deepest limbic beliefs and we call that orphan work. Okay? And to be able to change them and to be able to reorganize about what it really means to engage uncertainty, we take away.

The notion of a biological threat and we demonstrate over and over again that you can actually handle this and you can handle it from a probability based mind. But that probability based mind has to be built. Now that's what this guy has engaged me for, is he wants to build a probability mind. He sees the mind that he came equipped with.

And as good as it's been in other areas, it's lousy in trading. It's not going to change because he wills it. It's going to change.

Because he decides to change the way the limbic reality is encoded.

Into the reactivity.

Of engaging uncertainty. Okay. That's the adaptiveness. We're going to change the adaptiveness. And you can do that. Takes work. And you have to learn how to use the thinking mind very differently. You have to learn how to use the emotional brain very differently. And ultimately they work together as a team. That's where trading happens. That's where you can engage uncertainty. Think in probabilities rather than think in terms. Well, think. No, in terms of survival. Friends, it's exciting. And it just really depends on whether or not you really want to become a successful trader or not. You're not going to think your way into becoming a successful trader. You're going to learn to use emotions to build a mind that creates the thought, that engages.

Uncertainty and risk. That's how it's done. Friends, come and learn. Come and learn. This is interesting stuff. Take care.