By Dr. M. Woodruff ("Woody") Johnson, Mastering the Mental Game and XLT Instructor
What you "see" and interpret as reality (like that "flag" pattern that looked like it until you looked closer after being stopped out) is created by internal working "models" in your mind. Mental models of the world are formed in your earliest years of development and continue to expand throughout years of living. These mental models or paradigms are built around everything that you have learned and make up the conscious and unconscious beliefs that motivate you to both good and bad behaviors. Additionally, these mental models and paradigm programming also involve how you perceive the world; in other words, the lenses we use to "filter" information. There are as many ways to filter data coming into the brain/mind for processing as there are people on the face of the planet. And, it's important to understand some of the more general ways that filters work. In this way, you will be able to promote changing "what" you do through "how" you do it. Doing things differently as a result of seeing and experiencing things differently is what we are talking about and this is the beginning of making changes in your trading in order to get different results.
Let's look at some of them:
Associated/Disassociated Filters
Associated filters are distinguished by your perception of an event and imagining it from being "in" your body. Think about one of your most recent trades, whether positive or negative. If you are able to experience it again by hearing the sounds from your ears, seeing the charts through your eyes, touching the keys of your computer with your fingers, and feeling the emotions again that you felt at the time while watching that price action either go with you or against you, you are filtering the event in an associated way. You are in your body. If, on the other hand, you saw yourself as though you were an outside observer and experienced yourself as if in a movie, then you are dissociated.
Take a moment to think about your trading room as you are in it. Notice the placement of the furniture, your computer and other tools. Also, notice the colors and lighting. As you become more aware of the space, notice if there are sounds, and if so, distinguish what they are: Loud, soft, pleasant, annoying. As you experience yourself in this space, you can become aware of your body, feel its textures and pressure, sense the parts of you that are touching the furniture or the ground, feel the temperature of the room. Is it warm or chilled? Allow yourself to notice smells or tastes; perhaps you eat lunch or a snack at your desk from time to time. As you are doing this, pay attention to any emotions, tensions, excitement, etc., and to the location in your body. What you are doing is experiencing an associated state.
Now, step back and view the same scene as though you were someone else looking at you. See yourself in your office and notice everything "external" to your body, sounds and sights. See the whole you and be aware of how the "whole" you looks and sounds. This is a dissociated state. It is detached from your inner experience.
Why is this important? The ability to associate or dissociate is a fundamental skill, with each state offering different benefits in order to, at times, experience feelings, emotions, and events as though you were there in an associated fashion, or to distance yourself from unpleasant, or traumatic situations.
With difficult incidents of your past sapping your strength and compromising your resolve, it is not only helpful but also empowering to be able to dissociate and distance yourself from the event(s). Additionally, you can manipulate the filter by exaggerating the distance through increasing or decreasing the modality, that is, what you see, hear, feel, taste, smell, and touch. It is extremely important to helping ameliorate both old, nagging traumas and memories of distant and near past events that can significantly detract from your trading discipline and focus. Conversely, uplifting and intensely supportive visions of the future can be paced more strongly by associating with the experience and feeling, touching, tasting, smelling and seeing what it will be like when it is achieved. And, in this instance, dissociation can be used as well to "see" and otherwise experience yourself in the future reality in order to clarify it in your mind as "you are achieving it." And here's something you probably didn't know: With regard to stress and trauma, those that relive the memories in an associated way add to their stress and experience longer lasting and more intense emotions because they inflict the intensity of the event(s) as though it were happening again and again. Those with the lowest levels of stress are able to dissociate and detach from the experience.
Big Picture/Detail Filters
Some traders are driven by Fundamentals and some have an eye for Technical Analysis. Both of these orientations are valid and offer controversy for hard liners. Within these ranks, there are those that look for the macro picture and are drawn to it. Macro-oriented or big picture traders are for the most part swing traders (in the trade for two or more weeks) and long-term traders (in for weeks to months). They prefer to analyze longer-term economic trends and look at charts that have longer-term data. Detail oriented individuals or micro-data traders often prefer intra-day to short term (days to a couple of weeks time frame). They are looking for the quick pop. Obviously, neither of these filters is wrong. It depends on your preference. However, it is important that you be aware your filter for information will impact upon what you see and how you see it.
Past/Present/ Future Filters
Some people have a penchant for the past. Some people are enamored with back testing, and many will tell you that back testing will only tell you what the price action did in the past under those circumstances. Others prefer to be in the present, and still there are those that live in the future. For instance, questions like: What's for dinner? How long until we get home? What's next on the agenda? All look to the future. There is no right or wrong, good or bad, but it does present a filter for how we communicate with ourselves regarding what we see and how we process the information.
Internal/External Filters
Internally-referenced people rely on their feelings, thoughts, images and voices as evidence of being correct, appropriate or being fulfilled. Externally-referenced people look to evidence outside of themselves for validation of their opinions and ideas. Your preference will play a big role in the way that you trade. If you are externally referenced, you are more susceptible to the influence of the "experts" and prone to heed the opinions of others while in a trade. People who are independent in style are usually internally referenced. They may listen to the opinions of others but rarely do they depend on them for validation of their own proclivities. When they have analyzed a trade, they feel confident. Conversely, people who are more driven by an external perspective will place a substantive portion of their confidence in what the pundits have to say. Again, the important thing is to be aware of how you think, embrace reality and find a balance that honors your own analytic abilities, but appreciates outside resources as beneficial modes of additional information.
Towards/Away From Filters
If you envision a goal, personal or professional, short or long term, it's important to be aware of how you are thinking about the goal. Are you envisioning what it would be like to have the goal (how it feels, looks, smells, tastes, and sounds)? Or are you inundated by all the ways that it might fail and haunted by what that failure will feel, look, smell, taste and sound like? This is a very important filter to be aware of. A towards filter engages your subconscious, especially if it is in a sensory rich fashion, and the subconscious relates to it as though it were real. Those who have this filter are much more likely to attract and achieve their goal. Those who think of (especially in a sensory rich way by feeling, seeing, smelling, tasting, and hearing) what they don't want are more likely to attract or achieve just that. This is especially important when putting your purpose, mission, goals, and profit objectives together. Remember, in the words of comic Flip Wilson, "What you see is what you get."
The important thing here is to become aware of your filters and when appropriate, to deliberately and by design use those filters to more easily direct you to the results you want. For instance, identify your goals and make them time specific, detailed, results-oriented and measureable. Next use a "towards" filter to catapult you in the direction of the goal with focused intention. Then associate, that is, float down into the body of your future and see, hear, and feel through your body's senses what it will be like to experience achieving that result. This is living by design and not by default. Take control of your trading and your life one event, one tool and one deliberate action at a time.
We teach these and many other powerful, fast-acting and highly effective tools, techniques and concepts in Mastering the Mental Game. Ask your Education Counselor for more information and enroll in the program that will take you and your trading to the next level.
Have a great day.
- Woody Johnson
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