Lessons from the Pros

Specialty Skills

Managing the Energy of the Trade through Managing Your Energy

Have you ever been caught in a downward spiral of negative thinking – feeling and doing? If you have, and the good bet is that you not only have but that you’ve been there many, many times, this is because the process of getting results involves in each instance what you are thinking, your emotions and your behavioral response. If we look a little closer, it becomes clear that when you respond to an event or situation in your environment, in most cases that response has been driven by an emotion. This emotion could be positive or negative and it is an outgrowth of, and is in most cases directly connected to, an internal dialogue stemming from either empowering or limiting beliefs. Additionally, this process also affects your body physiologically due to system stress that can cause disruptions throughout the body leading to pain and disease. Let’s look closer yet with an example. Pam was in a streak of losing trades, a drawdown for what seemed an eternity which stemmed from a string of rule violations and erratic out-of-plan behaviors. She experienced a flood of emotions such as fear, anxiety, doubt and constant worry which drove her to move stops, exit trades prematurely and make other plan deviations that created dismal results. She also experienced digestive issues, headaches and back pain. Now, these uncomfortable emotions had their genesis in her running commentary and unconscious conversations regarding what a bad trader she was, how she was ruining her chances to become successful and that she was a hopeless cause. This interplay between thoughts, emotions, behavior and wellness not only determine outcomes and consequences, they represent energy, and this energy must be regulated and managed in order to positively affect those outcomes and change the course of spiraling events from negative to positive.

Free Trading WorkshopThought and emotion are emanations of energy. This becomes quite clear if we look at a functional brain scan such as an fMRI (functional Magnetic Resonance Imaging) which shows the movement of circulation, hormones and neurotransmitters along with color-coded illustrations of thinking and emotional feeling processes. The way you think affects your body, your trading and your life. The relationship between thoughts and the physical body have been researched well. The growing field of psychoneuroimmunology has demonstrated the connection between mind and body. Simply put, whenever you have a thought you produce a biochemical reaction in the brain. The brain then releases chemical signals that are transmitted to the body as messengers of the thought. The chemicals released by the brain that were produced of that thought activate feelings in the body as a direct result of the thought connected chemicals; you feel in the body exactly how you were thinking a moment ago. This is why depressed, fatalistic, worrisome, angry and fearful thoughts have a corresponding physical response as in tired, rundown and compromising the immune system so that your resistance to disease and illness becomes quite low.

The brain constantly monitors and evaluates the status of the body and notices changes in how the body feels. In response to how the body feels the brain generates other thoughts that produce corresponding chemical messengers and you begin to “think” the way you feel. This produces a continuous cycle of thoughts producing feelings/emotions and feelings/emotions producing thoughts. This cycle creates an overall state that can and does become pervasive. If this cycle is in a negative state, then it affects everything that you do negatively; that is your communication, your interactions and, of course, your trading. What you think about and the intensity of those thoughts (the energy) ultimately influences your health, the choices you make and your quality of life. While in this continuous negative state, it is nearly impossible to get different (positive) results in your trading. The reason is that in order to get different results you must behave differently. But, your behavior is a direct byproduct of your thinking. So, to change your results you must change your thinking … your state.

What should you do to change your state? First, you must constantly monitor what you are telling yourself, especially automatic thoughts that are tied to limiting beliefs. You will find that many of your limiting beliefs and automatic thoughts are “not true.” But, over time you come to believe them and they have profoundly affected your state or overall attitude. Actually, one of the questions that you can ask yourself when you are experiencing lack and limited thinking is, “…is this thought true, is it absolutely true?” In this way you begin to challenge the underlying premise of your state or attitude and gain insight. You also must fight against the limiting belief that they are not manageable. Your brain has neuro-plasticity, meaning that it is a self-organizing organ that adapts. Remember, first examine each thought, then purposefully modify untrue limiting beliefs – then you can begin to change them one thought at a time.

One thing that is crucial to your trading is the Thought Journal. I hope this brief explanation helped to shed a little more light on why thoughts are so important and why you must manage your thoughts before you can manage your emotions – the energy. Changing results depend upon dealing with the whole “internal data” equation; Thoughts + Emotions + Behavior = Results. Each point in the equation is critical and contributes to the results that you are getting. This is what we are committed to, that is, to support you in gaining insight into your negative thoughts in order to begin to manage them and thereby manage your emotions. We are here to help you to bring your A-Game to your platform and keep it there throughout your trading session. Ask your Online Trading Academy representative for more information. Also, get my book From Pain to Profit: Secrets of the Peak Performance Trader.

Happy Trading,

Dr. Woody Johnson – wjohnson@tradingacademy.com

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.