Lessons from the Pros

Specialty Skills

Language Can Make the Difference between Winning and Losing

The New Year, no matter what culture or religious background that you come from, is a time for reflection and renewal. It’s an opportunity to examine your purpose, goals and objectives to determine how well you did this past year and what may need to be modified or completely changed for the upcoming year. Many of you will be making New Year’s resolutions in hopes of getting control of your weight or your relationships or your trading. And, there will be a number of you who will just continue to be resolute in your fierce focus on what-matters-most in your trading and in your life. Well, whatever happens to be your preference of self-reflection it is critical to be aware of the language that you use to both evaluate what you have done and to chart your course for moving forward. Language is the precursor to what you do and what you do is going to bring results.

Winning and Losing

As you look to prepare for this New Year how do you describe your trading process? What are your biases and beliefs about trading and about yourself; and how do you express them? Actually, language and how you use it defines your reality; and it can make your reality positive or negative, promising or apocryphal. “Hold on,” you might say, “Reality is what it is and will not change based upon what you say about it.” And, I would say, “Yes, you are correct.” However, your language about reality – or your meaning of it – can change your response to it. As with losses, you can say, “Hey, I just lost; the market took my money and I’m going to get it back in this revenge trade.” Of course in all probability, that would be a prescription for a greater loss because that response would be erratic and impulsive. Thought and the words that you use in your thought process in part create the results that you get. It happens this way because everything that you do begins as either a conscious thought that you are aware of, or as an unconscious thought. Your body cannot engage physiologically in any behavior that is not orchestrated completely by the brain/mind, originating in your hindbrain (totally unconscious), midbrain (mostly unconscious) or cerebral cortex (to some degree conscious). There aren’t many things that are as mentally and emotionally intense as trading in the financial markets. As you negotiate with yourself on identifying supportive data towards potential entries, trade management or exits; you are employing all manner of biases, beliefs and thoughts that are engineering every instruction of your execution and implementation down to the smallest detail. So, it follows that in order to ensure that those instructions are not in conflict, or emanating from a limiting belief, you must monitor what you are telling yourself…your language.

Many of you have experienced how thoughts have disrupted, derailed, distracted and otherwise destroyed your trading process by prompting you to move stops, chase trades, trade without a plan or engage in any of a number of rule violations that have side-tracked your results. Thoughts like, “I’m going to lose if I don’t move my stop and that means I’m a failure,” “I’m stupid,” or “What have I gotten myself into with this trading.” Of course, when you have these disruptive thoughts they cue any number of corresponding emotions, for example, fear, self-loathing, anxiety, doubt, worry and/or greed. When that happened to you what happened next? Let me guess, you went ahead and moved the stop, or chased that trade or doubled down on a loser, …despite the fact that you have said many times that you weren’t going to do that – anymore. But, you have done it, over and over and over again. That rule violation, whatever it was, began with a thought – limiting belief or bias – and it triggered a negative emotion, and you fell into the behavioral abyss. You want to change but lo and behold, you just can’t seem to make the change that makes the difference. So, bottom line…you’ve got to change your negative thinking in order to begin to change the emotions and that will change your behavior, one issue at a time. There are far too many people who continue to do the same thing and expect different results in their trading and in their lives. Well, in order for you to get different results, you have got to change your language.

Language is a set of codified and structured sounds that is formed by and emanates from thought and that originate in your mind. You define yourself by the language you use. Your identity is detailed by the story you tell yourself and share with others. Your interpretations of the world depend upon the words you choose to describe it. Additionally, the questions you ask contain your assumptions, biases and beliefs about the world. These mental models are largely formed by events that were first codified by word descriptions, chosen either by you or by others as a response to interpretations of events. Also, these events, especially in your young years, not only involved interpretations but also deep-seated emotions that memorialized the learning and the description of that event. These events of your childhood, especially if negative and painful, create encoded networks of everything that you saw, heard and felt along with the painful emotions and you formed a story and meaning of each event that happened. With each story, you came up with the words or language for that story. This story was either supportive with a meaning that you were “OK”, or it was negative and unsupportive of you with a meaning that you were “not OK.” Check this out…in response to an abusive event where you were shamed, it is much different if a four-year-old says, “It’s my fault and I am bad,” as opposed to, “something bad happened and it will be OK.” The language of that four-year-old as he grows up will either be a source of resilience in the face of adversity or it will become a pattern of debilitating stories that erodes confidence and causes self-sabotage.

The good news is that if you monitor and change your language as you describe current events; for instance trading, you can begin to positively impact upon your emotional states and eventually your follow-through in the trade. In other words, it is immensely helpful to be skilled in using language to support your trading efforts. You can choose language that is in line with the outcomes you want to achieve. Consider the following. “I can trade consistently well if I am consistent in following my rules and remain connected to my purpose for trading.” You can create space in your language in order to draw on inner resources and trust yourself for the resolution to problems, thereby building self-esteem and confidence as in, “I wonder how I will creatively come up with just the right solution to this issue?” This type of language assumes resolution and sets up the unconscious to follow-through with the presupposition that is inspired through curiosity and trust – the unconscious loves this stuff.

Programming in your unconscious is something that goes on most of the time … and language is a major medium. The use of language is essential in directing a person’s experience and focus of attention. The unconscious mind is creative, solution-generating, and can be positive if it is prompted to do so. However, it is a matter of being deliberate in the design of the language that you use. For instance, identify an issue like “moving your stops.” Become aware of what you are telling yourself about moving stops like, “If I don’t move this stop I will lose again and that means that I am stupid.” Now that you have identified the thought behind the bad behavior, change the statement to one that is more positive and productive and write it down. Then get into a comfortable position, take several deep breaths and visualize or imagine taking trades where you have a stop in and use your new language repeatedly as you “see” yourself allowing the trade to progress according to plan. Do this for about 5 minutes, several times a day for a few days. What you are doing is engaging your unconscious to be supportive in the scenarios that you envision. For most people, it will take practice and diligence to make a difference. The important thing to remember is that you can be instrumental in beginning the change process. Be proactive and courageous as you resolve to bring your highest and best trader to your platform.

So, as you move into the New Year take time to review and evaluate not only where you have been and where you want to go from this point on; but, notice how you are describing them…your language. If you learn and use powerful mind tools you will effectively communicate with your subconscious and create the momentum to make the changes in your behavior to start you on your way to getting the trading results that you want. Bringing and maintaining your A-Game as you trade is a requirement for consistently successful trading; and it all begins with your language. This is what we teach in “Mastering the Mental Game” Online and On-Location Courses along with the XLT. Ask your Online Trading Academy representative for more information. Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.”

Have a healthy, happy and prosperous New Year!

Dr. Woody Johnson



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.