Lessons from the Pros

Specialty Skills

Is Your Trade Perspective Helping Your Perception?

How you perceive your trades is critical to your ability to execute in a way that will get you closer to the results that you seek.  In other words what you are choosing to pay attention to is going to either take you closer to your objectives or further away from them.  How often have you seen something that upon closer examination turned out to be something very different?  Or, have you ever looked at the price action and acted upon what seemed to be a perfect price pattern; then wrote your plan, executed the plan, and summarily were stopped out; only to go back to what you thought was the price pattern that now looked entirely different?!  It was like a dream.  What you perceived was predicated upon how you “filter” information.  You interpreted what you saw through mental models of how the world appears to be.  In other words, what you “see” and interpret as reality 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 or 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.  If you are getting results that you don’t want then you must change something.  But, it is very difficult to change in the “right” direction, if you aren’t clear about objectives and the direction to begin with.  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 better results.

Let’s look at some of them:

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.

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.  If you are able to experience it again by hearing the sounds through your ears, seeing the charts through your eyes, and touching the keys of your computer with your fingers, you are filtering the event in an associated way.  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.

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. Difficult events can sap your strength and compromise your resolve.  It is not only helpful but also empowering to be able to dissociate and distance yourself from those events.  When you distance yourself, you are actually detaching as well from the intensity of the emotions; which can be very supportive in honing your focus in the trade.  This is quite helpful if you are dealing with a trade that went sour, or the memory of a past trauma.  Additionally, you can manipulate the filter by exaggerating the distance as you see yourself far away and hear the sounds of the experience from a distance.  Conversely, uplifting and supportive visions of what you want can be used by associating into 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 as though it were happening again and again.  Those with the lowest levels of stress are able to dissociate and detach from the experience.

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 sensory rich, 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 what they don’t want (especially in a sensory rich way by feeling, seeing, smelling, tasting, and hearing) are more likely to attract or achieve just that.  This is especially important when putting your purpose, mission, goals, and profit objectives together.

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 specific, measurable, achievable, results oriented and time bound.  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 the Online Trading Academy “Mastering the Mental Game” Online and On-location courses.  Ask your OTA representative for more information.  Also, get my book “From Pain to Profit: Secrets of the Peak Performance Trader.

Happy Trading,

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.

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