Have you ever emerged from a trading session in a fog and found yourself looking over the trading carnage of violated rule after violated rule and heard yourself say, “Who made those trades?” And, as the fog lifted it became clear that you had been trading like a crazy person? It was like someone had control of your mouse and you felt as if you were in a trance; a negative trading trance to be exact? Well, if this or something similar has happened to you then listen up…you are not alone. I call this situation a “negative trading trance” because it happens when you are caught in a series of bad patterns. These bad patterns of thinking (ex. I gotta take this trade even though I’m chasing it), feeling (ex. anxious and impatient) and doing (ex. impulsively entering without a setup or plan) are like pre-recorded tapes that frequently are out of your awareness and, therefore, once they’ve been triggered you lose sight of reality. Now, the bad patterns grow out of programming from negative events (pain filled experiences where you had been shamed, humiliated, neglected, etc.) in your life going back as far as childhood. The programming is also connected to mental states (emotions, thoughts, and memories). These programmed states, like the state of fear, are not just emotions but include fear based thoughts, memories and responses that all get triggered together. When enough of these patterns fire together long enough, they also can be the foundation of a “sub-personality” or “part” of yourself that has a way of “showing up” when a trigger (something that happens in the present that resembles a wound from the past) initiates the program or pattern… like losing in a trade.
Did you know that you don’t have to be mentally ill to have different personalities? Actually, it is quite normal to have various “parts” that emerge at different times depending on what is going on at the moment. If fact, these parts speak different languages (as in negative thoughts vs. positive thoughts) and see different things as well; which is why you may have wondered how you made that bonehead trade after seeing the chart’s reality in the wake of a loss. This kind of personal and emotional volatility can play havoc on your trading account.
The market is continually sending messages; messages about volume, momentum and volatility. But, those messages are best captured by first attending to your own volatility so that you can see the charts as they are. The successful trader can “feel the markets” through insight and intuition that has been developed through countless hours of observing market charts; but they do not get lost in those feelings. The successful trader has an intimate understanding about the importance of emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits. They focus on doing the “right” things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it…and their trading life does depend upon it. In this way they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering the right things. This represents the development of a “positive trading trance.” The “positive trading trance” becomes a “Zen” of trading by losing the ego attachment and using mind management tools that engage the subconscious to work for them rather than against them. This is accomplished by redefining your relationship to the trade. As in a business transaction with another human being, the objective is to be in the flow; that is, a detached interaction where (even when a profit is involved) you are not attempting to aggressively bleed the situation dry, but come away having done well.
To be and stay in the flow of the “positive trading trance” you must be fully conscious and “watch” what you are doing. You want to activate the “internal observer” and this is accomplished by relaxing at every opportunity and creating the habit of “being in the now of the trade.” In this way you can then access and activate internal resources that can shift you from a state of fear, frustration, irritation and stressful tension to a state of relaxation, mental clarity and self-confidence with focused intention on doing the “right” thing in the trade. You have numerous resources inside, many of which you may not even be aware. But, it is very difficult to access and activate internal resources without activating the internal observer.
Activating the internal observer can be accomplished by doing the following:
- Change physiology
- Change your physiology, stand if sitting or sit if standing
- Straighten your body
- Take a good stretch
- Take a few deep breaths, in this way you are oxygenating the blood in your brain and muscles, which in turn helps you to relax. By breathing deeply you slow things down and initiate a “Relaxation Response.”
When ego investment and emotion rise trading becomes a reflection of the ego, in other words defensive reactions to negative triggering events that really distort reality. Overly invested egos create a sort of delusion and, consequently, what we thought was a great trade was in reality a “fake out” or something that came from internal bias not the objective reality of the charts.
So my friend, your ego is not your amigo. You’ll want to get the internal observer involved early and often as you aim to create a positive trading trance. And, you’ll want to use mental and emotional “state shifting” tools that can shake you out of that delusion. Remember, as you aim to develop a positive trader trance you will be intentionally honing your focus on what matters most in the trade. It could save you from a lot of loss. For more on this subject get my book “From Pain to Profit: Secrets of the Peak Performance Trader.”
Dr. Woody Johnson