In an unlimited environment, if you can't confront the reality of a loss,
then the possibility exists for you to lose everything, in each and every trade.
If you believe trading is like gambling, it isn't. In any gambling game you
have to actively participate to lose and do nothing to stop losing. In the
market environment, you have to actively participate to get into a trade and
actively participate to end your losses. If you do nothing, the potential exists
to lose everything you own.
With the markets you don't ultimately know what your risk is, even if you are disciplined enough to use stops, because the market could gap through your stops.Also because the event never ends and is in constant motion, there is always the possibility of getting back what you are losing in any trade. You won't need to actively participate to get back what you are losing; you just have to stay in your trade and let the market give it to you. As a result, there is the constant temptation not to cut your losses which is very difficult to resist. Why choose pain over the possibility of being made whole, when all you need do is ignore the risk.
YOU CREATE YOUR EXPERIENCE OF THE MARKET
Each equilibrium (the current price) presents every trader with an opportunity to either buy low or sell high relative to the next change.
Except for the time it takes to execute a trade, it is basically the same market for all of us. You are either able to perceive any given equilibrium as opportunity to execute a trade, or you can agonize over what you believe is a missed opportunity from the last price change, or you can refrain from taking the trade at the current price even though you perceive it as an opportunity because you fear the market might make you wrong.
The market does not create the ways in which you perceive it; it merely reflects what is going on inside of you in any given moment.
Your own mental framework (controlling what and the ways in which you perceive information) locked you into that losing trade. The unique way you define a loss (your beliefs about it) and what it means to you is a component part of your psychological makeup. Your beliefs will interact with your perception of environmental information to form the particular way you pick and choose whatever information you happen to focus your attention on. The market has nothing to do with this process, even though that is where the information is coming from.
In the trading environment the outcome of your decisions is immediate, and you are powerless to change anything except your mind. The power you have to create more fulfilling outcomes from your trading resides in your degree of mental flexibility. You have to learn how to flow with the markets; you are either in harmony with them or you are not. The less acceptance you have for different types of market behavior, the more the market seems to turn on you like Dr. Jekyll and Mr. Hyde. In one moment it is satisfying all your needs; in the next it is like a greedy monster taking everything away. This Dr. Jekyll/Mr. Hyde characteristic of the markets only represents your own mental inflexibility to flow with the changes and your lack of understanding—that you give yourself to the best of your ability what you end up with, out of what is available. And by the same token, what you lost, you gave away.
You can't change what the market is doing. You can only change yourself in a way that allows you to perceive what it may do next with increased clarity and objectivity. As a trader you want to know what is going to happen next, yet, how can you begin to know what could happen next, if you refuse to open yourself up mentally in ways that allow you to perceive the most likely possibilities? It is a complete contradiction in thought to want to know what is going to happen next in an event over which you have no control and at the same time to maintain a rigid mental structure that allows for only a very limited number of possibilities.
This contradiction in thought is the result of not understanding the nature of beliefs and how they limit a person's perception of environmental information. When you put on the trade, you had to have some belief about the future. What you need to do is learn how to release yourself from the demand your expectations be fulfilled exactly the way you expect them to be. Releasing yourself from the demand will allow you to shift your perspective to perceive whatever opportunities exist in the market now, as if you didn't have a trade on at all.
All of us are in a position of having to pick and choose environmental information because we can't be aware of everything at once. If you pick and choose market information on the basis of having to justify your beliefs, you are putting yourself at an extreme disadvantage. You will be excluding from your awareness information that may be more indicative of the consistency of the market and its potential to move in any given direction. And it will be extremely difficult to learn how to develop a perspective for the "big picture," by expanding your time frame perspective. So even though you can't actually control the market's movement, you can learn how to control your perception of the market's movement in a way that allows you the maximum objectivity. Learning to perceive objectively will increase your ability to let the market tell you when to get in and when to get out. You can learn how to trade where you won't be using information to justify your beliefs but rather to perceive the most likely possibilities in any given moment. As you build a solid foundation of insight and understanding into the workings of your mental environment ), you will learn how to change yourself in ways that will allow you to perceive the markets from an objective perspective and eventually trade intuitively.
PERCEIVING OPPORTUNITY
Your perception of opportunity is a function of the depth of insight into the market's behavior. The depth of your insight into the market's behavior is equivalent to the number of distinctions you can make and the quality of these distinctions. Perception of opportunity is synonymous with your expectation of what the market will do next. To be effective, you will need to learn how to make kinds of distinctions that will provide you with an indication of a high-probability opportunity from an objective perspective, what I call making an uncommitted assessment of the probabilities.
To be able to make some kind of quality distinctions that will eventually develop into a "vision" of the broader perspective, you will need to learn how to expand your time frame perspective of market activity. There are several components to this process, but the two most important are (1) instituting a completely disciplined trading approach and (2} learning how to release yourself from the negative emotional energy stored in the memories of any past trading experiences.
The disciplined approach will naturally help you develop the degree of self-trust essential to function effectively in an environment that does not provide any external constraints to limit or control your behavior, as society does. Without the discipline, you will be at the mercy of your own unrestrained impulses and basically out of control. Consequently, without the self-trust that develops from the self-discipline, you will fear the unpredictability of your own behavior. At the same time, you will likely project this fear into the markets as being erratic and seemingly unpredictable, when it is your own behavior you fear the most.
It would be ludicrous to think that you could understand the market's behavior to any degree greater than you understand your own behavior first. To grasp the fundamental nature of your own behavior, you will need to understand thoroughly all the effects fear has on your perception of environmental information.
Fear will limit your awareness of market information that could clearly indicate those possibilities that are in your favor and those that are not. How could any deep level of insight into the market's behavior ever develop if you are constantly worried about what the market may do to you and cannot stay focused on the consistency and structure of the market itself. The market can't do anything to you if you trust yourself to act appropriately under any market condition. Learning this is the key to gaining the level of confidence every trader needs to be successful.
When you understand how fear operates in your trading and have conquered it, you will be able to see how fear operates in the market as a whole and then be able to anticipate the group's reaction to certain kinds of information.
If you did not start your trading career with the proper mental perspective or with a disciplined approach, then it is likely you have suffered some degree of psychological damage. I define psychological damage as any mental condition that has the potential of generating fear. The negative energy stored in these experiences (that create and support a belief about the threatening nature of the environment) will generate fear to the same extent as the degree of energy stored in the memory.
By learning to release yourself from the pain, you will be reducing the fear and automatically opening yourself up to new awarenesses about the nature of the markets. You will be opening yourself up because fear will not be causing you to narrow your focus of attention. Instead of being focused on pain avoidance, you can be focused on what the markets are telling you. Learning how to release yourself from fear will also free you up to think of creative ways in which you can respond to the new relationships you are perceiving in the market's behavior. As a result, you will be increasing your confidence in your ability to respond appropriately to any given market situation.
With the markets you don't ultimately know what your risk is, even if you are disciplined enough to use stops, because the market could gap through your stops.Also because the event never ends and is in constant motion, there is always the possibility of getting back what you are losing in any trade. You won't need to actively participate to get back what you are losing; you just have to stay in your trade and let the market give it to you. As a result, there is the constant temptation not to cut your losses which is very difficult to resist. Why choose pain over the possibility of being made whole, when all you need do is ignore the risk.
YOU CREATE YOUR EXPERIENCE OF THE MARKET
Each equilibrium (the current price) presents every trader with an opportunity to either buy low or sell high relative to the next change.
Except for the time it takes to execute a trade, it is basically the same market for all of us. You are either able to perceive any given equilibrium as opportunity to execute a trade, or you can agonize over what you believe is a missed opportunity from the last price change, or you can refrain from taking the trade at the current price even though you perceive it as an opportunity because you fear the market might make you wrong.
The market does not create the ways in which you perceive it; it merely reflects what is going on inside of you in any given moment.
Your own mental framework (controlling what and the ways in which you perceive information) locked you into that losing trade. The unique way you define a loss (your beliefs about it) and what it means to you is a component part of your psychological makeup. Your beliefs will interact with your perception of environmental information to form the particular way you pick and choose whatever information you happen to focus your attention on. The market has nothing to do with this process, even though that is where the information is coming from.
In the trading environment the outcome of your decisions is immediate, and you are powerless to change anything except your mind. The power you have to create more fulfilling outcomes from your trading resides in your degree of mental flexibility. You have to learn how to flow with the markets; you are either in harmony with them or you are not. The less acceptance you have for different types of market behavior, the more the market seems to turn on you like Dr. Jekyll and Mr. Hyde. In one moment it is satisfying all your needs; in the next it is like a greedy monster taking everything away. This Dr. Jekyll/Mr. Hyde characteristic of the markets only represents your own mental inflexibility to flow with the changes and your lack of understanding—that you give yourself to the best of your ability what you end up with, out of what is available. And by the same token, what you lost, you gave away.
You can't change what the market is doing. You can only change yourself in a way that allows you to perceive what it may do next with increased clarity and objectivity. As a trader you want to know what is going to happen next, yet, how can you begin to know what could happen next, if you refuse to open yourself up mentally in ways that allow you to perceive the most likely possibilities? It is a complete contradiction in thought to want to know what is going to happen next in an event over which you have no control and at the same time to maintain a rigid mental structure that allows for only a very limited number of possibilities.
This contradiction in thought is the result of not understanding the nature of beliefs and how they limit a person's perception of environmental information. When you put on the trade, you had to have some belief about the future. What you need to do is learn how to release yourself from the demand your expectations be fulfilled exactly the way you expect them to be. Releasing yourself from the demand will allow you to shift your perspective to perceive whatever opportunities exist in the market now, as if you didn't have a trade on at all.
All of us are in a position of having to pick and choose environmental information because we can't be aware of everything at once. If you pick and choose market information on the basis of having to justify your beliefs, you are putting yourself at an extreme disadvantage. You will be excluding from your awareness information that may be more indicative of the consistency of the market and its potential to move in any given direction. And it will be extremely difficult to learn how to develop a perspective for the "big picture," by expanding your time frame perspective. So even though you can't actually control the market's movement, you can learn how to control your perception of the market's movement in a way that allows you the maximum objectivity. Learning to perceive objectively will increase your ability to let the market tell you when to get in and when to get out. You can learn how to trade where you won't be using information to justify your beliefs but rather to perceive the most likely possibilities in any given moment. As you build a solid foundation of insight and understanding into the workings of your mental environment ), you will learn how to change yourself in ways that will allow you to perceive the markets from an objective perspective and eventually trade intuitively.
PERCEIVING OPPORTUNITY
Your perception of opportunity is a function of the depth of insight into the market's behavior. The depth of your insight into the market's behavior is equivalent to the number of distinctions you can make and the quality of these distinctions. Perception of opportunity is synonymous with your expectation of what the market will do next. To be effective, you will need to learn how to make kinds of distinctions that will provide you with an indication of a high-probability opportunity from an objective perspective, what I call making an uncommitted assessment of the probabilities.
To be able to make some kind of quality distinctions that will eventually develop into a "vision" of the broader perspective, you will need to learn how to expand your time frame perspective of market activity. There are several components to this process, but the two most important are (1) instituting a completely disciplined trading approach and (2} learning how to release yourself from the negative emotional energy stored in the memories of any past trading experiences.
The disciplined approach will naturally help you develop the degree of self-trust essential to function effectively in an environment that does not provide any external constraints to limit or control your behavior, as society does. Without the discipline, you will be at the mercy of your own unrestrained impulses and basically out of control. Consequently, without the self-trust that develops from the self-discipline, you will fear the unpredictability of your own behavior. At the same time, you will likely project this fear into the markets as being erratic and seemingly unpredictable, when it is your own behavior you fear the most.
It would be ludicrous to think that you could understand the market's behavior to any degree greater than you understand your own behavior first. To grasp the fundamental nature of your own behavior, you will need to understand thoroughly all the effects fear has on your perception of environmental information.
Fear will limit your awareness of market information that could clearly indicate those possibilities that are in your favor and those that are not. How could any deep level of insight into the market's behavior ever develop if you are constantly worried about what the market may do to you and cannot stay focused on the consistency and structure of the market itself. The market can't do anything to you if you trust yourself to act appropriately under any market condition. Learning this is the key to gaining the level of confidence every trader needs to be successful.
When you understand how fear operates in your trading and have conquered it, you will be able to see how fear operates in the market as a whole and then be able to anticipate the group's reaction to certain kinds of information.
If you did not start your trading career with the proper mental perspective or with a disciplined approach, then it is likely you have suffered some degree of psychological damage. I define psychological damage as any mental condition that has the potential of generating fear. The negative energy stored in these experiences (that create and support a belief about the threatening nature of the environment) will generate fear to the same extent as the degree of energy stored in the memory.
By learning to release yourself from the pain, you will be reducing the fear and automatically opening yourself up to new awarenesses about the nature of the markets. You will be opening yourself up because fear will not be causing you to narrow your focus of attention. Instead of being focused on pain avoidance, you can be focused on what the markets are telling you. Learning how to release yourself from fear will also free you up to think of creative ways in which you can respond to the new relationships you are perceiving in the market's behavior. As a result, you will be increasing your confidence in your ability to respond appropriately to any given market situation.
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