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or unconscious mind can only re-present the event as it was initially saved to our memory. What we saw is determined by where our focus was. Our focus in turn is determined by our thoughts, which fall under the influence of our beliefs and values. Consequently because of our internal beliefs and values, we are able to perceive, and therefore remember, only a small part of the real event. When we recall an event, we also remember (consciously and unconsciously) all the emotions (actual or imagined) linked to that event. Our sense of reality becomes distorted by our perceptions. |
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Like eyewitnesses to an accident, novice traders will "experience" the same price movement and yet have different explanations of exactly why the market is behaving the way it is. Every trader sees the price movement through sunglasses that are tinted by personal beliefs and rules, associated emotional feelings, and expectations. No matter how hard the novice tries to see the price movement with clear vision, it remains tinted. Thus a novice trader will usually perceive the price movement with a lot of emotional intensity, whereas a successful trader will re-present the price action in a more detached, objective way. |
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An important concept to remember is that each of your experiences is remembered in a certain way, with certain emotional attachments, depending on what you were focusing on and the emotional and physiological state you were in at the time. Whenever you remember a given event, your mind will re-present it the way it was stored. The thing to keep in mind is that when you underwent the experience, you actually experienced only a small part of the overall "event." So when you subsequently remember that event, the emotional feelings attached to it are much larger than they should be. In effect, the linked emotional feelings are being overrepresented to your mind. |
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The primary negative emotion all traders experience is fear. This fear is created by a belief that there is an impending threat or danger to something they hold value in. Traders value many things, such as money, beliefs, expectations, and other values. |
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So is losing money while trading a bad thing? Just about every trader out there will say "of course." Of course most traders lose all the money they started trading with. Of course it is logical that it is a bad thing to lose money. Of course only a fool wouldn't get upset about losing money! |
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As you might suspect, this is a loaded question. The truth is that no one wants to lose money. The big difference is that successful traders will experience one set of beliefs and emotions when a trade results in a loss. Novice traders will experience an entirely different set of emotions. The key lies in how the traders represent the loss to themselves. Excellent traders will represent the loss in a manner that empowers their beliefs about the market. |
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