By Janice Dorn, M.D., Ph.D 8/05/06
Now that you have had an opportunity to read and digest the First Two Blunders, let us move on to Blunder Number Three:
FAILURE TO MASTER YOUR EMOTIONS
When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion...Dale Carnegie
Bingo! As a Trading Neuropsychologist, I have hit The Mother Lode. You will also, once you have an opportunity to really read, digest and inculcate into your brain and body what I am about to tell you. In a way, this is the most challenging of the Ten Biggest Blunders that traders and investors will make in 2006-2007. Challenging for me and for you. Why?
For me: My Trading Wisdoms devote significant time and space to a vast array of emotional responses and reactions of traders and investors and specific ways to identify and deal with them in order to move you onward and upward to trading excellence. Thus, attempting to distill some forty years of study of brain and behavior into Blunder Number 3 is no small task.
For you: Unless and until you are at the point where you "get" that successful trading and investing is at least 90% neuropsychological, you are destined to be on an eternal search for someone or something outside of you that will tell you exactly what to do, how to do it and for which you are likely to pay large sums of money. When that system fails, you will go on to another service or newsletter or the latest guru who will tell you what works for him or for her and that it should certainly work for you. When it doesn't, you will begin the search once more. Eventually, you will come to realize that, although there are tools, platforms, indicators and signals unlimited, every answer to trading and investing success lies within you. External forces can and may facilitate some progress, but, in the final analysis, you absolutely must do the inner work required to take you to trading and investing mastery.
OK. Enough of that because it is a theme you will hear from me repeatedly until you either write me off as some kind of lunatic or realize that every answer to successful trading which you are seeking is within you and your brain.
Short of an interminable discourse on emotions, emotional intelligence, self-assessment, self-confidence, the stages of trading competence, adaptability, achievement, heuristics and biases, allow me to introduce you to an endlessly fascinating topic: Who are you? What do you feel when you are trading and why do you feel it? Why do you make certain trading decisions? Are you a hot or cold reactor? Are you human or an android?
Once you get your arms around some of the above questions, you are on the path to inner knowledge of your emotions and why it is critical to understand and manage them. Notice, I did not say get rid of your emotions. Who would want to get rid of emotions? Emotions are what make us human, give flavor and color to life, provide the ups and downs which we need to appreciate that everything exists only because of the existence of its opposite.
Of all the Trading Wisdoms I have written for www.trending123.com, "Your Rat Brain Is Out To Get You" stands out in that it touched many people in such a way that they could identify that their emotions were actually their enemies and, unless they were able to get a grip over their limbic systems, they were doomed to keep doing what they were doing and getting what they were getting. Rat Braining, manifest in many ways, including anger, frustration, sorrow, terror, greed or "Duh! How could I possibly do something like that!" has become part of the trending vernacular. John Lansing, founder of www.trending123.com has said many times that emotions were plotted as lines on a chart. Think about how powerful that is coming from a brilliant technical analyst! It is not just your own emotions, but the emotions of millions of people which are reflected in any chart at any time. Study your emotions and own them, and then study mass emotions in order to really get an understanding of how markets move and why.
What I wrote in "Your Rat Brain Is Out To Get You" is every bit as applicable now as it was yesterday, a year ago, or at any time in the history of the stock market. Today, however, I would like you to take this one step farther than being stuck in your Limbic Brain. I want you to learn to absolutely 'be" with any emotions that come up for you during the trading day and to begin to take the journey out of your primitive, Limbic Rat Brain and into the higher cortical centers of your brain. In this way, you will be able to manage your emotions in a more definitive way. You will not take the low Limbic road and panic out of positions or chase into positions. You will feel the emotions coming up for you and then pause and wait until you can get them to the higher centers of the brain where more clarity will appear. You will still have the feelings but they will actually feel different because they are now laced with higher cortical restraint.
In summary, what I am asking you to do is to manage your emotions, not to get rid of them. Allow yourself to feel everything, but modulate your response to it. In this way, you do not struggle to repress, rather you accept and interpret in your new higher brain how your old lower brain is reacting. Turn impulsive limbic reaction into a calmer higher cortical response.
At the highest level, the ability to turn this process of primitive, instinctual reactions into more logical and considered responses is what separates losing traders from winning traders. It is the basis of survival of the fittest through selective adaptation. Only the most clever and the most fit will survive in the great game of trading, so it is time for each of you to start the journey inward and to come to understand who you are, what you are doing with your emotions and how to preserve yourself to trade another day. Do not give up on your emotions. Embrace them, manage them, master them and make them work for you. Make yourself a fabulous and fierce trader and investor by using what you have to make you stronger.
If I feel depressed I will sing. If I feel sad I will laugh. If I feel ill I will double my labor. If I feel fear I will plunge ahead. If I feel inferior I will wear new garments. If I feel uncertain I will raise my voice. If I feel poverty I will think of wealth to come. If I feel incompetent I will think of past success. If I feel insignificant I will remember my goals. Today I will be the master of my emotions...Og Mandino ( The Greatest Secret In The World)
I realize this is a lot of information and only the tip of the iceberg of what is likely to be a study that will take you many years to a lifetime. If you want or need a guide or someone to just listen, please write to me: drjanice@trending123.com and stay tuned for Blunder Number 4!
Disclaimer - I am not a commodity trading advisor. The information on this site is for trading education only. There are no trading recommendations for any one individual made on this site and this information is paper trades for trading education. All trades are extemely risky and only risk capital should be used when trading.
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