For some, these days can be their best money makers – they know how to push the pedal to the metal when the time is right. For others, they tend to be their worst days – the think they have missed it, they fade the move (it will revert right?) and then give up and go with it – at the exact wrong moment.

So for many traders, it is a day of frustration. For some, it is a day that induces them to prove how smart they are by 1) finding the turn 2) finding the turn again. This usually ends up with their largest loss of the month.

Want to be the pedal to the metal trader? First you have to curtail the need to be right, to be contrary or give in to feeling you missed the move. How do you do that?

Ask yourself – what am I feeling? If I am really honest with myself, what do I WANT? Don’t tell yourself not to want it and don’t try to deny it. Let yourself feel and express whatever you feel. THEN look at that and ask yourself if you want to act on that feeling, if it will make money to act on that feeling. Once you have that answer, make a decision about what to do in the market.

Then repeat the sequence –

1) Your brain will NOT make a decision without emotion and  2) Emotion signals meaning – even to your eyesight.

These facts leave us with no choice but to get better at using our emotions as data. They tend to be the communicator between the unconscious (where according to some 95% of the activity takes place) and the conscious. So… why wouldn’t you want access to the parts of your brain where 95% of the thinking is being done?

I know it isn’t easy to do but the strategy should be to re-orient your perspective to one anchored in understanding your feelings and emotions. This is palpably different than using your intellect to try to override or change how you feel.

It also is NOT about just acting on how you feel. That is confusing actions with feelings and emotions.

Knowing your own emotional (social) context is your risk management key and predicting the emotional (social) context of key influencers (Central bankers on at least two continents as well as operating M.O of HFT traders (IE what is everyone else doing?) is a key to market predicting. Work with the first and the second becomes easier.

While we wait for me to finish my book – check out The Social Animal by David Brooks.

Next, when you get in the market, your position either starts to work – or it doesn’t. The latter is actually easier – a loss is a loss and you know it. Oh sure maybe it will turn around but… it is clear. And of course, it doesn’t feel that great.

Relatively however it generally feels better than a winner. WHAT? you say?

Well think about it – when a position starts to work you are faced with an impossible decision scenario – wait for more but risk reversal, get out now but risk not getting more …or put a trailing stop – which means by definition you will get less than you could have had.

None of us can change the fundamental uncertainty of trading – no matter how many clever combo’s we put on our charts and no matter how many experts we work with. So to give yourself the psychological leverage that can set you apart … get used to the anxiety of ambiguity. (see posts below for some help).

To learn how to handle the very real frustration and disappointment of winners – expect it. Winning is going to tap into “anticipated regret” or more properly stated  -  the avoidance of anticipated regret.  But the bottom line… the vagaries of the market induce regret almost no matter which way you turn.

If you know that going in, you have an edge vis a vis those who don’t. And what percentage of those you are trading against do you suppose do not know – or accept – this? … See… there you go.

But in any event, the point I want to make is that Mondays and particularly Mondays after a holiday sit within one of the many special contexts of markets. In this case you have not only the Monday after a long Spring Break but the Monday before the Fed pulls a totally new move that everyone (at least in the media) is talking about.

Now you may try to trade pure chart patterns… but the big boys trade charts and context (social context really – or trading other people). Given that they do, they will be paying attention to this NYC Rainy Monday and the context within which it sits. For the independent who thinks they can’t  or won’t or shouldn’t do that – it will still pay to take an extra patience pill as the markets open up.

I know everyone likes to get back to trading… but the payoffs aren’t worth it. Let the big boys take the lead and make something happen. Then jump on their coattails. Otherwise, you will have a few small losers – or scratches – and you will have debited your psychological capital to the point that when the game really starts – late today or not until after Tuesday – you will be spent.

The solution to this isn’t to think harder, find another system or add something to a series of charts. The answer lies within each trader. It first demands understanding the basics of psychological capital – managing yourself with more care than you monitor your charts – but beyond that, the real way to reduce the number of times you have to ask yourself that “wtf” question is to understand the sequence and more importantly the unconscious meaning to your actions.

We all know that actions speak louder than words so it is possible to work backwards from what you do to what it means. Armed with what it means, you have the first step towards changing the behavior.

Now this culture is still under the spell of the superiority of the intellect (which by definition means the inferiority of non-cognitive dimensions like senses, feelings and emotions) but that is changing rapidly. Neuroscience now compels us to look at what is going on below the level of consciousness. There are literally hundreds of studies now showing the power of what we are NOT conscious of.

Now many people are afraid of knowing their unconscious. The good news about that is for anyone who is willing to get to know themselves and the meaning behind what they do, there is a built-in edge (that you can control) over every trader who won’t or can’t do that work.

The markets work in psyches as authority figures because indeed they are – no amount of arguing, imploring or pleading will change what they do. The are the ultimate implacable listener. This brings up many issues – need to be right, habit of rebelling, desire to be perfect and get “their” approval – all of which will coalesce into a pattern of behavior that will NEVER be changed by the intellect alone. It begins with simple fractals of experience from early in life and as adults, those simple fractals combine and recombine to create our perceptions, decisions, context of feelings and “baggage” that fuels that never-ending “Why did I do that ?”

Solving it is indeed possible. It just requires giving up the resistance to knowing the unconscious meanings – and being open to having and creating new emotional experiences. For each time you do it, it is a risk well-managed or a trade better executed. What will that do to your year-end results?

I hope you are well and that your book is coming along nicely. I haven’t written in awhile, but I’ve been having quite a time with the Access course. When I began, I made steady progress through the first four or five chapters, and my trading was improving as well, though I didn’t feel I had “turned the corner”.

The first surprising thing I learned was about ambiguity: all it took to “embrace” it was to physically write down or say out loud “Yea, ambiguity!” I would laugh and then not worry about it; because the benefit of embracing ambiguity was not some great insight into what the market was going to do, rather it was an increase in energy, which I had previously wasted in trying to fight ambiguity. Now I could put that same energy to better use in making judgements. So far, so good.

A few weeks later I had a losing spiral. Of course it began with a BIKB trade. The plus side was that this time I was able to stop myself from trading—not as soon as I would have liked, but quite a bit sooner than previously. Still, I was shocked that I had fallen into such an obvious pattern after all the PsychCap work I had been doing. So, I took a closer look at what happened that day and noticed two things. First, the BIKB trade didn’t just come out of nowhere; it was preceded by a series of trades which I planned but didn’t take (that would have won), and one winning trade which I exited early. I thought I was being cautious, but in fact my second-guessing of my planned trades was building up frustration and impatience. Without that, I don’t think the BIKB trade would have had such a powerful impact on my PsychCap. So the cost of those untaken or poorly executed trades was not just a reduced upside; they were “setting the stage” for a losing spiral.

I also noticed that I had (have?) a deeply ingrained belief that a losing trade has to be “made back”—and not just made back eventually, but right now (and preferably in the same futures contract!). Of course, that’s ridiculous, but it didn’t feel ridiculous at the time.

I’ve dubbed the rest of this year, “Fun with ANNA and ToM”. I’m now in the habit of checking my feelings context frequently (both in and out of trading), using WWW, and stating my confidence level in the “Story” out loud or in writing before I enter trades. It’s made a lot of difference. However, the anticipation part of ANNA, and considering the market action explicitly from the viewpoint of theory of mind, are not yet habitual; I’m building those up gradually.

… END OF PART ONE -The above has a few highlights and paragraph changes so that you, the trader-reader can more easily benefit from this trader’s experience. BIKB is the “but I know better trade”. The other strings of initials are strategies for managing to your psychological capital – the first and foremost edge you can create in trading. Your mental state is EVERYTHING – and it is more important than what the market is doing. Perception of uncertainty is a very tricky brain endeavor – you want to train – just like an athlete – to perceive as well as you can. ….

Part 2 of this note to be published soon.

I hate it !

I hate it !

I hate it !

My stomach crawls & rumbles

My palms sweaty,

A rat caught in the eyes of a snake,

I begin to shake,

So many wrong choices, only one right,

Hindsight laughs in my face.

Does she love me ?

Or just need me more vulnerable?

The pitch & roll of my gut,

Oh, how I long for the safety of the rut,

But then, that dreaded mock,

As my ship heads straight for the jagged rock

A slave,

or brave?

Hey I took a trade today

I sit and watch it with dismay

Will the plan follow as I have laid?

Away you indefinite penny arcade

The stench of fear invades my being

Wondering if what I am seeing

Is solid as I think it is

Confirmed or antithesis

Time to jump out its changing it tune

For that trade is not following the phase of the moon

How can I be an entrepreneur?

If I am uncertain and never am sure?

I just sit and watch and waiting for it

To be perfect and beyond just a base hit

How many days of innings I miss

As I avoid being unsure and live in abyss Like looking up from a valley decided and convinced That I will find that place of sureness Without having to wince

As I stay attached to playing a sure thing I will not be trading, instead I am aging With bare knuckle grip that certainty is there And waiting forever for a trade with no repair

All I have done starts with a goal

And I finish it with confidence and control But with trading the idea of working hard And not getting paid has left me scarred

The art of being, not doing, really works well In that moment all is possible, then I trade well The fight within me needs to let go And feel my feelings with knowledge that I won’t know What’s going to happen and go with the flow Not knowing is trusting that I can follow the road With the pleasure of being with presence that bodes

After a cup of Joe and a slice of shingle with a shimmy and a shake, I set myself down the ponder:

Ambiguity

Coveted by politicians and poets… Distained by science and law.

“political science” or “poetic justice”?

Artist, freed from the needs to record unambiguous reality.

Kodak moment or timeless Monet?

Sirens of synchronous and synchronized sounds.

Add feeling, and you have music.

And of the movement of minds and markets?

Rarely a consensus, always a conversation.

But with whom? I am not sure.

But for this ex-engineer to ponder its meaning, I can  only say

The mind is a very strange place to be.

By the way, have you met to friends, Russell the rabbit, and his friend Eias the cat?

n

e

a

r

i

n

g

the

snowy

summit

the comforts

of the slow and

steady climb slip away

the air has changed

gazing off the windy peak

inside churns – excitement erupts

voices clamoring to be heard

Maslow entices me to take it to a higher level

Darwin implores – be careful, you’ve got to survive this

and all the insane monkeys screaming, “just go for it!”

it is the child who silences them all

for a moment he basks in

the feeling of this place

simple

pure

alive

quiet

off

he

soars

down the

mountain

like a

playful

hawk

knowing

not

what

else

to

d

o