Trading Psychology Journal Part 2

Understanding the nature of beliefs:-

• ‘Beliefs seem to naturally resist any force that would alter their present form.’
• ‘Once you tap into a belief it forces itself into your conscious mind.’
• ‘An inherent characteristic of a belief is that we severely reject any possibility that exists outside the limitation of what we believe is true.’
• ‘There is a huge difference between being aware and believing.’
• Committing yourself to trade a mechanical system in predefined sample sizes will cause a head-on confrontation between the variables that define your  edge and any mental forces that are in conflict with the Five Fundamental Truths and the Seven Principles of Consistency
• Effectively working through these conflicts will create a resolute belief in probabilities and build a sense of self-trust that you will always, without hesitation, act in your own best interests.
• You are ‘there’ when you are no longer experiencing any conflicting thoughts when you execute your mechanical edge

Why do traders not recognise that  they are making trading errors?
However, it all comes back to beliefs. The beliefs that stand people in good stead to make them successful  in society/business do NOT work in the markets.

To be successful in society/business you need to:

1. Control people, companies, opposition.

2. Be better than people, companies etc.

3. Have better and bigger ideas than others.

4. Manipulate data, people, companies, situation etc.

5. Convince people that you are right and your

company is the right solution.

6. Compete and beat.

7. Win and be right (or more appropriately, not lose 

and not be wrong).

8. Outsell and out maneuver the opposition.

9. Be a step ahead of the opposition – try to predict 

their next move.

Automatic hard-wired programs that all human beings have are to:

• 
  

  Associate the current moment with previous 
• experiences, and



• Avoid emotional and physical pain

‘As long as our minds are associating we are NOT  in the “now” moment’.

‘Your ultimate trading objective is to get to a point where you can trade from a care-free, objective state  of mind where you are making yourself available 

to perceive and act upon whatever the market 

is offering you in any given now moment from its  

perspective.’

Through your hard-wired mechanism of association you have likened current 

information to a past painful experience which is out 

f the ‘now’ moment. The association creates the 

perception of a potential threat of emotional pain which automatically invokes your pain avoidance 

mechanism. This mechanism will cause thoughts 

to pop into your conscious mind (your beliefs are 

at work) that result in actions such as delay, freeze,

avoid, justify, rationalise etc. In this state of mind you 

cannot be carefree and objective.

‘As long as our minds are associating we are NOT in the “now” moment’.

The actions that could result would be doing more analysis of the charts, researching stocks on the internet, phoning a broker for advice, reading newsletters for additional input into your buy, hold or sell trading decision - all subjective actions – when you should have just acted on your edge.

 In a market environment emotional pain is experienced through:

1. Being proven wrong.

2. Losing money.
3. Missing out.

4. Leaving money on the table.

These are the four primal fears that traders, whose trading paradigm is set by the same beliefs that they   operate under in the community and in business, try   

to avoid. Meaning that we become hard-wired   

to avoid the above four situations in a market   

environment. Any action that a trader takes to avoid   

any of the above four situations is a trading error. 

This is why people do not recognize that they are making trading errors. To them their mind, through  their time grown beliefs, is operating correctly. 

And it is, only it is operating correctly for 

a non-market environment.

Identifying and neutralizing beliefs that are no 

longer useful in helping one fulfill their Objectives.