Coulda woulda shoulda

[thetradingdoctor]

Primordial mud, indeed. We have the brain of the Neanderthal. Still. In times of stress, distress, anxiety, fear, overload---the brain defaults into the old ( primitive, limbic, rat) brain. It does not think, rather it reacts. The processing in the rat brain is based purely on emotion--fight or flight, kill or be killed, starve or binge, procreate or continue to prowl until you do. The rat brain does not recognize the word "No." Everything is yes, yes , yes!
Grab for all the gusto you can get and get it now and damn the torpedoes!
The new ( rational, frontal lobe, thinking) brain is much slower to react. It wants to ponder, to analyze, to think things through. In times of overload, groupthink, massive bombardment from terabytes of information, the new brain can't keep up, so it just lets the old brain do its think. Bigger and better and faster and faster and keep grabbing because you want it all and you want it now. The power of the primordial slime that is the rat brain must never be underestimated. Think back to the times in your lives and your trading when you looked --in the calm tranquility of some future moment--and asked yourself: DUH! What in the name of ##$$$ was I thinking! How could I possibly have said/done/thought that? Now, what am I supposed to do to "fix" it or make it right? This is pure madness and I couldn't help myself--could I?"

Your rat brain got you. It is always out to get you. We are addicted to dopamine and the promise of dopamine. The new brain is powerless in the presence of such euphoria. Game over: Rat brain wins.

Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?

Thanks!

Doctor Janice

[PYenner]

So the human canoe is being paddled by two very different life forms.
They don't have a common language to comminicate in and their roles conflict when we most need them to work together.
It put a man on the moon against all the odds.
You have to wonder at the audacity and the achievement of it.

[PYenner]

"Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?"

Doc,
There is a third part of the brain that learns to drive a car by reflex and takes the load off the reasoning brain, leaves it free to go into overview or even daydream modes. This seems to be the dependable part, experience, assuming it has been soundly programmed that is.

Is that where this leads, trade by reflex while keeping reason in watchdog mode? Like riding a bike?

[PYenner]

James

A real life story fwiw.
There is a young guy in my town, no education, no money, two kids.
Worked for my brother, minimum wage.
Impressed my brother, impressed me as someone who would not be spending much of his life working for wages.

I passed on to him a chunk of a business I was quitting and encouraged him to look for the next step up.
He sold that business, did a year overseas for 100k, came back.
Started in real estate signs, sold that.
Billboards, I think he still has that.
He lastest scheme was a multi megabuck vision, drought relief, but it has been ruined by the 5yr drought breaking a year too soon.
He will probably be smarting but I doubt if will slow him down for long.
He has had a taste of how it works and he knows he has uncommon talent.

Now I will get to the point.
Entrepreneurs are a rare breed and that makes them isolated.
No one to talk to who speaks the same language.

This young guy cold calls a commercial property developer and asks if he would offer any guidance on the steps he took to get there.
That developer has been mentoring him for 5 years now and has offered to do a 10 house residential development with him anytime and split the profit as a training exercise.
I think the young guy wants to do it on his own and not be taken on as an apprentice.

This young guys plans are not just 6 steps ahead of anyone elses, its more like 6 city blocks.
I struggle to keep my mouth shut because I am a dunce next to him and I don't want to slow him down but that is what I most want to tell him.
Turtle or hare, I dont know.
Anyone who told Bill Gates to go another way would be feeling like a dummy.

I don't know what the odds are.
I dont know if a CEO type will give you the time of day, but for the price of a phone call and some embarassment, maybe.
If you can pick up tips plus hindsight from someone who has been down your path ahead of you, that is way better than finding everything out the hard and slow way.
Don't waste time inventing the wheel if you can talk to someone who already makes wheels.
Leapfrog off their experience if you can.

[PYenner]

It's easy to talk the talk, not so easy to walk the walk.

Second attempt, may get closer this time.
This one is motivational in both right and wrong ways.

Your asperations will always be distant, thats what asperations are.
Your view of them will come and go.
If only the rat brain could be kept at an even greater distance.

The objection I have is that "talk the talk" encourages you to monitor measures of failure or uncertainty, which is wrongheaded and unconstructive.
It encourages you to run along a knife edge of insecurity, the road to a stomach ulcer.
Keeping your rat nibbling into you constantly.

Unrealistic over confidence is also to be avoided.

The ideal path is a persistant and realistic belief in your abiliy to achieve constructive outcomes.
On top of that is some optimism that you can go the extra mile when need the need arises.
Your realistic abilities are what will pull you through the wanted and the unwanted challenges and leave you standing a little taller on the inside regardless of what the outside circumstances may be.

Keep faith in your constructive abilities.
Keep that as your focus, your strength and friend.
The knife edge of uncertainty is not your friend it is baggage that loads you down.
It remains that fear of poverty or adversity will always sensibly remain part of what motivates us, it is part of the reality mix.

Another story.
At the first place I worked, the factory manager was always cool and balanced, nothing would him wind him up.
I would look at him and see myself as a twitchy mess in comparison.
That guy has got the right perspectives, carrying no baggage, got it all sorted out.
How come I missed the plot?

Turns out he had Multiple Sclerosis and with MS you cant let stress or fatigue take you down because you may never get up again.
20 years later he was on TV, in a wheelchair paralysed from the waist down.
His one liner was "I only want to have a normal life".

[thetradingdoctor]

	Quote:	PYenner
	"Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?" Doc, There is a third part of the brain that learns to drive a car by reflex and takes the load off the reasoning brain, leaves it free to go into overview or even daydream modes. This seems to be the dependable part, experience, assuming it has been soundly programmed that is. Is that where this leads, trade by reflex while keeping reason in watchdog mode? Like riding a bike?

The best of all possible worlds is to recognize mistakes as mistakes and learn from them so as to not keep doing the same thing over and over again and expecting different results. This is a big challenge for traders who want to be right, be perfect and have problems recognizing mistakes as mistakes ( rather they want to blame something or someone and not take personal responsibility).

It is not really a third part of the brain tha governs "reflex trading." It is a synaptic strategy which sees the signal, recognizes the signal as positive and something that has produced good results in the past, is not internally conflicted about that signal and executes with little or no cognitive or emotional dissonance. It is a trained response, so, in a way you think of it like a reflex.

The article I wrote in July for SFO was my attempt to at least begin a study of this in the actual context of the trader's brain. It is not the final answer,rather something to start a discussion and further study of how successful traders differ in their brain synaptic strategies from novice traders. I have received so much comment on this article, ranging from "Wow" to " this is too scientific" to "this is so easy that everyone knows about it" to " how ridiculous is this?" Whay's a girl to do? ;-) Keep studying, writing and trading and never give up!

Thanks!

Doctor Janice

[PYenner]

Doc, thank you.

In reverse order-
"Whats a girl to do?"
Pat yourself on the back and keep going.
The article was right and I hope you feel confident about that, it applies to any demanding area of learning where there is a large content of unknown and uncertain, so you may have had direct experience of watching the process unfold inside your head. Worked that way for me anyway.

"It is a trained response, so, in a way you think of it like a reflex."
They said the same thing about learning a golf swing, but they didn't say why. We think of it as reflex but it isn't. The golf swing can also get sabotaged by questions, even the simplest one, the putt, perhaps because it is the payoff stroke, perhaps because it has the least in common with the rest of the game.
The rat brain thrives on uncertainty levels and tends to pounce on the largest one in sight.

"This is a big challenge for traders who want to be right, be perfect.."
Just got bitten by this one, as you say it is about probabilities, it will never be about certainties.
The need to be right with certainty, has to be held aside as unrealistic.
So long as the trading record is adequate, useful, that is as good as it gets, or needs to be.
Got to learn to value and rely on something that will always be less than certain.
Adequate becomes the measure and humility helps.