Rande Howell

I figure that the people I work with is self selecting, and what I see is a fairly conservative group of people who are trying to build a new career that allows them freedom from corporate culture and financial freedom. I don't see gamblers. I see traders with impulse problems that want to address the problem so they can become effective in the heat of trading and I see people who are motivated to distinguish between the management of the risk of uncertainty and fear based thinking. I have no doubt that there are gamblers, but why would they ever want to talk with me -- there beliefs would have to change. Rande Howell

Some come to love the game. It's like a puzzle. And as they unravel it, they discover it is really a puzzle about themselves and their relationships with others. For the most of traders, the thinking that got them into trading are not the thinking that will bring them success in trading. They have to fundamentally change the way they preceive and react to the world in the microcosm of trading. Rande Howell

If your methodology and platform are sound so that you have an edge and tweaking your trading plan has not proven to be the "answer", self sabotage often comes down to our beliefs about our worthiness. Confidence without humbleness becomes arrogence which begets self deception. It a great short term cover-up for having to deal with uncomfortable self limiting beliefs of unworthiness (or a sense of having to prove the self by performance to have meaning). I suspect what you speak of as growing confidence is actually letting go of the discipline to stay in the zone that produced the positive results. The moment you move out of the zone governed by discipline, you fall prey to temptation. Self sabotage is sure to follow. This is an adaptive pattern your brain has built. It is not your truth. But it is self fulfilling as long as it stays out of the light of your awareness. Not sure if this fits your situation. This is something I see in traders when they bring a mindset into their trading room that is zoned in on proving the self by performance. Your being and your performances are very different. Rande Howell

Fortunately we can deconstruct the meaning that has become associated within the elements of an emotion. To the brain, ambiguity comes out of uncertainty. And the brain is biased to seek certainty in the midst of ambiguity. Until this is retrained, the ambiguity triggers worry or fear. And there goes your trading. Fortunately, this relationship can be shaped to other ends. But it does require work and self honesty. Rande Howell

Yes. Our biologic system simply shows up in the environment and adapts us to the circumstance. It's brillant. Now we have to accommdate the thinking brain. Rande Howell

First. What is an emotion? It is not a "feeling". According to Steven Stosney (a pioneer in Emotional Intelligence) an emotion is any deviation from a standard sensorial part that the brain as acclimated to. You disrupt the standard pattern and an emotion automatically pops up. Fear is a particular emotional state among other emotional states and is often confused with them. Distinguishing between vigilence, concern, uncertainty, worry, and fear is vital for emotional sobriety in trading. Otherwise the brain/mind keeps associating primal fear of threat with risk management of uncertainty. Last thing. To come to an effective understanding of emotion, consider this. An emotion can be broken down into 5 components. Motivation (what it is telling you to do), meaning (the beliefs that becomes fused to the emotion), arousal (the cranking up of an emotion preparing it for action in a direction goverened by its motivation), feeling (the subjective experience of the emotion -- that sinking feeling), and terperment (the genetics that influence pre-disposition). In trading, beliefs of inadequacy, mattering, and worth become embedded as the meaning of the emotion. And out of this come a trader's fears. The fear that occurs in trading is not the "reality" that primal fear is useful for. But, when the trader becomes "possessed" by the meaning embedded into the fear, he will truly act as if a saber tooth tiger is in persuit of him. He has not distinguished fear from uncertainty in this case. Rande Howell

Bingo. Hidden beliefs sabotage rational trade plan. Rande Howell

Good observation and question. Fear and impulse live on different ends of a continuum. Impulse (how I define what you refer to) tends to be rooted in grandiosity, which is dangerous in trading, while fear tends to be rooted in self doubt. Impulse also can happen as a result of anger during a trade. That is, the trade goes the wrong way, and suddenly the trader is sweep away by an impulse for attack and revenge. I, too, have found the dynamics very different. With impulse traders I train the trader to have a conditioned response to breathing and relaxation (relaxation response) as the emotional pressure builds up in the impulse, but before it triggers. I train to this for 3-4 weeks before getting into the mind stuff. The biology of the impulse has to be disrupted before going further. Otherwise the pattern keeps triggering and deeper training is useless. It's actually the same process I used when I was treating impulse disordered youth populations when I was in public mental health. In the case of Steve, which by the way is his real name, he had a core of discipline that had been well developed in other domains of his life, but had never been transferred to trading. By using highly charged emotional memory from a different domain where he experienced both discipline and impartiality, he was able to generalize it to the domain of trading. His relationship to uncertainty changed here. Rather than avoid uncertainty out of fear, he approached uncertainty from this newly developed discipline and impartiality applied to the domain of trading. He moved from being an analyst to be a player. He still had to face his fears located in his limbic system (no escape of that), but he faced them from discipline and impartiality (compassion also) rather than the fear of losing belief pattern learned in his youth. From here, he was able to reconstruct the belief that he traded from. And a new history emerged from here. Rande Howell

I love the hidden assumptions this reveals. In actuality, "Steve" is a former client of mine who has over 10 years experience with Drummond Geometry and was always (after learning curve) a great technical trader. His problem was a deeply ingrained family belief system about avoiding loss (for very good reasons). This was the adapted self that he brought into finance, which was effective in that domain. When he got to trading, this same set of beliefs kept him out of trading on the level he wanted to. He was able to support his family, but sought to take his trading to another level. That's why he worked with me. He could not "see" this pattern running in the background comtaminating how he interpreted possibility. As he opened himself to the discipline, courage, patience, and impartiality that also lived within him, he disrupted the old mindset's hold over the thoughts in his mind. These other elements began showing up in his trading. And he has moved to a new level in his trading. Fear is an emotional state that is good when your life is at risk. Otherwise it will comtaminate the impartial thinking required to trade well. Worry is different. Worry is about negative attribution of the future. Concern and vigilance are the emotional states that a trader needs to develop. Fear and worry will comtaminate your capacity for clear thinking. You are not stuck with the kind of thinking that you bring to trading. You are not deterministic. Western medicine failed on this account. They discovered 85% of all illness is stress (fear based) related. Changing the mindset changes outcome. Fortunately many people learn how to change mindset rather than accepting limitation. Rande Howell

As most folks probably recognize, I take my sceneros out of clients I work with or have worked with. "Steve" is doing well now. Took a little work and soul searching. Fortunately he did not take your advice. We'll see about the future. Rande Howell

Steve stared at the set-up. It was a close match for what he was seeking. He had seen this pattern emerge many times before and was comfortable that this was a high probability trade – right in line with his trading plan. Now all he had to do was get the right price. He put in his order at a rock bottom price figuring that he was managing any potential for loss. And then he waited for it to be filled. And he waited. As he waited, he watched as the trade kept climbing. Finally it had run its course and Steve, again, had been left on the sideline of the trade – his order was never filled. And this was not the first time. It was a persistent pattern that defied explanation. Frustrated, he looked at his charts and recognized for the umpteenth time he had let a high probability, low risk trade slip through his fingers because he had insisted on a rock bottom price when, in fact, if he had acted within the price range that his trading plan had called for, he would have been able to profitably enter the trade with plenty of room to spare. This was a persistent pattern in his trading, and he did not understand it. There was also a sense of relief that he had not lost capital. He really liked keeping his potential losses to a minimum. Ex-comptroller that he was, he took great pride in loss abatement. When he looked at his ratio of winners to losers, he smiled. It was good. It was very good. The problem was that he was not entering enough trades to make a comfortable living. The truly frustrating part for Steve was that he knew he knew how to trade. He was good enough at his methodology that he could teach it. The problem, as he saw it, was that he could not find the perfect blend of indicators and signals that would make his system work properly. As soon as he figured that out, he knew he would be able to make his financial dreams come true. ___________________________ Being Blind to a Self-Limiting Pattern If you look at Steve’s situation from a third party, emotionally detached, perspective, it is easy to superficially spot the problem. He simply needs to tweak his trading plan to allow more flexibility in what price he is willing to pay to enter a trade. After all, there was plenty of room for a profit. With his trading plan modified, he would have more flexibility on his entry points and would confidently ride the high probability, low risk trade predicted by his charting. Following this line of thinking, the problem would then be solved. And if traders were, in fact, rational and emotionally detached human beings, this would be the case. However, because they are human, actually all their thinking is emotional state dependent. And what lurks in the shadows of the mind (pushed far away from conscious awareness), does create a persistent pattern of perception, emotion, thinking, and behavior that limits a trader’s potential for peak performance trading. The trader becomes blind to this pattern operating in the background of his awareness – he does not even see it influencing this perception. Off his radar screen, it keeps hijacking his capacity to successfully perform in his trading. Here is the way one trader described this form of blindness: __________________________________________ “Most traders don't believe one of the key variables to successful trading is themselves. Thus, they ignore or underestimate the importance of themselves as a key piece of the puzzle, which is why they get "tunnel vision" about their trade methods. I also see an escalating situation where traders realize that they have a discipline problem via publicly stating such as a fact...they believe their "self help" solution is too fine tuned for their trade method. Simply, once again, they fall back into the trap that it's about the trade method, only under the facade they are working on their discipline problems. Further, just as much of a problem, many of those that show up to give advice about the discipline problems...their recommendation involves changing, tweaking or fine tuning the trade method. This pattern (pun intended) helps instill the belief that if we fix the trade method...we'll become disciplined traders. It just doesn't work like that.” _________________________________________ Like many traders before him, initially Steve was resistant to exploring how he was part of the problem. He looked everywhere but failed to look at his psychological contribution to his trading problem. As a rationally trained man, he believed the problem was “out there”. And that he, of course, was rational. The problem, in his perception, was to be fixed by altering the variables of his trading plan. The trading plan was the problem. If the trading plan were fixed, his problem would go away. What he had to acknowledge, though, was that after five years of rationally “fixing” his trading plan (when it worked quite well in simulation) was that the trading plan was not the problem – he was. But how? Trading “Not to Lose”, Rather Than Trading With an Edge When Steve began to examine beliefs that he brought into trading, he discovered he carried more emotional baggage than he initially thought. And, in his mindlessness, these deeply held beliefs directed what his rational mind saw. His hard-nosed approach to price and avoidance of loss, under close scrutiny, was not the product of rational, impartial problem solving. It was fear masquerading as reason. What Steve discovered was that he had been using “rationally thinking” as a way of avoiding his discomfort that trading forced into the conscious mind. Uncertainty and loss had become associated with one another in Steve’s brain/mind – his perceptual map. He carried this fear of loss in the face of uncertainty as self limiting belief now. But it was beneath the surface. It was like a submarine, beneath the surface, torpedoing a ship on the surface. Fear was the submarine. Rational was the ship on the surface. His trading was the casualty. When he traded, he triggered to this perceptual map that had become a self-fulfilling prophesy. The truth, beneath his rational exterior, was that he believed that the uncertainty of the markets would lead to loss if he were not very careful. Out of this deeply held and unconscious, fear-based belief, he created a rational cover up to avoid the potential for loss. By never getting the price he wanted, he avoided the fear of uncertainty that kept blowing up this trading plan. With his rational mind doing the bidding of his fear-based beliefs, he avoided the potential for loss in his trading. There was nothing wrong with his trading plan, he discovered. The limitation to his trading was based on the rules of uncertainty and loss he had learned as he grew up in a family that experienced terrible financial losses in his formative years. These years had been tough on the family. In the face of survival, they had learned the hard way to avoid uncertainty and to only risk when you could not lose. This way of seeing the world (that the world is a dangerous place and you’d better be careful) became the hidden assumption that guided Steve’s development of risk management. And in his profession prior to trading, as a corporate comptroller, this perceptual map worked well. Steve did not see his perspective as a personal bias though; he saw it “as the way it is”. This is because it had become a familiar pattern and was pushed into the background of his awareness. The very skill set that gave Steve an “edge” in corporate finance had become a liability in trading. He had developed a habit of trading “not to lose”, rather than a mindset of accepting and managing the risk of probabilities that trading demands Steve came to recognize that it was not his trading plan that needed to change – it was him. This is not to say that his trading plan does not need to evolve, along with him, as he moves deeper into his journey of trading. What Steve came to understand was that he is an inseparable element from his trading. Each element – from platform to methodology to personal psychology – has to be woven together with care to create successful trading. And without a close examination of the beliefs in which his psychology is rooted, he was missing the access to a key element to successful trading. He fell into the deception that he was rational and that “rational” was normal – even superior. It felt emotionless, which he had been taught was how a trader needed to trade. This was also a stumbling block to his growth as a trader. What he discovered was that “rational” is an emotional state among other emotional states. And that he could hide his discomfort behind the façade of “being emotionless” that a rational emotional state provides. Rational became a defense that allowed him to avoid looking deeper into himself. After closer inspection he discovered that a deeply rooted fear of loss had caused him to stay out of trades. Demanding a price that the market was not willing to give became a way for him to avoid his fear that he might lose. And with his logic and rational thinking captured by this fear, he produced a trading plan of elaborate criterion that looked good and keep him out of trades. And because it was so familiar to him, he never saw the self limiting beliefs operating within him. Mindfulness as Part of a Psychological Trading Plan You have just read about a trader wakening up from his mindlessness. He was so absorbed by his logic that he could not see that it was blinding him to the core problem. It kept him focused on the surface of the problem. He saw symptoms of the deeper problem, but the symptoms so pre-occupied him that he thought the symptoms were the problem. He was lost in his direction, but making good time. Questions for Developing Your Mindfulness: (1) If you take a look at the symptoms of your trading, what do you discover? (2) What is the consistent behavioral performance that keeps repeating itself? Then let’s go a little deeper. (3) What kind of game plan seems to be in place? For the trader in the example above, for instance, the game plan was “not to lose”. His game plan did not include managing the risk of uncertainty so that probability was on his side. He kept telling himself that in his self deception he was trading to win, but his behavioral performances over time told a different story. His logic actually covered up the deeper self-limiting belief that was at the core of his lackluster trading performance. The second part of his game plan was to hide from his fear, and he accomplished that by staying stuck in a kind of "logical thinking" that produces merely surface evaluation – projecting the problem outside of the self – rather than a mindful attitude that looks for the beliefs beneath the performance. (4) Based on your trading performances, not on your rhetoric, what beliefs actually drive your trading? No one is going to be looking at your answers to these questions. The questions are designed to help you discover the current psychological organization of self that trades your platform and methodology. Becoming mindful of them is a major step in changing them into more effective beliefs that open up the possibility of peak performance trading. As long as hidden beliefs stay out of sight, they are out of mind. But, they still influence your trading performance. You are simply mindless of (i.e. blind to) their influence much like a horse with blinders on never sees the green grass on each side of the path. The blinders become the “tunnel vision” that limits what the horse (or the trader) sees and can act upon. Developing this kind of mindfulness is a major element in the evolution of a trader. Without its development, you stay stuck in the pattern of seeking answers “out there”. With it, the trader becomes aware of the tunnel vision that has blinded his development. Blinders off, a new vision of trading emerges where platform, methodology, and personal psychology coalesce into a dynamic new possibility of peak performance trading. For a video interview by MoneyShow.com with Rande Howell regarding managing uncertainty and mindfulness, click here http://www.moneyshow.com/video/video.asp?wid=6913&t=3&scode=020437

Of Gladwell's work I prefer "The Tipping Point". That one really helped me. Dan Brown takes the theory behind Blink and actually shows how it applies in marketing and advertising. He uses the notion of facial encoding to get at the most primal motivations for audiences. He video tapes faces during interviews and slows them down. He is able to get at micro experessions of emotion and meaning (not seen by the conscous eye -- 1/25 of a second or less). This cuts through neo-cortical thinkng and gets to the limbic meaning. One of the notions he uses, that really applies to trading, is called "desire to acquire". As it applies to trading, you can ask yourself this question and recognize that most likely your first answer is simply an explanation that is not rooted in primal meaning. The brain does that. Once you get past that level, you're back at desiring to acquire a fix (how ever temporary) to beliefs of inadequacy, mattering, and worthiness. Scary technology to be in the hands of marketers and advertiers (of which I used to be one). But it can be harnessed for psychological development also. Rande Howell

JaySmith124 Trading will give you an excellent arena to observe yourself. So be prepared to change. At the very bottom of human psychological organization is the fundamental needs for connection (belonging) and cherishment in a context of safety. This all gets set up in our attachments to self, others, things, and greater purpose. Out of our personal disruptions to these fundamental needs comes our sense of meaning and purpose in the world. Truth is, most folks seek answers to worth, mattering, and worthiness externally through performances rather than their inherent value as a human being. The spiritiual masters have been telling us this for centuries, but it is hard to hear. Trading really exposes this. This is why trading is such a great arena for self development. It becomes impossible to avoid ineffective beliefs about the self once you accept full responsibility for what happens in your trading. I wish you well. Rande Howell

In my clinical practice working with couples, I've come to believe that a woman's brain may mature in the mid twenties (can think abstactly and reflect), but that a male's brain is lucky to hit this same milestone by mid thirties. Just an observation. A memory is not a whole thing. Elements of a memory is actually stored in various locations in the brain. When we retrieve a memory, we are actually "re-membering" the memory. Each element of the memory is reassembled into the current memory you have of an event. And it changes based on emotional state. That's why eye witness accounts are not of very much value in court -- they change too much. I actually use this process in building memory that is associated in one domain that is emotionally laden with discipline and impartialilty to the domain of the mindset of the trader in a trade. Once the memory is built, stable, and enriched -- it can be called up into awareness to create a state of mind. It's actually more complicated than the way I describe here. For me, it is not so much that a memory exists; it is what observer (within you) is calling up the memory for interpretation. This is what reassemblies the memory into whatever form it takes. And, yes, you're right. When the trader wakes up to this, memory can become a powerful catalyst for their trading. Rande Howell

The assumption in neuro-science (Antonio DeMasio and Richard Dawkins) is that mind emerges from brain and that all perception is a neurological event. In this theory it is the vast number of synaptic interactions is what causes us to have continual awareness, whereas other animals do not have the over sized hot rod brain we do and cannot, therefore, produce these continuous states. I am aware that many, myself included, often wonder if humans are aware or not. But that's another story. Other folks (I'm blanking out on the name right now) purport that perception of reality is both inside the brain and outside the brain. The example is eating an apple. Certainly the entire experience is a neurological event -- AND that the apple exists out side of your perception simultaneously. So, consequently, mind is only one element of a larger reality. It so happens that it is this assumption that I hold as a belief. I am a certain observer of reality that is limited by the biology of the brain that becomes mind. But other worlds exist beyond the brain and the emergent mind's capacity to observe. This would apply to String Theory as well as opening ourselves to inherent human need for spirituality (which I am all for). zdo, I walk a fine line. I force several traditions of interpreting our world into the same room. I see their inter-connectedness. They make strange bedfellows, but I believe we have to become comfortable with uncertainty, ambiguity, and the limitations to our awareness as long as consciousness is embedded into a brain. It makes for an interesting journey. Rande Howell

I agree. Just flies past them like ships in the night. We are all born into historical narratives that our brain adapts us to. We internalize them to the point that the narratives have us -- we do not have the narrative. That's simply the biology of it all. And we can stay there in these limitations from generation to generation. Mindfulness is a way of waking up from the prison of this comfort zone. Trading gives us a slew of opportunties to wake up from the feaar-bsed trance that blinds us to a greater expression of living. Humans, especially traders, are in a unique position to wake up from this entrancement. There is a joy beyond comparison in being witness to a person's awakening from his history and into the light of who he can be. There a real cosmic sense of humor to all this -- that trading (of all things) would be such an excellent path to self discovery. Rande Howell

One thing for sure. Trading will give you plenty of opportunity to test out your observations. Regarding Transactional Analysis -- The Gouldings took TA from an eloquent cognitive theory to a highly practical one for changing core beliefs in their modification of TA called Redecision Therapy. What they got was that it was the fundamental belief about self that had to change. Otherwise, it was great talk but no long term change. They used the language of TA, where as I use the language of Jungian Archetypes, that is not what matters. They were able to get at the process of change long before neuro-science started contributing to our understanding of how the brain produces mind. Rande Howell

To our mammalian brain (limbic system) fear is not complicated. Any threat to survival triggers the fear of death. And this element of our brain is mandated to attack/avoid/approach the threat as a solution to the problem. Then along came the neo-cortex and things got complicated. Suddenly there was all sorts of finer distinctions of the meaning of fear. It's this organization for survival's sake around the base of fear that I call a core wound. For trading purposes I isolate 3 core wounds that human's perception and action become organized around. They are inadequacy, not mattering, and unworthiness. Most humans try to prove their adequacy and their meaning and purpose in the world externally by performances. This is called external validation. If a trader brings this into his or her trading day, proving the self by performance, there is most likely going to be trouble. As we learn to de-construct the value of the self from performance, we come to a place of internal validation. Performance and being are separated. This is the value of developing a mindfulness practice as part of the development of our psychology. Threat (possible loss) is no longer a reflection of the value of the self. Our limbic system doesn't trigger so grandly and the trader is able to bring a disciplined, impartial mindset to the trading performance, rather than one tainted by fear. PS -- Most folks find this internal validation as part of their spirituality. Rande Howell

Medications are going to impact certain elements of an emotion and the state of mind that comes from the emotion. It will impact the feeling, or the subjective experience, of the emotion. This often gives people an edge in dealing with emotional nature. Medications will also impact the arousal aspect (the excititory element of an emotion). This can be a good thing because it can give you more control of the emotion sweeping you away. Medication will not impact the essential elements of meaning nor motivation. These are the most important aspects of our humanness and they hold the key to long term change. These are the elements that influence mind and action. My hope is that you are learning how to re-organize belief rather than just the cognitive distortions you mentioned here. I practiced for many years as a CBT therapist and have respect for the field. However I hold that it is belief bound by emotion is the key. Whereas in CBT the assumption is that emotion follows thought. You can disrupt thought (I certainly teach that), you can nab your cognitive distortions, and you debate the negative thinking -- but until you change the meaning of self that has fused with the emotion, the thinking will be a constant battle. Sooner or later you will still have to fight your inner demons. Rande Howell

First, fear needs to be deconstructed from both worry and fear. Many traders have this pattern engrained in the way they see and interpret the world. Otherwise it is hard to learn to stop putting your hand on the hot stove. What I find most often is that the trader has a winning strategy as attested by simulated trading, but the capacity to learn from mistakes is compromised by the very thing your speak of here -- the need to decouple past learning based on fear and present learning based on risk management of uncertainty. Fortunately this can be done. Re-organizing the trading mind around discipline and impartiality in the face of uncertainty (rather than a form of fear of death) is the next step. And you're right, if they don't have a winning strategy, I hope that fear does stop them from losing money needlessly. Rande Howell

People are always in the act of becoming. What we are in one moment in time is simply the door to the next stage of a personal journey. My hope is that passion would find even greater expression as that person evolved. Trading is a powerful way of discerning between a need to prove the self by an external vechile and discovering what drives the self internally. Many people find a deeper spiritualilty as they evolve as trader. As they become able to solve the mystery of themselves, they become open to becoming steward to serve a purpose greater than the self. Rande Howell

Your assessment is no surprise. May your trading be productive. Rande Howell

This is a great question because it locates your passion for trading -- the love of the game. This is the essential intrinsic motivation for a trader to re-organize his or her psychological self to become the trader he needs to be rather than who he or she currently is. Rande Howell

Here is Trader's Toolbox website: URL Deleted by Moderator . Check out his background and his stories. Rande Howell

I have no doubt that making a profit is part of his intention. But I doubt seriously that their is actually much profit in a book like this. Unless you have a mass seller, authors make little money. The publisher does. And trading is a vertical market. So money is not the primary aim. What I got, was that this whole field fasinates him and he enjoys helping other gain competence in this area. I wish their were more capitalists like him. Any time you use a popular platform, there is a good chance you are using his indicators that are already embedded into it. So you've paid for them. By taking and holding a conspiracy mindset, you also blind yourself to what this man offers. Rande Howell