[Rande Howell]

I get a number of questions from traders. Here is a trader who is discovering a disabling money narrative that has held his trading hostage. Let's take a look.

Here is the trader's observation:
Attached is the script that we discussed on Wednesday. When I finished writing this I realized that this does not happen every time, just most of the time. There are times that I calmly enter and manage the trade without feeling anything close to this level of uncertainty / fear.

Let me know what you think. I am really looking forward to interrupting this dis-empowering script. Writing this made me somewhat frustrated that this was happening. I feel hostage by all this. This looks like inconsistency to me! The good news is that I now know what I am dealing with.

Now, listen to the script that has been driving much of his trading. Before, this money conversation about uncertainty was outside his threshold of awareness. I want you to see what opens up to the trader as he starts observing and confronting this aspect of his mind.

Script up to the point of seeing the flash:

Generally from the review I am open to several setups as I am monitoring 5 symbols for trade possibilities. To help with this I set price alerts. To this point I am experiencing very little fear or anxiety. When a price alert goes off I begin closely monitoring the symbol for possible entry. Generally four questions follow: 1) Am I still interested in the setup given the price action that has already occurred? 2) What do I want to see, if anything, from the lower time period? 3) What price to enter? 4) What is my must? In other words, what will I see if my hypothesis is not currently playing out.

I begin to feel uncertainty particularly with questions 2 and 3. I often hear things like the following:

1) Do I want to see an L1 failure first for additional trade confirmation? If I want to see the failure and it doesn’t happen then I won’t be in the trade.

2) What price should I take?

3) If I’m wrong how big will the loss be? What will I allow to hold to stay in the trade?

Asking these question I begin to feel uncertainty / fear about the trade.

I also hear “what if I’m wrong, what if this is a big loser”?

With this the uncertainty / fear builds even more. If I decide to take the trade anyway, and with my hand on the mouse, I see the FLASH. This can lead to hesitation, etc…..

This flash that he "sees" in his mind is actually the firing of an automatic fear response to uncertainty. From the flash there is an emotional cascade that hijacks his mind and his thinking becomes corrupted with fear of loss. Up to this point, this automatic response to uncertainty had been out of his awareness. Now, it is in his awareness, and he can begin to disrupt it and change it. Notice the build up to the flash. This is what has to be disrupted.

This is a powerful moment in getting control of his psychology for trading. Based on this trader's AHA moment about the disruption to his good trading practices, what can you learn about your relationship to uncertainty and trading?

Rande Howell

[4EverMaAT]

Originally Posted by Rande Howell »

I get a number of questions from traders. Here is a trader who is discovering a disabling money narrative that has held his trading hostage. Let's take a look.

Here is the trader's observation:
Attached is the script that we discussed on Wednesday. When I finished writing this I realized that this does not happen every time, just most of the time. There are times that I calmly enter and manage the trade without feeling anything close to this level of uncertainty / fear.

Let me know what you think. I am really looking forward to interrupting this dis-empowering script. Writing this made me somewhat frustrated that this was happening. I feel hostage by all this. This looks like inconsistency to me! The good news is that I now know what I am dealing with.

Now, listen to the script that has been driving much of his trading. Before, this money conversation about uncertainty was outside his threshold of awareness. I want you to see what opens up to the trader as he starts observing and confronting this aspect of his mind.

Script up to the point of seeing the flash:

Generally from the review I am open to several setups as I am monitoring 5 symbols for trade possibilities. To help with this I set price alerts. To this point I am experiencing very little fear or anxiety. When a price alert goes off I begin closely monitoring the symbol for possible entry. Generally four questions follow: 1) Am I still interested in the setup given the price action that has already occurred? 2) What do I want to see, if anything, from the lower time period? 3) What price to enter? 4) What is my must? In other words, what will I see if my hypothesis is not currently playing out.

I begin to feel uncertainty particularly with questions 2 and 3. I often hear things like the following:

1) Do I want to see an L1 failure first for additional trade confirmation? If I want to see the failure and it doesn’t happen then I won’t be in the trade.

2) What price should I take?

3) If I’m wrong how big will the loss be? What will I allow to hold to stay in the trade?

Asking these question I begin to feel uncertainty / fear about the trade.

I also hear “what if I’m wrong, what if this is a big loser”?

With this the uncertainty / fear builds even more. If I decide to take the trade anyway, and with my hand on the mouse, I see the FLASH. This can lead to hesitation, etc…..

This flash that he "sees" in his mind is actually the firing of an automatic fear response to uncertainty. From the flash there is an emotional cascade that hijacks his mind and his thinking becomes corrupted with fear of loss. Up to this point, this automatic response to uncertainty had been out of his awareness. Now, it is in his awareness, and he can begin to disrupt it and change it. Notice the build up to the flash. This is what has to be disrupted.

This is a powerful moment in getting control of his psychology for trading. Based on this trader's AHA moment about the disruption to his good trading practices, what can you learn about your relationship to uncertainty and trading?

Rande Howell

We tend to fear what we do not understand when we make a habit of trying to explain why things are the way they are. When we cannot get a direct answer from the source, we make assumptions to feel safe. "Just the answer makes us feel safe". Making assumptions has a snowball effect because once you get rolling with one strong enough, it just perpetuates along with additional assumptions to support it until something catestrophic happens that forces you to challenge some or all of the agreements. This may be a sigificant loss or wipeout of account equity.

So for trading, the uncertainty is mainly the fear that you will lose money that you may not lose if you don't trade. You feel safe in "staying where you are". The irony is that you also LOSE by not trading at all. Huh? Staying on the sidelines forever you never get the opportunity to gain any reward. But we hardly ever think of trading in this way. We know that accidents happen, but does that stop us from driving or taking a flight? We know at least in that instance that we must take concrete steps to get to our next destination. But we trust that the systems that are being used (car, plane) are sturdy enough to work for our intended purpose. Has the client tested his own "system" to ensure its sturdiness? This would be best acheived with automation, but that's another thread.

The reality is that there will always be uncertainty. All you can do is your best. The awareness that he has the problem is the first step.