[Rande Howell]

What does this discussion open or close for you as a trader?

Trading does not come natural to the human brain. For the vast majority of traders, it has to be learned. From an evolutionary perspective, just a few short years ago we were all cavemen. In your ancestor’s world there was no reason to separate uncertainty from fear. The world was a dangerous place and if you experienced uncertainty in your dealings with your environment, there was a good chance you were facing a mortal threat. Uncertainty became glued to fear and anxiety as a survival trait. And that trait got transmitted to future generations -- long after the usefulness of glueing uncertainty and fear together.

Your inner caveman still lives within you as you trade. Your limbic brain (caveman’s inheritance to you) still is still watching his environment (your trading screens now) and interpreting from an evolutionary bias that locks uncertainty and fear together – rather than distinguishing them from one another. This deeply embedded trait has also been uploaded into your psychology. This is the psychology of self that trades and experiences worry and fear when you are supposed to be impartially managing risk with your trading plan.

Separating uncertainty from worry and fear (more primitive parts of your survival brain) – caveman – is what is required for a trader to evolve from fear based interpretations of uncertainty to risk management interpretations of uncertainty. So if you're having difficulty moving one set of psychological skills that proved okay successful in one domain of your life to success in trading, welcome -- this is typical. There is nothing "wrong" with you. But it does indicate that the "you" that your brain has organized you as needs to be changed. And that new psychological skills will need to be developed to replace your inheritance from caveman. Otherwise caveman will continue to participate in your trading. That's all.

The mindset for the vast majority of traders has to be developed. Particularly the management of uncertainty and the meaning that becomes embedded tin he meaning making pathways of your brain (that's your perception). This is where you will find your self limiting beliefs about yourself. If you experience hesitation as you evaluate set ups for risking capital, if you are seized with fear as you try to pull the trigger, or if your heart pounds as you enters a trade (particularly when it goes against you), you are experiencing a biological predisposition that has shaped your personal psychology to avoid uncertainty -- that's your caveman trading along side of you, perhaps even taking over. It is the mindset that you take into uncertainty (that's trading) determines the probability of success.

Evolutionary and psychological bias, in the vast majority of traders, will have to be examined and changed for this to occur. It takes emotional labor, and that's the price for re-development of the self designed for trading. It's a great personal development adventure. Traders often invest years in learning to know the self and developing a psyhology that trades effectively. This process is unavoidable.

Where are you in the evolution of this process?

Rande Howell

[SIUYA]

without uncertainty there is no opportunity.
by planning and understanding there can be opportunity from uncertainty.
This helps reduce the fear....but not eliminate it.
Fear, can also be a good thing. Not of uncertainty, but fear of being unprepared, fear of betting the house and blowing up.

Luckily I have always been conservative enough to respect the fear, but also to embrace the uncertainty.

[PQL111]

build a mechanical trading system to eliminate fear and hope, and to be free of emotions in the trade.
overbalance of time, and imbalance of order or chaos are the only things too concentrate on to understand the cause,

[Rande Howell]

Originally Posted by SIUYA »

without uncertainty there is no opportunity.
by planning and understanding there can be opportunity from uncertainty.
This helps reduce the fear....but not eliminate it.
Fear, can also be a good thing. Not of uncertainty, but fear of being unprepared, fear of betting the house and blowing up.

Luckily I have always been conservative enough to respect the fear, but also to embrace the uncertainty.

It is the mindset that enters the uncertainty that creates either opportunity or negative fortune. It is in the eye of the beholder. I believe that what you refer to as "respect the fear" is called vigilance or reverence -- both essential emotions to deal with uncertainty.
Rande

[zdo]

The first thought that opened for me was some material from Kenneth Reid from years ago about the ‘genetic types’ of traders
“Type One Traders have a 68% chance of being wiped out;
Type Two Traders have a 27% chance of losing all their capital; and,
Type Three Traders have only a 5% chance of washing out.”
It doesn’t appear he is still using the ‘genetics’ word – maybe that lead too many into thinking the chances of change were limited...
(Rande, sorry to introduce a ‘competitor’ Trading psychology - Coaching for traders so early in this topic, but I’d bet both you guys need to be referring a certain % of your clients to each other anyway… I’m not endorsing his ‘typing’ btw. Don’t even really understand the specifics – but I do know he is getting at individuals' susceptibilities to your term, the 'caveman'…)

The second thought I had was how many Type Two and Type Three traders simply cannot even conceive of the tendencies and experiences of Type One traders. Forum readers generally have to infer the ‘typing’ of posters, and see through the flamings and more subtle denigrations, etc.
It might be more accurate and helpful to even say how amazing it is that each of the types has challenges in conceiving of the tendencies and experiences of the other types - limited the chances of assistance from 'higher' types and also limiting the possibilties of lower types resonating with or benefitting directly from modeling from higher types. Their whole (nervous system , etc) will simply have no concept of what to 'do' internally...

Finally, I thought about my own process with this uncertainty issue. Alas, my journey was one of self guided desensitization – helped along significantly by realizing and applying the importance of ‘staying power’ capitalization and proper sizing and then later in the process by learning ways to clear the ‘circuitry’/ programming between the various levels, plus gradually learning the quality of a trade isn't very dependent on the qualities and accumulation of 'confirmations' in trading systems, etc . I applaud and appreciate you for offering others ways of shortening the development curve.

[Rande Howell]

zdo

Interesting reflection. I don't use typing because I find it tends to pigeon holes people rather than develop their potential. After emotional regulation, I teach Jungian archetypes as dominant or under utilized aspects of the self that can be brought into awareness. This has the affect of harnessing the gifts and talents that lie within us. Intially my interest is whether the trader is fear based or impulse based in his trading.
Your desensitization comment is really on target. I actually use a process called stress inoculation as a way of shaping healthier perception while in the process of trading. It's kinda like sytematic desensitization on steriods.
Probably the most I learned in working with traders is the need for compassion and courage to harness the power of shame to reshape the psychological organization of the self that trades. To change core beliefs about the self (which you are trading), this is essential. Trading is a journey into knowing the self and changing the self. Fear is locked door that must be opened.

Rande Howell

[SIUYA]

would a person who had no emotion be able to trade well? (I assume it would be like a computer if given the right rules...so yes given the right rules)
Can you teach a computer fear? (or is that just part of the money mgmt rules to help stay in the game)
Is it more important to control/regulate emotion or fear, or is it more important to suit the type of trader to the correct style of trading for them? To focus on what suits them rather than trying to remap the brain.

[Rande Howell]

Originally Posted by SIUYA »

would a person who had no emotion be able to trade well? (I assume it would be like a computer if given the right rules...so yes given the right rules)
Can you teach a computer fear? (or is that just part of the money mgmt rules to help stay in the game)
Is it more important to control/regulate emotion or fear, or is it more important to suit the type of trader to the correct style of trading for them? To focus on what suits them rather than trying to remap the brain.

The only time a person does not experience emotion is when they are dead. So I'm hoping no one tries to set up the situation that they trade without emotion. Emotions and our perception can not be separated. The trick is to trade (and think) from particular emotional states when trading. When we say we are logical, rational, or impartial, we are trading from this emotion. Rational or logical is not independent of emotion -- it is simply an emotion among other emotions. Rational is a great emotional state to solve problems from. But it would be a terrible emotion to romance from. Each emotions sets forth a kind of thinking and memory that is associated with it. Managing this relationship while trading is key. The problem is that impartiality cannot co-exist with fear. Fear, unless regulated, will block your ability to maintain impartiality in the face of uncertainty. This is why you see so many traders who will assert that they know HOW to trade, but that their emotions get in the way of their trading. Actually it is the kind of emotion that seizes thinking that is the problem -- not that they have emotions.

Once they know how to regulate themselves emotionally, some traders do exhibit particular kinds of trading they gravitate towards. Others practices several different kinds. The problem I have with deterministic forms of personality tests that determine the best kind of trading for a trader is that they are measuring a snap shot of where a trader's psychology is at a particular moment and applying it to a style of trading. They do not measure the potential that is possible. So they tend to pigeon hole people that simutaneously cuts off potential. Once fear is regulated, a whole new world can show up that a deterministic test would have missed. Focusing on the development of potential beyond fear opens a different range of possibilities for people. It's the fear that has to be regulated. Patience, disciple, courage, and impartiality then can be developed.

Rande Howell