If you've been implementing the usual trading psychology tips from blog posts, books and courses…
…and it's still not working…
Then this post was written for you.
If you don't have the results that you want in your life or in your trading, and you are working hard at it, then there's really only one reason:
Your mindset is holding you back.
It's not your trading system.
It's not your broker.
It's not your mentor.
Your mindset determines:
- How easily you rebound from losses
- Your discipline to follow your trading plan and fill out your trading journal
- How long you will persevere until you finally figure out how to become a consistently profitable trader
- The number of trading strategies you will test before you find the right one for you
- And more
But how do you change a mindset that has been with you for years, or even decades?
If you have ever tried to make major behavioral changes, it can seem impossible.
In this post, I'm going to share with you my 18+ years of experience in working to figure out how to get past my deepest limiting beliefs and change my unfulfilling habits.
I'll share:
- My research
- Resources
- What I have tried
- What has worked best for me
- The benefits/limitations that I've observed in each type of healing modality
My hope is that this post will give you a starting point to figure out how to change the behaviors that you want to change, in order to reach your goals and live a more fulfilled life.
There's one key concept that you need to understand before we get started…
Negative emotions can get trapped in your subconscious mind, from various traumatic events in your life. These negative emotions can then cause addictions, irrational behaviors and even diseases.
In trading, they cause of things like overtrading, revenge trading, a lack of discipline and much more.
The key to changing your undesirable behaviors is to release your trapped negative emotions.
If you want to see how I came to this conclusion and what has worked for me, then keep reading…
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We have only to follow the thread of the hero path. And where we had thought to find an abomination, we shall find a god; where we had thought to slay another, we shall slay ourselves; where we had thought to travel outward, we shall come to the center of our own existence; and where we had thought to be alone, we shall be with all the world.
– Joesph Campbell
How to Get the Most Out of this Post
What I'm about to share with you can help you become the heroic trader and human being you have always known you could be.
But it won't be easy.
You will have to go on what Joseph Campbell calls the Hero's Journey.
Since you found this post, you are probably ready to start your journey.
Before we get started however, please keep the following 4 things in mind…
1. The Same Things Won't Work for Everyone
There are no panaceas.
This post will give you some starting points, but it's up to you to put in the work.
You have to be willing to try different modalities and figure things out for yourself. What works for me, may not work for you.
Some people will tell you that a certain treatment will cure everything.
That's simply not true.
2. Dogma is the Enemy of Progress
Put down your existing beliefs, just for the duration of this blog post.
Do you remember the game of Telephone in elementary school? Here's a good example.
If you don't know what I'm talking about, the game is basically used to teach kids that statements can change dramatically, as they are passed from person to person. So don't always believe what you hear.
The same thing can happen in belief systems like:
- Religions
- Laws
- Education systems
- Traditions
- Common sayings
The difference is that the “telephone effect” in these belief systems can be multiplied by billions of people over thousands of years. More than a few things probably got lost in translation, are out of date, and got twisted to serve personal agendas.
So be willing to judge ideas on the only criteria that matters…if it works for you or not.
You can choose to pick up your existing beliefs again at the end of this blog post.
3. This is a Continuous Process
Even if you solve some big issues in your life, it won't be all unicorns and rainbows. You will need to maintain the gains you have made and there will inevitably be new shit that comes up.
The good news is that if you are able to solve the big issues once, you are much better equipped to deal with new stuff later.
It's like Spring cleaning.
If you don't do it every year, the mess just piles up.
4. I'm Not a Doctor
Consult a licensed medical physician before you try anything mentioned in this blog post.
All information in this post is for informational purposes only and is my personal experience and opinion. It's not medical advice of any kind. I don't pretend to have all the answers, just a lot of curiosity and a willingness to try different things.
Alright now that we have that out of the way, let's dig into why we have psychological roadblocks on the journey to becoming a consistently profitable trader.
Why We Have Bad Habits, Addictions and Self Sabotage
It all starts with a traumatic events in our lives.
There are things in our trading that we know we “should” do.
Maybe you know that you should stop moving your stop loss. Or maybe you know that you shouldn't trade after you've had 5 beers.
But why are these behaviors so hard to change?
Because our traumas have created habits.
In the book The Power of Habit by Charles Duhigg, shows us how habits get formed and why it's so difficult to change them.
Through several examples, he demonstrates that habits are the result of doing the same things over and over. They are stored in a part of the brain that is separate from short-term memory and they can be formed even when the part of the brain that handles short-term memory is damaged.
So good luck trying to change a habit with your conscious mind.
When we experience a trauma, we start acting in a certain way.
It may be a depressed state, exhibiting defensive behavior, or a deep aversion to failure. After we have been acting this for a some time, we form the habit of living in that state and it “sticks.”
In his book Breaking the Habit of Being Yourself, Dr. Joe Dispenza does an excellent job of explaining the neuroscience behind our most deeply engrained behaviors.
He says that we basically become addicted to the physical and neurochemical states that we find ourselves in on a daily basis. If you are living in a state of trauma and fear all of the time, then you cannot imagine yourself any other way.
It's your identity.
Another way to look at is that your trauma has become your personality.
Still another way to look at it is you have PTSD.
We All Have PTSD
This might get weird, but if you stick with me, I'll show you exactly why I believe this is true.
More importantly, I'll also show you why this belief can provide the clues to solving your most annoying behaviors.
What is PTSD?
PTSD stands for Post Traumatic Stress Disorder.
In other words, you went through a traumatic experience which is causing a negative pattern in your current behavior.
Most people think of war veterans or victims of abuse when it comes to PTSD.
But in reality, there is a wide spectrum of PTSD and we all have it because we have all been exposed to trauma.
It's like muscle strength.
Everyone has muscles. But some people are very strong and others are weak.
My research has shown that there are only 4 sources of trauma:
- Environmental – A physical accident, genetic disorder, toxins, etc.
- Emotional – Traumas that have happened between your conception and the present.
- Inherited emotions – You can genetically inherit traumas from your family line and culture. If you don't believe me, read this book.
- Past life – I'm not religious, so this belief is not based in religion. Past lives are a fact. If you don't believe me, read this book. Also watch my video at the end of this post.
A lot of psychologists will focus on traumas in your childhood. The source of your major traumas could be there.
But if you only focus there, you can miss out on so much more.
This is one of the reasons why I believe over 90% of independent traders fail. They aren't addressing the right psychology issues.
Now let's look at some common examples…
Your Parents Meant Well But…
Even the most caring and nurturing parents will give their kids a little PTSD.
(But in all fairness, the opposite is probably also true, so it evens out 🙂 )
If you're a parent, don't freak out about this.
Trauma will happen to everyone, there's nothing you can do about it.
One of our responsibilities as adults is to figure out how to overcome this trauma and live the best life possible.
This is all part of the human experience and the Hero's Journey.
These traumas usually happen between 0 and 5 years old, when we are still too young to comprehend what is going on in the world.
Everything has the potential to be scary and possibly traumatic.
The birth process can cause trauma.
In his book, Game Changers, Dave Asprey talks about how he was born with the umbilical cord wrapped around his neck and this led him to him being a pissed off adult.
He also talks about how some healing modalities understand this link, and can reliably predict birth conditions, based on personality traits.
Not getting fed on time can cause trauma.
Being taken away from your mother at birth (like in most American hospitals) can cause trauma.
…and those are just the first few days of your life.
Other Sources of Trauma
Of course, trauma can happen at any point in your life.
Your biggest traumas may have happened after childhood.
The obvious ones are things like: going to war, domestic abuse or getting into a major accident.
But trauma could be the result of less obvious circumstances like a relationship breakup, or the loss of a job.
If you experience trauma at any point in your life, it's simply an overwhelming experience that you didn't know how to cope with.
The negative emotion gets trapped in your body/mind and can cause problems later on.
With each subsequent year that passes, your subconscious database gets bigger and bigger, and there is the potential to stack on more and more traumas.
It's like an iceberg…
The Iceberg Analogy of Advanced Trading Psychology
You've probably seen this on a trading psychology webinar somewhere.
Sigmund Freud popularized the idea that our minds are like an iceberg. Our conscious mind is above the water and our subconscious mind is below the water.
The part that we can see above the surface is only a small fraction of what is actually going on below the surface.
In other words, there's a lot more going on in our subconscious than we realize.
But I believe that there is much more to the iceberg analogy.
It's missing our Inner Hero.
People also call this the true self, the authentic self or our soul.
When we are born, we are the closest to our Inner Hero.
If we live our adult life connected to our Inner Hero, life is fun, we are doing fulfilling work and we express our true feelings.
…and we usually trade like a rockstar.
In other words…we are the fullest expression of our true selves.
PTSD disconnects you from your Inner Hero.
When you are disconnected from your Inner Hero, life becomes a struggle and everything seems difficult. If you have ever been at a job that you absolutely hate, you know exactly what that feels like.
I'll represent our Inner Hero with this image.
As small children, our mind looks like this, with our Inner Hero pretty close to the surface. Our subconscious has not developed much yet, so there isn't much space between our conscious minds and our authentic selves.
This is obvious in small children. They express their true selves all the time.
Kids cry hard when they get hurt and they jump up and down when they are happy.
As we get older, our parents, school and society tell us to “tone it down” and we get away from what really makes us happy and allows us to express ourselves fully.
Consequently, our Inner Hero gets buried deeper and deeper in our subconscious.
Unusually well adjusted? Then your Inner Hero might be a little closer to the surface.
But there is always some separation.
Either way, it's going to take some digging to get down there and reconnect with your true self.
Think of this as rescuing your Inner Hero.
When you finally make that connection again, you will have more self awareness and have a deeper understanding what is right and wrong…for you. You will also be able to forgive yourself for your mistakes and move on faster.
The Hidden Barriers
Rescuing your Inner Hero probably won't be easy though.
There's a major barrier that is going to prevent you from rescuing your Inner Hero.
It's your ego.
Your ego wants to maintain your current state and doesn't want you to resolve any of your traumas.
It's very heavily invested in your current identity.
You can think of it as a giant granite wall that is lodged somewhere in your subconscious, between your conscious mind and your Inner Hero.
Along the way, there will also be other smaller barriers. You will be able to get through some of them easily, and others will take more work.
Advanced Trading Psychology Tools for Rescuing Your Inner Hero
Now that you understand that you have an Inner Hero buried inside your subconscious iceberg, it's time to start digging and bring your heroic ass to the surface. I believe that there are basically three levels of healing modalities to do this.
Again, I might think that a treatment isn't particularly effective, but it may be the thing that moves the needle for you.
So be open to experimentation.
At the end, I'll also give you a list of things that I haven't tried, but my research has shown can be useful.
Level 1: Like Using a Spoon to Dig Into Your Iceberg
The following resources are great for giving you the awareness that you have certain issues. They can also probably solve a few of the smaller ones.
In my experience, the positive effects of these methods usually don't last long. However, if you don't know where to begin, these can be great ways to start your journey.
Talk Therapy
This can include talking to a psychiatrist, a coach or a trading partner. Talk therapy can work well for some things.
From what I have seen and experienced however, talk therapy will only get you so far.
You might be able to get really deep with 15 years of talk therapy. But it's really difficult to bypass your ego