Introduction To Trading Psychology

[samuelleach]

I decided to make this topic to provide valuable free psychology articles to trading to help the babypips community out, ENJOY! yes i have permission to post these articles from the individual too.

Issue 1 – Introduction to Mindset Written by Adrian Leach

Welcome to the psychological aspect of life…. That part of your brain that you don’t know about, take for granted, don’t consider, or don’t really care about?

Over the following weeks and issues of Mindset Weekly, I hope to explain in simplistic terms what the brain does and why it does it, therefore, shedding some light as to why you react and respond in the way that you do. This is not limited just to trading but how you cope in your general day to day life. And, ultimately, to offer some solutions that will help you change the way that you think, feel and cope with life on a daily basis.

After all, you’re in control of your life, right? You chose when to get up, what to wear, how you’re going to get to work, what you’re going to eat and every other decision that you’ve ever made? Of course, you’re in control, you’re an intelligent human being; you’re educated, smart-n-savvy, you know what you want and you’re going to get it!

So why then at times does life feel so bad? That no matter what you do nothing seems to go right? In fact, the harder you try the worse it gets? At times you can’t cope, life’s stressful, you get angry and emotional, you argue for no apparent reason. Then everyone else seems to get what they want but not you?

Does that sound familiar? Well, you’re not alone, most people have felt that way to some degree at some point in their life.

It is said that the ability to trade the forex market is 20% analytical and 80% mindset. In fact, 95-98% of what you do on a daily basis is under the complete control of your subconscious mind. So, in reality, your ability to make conscious, rational, analytical decisions on an ongoing basis equates to just 2-5% of your daily experience.

95-98% of everything that you do is programming; a set of experiences that created a programme along with a belief. The programme allows you to engage with the world; a coping method, skill or strategy that allows you to deal with every life experience and, a belief system to go along with that programme. The belief system is based on and linked directly to your life experiences that created the programme. If all your initial experiences were good and positive then, your belief system will reflect that and you will feel strong, confident, capable and that no matter what you do, you will succeed.

However, if most of your life experiences were bad, negative and unhelpful, then once again, your belief system will reflect those experiences and you will go through life with hesitancy, fear and doubting your skills and abilities - in fact, it can seem like why should I bother?

So, right now, you’re probably wondering if you’re able to change your current mindset and develop those skills that are required to be a consistent, successful trader and those are the right questions.

The answer is yes you can change the way that you think, feel, react and respond - not only as a trader but in every aspect of your daily life. Whether it’s a skill or ability, a coping mechanism, or money, business, finance, health or even sport. All of them can be improved.

Why not become one of the 10% that think about it…

In the upcoming issues, I will go into detail of how to get your mindset reprogrammed, understand why you are thinking or feeling the way you are and how to apply the solutions to the markets, plus all other aspects of your life.

Adrian Leach
He is the senior mindset coach at a trading company. While studying and practising many energy healing systems spanning 40 years (EFT, TAT, TCM, Yuen Method, NLP, Applied Kinesiology, Qigong etc.),He gained qualifications in Massage, Reflexology, Hypnotherapy and Psychotherapy. His goal is to continue to help his clients experience freedom from life’s emotional trauma, stress, negativity, limiting beliefs and to holistically balance the Mind, Body and Spirit.

[mystic707]

thank you for sharing this mate. is he your father? you have the same last names. thanks.

[samuelleach]

He is yes, very talented with the mindset side of things!

[JordanFreckleton]

Very insightful, its important to understand the balance between fundamental/technical knowledge and psychology when trading, which can then have a positive effect in other aspects of your life. Understand your brain!

[beginnertrader2019]

wow thanks for sharing very interesting

[JackSherwin]

What a great insight into maybe the most overlooked area of trading. Looking forward to seeing more from Adrian.

[dumidumi]

I like this one, I will find my self too

[AhsanMalik]

its a nice message Mate , got something new information from this.

[samuelleach]

Mindset Weekly Article 2 - The Subconscious Mind, Programmes and Beliefs

Following on from my previous article introducing myself and Mindset Weekly, this week’s article is delving into the subconscious mind, how it operates, the results you get and how early in life it starts to build these foundations. Enjoy!

The subconscious is the part of our mind that operates automatically below our conscious mind’s level of awareness. The subconscious is a recording device that continuously and accurately records and remembers all the sensory information (experiences) that are continually streaming in from our external and our internal environment via our 5 senses and energy systems.
The subconscious uses this information to create programmes, operating systems to help us deal with every moment to moment life experience. Basically, how we interact, respond and cope with the world around us in every moment.

For example, if someone were to introduce themselves and extend their hand to you, you would respond by shaking their hand and introducing yourself. That action triggered a subconscious programme and you responded accordingly. We have and continue to develop 1000’s of these programmes; learning to walk, to talk, to ride a bike, drive a car the sports you play, your school experiences, your current job and how you interact and socialise with people are all programmes. We, of course, don’t think of them in this way, we just get on with life as best we can.

This process started in the womb, without language, and continues right up to this very moment. The subconscious does this continually 24/7, it doesn’t sleep. The subconscious is neutral about all this input and, accepts it all as being valid. It’s not a seat of judgement in this regard and accepts and embraces thoughts, feelings, beliefs, attitudes, imaginations, energetic impressions and all sorts of problems and reactions whether they are positive or negative, helpful or unhelpful.
The subconscious operates independently from the conscious mind. Faithfully and exquisitely, the subconscious carries out its programming right on cue as circumstances and events unfold in our lives. The subconscious overrides the conscious mind when a subconscious programme is triggered that differs from the focus of the conscious mind.

Eventually, when the subconscious has enough information (input) it creates a belief system to go along with the programming. If the majority of those experiences were positive then, the belief will reflect that. You feel confident, in control and know what you’re doing, and your emotions will reflect that too.
However, if the majority of those experiences were negative then, you will have doubts about your skills and abilities. You worry and have concerns whether you’re doing something properly or not. You may even develop fears and find reasons not to do something or to go somewhere. What you may not be aware of is that the foundation for the majority of your core life beliefs are created before you reach the age of 6.
Now, if you apply these principles to your trading performance, you may begin to understand why you feel the way that you do. If you feel confident, then that’s great. But, if you are feeling anything other than confident then, you may be wondering what you can do to change your mindset in order to be more positive?

Over the next few articles, I will continue to expand on these basic principles and share some techniques that will allow you to start changing your mindset. I hope you have enjoyed the input, I look forward to seeing any discussions and interaction from the community – more next week!

Adrian Leach

Senior Mindset Coach at Samuel and Co Trading. While studying and practising many energy healing systems spanning 40 years (EFT, TAT, TCM, Yuen Method, NLP, Applied Kinesiology, Qigong etc). He gained qualifications in Massage, Reflexology, Hypnotherapy and Psychotherapy. His goal is to continue to help his clients experience freedom from life’s emotional trauma, stress, negativity, limiting beliefs and to holistically balance the Mind, Body and Spirit.

[JackSherwin]

Another great article from Adrian. Its so important to introduce WHY processes are there before going ahead to change them if this is what is holding your trading back. Looking forward to next weeks article.

[riskrewardratio.club]

I think that risk management is also very important. Calculate risk of every transaction before is realized.

[Honeymoon]

Yep, people often need their minds to be fixed, but you should trust your psychiatrist completely which is not simple, by the way

[samuelleach]

Three Brains not One

This week’s article is about bringing 500 million years of the brain’s evolution up to the present day.
Believe it or not, our brain has gone through three stages of development during human evolution. This was first postulated in the 1950s by Paul MacLean’s famous triune brain theory. This model attempted to explain the structure of the human brain associated with the evolutionary history of the species. So, let’s look at each of these three stages and see what they do.

1st Stage, we have the Paleo-Cortex, the oldest part of the brain shown in green within the image below. This part of the brain is approximately 500 million years old in evolutionary design and is referred to as the Reptilian Brain. The Reptilian Brain is instinctual and operates on what we term as Primal Drives.
In order for a species (reptile) to survive, they need to meet a certain set of criteria (Primal Drives) to maintain the status-quo; air, food, water, safety and reproduction. Reptiles are said to be cold-blooded. What that really means is they struggle to maintain their core body temperature, moving towards warm areas when cold and vice versa. Reptiles are solitary creatures only coming together once a year in order to mate. They generally give birth to live young or lay eggs, either way, they leave their young to fend for themselves once they’ve hatched.

Our Primal Drives are constantly being triggered and influence our lives on a daily basis. Our eyes are our primary source of information that contributes 80% of our sensory input, constantly scanning our surroundings looking for danger, conflict or an aggressive situation. Or looking for somewhere to eat or drink, even though we’re not hungry or thirsty, and we remember where they’re located for future reference. And, we still keep scanning for a partner, looking for a mate, even though we may be in a relationship or married - it’s programmed into us. Our nose is sensitive to the smell of cooked food, coffee or freshly made bread that trigger our saliva glands, even though we’re not hungry. It’s all to do with keeping us alive.

The 2nd Stage developed around 150 million years ago and was originally called the Mammalian Brain, what some people refer to as the Monkey Brain. It is now referred to as The Limbic System which records our memories and is responsible for our emotions, shown in the first referenced picture above to be located at the red part of the brain. The Limbic System wraps around the Reptilian Brain and acts on our Primal Drives. Monkeys are warm-blooded, sociable animals living in troops. They have a complex social structure and hierarchy that involves sounds, facial expressions and body posturing. They nurture and suckle their own young and will often care for other monkeys’ siblings. There is safety in numbers; more eyes to look for food and water and deal with predators.

The Limbic System is a complex integrated area involved in learning, memory, emotion and executive function (how/what we learn to do). The Limbic System integrates all systems and allows us to engage in the world: Our sensory systems allow us to know about the world, and our motor system allows us to act in the world. The Amygdala is also contained within The Limbic System and that aspect will be covered in the next article.

So, when we add our five senses together with a physical movement, that allows us to engage with the world. Then we add our emotions, which give us texture to that experience along with our ability to remember the event, built up over time helps to produce our unique personality.

The 3rd Stage is called the Neo-Cortex, which is often called the New Brain (Neo meaning New), and developed around 2-3 million years ago, it’s shaded blue on the first picture referenced above and makes up around 80% of the human brain volume, needing 20% of the energy produced by the body in order to function. The Neo-Cortex or New Brain is said to be like a 2-year-old in simplicity, it makes up stories to rationalise a situation and, just like a child, you must be very specific when giving it instructions. It is said that the subconscious mind is held in this area.
The Neo-Cortex is more commonly recognised as having the two large left and right hemispheres shown in the second picture below.

The Neo-Cortex, for anatomical classification purposes, is also sub-divided into 5 areas called Lobes, each named after the skull bones in that area. These Lobes have very specialised functions and are responsible for the development of sensory perception, motor commands, language, abstract thinking, imagination, learning, memory, sleep and executive functions; such as reasoning, decision-making, self-control, concentration, self-reflection, problem-solving etc.

Although each of these three brains or areas of the overall one brain have distinct functions and appear to operate independently of each other, collectively, they are interconnected by nerves and strongly influence each other.

I hope you have enjoyed the journey so far, I look forward to seeing any discussions and interaction from the community – more next week where we delve into the workings of The Amygdala and link all the information from previous articles, including this one, to contribute to how it all affects trading.

Adrian Leach

Senior Mindset Coach at Samuel and Co Trading. While studying and practising many energy healing systems spanning 40 years (EFT, TAT, TCM, Yuen Method, NLP, Applied Kinesiology, Qigong etc). He gained qualifications in Massage, Reflexology, Hypnotherapy and Psychotherapy. His goal is to continue to help his clients experience freedom from life’s emotional trauma, stress, negativity, limiting beliefs and to holistically balance the Mind, Body and Spirit.

[Stephen.W]

Awesome insight into the human development and evolution of our brains! Big A always dropping bombs

[rajsingh18]

Great read. I find Adrian’s articles very intriguing. Looking forward to the next one.

[samuelleach]

Mindset Weekly Article 4: Our Guardian Angel – The Amygdala
So now that I’ve covered the basic background of how your subconscious mind operates and how the brain developed through evolution, I want to focus on just one part of your brain. When this part is activated, it will automatically override your conscious mind from what you are currently doing. If you’re trading, you’ll experience internal turmoil, conflicts, indecision that causes you to make mistakes. Understanding this one fact can help you control your actions when trading. It is, of course, the Amygdala.

The Amygdala is part of the Limbic system. Remember in the previous article about the Three Brains, the Limbic System, also called the Mammalian Brain, shown by red in the picture above. The Amygdala is responsible for the “fight-or-flight” response.

Over the past 150 million years, the Amygdala has utilised our 5 senses to seek out danger and keep us safe by triggering the “fight-or-flight” response. Such as; direct conflict, being attacked, being startled, fear, panic and anything that’s going to threaten life and limb.

Fantastic – what a great job.

And, it still does that for us today. So, what’s the problem? Well, the Amygdala hasn’t had a software update, it hasn’t evolved or kept pace with mankind’s evolution.

Let me briefly explain what happens when it’s triggered. And yes, I understand that for some of you this is boring but, if you need to answer a trivia question you’ll have the answer!! Bear with me – it’s important.

So, let’s create a scenario for 150 million years ago. A tiger comes along, the Amygdala is alerted to the danger - which is a really good thing. The Amygdala then triggers the “fight-or-flight” response. The body is immediately flooded with adrenaline causing our blood pressure to rise, the heart rate to increase, forcing blood to our arms and legs, preparing the body to fight the tiger or run away.

When the Amygdala is triggered, it automatically takes over and shuts down the Pre-Frontal Cortex, the part of our brain located behind our forehead where we make rational executive decisions. The Amygdala is not concerned that you’re analysing the markets, calculating lots sizes or looking at candlesticks, it’s job is to keep you alive. So why is it being triggered? Well, it turns out that any fearful, angry, anxious or worried thoughts also trigger the Amygdala.

And it gets worse. Money issues, business, relationships, the failing global economy, wars, terrorism, climate change, Brexit, stabbings etc. also triggers this response.

Technically; It triggers a response when one is in a position or situation where demands on a person exceed that person’s resources or ability to cope mentally, emotionally or physically.

The “fight-or-flight” response is not conducive to a trader’s performance. As traders, we need to be in a calm and relaxed frame of mind and in control of our emotions.

Is there anything that we can do to regain control of our emotions? YES!!

The Amygdala is connected to the Autonomic Nervous System (ANS) and they influence one another. Although the ANS is automatically triggered when a potential threat is experienced, there are methods that we can use to influence and reverse its effect. And that’s because the ANS has two functions, the Sympathetic and Parasympathetic nervous system.

When the Amygdala experiences a threat it triggers the Sympathetic Nervous System (SNS) and the Adrenal glands, which sit on top of the kidneys, release adrenaline (Cortisol and Epinephrine) in preparation for the “fight-or-flight” response. The Parasympathetic Nervous System (PNS) is the opposite and relaxes the body. Both systems are like a light switch in that they are either on or off. Neither work at the same time.

You can utilise a variety of methods individually or in combination to help reverse the “fight-or-flight” response and elicit the relaxation response. Any form of exercise that causes deep abdominal breathing such as; weight training, cycling, jogging, brisk walking and visualisation. Yoga, Tai-chi and Qi gong all combine slow fluid movements with mental focus and deep breathing. But my favourite method is the Silence the Mind technique that I teach and have mentioned many times before. It elicits deep focused breathing and switches off the mental chatter in seconds, thus, allowing the Amygdala to reset and calm the body.

These are just some of the many techniques that you can employ to help calm your body and mind. Maybe you already practise one or more of them in your daily routine? Over the coming weeks, I will share some techniques that will help you to take back control, change your thinking and refocus your mind. As always, I hope you have enjoyed the input, I look forward to seeing any discussions and interaction from the community – more to come next week!

Adrian Leach

Senior Mindset Coach at Samuel and Co Trading. While studying and practising many energy healing systems spanning 40 years (EFT, TAT, TCM, Yuen Method, NLP, Applied Kinesiology, Qigong etc). He gained qualifications in Massage, Reflexology, Hypnotherapy and Psychotherapy. His goal is to continue to help his clients experience freedom from life’s emotional trauma, stress, negativity, limiting beliefs and to holistically balance the Mind, Body and Spirit.

[atishpatel]

Invaluable knowledge!

[rajsingh18]

I like the breakdown of how the fight or flight is related to everyday life as well as trading. I like to meditate to help shut off at times. I totally agree with visualisation. Something I have been doing very often, recently.

[JackSherwin]

looking forward to hearing about more techniques to come. Hopefully give us that well needed software update.

[Stephen.W]

Really looking forward to hearing more about how we can utilise these techniques to help calm our brains! Awesome read as always from Adrian