- The conscious subconscious loop
- Psychological implications of high impact news events e.g. FOMC
- How to rewrite your subconsciousness
- Read of the week
- Your subconsciousness's manifestation into reality
- Link to trading consistency
I want to dive into your mind and your thinking.
The mind is the most complex machine on this entire planet and we are not given an instruction manual on how to use it. Napoleon Hill – "Nature has endowed us with absolute control over but one thing, and that is thought". I believe this is a profound statement.
The only thing we have complete control over is our thoughts. Let's start with this: ask yourself, where do your thoughts come from? Take some time before reading on to try and answer this yourself…
You may have found a randomness to your thoughts? When you sit there idle? When you hop in the shower? drive your car… Thoughts just pop into your head but where do these thoughts come from?
In a sense they are random, each individual thought is random but over the broad scope, they are not random.
On average humans have 70,000 thoughts per day, 90% of these will repeat daily so it's the 10% difference which makes up who you are. That 10% creates your beliefs > your beliefs manifest themselves into reality through your actions > your actions determine where you end up in later life.
The house you live in, the car you drive, your family dynamic. Everything.
Aristotle summarised this nicely – "Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act or a onetime event, it is a habit."
Your entire life is based around your habits and those habits are manifestations of your subconsciousness.
Your subconscious pops thoughts into your consciousness. It is however a loop, your subconsciousness forms your consciousness and your consciousness forms your subconsciousness.
Image source: https://www.vecteezy.com/
I like to think of them as factories – your consciousness (what you think about) embeds itself into your subconscious brain through repetition, producing 'thought factories'. These factories then produce similar thoughts which pop into your consciousness from your subconsciousness, this creates the loop!
A good example to explain: You learn 2+2 = 4 from someone telling you this fact, it will briefly be held in your consciousness, to be able to remember this your brain embeds this fact into your subconsciousness, so when someone asks you 'what is 2+2?' You retrieve this information from your subconsciousness back into your consciousness to answer the question, it is a loop!
The same happens with skills, beliefs everything! Memory is simply information stored in your subconsciousness, to remember something it must be stored there so then you can recall it at will into your consciousness e.g. in an exam to answer a question.
Let's give a brief example of why this is important. Say you have two people who both have a job interview and both fail to get the job. One persons automatic reaction is: I give up! I will never get a job. I am a failure. The other persons automatic reaction is: I will take this as a lesson, it is not the end of the world, I will try again! Both responses stem from your subconsciousness.
These responses are more often than not, automatic. This is an important point. Automatic implies little to no effort required, no energy is required to produce these responses, you don't have to sit and think about how you will respond, it just happens, it is automatic!
Why is this important? Well both are humans, both of their brains act on the same biochemistry, why does one person have a automatic negative response and the other a positive one?
They both have a different belief system, a different subconsciousness!
Overtime who of the two is likely to be more successful? It's quite apparent that it will be the second person.
I think it is important to understand HOW thoughts in your consciousness embed themselves into your subconsciousness.
Brain waves or brain activity is a sort of barrier between the two.
When you have a lot on your mind it is more difficult to learn things, this is because your brain activity is higher and so the barrier between your consciousness and subconsciousness is stronger.
Not everything in your consciousness forms subconscious factories, this barrier separates the two. Linking a thought with emotion or through simple repetition will allow a thought to break the barrier to form a subconscious factories.
Thought + Emotion or simple Repetition = Subconscious Factory
For example in school when you wanted to learn Pi = 3.14 you repeated it over and over, each time you placed it into your consciousness there was a chance it broke the barrier to embed that information into your subconsciousness. This means you'd then remember it and can recall that information at will.
The same will happen with beliefs. If you charge a thought with emotion that will give it a higher chance of breaking the barrier into your subconsciousness – highly emotional events are easy to remember and this is why. Now we understand the basics of how your brain works let's move onto the next chapter.
This week I am going to cover the psychological dynamics of trading during high impact news events, specifically the more recent FOMC which really shook the market up during the week 14/06/21.
Trading around news events always presents a greater risk, even if the technical all line up for a certain bias an unanticipated news event can rattle the market and cause some unpredictable explosive moves.
At TST we aim to protect our capital and we focus on managing our risk over sitting in awe over the potential profits. We are cautious and only take the highest probability set ups.
So during high impact news such as FOMC we stay more patient and accept the fact that our trades or opportunities can be heavily disrupted. We never take this to heart and simply stay disciplined with our trading plan, we manage our positions accordingly and we allow any disruptions to the market to settle down before getting involved again, as there can be some highly manipulated price when news is involved.
Above is AUDUSD, price was sitting in a very strong region to see some upside but due to the FOMC meeting we remained patient.
This set up did not present a suitable entry as a result of the news, so we remained disciplined and did not take any unnecessary risks. We understand there is an abundance of opportunity and that we do not need to worry about missing one high probability set up.
We have to revisit the brain waves for this part, they are the barrier between your consciousness and subconsciousness.
We already know that lower brain waves makes it easier to break through the barrier and alter what's in your subconsciousness, there are certain habits you can do to help this:
- Regular meditation
- Daily journaling
- Brain dumping (a strategy where you sit down with a blank piece of paper and write in continuous prose, what ever comes to mind, until nothing comes to mind)
- Walks in nature
- Wim Hof breathing
These are all ways in which you relax your mind and therefore make it easier to access your subconsciousness and your belief system.
Now once you have access to your subconscious through these habits what do you do to re-write your code?
Well it's about repetition of the correct things. Affirmations are the most powerful way in which you can re-write your code.
Of course to know what to fix you must first know what is wrong, that is a job only you can do, you must spend time reflecting and figuring out where your strengths and weaknesses lie – in trading especially, they will all stem from good/bad code in your subconsciousness.
This list of questions is a great start on figuring out what your faulty code is:
- Describe the problem – surface level
- Why does it make logical sense that you would react, think or feel that way? Mental problems always have logical rationale behind them – if there are multiple do the next 3 steps for each one.
- Why is that logic flawed? Accuracy is critical, there is often more than one flaw don't worry if you can't find them all right away.
- What is the correct way to handle the situation? Take into account steps 2 and 3, use affirmative language.
- Why is that correction correct? Figure out why the answer in step 4 is correct, this step can be a little redundant at times but it helps you learn and also adds some clarity to the solution.
This question list was sourced from the book – 'The mental game of poker' Written by Jared Tendler and Barry Carter.
Once you have identified the faulty code you must figure out what the correct code should be, then consistently affirm that to yourself.
Visualisation is another powerful technique, this works by creating relevant factories in your subconsciousness.
Your subconsciousness will then continuously work (through your interpretation of your environment) to make sure you act in accordance with your visualisation.
So the actions you take will gradually transform your visual into physical reality, morph into the future projection of yourself, or what ever your visual may be about.
What an incredible read. There is a very strong message buried in each one of the chapters. A book that really encapsulates the correct psychology for how to build a life of abundance, I learned some incredible information from this book which has transformed the way I see success and how to attain it! A classic book on self mastery and one I would highly recommend everyone to read!
Where do beliefs begin?
Everything around you from your phone, to the bed you sleep on, all once started as a thought in someone's brain. I mentioned previously that your beliefs and therefore your interpretation of the environment produce your day to day actions.
You aren't born with the belief that murder is bad. The belief manifests itself inside of your subconscious from your environment, other people saying it, reading it online or what ever the source of information is, it begins in the environment. It is then held in your consciousness when you think about it and after exposure it can embed itself as a belief in your subconsciousness.
The nature of beliefs is that they are structured energy, energy cannot be created nor destroyed – according to the first law of thermodynamics – but they can be transformed.
Someone may have the belief murder is bad and equally someone may hold the belief that it is not bad, it is the same energy structured in a different way.
Once you form a structure of a belief you can never get rid of that energy structure, you can however, deactivate it and reduce the energy behind that belief, you can also form new structures and energise those making that the dominant belief.
All beliefs work on these same principles and this theory is vital to understand how to transform certain beliefs, as for the majority of people, the beliefs learned to your subconscious through your upbringing is not congruent with becoming a consistently profitable trader, as stated in 'Trading in the zone' written by Mark Douglas.
So that is where the saying comes from – you are product of your environment.
This is because your external environment creates thoughts in your conscious brain which then embeds relevant factories into your subconsciousness over time, it forms your beliefs, about money, work, relationships, everything; these beliefs are the factories which produce thoughts which pop into your consciousness, this production creates your actions and subsequent results over a period of time.
So this is where things start to turn from theory into practicality, the theory of attraction, what you think about is what happens.
Part 5: Trading
Being a successful trader is often about winning on your trade before you even take the position. If you believe you are a consistently profitable trader, your subconsciousness will automatically perform the actions you previously did to be successful in the past.
The other side of the coin is also true. If you let any amount of negative energy or doubt in, your subconsciousness will recall all the past recorded bad actions which caused you to lose.
If you go into a trade with a negative attitude you are self-sabotaging. Your subconsciousness recorded all the actions you did to form that result, so your mind becomes clear on exactly what it needs to do to repeat those same actions to achieve the same result.
This is why it is important to constantly affirm the correct psychology to yourself on a regular basis!
This by no means should give you the interpretation that a winners mindset alone will make you a consistently profitable trader, you must have a detailed understanding of your strategy and great technical analysis skills. This is just the other side of the coin.
Both are as important as one another as you cannot be a consistently profitable trader without being both a great analyst and having the correct psychology.
This is only the theory, it is only potential power, the real work is down to you to work on building a belief system congruent with becoming a consistently profitable trader.
Have you got what it takes?
We thank you for reading this week's addition to the Traders Dojo, have a great trading week and stay persistent – 'The Social Traders Team'
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I must disclose the fact that this piece is purely my own opinion and knowledge of the topic. If you feel we have plagiarised your work then please contact us directly.
Written by: Jack Hilton