In this article we’ll discuss the role of the subconscious mind in trading psychology. Our subconscious mind could be compared to an animal that’s sleeping and it is sometimes more than one.
The Hyena and the Lion
One animal that is often very comfortable in our subconscious is the hyena.
A hyena is typically reckless and cowardly at the same time, while its emotions are often out of control. This results in us not following the rules of a successful trader, leading in turn to unprofitable transactions.
At other times however, a lion awakens inside us, and when this happens, we’ll start to earn a handsome profit. The trick here is to get into a situation where the lion is dominant and the hyena hardly ever, or preferably never takes control.
Will the lion ever lose? In trading, there are never any guarantees, so yes, the lion will sometimes lose. The market is always risky and a loss is always possible, no matter how good you are. It is however still important to become a lion. Other animal’s behavior is uninteresting and common, but a lion often becomes the leader of the pride. Hyenas tend to only do stupid things and most often survive by picking up leftovers.
A Successful Mindset
Humans are different from other animals in that they can choose and determine their own set of principles. Our psychological setting will determine our results when trading, as it influences every decision we make and our attitude to the external world and the events that take place.
An optimistic trader finds it easier to accept temporary drawdowns, simply because their belief in a better future is an integral part of their personality. Pessimists on the other hand have difficultly dealing with temporary setbacks, but they do manage to easily deal with events that are less emotional, like training and transaction analysis.
To become a lion in trading, you’ll have to develop the right psychological mindset and this happens when you start working with your subconscious mind.
A famous psychologist that is popular with Western traders, Larry Nims, developed what is known as the “Be Set Free Fast” (BSFF) technique of deprogramming the subconscious mind. Let’s have a look at some of the detail.
1. Make Lists
People that lie to themselves don’t often succeed. Start by making a detailed list of all the things that are preventing you from becoming successful at trading. Make sure you include all your prejudices and fears.
Example:
- My friends don’t believe I can make enough money working from home.
- I’m scared to lose money if the strategies don’t work.
- I don’t think it’s possible to increase the money in my account by 100 times.
When you make the list, be aware that your subconscious will try to block you from bringing these thoughts out in the open. Fight the urge to keep the thought hidden in your mind and get them down on paper.
2. Create Instructions
Nims, the creator of this technique, suggests you decide on a keyword that will be used to activate protection from negative thoughts. It’s best to use a word that has nothing to do with your problems.
Let’s use the word “desk” as an example. Read the list that you compiled in the first step again. Now create text that you will use to “activate” your self-confidence before you start trading.
An example of this text could be: If I think that I am taking wrong steps and can’t trade profitably due to my negative thoughts, then I will simply say the word “desk” and my negative thoughts will disappear!
3. Recognition and Acceptance
The next stop is to get real close to your weaknesses and understand them fully. To do this, you’ll need to look at your list as often as possible, and even read it out loud.
Recall the emotions you first experienced when you wrote about everything that is holding you back, i.e. melancholy, fear, uncertainty, etc.
A lion stares straight into the eyes of its opponent. You need to do the same. Acknowledge and accept your weaknesses, and read the list until the cowardice and negativity disappears. Doing this will enable you to change your attitude to your shortcomings and fears, making it easier for you to accept yourself. This is a big step in your overall self-development.
4. Fix the Results
The last step is to transform the negative items on the list into positive ones.
Let’s use the first item on the list as an example: “My friends don’t believe I can make enough money working from home.” Many traders find this negative belief to be quite significant for them.
Now rewrite the item: “My friends say this because they don’t have the knowledge that I have. This makes this negative statement invalid and I am no longer bound by it.”
You can add your trigger keyword to the end of each sentence you have converted so that it gets integrated into your subconscious as solidly as possible. Remember that only those who keep on developing tirelessly, ultimately win. It’s a good habit to always keep on improving your professional skills, including learning more about the psychology of trading. Understanding different mindsets will help you in reducing your stress and creating a solid foundation for personal growth.