Tag Archive for: traders mindset course

Why Your Biology And Psychophysiology Make Trading Hard (And Easy)

What You’ll Learn In This Trading Article

-What is psychophysiology?
-How does your biology + psychophysiology make trading hard
-How does your biology + psychophysiology make trading easy

Ever felt really nervous making a trade to the point where you passed on it, even though it was a perfectly good trading setup according to your plan? What about being so angry/upset/frustrated at a prior loss that you revenge trade on the next setup?

On the flip side, how about having a ‘gut feel‘ that your current trade is going to get stopped out, or perhaps a really good setup is forming and you have to jump in? If you’ve experienced these things (I have 1000’s of times), then welcome to how your biology and psychophysiology affects your trading.

In today’s trading article, I’m going to first define what psychophysiology is.

Then I’m going to talk about the ways your biology and psychophysiology make trading hard for you and how it affects your day to day performance.

After that, I’ll talk about how you actually have various biological or psychophysiological traits which can help you become a profitable trader, and how to use them to your advantage.

What Is Psychophysiology?

Psychophysiology is a branch of neuroscience (science of the brain and central nervous system) which shows you how your mental states and biological + physiological responses can affect your mood, higher cognitive skills, analytical abilities, perception, decision making and mental states.

the biology of why you are losing money forex trading

In simple words: the current state of your body + brain affect your mental abilities – abilities which are crucial to making profitable trades and trading decisions.

Think of it as the biology of why you are losing money in forex trading.

This is critical to understand because once you know the various biological/psychophysiological mechanisms, and how they affect your mental abilities, you can employ methods to counteract their negative effects so you don’t make really bad trading decisions.

How Your Biology + Psychophysiology Make Trading Hard

I’m going to start off with an easy one here as it relates to my situation right now. I was having a jolly good time with my friends last night and was up later than usual, which cut my sleep time by 2 hours.

Sleep is incredibly important to your brain and body as it a) allows your brain to detox, rest and cleanse itself, while b) allowing your body to rest/relax while your internal organs are cleaning, and resetting themselves for the next day’s work.

Did you know that in a study by Dr. Walker at the Sleep & Neuroimaging Lab @ UC Berkeley shown how subjects that had less than normal sleep (6hrs) remembered 81% of the words they were exposed to with a negative connotation to them (i.e. anger, fear, loss), while only 31% of the words with a positive connotation to them.

Translation: Getting less sleep than needed triggers a massive bias in your brain towards the negative.

Now with your mind primed to see the negative more than the positive, do you think this will affect your trading decisions and performance? I hope so.

Ever had that experience of a winning trading starting to against you and it immediately feels ‘threatening‘? That’s your biology + psychophysiology working against you and making trading hard. It’s why we are afraid to lose money trading.

FYI…sleep debt is cumulative…so less sleep over an extended period of time really affects your mental capacities and states.

Below are two charts/images showing how sleep debt affects your brain + performance over time.

Image 1: How Less Sleep Leads to Performance Lapses

performance-lapses-from-sleep-deprivation-2ndskiesforex

Image 2: Your Brain on More/Less Sleep

brain-after-sleep-deprivation-image-2-2ndskiesforex

Another example of how your biology + psychophysiology makes trading hard is a fear of a loss. This ‘fear‘ is so ingrained in us it dates back 1000’s of years to our ancestors where survival was a daily fight for food, shelter and safety and a life or death struggle.

The rule was ‘eat lunch, don’t be lunch‘.

Sadly, our ancestors ‘experience‘ was encoded in our DNA, particularly in the DNA of our brains and nervous systems. 10,000 years ago, 1 in every 8 people died from protecting their families. This made us more ‘fearful‘ of ‘threats‘ and created this a ‘negativity bias‘ along with activated our ‘fight, flight or freeze responses’.

negativity bias in trading 2ndskiesforex

NEWS FLASH: Even though it’s the 21st century, and our chances of dying before old age are 1 in 100, we still experience this fight/flight/freeze response to stimuli which are not threatening. Your fear of a loss is an example of it.

In fact, this negativity bias (fear of that which is negative to our life/survival) is so strong in us, we have %500 more neural real estate towards spotting the negative vs the positive!

Do you think that will affect your trading mindset if for every 6 stimuli you receive from the market, 5 of them will be perceived as ‘negative/threatening/harmful‘ vs ‘positive/beneficial’? What do you think that will do to how you perceive changes in the price action context which go against your trade?

psychophysiology of fear 2ndskiesforex

Ever had a day/week/month where you crushed it for most of that time period, and went on a winning streak, but then one loss killed all your profits? Now, of those many trades you took, with the majority of them being winners, which trade do you remember the most? The big loss, or the several wins in a row? My guess is the big loss is what you remember the most.

Another example how this negativity bias can kill your trading performance has to do with neural real estate (how regions of your brain are wired).

Did you know it can take you 5-7 seconds to notice anything positive in your environment vs <.1 seconds to perceive a negative/threatening stimuli? Do you think that will really affect your trading mindset, perceptions and decisions about what is happening with your current open trades? I hope so.

There are 100’s of examples I could get into here, however it should be pretty clear how our biology and psychophysiology make trading hard. Now it’s not all bad, and there is a silver lining in all this.

How Your Biology + Psychophysiology Make Trading Easy

Ironically, even though you have about 5x more neural cells dedicated to finding the negative vs the positive, you also have some aces up your neurological & biological sleeves.

Case in point, your brain has this amazing trait called ‘neuroplasticity‘ which basically means your brain can adapt its wiring based upon your experiences, environment, what you focus on, and what little thoughts you have going through your head.

Experience Dependent Neuroplasticity (EDN) is the ability to wire new habits into your brain through two main factors:

1) neurons that fire together, wire together
2) consistent passing mental states create lasting neural traits

Translation: you can correct your mental errors/decisions/processes which are affecting your trading mindset and performance by firing new neurons in your brain (e.g. changing the thoughts/emotions/mindset you experience day to day). This is a real thing that we’ve taught members of our traders mindset course to do.

Imagine getting over the mental mistakes/hurdles you experience day in-day out of your trading?

Imagine not being afraid to pull the trigger, or fearing a loss, or worrying about a winning trade that’s starting to pullback against you.

You can learn to change these experiences which are holding you back from making money trading.

Regardless, neuroplasticity is one example of how your biology + psychophysiology can make trading easier. You have another tool in your biological belt which can make trading easier. You’re already familiar with it – it’s called your ‘gut feel‘.

While this term ‘gut feel‘ may seem wishy-washy, it actually has its roots in science.

You Have A Second Brain?

Did you know you that your gut actually sends more signals to your brain than your brain does to your gut?

Did you know you have an entire nervous system which has 5x more neurons than in your own spinal cord?

Welcome to your enteric nervous system which is embedded in the lining of your gut, starting at the esophagus and going down to your ‘dairy-aire‘ 🙂

It’s often called your ‘second brain‘ because it a) can operate independently of your brain, and b) uses the same neurotransmitters as your brain, such as dopamine (i.e. reward experiences) and serotonin. In fact, more than 90% of your bodies seratonin is found in your gut. Seratonin is an essential neurotransmitter because it’s critical for feeling happy, affecting memory, learning, mood and sleep. Can you start to see how your ‘gut‘ can affect your trading performance?

And this is where the vagus nerve comes into play.

The Vagus Nerve

You have many cranial nerves in your brain (12 total), but the 10th one is of great importance to you. It’s called the Vagus Nerve and it’s connected from your brain (medulla oblongata) down to your stomach, innervating itself to most of your major organs along the way.

It is the longest nerve of the ANS (autonomic nervous system) in your entire body and can affect heart rate, lungs, sweating, muscle movements, digestion, etc. The vagus nerve conveys sensory information about the state of the body’s organs to your CNS (central nervous system).

Now the vagus nerve can become heavily agitated due to stress or emotional responses to trading. These can either be good signals, or bad ones. But our experiences of the vagus nerve + enteric nervous system comprise what is often referred to as ‘gut feel‘.

This is because your gut might actually be getting signals from your brain or body that something is really right, or something is really wrong with your current trades. Often times these signals go unnoticed on an unconscious level, but can also manifest because you’ve treated your gut poorly (bad diet/food intake/etc).

When tuned right, your ‘gut feel‘ can be a warning signal something is about to go awry, or a spotlight that you need to jump into this trade before it takes off.

Have you ever had any of the above experiences? If so, then you’re seeing how your biology + psychophysiology can really affect your trading performance.

In Closing

There are many ways your biology + psychophysiology can make trading hard (and easy). It is critical for you as a trader to learn how to spot these reactions/responses, and learn to change them, or use them to make better trading decisions and thus more profitable trades.

I feel the trading education industry + trading mentors are just waking up to this and how powerful your body + brain can/will affect your trading performance (for the good, or bad).

I also feel the trading education industry can/should make a concerted push to use these things to our advantage so you can become a better trader and make less trading mistakes.

We’ve covered this extensively in our traders mindset course, along with practices and methods to help you use these biological and neurological reactions/responses to your advantage.

Now Your Turn

Did you learn anything about how your body and brain can affect your trading mindset and decisions? Have you ever had these ‘gut feel’ experiences? What about a fear of a loss even though you’re in a winning trade?

Make sure to leave a comment about this important trading subject as I really want to hear your feedback on this.

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Discipline = Freedom + Success for Traders

I wanted to share a unique lesson this week, one that is different from any of my other ones.
Recently I was at a meditation retreat with my teacher. As many of you know, I have been practicing meditation and buddhism every day for 15+ years now. For 14 of those 15 years, I’ve been working with one teacher.
Who I was 15 years ago is not even recognizable to the person I am today, and my teacher is the biggest reason behind that.
She guides, challenges and helps me grow in all aspects of my life. Her in-exhaustable wisdom, penetrating insight and poignant clarity continue to amaze me every time I am with her.
It is a relationship I am ever grateful for.
Back to the Retreat
During a private moment with the senior members, she was taking questions from the group, when one of the students asked a question about discipline.
meditation retreat 2ndskiesforex
I wanted to share her response because it speaks to the heart of what discipline, training and taking things to the next level is really about (in trading, and life).
I’ve changed a few words to make it more tailored towards trading, but the message is the same, and all the credit remains with her for this message below.
Without further adieu, here is her thoughts on discipline & training.
Discipline Is Not the Anti-thesis of Freedom
“I’ve often seen in people this idea, or framework of thinking, that force, rigidity, and intensity in one’s work is the antithesis of freedom & creativity, and it’s absolutely not.
One pattern that revolves around discipline is people floating around from one system to another, and another, and another, but what people end up doing is spinning their wheels and never going deep.
They’ll let go of one system because they think it is ‘under-performing‘ for that week or month, all according to our wants and needs to succeed ‘now’.
What we are really doing is playing out our conditioned scripts and never breaking through.
Breaking the Cycle
The only way to break out of this cycle is to harness the power of habit in a positive direction. That requires discipline, it requires a focused training.
There will be a level of force and unhappiness that comes with this sandwich. But for anything that requires us to succeed, we have to go deep, and that takes discipline & training. We have to develop this habit and power.
bruce lee discipline 2ndskiesforex
Michael Jordan
An Olympic athlete doesn’t always feel like getting up that day and training for hours on end each day.
I’m pretty sure Michael Jordan didn’t always feel like practicing or training hard. But he did it anyway, and that communicated something to his self-image.
To transcend our current limits, we have to go beyond what we feel like. We have to transform this feeling of constantly wanting to do what we feel like, and then making excuses in trading and why we aren’t performing the way we want to.
There is so much energy out there today about doing what you feel like, doing whatever you want.
michael jordan discipline 2ndskiesforex
Taking Things to the Next Level
But if the goal is to take your skills, awareness and mind to the next level…if your goal is to be something, do something, perform a skill at a higher level than you are now, then you need to start working on those hidden levels, in those areas of your sub-conscious and unconscious mind where we have some heavy conditioning in place.
So if you want to go beyond the level of success, performance and the mindset you have now, that takes training, that takes discipline, that takes force, even when we don’t feel like doing it.
Discipline = Freedom
I too have moments like that, where I ‘don’t feel like it‘. But what I remember in those moments is that discipline will give me freedom.
If I do the practice and train whether I feel like it or not, this very action repeated many times, will lead to an accumulation of skills, wisdom and knowledge that will allow me to transcend my current limits.
Part of what is happening for me in those moments is my nervous system is reaching its limit to participate, act and execute in a particular way.
In that state of duress, in that level of concentration, what is being challenged is our limits, and it is only there that we can learn to expand that.
We can’t expand our limits while ‘doing what we want‘, or ‘being a lazy trader‘, or spending < an hour in front of the charts and then being on vacation the rest of the time.
That is an illusion, and no-high level professional works like that in any field.
Discipline = Power
There is a huge power to doing things we don’t feel like, and that power is called discipline.
Perhaps though discipline isn’t the best word, because we can easily associate it with some form or punitive measure or experience. But the reality is, discipline is our potency.
If we cannot have it, if we cannot hit the mat every day, or keep playing the guitar when Jimi Hendrix isn’t coming out of our strings, if we don’t push up against those limits, against that inertia, then we won’t grow.
We’ll remain shallow, and we’ll just end up repeating the same mistakes over and over and over again. If that is your experience, then you know the variables and recipe behind said experience.
Habitual Momentum
There is so much momentum to repeating our habits and cultural scripts. They have incredible momentum and energy behind them.
To establish another direction, to challenge and go against it, we will feel it, and that will not always be comfortable. Yet in those moments, there is a huge power available to us, to make discipline our habit.
Those Who Really Develop
If we look at the defining moment of someone who matures, develops and takes things to the next level vs. someone who doesn’t, it’s their capacity to stretch beyond what they don’t feel like doing.
It’s their ability to hold a discipline.
If discipline isn’t our strongest point, that’s ok, we can start with where we are. We can go to that limit, stretch the envelope a little bit each time in a controlled growth way. Discipline is a super power we have.
If you can tolerate insecurity, tolerate discomfort, and go against what you feel like doing, hold that discipline and train – there is no limit to how much you can grow, develop and succeed.
That is a great power we have, and for those who take this on, it is only a matter of time before you climb that mountain and have a successful trading mindset.
climbing mountain 2ndskiesforex
Netflix + Video Games
I certainly have moments where I exert beyond what I think is possible, and many times after that I need to rest my body and mind.
It’s usually in these times when we start to have those fantasies of laying on a beach for days on end, or just lying on the couch watching movies. I’ve done that.
Recently after some graduate school exams, someone told me after their finally done, that they just watch netflix and play video games for 3 days to decompress.
I heard that and thought ‘oh wow, that sounds like heaven‘. So I tried that, literally watching Breaking Bad from beginning to end, playing video games for long hours.
breaking bad 2ndskiesforex
But after doing that, although there was some rest I caught up on, I can say the overall experience wasn’t truly satisfying. It was helpful to get that rest and down time in, and we need that in certain moments.
But the rest of it wasn’t really satisfying…not in the same way where I can experience the fruits of my discipline, work and what I’ve created.
Shifting the Fantasy
So I’ve shifted to a place now where when I experience those fantasies, that when they come up and I want a ‘vacation of freedom’, a ‘vacation from discipline’…I’ve learned that too much freedom can be just as much a poison as too much discipline, so that’s not the solution.
Hence I remind myself that it is an illusion, and that I don’t want the fruit of that. What I really want is the fruit of taking things to the next level.
Even if it’s painful, even if I don’t like it, I’ve found the fantasy to be limiting. I’ve found that discipline in training yields me a feeling of being regret-less about my time.
I don’t have those regrets of ‘oh, I wish I had done that,’ because I am doing ‘that’, and there is something really gratifying in that experience and knowing.
I am definitely not a master of it. It’s hard, and I have times just like you that I wrestle with it. But I can say that I love what discipline gives me, especially in my meditation and mindfulness practice.
Highly Successful People
When I talk to people of high caliber, people who have a unique perspective and are highly successful, this is totally the difference.
This isn’t someone just doing what they want to do, or feeling what they like all the time.
They definitely aren’t following the fantasy being marketed by people out there that you can just work one hour a day and have all the money and success you want.
They aren’t staying in the little house of their mind, of what their mind wants, or what feels comfortable.
They’ve put themselves in environments that challenge them, that demand from them, and stayed in those environments through discomfort, foraging their way through.
And for those that have had this experience, you’ll see they are of a high caliber and performing at a high level.
The fruits of their work, discipline and training are obvious when you meet and talk with them.
highly successful people 2ndskiesforex
Ultimately, I think time is really precious, and we should question what our cultures teach us about how we should spend our time, and what it is really for.”
Wow is all I have to say to that.
I hope you enjoyed this article and found it insightful, poignant and informative about trading, success and discipline.
Please do share your comments and thoughts as I’m itching to hear your feedback.
Just Released: For those wanting to build a successful trading mindset while re-wiring your brain for success, check out our Advanced Traders Mindset Course, only available till April 2nd.

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The Three Parts of Your Trading Mind

In this weeks lesson for the Advanced Traders Mindset Course, we went through a very important topic for building a successful mindset. We covered the three parts of your trading mind, addressing some of the critical topics below;
1) how these three parts relate towards your trading performance
2) how you can tell if these three are in balance
3) why the training you are doing isn’t going to work
4) what part of your mind creates each trading mistake you make
5) how to fix analysis paralysis
and more…
three parts of your mind 2ndskiesforex
Lamentably, most traders failing to achieve consistency or profitability are not working on all three parts of the mind. Most likely they are working on one part.
This creates an imbalance, and thus when you need to pull the trigger – you hesitate, get nervous, fearful, worry, experience doubt, have analysis paralysis, or any combination of those, and thus never hit the button.
Most likely, you end up watching the trade activate as you planned and hit your profit target with relative ease. The common response from here is frustration, regret, anger (towards oneself/market), and probably a host of other things.
Sound familiar?
Thinking and results mindset - disappointment
The reason why you have this experience repeatedly, is because you are training only one part of your mind.
This is done mostly via watching the market, doing ‘analysis‘, reading trading books, watching trading videos, basically stocking everything up to the ‘thinking-analytical’ part of your mind.
What you are missing is the other two parts of your mind which a) likely need training, and b) are probably imbalanced since you put 90% of your effort into only one part.
The result is…well you know what the result is…it’s the current state of your account, it’s the inconsistency, the repeating of the same mistakes over and over again, the inability to maintain any profits, discipline, or control your risk.
My teacher uses the phrase, ‘putting a big foot into a little shoe‘.
If you are putting something quite large (the mind/your trading mindset) & trying to stuff it into a little shoe (thinking/analytical part of your mind), the result will not work out as planned.
If you’ve experienced analysis paralysis, are still repeating the same mistakes, can profit for a few weeks, but then blow it all up in a few days, you are not alone.
The good thing is you can change this. You can re-wire your brain for trading success. You can learn to train all three parts of your mind.
fire bulb
We covered this in a 1+ hour video in our Traders Mindset Course. Registration closes April 2nd (2015) and we’ve already filled over 150 seats in the last few days.
To learn more about the Adv. Traders Mindset Course and how you can get past your biggest challenges in trading, click here.