It is well established that your brain has loads to do with your trading. But there are some facts that may help you to support your trading better by understanding the super computer between your ears. The brain has two sides called the right and left hemisphere. They are at first glance identical, but upon closer observation, it becomes apparent that they are not two halves of one brain but two brains in one skull. This is an important distinction to understand and it has vast implications on our thoughts, emotions and behaviors. Schiffe, author of Two Minds – The Revolutionary Science of Dual Brain Psychology, wrote:
"There exists two intact, reasonably intelligent, autonomous minds. After these patients had their corpus callosum cut, they each manifested two separate minds. They became, two people inhabiting one body."
Roger Sperry, psychologist and prominent neuroscientist, performed research that involved "split-brain" patients, people who had had the connection between their left and right brain hemispheres surgically cut as an intervention for epilepsy. His work showed how the two hemispheres function, independently and in concert. He promoted the thought that there are two minds. Joseph Bogen, MD, a neurophysiologist on the same Cal Tech research team with Dr. Sperry, thought that this dual-mind concept was very much under-recognized when considering the greatness of Sperry's work. Now, is there any wonder why so much of the market conflict exists in you?
Four centuries before Christ, Diocles of Carystus, understood that the functions or the two sides of the brain differed. He wrote, "There are two brains in the head, one which gives understanding, and another which provides sense perception." Having two ways to approach our environment increases our ability to survive. Having the overall picture serves the animal well for getting around in the world. We quickly have to recognize situations that are safe or that have difficulties, and we need to recognize facial expressions, body movements, frame of mind, and other people's or other organisms' intentions toward us. This ability to assess the immediate situation forms the basis of social intelligence and helps judge whether someone is always hostile or friendly. At the same time, rapid and precise actions need simplicity of attention, and of course, chart-analysis is no different. Being able to assess the reflection of the electronic terrain of the charts requires both intuition and precision. A human animal can't spend its life forever searching the data stream horizon.
A response (trade decision) needs to be made, and it has to be one continuous, coordinated movement - even when staying in a cash position. The individual needs to make a sequence of precise, rapid-fire decisions, and this decision-making seems best done by the left-brain. Similarly, in speech, one particular word has to follow the one before; we can't say everything at once. For this, an ordered sequencer is most useful.
In humans, sequential ability underlies logic and language; let's take the monkey as an example, since they are rumored to be our distant relatives, to illustrate how sequential ability is manifest. Anthropologist Gordon Gallup describes a kind of grammar necessary to swing through the trees. So, what's important to recognize is that the animal that remembered better these sequential or "grammatical" movements would survive to produce more offspring. The trader that establishes a sequential routine based upon effective behavioral protocols will survive to trade successfully.
Language sets the definition of what we view as reality. When we have no word for something we tend to not be aware of the concept. Learning to read and write in youth influences the development of the hemispheres and the way they work. Benjamin Lee Whorf, author of Language, Thought & Reality, uses the example of the word snow and the fact that the Eskimos have so many words for it because they see it in so many different forms.
Richard Davidson, PhD, Vilas Professor of Psychology and Psychiatry at Harvard, in a series of studies showed that the left hemisphere might involve different emotions than the right. The conventional wisdom of the past indicated that the right was playful and happy, with spontaneity. But, based on more recent studies, the left hemisphere seems to involve positive emotions like happiness, and the right, negative emotions like anger. Working with newborns (using sucrose and citric acid solutions and recorded EEG's from the frontal and parietal scalp regions on the left and right sides), he found the same kind of brain patterns consisting of significant activation of the left in happy moods and the right in fear, anger and disgust. This means that the difference in the hemispheric emotions, measured by their asymmetries in brain electrical activity, exist at birth. Why is negativity on the right side? It may have to do with the issue of control and the safety that knowing and awareness brings. Organization and sequential logic can be very comforting and lead to optimism, whereas the intangible, the unclear, the ambiguous can be troubling and fearful. Can you think of a better definition of the markets than intangible, unclear in predictive quality, and ambiguous in character? It will move as it will, so we have even more reason to be troubled and fearful at first pass when taking risk in the markets. However, armed with this information about emotion and the left and right brains, we can then develop ways to impact upon the way our unconscious negative emotions can be given expression.
Awareness and using exercises that help the right brain to both purge, express and process difficult emotions will go a long way to controlling disruptive urges that can suck your capital right out of your trading account.
The ability to see the big picture involves both hemispheres and the nature of perception is impacted upon by the orientation of the dominant or left hemisphere. How is perception determined by hemisphere dominance for right and for left? The good news is that the right brain has an innate ability to tolerate ambiguity; however, the bad news is that there is a tendency to fear, morbidity, and negativism. But, there is more good news; the right brain is much more flexible and is prone to explore "different" ways to approach items (creative). What does this mean for your trading? Well, develop intuitive analysis and train your right brain to "see" the charts from various angles and learn to listen to your gut. This is much different from winging it impulsively, which is what leads to "issues."
The left may be more rigid, but it is usually happier; however, it may not tolerate ambiguity well. So, we can begin to see that who shows up to trade is determined also by what brain you're firing from.
There is almost nothing that is regulated solely by the left or right hemisphere. Both get involved as soon as any situation becomes slightly more complex. And both are at work all the time. That is why there are times when conflict is raging inside. Consider these anecdotes from the archives of split-brain surgeries performed to positively impact upon epilepsy. When this surgery is performed, the individual by most accounts seems normal, but when we look a little closer we find:
The man who tried to hit his wife with his right hand while his left tried to stop him.
The man who tried to light a cigarette with his left hand while his right tried to pull it out.
The woman who went to take a dress from her closet with her right hand while her left would put it back.
The woman who abruptly woke because she was slapped only to realize that she had slapped herself, the right had awakened and heard the alarm while the left was still sleep and attempted to wake her because she was late.
So, you can see that there is a lot of power in the parts of your brain that if you learn and understand how they work, you can greatly improve your trading performance. With this in mind, the Mastering the Mental Game courses, both on-location and in the Extended Learning Track - XLT program, offer many left and right brain oriented tools, techniques and concepts designed to activate the power of your brain/mind.