What are the results you've been getting in your trading and in your life? If they are less than what you want, if they in fact suck, then changes are in order - from the inside out; changes that involve new strategies for thinking, which in turn create emotions that drive behavior, which produce the result. Results, any results, follow a model and that model is sequential. In fact, results are effects and effects all have a cause; so we can call it "The Cause and Effect Model." Now, any result that we get begins with an event. An event is anything that gets your attention. For instance, you wake up and realize the alarm didn't go off. You had set it to alert you to an early Economic Calendar report, but now you missed the play. That's an event. You stumble downstairs for coffee and the coffee maker is broken. That's an event. You turn on your computer and somehow your connection isn't working. That's an event.
Events are message neutral; they have no meaning aside from what you give them.

Every event has three components:

  • What is it?

  • What does it mean to me?

  • What am I going to do about it?

The next point in the model involves your MAPS (a phrase coined from Peter Senge's book, The Fifth Discipline). MAPs are mental models of the environment. MAPS are not an acronym and only refer to all that we have learned from 0 years up to and including the present moment. These MAPS are largely out of our awareness because they draw from programmed lessons stemming from our earliest days...so they are mostly unconscious. They are similar to the "operating system" of a computer; that is to say, the underlying program the software is driven by. These lessons or "programs" come from family, teachers, coaches, counselors, TV, radio, friends, and enemies - anything that has been significant.
These programs create the lenses or "filters" through which you see the world. They work automatically and immediately. And, they are very much like travel maps. A travel map is only as good as the information in it. A travel map is bound by the limits of the book or page. A travel map is "not" the terrain; it is only a representation.

Your MAPS, or "filters," are only as accurate as the lessons that we have learned. Consequently, if you grew up being told that rich people are greedy, money-grubbing jerks who take advantage of others, the picture, however inaccurate, becomes the unconscious story that drives conscious thoughts about money and people who have money. Furthermore, if you grew up in a household with an alcoholic father and a depressed mother, your view of the world is filtered by those childhood experiences. And, finally, these filters or thought patterns become ingrained as though they were the "truth," rather than a "representation" of what we've been taught, so your underlying thinking is acted upon as though it were reality.

Next, you draw conclusions, and make meaning of the event based upon those MAPS or mental models after the event is filtered through them. Depending on how deep and strong the story is, it will determine how strongly you react or respond when they have been activated.
The truth may be miles from what you think, but your reaction can be immediate, unwavering, and unmistakable to you. Consider the phrase, "You look like my father." Now, if your father was a loving, respectful, giving, nurturing and strong man, those positive images would be your internal picture as soon as the phrase was told to you - and your response would be in keeping with the positive picture that is just below the surface (warm and fuzzy). If, on the other hand, your father was mean, cruel, shiftless, lazy and abusive, and someone says that same phrase, your response - based upon your internal model of what "father" means to you - would be very different. The conclusions you draw, and the meaning you give to events, are based upon those internal MAPS. They create immediate, automatic and autocratic responses. In fact, the more deeply held the story, and the more the stories are activated, the stronger the behavioral "patterns" you act out.

What you think determines your emotions. When you react or respond, there are three emotional domains you face:

1. Positive emotions – you feel glad, happy, giving, receptive, included, and or loving.

2. Neutral emotions – you don't have any emotional investment and don't care. Feeling nonchalant, uninvolved, and/or disinterested.

3. Other than positive or neutral emotions – anger, sadness, jealousy, envy, guilt, fear and greed.

Obviously, the first two domains provide a very different behavioral response than the third. If you were angry, jealous, envious or sad, your behavioral response is likely not going to be as warm and fuzzy as if you were glad, happy, receptive or simply disinterested.

Results are the consequences and outcomes when the event is filtered through the layers of MAPS. When interpretations and assumptions are made, conclusions are drawn, emotions are activated based on mythology and meaning, and a behavior is generated. Let's see how this might play out. You're driving along on the freeway and out of the blue, someone cuts you off. You become angry and through your window, throw a few hand gestures as you shout, "that @%$#@@%@%$&$%" jerk. Your interpretation might be that this is someone who cares nothing about the safety of others and he's so caught up in himself that he's cruisin' for an accident. But what if you found out that he was rushing to the hospital with his pregnant wife because the baby was on its way out! Would that have any bearing on your interpretations, assumptions, and conclusions? Of course it would. If you're like most normal people, you would feel an immediate compassion, and you would understand that his behavior wasn't personal, nor with this new interpretation would you feel hurt or angry. Now, did the event change? No, it didn't. The only thing that changed was the meaning of the event. If a video camera had shot the event all we would have seen would have been a car pulling in front of another car on the freeway. So, we can see that what is often accepted as reality or fact is often neither.

So how does this apply to trading? Well, you can easily get caught up in an event. Does this sound familiar? The price pattern you see might look like it "must" be a symmetrical triangle or a double top and you enter into the trade "knowing" that it "must" be about to move in "this" direction. Then the tick goes against you and you feel a sense of panic and dread. You haven't put a stop loss in and the price action makes a sudden and dramatic move. You begin to get high on "hopium," the drug traders grab when the price action has moved in the opposite direction from your target, and you begin to hope that it comes back - and worse, you may double down, attempting to get back to break-even. Later, and maybe much later, you go back to look at the trade setup again and, lo and behold, it looks nothing like the setup you got into. Or, something else has appeared that you never saw the first time around. In any event, in the "excitement" to make the trade, the "reality" was distorted by the greed of making more money or the fear of losing again, to the point that an illusion or delusion took place. In other words, the results reflected the state of mind you were in and this, for so many, becomes a pattern played out over and over again.

As you can see, the results you experience can be traced directly to how and what you think. If you are getting results that fly in the face of what you want, then you must change your thinking to break the pattern. As the cliché goes, the definition of insanity is continuing to do the same thing, but expecting a different result. Change your thinking to change your results, because if you always do what you've always done, you'll always get what you've always gotten.

Wouldn't you like to get yourself out of that vicious cycle where your money is circling down the drain? You can learn highly effective, fast-acting and easy-to-use tools, techniques and concepts to bring your "A" Game to your trading platform. You have felt the pain of being out-of-control and getting results you don't want. Mastering the Mental Game on-location and the Extended Learning Track (XLT) coaching program will help you get back in control so that you can and will keep your commitments to your plan and your rules. Ask your Education Counselor for more information.