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Determining Realty 1

Determining Realty 1

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Published by Ian Moncrieffe

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Published by: Ian Moncrieffe on Jan 25, 2009
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06/16/2009

 
Special Report #4
Determining
 You ‘Raly’ As A Tad
 
(Success as a trader IS up to YOU!)
 
© 2008 TheDisciplinedTrader.com. All Rights Reserved.
s
pecial 
eport
#4
T
his amiliar quote sounds like something spoken at the board meeting o some Madison avenue marketing rm or maybe this saying hangs overthe entrance to Rupert Murdoch’s oce. Yes, my riends, it strikes right at theheart o our greatest ear: the “truth” is subjective.But that ear can be turned on its head. Indeed, i this is the “truth about thetruth”, then why can’t we use it in our avor? Everyday, I see ugly cars, tastelessashion and unacceptable behavior. However, somebody else doesn’t think so. Who’s to say that I am correct and the others are misled or just plain stupid?Our realities might be the same on some basic level, like dont cross the streetin heavy trac or dont shoot your spouse i you get angry, but on many othermore subtle issues, our perceptions o things can be quite dierent.
Most psychologists say “who we are” is a matter o nature and nurture; you arethe sum o what your DNA dictates and your environmental exposure. Niceand neat. But we intuitively know better. Te chaos o our constantly stimu-lating world orces us to become flters o inormation. Without the ability toorm some sort o consistency in our world, we would be quickly buried inconusion.
So, our marvelous brains help us create a world that makes somesort o sense to us. Most o the basic education or survival havebeen passed rom generation to generation and orms the basicpart o our ormative education. We rst learn survival skills andthen spend the rest o our waking lives learning what we can or what you preer rom the steady bombardment o inormationand experience.
“What you can or what you prefer” 
, this is an interesting statement because itsupposes that we have a choice.
“aking what we can” 
suggests a reactive natureto our environmental education. In other words, i something happens in ourlives, i there is a lesson to be learned, some o us will be able to learn whileothers may not.
“...our marvelous brains help us create a world that makes some sort of sense to us.” 
“If you tell people something enough times, they will begin to accept it as truth”.
 
© 2008 TheDisciplinedTrader.com. All Rights Reserved.
s
pecial 
eport
#4
Let’s look at an example. wo traders experience a loss. One trader says,
“Damn,I should have gotten out earlier. I lost $800” 
. Te other trader says,
“missed that one, I did everything according to my plan but got stopped out so this trade is just one of the outliers. On to the next trade.” 
 Te rst trader reacts to the trade with a reinorcing negative statement:
“I lost $800” 
. Tis sort o statement demonstrates several things. First,the trader has done no analysis o what happened-even briefy.Tey learned nothing. Second and more importantly, the traderblames themselves and reinorces the act that it is their ailure andthen they go on to make it emotionally burn by quantiying theloss. Tis kind o thinking tells your subconscious, which remem-bers everything, that you lost $800 and it also adds an emotionalcomponent to the loss. Hearing your subconscious thought, thesubconscious builds up an association o loss with emotional dis-tress. It les the episode away and awaits more similar reinorce-ment. In the end, the trader didn’t learn anything but the subconscious did:trading is painul.Te second trader, on the other hand, preerred to see the trade in a dierentlight. o the second trader, the loss was just a low probability occurrence and was not a ailure. It was accepted. Tere was no hint o emotion; it was justpart o an expectation o a certain percentage o losing trades produced by thetrading system and was o no particular signicance. Te subconscious wastold,
“everything is normal, steady as she goes” 
.Both traders experienced the same action but the subconscious experience wascompletely dierent. One trader preerred to see it in a purely 
reactive 
way (Damn, I lost and it cost me $800) and the other
 preferred 
to se it as a non-event.Given that they are both using similar systems, which trader do you think hasthe best chance o staying in the game and letting probability work or them? Which trader is going to like trading and which one will become tormentedand probably move on to other things? Sounds like a no brainer, but most
“Hearing your subconscious thought, the subconscious builds up an associationof loss withemotional distress.” 

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