AVERSIVE CONDITIONING
“Most trading difficulties arise from the way trading naturally conditions us to avoid those situations that actually present the greatest possibility of monetary reward.”
Kenneth Reid, Ph.D
As a trading coach for over a decade, I’ve noticed that traders often start out with a streak of ‘beginner’s luck,’ but eventually the risks catch up with them. At some point, many traders experience the Reverse Midas Touch, when one simply can’t win.
THE CONDITIONING CYCLE
Trading coach Mark Douglas points out that the initial naivete of traders makes us fearless. In that fearless state we actually trade much better than if we were afraid, even though we have less objective knowledge about the market and about what we are doing.Many traders report that they were able to trade well when they first started, but the more experience they gained, the worse things got. Trading is perhaps the only business in which increased knowledge and experience can work against you.
In the course of learning to trade, you will make errors and they will cause you pain.
You may not remember the details of those painful experiences, but a part of your brain does. That part of your brain (the amygdala) stores details about everything that ever hurt you and tries to avoid those things in the future. The amygdala is a pattern recognition device. It is the size of an almond, but it can recognize
20,000 faces….or chart patterns.
Gradually, therefore, the amygdala adds emotional color to your trading experience in the form of fear. Gradually, you become subtly afraid of the setups you used to take even if you consciously decide that you still want to take them. Each time a setup occurs, you will either miss it entirely or think up a reason why you should not take it.Losses have much more impact on the amygdala than wins. In fact, it does not register wins at all. It only registers things that hurt. The more you trade, the more times you will lose and the amygdala never forgets a loss and who/what caused it. Never.
The good news is that this type of conditioning can be reversed. As a trading coach I specialize in helping traders reverse aversive conditioning. But first you have to know that the conditioning is there, running the show, filtering (distorting) all your perceptions of the market’s opportunity flow.
BOTTOMLINE
Contact me to schedule a FREE 15-Min. CONSULTATION or click here to sign up for one of my three Trader Coaching Programs now.Job #1 for traders is to correct aversive conditioning. My trader coaching program is focused on identifying how you may have been conditioned through your trading and reversing it.
If you take no other action today my friend, be sure you order my Positive (+) Neuroprogramming MP3 TRAINING A WINNING MINDSET. Nothing is more important than becoming proactive about your mental-emotional state while trading. It could save you thousands!
Kenneth Reid, Ph.D