Built Innerself Power and Trading Psychology

"Anyone can become angry-that is easy. But to be angry with the right person, to the right degree, at the right time, for the right purpose, and in the right way-that is not easy." Aristotle, The Nicomachean Ethics

Indeed. And the same can be said for fear and anxiety and remorse and hope and greed and elation and all the other emotions that swirl around trading.

Traders often say that they don't want to have any emotions when trading. They say they want to be flat and factual like a machine. Fortunately or unfortunately, traders, like anybody else, are not machines. To erase all emotion would be to destroy the psyche and to demolish intuition and sixth sense knowing as well as to eliminate all sense of joy and laughter. If you could drive your emotions from awareness, you would only have banished them to a deep repressed area where they would rule beyond your control. You would be amazed to see yourself doing things you didn't intend to do.

Are we hopeless, then, in the face of our emotions?

Of course not. Emotions give us messages. We can receive those messages and make necessary alterations and take advisable action. We can interpret the emotions in ways that assist us. We can moderate the intensity of emotions. We can shift one emotion into another emotion.

I like to think of emotion as energy in motion. Conscious thought and unconscious thought is highly charged energy. This energy effects our inner and outer worlds. (I'll be writing more about this in future columns.) As Carl Jung says, "There can be no transforming of darkness into light and of apathy into movement without emotion." We can use our emotions as means to further our trading process. But we need to learn to interpret them, to direct them, and to moderate them.

There are three basic ways to change emotions:

First, we can change our emotions by changing our focus. This makes perfect sense. What we focus on becomes our reality. Are we looking at the possibility of taking a loss, or are we looking at the probability of taking a profit?

Second, we can change our emotions by changing our beliefs. Our beliefs act as filters for what we notice, thereby effecting the information we allow into consciousness. Our beliefs effect the interpretation we give to facts and events. If we believe we have stacked the probabilities in our favor, we are not going to be distraught over a single loss because we believe that we will make money over time.

Third, we can change our emotions by changing our physiology. It is common knowledge that physiology-breathing, facial expression, body posture, voice tone and tempo-are effected by thought and emotion. What is not so commonly understood is that physiology actually effects thought and emotion. If you trade sitting on the edge of your chair, shoulders hunched, jaw clenched, lips tightened, hand with a death grip on the mouse, and holding your breath, you will be telling yourself to be anxious about what is about to happen.

In the next three columns I will be showing you how to use each of these methods to your advantage as you trade. Wouldn't it be great if you could moderate and direct your emotions in support of your trading?