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Tuesday, December 19, 2006

Trading Wisdom

The First Three Minutes

"The greatest discovery of my generation is that man can alter his life simply by altering his attitude of mind." -- William James

What you say to yourself is more powerful than anything anyone says to you. The way you talk to yourself is crucial because your brain is not only speaking, but also listening and learning. Thoughts determine actions through a process called entrainment.

Entrainment is just a fancy word for what the psychologist William James described over a hundred years ago. He said that if you form a picture in your mind of what you would like to be and keep reinforcing it day after day, you will become what you think.

Part of training the brain for trading success is entraining your thoughts in such a way that they are able to override the negative, self-defeating messages you carry with you, or negative automatic thought (NAT). Entraining your brain means that you replace the NAT with positive automatic thought (PAT). Think of it as a way to PAT yourself on the back via your thoughts.

Why do I keep talking about the brain so much? The brain is your most powerful trading tool. It doesn't matter how many seminars, trading systems, newsletters or courses you subscribe to. Wherever you go, you take your brain with you, and it is your brain that is the ultimate source of everything you know, have known or will know.

What difference does it make to you if all you want to know is where to get in, where to get out, and where to set a stop? If that is all you care about, then you can stop reading now. If you are waiting every day for someone to tell you what to do and how to do it, then you can stop reading. If you have no desire to do the nitty-gritty work it takes to become a master trader and just want someone to throw you a fish, then you can stop reading. It will only be a waste of your time.

One of the reasons Trending123.com is the premier technical trading service in the world is that every day you have the unique opportunity to see and hear master technician John Lansing tell you what and how he is thinking about the market. If you open your eyes and ears and really pay attention, you will realize that John is teaching you how to think about the markets.

Yet, with all of this guidance, many of you hesitate to take the alerts and execute the trades. So you sit at your computer in the Trending123 Trading Room, receiving update after update, watching stock picks soar 10% or 20%, and feeling like a kid with your nose pressed to the candy store window. You see it, but you can't act on it. You are told what you can do, but you cannot do it. You struggle with it and make excuses for what you are or are not doing.

Why? Because one function of your brain is to trick you. Yes, your brain, the most powerful object on the planet, your internal storehouse of wisdom and knowledge, is also your worst enemy. You see catastrophe around every corner because that is the way you have conditioned your brain. The media, with images of death and destruction, feeds directly into these fears. You are worried about everything, especially those things about which you should not be worried. The brain tricks you into being fearful when you should be greedy and greedy when you should be fearful.

Those of you who were with Trending123 in mid-2005 will remember what I call the "rat brain." Memories of loss and big hits to your portfolio are etched onto a part of your rat brain that is called the limbic system, specifically the amygdala, septum and hippocampus. Even now, in an age of technological acceleration at logarithmic pace, we are plagued by primitive memories of fear, dread and anxiety. Your rat brain is still out to get you! And it will be out to get you until you make up your mind once and for all that you are going to take charge of your brain, your trading and your life. There is no other way. It is up to you. All the fancy bells and whistles mean nothing if you are stuck in NAT.

There are 1,440 minutes in every day. Take the first three minutes to entrain your brain for success with PAT. Get out of bed. Look in the mirror. Look closely and keep looking. Stare at yourself and tell yourself:

"Today, no matter what, I will trade well. I am a person of confidence and success in the markets. I will reach my trading goal today. I will plan my trade and trade my plan. I am a great trader and becoming greater with every passing day."

When you do this repeatedly, the reticular activating nervous system mechanism that feeds into the rat brain and then upward into the more advanced part of your brain (what I call the new brain) will actually LEARN! You will, in a way, hypnotize yourself with these repeated messages until they are strong enough to override the negative images you have stored there.

Keep doing it every day until it becomes a habit. It should take about 21 days for you to get to the point where you look in the mirror, tell yourself that you are a winner and actually begin to play out that scenario during the trading day and through all the remaining 1,437 minutes of your day.

Before I go, I'd like to share one more quote with you:

"Self-discipline begins with the mastery of your thoughts. If you don't control what you think, you can't control what you do. Simply, self-discipline enables you to think first and act afterward." -- Napoleon Hill

Until next time, remember: focus on PAT, not NAT -- and definitely not RAT!

Good trading, and Brain On!

Janice Dorn, M.D., Ph.D.

Related reading:

Your Rat Brain Is Out To Get You (Original article on the "rat brain" from mid-2005)

http://trending123.com/trading_wisdom/trading_wisdom_5_22_05.htm

Venery and the Serotonin Sink (What happens when a bunch of rat brains get together)

http://trending123.com/trading_wisdom/Stock-Market-Traders-Fear-Greed.htm

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