Keep Calm and Don't Move Your Stops.....

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The Purpose of Life is Joy!!

Saturday, June 3, 2017

Get yer mind right!

I debated about the wisdom of posting this rambling stream of consciousness post. I thought the example I used was to negative and it is but I love the movie quote even though the movie is quite dark. So take what you will from this post. It's intended to illuminate the necessity for proper thinking about trading. I'd be interested in your thoughts regarding this subject.

There's a great movie about getting your mind right....Its called Cool Hand Luke and its about a petty criminal that gets thrown in prison to work on a chain gang. He doesn't adapt to prison life well and tries to escape. Down south where the movie takes place, they don't cotton much to such things and a large portion of the movie is about the prison trying to "get Cool Hand Luke's mind right". In other words, they work hard to break his mind down so he will be compliant and not try to escape or make trouble.

Trading is about getting yer mind right and the market will work overtime to break your mind and make you give up. I realize there is a negative connotation in the movie and I'm using it in a negative fashion with regards to the market trying to break your spirit but the hard truth is this: You must get your mind right if you expect to beat this thing called the market.

There is a prison most of us lock ourselves up in with regard to trading. The market reinforces that locked up mentality. It punishes bad behavior nearly all the time and once it awhile it rewards that same bad behavior just enough to make us believe we can continue same and somehow avoid the consequences. Regardless of how you arrived there, nearly everyone lives in a prison of their own making with regards to the market.

Here is the prison I've been locked up in for nearly all my trading career:

In simplistic terms; I have believed the market was evil and out to get me. Its why I have been so aggressive with moving to break even on good trades only to see them ticked out and then go on to the profit targets. It's why I have habitually bailed out of good trades way to early thinking the market would take back all my open profits and leave me with nothing or a loss after all the hard work of finding a good trade. It's why sometimes I insist on "taking" something from the market when in fact, all I need to do is wait until its ready to simply "give" it to me. Its why sometimes I think "If I could find an easier way to make the kind of money I know I can in trading, I'd do it in a heartbeat".

This as all the teachers say, is "a limiting belief". It places a cap on what I can realistically expect to receive from the market. As Ed Seykota once said, "Every one gets what they want from the market". If you expect bad from the market, you should expect to receive bad from the market. If you expect to have to "beat" the market, you should expect a fight just to get the smallest degree of profit. If you expect the market to be stingy and evil, you would be correct. It is.

Instead, a more correct belief would be; The market is a wonderful mistress. She is good and generous. She is not out to get me, instead, she is looking for ways to give me what I desire. My only job is to get in tune with what she wants to give me and simply receive it with joy and calmness.

This all comes down to a famous Einstein quote. He once said, "the most important decision we make is whether the universe is friendly or hostile". It seems like a trivial question for the philosophers of the world to debate but it has direct bearing on our success. Everyone I have ever read that has written on success says it must come from a place of joy. Joy is hard to come by if you believe the universe is a hostile place. This way of thinking creates conflict between the stated desire and the underlying belief. If the subconscious is the driver of behavior and it knows you don't believe in a friendly and generous universe/market, then your behaviors will mirror your beliefs even though you verbally state the opposite. In trading terms, this is known as the monkey brain. It acts in opposition to your stated goals but in line with your fundamental belief system. You will find yourself doing exactly the opposite of what you KNOW to be the correct course of action and seemingly powerless to change or stop that behavior.

Eventually we give up altogether or we arrive at that place where Cool Hand Luke did. He got his mind right. He broke and accepted the truth of where he was and his inability to change it. This is a negative example but it serves the purpose of demonstrating that eventually we must get our mind right and that means accepting the fact that the market is a good and generous place to be and that we love it. We are patient with it. We allow it to reach the point where we can simply receive what it is offering and be in the flow of its offerings. Trust me, its there. It's quiet and not always obvious but its there. A never ending flow of money ready to be transferred from those that demand to those that receive.

I am getting my mind right. I know what to do and sometimes I do it correctly. Other times I fight it and my monkey brain is in complete control because my belief system allows him free reign. But I feel as though I made a huge leap this week in terms of getting this part of my trading life correct. Patience will probably always be an issue but I am following the advice of Ed Seykota in terms of allowing myself to trade in accordance with my personality vs trying to trade in a manner that looks good to the outside world. Harmonizing personality with trading style is important but not nearly as important as harmonizing my beliefs about the market with the truth of the market.

There's another quote and I think it is from Will Smith in The Pursuit of Happiness. He said, "I wasn't free until I got my mind right". What an incredible statement. Get your mind right and freedom follows!

Here's the clip from Cool Hand Luke.


  1. Great post - I was getting ready to comment on statements such as "You must get your mind right if you expect to beat this thing called the market." But, you beat me to it later in the post!

    The verbs and adjectives we use to describe our (trading) world will, in my experience and opinion, change the course of our feelings which has a knock-on affect to thoughts and, finally, actions.

    The thing that's helped me the most is doing my best to divorce myself from short-term outcomes and, instead, marry short-term processes. When I don't need anything anytime soon, I'm free to just allow rather than force. Align rather than beat etc.

  2. I know how to trade, its the mind that keeps getting in the way. So yes, I am working hard on the reverse engineering of habits and why I do certain things. I am quite tired of pissing in the wind, and since the process I've gone through in the past don't seem to work well, I am betting large on this one. I'm doing stuff I never dreamed I'd be doing and for once I feel as though I might be on the right track. Time will tell of course. But I'm in it for the long haul.

  3. PW,

    If you believe you can trade(you can define your edge), but your mind (monkeybrain) interferes with execution of it... the problem's solution sounds quite simple. Why not hire a psych to analyze how you are derailing your trading so as to fast track the re programming? Seems to be the fastest way if you are committed to the long term and have tried everything else. After all, time is money. Reading books and pondering movies seems like a waste of time to me and I would want hard and fast plan from a professional psych.


    1. I rarely read books these days. No real time for that and haven't watched a movie all the way through at home anyway since I don't remember the last time. But the movie Cool Hand Luke is a great metaphor for life in general and trading in particular. It is about getting your mind right.

      And yes, I have and am considering hiring a professional in the very near future.

  4. loved this content man.

    you know, sometimes some things work and other times other things work. i'm sure you know how that relates to the business. and that's why i like the post because the only thing you can do is not to let it destroy your mind either through negative thought cycles or a sense of infallibility. even on a good day, the market will always be a humbling mechanism, it's how you digest it that determines your overall fate. and if you're going into the day with a good mindset, that counts for something.

    hope the week is going well for you.


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