3 November 2013
Comments: 0
Category: Subconscious Mind
3 November 2013, Comments: 0

Last week I wrote how the subconscious mind can directly contradict with what you want without you even realising it. Let’s now see how it can interfere with trading.

Subconscious mind records everything we have experienced from the very first moment of our lives. Its work is then based on all the ideas, which were pumped into us in the childhood. One of these ideas is “making mistakes is bad”. I am quite sure everyone will recall some situations from the past when making mistakes resulted in punishment. Every mistake at school is “punished” with bad grades, and those consequently with no pocket money, no TV or whatever you can think of. Later mistakes done at work we punished with low rewards or even getting fired.

“Making mistakes is bad” is one of the strongest ideas rooted in our subconscious minds. The result is that our brain is not ready to trade, because mistakes, or losses, in trading are just a natural part of success.


Trader’s mindset in NOT natural to us

No wonder fear is the strongest enemy of every trader. Every time we, traders, enter a trade we know we can lose money, which is often seen as a “mistake”. More experienced traders do realize losses are part of their job but only on the conscious level. However in most cases it does not apply to the subconscious mind, and it still does interfere with trading execution. So when the moment to execute the trade comes and you have doubts/second thoughts/fear, it is because your subconscious mind tries to protect you from making mistakes and therefore from possible pain. That is why perfect trader’s mindset is not natural for us.


It is not about being smarter, but about being ready.

Some traders naively think that the success in the markets is proportionate to intelligence. That leads to the misconception that it is possible to “out-smart” the market. For successful trading only the following two aspects are important:

  1. to admit on the conscious level that losses are an inseparable part of trading
  2. to admit it on the subconscious level


The first step: Conscious level.

It is quite easy to learn to respect the fact, that losses are an inseparable part of trading business. How? One of the ways is to pick a trading system and test it on a large amount of data. If even after many losses the net profit is positive, it must be obvious to everyone that it is possible to earn money even after you lose some. Trading is a game of probabilities and if you manage to find a high probability and integrate it into a trading system, you will end up generating profits regardless of how much money you have lost. The right combination of technical analysis and money management is the best way to persuade yourself on the conscious level that making mistakes is not bad. However to do that on the subconscious level is much more difficult and that is what my next article is going to be about.



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