Perception is a significantly important thing in what you think and believe about the market just as it is in any other case or scenario.
For instance, if I give you an image to observe and write a description of, some of you will look at the colors while others will focus on the objects.
The story of perception doesn’t end there.
There are just as many perceptions as there are people.
So, the interference of this element of our personality in what we think about the market and how we respond to what the markets present to us is inevitable.
One facet of trading that can significantly be changed using this approach is the pain and threat that come with trading.
Like we have said time and again, the information generated by the market isn’t happy or tragic.
It is what you do with this information that helps you classify the information into one of these categories.
If you look at the whole scenario from the market’s perspective, then the market is simply providing you with information.
Although, you may be tempted to blame the market for all the suffering that you are going through, but the market has little to do with what you gain or lose in the market.
The market gives you information.
You perceive this information, derive trends out of it and determine if the time is right to enter or exit a trade and end up as a loser or a winner.
Therefore, it is basically you and not the market that determines your chances of making money in the market.
From a professional’s point of view, there is nothing that can be categorised as painful or threatening.
This is why they are not guarding against anything and perhaps the reason why they can do what many others cannot do and think of.
When they know that they have a good hold over the market and they are able to see opportunities as a stream of positive trends.
So, they know that the time is right for them to get into the trade and benefit from what the market is willing to present them with.
On the contrary, when they know that the market isn’t in their favor, they simply keep themselves at a safe distance from the market so they don’t lose anything in the process.
If you hope to become a professional trader, you must learn to bring objectivity in your perspective and how you look at the market.
Most people possess a distorted frame of mind, which makes them hesitant and resistant.
This thin line of what you will need to work on is known as a trader’s mentality.
Once you achieve this mentality and adopt it completely, you will be able to sort out all the problems that you have ever had with trading.
In order to achieve this, you must create a different kind of relationship with the market.
At the very foundation of this relationship lies the basis that none of the information must be perceived as threatening.
As you attempt to create or define such a relationship between the market and yourself, you must understand that you need to ‘redefine’ your relationship with the market.
This redefinition will require a complete change in perspective, which can help you remain focused towards achieving success instead of falling into the maze of guilt and pain.
Getting Your Mind To Think Right
Nobody is perfect and there is one facet of another of your personality that will not be aligned in the manner that you want or wish it to be.
A perfect analogy to explain this is that of a software program.
It may function perfectly fine, but a few bugs will always be there.
You need to proactively look for these bugs, identify the underlying reasons for them and get rid of them in the most effective manner possible.
Coming back to the context of our mental framework, you will need to manipulate with your mental energy to look for and get rid of these glitches in the way you think.
The manner in which these little changes can change the results you get can be astounding and you will realize it only when you try it.
Simply, trading is nothing more than seeing opportunity and utilizing it for your own advantage.
Therefore, when it comes to trading, the first change in perception that you need to look at is the perception of opportunity.
This is the very basis of trading.
Before discussing the relationship between perception and results, you will need to understand the basics of perception.
From the very basic definition
Regardless of what the source of information may be, this information is sure to strike one of your senses and generate what is called ‘perception’.
To understand this concept better, it shall be enough to know that a cause and effect relationship exists between what is within us and what is outside us.
How we exist and coordinate with the outside forces determines what are called the energy structures of our mental framework.
Our beliefs, conceptions, perceptions and memories exist within our mind in the form of energy.
This energy structure can be described as an abstract concept and defining it is not as easy as it may seem.
This may want you to question that very existence of memories and beliefs.
Do they even exist?
There are no scientific or research-based social proofs that can prove the existence of these mental components.
However, if you see how the human brain was and is one of the most unexplored components of the human body as far as science is concerned, this should not come as a surprise to you.
Just ask yourself – how do you remember things and how do you take decisions?
Well, where there is an abstract concept, there is sure to be a physical structure in the form of atoms and this should be taking some of your mental space.
If all these components exist in the physical space, someone must have observed them.
However, there is no study or observation that supports this assertion.
With this said, we don’t mean to say that scientists haven’t attempted to explore these components of the human mind.
They sure have!
They have dissected the minutest regions of the brain to map regions and explore how they function in the human body.
However, there is no research or study that can physically show a set of cells or a region of the brain that can be mapped to a specific belief or memory.
In other words, a memory or a belief can be accessed only if the individual is alive and is willing to express it in some way.
The only other way you can explain the existence of all these elements is by saying that they exist as energies.
Taking this concept further, it would not be wrong to say that this energy must be structured and how it is structured largely depends on the external factors that exist.
Thinking is also language-specific and when you express your thinking patterns in the form of sound energy, your thoughts can be heard.
Similarly, laser is also a form of energy structure, which is used by artists to express their thoughts and creative illustrations.
In all the discussion, we have left out a very crucial aspect of our existence, dreams.
We are not talking about the dreams that you see with your open eyes.
We are talking about the dreams that you see while you are asleep.
So, what are dreams?
What do dreams signify?
And, more importantly, what do they mean?
They are simply energy structures that exist for us like real experiences when we are alive.
However, they do not take up any spaces in our brains.
This should be enough to make you understand that the human brain’s capacity to learn is limitless.
Perception and Learning
With all that we have already discussed, it is important for you to clearly understand the fact that learning capacity isn’t the same as storing capacity.
So, while the learning capacity of your brain is limitless, the storage capacity cannot really be called the same.
An explanation of how this works is that when you have a situation at hand, you observe the essentials or all the characteristics and features that are important to you.
You don’t really perceive or remember everything about this situation.
Had your storage capacity been limitless, you should have been able to store everything in your brain and consequently remember everything.
Learning capacity can be described as the human brain’s capacity to know what all is there in the world for it to learn.
In view of the fact that our learning capacity is limitless, we can easily conclude that we know everything that is available for us to learn in this world.
If this is the case, why is it that we know everything, but aren’t able to store and remember it.
This understanding is the very core of comprehending what memories and beliefs are made of.
Beliefs, thoughts and memories are basically all forms of expression.
So, how well you express them largely depends on your capabilities.
In other words, these structured energy components are stored in the manner in which the human perceives it.
Therefore, this level and magnitude of perception of the individual determine the amount of information that is stored as a result.
Every situation has associated with it limitless information in terms of characteristics, properties and attributes.
In fact, the dimension and magnitude of information is so huge that it is not possible for our senses to perceive everything.
For instance, we can see light, but it isn’t possible for our eyes to perceive every single wavelength that the light is made up of.
These are the kinds of physiological and psychological limitations that we are talking about.
In most cases, we have an external environment in front of us.
However, we aren’t able to perceive everything about the environment because we haven’t learnt anything about it in the past.
For example, if I give you a chart to read, you will most likely not infer anything about it in the first look and it will just appear like some text and numbers with no meaning.
However, as you pay more attention and give yourself the time to understand what the chart is trying to reflect, you will realize the meanings and inferences that the chart portrays.
How do the learning and the increased exposure to the chart makes all the difference?
When you have spent some time with the chart and gained enough knowledge about it to understand the basic structures and formats, this knowledge acts like a driving force for your senses to work upon.
This brings us to an important point that
Most of what we are trying to say here can be summed up by ‘you see what you want to see’.
In the present context, we can change this saying a little bit and say that you see what you have learned to see.
So, the information that you are ignorant to or aren’t in a position to acquire and use remains invisible to you.
To illustrate the concept in a better manner, let us take a live example.
Let us take the example of a child who is going to see a dog for the very first time in his life.
So, presently, the child has no memories, experiences or beliefs to back his perception or behaviour with the dog.
In a way, the child’s mind is a clean slate at the moment.
Out of curiosity, the child approaches the dogs and goes really close to the dog.
Assuming that the dog is threatened by the actions of the child, the dog bites the child.
So, the very first experience of the child with a dog is a tainted one.
In a normal scenario, you can expect the child to remember this incident and the next time he meets or even sees a dog, no matter how friendly the dog may be, he is likely to be repelled and feels fearful.
As a result, a past experience or a memory is what creates a belief and it is this belief that generates a perception.
The dog that had bitten the child may have just played with him and the child would have had a positive experience to back his perception of a dog the second time he sees one.
Therefore, two types of mental energies exist namely, positive and negative mental energy.
While the positive mental energy is associated with love, care, affection and any other feeling that is positive in nature, the negative energy is associated with fear, frustration and negativity.
Perception and Risk
From a normal person’s perspective, the child’s reaction to the dog the second time he meets a dog is irrational as he or she can see the endless possibilities that exist in the situation even though the child’s mind is completely focused on the one possibility that he has experienced in the past.
Analogously, when you trade with fear, you only look at the opportunity or possibility that you know and believe to be existent.
Although, other people can see all the other possibilities that are placed right in front of your eyes, you may not even have the slightest idea about it.
A master trader knows that you cannot predict the outcome of any trade.
Every trade can turn out to be one of the probable results and the chances for each of them to occur are equal.
However, as a trader with fear, you will begin to believe that the trade is more inclined towards a single outcome and this is where real problem starts.
This is perhaps the reason why you are fearful and let me tell this to you straight in the eye that your fears have no ground.
Your fear stems from the fact that you believe in a certain outcome more than the other outcome purely on the basis that you feel that you have been in a similar position before.
You cannot blame yourself for this thinking.
This is how the human brain works.
The brain does it best to avoid any threatening situations and when it seems that you are going to be in a situation that can be threatening in one way or the other, it warns you against it.
As a result, you experience fear and change things for the worse.
Going back to the child and dog example, the child’s first encounter does not tell him everything about the dog.
There is much more to a dog’s nature.
So, even if you have had a bad experience, it doesn’t mean that you know everything about the market and know enough to make predictions.
As a master trader, you must learn to live with the fact that risk is absolute and totally governed by the present trade.
The theory of relativity may not help you a great deal here.
How Our Mind Works
Our minds basically work on the principle of association.
The human brain has an unmatched ability to organize, compare, link and classify things and experiences.
So, when the dog bites the child, the child identifies the dog as a dangerous creature.
The next time and every other time that the child sees a dog, he classifies the situation as dangerous regardless of the fact that this dog may not be the same dog that had bitten him.
Moreover, this activity is unconsciously performed. In words, you don’t really need to think or act to get this done in your mind.
Now, let us see how the sequence of events, step-by-step, brings the child to a point that he is not willing to see any other possibilities and outcomes that the situation may hold for him.
The second time that the child meets a dog the child has an internal energy that is filled with negativity and images of how the previous experience was.
On the other hand, assuming that this second dog is a friendly one, the external energy is filled with positivity.
What the child perceives of this situation depends on both the internal and external energy.
Therefore, the child will experience contradictory perceptions.
While the external energy, in the form of the friendly dog’s behaviour and mannerisms, will force the child to think that this experience can be a good one, the negativity inside him will link this situation to the previous situation and propel the thought of fear and feeling of threaten.
Of the two perceptions, the child is most likely to choose the negative perception and play around that.
There are several reasons that can explain why.
Firstly, you need to understand that the child hasn’t experienced any positive experiences with a dog before.
So, for the child, such an experience doesn’t really exist.
Secondly, the power of association is so strong that linkages and associations will make the child agnostic to the dog’s behaviour and the positive characteristics that the child would have otherwise noticed.
Another important facet of this situation is how the human brain associates and links experiences.
The simplest answer to this question is that human brain looks for similarity.
When the child approaches the second dog, he instantly sees a similarity in the way the dog looks, sounds and feels.
Immediately, the negative energy inside the child sets the feelings of discomfort and fear.
So, it is this similarity in objects and behaviour that helps the child associate this experience with a previous experience.
The next thing that happens in this course of events is what is medically called projection.
When the child feels threatened and fearful and the child’s senses have gathered the information that they had to and supplied the same to the brain, the brain holds the dog responsible for all the negativity that is present inside it.
The core of this feeling lies in the fact that the child believes that dog in his brain and the dog that is in front of him are the same.
As a result, the child does not see this situation as an opportunity to experience something new.
In fact, the child feels fearful of the dog and claims to know about the result of the encounter even before it has begun.
Talking about perceptions, if you take a layman’s perspective on the situation, you will certainly get the answer that the child was fearful for no reason.
However, if you look at the situation from the child’s perspective, then the child isn’t wrong in the way he thinks for the simple reason that he cannot imagine what he hasn’t experienced or learned.
Moreover, the fact that the child believes that the source of all his pain and discomfort is the dog makes it all the more difficult for him to look at possibilities.
An important point to note here that the child reacts in the manner that he does because what he believes is what he knows to be the absolute truth.
However, this is not the absolute truth.
Although, the dog is the source of his pain, the dog in front of him is not the source of his pain.
However, he perceives all the information that the dog in front of him gives him with a negative perception.
Therefore, pain, discomfort and frustration are largely self-generated.
In the same manner, mental dynamics and framework force the trader to self generate fear and discomfort.
Consequently, while the trader is busy with all the fear and discomfort, he or she is left with little space in his mind to think about the opportunities and possibilities that are waiting for him in the same scenario.
To keep your focus on the opportunities and possibilities, you must understand that the market is not responsible for all the pain and discomfort that are there inside of you.
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