Define Your Problem
Even if you ask a layman about what a market is, he or she is sure to tell you about the graph that goes up and down showing market trends.
Forming a more technical definition from this vague description, the market is a series of uptrends and downtrends that together forms patterns. Most technical analysts refer to these patterns as edges.
So, what do these patterns indicate?
When a pattern is identified, it is a clear indication of where the market is heading.
For instance, if an uptrend is noticed, the probability of a continued trend up increasing prices can be expected.
This illustration may sound like a contradiction to you.
While patterns create expectations or a consistency is outcome, every pattern is different and unique in its own ways.
There are superficial similarities between patterns, but the fact is that intricate differences exist between patterns, which may not be apparent to you at first.
The reason behind these differences is the set of forces and trade influences that create the pattern.
Every time a trend is seen, these forces are different and this is perhaps the reason why you cannot expect the trend to be the same.
You have the information and the opportunity to gain from it. Despite this, most traders fail to see success.
Let us focus our attention on one of the three things that we just mentioned beliefs.
What we believe at a given point in time is a result of what we already know from our past associations and experiences.
Besides this, pain avoidance mechanisms also have a part to play here.
They make every effort to avoid any emotional pain to you.
As a result, you end up looking at only the things that are working in your favour and the truth remains invisible to you.
This gives rise to expectations.
When you use your beliefs to predict what is going to happen in the future, you give rise to expectations.
It is imperative and usually automatic for the human mind to associate things, experiences or pattern that are similar to it in characteristics or features.
This in turn attaches feelings and emotions to expectations.
All of these factors impact your perception so much that you may not even know this, but you may be overlooking crucial information that exists right in front of you.
Our beliefs and perceptions are in complete contrast to what the truth is.
The market works on possibilities and probabilities.
There is no sure outcome.
This makes it impossible for us to make a comparison of this moment to any other moment that we may have experienced in the past.
As a result, living in the world of probabilities and realizing the relevance of being in the ‘now moment’ is fundamental for a trader’s success.
Coming to the terms that you will commonly encounter in this book, let us look at some of the definitions.
The first and perhaps one of the most important terms that you will encounter is objectives.
What is your objective in trading?
Or simply, what are you trading for?
The obvious objective is to make money.
However, if this is your sole objective, you don’t really need this book.
Making money doesn’t require any skill, but making money on a consistent basis does require some thinking on your part.
Another term that we just used is ‘objectivity’, which can simply be defined as thinking in a manner that your interpretations are not affected by the environment or even the pain avoidance mechanisms that work at the conscious and sub-conscious level.
The last thing that you need to pay heed to is the ‘now moment’.
This term is used in view of the fact that trading is a highly volatile environment.
No pattern is repeated and no moment can be compared to a moment that has passed.
So, if you wish to make a precise analysis of what you have on your trading platter, you must remember to think only terms of the present moment.
What Are Beliefs and How Do They Impact Our Lives?
Before anything else, let us define the line of difference between a memory and belief.
A memory can simply be described as sensory information associated with a circumstance of interest in its original form.
On the other hand, a belief is a form of expression, which associates sensory information with language.
So, beliefs do exist! Now, the question that arises is what do they do?
All of us live with our own set of beliefs and act in accordance to what they cumulatively instruct us to.
However, most of us don’t have an answer for the question that I had just asked for the simple reason that beliefs are too integral to our existence for us to spend time thinking about them.
The biggest problem with beliefs is that they are integral part of our existence and unless you have a serious commitment and conviction to change them, you won’t be able to do much about them.
To start with, a realization that none of us was born with any of the hard or soft beliefs that we have today and most of them have just been acquired, can be useful.
Moreover, it wouldn’t be wrong to say that we don’t even make an attempt to create these beliefs.
When we talk about the means and ways in which your beliefs can impact your life, the simplest way to put it is that your beliefs determine the way you experience your life and all that it throws to you.
At the basic level, your beliefs decide how you interpret information and on the basis of your evaluations, your expectations take shape.
So, anything that you do or the manner in which you act is a result of what you believe.
In addition, how we perceive the outcomes is also a by-product of what we believe.
Conclusion – Impact of Beliefs on Trading
There is no limitation on the manner in which an environment can express itself.
As a result, the beliefs that we can nurture are also infinite in nature.
If you consider this statement and ponder a thought on the same, you will realize that this can be contradicting.
If we validate the existence of infinite combinations and ways in which beliefs can exist, we have no reason whatsoever to fight and argue with each other.
Every single conflict that exists in this world today is a result of contradicting beliefs.
Why is it then that we attempt to prove our beliefs as right and someone else’s beliefs as wrong?
There is a level of satisfaction and happiness that we human get when we know that we are being believed.
More so, when we are disbelieved, we feel disappointed.
Taking a lead from this, it can be said that none of us like to be challenged on the validity of our beliefs.
Whenever someone challenges our beliefs, we find ourselves in a continuous trial to prove ourselves right and this is where the conflict begins.
This is a universal system of working that all of us irrespective of our cultures and backgrounds.
To integrate the basic truths about trading into your mental framework, you must understand the three fundamental characteristics of a belief.
Firstly, beliefs are rigid and they tend to offer extreme resistance to anything that poses to change them, even if it is for your own betterment.
Secondly, beliefs demand from you a mode of expression.
Lastly, regardless of whether you acknowledge their existence or not, they tend to exist at the sub-conscious level and operate.
They do not require your consent to function in the manner that they have to.
Now, let us see how this concept applies to trading.
This brings us to the concept of self-valuation.
As part of this process, you will need to list out all your beliefs that are contradicting the existence of the opportunity or the possibility of achieving success and earning huge profits.
In addition, you need to list out all the beliefs that are telling you that you have all that you need to make it big in trading.
When you have the two lists ready, you need to evaluate the positives against the negatives and see where the balance is dominantly inclined.
For instance, if you’re positive energies are more, then your sense of self-valuation is positive.
On the other hand, if the negative energies are more, then you are more inclined towards a negative sense of self-valuation.
Although, this may sound really simple, it isn’t really so!
You may need years of mental work to reach a point where you can organize yourself for such a valuation process.
The one that you need to understand and remember here is that regardless of where and how you grew up, it is impossible to assume that you don’t have any negatively charged beliefs in you.
Even if you feel that you don’t have any self-sabotaging beliefs to pull you back, you can just assume that they exist in a forgotten state.
Moreover, even if you don’t know it, they are operating all the time at the sub-conscious level.
The existence of these beliefs can be dated back to your childhood or the time when you weren’t even in control of yourself.
A negative remark, punishment or just a ‘no’ from one of your parents when you were trying something new can manifest into something as grave as a self-sabotaging belief.
In the trading environment, the effects of these beliefs can be seen in the form of lapses in focus or concentration and trading errors.
So, every time you blame luck for a trading result, think again! The reason for your failure may just have its roots here.