Train Your Brain-Fear

Train the Brain to

manage By Rande Howell, MEd, LPC Successful traders manage the fear generated by uncertainty. Understanding the inter-relationship between the biology and psychology of fear helps traders grow. The brain’s bias to avoid the discomfort

of uncertainty conspires against the trader’s need to develop the mindset that can manage uncertainty and probability. BIOLOGY MEETS TRADER PSYCHOLOGY The brain (and the mind that emerges out of it) was never intended for trading. It was engineered to avoid the confusion generated by uncertainty and ambiguity. Our brain developed a predisposition toward creating certainty rather than the management of uncertainty. It is these emotionally based beliefs embedded in the brain that the trader brings to trading. Emotion is biological, not psychological. Emotion takes over the trader’s psychology. Emotionally undisciplined traders are predisposed to have their minds taken over by fear. Emotion, while under stress, hijacks traders’ psychology, and they are consumed by reactive fear. Suddenly fear-based beliefs about the management of uncertainty take

With a relaxed mind, you can become mindful of your beliefs about the management of uncertainty. over the cognition of the mind, and the trader perceives and acts from fear. Uncertainty in trading cannot be avoided. The brain and evolution have shaped our beliefs so that a trader brings a fearbased psychology rooted in predicting certainty and avoiding uncertainty to an endeavor where the management of the risk of uncertainty is the needed skill. The brain and the untrained mind that the trader brings to trading is going to have to be retrained to produce the mindset needed for successful trading. EMOTION AND MIND The first step in developing a trading mindset is to understand emotions and how to work with them so that fear (or its cousin, greed) no longer contaminates the trader’s

need for clear, impartial thinking. Recognizing the fact that emotion is biological and that it takes over the quality of the thinking of the trader’s mind allows us to understand emotion very differently. Emotion, from this perspective, is any disruption to a standard familiar pattern that the brain has established already. If you have ever felt anxious when trying to commit to an entry point or gotten rattled when in a trade, you have experienced emotion triggering after a disruption to a standard sensorial pattern based on a belief in the need for certainty. Fear gears the body and mind up for fight or flight. If not regulated, the arousal of the emotion hits a threshold. The chemistry of fear takes

over the body, and then the feeling element of the emotion takes charge of the mind. Feeling is the subjective experience of an emotion. Think about how you feel when trying to pull the trig-

RETOOLING FOR TRADING Because emotions are biological, a trader can learn to regulate emotion. Each emotion has a breathing and muscletension-signature that is associated with it.

Emotional state management provides the skills to produce a calm mind. ger and finding that your finger is frozen. Feeling then produces a certainty in the belief in whatever direction the emotion is taking you. If the direction is toward fear, you will believe in the certainty that bad things are going to happen if you pull the trigger. On the other hand, if the emotion is euphoric (greed), it will hijack your mind into believing with certainty that the good times are going to continue to roll. Gone is the disciplined impartiality you need to trade effectively.

If you alter the kind of breathing and muscle tension that is associated with the emotion, you also disrupt the arousal of that emotion and the capacity of the emotion to be maintained. Fear’s biology requires shallow, fast breathing (or holding of breath) and tension in areas of the body such as the jaw, eyes, neck or shoulders. By altering the breathing and tension elements of the emotion using diaphragmatic breathing and relaxing the muscles, the emotional force of fear is

disrupted. Consequently fear is managed and does not hijack the critical thinking necessary for trading with a clear, relaxed head. FROM BRAIN TO MIND Emotional state management provides the skills to produce a calm mind. Until this is done, you do not get to the door of the mind. With a relaxed mind, you can become mindful of your beliefs about the management of uncertainty. You can now develop a mind built to manage the risk of uncertainty from a state of calm. Fear transformed into concern and a mindset rooted in disciplined impartiality can be brought to the management of trading uncertainty.

Rande Howell (MEd, LPC) is a licensed therapist and performance coach. He is the author of four books including “Mindful Trading: Mastering Your Emotions and the Inner Game of Trading.”