How to break the emotional model

Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book «Psychology trade», 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.

Traders love patterns. We sell on graphical models, models of oscillators, historical patterns, cyclical patterns - patterns that you call, what you can sell. Most of the trade is reduced to recognize patterns and the ability to quickly identify and act on profitable models, as they arise. This is especially important for traders, active traders in the markets, which should be read as a model to take its decisions and to place market orders in seconds. The ability to handle market-based models, are among their own emotional patterns - our tendency to impulsiveness, fluctuations, disorder, and unfortunately - is one of the biggest challenges to active trade.

It always calms traders when they realize that they are part of the market in which they sell, and sometimes even more than that. In this article I will share my experiences twenty psychologist, to illustrate a powerful technique for the repeated interruptions and changes of emotional and behavioral patterns that are destroying our trade. Engineering is a cognitive-behavioral technique known as exposure and is a powerful tool to make yourself do the maximum possible quality of trade execution.

Become your own therapist

Extensive research Kliremansa Axel and Arthur ribs suggest that with sufficient experience, people can learn to read patterns in data and expected future sequence data. Interestingly, this recognition of the model is more intuitive and implicit, rather than logical: we know things before we know what we know them. These results contradict the conventional belief that a successful sale requires the removal of emotions. Our feelings, like market data, are composed of relatively weak, but vitally important signal to significant market noise. Our sensitivity to the market model is often hidden among the pulses and impulses associated with the trading fear and ambition. Traders can learn to become their own therapist, using techniques such as methods of exposure - not dull or destroy the emotions as well to gain control over their cognitive abilities and more to extract signals from noise.

The problem, as you can see, not just in our models of anxiety, guilt, anger or sadness. The problem is that we can not control these patterns. No one deliberately has no plans to not be able to click on «trigger», with a promising opportunity and, while nobody wants to impulsively zaprygivat changeable, but not the developing trend of the market before a certificate of a breakthrough. As I emphasize in the book «Psychology trade», such emotional and behavioral patterns emerge by themselves and against the wishes of the trader, in spite of our best trading strategies and sophisticated market research.

For most of us painfully familiar scenario: We plan to enter into a form to go on a diet, or try to improve something else - and what happens? Too easily, we return back to its previous track. At a time when we accept their decision, we are quite sincere. But under the influence of the old models, solutions rapidly lose their strength. The plans that we have carefully developed, have been frustrated, like so many good intentions, like the desire to go on a diet.

Why?

Our trade (or any other) plans tailored to a particular mental state associated with a specific set of thoughts, feelings and physical sensations. When something interferes and moves us into another state, we lose our anchor. We no longer have a strong and direct access to the motivation that inspired our original intent. The key point is not to spend months and years in psychoanalysis, why we are destroying their plans or, in other words, the lack of «self». Rather, we must become their own therapists and to learn to remain tied to the original state, even in the face of the market and the emotional force that can destroy our retail plans. That is the purpose of methods based on exposure.

Overcoming the problems through exposure

Let us take a classic example of how exposure can break it seems difficult emotional patterns. Helen suffers from a condition known as indiscriminate panic. Sudden episodes of anxiety struck her in casual moments, seriously affecting the normal activities. These episodes are so terrible, that she is afraid to lose control and may even die. As a result, from Ellen about her fear of developing panic episodes - known as the «secondary concern». It is stable enough to fear about panic attacks leads her to become more and more concerned and, in fact, cause further attacks. By that time, as Elaine beginning therapy, she was captured in a continuous cycle of anxiety, fear and panic.

To apply the method of exposure with Elaine, I first taught her how deep breathing and progressive muscle relaxation method. This involves the study of how to slow itself by reducing the frequency of breathing and deepening the breath, with the removal of physical tension, gradually straining and relaxing groups of muscles of one side of the body to another (see Appendix 1 at the end of the article).

As soon as Ellen has learned this technique, the exposure can begin. I asked her that she made a few quick breaths and small-breath, simulating hyperventilation. This exposes some of Helen from the same physical sensations that she experienced during the early stages of her panic attacks. This also raises the same thoughts and feelings of panic, which had become deeply involved with the physical sensations of concern. When Helen starts to re-test some of their anxiety, I instructed her to perform deep breathing and muscle relaxation. She continues to perform to relax until the initial sense of anxiety is not addressed.

After Ellen learned to douse the anxiety which arises from a few quick, small breaths, exhale and then from a more prolonged hyperventilation, I then told her to perform more intense exercise exposure. I made her dance around the room, creating a sense of vertigo that occurs when there is panic fits. Later, I recommend it to cause feelings of panic entering a situation (like the overcrowded shopping center) that are associated with anxiety. In each case, she had a problem model, which she tried to escape, but always limited the exposure and immediately after that served their skills out of this state. In daily practice, serious problems such as indiscriminate panic, you can successfully move on to the weekly training.

How does this technology work?

Most of our models are a painful problem for us - no one likes to feel concern or distress. It is rooted in human nature - the desire to avoid emotional pain. Away from your problems, but we never study the controls necessary to address them. Gradually, more and more intensively and exposing themselves to stressful situations all the time, working on methods of how to cope with them and maintaining control, we build a sense of mastery. That is how people learn to overcome various phobias and reduce the effects of psychological trauma. No calls will not replace the experience of the first direct clash with the dangerous situation and the subsequent stay in a controlled situation. Repeated success modifies its own self-esteem and it alters our conversation with them. Suddenly, we are really starting to feel and believe that «I can do it!»

The application of exposure to trade

If you are going to become your own therapist, using the method of exposure, you remember the key rule: you must always activate the problematic model to overcome them. Not enough to think about their problems or talk about them. You should actually try to model problems in real time, and gradually with the increase, and make a conscious effort to confront these models. If your problem is to trade occurs when increasing the size of the position, you will need to gradually and steadily to trade large volumes. If your model of impulsive trading occurs in the market with low volatility in the absence of trend, or in the first few minutes of trade, it is then you will need to work on them.

Fortunately, we can accelerate emotional changes through the process known as imadzhinalnoe exposure. Imadzhinalnoe exposure can be seen as the psychological equivalent of a virtual trade. Rather than begin to face problematic situations in the real world (known as exposure in vivo), we can vividly imagine scenarios associated with our negative patterns, causing some of the emotions of greed, fear, doubt and regret, and mentally rehearse the strategy as to deal with such scenarios. Imadzhinalnoe exposure is not so powerful as a clash with the problems in the wild (so same virtual trade lacks in reality), but this will be a useful starting point in building a sense of success and mastery. Just as athletes mental rehearsal helps sharpen athletic skills, mental problems in the trade can prepare us for the real thing.

Let's look at an example:

Lou is an active trader in the futures market, with experience in trading a little over a year. He made most of the beginner mistakes and learn from them, as carefully plan their transactions to limit their losses and to adjust the size of the positions of market volatility. It mainly deals in ES-and NQ-mini short-term trading practices to breakthroughs in an attempt to catch the 1-4 oscillations per day depending on the state of the variability and trends. Its inputs are based on double meanings oscillator RSI, using short-term (within days) and long-term options. Although, in general, he was successful, he noticed that it was relatively poorly performing transactions in the trend days. He believes that it is too long ranged at the entrance to the market too quickly and then withdraws from the transaction as soon as they become profitable. As a result, it takes only small pieces of the movements, which should provide him most of the profits.

Checking problematic trend of days shows that they begin with GEPa at the opening, in which the price moves sharply up or down on the closing price the previous day. This immediately raises GEO negative reflection on the part of Lu, the majority of which reflect a sense that there is no obvious maximum or minimum on the market. During this period of regret, he did not actively follow the price action and has no plans to login. Instead, he hopes to roll back so that he could have a better entry point. Price, of course, is not returned in accordance with his wish and moves further away from opening, is now giving a signal «perekuplennosti» or «pereprodannosti» in the short oscillator. Lou uses this as further justification to resist the entrance of the market, allowing me to skip a good share of the morning the trend.

This problem seems unusual for a non-experienced trader, so we explore the full implementation of trade Lou. Enough confidence, we find that its worst losses occurred when GEPy the opening of the market have been deployed. These false breakthroughs made him, in the early kupivshego maximum or sold at a minimum, begin your day with heavy losses and shattered his confidence. This allows us to see what seems to be the problem - the refusal to enter the market early in the day, in fact, trend is a response generated to minimize the possibility of losses. Unfortunately, this also minimizes the possibility of making a profit!

Our exposure therapy for Lou begins with training, as is the case with Ellen. We learn how to Lou for behavioral self-control, which includes slow, deep breathing smooth and soothing images and forces him to do so until he becomes skilled in maintaining its self. In addition, we also want to explore some life Lou trade skills. He needs a set of rules to distinguish the potential trend of those days when the spread might occur and to examine the rules for the rapid recognition of turn as soon as they occur. For example, his own research and small studies have experienced traders could teach him that GEPy that occur at the break of maxima or minima period X, is more likely to show continued as GEPy that occur without these advances. Or, he may find that the motion of GEPov at the opening, which remain intact to a certain hour, more likely to continue throughout the day, than those which are partially filled.

As soon as Lu has identified its trade rules to the problem situations and to learn a method for self-development, work on the exposure can begin. First we started with imadzhinalnogo exposure, forcing Lou to enter into a state of relaxation with a slow, diaphragm breathing and his eyes closed. In this case, he vividly imagined that night news lead the market to open with GEPom down well outside its previous range. It supports the visualization of the scenario, as, as he makes his slow breath, and mentally rehearse the appropriate trading strategy. Thus, for example, he could imagine a tick, descend to the days of a minimum of movement when opening and an unsuccessful attempt to fill in the GEO push back. That would be a signal for him to enter the short position, and it will be clearly visualize each step that he would be taken to control the market - placing their orders at the entrance, installation of protective stop orders, etc. Such a set of visualizations could also facilitate rehearsal of strategies exit.

Once all the discomfort overcome in mental rehearsals, the next step in the exposure was in the application of skills in virtual commerce. Using historical market data, we made sure that Lou has been a bar for the bar simulation trading days in the trend with the rehearsal of his self and trading strategies. Only when the simulation is successful (ie, excluding anxiety), Lou was able to take exposure in the real world, starting with small positions and moving to the big. The speed with which the progression of Lou imadzhinalnogo virtual exposure to trade and work in the real world depends on the seriousness of the problem and the intensity with which he was rehearsing techniques. The study suggests that fewer but more intense sessions of exposure more effectively to address the negative emotional patterns, the greater the number of short exposure.

The idea is that, before Lou again face the market with other potential trend day, he will experience repeated success in testing these days, in his imagination and then in a virtual trade.

This experience re-skill and success, which provides the effect of intervention on the basis of exposure. Nothing builds confidence like repeated collision and overcoming fears. (See Appendix 2 at the end of the article).

Conclusion

There are many psychological approaches that can enable us to achieve control over our critical models. Methods based on the exposure is particularly useful to individual traders, trading in volatile markets, because they allow for self-control and often get quick results. Such techniques can not overcome all the problems the model. Sometimes people with chronic problems in need of additional forms of therapy, including treatment. However, when emotional reactions are situational rather than chronic, and especially when you can make the trade situation, which are problematic models, methods based on exposure are an excellent means to achieve control and to remain tied to the trading plan.

However, please note that I emphasized the need for appropriate, examined the trading strategy that accompanies exposure techniques. As an experienced clinical psychologist and trader, I can assure you that self-help methods alone will never allow you to cope with the market. If you want to know how to trade in the trend at day break the range, or full-time consolidation of the morning the trend, you should be well to investigate these market conditions and to develop certain rules and methods to enter the market and exit from it. Otherwise, you will learn to concentrate and relax, while you lose your hard-earned capital.

It is important to understand that psychological techniques can be done - is to ensure your self for their well-researched trading strategies.

Annex 1: Methods of relaxation

First step: a deep breath - Close your eyes and start breathing deeply, slowly and rhythmically. Your breathing should be from the diaphragm, and should not be amplified or accelerated in any way. During a deep breath, you hold your body still as possible, performing the exercise in a quiet environment without distraction.

Second step: the mental concentration - Focus your attention on the peaceful, relaxing stimulants, while you are making a deep breath. You can listen to instrumental music through headphones, if that helps, and focus on mental images of sedatives or scenes. For example, you could imagine yourself in detail, proceeding along the ocean beach, feeling the salt spray and the warm sun, hearing rote, etc. The most important thing is that music and / or picture all absorbed by adjusting to your inner conversation.

Third step: relaxation of muscles - As soon as you feel more relaxed, start with one part of his body (eg, finger foot) stretch and relax one muscle group at once, gradually prorabatyvaya all parts of the body. Ten repetitions for each muscle group, with a strong voltage and slow relaxation will be easy enough. This can be done, while you breathe slowly and deeply, under the accompaniment of music and / or images. Rising from the toes to the feet, knees, hips, buttocks, back, shoulders, arms, wrists, fingers, neck and forehead, you consistently destroy the tension in your body.

Fourth step: self-esteem - when you have finished relaxing the muscles, slowly open your eyes and pay attention to what you feel. By this time, you breathed deeply and slowly to changes in the concentrations and physical relaxation, in a long time. Very often, there are certain physical sensations that accompany your relaxed, focused state, which traders call a zone. I think I have a feeling in his head, as though I am somewhat remote from the real world. Such feelings may be your signal, leading you to the willingness that you have entered the zone and ready for the conversion of old models through exposure.

Note. Initially it may take time to enter into a zone. With practice, you can become quite skilful in breathing and relaxation of muscles and enter the zone for a few minutes or even seconds. The key is frequent repetition, first under normal conditions, then under conditions of gradually increasing the voltage.

Annex 2: Keys to success with the methods of exposure

• Patience - take the necessary time to become completely relaxed before the start of exposure, which is extremely important. Give yourself enough time to reach the area (see Annex 1).

• Consistency - the key to maturity is the repetition of negative patterns. Use appropriate skills to problem scenarios over and over again, in images and in natural surroundings, stressful situations that will make friends.

• Graduation - configure themselves for success, beginning with the managed version of your model and problem imadzhinalnogo exposure before his move to the main problem in the real world.

• Consistency - is the short-term methods, but the daily intensive and consistent application provides excellent results.

• Realism - exposure can break old patterns of concern, but in isolation will not develop new models of success. Nothing can replace experience and research on the markets!

Brett Stinberger
www.brettsteenbarger.com