BarroMetrics Views: Do You Have What It Takes? 2
Yesterday I left you with a question: how do ensure that we operate from a foundation based on greater pleasure? I asked that because doing so ensures we maintain our motivation.
To answer that question, we need to delve once more into our human wiring.
- What drives our actions? The imbalance of pleasure and pain.
- What creates pleasure and pain? A thought gives rise to a feeling which gives rise to an action. That action produces results that lead to a thought etc.
The result of our actions tends to be determined by how closely aligned our perceptions are aligned with reality. The closer aligned they are, the more likely our results will bring us what we want (and that means pleasure).
It’s important to note that ‘our reality’ is the ‘out there as seen by the in here’. Our perceptions determine what is real for us. If our reality is out of alignment with the way things are, then we are unlikely to get the results we want.
For example, if we believe that trading success is guaranteed by doubling down, then we are likely to go broke before we get rich.
The other mistake is to confuse reality with our thoughts. For example, we are long the S&P and the market suddenly dives. The reality is the market is moving against us, and we are losing $x.00. That’s it. If we catastrophize or indulge in wishful thinking, we are making our thoughts a reality – a reality that exists only in our mind.
What is the reality? It is that the market is moving against us, and we are losing $xx.00. That’s it. If we catastrophize or indulge in wishful thinking, we are making our thoughts a reality – a reality that exists only in our mind.
Our confusion of ‘thoughts for reality’ tends to surface when our fight, flight or freeze instincts are triggered. So, the best ways to deal with this primal fear:
- Learn to accept uncomfortable thoughts and feelings for what they are – automatic responses to external events. Be comfortable with discomfort.
- Prepare as best (and as extensively) as we can for ‘surprise’ and ‘unexpected events’ – by pre-planning our responses.
For example, Let’s say I envisage that I short the GBPUSD at 1.3307. And, no sooner do I get my fill, that the pair rallies to 1.3397. How would I react?
I picture firstly how I would feel, then secondly, how I would react. I tell my students to ask, after entry, ‘what does the market have to do to prove me wrong?’ And to answer that question by ‘seeing’ their response is as
I tell my students to ask, after entry, ‘what does the market have to do to prove me wrong?’ And to answer that question by ‘seeing’ their response is as much detail a possible.
Through preparation and anticipation, we overcome the effects of ‘fight, flight and freeze’. Using the same process, we can ensure that the ‘pleasure’ side of the equation outweighs the ‘pain’ side. And in this way develop our grit to attain our goals no matter the barriers.