Market Mind Games Review, A Radical Psychology of Investing, Trading and Risk
here a review of Market Mind Games, it disagrees at points with positive thinking of the Law Of Attraction, it turned out a bit long and winding but these are the notes i made, so what can you say? what this book is hammering home is that numbers(statistics) can lie and you need to keep track of your emotions to know them and to use them to your advantage.
You cannot control your emotions
The smartest move you can make is to Let Yourself Feel Disgusted(if things go wrong). Feelings don’t cause any harm, bad trades do. What happens is it puts your body in sync with your mind and your mind in synch with reality. If you messed up what else are you supposed to feel? Most of the time, if you have the courage to feel badly, get to the root of the feeling, and realize that x-y-z feeling or fractal-emotional context crept up on you without you knowing it, the feeling “pops” like a balloon. And then you see how the feeling, emotional, and social contexts-the conscious and previously unconscious-were coloring your beliefs and perceptions.
Why Traders Don’t Have to Control Their Emotions by Denise Shull (6 min video)
(you can’t control your emotions)
Are Impulse Trades Hurting Your Bottom Line? (3 min video)
Market Mind Games by Denise Shull (3 min video)
Managing Your Psychological Capital Part 1 by Denise Shull (7 min video)
Managing Your Psychological Capital Part 2 by Denise Shull (9 min video)
Questions to Ask
What is the feeling context(fC)(tired and hungry) and emotional context(eC)(fears)? Where are you on the spectrum between fear of losing and the fear of missing out(fear of future regret)?
What is the fractal emotional context(F-eC)? (most unconscious)
Psychological set-ups exits in your trading that makes you feel like you felt when you were a child. It is all there. The simple and early fractals were there before you got to high school. They may become re-mixed somewhat and events from your teenage years may exacerbate them, but the roots go deep.
When the intensity of wanting to be right, frustration over being wrong, or fear of missing something emanates from your past is the strongest. It dilutes enough of the physical energy embedded in the emotion and gives you a window through which to unravel it. As opposed to acting out(or trading) with the money you manage. Understanding this internal data gives you an edge, the psychological leverage, that no one can take away.
If you are managing to the objective of creating and maintaining psychological capital first, you will recognize your situation sooner. Likewise you get to the point where you can have one awful trade, just one one(sort of like one potato chip or one chocolate chip cookie). In stead of turning into a gorge fest. you have a psychological strategy to fall back on.
In fact force yourself to celebrate when things go brilliantly! Consciously act out that real feeling, that one where you get the next million dollar paycheck.
Delve fully and completely into it. Avoid overconfidence. Feeling the feeling, knowing what it is and why, and putting it into words short circuits that overconfidence process. If you manage to your level of mental capital and psychological leverage first, you know when you feel “over the moon”. This feeling carries the same risk signal as being tired or angry. It creates a context that skews your perception. If you revel instead, you can feel the feeling-really enjoy it-but keep it out of your account.
Conscious Feeling Contexts for fighting the trend:
-Missed the trade and want to be in the market
-Fear of Missing out on the move altogether, but can get the pullback
-The feeling it just can’t go any further
Influence of the fractal and unconscious emotional context we all have
price movement is “transference object”
transference and repetition
their basic childhood stories and feelings reoccurring in their reactions to the market and their positions
the reality of unconsciously believing, perceiving, and acting out of fractals-you almost always get exactly what you are trying to avoid
Price can only be Perception’s reflection-Price depends on perception. Perception is reality.
Price reflects perception, and perceptions can stem from almost innumerable combinations of factors.
Every single price at every single moment now and forever will be only a perception-nothing more and nothing less.
Judgement Calls-judgement should be used on factors that can’t be calculated
“I think, therefore i am” or is it “i feel, therefore i am”
We can’t actually apply math or logic, let alone, make judgements, or decisions, if we lack feeling and emotion.
It is not enough to ‘know’ what should be done: it is also necessary to ‘feel’ it and to influence behavior, the cognitive system must operate via the affective(emotion) system.
Contrary to the popular belief that feelings are generally bad for decision making, we found that individuals who experience more intense feelings had higher decision-making performance…
Individuals who were better able to identify and distinguish among their current feelings achieved higher decision-making performance…
“The only thing we have to fear is fear”
The only true thing we have to fear, at least when it comes to decision uncertainty, is a complete lack of fear.
One should always explicitly know where they stand on the spectrum of fear to confidence. If they do, they have a shot at knowing their pre-existing conditions of beliefs and, in turn, at making their best judgement call. Devise for yourself the self awareness and tracking systems that will indeed allow you to do so.
Know the difference between a phlethora of different types of feelings, intuition and impulse…
No matter how you analyze a market or trade, no matter what your time frame, the only “thing” you are ever trying to deduce is if other market players will value the asset in question differently in the future.
The truth of speculation:
You make money by correctly predicting the opponent’s future perception-not ‘the facts’!
Fear of missing out or not getting the trade the other guy got plays a huge role..regret theory
The prospect of regret…The potential for regret drives prices in ways much more profoundly than generally recognized, particularly in bubbles and upward pushes.
The place of numbers
numbers actually serve a whole different master-a master less precise, more artful, and much more subject to interpretation-the function of language.
Theory of Mind: We all have to predict what other people are going to do almost every moment of our lives.
“Exploring the Nature of “Trader Intuition”
“We find that skill in predicting price changes in markets with insiders(/traders) correlates with scores on two ToM tests”
Intentionally resolve to evaluate the social/human context through which you analyze your data, projections, or probabilities. Do this first for yourself as a risk management tool, ie, what are the emotional and social pressures playing on you, and second as a strategy tool for understanding market action.
If context means everything, it means even more in uncertainty…
Counterintuitively, we deal with uncertainty faster than we deal with arithmetic! Could this be because the vast majority of what we deal with is actually uncertain even though we typically forget that in reality we don’t ever know what will happen tomorrow.
You gain psychological leverage when you make a set of contexts explicit with an intentional focus on the “meaning gap” between where numbers leave off and good judgement begins. In practical terms, resolve to know your contexts-all of them.
Both external and internal contexts should be explored if one truly wants to commit to making better market mind plays.
Beliefs, which implicitly include a feeling of confidence, influence(restrict) context; therefore, beliefs influence what we think we see or beliefs drive perception.
Beliefs as curator
Beliefs limit our range of view but they do it necessarily. Too many possibilities exist and beliefs curate how we go about looking at things.
Clarifying perceptions over and over so that they match up with the everchanging realities and eventualities of other players’ percepts puts you in the real game. Easier said than done though. (Like taking the temperature of the situation)
Knowing, Not Controlling Your Emotions (fC or eC) can be your secret weapon.
The Initial deposit in mental Capital and Psychological Leverage
Mental Capital and Psychological Leverage (Chapter11)
-Review the basic concepts of the new psychology of risk and uncertainty
-Mental and emotional or psychological capital
-The spectrum of fears
-The fractal psyche embedded in your market mind
The most predictive element of context is the feeling- emotional one, the fC or eC.
The emotions are your data…
Expect to feel and then pay attention to your body and let it give you its message.
Feeling start with the basics of tired and hungry
Emotions start with fear etc
Capturing self data
a number of traders speak directly into an audio recorder or use a note pad about fears and what not
Anticipate-the feelings will be there
Notice-resolve to become aware
Name-begin to name the different combination of feelings(anger, fear, disgust, sadness, and pleasure)
FAD(fear, anxiety, and doubt) spectrum.(Fomo=fear(panic) of missing out)
Panic_______________fear of losing or being wrong________________FOMO_______________________________Panic OMO___
Fear turned Frustration Turned Anger Turned Meltdown
The cloud of the feeling context from the previous trade deposits the frustration of wanting the money back, not just once but twice, three times, usually to the tune of half dozen losing trades before the traders realize they have to quit…
Vow to always ask: How will i be feeling in the future if i take this trade?
A typical scenario:
-Beginning-fear of losing and/or being wrong at one level below conscious awareness
-A generalized doubt and anxiety about any market decision
-Time in the state above opens the window for fear of missing out but doubt lingers
-Fear turns into frustration over missing out
-Frustration turns to gaining a feeling of control via taking a trade
-Frustration being a close cousin of anger prevented us from seeing risk
-Anger at ourselves for making an ill-advised decision ensues
-We want our money back and knew we were right to be afraid(occasionally we digress into the “temper trantrum” of trades)
-Eventually we stop. We recognize we have to “reboot”
Feel what you feel-as much as you can feel it.
Fear and its derivatives anxiety and doubt…
fear of losing money
fear of being wrong or stupid
Fractal emotional contexts or F-eC offer exorbitant amounts of psychological leverage(if you can use it to your advantage)
The Middle of the Spectrum-Anxiety of Uncertainty
between the extremes you will be living with at least some modicum of anxiety and doubt just about all the time.
Greed-Fear of missing out
Anticipate Feeling Lousy-Regret Theory, the Logic of FOMO
-Long or short and wrong
-Got out too early; left a lot on the table
-Got out too late; gave back a lot
Applied regret theory:
Choice A-get out now = take profits good; it might go further = regret
Choice B-wait for the trade to move further = “let profits run”; it might reverse and i will give all my money back = regret
Choice C-put a trailing stop in = I get a chance to make more but i might regret giving it back when it reverts to my trailing stop(to the exact tick and then continues)
Anticipating Regret Dilutes its Inherent Strength
Understanding the inherent conflict in relentless uncertainty changes everything. Or rather, maybe I should say accepting it. Stop trying to make it certain. Stop trying to get rid of the conflict. In fact lean into it. Try to feel it. If you do, you won’t act on it.
We experience the present through the lens or prism of the past experience. The small pattern, the simple fractal, repeats itself because the memory traces laid down early on merge together to form the foundation. Emotional templates.
We hear criticisms, spoken or unspoken, of our teachers, siblings, fathers and mothers. And even if they criticize, but it seemed that way.
What happens when we make buy or sell decisions, or even when we are just perusing the market to make a decision, is that we experience a mosaic of feelings that we have felt many times before. We rarely, if ever, recognize it for what it is.
The fractals of our early feelings replay themselves out. If we really analyze the emotion, our market-to-market emotions, those feelings are very similar to when we didn’t make the football team, lost a chess match, or listened to our father’s complaint about us getting only a “B”. The feelings induced in us back then, stick with us.
The basic elements of perception we have formed about ourselves and others becomes infused into our expectations and explanations for circumstances in our ever more complex lives. And we can easily substitute the human with the human-group that is the market.
The feeling we get while we are waiting for a losing position to turn around will map to a simple fractal of our basic expectation for ourselves.
one variant: being not good enough
variant: i deserved better
variant: repeated rebellious or defiant acts(rebellion against the trading plan/father)
variant: want to prove they are smart(smarter than given credit for)
variant: not used to having fun(results in sabotaging a good run)