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 With a relaxed mind,
against the trader’s need
to develop the mindset
you can become mindful
that can manage uncer- of your beliefs about
tainty and probability. the management of
BIOLOGY MEETS
uncertainty.
TRADER PSYCHOLOGY
The brain (and the mind over the cognition of the need for clear, impartial
that emerges out of it) mind, and the trader per- thinking.
was never intended ceives and acts from fear. Recognizing the fact
for trading. It was en- Uncertainty in trading that emotion is biological
gineered to avoid the cannot be avoided. The and that it takes over the
confusion generated by brain and evolution have quality of the thinking of
uncertainty and ambigu- shaped our beliefs so that the trader’s mind allows
ity. Our brain developed a trader brings a fear- us to understand emotion
a predisposition toward based psychology rooted very differently. Emo-
creating certainty rather in predicting certainty tion, from this perspec-
than the management of and avoiding uncertainty tive, is any disruption to a
uncertainty. to an endeavor where standard familiar pattern
It is these emotionally the management of the that the brain has es-
based beliefs embed- risk of uncertainty is the tablished already. If you
ded in the brain that the needed skill. The brain have ever felt anxious
trader brings to trading. and the untrained mind when trying to commit to
Emotion is biological, not that the trader brings to an entry point or gotten
psychological. Emotion trading is going to have to rattled when in a trade,
takes over the trader’s be retrained to produce you have experienced
psychology. Emotionally the mindset needed for emotion triggering after a
undisciplined traders are successful trading. disruption to a standard
predisposed to have their sensorial pattern based
minds taken over by fear. EMOTION AND MIND on a belief in the need for
Emotion, while under The first step in develop- certainty.
stress, hijacks traders’ ing a trading mindset is Fear gears the body
psychology, and they are to understand emotions and mind up for fight or
consumed by reactive and how to work with flight. If not regulated,
fear. Suddenly fear-based them so that fear (or its the arousal of the emo-
beliefs about the manage- cousin, greed) no longer tion hits a threshold. The
ment of uncertainty take contaminates the trader’s chemistry of fear takes
over the body, and then RETOOLING FOR TRADING disrupted. Consequently
the feeling element of Because emotions are fear is managed and
the emotion takes charge biological, a trader can does not hijack the criti-
of the mind. Feeling is learn to regulate emo- cal thinking necessary
the subjective experience tion. Each emotion has for trading with a clear,
of an emotion. Think a breathing and muscle- relaxed head.
about how you feel when tension-signature that is
trying to pull the trig- associated with it. FROM BRAIN TO MIND
Emotional state manage-
ment provides the skills to
Emotional state produce a calm mind. Until
this is done, you do not get
management provides
to the door of the mind.
the skills to produce With a relaxed mind,
a calm mind. you can become mindful
of your beliefs about the
management of uncer-
ger and finding that your If you alter the kind of tainty. You can now devel-
finger is frozen. Feeling breathing and muscle op a mind built to manage
then produces a certainty tension that is associated the risk of uncertainty
in the belief in whatever with the emotion, you from a state of calm. Fear
direction the emotion is also disrupt the arousal transformed into concern
taking you. of that emotion and the and a mindset rooted in
If the direction is to- capacity of the emotion to disciplined impartial-
ward fear, you will be- be maintained. ity can be brought to the
lieve in the certainty Fear’s biology requires management of trading
that bad things are go- shallow, fast breathing uncertainty.
ing to happen if you pull (or holding of breath)
the trigger. On the other and tension in areas of
hand, if the emotion is the body such as the
Rande Howell (MEd, LPC) is a
euphoric (greed), it will jaw, eyes, neck or shoul-
licensed therapist and perfor-
hijack your mind into ders. By altering the
mance coach. He is the author
believing with certainty breathing and tension
of four books including “Mindful
that the good times are elements of the emotion
Trading: Mastering Your Emotions
going to continue to roll. using diaphragmatic
and the Inner Game of Trading.”
Gone is the disciplined breathing and relaxing
impartiality you need to the muscles, the emo-
trade effectively. tional force of fear is