This pattern of seeing an event in the charts, thinking negative thoughts that create errant emotions, which then drive physiological and behavioral responses, is a negative default pattern. Negative default patterns that get triggered are like computer viruses … in your body. They take over your system and end up causing results that you don’t want.
Default patterns are programs that are connected to beliefs, biases and values and they are often not in your best interests. Programming is created from your earliest days of being with family, teachers, counselors, coaches, clergy etc. These programs represent all that you have learned and/or experienced from zero years up to and including the present moment. It is for these reasons that when they are triggered, default programs keep rolling until the situation is over.
Of course, all programming is not negative or bad…thank goodness. It is important to identify and modify negative default patterns that are contrary to getting the results that you want with your trades. Trading is counter-intuitive which greatly adds to the challenges. For example, humans are loss averse. We are much more opposed to giving up something than we are drawn to obtaining it. Losses tend to be twice as powerful as gains, as suggested by research. This bias can cause you to move a stop when it is threatened by the price action or to exit a trade prematurely. Another example is that humans are prone to conform and go with the herd when clearly this type of trading can quickly cause you to chase trades and jump in after extended rallies or sell-offs triggering more losses.
Self-awareness will increase self-knowledge and understanding by finding out those limiting beliefs, biases and values so that you can work on changing them.
Trading is psychological warfare. The difficulty stems from the myriad ways that the trading process challenges your weaknesses, character flaws and blemishes. Trading requires self-limits and personal accountability. Your best trader, your A-Game is the only acceptable position to trade from. Otherwise you are placing yourself under impractical, unacceptable and unsustainable risk. Don’t allow yourself to continue to trade under the influence of negative default patterns. Identify, root-out, neutralize and replace negative default patterns by becoming deliberate and trading by design. Protect your capital. This is what is taught in the “Mastering the Mental Game” Online and On-location courses.
Dr Johnson is author of “From Pain to Profit: Secrets of the Peak Performance Trader.” and can be contacted on this link: Dr Woody Johnson