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pain. When an existing belief is threatened, we perceive it as actually threatening some of our basic needs. Remember that our conscious, and/or unconscious mind will determine that a belief is valid if it meets some or all of the basic human needs: certainty, variety, significance, and connection. |
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In other words, if we have slowly developed a belief that the market is about to behave in a certain way, we will be very hesitant to change that belief. The more emotional intensity we have linked to this belief, the more difficult it becomes to change. Opinions if threatened generate a low level of emotional feelings; however, if our conviction is threatened, we will become very protective and will start to get very upset that our conviction is even at issue. Consequently if through a lot of research we have come up with certain beliefs about the market, and we enter into the trade, and it works as expected, we begin to change our belief into a conviction. However, what happens when we enter into a trade that fails, generating a rather large loss? We tend to get angry at the market. What happens if the subsequent trade also fails? We not only become angry that it didn't work, but we also start to experience some fear. Why? Is it because we might lose some more money? Or is it because our belief about the market action is being threatened? In most cases, if we used correct money management rules (most novices utterly fail in this are), our fear is that the belief is not valid. Thus begins a vicious circle of fear, more research, new beliefs, more fearthe black hole of trading. |
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What is an expectation? Do you remember? It is a belief about a belief. If our expectations on a particular trade are high, what does that actually mean? Simple. We are convinced that the underlying beliefs that the trade is based upon will work this time. What happens when a conviction or a strong belief is threatened? We experience anger and resentment against the source of the threat. If the source is another person, we typically respond with anger and attack the opponent who threatened our belief. We respond with anger because we learned that by doing so we were able to control the situation enough so that the person who questioned our belief decided to stop. Our opinion prevails because of the way we exercised control. Unfortunately the market cannot be controlled. This leaves us ultimately with uncontrollable fear. |
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So now that we have a working knowledge of fear, how can we control and eliminate it as best we can? The first step is to accept responsibility for our beliefs and actions, and what we value most. The second step is to accept |
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