your lack of understanding—that you give yourself to the best of yourability what you end up with, out of what is available. And by the sametoken, what you lost, you gave away.
You can't change what the market is doing. You can only change yourselfin a way that allows you to perceive what it may do next with increasedclarity and objectivity. As a trader you want to know what is going tohappen next, yet, how can you begin to know what could happen next, ifyou refuse to open yourself up mentally in ways that allow you to perceivethe most likely possibilities? It is a complete contradiction in thought towant to know what is going to happen next in an event over which youhave no control and at the same time to maintain a rigid mental structurethat allows for only a very limited number of possibilities.
This contradiction in thought is the result of not understanding thenature of beliefs and how they limit a person's perception of environmentalinformation. When you put on the trade, you had to have some belief aboutthe future. What you need to do is learn how to release yourself from thedemand your expectations be fulfilled exactly the way you expect them tobe. Releasing yourself from the demand will allow you to shift yourperspective to perceive whatever opportunities exist in the market now, as ifyou didn't have a trade on at all.
All of us are in a position of having to pick and choose environmental
63information because we can't be aware of everything at once. If you pick andchoose market information on the basis of having to justify your beliefs, youare putting yourself at an extreme disadvantage. You will be excluding fromyour awareness information that may be more indicative of the consistencyof the market and its potential to move in any given direction. And it willbe extremely difficult to learn how to develop a perspective for the "bigpicture,” by expanding your time frame perspective.
So even though you can't actually control the market's movement, youcan learn how to control your perception of the market's movement in a waythat allows you the maximum objectivity. Learning to perceive objectively willincrease your ability to let the market tell you when to get in and when to getout. You can learn how to trade where you won't be using information to justifyyour beliefs but rather to perceive the most likely possibilities in any givenmoment. As you build a solid foundation of insight and understanding into theworkings of your mental environment (which I will present in Chapters 9through 14), you will learn how to change yourself in ways that will allowyou to perceive the markets from an objective perspective and eventually tradeintuitively.
What I will be offering you in the remainder of the book is a step-by-stepprocess of how to adapt yourself to function more effectively in the tradingenvironment. Essentially it is a process that will enable you to identify andmanipulate your beliefs to be more consistent with your goals.
There are two dominant themes that form the foundation for this approach.The first we have already briefly covered, that you create the market that youexperience in your own mind based on your beliefs, perceptions, intents, andrules. And, second, your trading results will be a function of the degree of skillsyou develop in three primary areas: perception, or your ability to perceiveopportunity; execution, or your ability to execute a trade; and accumulation, oryour ability to allow your account balance to grow over a period of time or seriesof trades.
PERCEIVING OPPORTUNITY
Your perception of opportunity is a function of the depth of insight into themarket's behavior. The depth of your insight into the market's behavior isequivalent to the number of distinctions you can make and the quality of thesedistinctions. Perception of opportunity is synonymous with your expectation ofwhat the market will do next. To be effective, you will need to learn how to makekinds of distinctions that will provide you with an indication of a high-probabilityopportunity from an objective perspective, what I call making an uncommittedassessment of the probabilities.
To be able to make some kind of quality distinctions that will eventuallydevelop into a "vision" of the broader perspective, you will need to learn
64how to expand your time frame perspective of market activity. There areseveral components to this process, but the two most important are (1)instituting a completely disciplined trading approach and (2} learning howto release yourself from the negative emotional energy stored in thememories of any past trading experiences.
The disciplined approach will naturally help you develop the degree ofself-trust essential to function effectively in an environment that does notprovide any external constraints to limit or control your behavior, associety does. Without the discipline, you will be at the mercy of your ownunrestrained impulses and basically out of control. Consequently, withoutthe self-trust that develops from the self-discipline, you will fear theunpredictability of your own behavior. At the same time, you will likelyproject this fear into the markets as being erratic and seeminglyunpredictable, when it is your own behavior you fear the most.
It would be ludicrous to think that you could understand the market'sbehavior to any degree greater than you understand your own behaviorfirst. To grasp the fundamental nature of your own behavior, you will needto understand thoroughly all the effects fear has on your perception ofenvironmental information.
At the most fundamental level, fear will limit your awareness of marketinformation that could clearly indicate those possibilities that are in yourfavor and those that are not. How could any deep level of insight into themarket's behavior ever develop if you are constantly worried about what themarket may do to you and cannot stay focused on the consistency andstructure of the market itself. The market can't do anything to you if youtrust yourself to act appropriately under any market condition. Learning thisis the key to gaining the level of confidence every trader needs to besuccessful.
In the larger perspective, fear will reduce the likelihood of you everdeveloping to the point of making the kinds of distinctions in marketbehavior where you acquire a "vision" of the big picture. When youunderstand how fear operates in your trading and have conquered it, youwill be able to see how fear operates in the market as a whole and then beable to anticipate the group's reaction to certain kinds of information.
If you did not start your trading career with the proper mentalperspective or with a disciplined approach, then it is likely you have sufferedsome degree of psychological damage. I define psychological damage as anymental condition that has the potential of generating fear. The negativeenergy stored in these experiences (that create and support a belief aboutthe threatening nature of the environment) will generate fear to the sameextent as the degree of energy stored in the memory.
By learning to release yourself from the pain, you will be reducing the fearand automatically opening yourself up to new awarenesses about the natureof the markets. You will be opening yourself up because fear will not becausing you to narrow your focus of attention. Instead of being focused on
65pain avoidance, you can be focused on what the markets are telling you.Learning how to release yourself from fear will also free you up to think ofcreative ways in which you can respond to the new relationships you areperceiving in the market's behavior. As a result, you will be increasingyour confidence in your ability to respond appropriately to any givenmarket situation.
EXECUTING YOUR TRADES
Your ability to execute your trades is a function of the amount of fear yougenerate or the lack of it. Fear is always the result of your beliefs about thethreatening nature of the environment. What could be threatening aboutthe market? Nothing, if you had the confidence and completely trustedyourself to act appropriately under any given set of market conditions.Essentially, what you fear is not the markets but rather your inability to dowhat you need to do, when you need to do it, without hesitation.
In your relationship with the markets you had to learn what to fear.What you learned to fear was a result of whatever you did that caused pain.Your pain was the result of your not knowing what to do next that resultedin an outcome you neither expected nor intended. In the marketenvironment you are free to act or not to act; the markets cannot doanything to you that you don't allow, even if it is out of ignorance or acomplete sense of powerlessness.
The effects of fear on one's behavior are obvious, limiting one to thepoint of complete immobility. If you can't execute your trades properly,even when you perceive the most perfect opportunity, it is because you havenot released yourself from the pain contained in the memories of pasttrading experiences and because you still don't trust yourself to actappropriately in any given set of conditions. If you did, there would be nofear or immobility.
ACCUMULATING PROFITS
Your ability to accumulate profits either in a single trade or cumulativelywith several trades over a period of time is a function of your degree of self-valuation. This sense of self-valuation is, in fact, the most importantpsychological component of success and will override all others indetermining your results.
Your degree of self-valuation will regulate how much money you willgive yourself (the market doesn't give you the money, you give it to yourselfbased on your ability to perceive opportunity and execute a trade) out of themaximum potential available or perceivable at any given moment or timeframe perspective. Regardless of the depth of understanding you have of
66market behavior or what you consciously imtend, you will only "give"yourself the amount of money that corresponds to your level of self-valuation.
This concept can be explained with a simple illustration. If you perceivean opportunity, based on your definition or what market conditionsconstitute an opportunity, and do not follow through by executing a trade,what stopped you? In my mind, there can be only two possible reasons. Youwere either immobilized by the fear of failure or you are struggling with abelief (value) system that says you don't deserve the money. Otherwise, youwould have acted on your perception.
SELF-ACCEPTANCE
The second theme that provides a foundation for the belief system I amoffering is that personal transformation, growth, and learning new skills area function of self-acceptance. Your intent of learning a new skill or way ofexpressing yourself is in essence an attempt to create a new dimension ofyourself. It is a goal you have projected out into the future that you will thenattempt to fulfill by growing into it.
The market will quite naturally make you face what is inside of you on amoment-to-moment basis. What is inside of you could be confidence or fear, aperception of opportunity or loss, restraint or uncontrollable greed, objectivity orillusion. The market just reflects these mental conditions, it does not create them.
Therefore, to grow into a new expression of yourself (fulfill your goal of beinga more successful trader), you will need to learn how to accept the existence of anyof these negative mental conditions and the psychological components that createthem. Cultivating a belief in accepting whatever you find inside of yourself willgive you the base you need to work from to change these conditions.
To illustrate this concept of self-acceptance, I will relate to you an example of afloor trader who came to me for assistance because he wanted to change histrading style. When he first went down to the floor he got caught up in scalpingbecause it seemed like the easiest way to make money. However, he soon foundthat trying to scalp for one or two ticks in the bond pit was just too physicallyexhausting because he had to compete with so many traders. So he decided that heneeded to learn how to hang on to his trades for more than one or two ticks.
The first thing we did was to preplan his trades. We used some fairly simpletechniques to identify intraday support and resistance points within a 7- to 10-tick range. The plan was for him to stand in the pit and wait for the price to hithis target (buy support or sell resistance), execute the trade, wait for the market tohit his objective, and then exit the trade. If the market traded through his entrypoint in the opposite direction by more than two or three ticks, he was supposedto execute the loss without hesitation. Based on our assessment of the reliabilityof the support and resistance numbers, we believed he didn't need to risk morethan two or three ticks to know if the trade was going to work or not.
The first day that he tried to execute his plan, he did very well waiting for the67market to hit his entry point. However, when it came time to execute the trade, hecouldn't do it. He was supposed to buy at a support level, and he didn’t do itbecause he thought it was going to keep on going lower. When the marketdidn't keep on going lower and bounced two and three ticks higher thanwhat was his original entry point, he went ahead and bought one contract.From there he was supposed to wait until the market rotated back up to testthe resistance which was 10 ticks higher than his originally intended entrypoint, but now it was only seven ticks away.
Instead of waiting for the market to rotate to his objective, he got out ofthe trade as soon as he had a two-tick profit. A short time Later when themarket rotated up to the resistance area, he did the same thing that he did inthe first trade. He didn't get in at his price because he thought the marketwas going to keep on going; it didn't, and he sold three ticks lower than heoriginally intended and then got out for a one-tick profit, not waiting for afull rotation.
When we talked about what he did later on that day, he was extremelydispleased with himself. He made himself accountable, but he did not dowhat he was supposed to. He didn't get in at the price he intended or outwhere he intended, "leaving several ticks on the table," so to speak. This isa very wealthy man who only had to risk two or three ticks at the most tofind out if the trade was going to work and couldn't do it. By the sametoken, he was so desperate for a win that he couldn't wait for his profitobjective, stating that he couldn't hang on because he has been burned toomany times.
Obviously his backlog of negative experiences had nothing to do with themarket's behavior or the probability of any particular strategy working ornot. What was even more important, however, was his lack of acceptancefor his current level of skill development. His intense anger over hisperformance clearly indicated that he could not accept where he was at orthe results it produced. That first day was not a positive experience for him,even though he had his first winning day in a long time. His lack of self-acceptance certainly won't help him hang on to winning trades in the future;in fact, he will be digging himself into a deeper hole that he will eventuallyhave to work his way out of if he wants to achieve the success he desires.
As time went by, he became increasingly more confident with his abilityto define an opportunity with a high probability of success. Almost everytrade he put on would immediately go in his favor, so he would rarely findhimself in a losing trade. But each day was also becoming ever moreexasperating because he was still only holding on for a one- or two-tickprofit and leaving several ticks on the table as the market rotated to test thenext level of support or resistance.
What was even more difficult for him to deal with was that many timeshe had bought the low or sold the high of the day. Of course, he didn't knowat the time it was going to be the high or low of the day, but looking back,he just couldn't deal with the fact that he only got one or two ticks out of it.
68I knew the pressure was building inside of him because each day he hadmore excuses related to the market for why he wasn't doing what he wassupposed to and had less and less tolerance to listen to anything I had to sayabout the situation. All these excuses were just an indication that he wouldnot accept who he was in relationship to who he desperately wanted tobelieve that he already was. He was obviously indulging himself in illusion.To be the person he wanted to believe he already was would require that helearn how to be patient, acknowledge who he now was so he couldconcentrate on what he needs to learn and forgive himself for what hebelieved to be his past mistakes and inadequacies.
However, this would be very difficult because being impatient withother people had always got him what he wanted as long as he was dealingwith people who perceived themselves as weaker than he. So why shouldhe have to learn how to be patient now? Besides if he was patient withhimself, it would make it difficult to justify his impatient, intolerant stancetoward others who didn't "learn" fast enough or made "mistakes."
I didn't hear from him for a while and I just assumed that he wasn'tdoing anything different. Then one day after the close he called to tell methat he was going to start trading a 20-contract position. Otherwise nothingelse about what he was doing had changed, except that he had severalwinning days in a row consisting of one- and two-tick winners.
I knew he was setting himself up for a big losing day, although I didn'tindicate this to him in our conversation. In his mental system he wasreasoning that by trading a larger contract size he would make enoughmoney to prove to himself and everyone else that he had finally arrived,that he was a successful trader and that he was not a person subject todeep-rooted fears. Not being one to stand in the way of "progress," all Isaid was that I didn't think it was very prudent for him to be trading a 20-contract position, since he hadn't developed the psychological ormechanical skills to handle a position of that size. He grunted and hung upthe phone.
The next day he lost almost $3,000.00 trading 20-contract positions. Hegave back to the markets all his profits, plus more, from all his successfulefforts over the last two and a half weeks of trading. At that point he wasready to listen to a plan on how he could learn how to be more accepting ofhimself and how to hang on to his winning trades.
The following is another example of a trader who has learned self-acceptance. This trader works for a local brokerage firm, manages hedgepositions for financial institutions, and also trades for his own account. Istarted working with him on a fairly regular basis about three years beforethe experience I am about to relate.
He called me one day to tell me how proud he was of reversing hisposition on his last trade of the day. He said he cut his losses withouthesitation and reversed his position from being short to going long. He wasdelighted that he felt no conflict, resistance, or mental anguish. He
69recognized what needed to be done and he did it. However, shortly afterhe did his reversal, one of the floor traders, who worked for the same firmfilling customer orders, called him from the floor with some friendlyadvice that he should get out of his long position.
Now, my client had resolved long ago that he would not place anysignificance on another trader's perception of the market. He had excellentknowledge of the markets and believed he could trust his abilitycompletely to define opportunity and make assessments of the potentialfor the market to move. At least he thought he believed he trusted himself.After he got the phone call, he knowingly allowed himself to be influencedby what this floor trader had to say and exited his position. Within 10minutes of doing so the market (bond) rallied 15 ticks, just about what myclient originally thought it had the potential to do when he put the positionon.
He left 15 ticks on the table because he let another trader influence hisperception of the market. However, he did not view this experience as amissed opportunity. He viewed it as an example of how he hadn't, as of yet,completely released himself from other people's opinions of the market.He didn't miss an opportunity because given the environmental conditionshe was working under (someone calling him was an environmentalcondition he had no control over other than not to place any significance onthe information); he simply was not psychologically prepared to takeadvantage of the opportunity. If he had been psychologically prepared, hewould have stayed with his original plan, realizing that someone else'sperception of the market isn't going to be any more objective than his.Furthermore, considering the skills he had already developed, theirobjectivity would usually be a lot less.
As you cultivate a stronger belief in self-acceptance, you will then realizehow the market reflects back to you your level of skill development alongwith the information that will indicate what you need to work on to becomeever more successful. Each moment will then become a perfect indicationof your skills and your degree of self-valuation, giving you a solid basefrom which to improve and learn.
You will eventually understand at a very practical level how you arealways doing the best you can because your outcomes will be the result ofyour depth of insight into the nature of the market environment and yourability to act on whatever you perceive.
There won't be any reason not to accept these results as you increaseyour understanding of how to adapt yourself to suit any particular set ofenvironmental conditions and realize the power inherent within thisunderstanding. If you were to deny this perfection of the moment (a lack ofself-acceptance), you would, in effect, be denying yourself the kind ofinformation you need to grow into the skills you are attempting to learn.You can't grow or expand if you are denying the existence ofenvironmental information that would clearly indicate your level of
70development. Nor can you acquire effective skills when you try to buildfrom a base of illusion about the nature of the environment and yourself. Ifyou won't acknowledge your true starting point, you cannot take the nextmost appropriate step in the development of any skill you intend to learn.
The most essential component in the process of transformation is learninghow to recognize and then clear out beliefs that argue for the status quo,beliefs that defend against the intrusion of environmental information yourefuse to consider, and learning how to read the environment in a way thatwill clearly point to the most appropriate path to fulfilling yourself.
7PART III
Building a Frameworkfor UnderstandingOurselvesAt the start of this book, I said it would be a step-by-step guide in theprocess of adapting yourself to the trading environment. The first step inthis process of adaptation is recognizing the need to adapt. If you can'tmanipulate or force the markets to change in a way that suits your needs,then you will need to learn how to change yourself to suit the conditions.The market places no limits or constraints on the ways in which you chooseto express yourself, in that respect; unlike in the cultural environment, youhave all the power. The primary purpose of Part II, The Nature of theTrading Environment from a Psychological Perspective, was to point outsome of the vast differences between the trading environment and thesocial environment we were taught to function in and to demonstrateclearly a need for a new perspective.
The next two steps in this process are to learn how to (1) identify exactlywhat changes you need to make to function successfully in the tradingenvironment and (2) how to effect any mental changes that are necessary.Manipulating the physical environment is as easy as moving a chair fromone place to another because that's where you want or need to sit. However,to consciously change yourself to function more effectively in a marketenvironment that will not respond to your attempts to manipulate it willrequire a thorough understanding of the nature and functioning of yourmental environment.
The types of changes you will need to make will fall into two broadcategories. First, you will need to learn some sophisticated mental skills toadapt yourself more readily to the constant changes with which the marketconfronts you—which will require neutralizing some commonly heldcultural beliefs about success. (These are the beliefs that have the potentialto distort market information.) Second, you will likely need to undo anypsychological injury you may have sustained from your previous tradingactivity. Any psychological injury diminishes your capacity to execute yourtrades properly.
There are obviously a multitude of substeps to learn how to identify whatyou need to learn, what you need to change, and how to make thosechanges. The six chapters in this part are organized to take you through thisprocess of adaptation by providing you with the insight you will need tounderstand what you have to do and why.
The first thing you will need is a structural framework to make thethings that go on in your mental environment more tangible and concrete.To give you this framework, I will describe, define, and organize thecomponent parts of the mental environment into a manageable context towhere you can (1) understand your behavior, (2) learn the varioustechniques for manipulating your mental environment at your consciousdirection to be more consistent with the environmental conditions and yourgoals, and (3) learn how to monitor your relationship with the exteriorenvironment.
It is essential that you learn how to monitor your relationship between
73the interior and exterior environment because our goals, intents,expectations, needs, and wants are all component parts of our mentalenvironment that we project out into the physical environment forfulfillment in some future moment. In other words, they are allcomponents of the mental environment that either happen or don't happenin the outside physical world. You need to be able to recognize immediately(especially as a trader) when you have the potential to distort the outsideinformation to be consistent with the inner components. These distortionswill inevitably result in pain and psychological injury.
What I intend to demonstrate in the following chapters is even thoughyou cannot turn your eyes inward to actually see these mental componentparts of the mental environment, it doesn't make them any less real. Besides,it isn't necessary to turn our eyes inward because we can just as easily learnto define what is inside of our mental environment by what we see andexperience in the outside physical environment. By making the connectionbetween what we believe and what we experience, it will be a lot easier tochange what we experience by learning how to manipulate our beliefs.
We will examine the nature of beliefs and how they act as environmentalinformation management systems. I will demonstrate how our individualbeliefs about the nature of the market, and our expectations of what it willdo next, manage and control the type and quality of information weperceive about it. By breaking down the dynamics of perception, you will beable to identify the various ways in which all of us place mental limitationson the market's behavior and how these limitations cause us to distortmarket information.
We will thoroughly explore the nature of fear and how it compels all ofus to act without a perception of choice. The predominate underlyingforce behind most traders' actions causing prices to move is fear—the fearof missing out (competing for the supply) and the fear of loss. If you reallywant to understand the market's behavior to anticipate what it will do next,then you will first have to learn about and understand the underlying forcesbeneath your own behavior and how you process and manage information.
When you understand how any number of typical market-related fearsoperate in your life and learn to release yourself from them, you will, ineffect, be separating yourself from the "crowd." When you separateyourself from the "crowd" and expand what you know about the forcesaffecting your behavior to encompass the group, it will be much easier toanticipate what the group will do because they will merely represent a larger(collective) version of the way you used to be. In other words, you will knowhow other traders will behave before they do because you will be able toobserve them from a detached perspective—due to your having evolvedbeyond the choiceless state of operating out of fear.
As you gain in your understanding of how beliefs interact withenvironmental information to control your perception and form yourexperience, along with learning how to distinguish between wishful
74thinking and what the market is indicating about itself, you will eventuallybe able to learn how to control your perception of the market activity in away that allows you the greatest amount of mental flexibility, where youwill be able to shift your perspective to flow with the markets and executeyour trades without hesitation. If you can't change or control what themarket is doing, then the only option you have left is to control yourself in away that allows you to perceive what the market may do next with increasedclarity and objectivity, requiring a thorough working knowledge of thenature of your inner environment in relationship to the outer physicalenvironment.
75CHAPTER 9
Understanding theNature of theMental Environment
Understanding yourself and learning how to function inside your mentalenvironment is not as difficult as you may think it is. It does, however,require that you gain a thorough understanding of the generalcharacteristics of the mental environment, its component parts, and howthey work, which is exactly what this part of the book is designed to giveyou.
The only reason why any of this would seem so difficult is because wearen't taught how to do it when we are young. In fact, we are usually taughtexactly the opposite—that the mental environment is a mysterious placethat can't be understood. As a result, we end up defining mentalcomponents in a haphazard fashion without ever really understanding therelationship between the components, or the relationship these componentshave with the outside physical environment in the ways that determine howwe experience our lives. So, if you are going to consciously transform oradapt yourself to function more effectively as a trader, you will need a veryfundamental and practical understanding of the nature of these mentalcomponents and how they operate. As will be explained in a moment, thereare vast differences in the characteristics of the mental environment (inner)and physical environment (outer) in which our bodies occupy space.Understanding these differences is a key ingredient in the process ofchanging yourself.
As a simple example, the book you are reading exists on the outside ofyou, whereas the label of book (i.e., your mind's perception of the book) orany other thoughts or sensations you would experience as a result of that
716label and the meaning you attach is all occurring on the inside of you.Anything that goes on or that happens on the inside of you wouldconstitute your mental environment; all your experiences and memories ofthose experiences, all your beliefs, all the emotional energy attached tothose beliefs, all your feelings, needs, wants, expectations, and goals, andall your thoughts, regardless of whether or not you have expressed thesethoughts into the environment, make up your mental landscape.
However, before we explore the differences between the inner and outerenvironments, I want to point out one characteristic common to the two.They are both constructed of many independently functioning parts("regions" would be a better word to describe the inner environment) thatcooperate to make up the whole. Most people are very familiar with theirbody parts, even the ones en-closed within the body cavity. These parts aremade up of cells that have distinct functions. They operate independentlyand cooperate with the other body parts. The sum total of thesecooperating parts is our body. A simple illustration would be that eyes arenot ears or lungs, they are distinct parts having unique functions withinthe whole.
By the same token, the mental environment is composed of a number ofcooperative but independently functioning regions that make-up the wholeof who we are. For example, a belief is not a dream, nor is a thought anemotion. Beliefs, dreams, thoughts, and emotions are all separate parts ofthe mental environment that interact in the same manner (at leastconceptually) that your hands will interact with your eyes or your fingerwith your nose or your lungs with your heart. I am pointing this outbecause most people do not think of their mental environments in suchspecific ways with highly refined distinctions among the various regionsand the ways the components within those regions function.
The following list provides some of the categories into which I havedivided the mental environment and the components associated with eachcategory that will be explained in the next five chapters.
Positively Charged Emotions: Love, happiness, joy, confidence,peace, acceptance
Negatively Charged Emotions: Fear, anger, hatred, jealousy,disappointment, confusion, impatience, stress, anxiety, betrayal
Illusions: Denials, rationalizations, intellectualizations, distortionsBeliefs
Intents: Goals, aspirations
Expectations: Wants, desires, demands
Needs
Dreams: Sleeping dreams, daydreams
77ThoughtsAttractionsMemoriesCreativity
Intuition
This is not intended to represent a complete list of components andcategories of the mental environment. However, it is comprehensive enoughto serve the objectives of this book, which is to give you enough of aworking knowledge of how they operate and interact to effect any changesyou determine are necessary to trade successfully.
WHAT EXACTLY IS THE MENTAL (INNER)ENVIRONMENT?
I am defining the mental environment as a place where all the sensoryinformation from the physical environment (sensory information being theway in which the physical environment acts as a force on our eyes, ears,nose, taste, and touch) gets sorted, categorized, labeled, organized,associated with, and stored. Beliefs are formed and meanings get attached.The mental environment is where our experiences of the outside world forminto a complex belief structure about the nature of the physical environmentand our relationship with it.
There are two things that I want you to note about this definition. First, itis limited, because it doesn't take into account mental activities that generatefrom within, exclusive of outside sensory information. This is something Iwill expand on later. Second, I am not including the brain as part of themental environment, even though the activity of the mental environmenttakes place inside of the brain. (Why I am not including it will becomeclear in a moment.)
One of the first characteristics you may notice about the mentalcomponents listed is that they are all intangible. You can't see, hear, touch,taste, or smell them, at least not as they exist in the mental environment.For example, no surgeon operating on living brain tissue has everencountered his patient's beliefs, thoughts, dreams, or memories, eventhough he knew they were in there somewhere. Biochemists havediscovered DNA (deoxyribonucleic acid) while working at the molecularlevel of tissue make-up and as of yet have not encountered