conditions, then he would have something by which to measure hisperformance, thus making himself accountable to himself. This is exactlywhat most traders don't want to do, preferring instead to keep theirrelationship with the market somewhat mysterious.
This creates a real psychological paradox for traders, because the . onlyway to learn how to trade effectively is to make oneself accountable bycreating structure; but, with accountability comes responsibility. Thetypical trader desperately wants to make money, but he has to do it in away where there is no direct connection between what he does and theoutcome that it produces, thereby avoiding responsibility if things don'tturn out satisfactorily.
To develop a plan, you have to anticipate events to some extent relativeto the depth of your plan. When you plan your trades in advance, you areputting your vision of the future and creative abilities on the line, so to speak,and making yourself accountable to yourself. Your plan either works or itdoesn't; you either have the ability to execute your plan or you don't. In anycase, it is your plan and your ability to follow it and, therefore, it is difficultto shift responsibility and lay the blame somewhere else if things don't workout.
Now, when a trader doesn't understand market behavior well enough toknow what he is going to do and under what market conditions he is goingto do it—but if at the same time, he is very attracted to the action and theopportunities he knows exist and if he is also impatient with the learningprocess—his impatience and attraction will make him feel compelled to dosomething, even if he doesn't know what he should do. How do you thinkthe typical trader will resolve this dilemma? He will play follow the leader,rationalizing that everybody else is doing something and, furthermore, allthese people waving their hands and screaming can't be as afraid andunknowing as himself, so they must know what they are doing or at least theyknow more than him. If he does what they do, or better yet, identifies the mostsuccessful trader and does what that trader does, then he too can make money.
This type of rationale creates a herd mentality (extremely prevalent on the floorof the exchanges), where most everyone is looking for direction, assumingeveryone else must know something they don't, otherwise why would they bedoing anything. In a group, this collective mentality is very volatile, where onekey trader can start an endless series of chain reactions where everyone mirrorseveryone else, all assuming that the other guy must have some rational reason fordoing what he is doing.
In fact, I wouldn't even describe what goes on down on the trading floor asfollow the leader. It is actually better described as "follow the follower," becausemost traders don't know what the leader is doing or who the leader may be at any
50given moment. Therefore, the group's behavior is like these endless waves ofback and forth movement, where the traders closest to the leaders (the leadersbeing those who know exactly what they want to do and why they want to do it)will have the first opportunity to get on the bandwagon at the best price andthose next closest have diminished opportunities and so on down the line untilyou get to the least skilled trader, who doesn't have much of a chance at all.When there is no leadership in the market, the prices usually drift back and forthin a small range until someone who knows what he is doing comes into themarket.
If the prices have made any significant move during or at the end of the tradingday, all the crowd followers get together to find any reason or rationale thatmight explain their (the market's) behavior and put it into some understandablecontext. Basically, what they come up with is a consensus reason for themarket's behavior that day. However, the leaders (those traders who takeresponsibility for their trades and know exactly why they did what they did) donot feel compelled to talk to anyone and usually don't. The typical crowdfollower feels compelled to find reasons outside of himself because these reasonsdon't exist inside of himself and he doesn't want to think he is irrational and actsrandomly.
For the crowd follower, trading this way serves many functions. It keeps hisrelationship with the market mysterious. If he makes money, he must havedone something right. If he loses money, he can blame the market, which isobviously very acceptable behavior among traders, since so many of themdo it. The rational or logical explanation for the individual's part in thecollective behavior will be decided on later (after the fact) by theconsensus opinion of the group. This way he can maintain an illusion ofbeing rational and responsible and whatever happened to him also happenedto a lot of other traders, so at least he knows he is not alone, whichthen creates a sense of comradeship among competitors.
Outside of the world of trading, most people think that traders arerugged individualists, associating them with the characteristics of theentrepreneurial types, like being decisive and persevering. Most outsidepeople would be shocked to learn that except for a small minority ofsuccessful traders, the rest fall into a group that, at any given moment,have no idea about what they are going to do next or know why they areeven doing what they are doing. If you asked them to tell youspecifically how they make money or lose money, they couldn't tell you.In addition, as a group, traders (except for the leaders) are indecisive andimpatient to an extreme. It isn't too difficult to determine why, if youconsider that under normal conditions, the frame of mind of the averagetrader is one notch away from unrestrained terror. Getting organized andcreating structure is one obvious solution to the many psychologicalproblems the typical trader heaps on himself. But that would also force himto cross that psychological boundary line into the realm of accountabilityand responsibility.
51Besides the outright refusal to plan trades, most traders go to greatlengths to put as much psychological distance as possible between whatthey do and the outcome of their actions. I know many traders who can doextremely good market analysis on their own but still seek opinions ofother traders on what to do and then take those trades instead of theirown, simply because they don't want to take responsibility if the tradedoesn't work out. And, more often than not, sticking with their ownanalysis would have produced far better results.
There are many floor traders who trade hundreds of contracts a day, andalthough they have to record each trade on a trading card, they will notkeep an accurate account of their net trading position, claiming they get toobusy or that they added wrong. At the end of the day, they count theircards with intense anxiety, hoping or praying to whatever unseen forcesthat they are flat (not carrying a net long or short position).
Obviously, if they were that concerned, the simple solution to their problemwould be to trade only at a volume level where they can always keep track ofwhere they are at and if they lose track to stop trading until they get a correctcount. But they wouldn't want to do that because, if they kept track of theirposition, then they would have to take the responsibility for what they end upwith. What if they inadvertently end up with a net long position at the end ofthe day and the market opens several ticks higher the next morning? The unseenmarket forces have thus blessed these traders with a winning position, orconversely if the market opens lower, they can always find someone orsomething to blame for their bad fortune. Maybe their lucky tie was sent to thedry cleaners by mistake or they hit three red lights in a row on the way to theexchange. Any reason or excuse to shift responsibility will do. These reasons canrange from the most eloquent academic jargon to the most superstitious beliefs,but in essence, they all focus blame outside of oneself for unsatisfactory results.
Tn an unlimited environment, the less structure you create for yourself, theless accountable you are, the more easily you will be swept along by the force ofevents, and the less control you seem to have over your life. However, having lessstructure has the benefit of shifting the responsibility for the events in your life toother unidentified forces. This is precisely why so many traders have such astrong belief in superstitions. If a person refuses to make any connection betweenhis thoughts, intents, skills, and results, then it is very easy to associate one'ssuccess or failure to something like the tie one had on that day or inadvertentlymaking some gesture and then finding oneself in a losing trade and associatingthe gesture with the loss.
I have a personal story to illustrate a typical superstitious belief that tradershave. One morning I went into the men's bathroom at the Chicago MercantileExchange, and as I approached the only urinal not in use, a floor trader using theurinal next to the one I was about to use turned his head, looked at me, and saidin a very cautious tone, "Don't use that one, you can wait for mine, I'll be donein a second.” I gave him a puzzled look, and he then pointed to a penny that wasat the bottom of the urinal. I gave him another puzzled look because I didn't
52have the slightest idea about what he was trying to communicate to me. AsI proceeded to use the urinal with the penny in it, he turned with a nervousexpression on his face and strode away from me as quickly as he could.
Later on that day, I told one of my floor trader clients about thisexperience and asked if he knew what was going on. He said certainly, thatit was very common knowledge that money at the bottom of a urinal is abad omen and certainly something to be avoided. After I thought about itfor a moment, I wondered what would happen if I went through the entireexchange and put pennies in all the urinals.
This story illustrates how the typical trader is caught in a psychologicaltrap of refusing to plan and create structure for his trading activity, so thathe can avoid taking responsibility for his results. And by doing so, he issubjecting himself to being tossed around by the whims of the crowd, atthe mercy of his own unrestrained impulses, finding himself in winningand losing positions, not knowing why or what to do next. This trap isextremely negative because it creates a potentially damaging psychologicalcondition I call random winning and random losing. If you can't defineyour own behavior and that of the markets, you can't learn how to repeatyour wins or prevent your losses.
When you win it is so pleasurable, it creates a need to repeat it andcompels you to try again. When you follow the crowd (instead ofanticipating the crowd, which would take planning) or trade off news items,tips, or isolated signals from technical systems, the anticipation of the nextattempt to win automatically produces fear and anxiety.
Why? Because, you can't define the market conditions or the decision-making process that produced the last win, and so you can't assure yourselfof the next.
If you don't know what you did to win the last time, you obviously don'tknow what to do to keep from losing this time. The end result is intenseanxiety, frustration, confusion, and fear. You feel out of control,experiencing a sense of powerlessness as you are swept along by theensuing events and wondering what is the market going to do to you today.
Consider that the markets can't do anything to any trader whocompletely trusts himself to act appropriately, in his best interests, under allmarket conditions. And before people can trust themselves in this manner,they would first have to define all those conditions and be able to recognizethem.
Understandably, taking responsibility is something that is extremelydifficult to do. We don't live in a society that has a highly evolved conceptof the growth process, and as a result, we learn to become very intolerant of"mistakes." I say this because we are basically taught as children and,therefore, in turn teach our children through our ridicule of them thatmistakes are something that diminish one as a person. Ridicule does notenhance a child's willingness to accept responsibility, and if he doesn't, thetypical parent will then criticize the child for being irresponsible.
53Taking responsibility is a function of self-acceptance. You can measurethis degree of self-acceptance by how positively or negatively you think ofyourself when you make what you perceive as a mistake. The morenegatively you think of yourself, the greater your tendency to avoid takingresponsibility, so you can avoid the pain of your harsh thoughts, thusgenerating a fear of making mistakes. However, the greater the degree ofself-acceptance you have for yourself, the more positive your thoughts willbe and the greater the degree of insight you will be able to extract from anexperience, instead of generating fear. The more self-accepting you are,the easier it is to learn because you are not trying to avoid certaininformation.
I don't know of any national prerogative to teach children how to acceptthemselves in spite of their "shortcomings" as perceived by the adults intheir lives. If people had a more accepting attitude about the outcome oftheir actions, they wouldn't have a need to avoid taking responsibility.
To be successful, the market forces you, as a trader, to be responsible incompletely new ways. For example, you can't put on a trade and thenrelease your responsibility to the market to do something for you, like giveyou money. The market is a fluid, ever-changing event, where at anymoment some other trader may decide to jump in with enough force tochange the expectations of other traders participating to the point wherethey reverse their positions and as a result completely negate the potentialyou believed existed a moment ago, when you put on your trade.
In our everyday lives, objects are very stable, and day-today events do notchange at anywhere near the rate and frequency that conditions change inthe market environment. Relative to the nature of the market environment, allof us take it completely for granted that the buildings, trees, traffic lights,and streets we all know are completely stationary and will be there from onemoment to the next. You didn't walk out of your front door this morning todiscover the street you live on doesn't look just as it did the previousevening when you walked inside your home. If getting to the office or yourplace of employment represents an opportunity to make money, you wouldtake it completely for granted that it would be possible to get there in familiarways.
However, as a potential opportunity to make money comparable to thatafforded in the markets, what if the location changed on a moment-to-moment basis, what if the streets also changed their location inrelationship to each other, and, furthermore, what if no one cared if youever found your way there, making you and you alone completelyresponsible for where you end up?
It just makes sense that to function in the market environmenteffectively you will need to make yourself accountable. Otherwise, howcould you ever learn how to trade, if you allow yourself to be swept into orout of something by forces outside of you and inside of you that you can'tidentify and don't want to? The market's behavior will seem mysterious
54because your own behavior is mysterious. You will be in a constant state ofconfusion, anxiety, and fear because you don't know what to do next—thekind of state of mind that breeds superstition.
Understanding yourself is synonymous with understanding the marketsbecause as a trader you are part of the collective force that moves prices.How could you begin to understand the dynamics of group behavior wellenough to extract money from the group, as a result of their behavior, ifyou don't understand the inner forces that affect your own? When you dounderstand the inner forces that affect your behavior and takeresponsibility for what you do and don't do, and what you can or can't do,you will begin to perceive how and why other traders comprising thegroup behave the way they do.
When you attain some degree of control over yourself, you can then seehow other traders are not in control of what happens to them, like bladesof grass, all bending to the force of the prevailing wind and constantly beingstepped on. You won't be able to see this until you are no longer a blade ofgrass yourself by evolving beyond the group mentality. Then it becomesmuch easier to understand the group's behavior, anticipate what they willlikely do next, and take advantage of it to the best of your ability. You willunderstand the group, certainly, to no greater degree than you understandyourself Creating definition and rules to make yourself accountable is buta first step on the road to lasting success. You could acknowledge theirnecessity and establish them, but then find to your dismay, it is extremelydifficult to abide by them. In Part III we will examine the interacting mentalforces that make it difficult to follow your own rules.
55CHAPTER 7
In the MarketEnvironment,Reasons Are Irrelevant
I have titled this chapter "In the Market Environment Reasons Are Irrelevant" inrecognition of the traders who believe that if they can ascertain the reasons whythe market did what it did, these reasons will help them to determine what themarket will do next. To believe this assumes that traders know why they behavedas they did and that the reasons they give for their actions will aid in determiningtheir future behavior
The reasons traders would give for their actions are irrelevant. Most tradersdon't know why they did what they did because most traders don't plan theirtrades, thus eliminating any connection between themselves and the results oftheir trades. Most traders act spontaneously and impulsively and then ascribe therationale for their behavior after the fact. Most of these after-the fact reasons areeither justifications for what traders did or excuses for what traders didn't do.
Fundamentally people trade to make money. And to make money, traders haveto cake positions, hold their positions for some length of time, and then exit theirpositions. When traders enter and exit positions, they act as a force on prices,making them move. When they are observing the market, waiting to enteror holding a position, traders are a potential force that can act on prices atany given moment. If traders planned what they were going to do beforethey did it, then the reasons they would give for why they act as they docould definitely help other traders to anticipate how prices will be affectedby their actions. This, of course, assumes that they will reveal their plansand that they will be telling the truth. There are only a few traders whomake money on a consistent basis, and rarely will they reveal their reasons
56unless it suits their purposes.
In fact, traders who are confident in their ability and know they canhave a significant impact on price movement go to great lengths to keepinformation about their plans away from other traders because that woulddiminish the possibility of executing these plans. However, this is not tosay that after they have taken their positions they won't purposely revealwhat they have done to then draw other traders into the same position,forcing them to compete among each other to create price movement intheir direction. On the other hand, traders who are not confident aboutwhat they want to do will gladly share their trading ideas with anyone whowill listen, hoping to get some sort of confirmation that what they areabout to do will work. So the after-the-fact reasons they offer for whythey acted as they did usually just serve the purpose of easing the pain ofwhat they perceive as their mistakes, which isn't particularly usefulinformation. What is useful is understanding that traders typically act asa group, very similar to a school of fish or herd of cattle. Individualtraders fall into specific groups that tend to perceive the same kind ofmarket conditions as opportunities or disappointments. As a result, theywill act in unison to upset the balance of the market, causing the pricesto move in predominately one direction. The various groups takepositions because they believe they can make money, and they get outbecause they are either losing money or perceive the possibility of makingany more money as diminished in relationship to the perceived risk oflosing money. For example, the locals on the floor of the exchanges havethe least amount of patience, are the most impulsive, are the most easilydisappointed, and consequently have the smallest price objectives andshortest time frame perspectives. As a result, they are the most active andwill all be trying to do the same thing at the same time.
Commercials and off-the-floor retail traders are two other groups thathave different price objectives and time frame perspectives from each other.Individuals within these groups will also tend to act in unison, upsettingthe balance in the market by their degree of participation or lack ofparticipation at any given moment. You can determine what marketconditions in which they are most likely to participate, what conditionswill confirm their beliefs about the future, and what will disappoint them.Once you learn their unique characteristics, you can anticipate how one ormore groups are likely to act and determine how their activity will affect thebalance of the market and the potential for price movement.
WHY DO WE TRADE?
Every moment we exist we are interacting with the environment,expressing ourselves in our own unique way, and thus creating our lives bythe way we live it. Everything we do in every moment is some form of theway we express ourselves. We express ourselves to fulfill our needs, wants,
S7desires, and goals. Today most individuals can channel their energies tofulfill needs beyond the requirements of food and shelter, but to do sorequires money.
Money allows for a system of exchange where we can trade the goodsand services created from individuals expressing themselves in highlyspecialized ways. Money has evolved to become the object of our needsbecause it represents the means or path by which we can express ourselvesas individuals. All behavior is a form of self-expression, and almost anyway in which an individual wants to express himself in our society requiresmoney. So at the most fundamental level of cultural existence, moneyrepresents freedom of expression.
Individuals expressing themselves in specialized ways create a highlycomplex system of interdependency. To exchange goods and services,individuals have to agree on the value of those goods and services to makean exchange. I am defining "value" as the relative degree of importance orpotential something has in fulfilling a need. The actual price at which goodsand services are then exchanged will be determined by the fundamentaleconomic law of supply and demand. In psychological terms, the law ofsupply and demand is founded in human fear and greed. Both fear andgreed will compel people to act or not act depending on their needs inrelation to the perceived external conditions. The price for goods andservices will be determined by the individual's needs in relationship totheir belief in their ability to fulfill those needs. Implied within that belief istheir perception of the availability of the goods and services they need.
Greed is founded in a belief in scarcity and insecurity. Both beliefsgenerate fear. I am defining "greed" as a belief that there will never beenough available to fulfill oneself in combination with a belief that onealways needs more to feel secure or satisfied. The perception that theseconditions exist either internally or externally will generate a fear that willcompel one to act or not act, depending on who controls the supply. Thebehavior someone displays will be consistent with what they believe theymust do to satisfy the deficit. If two or more people have the same fears,they will typically compete among one another for the existing supply.
If the supply of something is limited in relationship to the need, thosethat are in need will compete for the available supply. They will competeby their willingness to exchange more resources (pay more money) thanwill someone else who may also be in need. If, however, the supply is greatin relationship to the need (demand), there will be no fear of scarcity;consequently, people will conserve their resources (money) by divertingthem to other needs or just waiting for the possibility that the price maycome down.
Any system of interaction founded in individual fears of lack or scarcitywill cause the price of goods and services to fluctuate in relationship tothe relative degree of security or insecurity that is being experienced bythe collective masses at any given moment. These fluctuating prices create
58economic risk for all those dependent on others to fulfill a need that theycannot fill themselves. What is risk? Risk is the possibility of a net loss ofpersonal resources (energy, money etc.) in the exchange or pursuit offulfilling a need. Fluctuating prices also create opportunities for those whoare willing to assume the risk created by price movement. As long as there isdisagreement between individuals about the value of goods and services,prices will fluctuate, thereby creating opportunities for traders to makemoney if they will assume the risks.
DEFINITION OF TRADING
I define trading as two parties exchanging something of value to fulfillsome need or goal. In the context of the stock or futures markets,participants trade for the sole purpose of accumulating wealth or protectingphysical assets from deteriorating in value. In essence, all traders in thesemarkets, whether they are labeled speculators or hedgers, trade toaccumulate wealth; it is only a matter of perspective. For the hedger themotivation to protect the value of an asset from economic risk is still toaccumulate wealth.
Hedgers will trade for a higher degree of economic certainty bytransferring the risk created by changing prices to another willing trader.Typically, it will be the speculator on the other side of the trade willing toassume the risk of changing prices for the opportunity to accumulatewealth from those changes. For example, stock owners will sell their stockbecause they believe the possibilities for the future appreciation of the stockare either nonexistent or minimal in relationship to their assessment of therisk to keeping it. They may also sell even with expectations of futureappreciation if there is a need to liquidate to satisfy other needs. The buyers(the other side of the trade) believe that the stock will appreciate in value.We can assume that the buyer believes this because people trade to accumu-late wealth.
Since the goal of a trader is to satisfy a need to accumulate wealth, we canassume that people will not consciously enter into a trade believing theywill lose or fail at satisfying their needs. Because all traders have basicallythe same goals (to win), we can then state that no two traders enter into atrade unless they have opposing beliefs about the future value of whateveris being traded. Keep in mind that the current price of anything is always areflection of what someone is willing to pay and what someone is willing tosell for in that moment. So, although there must be agreement betweentwo parties for a trade to exist at a price, inherent within the transaction iscomplete disagreement between buyer and seller on the future value ofwhat they are trading. For example, would I be incorrect in stating that anystock owner will not sell his stock if he believed it had potential for futureappreciation. When he sells he has basically given up on the possibilitiesof future appreciation. Why did the buyer buy? To lose money? To be
59wrong? No, of course not. The buyer's belief in the future value of the stockis opposite that of the seller's. This disparity is illustrated even more clearlywith futures trading.
Of real interest is the academic community's belief that the markets areefficient, which assumes that traders have rational reasons for theirbehavior, knowing what they are doing and having a good reason for doingit. Academicians also believe that the markets are basically random, whichseems to be a complete contradiction to a market that is supposed to beefficient. In fact, however, the market's behavior is mostly irrational, if youdefine rational as any action that is the result of a specific methodology or isplanned in advance and definitely not random because irrational behavior isvery predictable. If you want to learn to predict price movement, you don'tneed to pay attention to reasons. What you need to do is determine how themajority of traders perceive the external conditions in relationship to eithertheir fear of scarcity, or their fear of missing out, or both.
60CHAPTER 8
The Three Stagesto Becoming aSuccessful Trader
Before we cover the three stages to becoming a successful trader, it wouldbe a good idea to review some of the material already covered. In the marketenvironment you have to make the rules to the game and then have thediscipline to abide by these rules, even though the market moves in waysthat will constantly tempt you into believing you don't need to follow yourrules this time. This movement allows you to indulge in any illusion ordistortion that suits you in any given moment. Certainly you wouldn'tchoose to feel pain (confronting your illusions about the market) if there isany reasonable information that would support the possibility of yourexpectation being fulfilled.
In an unlimited environment, if you can't confront the reality of a loss,then the possibility exists for you to lose everything, in each and every trade.If you believe trading is like gambling, it isn't. In any gambling game youhave to actively participate to lose and do nothing to stop losing. In themarket environment, you have to actively participate to get into a trade andactively participate to end your losses. If you do nothing, the potential existsto lose everything you own.
When you participate in gambling games, you know exactly what yourrisk is and the event always ends. With the markets you don't ultimatelyknow what your risk is, even if you are disciplined enough to use stops,because the market could gap through your stops. Also because the eventnever ends and is in constant motion, there is always the possibility ofgetting back what you are losing in any trade. You won't need to activelyparticipate to get back what you are losing; you just have to stay in your
61trade and let the market give it to you. As a result, there is the constanttemptation not to cut your losses which is very difficult to resist. Whychoose pain over the possibility of being made whole, when all you need dois ignore the risk.
YOU CREATE YOUR EXPERIENCEOF THE MARKET
Each equilibrium (the current price) presents every trader with anopportunity to either buy low or sell high relative to the next change.Except for the time it takes to execute a trade, it is basically the same marketfor all of us. You are either able to perceive any given equilibrium asopportunity to execute a trade, or you can agonize over what you believe isa missed opportunity from the last price change, or you can refrain fromtaking the trade at the current price—even though you perceive it as anopportunity—because you fear the market might make you wrong. Themarket does not create the ways in which you perceive it; it merely reflectswhat is going on inside of you in any given moment.
Whether you perceived the current market condition as an opportunityand didn't act on your perception, or didn't realize it was an opportunityuntil after the move occurred is, again, a direct reflection of your uniquepsychological makeup. You attach the meaning to any particular move.
From an objective perspective the next tick up can be described as theprice just moved one tick up from the previous price. That is a realityabout that one-tick price change we all share. However, to one trader thatone up tick could be the final defeat in a short position he had beencarrying. To another trader, it could mean a perfect selling opportunitybecause the market just can't go higher.
To a third trader it could mean a buying opportunity because the marketbroke out of a resistance area, based on the way he defines resistance.
The market neither chooses nor has any way of choosing the meaningyou attach to any particular price change or market condition. For example,you could perceive an opportunity to sell high and act on that perceptionby entering the market with a short position. From the point you entered,let's say the market went in your favor and then violently reversed itself. Indoing so, it very quickly went through your entry point and kept on goingup with only a few rest periods and minor little retracements.
Each rest or retracement could have been an opportunity to get out ofyour short position and reverse yourself. What would stop you? The answeris inside of you. If you breathed a sigh of relief each time the market pausedor retraced a bit, choosing to believe it was finally all over, then I ask you,What is all over? Is it possibly the fact that you won't have to confrontyourself and say I'm wrong. That again is inside of you. You choose (basedon the makeup of your mental environment) to believe the pauses were
62stopping points, relief from confrontation, instead of a possibility to takeadvantage of an opportunity to eliminate your risk and a high probabilityto accumulate a profit by reversing yourself.
The way the market seemed to you was actually the way you created itin your own mind. Out of all the available choices and alternate ways ofconsidering the possibilities, you choose one particular way. Your ownmental framework (controlling what and the ways in which you perceiveinformation) locked you into that losing trade. The unique way you define aloss (your beliefs about it) and what it means to you is a component part ofyour psychological makeup. Your beliefs will interact with your perceptionof environmental information to form the particular way you pick andchoose whatever information you happen to focus your attention on. Themarket has nothing to do with this process, even though that is where theinformation is coming from.
In the trading environment the outcome of your decisions is immediate,and you are powerless to change anything except your mind. The poweryou have to create more fulfilling outcomes from your trading resides inyour degree of mental flexibility. You have to learn how to flow with themarkets; you are either in harmony with them or you are not. The lessacceptance you have for different types of market behavior, the more themarket seems to turn on you like Dr. Jekyll and Mr. Hyde. In one moment itis satisfying all your needs; in the next it is like a greedy monster takingeverything away. This Dr. Jekyll/Mr. Hyde characteristic of the marketsonly represents your own mental inflexibility to flow with the changes and