sees will all be connected with the intensity of the force being applied to his body.So if there was some song playing on the radio or a distinctive odor in the air atthe same time that he was experiencing pain, he will associate the song or theodor with the pain.
Now, both these environmental distinctions (a certain song and a certain smell)will be connected with negative energy in his mental environment. When thechild was getting his spanking he may not have even noticed either the song orthe smell because his attention was obviously focused in other directions.However, in the future whenever he hears that song or smells that particular odor,they will automatically cause him to experience the negative energy connectedwith the spanking. Even if it is years later, and he is enjoying himself with the lastthing on his mind being the memory of that spanking, if he hears that particularsong or smells that particular odor, it will carry him back to that time as if itwere the present moment, changing his experience from happiness to anger,sadness, or guilt.
Of course, this same principle also works for positive experiences. A perfectexample is many couples have "a song" that they associate with some intensesexual or loving experience. When they hear "their song," it will mentally putthem into the feelings of the experience the song is associated with. In fact, thesong can eventually come to symbolize the quality of the entire relationship whereall the memories and emotions connected to those memories will run thoughtheir consciousness upon hearing the song.
Associations are an automatic function of the way in which information getsorganized in our mental systems. Most of these associations are inadvertent,meaning we have positively or negatively charged energy connected to variouselements of the environment, and we aren't consciously aware of it. We can see,hear, taste, or smell certain things that, in turn, cause us to feel emotions and notknow why because we don't consciously remember connecting the extraneoussensory information with the primary event.
THE ENERGY LOOP BETWEEN THEPHYSICAL AND MENTAL ENVIRONMENTS
None of us has access to "all" the environmental information that exists inany given moment. Our senses aren't constructed to allow us to pick up(see, hear, touch, taste, or smell) everything at once. If we can't be aware of
it all, then we must have some mechanism by which we pick and choose92what we do become aware of and give our attention and consideration to.What we learn creates an energy loop between the inner and outerenvironment. We can call this energy loop perception. "Perception" isrecognizing—with our eyes, ears, nose, taste, and touch—in the physicalenvironment what we have already learned about it. Mental energy worksin conjunction with our physical senses to separate, categorize, andorganize environmental information based on the distinctions we havelearned to make. We recognize what we have learned in the environmentbecause it is already inside of us. There has to be a mental framework toaccept the information; otherwise, it gets rejected, labeled as meaningless,or not perceived at all, unless of course we are willing to construct aframework for it—being open to learn.
Distinctions
Distinctions make separations in environmental information where noprevious separation existed. A child won't make a distinction between aspoon and pencil until someone teaches him the difference. Otherwise, hewill instinctively put both in his mouth, until the information stored in hismental environment acts as a force on his perception to distinguish betweenthe two. Environmental objects give off information about themselves, butthe information that is perceived already exists inside of each individual,unless it is a first-time experience. The spoon and the information about whatit is create an energy loop between the inside and the outside, where beforethe distinction was learned the spoon and he pencil would fall into the samecategory as something to put into the mouth. Anything we don't know, butexists in the environment as a possibility, is a distinction that we haven'tlearned to make yet. If we haven't learned to make the distinction, we won'tperceive the various types of information the environment is giving off aboutitself.
For example, if I were to open up my computer, what I would perceivewould be very different from that of a skilled computer repair technician.All the various parts giving off information about themselves would meanalmost nothing to me because there is no meaning inside of me. All theparts my eyes would be seeing would fall into that one large categorybecause I haven't learned to make any distinctions between the variousparts, whereas the technician would perceive the parts in a very differentway because he understands the functioning of the parts and therelationship that they have with one another. That understanding is themental framework that structures the particular way in which he perceivesthe parts. The parts would be giving off information about themselves that Icouldn't perceive because I don't have the mental structure to perceive it.
Learning how to read the markets to recognize an opportunity is another
93example to illustrate this energy loop between the inside and outside that wecall perception. Traders act as a force on the market to move prices. Sincemost traders don't plan their trades or want to take responsibility for theiroutcomes they are highly susceptible to acting out of any number of fears.Traders who are motivated to act out of fear generally aren't aware that theirfear drastically reduces the choices they perceive as available, making theirbehavior very predictable to an objective observer (someone not caught inthe same cycles of fear). So under certain market conditions large groups oftraders will all be trying to do the same thing—because of what they fearwill or won't happen—upsetting the equilibrium, forcing prices to move inone direction. If you haven't yet learned to identify these conditions, younaturally won't perceive them when they exist because there has to be anenergy loop between the inner and outer environments for perception tooccur.
I am sure everyone has had the experience of reading unfamiliar materiala second, third, or fourth time and perceiving something new with eachsubsequent reading. What is happening here? With each reading you arebuilding a mental framework that enables you to recognize what wasavailable but unperceivable to you when it was read previously. That is, allthe new insight that you garner with each reading was available from thebook the moment you picked it up the first time. However, you weren't ableto perceive what it had to offer in the way of insights or understandings untilyou created an energy loop that enabled you to perceive it; otherwise, the wordsget read but the insight goes by completely unnoticed even though you arelooking right at it.
In any given moment there is a vast difference between what each of usperceives and what is actually available in the way of possible distinctions fromthe environment's perspective. Take, for example, a salesperson who has learnedto recognize the exact, most appropriate moment to ask for the order and close asale. Or an auto mechanic who knows exactly what is wrong with a car by thekind of sounds that it makes. To the inexperienced salesperson or automechanic, these abilities will seem like magic because they will assume that theyare hearing or seeing the same things as their experienced counterparts.However, that is not the case. They are not hearing or seeing the sameinformation even though they are in the same sales interview or listening to thesame car at the exact same moment. They are actually perceiving differentenvironmental information because of the differences in the structure of theirrespective mental environments. The information that indicates the exact mo-ment to ask for the order to close the sale is indistinguishable from everythingelse to the inexperienced salesperson. The same is true for the inexperiencedauto mechanic. Consequently, neither one will perceive the existence of thisinformation until they learn to make the appropriate distinctions. If someonewasn't there to teach them how to make these more refined distinctions thatindicate the most appropriate moment to ask, they may never know about theexistence of such information. By learning to make more distinctions, we
94increase the depth of our level of understanding of the cause-and-effectrelationship between everything that exists.
How Our Perceptions Shape Our Experiences
We experience the environment through our senses. At the most fundamentallevel the world gets transformed into electrical impulses of energy, energy thatcarries information, as well as feelings and emotions ranging from extremehappiness to rage, elation to despair, love to hate, and all the degrees of feelingsand emotions in between. Each first-time encounter with the environmentcreates a memory, distinction, or association that didn't exist previously. A first-time encounter is any experience that is completely unique, like learning themeaning of a word that we have never heard before, and there is nothing in ourmental environment to relate it to. These new memories, distinctions, andassociations build into a mental framework that constitute what we have learnedabout the nature of the outside environment.
Once we learn something, mental energy will then act as a force on our sensesto recognize in the environment what we have learned about it. So there is a two-way flow of energy; first, we learn something through some unique experience;then, we perceive what we have learned in the environment. Fear is a perfectexample for illustrating this concept. We feel fear when we recognize in theenvironment anything that we have learned can cause us pain. We will feel thisfear and consequently have a fearful experience because the negatively chargedenergy in our memories, distinctions, and associations will act as a force on oureyes, ears, nose, and sense of touch to recognize in the environment anything thatis similar to what we have already learned can cause pain.
So when we perceive something (recognizing what we have already learned) inthe environment, mental energy is acting as a force on our senses, instead of theenvironment acting as a force on our senses. In other words, the conditions aresimilar or identical to what we already know, and we can therefore attach somemeaning to the information. The environment isn't creating the meaning as in afirst-time encounter; the meaning is already inside of us, and in essence wecreate the experience by the way in which we perceive it, through our memories,distinctions, and associations.
This is why a group of people can all be in the same location, be exposed tothe same environmental information, and then afterward describe the event in adifferent way. The event was different for each individual because everyoneexperienced it differently. Their experience was a function of the structure oftheir mental environment. Each individual will make different associations withthe same information and then experience the varying degrees of positive ornegative energy connected with those associations. Each individual will makedifferent distinctions with the same information, in effect placing a differentmeaning on it. Each meaning will be composed of varying degrees of positive ornegative energy, thereby creating a different experience relative to everyoneelse's. Each person will experience the amount of time the event took
95differently, depending on whether they are perceiving the experience withpredominately positively charged energy (time speeds up) or negatively chargedenergy (time slows down). Without taking all these mental variables intoconsideration, it is little wonder why people get so frustrated with one anotherwhen they can't agree on what happened. Everybody's version of whathappened was unique, because the way each of us experience the outsideenvironment is determined by how we perceive it, and how we perceive it is afunction of what is already inside of us unless we are in the process learningsomething new.
The implications are that much of what we experience of the outsideenvironment is shaped from the inside, not from the outside as most peoplewould assume. In other words, our first-time experiences shape the meaning, aswell as determine the quality of energy connected with that meaning, and thenonce the meaning exists inside of us, it shapes our experience of the outside by theway we pick and choose information and how we feel about that information.
This is a very important concept, so I will give you another example to illustratehow our perceptions shape the way we experience the environment. Let's say thatI am approaching a statue of a man. At first, I look at the statue face to face, andI experience indifference; that is, what I am seeing does not evoke any particularemotion. Then, I walk around the statue, and change my viewing angle until Ilook at it in profile. As I look at the profile, the face reminds me of a someone(an association) whom I like very much and whom I haven't seen for years. Fromthis new perspective the statue would take on a new meaning changing myexperience from emotionally neutral to some strong feelings of nostalgia as Ithink about how much I miss this person.
The energy for how I experienced that statue and that particular moment inthe environment was inside of me before I even looked at it. The energy thatchanged the feelings I was experiencing did not come from the statue or reallyhave anything to do with that statue. My unique mental structure caused me toexperience that statue the way in which I did. It took on a new meaning as Ichanged my perspective because of the way the energy that was already inside ofme acted on my perception. If I hadn't had the positive experiences with theperson the statue reminded me of, then I would have continued to experienceindifference as I looked at it.
THE RELATIONSHIP BETWEENPERCEPTIONS AND EMOTIONS
The energy that determines how we feel (love/hate, happiness/ anger,confidence/fear, etc.) in many circumstances and situations does not comefrom the environment. These feelings and emotions are already part of us,and we will automatically feel them when there is a matchup (perception)between what is outside in the now moment with what is already inside ofus as a result of our past experiences. For example, imagine a father holdinghis five-year-old son with one hand, screaming "you stupid idiot" while96spanking him with the other hand. And let's assume that this is the firsttime the child has heard the words stupid or idiot. Now he may not knowwhat the words mean in an adult context, but he will most certainly connectthe words with pain he is feeling through both his body as well as his ears.From that point forward these words will have a strong negative chargeattached to them in his mental environment. Now, when he encounters thesewords in the environment again in some future moment he will be able torecognize them because he has experienced these words—they exist as adistinction in his mental environment. As a result of the way in which helearned the meaning of these words, how will his perception of them affecthis experience of them? Whenever he hears the words "stupid" or "idiot" hewill feel the negatively charged energy connected to these words in his mentalenvironment and consequently experience the physical environment in apainful way. Does the environment need to physically assault him, as in thefirst experience, for him to feel this pain? No. All he has to do is hear thewords and he will experience pain. After his first encounter with thesewords, the pain doesn't have to come directly from the environment becauseit is already inside of him. Would it make any difference if from theenvironment's perspective that the words were spoken with absolutely nointent to cause him any pain or without any awareness that they could, infact, cause him to feel pain. Again, no. He would not be able to perceivethe intent of the environment as anything but wanting to cause him painbecause that is exactly what he experiences when he hears those words.How could he know that other alternative meanings exist for these words orthat they can also be used within a context of good-natured fun? Hecouldn't, because he has never experienced those words in any kind of funcontext, he hasn't learned to make that distinction yet. From theperspective of his mental environment, there are no other alternativepossibilities for the meaning of these words. Furthermore, he may neverlearn to make any alternative distinctions, because every time he hears thewords "stupid" or "idiot," he will perceive them in a painful way, therebycreating an experience of pain, which will in turn reinforce the negativeenergy already connected to the meaning for those words. From the firstexperience forward into the future, he will be locked into only one versionof the way he can experience those words.
In any given moment, there are a whole range of experiences availablefrom the environment. What we experience as individuals will be a functionof what we perceive, unless we are in a learning mode. In other words,what we are experiencing in any given moment is being shaped by what isalready inside of us (memories, distinctions, associations, and beliefs), andwhat is already inside of us may not be remotely close to what theenvironment is offering in the way of experience. When we are in alearning mode we open ourselves up to learn new distinctions andalternative meanings to expand what we know about the nature of theenvironment.
97Our experiences shape our meanings and then the meanings shape ourexperiences of the future. Let me illustrate this concept for you. I waswatching a local television program in spring 1987 called "GotchaChicago." It was about some local celebrities who played practical jokes onother Chicago notables. In one segment of the program the TV station hireda man to stand on the sidewalk along Michigan Avenue holding a sign thatread "FREE MONEY— TODAY ONLY." (For those of you who are notfamiliar with Chicago, Michigan Avenue is home to many of the mostexpensive and fashionable department stores and boutiques in the city.)The man's pockets were stuffed with cash, and he had been instructed togive money to anyone who asked for it. Considering that Michigan Avenueis one of the busiest areas of the city, how many people do you think tookhim up on his offer and asked for some money?
Out of all the people who walked by and read the sign, only one personstopped and said, "Great! May I have a quarter to buy a bus transfer?"Otherwise, no one would even go near him. Eventually he grew frustratedand started crying out, "Do you want any money? Please take my money. Ican't give it away fast enough." Everybody just walked around him asthough he didn't exist. He approached one businessman asking, "Wouldyou like some money?" And the man responded, "Not today." The "plant"said, "How many days does this happen?" as he tried to give him a handfulof cash, while continuing to say "Would you please take this?" Thebusinessman responded with a terse "no" and walked on.
Now here is a situation where the environment was expressing itself ina way that only one person had the mental structure to perceive. For therest of the people, there was no meaning inside of them that they coulddirectly correlate with the actual environmental conditions. Other thanthe one person who asked for a quarter, nobody looked at the sign andsaid to themselves "Great! Somebody is giving away free money, I wonderhow much he will give me."
People's responses to the conditions shouldn't be too surprising becausewe generally don't believe that money is ever free. And we can know whatpeople believed about the situation by just observing their behavior. If theythought that it was possible to get free money, we can assume that theywould not have walked by, ignoring the opportunity to get some. So themeaning they attached and what they experienced corresponded to theirbelief that "free money" isn't possible or nobody gives away money on thestreet—no strings attached. In fact, most people probably thought he wascrazy, which would explain why people went out of their way to walkaround him to avoid contact.
However, the environment was expressing itself in exactly the way inwhich it was representing itself. The sign reading "free money" was thetruth, but the information "free money" did not connect with anything inanyone's mental environment so that it could be perceived as the truth.There was a direct one-to-one relationship between what any given
98individual believed, what he perceived, and what he experienced Except forone man, everyone else obviously did not believe in the possibility of freemoney; they probably perceived a crazy man and thus had an erroneousexperience relative to the conditions. Now, the environment did notchoose the meaning any of these people placed on the information it wasoffering. And if the environment did not choose, then each individualcreated his own experience out of the situation that was presented to him.There were a number of alternate experiences available and each alternateexperience would correspond to the type of belief someone would haveabout the possibilities.
BELIEFS
Beliefs create definitions, make distinctions, and shape our perception ofenvironmental information by programming our senses to hear, see, andselect information that corresponds with what we believe. Our experienceof the environment will correspond to the choices we make, and thesechoices will correspond to the information that is perceivable. What isperceivable to each individual, however, may not have much of arelationship to what is available or possible from the environment'sperspective. Each person in the illustration of free money would claim thatwhat he experienced was, in fact, the true reality of the situation. Whatwould cause them to believe anything different? People think of their beliefsand subsequent experiences as a fact of reality instead of a belief aboutreality. This is natural because beliefs create a relationship with the environ-ment that is best described as circular or a closed loop.
What I mean by a closed loop is that every component part in the processof how we experience the environment supports every other component,making everything seem self-evident or beyond question. These closed-loop systems that beliefs create are extremely difficult to open up. Thebelief controls the information coming into the mental system, theinformation that is actually perceived will be consistent with the belief, thecourse of action taken will be consistent with the information perceived,and the subsequent experience will support and reinforce the validity of thebelief. This is a closed system that will not allow for the possibility of otheralternatives because the experiences keep on reinforcing the beliefs,making the beliefs seem increasingly more self-evident and beyondquestion. Unless we are open or even know how to be open to newinformation that could lead to new experiences, we will experience theclosed-loop nature of our beliefs every moment, assuming the whole timethat what we experienced in each situation was the only possibility available.
The people who walked by the man giving away free money didn't knowthey were completely oblivious to the possibility of the environmentexpressing itself in such a manner, even though the sign said "FreeMoney." And if confronted with the same set of environmental conditions
99again, they would behave the same way as the first time, not knowing thatother distinctions are possible, even if they are remote. The perception andthe experience have to match up because we can't experience somethingthat we don't know about yet, unless we are open to the possibility that whatwe believe might be very limiting in relationship to what the environment isoffering. Remember the man who refused to take the money even when itwas being handed to him? He was being offered an experience that wouldhave increased the number of distinctions he could make about the natureof the environment (free money does exist), and he would have grownmentally as a result. Being given free money was obviously a distinction hedidn't know about yet. And even though it would seem that free moneywould be a powerful incentive to question one's belief that it doesn't exist,it wasn't enough for this man. His beliefs obviously did not allow him toeven remotely consider the possibility, again creating this closed loop,leading him to believe that what he ended up with or experienced out ofthis situation was the true nature of his existence, when all it really was wasa reflection of the true nature of his beliefs and how they manageenvironmental information.
Beliefs define the parameters in which we perceive environmentalinformation. All definitions by definition create boundaries. Beliefs willmanage information in various ways to maintain a balance between theinner and outer environment. Any perceived imbalance will result in somedegree of either stress or illusion. In maintaining a balance, many of ourresponses to environmental conditions are automatic because our beliefsmake the response seem self-evident, when, in fact, under any given set ofenvironmental conditions alternate experiences exist along side of theexperiences our beliefs locked us into.
By inhibiting the flow of information into the mental system, beliefs doexactly what they are supposed to do. They limit our awareness of data sothat we can learn in stages. If we believe that things exist in only oneparticular way, then our beliefs will act as a natural mechanism to block theacceptance of any conflicting information.
Considering or accepting any new or conflicting information would open upchoices that we ordinarily would not have to consider. Too many choices too sooncan cause confusion and mental overload. If it were not for the limiting nature ofbeliefs, what would happen to our minds would probably be similar to what itwould be like if a television set picked up all the information being broadcastfrom all the TV stations and projected that information on to the screen simulta-neously on the same channel. Beliefs allow us to tune into one channel ofenvironmental information at a time so that we can learn about the nature of theenvironment through that one channel. Then we can expand our awareness topick up another channel as we learn how to deal with the additional choices weare confronted with as we become aware of the additional possibilities.
100HOW OUR FEARS FUNCTION TOCREATE THE EXPERIENCEWE ARE TRYING TO AVOID
What we perceive is a function of the distinctions that we have learned tomake. What we focus our attention on—out of all the distinctions we havelearned to perceive—is a function of the intensity of the energy in the perceptionloop. We only have so much of our conscious attention to give to whateverinformation happens to be available in any given moment. Fear (high degree ofnegatively charged energy) has a profoundly limiting effect on the range ofinformation that we can pay attention to. It causes us to narrow our range ofperception to focus our attention on to the object of our fears. How else couldwe avoid what we perceive as threatening?
Learning to drive is an excellent example that illustrates how fear narrows ourfocus of attention. The dangers of driving are obvious even to someone who hasnever driven before. It isn't too difficult to imagine the harmful effects of a head-on collision. Without having developed the necessary skills to control the car, thenew driver would lack the confidence to know that he can respond appropriatelyto any given situation. That is, he doesn't trust himself. As a result, he will feelsome degree of uncomfortableness or fear when he drives. The fear will, in turn,cause him to focus his attention on the oncoming traffic or concentrate on theeye/hand coordination necessary to keep the car in the appropriate lane.Because he is so focused on what he can't do and what may happen as aresult, he has little if any of his attention available to do anything else, likecarry on a conversation with a passenger, notice the scenery in his peripheralvision, or even read road signs. All this other environmental information isavailable and perceivable, but in his case it is either blocked or unnoticedbecause he has to devote so much of his attention to the object of his fear(the lack of control he has over the car). At the point where he becomescomfortable with his ability to drive safely, his field of awareness will openup allowing him to perceive all this other information.
The purpose of fear is to help us avoid those things in the environmentwe have learned to perceive as threatening. However, when we couple ourpainful memories with our natural propensity to associate and groupenvironmental components together— instead of avoiding the object ofour fears—we will actually create the very experiences we are trying toavoid. For example, a child severely bitten by a dog will quite naturallyassociate all dogs with the threat of pain and consequently generate anintense fear or even terror whenever he encounters any dog in the future.The child's fear of all other dogs other than the one that bit him is real. Hehas no way of making a distinction between a friendly and a dangerous dogbecause his personal experience has taught him that all dogs are dangerous.Because of this natural propensity to associate, all we need is one first-timeexperience to believe that all dogs are dangerous. That is his truth about thenature of the environment. However, his truth is not all the environment
101has to offer in the way of experiences in relationship to dogs. Not everydog that exists is dangerous. Quite the contrary, very few would beconsidered threatening; most see a child and want to play.
Now, in every chance encounter the child has with a dog in the future hewill create an experience of terror, regardless of the disposition of anyparticular dog he happens to run into. If a dog makes any movement towardthe child, the child will perceive that movement as an actual attack when allthe dog wanted to do was play or be petted. In fact, the child could becomeso afraid of being attacked that he will devote most if not all of hisattention to scanning the surrounding environment for dogs. Eventually hissenses will become attuned to picking up their sights and sounds. And everytime he sees or hears one, he will create another terrifying experience thatjust reinforces his fears. His focus of attention will attract to his attentionthe object of his fears so that he can avoid what he has learned isthreatening. The problem is that what he has learned is erroneous inrelationship to the conditions, that not all dogs are dangerous. Notknowing that, he will naturally believe that his terror is coming fromoutside him instead of inside him. In effect his fears are acting on hisperception to create the very experiences he is trying to avoid by causinghim to hone in on all the dogs in the environment.
What we focus our attention on in the environment is what we willusually get. The dog-biting example is a graphic illustration of this.However, there are other ways that our fears act as a cause to create whatwe are trying to avoid that aren't so obvious. Remember that all fears act onour perception as a warning mechanism to help us avoid what we believeto be threatening. One way to avoid the object of our fears is simply torefuse to acknowledge the existence of threatening information. Anothermore subtle way that will create some real blind spots in our perception isto focus all our attention on alternative - nonthreatening - information tothe exclusion of everything else. These blind spots will exclude wholecategories of perceivable information from our awareness, which can resultin some disastrous consequences, especially in the trading environment.
For example, let's say that the market is offering us what we believe tobe a good opportunity to make some money, so we go ahead and put on atrade, but at the same time we are also operating out of a fear of beingwrong. We will fear being wrong because, if we are, it will force us to feelwhatever negative energy has accumulated inside of us as a result of beingwrong in the past. Now, if the market offers us a choice betweeninformation that would indicate we are right or information that wouldindicate that we are wrong, what information will we naturally focus ourattention on? The information that will make us right, withoutacknowledging or considering the implications of the information thatwould indicate otherwise. Again, those implications could be disastrous.
Let's look at another example of a trader who is afraid of losing. A fear oflosing presents an obvious conflict because it would be difficult to put on a
102trade in the first place. However, for the sake of this example, let's say thistrader was so attracted to a specific opportunity that he managed to operateoutside of his fear long enough to put on a trade. Now, the kind ofinformation he focuses his attention on will depend on what the marketdoes. If the market goes against him, he will be afraid to confront thepossibility of another loss, so he will focus his attention on any othernonthreatening information. If the market happens to come back to hisentry point, he will exit the trade in a sigh of relief, regardless of what thepotential is for any further movement in his direction. But, if the marketcontinues to go against him, his mental defenses will begin to break down asthe threatening information becomes just too overwhelming for him to beable to block from his awareness any longer. At that point he could easilybecome paralyzed and not be able to do anything on his behalf. Eventuallyhis stress and anxiety will become so acute that the only way he can relieveit is by getting out of the trade.
On the other hand, if he finds himself in a winning trade he will focus oncompletely different information. His fear of losing will cause him to focushis attention on what the market can take away from him. In a winning tradehe will exclude from his awareness any information that would indicate whatthe potential is for the market to continue to move in his direction, which isthe only information he focused on in a losing trade, and instead focusexclusively on information that will confirm his fears of the market,retracing back to his entry point or beyond. In effect, his fear of losingcauses him to exit the trade early for a small profit regardless of whateverthe possible profit potential was in that trade. Once he is out, if the marketcontinues to move in his original direction, he will agonize over the profitshe left on the table and wonder why he just couldn't hang in there just alittle longer, not realizing that his fear of losing actually caused him to loseall those additional profits.
What you have just been given is an example of why the vast majority oftraders cut their profits short and let their losses run. In a winning trade, thefear of losing will cause us to focus our attention on information that themarket is going to take our profits away, compelling us to get out early. In alosing trade we will focus our attention on just the opposite information—anything other than that which would indicate the trade is a loser. Fearcauses us to act without a perception of choice. When we are afraid toconfront certain categories of market information, it drastically limits thechoices that we perceive as available. Cutting a loss isn't a choice if wesystematically block from our awareness any information that wouldindicate that we are in a losing trade. Staying in a winner isn't a choice if weare consumed with the fear that the market is going to take away our money.
To prevent these blind spots in our perception, we have to learn to tradewithout fear. And to trade without fear we need to completely trustourselves to confront and