The Mental Game of Trader Training

The first thing to do when looking for a trading coach is to eliminate the trading coaches that are less likely to be helpful.

The first thing to be aware of is the language that the trading coach uses. Notice if these words are in their written materials or come up in your interview.

1. Discipline
2. Motivation
3. Should
4. Profit per day
5. Suppress
6. Eliminate emotion
7. Control behavior
8. Be rational

These words are indicators that the coach’s model of behavioral change involves what I call a two-story nut house. In the two-story model we have the rational part of ourselves that is all-knowing and all good that lives in the top story. The bottom story holds our impulsive, greedy and emotional part of ourselves.

A trading coach telling a trader “to be more disciplined,” is like a track coach telling a sprinter to “run faster.”

In the discipline model, our job is to identify with the rational part of our brain and to discipline the animal part of our brain. Simply by setting up the problem in this way, we automatically lose rapport with parts of ourselves. As a result, we end up fighting parts of ourselves that are connected to our survival instinct. This results in a tension that becomes stabilized with equal opposing forces. Thus, we are unable to create the behaviors that really benefit us.

Over the years I have found that coaches with a background in Neuro-Linguistic Programming or NLP tend to have a model of behavioral change that moves us towards rapport with ourselves. Does the coach recognize that our human brain has many functions and that our job is to become aware of, to accept and to work with those functions in a positive way? Does the coach set it up so that our current state naturally unfolds into a new desired state? If so, I believe that this model will produce better results than the two-story model of human behavior.

The second thing I look for in an excellent trading coach is their ability to understand that repeated unprofitable behaviors are simply behaviors that no longer serve in terms of neurological functions. Once we understand that repeated behaviors are a result of well used neural connections, we can then start solving the problems with an intentional method of creating new neural connections that work better in any given situation.

This also has the advantage of removing blame and shame and the resulting self-flagellation when we repeat unhelpful behaviors. Once we view these behaviors simply as vestigial neural connections, we can now, intentionally, create the appropriate experiences that can change our behaviors to ones that meet our goals.

So, avoid trading coaches who want you to discipline yourself and find a trading coach who supports a growing awareness and acceptance of all the parts of yourself in your quest for consistently profitable trading behaviors.

At the Mind Muscles Academy, our core guiding principle is “rapport.” Rapport with ourselves and rapport with the markets we are trading. To see how we put this principle into action, please review our description of our current offering, our Pathfinder course.

I invite you to find more peace and joy when trading and I am eager to work with you towards this goal.

Self-Awareness Exercise

Story: Bob walked the meeting with a vague sense that something was wrong. He had not slept well the night before and Stephen, his rival for CEO in another division, had set up the participants and the agenda. The critical players in the company would be there. Bob sensed that he had to be careful. His last project had not gone well, even though it wasn’t his fault.

When Bob walked into the room all the other players were already there, as if they had met earlier. All eyes turned to him. Out of his awareness, Bob’s brain downshifted into his limbic brain and sent an adrenaline cocktail instantly exploding in his body. His field of vision narrowed so he only got visual cues from a sharpened, but narrow field. The sounds in the room went quiet as though someone had turned down the volume. He dropped his binder as the blood left his finders to focus on the major muscle systems. His breathing went shallow and rapid. His heart rate almost doubled in an instant.He bent over to pick up his binder and he imagined he heard laughter. Bob was not consciously aware of any of this as his body went into fight/flight mode.

As Bob straightened out from picking up the dropped binder, Stephen asked, “How ya doing Bob?”

Bob looked up, glared at Stephen and said “Screw you.”

Mind Muscles™ Neural Classroom

As we pick up cues from our environment or even just from watching financial and business news, it is common for our unconscious emotional state to shift from event to event, news story to news story – across a spectrum from joy to anger to fear – depending on the message of each story. As these shifts occur, the brain shifts the center of its decision making from primarily neocortex based (analytical) to primarily limbic based (emotional). Most importantly, this shift to emotional decision making is unconscious.

After such a shift, our rational brain (neocortex) believes that it is responding to financial circumstances and information as before, but in actuality it has been“emotionally primed” and is reacting to events from within an emotional frame.

We can see the consequences of this effect in our own behavior. After hearing frightening news, we react with more caution, after joyous news, we take more risk. This effect is evident in our work with clients. When investors in aggregate are using their neocortices to formulate analytical decisions based on earnings and fundamental data, their forecasts are generally correct. When they use emotions to guide their decisions – making an investment because they feel good about it – they underperform.

Awareness of emotions, and their influence on decision making, is the foundation for improving business, personal and financial decisions. The brain has established neurological pathways (habits) that guide decision making toward the path of least resistance. When emotions are high, these pathways are adopted as a rapid shortcut, and habitual decision patterns are utilized. Awareness of our emotion-driven habits is the foundation for behavioral change. Such awareness allows us to slow down habitual reactions, make conscious decisions, and create new habits that serve us better.

Awareness is a muscle. Like going to the gym to work out, neuroscience research with meditators shows that awareness can be built, expanded and accessed in real time with practice. And just like going the gym for the first time, the proper way to begin strengthening this muscle is to begin slowly and build up awareness over time. For some, awareness may come easily. For others, building real time, neural pathways linked to new awareness may take more time. In either case, strengthening the Awareness Mind Muscles™ creates the potential for big change and more productive results. This makes the psychology of trading go from hard to easy.

Mind Muscles™ Exercise

At a variety of times during the day during work, play and in social engagements with a friend or spouse, set an alarm for between ten minutes to an hour. You can adjust this period with experience. The alarm can be set on your smartphone, computer or with a kitchen timer. You are likely to forget about the alarm by the time it goes off.To be prepared for the following steps, create a form to record your observations. Include the date and time, context of what you are doing along with your observations. As the form grows with observations, you may notice personal habits and patterns that were previously out of awareness.

When it does go off, shift your attention to:Your physical sensations– What sensations were present in your body? An easy way to do this is by taking a trip from your nose to your toes. Notice your breathing rate, tension level, physical discomfort, posture and tightness. If this awareness is challenging, you can use the checklist included in the form.Next, record your physical findings – everything you notice.

Remember, this isn’t about judgment, right, wrong or changing anything! It is just about being curious and aware. Resist the urge to “fix” or change anything you notice. Simply become an anthropologist, a curious adventurer in your own body.Continue to do this exercise several times a day until it becomes comfortable. This may be a couple of days, or it may be some weeks, depending on your own neural wiring. Once you are comfortable with physical awareness, you will notice that this awareness becomes “real time.” You will be more aware of your physical sensations as they happen. You may notice shifts, but again, just let them happen. There is no need to “change.”

Your emotions

Next, repeat the same exercise, but this time record feelings and emotions instead of physical sensations. What feelings or emotional tone are you experiencing? Pressure, stress, joy, sadness, anger? When the alarm goes off, you may be so involved in your work that you aren’t aware of any feelings. On the other hand, you may find yourself with intense emotions at the moment of the alarm. Again, don’t try to change anything, just increase your awareness in the moment.

For some, it is easy to identify feelings at any given time. For others, it can be bewildering at first. Practice makes perfect. Continue to use the same form to record your emotions.Your thoughts – Now repeat again, but this time when the timer goes off, record your thoughts at that moment. What were you thinking about when the alarm went off? Were you lost in the flow of work? Were you telling yourself a story? Were you listening to a internal critical voice?

The goal of this part of the exercise is to ferret out the stories you tell yourself, as evidenced in your repeating thoughts and feelings. The themes of these stories are evidence of your unconscious emotional state. If you find yourself rehearsing a stressful conversation with a client or colleague, then it’s safe to assume you have unresolved tension that your mind is trying working out. While this tension remains unresolved, it affects your decision process.

Just like the evening news gives us “stories” that shift our emotional responses, we have the ability to create our own internal “news channel.” What is on your internal news channel? What are the top stories of the hour? What teasers do you tell yourself? Again, there is no need to change. Just notice, become aware, and record the results. (Another Mind Muscle™ for later is the “Channel Changer” Mind Muscles™) Continue to use the same form to record your thoughts.

Awareness Mind Muscles™ IntegrationAll together now – After going through the cycle of increasing your awareness of your physiology, emotions and thoughts individually, now speed up the process by combining them. As your Awareness Mind Muscles™ strengthen, try noting your awareness in each of these areas together. Now when the alarm goes off, record your physiology, emotions and thoughts at the same time. Continue to use the same form to record your physical state, emotions and thoughts.

Finally – Create a new trigger so you don’t have to set alarms. The ring of the telephone is great because you can improve your awareness as you take that incoming call. When the baby cries, your spouse asks you a question, the boss sends you an email…all these are great triggers to do an instant awareness Mind Muscle™. In later newsletters and in our coaching practice, we introduce new Mind Muscles™ that give you the power to not only be aware of, but to create purposeful shifts in your internal processes.

As you fill in the exercise form, you may start to see patterns emerge of the kind of thoughts, emotions and physical sensations you experience. For example, you may notice that when watching an investment or trade that has lost money, you may have a tight stomach, critical thoughts, or angry feelings. Note consistencies, such as if you are unkind or self-congratulatory. Remember we are looking for habits and patterns. For Example, a particular trigger may consistently deliver a negative experience. This is a great awareness.

I can’t emphasize this too much – whatever you become aware of is OK. Right now at this stage, the goal is just to become aware of your process, with self-acceptance. If you find yourself being judgmental, self-critical, or comparing yourself to the imagined states of others, note that also. This is all OK. You are just gathering data much as an anthropologist who is delighted to note the behaviors of a newly found tribe.

As you continue this exercise, your awareness of your internal process will sharpen. Eventually, you will be able to monitor your thoughts, emotions and sensations in real time. In later newsletters and in our coaching practice, we will talk about building new behaviors that feel better and get you what you want. But for now, don’t worry about change. Just keep building those Awareness Mind Muscles™.

PS: The meeting Bob attended was to announce his promotion. Good job!

How most traders fail: The roller coaster of hope and despair

Yes, most traders fail to realize their dreams. Yet most traders continue to try harder doing what they have been doing. Although it doesn’t seem rational, we as humans with our human brains continue to hope that tomorrow will be better.

It is this hope that keeps us going. But then we lose hope. Then the dream crashes.

We lose confidence in our strategy and more importantly in ourselves. Then we flounder and look to new gurus, new indicators and new strategies. All this in an attempt to revive the hope that we need so badly.

Trading is one of the most rewarding professions in the world and because of that, it triggers both the best in us and the worst in us. The major problem we as traders face is that our brains are built for survival and work well in the jungle of our ancestors and the jungle of work.

But our brains’ mechanisms for trading do us more harm than good. At the Mind Muscles Academy we call these ingrained patterns of behavior NEMES, or Neuro Meta Structures. This frame of thinking gives us traders a big boost when it comes to creating the new behaviors that serve us better.


Once we recognize our repeated trading mistakes as “NEMES” or patterns in our brain, we are then relieved of the guilt and shame of moral failure. It is not our fault. No more blame or self-criticisms. Just acceptance that our brains are reacting how they were meant to react.

The good news is that once we identify these unwanted behaviors as NEMES, it is possible to create new neural connection, patterns of behavior and trading actions that serve us better and lead to consistent and growing profits.


Neuroplasticity! Neuroscientists used to think that our brain power was fixed, but for a couple of decades we now know better. We can intentionally create new neural connections that lead to new behaviors that get us to our goals.

If the solution is creating new neural connections, then we can be far more effective than if we are changing behavior with shear will power. We now have a method of change that maps to our neurology. We can get off of that roller coaster of hope and despair.

Here is the productive model we have developed and refined with our private clients and our Pathfinder community:

  1. Define the current behavior and then the preferred behavior
  2. Locate the trigger that activates the unwanted NEMES
  3. Create exercises and simulations to experience the preferred behavior
  4. Make commitments to your fellow traders of what will be changing
  5. Measure your progress
  6. Allow yourself to notice and appreciate your progress and how good that feels
  7. Take your behavioral success to your fellow traders for celebration.

Creating positive new trading behaviors can be accomplished on your own by following these steps. However, it helps to have specific guidance, like the support of our online only courses.

But, with over five years of training experience, it has become apparent that all of us improve more rapidly with the right kind of community support. Our online courses created a foundation for change, but community expectations and support created clear channels for enjoying successful trading behaviors.

Want to get off of the roller coaster? Create a new path for yourself that involves changing what you believe and how you behave. More “discipline” will only add to pressure. Follow the steps above and celebrate your smallest success.

Trading in the Now

"Watch your thoughts: They become words. Watch your words: They become actions. Watch your actions: They become habits. Watch your habits: They become character. Watch your character; It becomes your destiny." - Lao Tzu

Trading in the NOW

In over three decades of trading, I have trained professional traders, money managers and independent day traders. Because we all operate with the same human brain, the issues that all traders face, from newbies to seasoned professionals, are all very similar. As a result, the best trader training practices involve the basic issues that are created from our neurological human condition. These basic issues allow us to create a core curriculum, core coaching and core online classes that address the common behavioral changes that impact our success.

At the same time, these shifts in beliefs and behaviors come down to a single moment. That moment is the moment when we are trading live and we click the mouse. It is in that moment, that critical millisecond, where we can discover the results of the foundational work we have done to date.

This is why some of the biggest impact we have had on both independent and professional traders is real time live coaching. Because, like a holograph, the traders beliefs and behaviors are contained and available in that microsecond of entering or exiting a trade.

I have seen traders who continually tweak their strategies. I have seen traders who have very successful systems be unable to execute them. I have seen traders who have a strategy that works, and yet trade impulsively time after time again. I have seen traders who will follow their systems and be consistently profitable for two or three weeks, and then blow their profits in just a couple of days.

All of these behaviors that no longer serve the trader happen in the blink of an eye, in the moment of that trade. What I am encouraging you to do is to bring your own awareness to that precise moment of the trade. What is happening in your physical body? What sensations are you experiencing? What feelings and emotions arise in that moment of the click? And as you evaluating a trade or making a trade, what thoughts are going through your head? In other words, what is happening right now!

At the Mind Muscles Academy, we have a process for increasing our awareness in that moment. However, you can work on this on your own by simply recording and becoming aware of that moment. Now that you have read this blog, your mind will be able to intentionally create the focus and awareness it needs in order to extract that holographic information that is packed into that single microsecond.

I am encouraging you to unpack that microsecond to notice what is going on physiologically, emotionally and cognitively. After entering a trade, notice each of these categories. Write them down. And as you record that moment and gather more data in all the moments that occur in a day/week/month, you will start to see patterns of the larger picture. Our Mind Metrics platform automates this process, but what is important is the process itself.

The next part of this process is to accept what you notice without judgment or criticism. Or, if you find yourself judging yourself for what you discover, then let that be okay! The more we can be just curious about our own internal state of mind in the moment of a trade and the less judgmental we are about what we discover, the more we are able to make the changes that create new beliefs and behaviors that serve us better and bring us to profitability.

We can’t change the past. I know because I’ve tried it and it just doesn’t work. I can’t decide in this moment to execute a specific behavior in the future. I’ve also tried that and that doesn’t work. However what does work is for me, in the moment, to create new behaviors that feel better and get me to my goals. The process of fully experiencing the “now” is a lifelong journey. However, improving our awareness and our acceptance, even a little bit, creates big benefits.

All the market research and strategy creation and improvement requires execution in the moment. If this is the case, then let’s concentrate on that moment and our state of mind in that moment. For many traders, this can be a revolutionary shift that makes all the difference.

Caution! Don’t use this trading indicator

Do you enter trades that with hindsight don’t make sense? And this happens time and time again?

You may berate yourself, try to apply more discipline or agonize over the “error.” Imagine a world where you didn’t take those trades? What would your P&L look like at the end of the year? For some traders, taking out those trades that don’t fit the strategy will make a significant difference.

I was working with a client this morning (Let’s call him Brett) while he was trading real time and we created a “Pressure to Trade” indicator. He was generous enough to give me permission to share our work together with you. Brett is a very self-aware trader with a strong sense of returning value to his community.

Brett has a strategy that takes 4 indicators to create a setup. When the indicators create a related pattern, it produces very high probability short term trades. However, the setups may happen only once or twice a day in normal markets. Brett will occasionally trade outside of the setups, and these trades in total bring down his profits.

As we talked, it appeared that there are several mechanisms that Brett uses to create the internal “Pressure to Trade.” As we paid attention while he was trading in real time we came up with a list.

  • A sigh when a potential trade was missed
  • An internal critic that says “You idiot” on missed trades
  • The thought that he needs to be making money
  • Feeling of boredom when nothing is happening
  • Didn’t pull the trigger on a previous setup or two
  • Haven’t traded in a while
  • A wish that he was in the trade when the market moves

On the bottom of Brett’s screen are the indicators that feed his setups.

So we came up with the idea of putting his “Pressure to Trade” indicator on a hand written graph just like his trading indicators. When the indicator is triggered (i.e. noticing a “sigh” when a trade is missed) that indicator goes to the top of the graph and is red. If more and more of these indicators get to the top of the graph in red, then we know that that the next trade is more likely to push a setup or be a revenge trade. Brett is going to chart his “Pressure to Trade” indicators.

My rule for self-exploration is ALWAYS, “just be aware, don’t change a thing.” If we notice something in ourselves that we want changed without an understanding the positive intent we end up in a forced discipline that isn’t effective. (see my blog post on discipline). What indicators do you have that precede “off strategy” trades? Your list may be very different than Brett’s list. 

As you build your self-awareness it is easier and easier to be aware of the internal mechanisms you use to create your own “Pressure to Trade.” You can increase your awareness by making your own list over the next couple of weeks of those “indicators” that are a “set-up” for off-strategy trades. As you build this indicator, refine it and test it, you may notice a change in behavior that happens naturally.

As always, I invite you to set up a free no obligation, no hype conversation to discuss exercises we can create for you to improve your profits.

Are you trading like a dog or a wolf?

The book “The Hour Between the Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust” obliterates many of the myths we carry around about ourselves and our trading decisions. Here are the corrections from author John Coates.

  1. Our bodies and our brains are so interconnected, think of them as one organism.
  2. Our physiology and neurochemistry change with winning and losing trades
  3.  Our decision process is in play long before we are aware of it
  4. Our pre-attentive processing is far more powerful than our conscious thought
  5. Intuition is about powerful pattern recognition
  6. Our communal and interconnected biochemistry sets us up for the boom and bust cycles

What can you do about the destructive aspects of our biochemistry? The good news is that our increasing knowledge of neuroscience supports the developing community of transformational psychology, including our model of Mind Muscles™ development. After two decades of floor trading on the U.S major exchanges and having lived through the major boom and bust cycles, the themes in this book hit home. It both fits my personal trading experiences and supports the foundations for my work with traders and building new Mind Muscles™ to improve their trading success. “On a winning streak we can become euphoric, and our appetite for risk expands so much that we turn manic, foolhardy and puffed up with self-importance. On a losing streak we struggle with fear, reliving the bad moments over and over, so that stress hormones linger in our brains, promoting a pathological risk aversion, even depression.” With this, Coates then builds his case for the physiological changes that happen in our bodies when we win and when we lose and the impact of this synchronized hormonal dance that produces our larger boom and bust cycles. This book not only felt right personally, but he backs up his work with hundreds of footnotes. The hour between the dog and the wolf is the transformation we all experience under pressure when we are primed and ready to act. And this transformation can destroy trading careers and trading institutions or create great wealth. Neuroscience and the models this book builds is an excellent foundation for improving trading behaviors and profits. The stories alone make this book a must read for the serious student of trading. The exciting part of the book for me is how we use this knowledge to make these changes. This is where Mind Muscles™ takes us from information to transformation in our personal and trading careers. As I continue to build the Mind Muscles™ training programs both with individual coaching and online training, this books broadens the foundation that we can leverage together. My work is increasingly physiologically oriented and this produces faster and better results. If you haven’t already done so, I invite you to start building your awareness Mind Muscles.™ Creating real time awareness of the state of your body, feelings and thoughts is the start of a powerful process that leverages these experiences positively. Click here to read the free exercise.   When you are ready, please set up a time for a free no hype conversation about improving your trading. Amazon link: “The Hour Between Dog and Wolf”  

Turning Your Uniqueness Into Market Edge and a Trading Strategy

We are all wired differently. We all bring different skills to trading. We all have distinct dispositions. We also have our own unique mental baggage that we deal with day in and day out.
This is good news.
Because you are unique, you can build a trading process that works for you. The ultimate goal is to accept who you are, know your skills and limitations and find a way to turn your internal trading machine into a statistical trading edge. Once you know your own “market edge,” you can then create a trading strategy that emphasizes your edge and ameliorates your mental baggage.
Some traders need control. Others love excitement. Some traders want a clear system to execute. Others feel imprisoned by mechanical systems. We all have trading weakness that can be triggered in certain market conditions with certain positions.
A system that is built on who you are, your trading needs and ameliorates your emotional triggers can turn a volatile P&L into more consistent profits. The first step is to determine what you really need. Not just what you say you need, but what is the underlying need. And don’t be shy here. It is ok to know that you need a trading adrenaline rush. There is no shame in this. It is fine to recognize a need to avoid being terrified.
Try this exercise to see if it reveals any deeper needs.
  • Make a list of what you need out of trading. This will probably include money, but be sure to look for other needs as well…perhaps recognition, proof of your intelligence or escape. Once you have written down all the benefits of trading, take the one that seems the most important.
  • Then ask yourself, what you get out of this benefit. Write that down.
  • Then ask again, what do you get out of that benefit? Write it down.
  • Keep drilling down until there are no more underlying benefits.
  • Then, go to the next most important trading benefit and drill down again.

For example, if you start with money as an important benefit, ask yourself, what benefit to I get out of money? The answer may be security. Then ask, what benefit do I get out of security? And keep drilling. The answers may surprise you.

The next step is to find out what your market edge is. Market edge is anything that gives you a statistical advantage for a trade. It might be pattern recognition, fearlessness in the face of market panic, discipline to follow a system, or an algorithm. What is your edge? How does it work? Why does the market not discount this edge? Why is the market going to give you profits?

Make sure this edge is in sync with your skills, temperament and emotional baggage. Once you have defined your market edge, you can then create a system. The more clearly defined it is, the more it can be followed, tested and improved. Understand who you are, use the best of yourself to create a statistical edge and build a system based on this foundation. Trader and investor Mind Muscles are built on this process.

Please call if we can be of help.