Forex Media News Station

2009/04/26

The no.1 psychological reason of failure in trading

Trading in the Zone by Mark Douglas, 2000, New York Institute of Finance

p.20-21

It is at the deepest level of our being that the potential for conflict exists. The social structure that we’re born into may or may not be sensitive to these inner-directed needs and interests. For example, you may have been born into a family of extremely competitive athletes, but feel a passionate interest in classical music or art. You may even have natural athletic ability, but no real interest in participating in athletic events. Is there any potential for conflict here?

In a typical family, most members would put a great deal of pressure on you to follow in the footsteps of your brothers, sisters, or parents. They do everything possible to teach you their ways and how to get the most out of your athletic ability. They discourage you from seriously pursuing any other interests. You go along with what they want, because you don’t want to be ostracized, but at the same time, doing what they want you to do just doesn’t feel right, although everything you’ve learned and been taught argues in favor of becoming an athlete. The problem is, it doesn’t feel like who you are.

The conflicts that result from what we’re taught about who we’re supposed to be and the feeling that resonates at the deepest levels of our being is not at all uncommon. I would say that many, if not most people, grow up in a family and cultural environment that gives little, if any, objective, nonjudgmental support to the unique ways in which we feel compelled to express ourselves.

This lack of support is not simply an absence of encouragement. It can be as deep as the outright denial of some particular way in which we want to express ourselves. […]

p.22

What happens when we’re denied the opportunity to express ourselves in the way we want to, or we’re forced to express ourselves in a way that doesn’t correspond with the natural selection process? The experience creates an upset, being “up-set” implies an imbalance. But what exactly is out of balance? For something that’s out of balance, there has to be something that’s in balance or in equal proportion in the first place. That something is the relative degree of correspondence that exists between our inner, mental environment and the exterior environment where we experience where we experience our lives.

In other words, our needs and desires are generated in our mental environment, and they are fulfilled in the exterior environment. If these two environments are in correspondence with on another, we’re in a state of inner balance and we feel a sense of satisfaction or happiness. If these environments are not in correspondence, we experience dissatisfaction, anger, and frustration, or what is commonly referred to as emotional pain.

p.24

They [the conflicts] accumulate and usually end up manifesting themselves in any number of addictive and compulsive behaviour patterns. A very loose rule of thumb is: what ever we believe we were deprived of as children can easily become addictions in adulthood. For example, many people are addicted to attention. I am referring to people who will do almost anything to draw attention to themselves. The most common reason for this is that they believe they either didn’t get enough attention when they were young or didn’t get it when it was important to them. In any case, the deprivation becomes unresolved emotional energy that compels them to behave in ways that will satisfy the addiction. What’s important for us to understand about these unreconciled, denied impulses (that exits in all of us) is how they affect our ability to stay focused and take a disciplined, consistent approach to our trading.

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