Fictional protagonists go through a lot.  They persevere, they overcome, they learn and they grow.  A good protagonist is also imperfect.  They make mistakes, they lose their temper, they try to be good, but often screw up from time to time anyway.

I can’t speak for you, but I know that pretty much describes me pretty well.

I’ve been through a lot. I’ve made some mistakes, some major and some minor.  I’ve always made the decision to get back up, even when that was the most painful thing for me to do. And yes, I still get it wrong from time to time.

Thinking about my life as a book, changed my view of my trials, tribulations and triumphs.  Astounding alliteration aside, I enjoyed looking at my life through that lens.  Suddenly, I was able to see the character in myself.  More importantly, I am now able to view my moment to moment decisions with a wider scope.  Will I respect the protagonist who sits in a desk chair and works all day long?  Maybe…that’s a quiet kind of heroism.  How about one who is completely stubborn about certain opinions that they’re difficult to rationalize with (yes, that’s me about Western medicine).  Maybe…maybe not…but whether I respect them [me] or not I’ll be able to relate or empathize with them.

Of course there are many considerations that are running through my mind about my choices, but I’d rather you take a look and ask who the hero is in your own story.  What story are you writing with your life?  Do you like your decisions?  If not, are you changing them or just feeling guilty about them.  If you’re feeling guilty about them, can you now relate and empathize with yourself a little better and let that lead to the changes you want?  If you think seriously about this exercise, the course of thoughts can really run on and I feel that it is a very important discussion to have with yourself.

If you’re able to look at your life by the tale being told with your real-time, right-now decisions you may open the door for new possibilities with the choices you make.  Maybe your story will be something grandiose like creating a foundation that leads to world peace.  Or maybe it will be simple and quiet like a person who fights through illness, depression or fear and still chooses to get up and go to work every day.  That doesn’t save lives or alter the course of history, but it takes a certain kind of inner strength to do it and is a hero nonetheless.

My point is this:  YOU are the hero of your own story.  What kind of hero are you?

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You need to LOVE trading.  Period.

Most people come to Forex as a means to an end (make money).  The people who keep coming back to Forex are after something else…maybe even a fulfillment of some kind.  The people who become profitable with Forex enjoy the process and are grateful for ALL the lessons learned and insights gained, not just those directly related to trading.

I had my own fits and starts with Forex.  To be honest, I’ve never known a successful trader who hasn’t.  But every time I came back to it I learned something new.  I was (am) being fulfilled by Forex in a way that the mundane routine of my life cannot.  I’m constantly challenged.  I’m continually surprised.  I’m always learning.  I compete with myself and drive myself through Forex in a way that nothing else has ever done for me.   I love patterns and the regularity of Fibs.  I’m in awe at how the markets reflect the best and worst of human behavior – especially en masse.

Simply put…I have reason, other than money, to keep coming back.  After a winning streak and after a losing streak I want to be trading.  I feel good when I’m putting my capital to work for me.  I feel even better when I’ve learned a larger life lesson from my own experience through trading.  And I feel honored and privileged that I get to work with other traders, students and teachers alike, from around the world.

I’m not saying that you can’t be good at what you do if you don’t love it, but I do believe that it is a heck of a lot easier if you do have a passion for it.

What do you believe?  What keeps you coming back?

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I imagine that you do something similar with your work day.

In between all of that stuff, however, there are moments. These moments have a lot more control over your decisions and your habits than you realize.

Imagine that you’re the perfectly disciplined trader.  You plan every trade.  You flawlessly execute every plan.  You learn something from every execution.  (Written out like that it seems like it should be SO easy, doesn’t it?!)

Now imagine you doing those 3 things on a good day.  You’ve woken up feeling refreshed and positive.  You’re seeing beauty and possibility in the world.  Your mind is at ease and your spirit is peaceful.  In between the plan, execution and learning process you’re unwittingly infusing beauty and possibility into your trading.  Even if there is a loss for the day, you’re able to look at it objectively and see it for exactly what it is…one moment in your entire trading career…and you’re able to glean something from it that helps you (even if that is just letting it go because it was well planned and executed after all).

Now imagine doing those 3 things on bad day.  You’re tired and irritable.  Nothing has gone right.  You even feel a little insolent that you have to still be SO freaking disciplined in your trading to get it right.  Now those spaces in between the doing are filled with negativity and resentment.  At this point, even if you have a winning trade you’ll be feeling like it wasn’t good enough.

How about if you’re feeling doggedly determined (usually in spite of something else going on in your life)?  Try on “lazy but trying not to be”.  Now extrapolate those attitudes and platitudes out over weeks, months even years.  What do you think your trading results are going to look like?

Inevitably they will reflect your underlying Self.  It will be very difficult to create success in your trading, or in life, if you’re filling the gaps with garbage.  On the other hand, if you fill those gaps with the sublime then you’re likely to see the rewards in every part of the process – not just the outcome.

All of those moments in between our decisions hold something for us.  Sadly, most of the time, we’re completely unaware of what we’re infusing into those moments.  Those quiet thoughts, concerns and hopes are rattling around inside our addled minds.  What we don’t realize is that we have more moments in between our deliberate decisions and actions than we have deliberate decisions and actions.

We could be quietly supporting ourselves in those spaces.  We could also be quietly sabotaging ourselves.  ….and our trading.

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That little article sparked some good, healthy debate with some of you.  I’m so pleased it did because it has been my experience that discussing these broader issues is what creates the opportunity for us to really delve into our own insights and beliefs.

When a trader gets to the point that they’ve been trading for a long time (years, not months) and have developed, through intrinsic learning, a “feel” for the market and the charts they can often do more discretionary trading than they realize at first glance.

A word of caution:  many students feel that they’ve come to this point TOO early in their process and it is easy to misidentify exuberance, fear or greed as intuition.

Trading, especially in the beginning, needs to be extremely methodical.  In order to allow a person to keep putting one step in front of the other there needs to be a routine, planning/record keeping and a system that is followed regularly – religiously even.

After a good string of successes a trader does start to develop a “feel” for the market, unfortunately most traders begin to trade off of that “feel” alone and they abandon the routine, planning and system that made them successful and began to give them the intuition for the market in the first place.  They begin to believe that they’re above the routine.  They get a little lazy and stop doing the planning or record keeping; they believe their intuition is enough.  They get overconfident or greedy and abandon their system, usually getting in early or trying to hold on a little longer, just to get a few more pips as they put too much stock in that “feel” of theirs.

That little bit of intuition that was being developed through presence and practice has faded…all but disappeared.  Needless to say it isn’t long before they’re losing.

If the trader is smart they’ll take a break and then return to the repetition and routine that works.  However this time they are usually hesitant about their system and it seems their intuition is telling them to stay out of trade when it is really fear that is speaking to them.

Eventually that trader can recover losses and become successful once again, but imagine the discipline and practice it takes to get there. It isn’t easy and every time a person repeats this cycle it is harder and harder to recover from it.

You will develop a “feel” for the market and over time, through experience, it will strengthen and bring you insights that the trading alone cannot.  However it is vitally important that you recognize that “feel” as an additional ally, an extra tool that helps you hone your trading…it is absolutely essential that you do not allow it to completely replace everything else you use that makes you successful.

Always understand the true underpinnings of your intuition and do not mistake extreme emotion (fear or greed for example) as insight.

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One of the reasons I recommend SO much backtesting is because of the intrinsic learning that goes on while one is testing.  (Stay with me here…it is relevant, I promise).

Intrinsic learning is the deeper level learning that happens without our even knowing it.  Take any profession, any field, and the person who has been doing it longer will almost always outshine the person who just studied all of the latest and greatest information.  That isn’t simply because of longevity in the field, it is because over the course of the masters’ time learning s/he has been subconsciously and unconsciously picking up tidbits, details, tiny little indicators and clues along the way that they couldn’t actually teach to someone even if they tried.  The lessons are too deep and often there aren’t even words to describe what the expert knows… it is just that they know it.

This is the level of expertise where people begin to describe the expert as a sage, “He just intuits the [insert situation].”  Is it true intuition as we often think of it?  Maybe s/he’s really reaching into the ether and extrapolating answers.  Maybe s/he’s just calling upon the deeper understanding that has developed over time.  Maybe s/he’s doing a little of both.

That is wonderful theory, but it doesn’t really answer the question that was asked, “Should intuition be used in a trade or should rules be strictly adhered to?”

A beginner should always just follow the rules because you have to start somewhere.  After a while it is inevitable that the experience that has been built will start to speak to you and it can be a difficult leap to go from the structural experience of the system to the life experience of actually trading.

Here’s what I recommend:

Keep a good record of those trades where you’ve knowingly incorporated your intuition.  The trades you skipped and the trades that you took should all be recorded.  At the end of a trading cycle (day/week/month – whatever a cycle is for your timeframe) review those trades and see if they’re working to enhance your system or destroy it.   If they’re improving what you do, you can rest a little easier and trust your instincts a little more.  If they’re depleting your account, go back to your structure for a bit and when (not if) you start to feel intuition come back into play start keeping track again.

The caveat to this is that a certain amount of intuition will come into your trading over time whether you’re conscious of it or not.  However, if you are noticing something other than your rules sneak into your trading, don’t disregard it entirely.  Entertain it, give it a chance, it could be introducing itself for a reason and might go a long way toward improving your trading as well as your belief system about your ability to trade well.

What do you think?

Next week:  Part 2 – Is it Intuition or Emotion?

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This week I want to make an important distinction that could have easily been missed in last week’s article.

I used the word “want” a lot in that article and only near the end did I discuss “choice” but it is really the choice that is the most important.

If we spend our time wanting, even if we think we know exactly what we want, than we spend our time focusing our energies on what we don’t have already.  This is a sure-fire way to make ourselves miserable. We can deplete our energies entirely merely by focusing on want.

What is important for me to impart here is that while you DO need to identify what it is you’re really trying to manifest in your life it is the actual choice you make that becomes vitally important to your being able to create it or not.

Once you really choose an option that you find appealing you begin to assess your starting point.  That immediately brings your focus to what you have.  Once you’re dialed into what you have then you are building energy in your life that will help you create what it is you envisioned in the first place.

Here’s an example:

Let’s say Simon has always dreamed about being a lumberjack, but the course of his life has taken him to wherever he is now – let’s just say some office job.  He gets up and goes to work every single day to support his lifestyle and he can see that he really has a lot to be grateful for, but he’s not feeling it because when he looks around him all he can see is the walls of his house, the boxiness of his car and the confines of his cubicle.  Someone asks him what he wants.  A new job?  “No, I’d hate to have to start over new somewhere.”  A better relationship?  “No, we’re actually pretty comfortable with each other.”  What do you want?  “I want to be a lumberjack, but…” and he lists a diatribe of reasons why it won’t work or isn’t responsible.  Each excuse takes him further and further away from what it is he really wants.

If he makes the choice to become a lumberjack:

Suddenly Simon decides to become a lumberjack.  He hasn’t trained for it, he doesn’t know why he even wants to do it, but he has chosen to do it – once and for all.  Now he’s chockfull of energy and drive.  He has no idea how to go about becoming a lumberjack, but he knows he’s smart, he knows he’s got a supportive partner and resources to learn.  He’s focusing, now, on what he has.  His partner may even be excited to see some life breathed into Simon after all this time or…maybe Simon is able to recognize his partner as an enabler to his misery and have the strength to move on.

If he makes the choice to stick with what he’s already doing:

Maybe Simon decides to finally really be present in his current life and he realizes that if he’d really wanted to become a lumberjack he’d have done it.  Since he didn’t he’s going to choose to be the best darned cubicle dweller there is because it does provide him with security and that is really what he’s wanted all along.  Now he can look at security as his real choice and he’s going to recognize what he has going on in his life that provides that.

That recognition will lead to gratitude which will lead to happiness.

The point is that, one way or the other, Simon has finally made a choice. He first had to understand what it is he really wanted but he didn’t stay there.  He didn’t keep on wanting.

As traders it is easy to want the end result of trade.  Who doesn’t want fast, easy money?!  But we have to understand what it is we’ve chosen once we step off of that starting block and entered into the race.  We’ve chosen to learn and expand ourselves.  We’ve chosen to do something that others don’t understand.  We’ve chosen to forge a new path for ourselves and in doing so we’ve chosen to grow and expand and re-identify ourselves.

If you’re not energized by the thought of that process, perhaps you’re not ready to make the change or maybe this isn’t what you really want.

But…once you recognize the consequences of this choice you may be thrilled to start (or re-start) this journey. Now it is your task to focus on the choice.  What do you have that enables you to institute the change?  Good teachers, supportive friends, family or spouse?  A brain that is able to learn?  A discipline that is willing to re-awaken?  What do you have that fuels this endeavor?  Put your time, energy and focus there and you will find that you are no longer depleting yourself – you are energizing yourself and you are re-creating yourself into a trader.

Tell me 3 things that you have, right now, that enable your trading?  Which of those 3 things do you think could use some more focus and attention (read:  more gratefulness)?  Does it feel good to redirect to what you have (vs what you don’t)?

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It is easy, in our youth, to see the possibilities in life and to imagine ourselves fully participating in each and every one of them.  It is much harder to do that once we’ve grown to adulthood.  We’ve got jobs to do, bills to pay, homes to clean and repair, relationships to foster, some of us have spouses and kids to look after.  While there is a LOT to be grateful for in that list (we have a job, and electricity, and homes and relationships and family) it can feel, sometimes, like the choices we’ve made have bound us to some degree to one small piece of the pie that we once imagined.

It is the feeling of being weighed down that can stagnate the heart and spirit.  Once that feeling really sets in it can be extremely difficult to see life through any other lens, especially one where other opportunities are available to you, because that feeling has changed the underlying belief system about what is really available for the taking.

It is important to understand that ALL opportunities are available to you.  Maybe some are more desirable than others, but they’re all out there waiting like patient students to be called upon.  The problem is however, that as the head of the classroom, many people spend so much time glancing back and forth between these willing students, hemming and hawing and never really choosing one.  This means that none of them has a chance to stand up and be heard.

So, I propose that you stop vacillating about your options and pick one.  If you’re a student of mine, one of the changes you’re instituting in your life is learning to trade in the Foreign Exchange market.

You have to understand by choosing this opportunity you have to commit to it.  You have to know what you want from the experience and it is not going to work if all you want is to make money.  You have to want to learn.  You have to want to grow.  You have to want the change in routine.  You have to want the business plan and the practice and the dedication to enter your life through this endeavor.

If you don’t really want all of those things and secretly your deep-down supplications just want everything to stay the same in life except you want some simple little thing on the side (in this case we’re talking about money, but it could easily be learning a new language/skill or traveling or whatever you’ve chosen) then you will continue to fight an uphill battle in your new endeavor.

You have to know what you want in order to make your choice.  If you think you’re not choosing, trust me you are…you’re merely choosing to not change and grow.

It is through the choice we make to institute change and through the devotion to the process of that change that we can ultimately develop everything we need to institute that change:  desire, choice, practice, then the penultimate… belief.  Once we believe that we can do it, we open the pathways in our mind and spirit to make that change possible.  Then, and only then, does it all become natural and second nature to who we are.

What do you REALLY want?  What change are you willing to devote yourself to in order to get it?

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I read an interesting piece by Sebastian Siegel recently that while it seems a bit contrived in its poetry and somewhat meandering in its structure did have a couple things to say about Consciousness and Intuition that I thought were intriguing.  He says, “Intuition is the pull of something beyond you, deeper than you, subtle potentiality of second sight, telling you where you ought to go – your propensity, your density, your soul.  Courage is the sure hand by which the potential that is intuited can be believed in without knowing the complete path of its manifestation.  Living is the engagement of life, awareness of and response to that call.  And even more, it is the requisite for pulse and music.  And this rhythm is the ultimate apothecary for the transcendence of loss and loneliness, and the ticket to eternity.”

What I like about this particular segment of the article is that it speaks to my personal belief about purpose and the interconnectedness of life.  It makes me look hard at my own definition of intuition and while it makes sense to me in the non-tangible ways I live I had to ask myself, “is there a place for it in the tangible ways I live?”  Like..oh…say….trading?

I do believe that there is a place for consciousness in everything we do.  For me that means that throughout my day I am mindful of each decision and purposeful in my direction.  I don’t always get it right and there are plenty of times that I feel overwhelmed or worn out and I realize that it has been several hours since I’ve been truly conscious in my choices.  My goal, however, is to increase the times that I act on purpose (even if that means I realize I need a break) and decrease the times that I’m on auto-pilot.  Given that definition, it stands to reason that consciousness has the most important place in my trading.  It really is as simple as asking the question, “Why am I doing/not doing [insert action]?”  That action could be backtesting, journaling or taking the trade itself.  There are times that I’m just sick to death of the charts, I’m not going to be worth a darn in my backtesting, but if I’m conscious of that then I’ll know that is a great time to journal about why I’m sick to death of the charts and recognize if there is any other impetus to my recalcitrance. Usually, there is and I can identify exactly what I need to get back on track.  So, for me, there is no question at all that consciousness belongs in our trading…or any undertaking, for that matter.

But what about intuition?

Is there ever a time when we should rely on something as subjective as intuition in our trading (or other parts of our lives for that matter)?

If intuition is, as Mr. Siegel defines it, “the pull of something beyond you, deeper than you, a subtle potentiality of second sight telling you where you ought to go…” then can it even be applied to something like trading where the primary ambition is to earn you money which seems to be something so obviously outside of yourself?

I have certainly had times that I’ve felt extremely intuitive about the charts and I’ve had quite the opposite experience as well.  So, is there any merit there at all?

I do believe that there is an inherent, almost immeasurable, learning that happens over time that we may not even be aware of.  I see it in students all the time.  Run any backtesting session for more than 200 trades and you’ll see, as you go, that your results get better and better even though you’ve tried hard to stick to the original rules of the system you’re testing.  There are teeny tiny elements in price action that you’re responding to that you weren’t in the beginning.  You’re beginning to ‘feel’ price movement and ‘sense’ the trend tiring.  If someone were to ask you why you took this trade but passed on that other one you may not even be able to put it into words and once you’re back into the ‘reasoning’ side of your brain you wonder, yourself, why you didn’t take it and begin to second guess your behavior.  Is that developing intuition or merely learning on a deeper level?

I’m willing to argue that it could be a little bit of both.  It makes sense to me that as we embed our learning deeper and deeper into our psyches we also tap into previously untapped areas of our brain as well as Universal Consciousness.  Maybe you’re not with me on the latter half of that, but certainly the former half bears its own credibility.  Couldn’t reaching into the depths of our own mental makeup be classified as intuition that has been developed through conscious practice and still follow Siegel’s model of being “something beyond you [logic], deeper than you [reasoning]…”?

It would be a dangerous line to walk, in my opinion, to assume that we’re somehow gifted with some kind of nebulous insight that just makes trading easy. However, it feels right to me to that both consciousness and intuition have their place in every facet of life, and I hold strong in my belief that the consciousness that drives us to be purposeful and dedicated in our craft is what develops our intuition.

That’s what makes sense to me, but how about you?  Is there a place for consciousness and intuition in a person’s trading?  If not, what do you think replaces that?  If so, how do you define it?

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Pain, in life, is inevitable. We’re always going to have times where we forget to do what is good for us, trip and fall, simply make mistakes or get hurt by someone else. That is a part of the human experience and much of it seems fairly unavoidable.

My argument with the kids is that while pain may be unavoidable suffering is not. If they get bonked on the head with the ball in a game it hurts but they’ve got the game to play and that’s fun, so they quickly shift their attention away from the tender spot on their noggin. If they get bonked on the head doing chores well then it is the worst thing ever and suddenly the pain completely incapacitates them and the wailing hurts the ears of every dog within a 5 mile radius as they crumple to the ground in agony…so surely they cannot be expected to continue their chores, right? Right?!

While it’s really not that dramatic, they do seem to feel the pain much sharper and for much longer depending on their state of mind when they’ve hurt themselves doing something they didn’t enjoy doing in the first place.

As adults our pain is much more complicated and layered and convoluted with other emotions and experiences. I contend, however, that we still, by a large measure, have a choice in whether or not we suffer from the pain we experience in life.

If we take a losing trade, for instance, that hurts. But if we love trading and we know we followed our plan we can easily move on.

What happens when we don’t follow our rules, though, and take a massive loss as a result? Or what if we got impulsive and didn’t have a plan at all and we’ve been doing that repeatedly and just can’t seem to change our habit? Then we not only feel the pain of the loss, but we also beat ourselves up over it – and for how long? Suffering ensues. Does it have to be a natural extension of the pain to suffer?

I would go so far as to say that the suffering is pointless. We don’t learn anything from it and we merely prolong our agony, which changes our habits, which changes our belief systems, which changes our thoughts, which changes our interactions with the world and more likely in a direction that will create more pain and then more suffering and then we’ve created a vicious cycle that is feels impossible to break.

I’m the first to admit that there are varying levels of pain, both literal and figurative types and I’m certainly not trying to discount how deeply certain events/mistakes can hurt us; however, once the actual pain is gone I do believe we have a choice about whether or not we suffer. As difficult as it is sometimes to redirect my emotions, I’d still rather not suffer. I don’t grow from that. I’d rather dissect my experience and see what I can do differently next time and put a plan in place to do it. It may not be the right plan and I may get hurt again, but at least I’m moving forward. I’m also empowered from my experience, rather than suffering from my foible.

What about you? Do you see a difference between the two? Do you think it is always a choice or do you think there are exceptions? Do you ever find yourself making the choice? How do you deal with it?

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In “normal” conditions (whatever that means these days) I’ve been willing to identify a trend and trade it in both directions.  The countertrend side has always made me more conservative, but I’m usually willing to take the signal that I encounter.

I traded through the first stages of the Great Recession and witnessed firsthand what high emotions can do to the marketplace;  that severely altered the way I view a changing tide.  Now, that I see market emotions reach a similar pitch to that of 08/09, and for similar reasons, I’m simply not all that thrilled about treating the market like I would in “normal conditions” until I see something that looks normal.

Now, that could be just that…”Yes, I hold a bias.”

But what’s really important to discuss in all of this is: when is it ok to break one of your rules?  In this case I’m breaking the ‘don’t marry your bias’ rule.

For me, my rules are in place to keep me as calm, cool and collected as I can possibly before, during and after a trade – but especially during because that is where I can do the most damage to my account.  Staying objective is the purpose of creating rules in the first place.  So, when I come across a rule that negates that intent, I defeat the purpose of the structure I’ve created to keep my trading sane.

If I were to enter a trade on technical signal – regardless of an overwhelming bias – I have to ask myself, is my prejudice so strong that I may mismanage the trade?  When the answer is yes I really have no business being in a trade because then I’m emotional before I ever even pull the trigger.

Even though I’m pretty even-keel in a trade, I still have to be aware of the emotions that can arise, especially when I’ve taken a trade that has gone so heavily against my instincts.  I can manage that a bit by cutting back on how much I put into the trade, but I can also just stay out and wait for my ideal opportunity.  That’s what I’ve chosen to do this week.  Even though it is in stark contrast to conventional wisdom, I feel good about my decision because win or lose I can hold myself responsible for my trading decisions.  I must face myself in the mirror every day and know that I did what I thought was best in my life and in my trading.

How about you?  Is it easy for you to drop your bias in ALL conditions?  Once you have a bias do you always trade with it?  What allows you to change it?

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