The Psychology of Trading

by Brett N Steenbarger

  One therapy for such a problem attempts to decondition the fear responses by gradually and progressively exposing the person to trigger situations while rehearsing coping skills that generate experiences of self-control. We placed a moratorium on all sexual contact between Alice and Jim and instead focused on nonsexual touch. Alice took the lead in guiding Jim, remaining in control throughout, as she reacquainted herself with safe physical contact. After much work on casual and sensual touch, Alice felt comfortable trying more sexual contact. With each successful experience, the traumatic conditioning was weakened, and Alice could reclaim the space on her dial of consciousness. It was a very special day when Jim and Alice came to my office, hand in hand, to tell me of their engagement.

  The phenomenon of trauma raises a fascinating possibility. What if positive experiences as powerful as traumatic ones could be created and actually expand the bandwidth of consciousness? These "positive traumas" would be akin to the "corrective emotional experiences" described by Franz Alexander and Thomas French in their landmark work on psychoanalysis: experiences so affirming and impactful that they could reshape personality for the better, in ways as profound as Alice's assault.

  Can the mind be directly programmed and expanded? Is it possible that people can alter their personalities without undergoing months and years of therapy?

  I believe so.

  DR. BRETT RECEIVES STRANGE COMMUNICATIONS

  Half in awe, half in disbelief, I stared at my computer screen. The communication in front of me was unlike any I had ever received. As a director of student counseling, I was accustomed to receiving all sorts of electronic messages: e-mails requesting appointment changes, pleas for assistance, progress reports from clients. But this posting was a first in my years of practice. It read:

  destroy the rather shied way of the arctic cold. Build a ladder to all you know and whatever you can see in the new age. This is only the beginning. We have so much to do and it's all in front of you so make a pyre to visit every now and again and let flow the words and the sense of relief that is here. You know what you have to do it's clear and lies in front of you like a bear skin rug with soft fur in front of a fire. The warmth of your mind spreads out across you body with heat so intense that the fire burns deep inside you. Flaming embers wait with a strict impatience that will never be felt or heard. It's quiet but the flow continues and all is well. Rain the maker day with special flowers in sequence. Happy joy can see whatever is to be.

  There was no signature, but I knew who had sent it. What didn't make sense was why it had been sent to me. Those who knew me recognized that I was the last person to be concerned with "whatever you can see in the new age." My greatest concerns from day to day were my family, short-term moves of the stock market, and whatever journal article or book chapter was in process. One of my favorite bumper stickers reads, "Forget world peace. Visualize using your turn signal." That's pretty much how I've always felt about the "new age."

  But it was the line "Rain the maker day with special flowers in sequence" that alarmed me. That didn't sound right.

  One nice thing about working in a department of psychiatry is that there is no lack of people willing to offer opinions about things that don't sound right. So I printed out the message and showed it to a few colleagues. The consensus was unanimous: My writer was probably bright, probably creative, and probably undergoing a psychotic break.

  Over the next few days, further messages appeared on my screen. All had the same sound and feel. They were filled with vivid imagery and portentous meanings, interspersed with sentences that violated the bounds of reality. For instance:

  Hallowed are the great ones in the time of the western light. Burning out of control they light the sky with flashes of their brilliance from a depth that has rarely been seen. So many faces and places that they cover the sky in hopes of reconciling the way that we have to go. This is coming straight from the heart in feelings that whisper their power to you over broadcast bands with maximum intensity and power. Live the unit for the day has come. You have seen the way and it is here in all its glory with brightness in a wind of maize. How is the unit to be captured amidst the turmoil of the day and how are we to grasp the meaning of what is to be if we are constricted in a shell of stone? These are the questions that wrack your soul and that light the fusion of the western sky. Power denied has the way that lies deep inside. Vanquish memories in the cement of day. Thrilling night has more glow than the coldness of day.

  It is interesting that when I showed the printed messages to people who were not mental health professionals, the reaction was mixed. Some saw the writer as needing emotional help. Others simply viewed the writings as nonsense. "It's amazing how much someone can write without saying anything," was one comment.

  Yet I was convinced that the writer was saying something. Common themes emerged across the messages: anticipation of a future path ("You have seen the way . . ."); the juxtaposition of warmth and cold; the need to leave memories behind and find a sense of power. Too, there was a recurrence of images: flashes of light, crystalline shapes, rolling seas, the sky. This was not a random collection of words or images. Like the Woolworth man, the writer was communicating something—and he was communicating it to me.

  Most of my colleagues were quick to advise me to not return the communications. The consensus seemed to be that this was not a person to be encouraged. Though no one came right out and said it, the gist was: This person is crazy. Who knows what they might do? Don't give any encouragement.

  MIND EXPERIMENTS

  It was a holiday period, and the counseling business was slow. Two students had already canceled their appointments. That meant that I'd have time for my experiment.

  In the past year, I had performed many such experiments. Most of these involved techniques for developing greater awareness and control over problem patterns. For example, I have always been prone to bouts of procrastination. From the time I was a boy, collecting money on my paper route, I recall avoiding the completion of tasks. Most of the time, these were not threatening or difficult tasks. They might be very simple things, like returning a phone call or running an errand. But I would avoid them until it was no longer possible to maintain the avoidance. Consequences—at least the fear of consequences—snapped me out of the procrastination.

  Through my experiments, I found that my procrastination was highly state-dependent; that is, when I was in a certain physical and emotional state, I was much more likely to procrastinate than at other times. So, for instance, if I found myself procrastinating and then began a very rapid, strenuous, and abrupt set of physical movements (e.g., moving my arms and legs in mock-fighting motions), I would fairly quickly enter an energized state in which the procrastination seemed to melt away. Also, if I entered into a deeply meditative state and stilled the thoughts inside my head, I found it easier to pick up tasks and complete them.

  This particular day, I had an interesting experiment to conduct. I had long noticed that, when I meditated, random images and sentences would often enter my mind. The same thing also occurred shortly after awakening from a deep sleep. Sometimes the intrusions took the form of emotionally neutral sentences, as in "That is the side that needs to turn." Other times, they appeared as images, such as a car that had plowed into a snow bank. Invariably the images or sentences were fleeting, and I would dismiss them from my mind and resume whatever I was doing. This day, however, I decided to investigate them more carefully. And I thought of an ingenious way to accomplish that.

  I knew that the intrusions were most vivid when I entered into a deep state of focus and relaxation. This state could be accessed most successfully through highly repetitive music, such as the early works of Philip Glass. I found that, in that state, I had been able in the past to give myself hypnotic suggestions, using the technique of moving the hands together. Perhaps, I thought, I could use the state to implement other suggestions.

  My idea was to enter into the focused, relaxed state while seated
at my desk. When a random thought or image would enter my mind, I would type it on the computer. I'm a speedy typist, so I figured I could easily keep up with the stray thoughts that might drift by. In unspoken anticipation, I harbored the hope that I might unearth some interesting insight this way. Perhaps I would obtain an intuition about the future course of the market or a grand realization about Life.

  I sat at the computer and began the induction, my headphones filled with Glass's Music in Twelve Parts. To enter the state, I close my eyes and gaze intently at the dark visual field. Eventually, in the darkness, I'll notice an area that is lighter than the rest. Very often, but not always, it is to one side of the visual field. I will then focus intently on the light and contract my eyes (as if looking at something very near) in such a way as to expand the light. Within a few minutes, the entire visual field is light, though my eyes are still closed. At that point, my gaze usually has drifted upward, and occasionally I will notice rapid pulsations of my eyeballs and eyelids. Although I am awake and fully conscious, it feels as though I am in a rapid eye movement (REM) sleep state. When I open my eyes, I typically feel very detached from the world, removed from the day's worries and concerns.

  In the experiment, however, I planned to type when I entered the state, recording the flow of intruding thoughts. I wasn't sure what to expect. Would the act of typing destroy or alter the flow of thought?

  As the experiment commenced, I found myself surprised that my fingers flew across the keyboard, typing the sudden flood of thought. I made a concerted effort to not censor or analyze anything I was typing, instead keeping my attention on the light. At one point in the exercise, I noticed a fleeting, intruding image: A child's drawing in primary colors. The sun was in the upper left-hand corner, and the top was a blue sky. A hand was coming from the right side of the picture, holding a watering can. Drops of water were falling on a row of daisies. The image lasted all of a second and was gone. Shortly thereafter, I stopped typing.

  When I opened my eyes, I felt my usual detachment, but with greater intensity. I looked at the computer screen and read my typing. A chill went through me. The writing was unlike any other that I had produced. Moreover, I could not recall having typed most of it. The sentence that floored me, however, was: "Rain the maker day with special flowers in sequence." I knew, beyond a shadow of a doubt, that this referred to my image. But it was a sentence that could not have come from my well-ordered mind.

  Half in awe, half in disbelief, I stared at my computer screen. I recall thinking that there was no way on earth that I could have written the New Age foolishness that appeared on my screen. I shuddered involuntarily. It was my first, and most powerful, realization that I was not a unitary self with a single mind and identity.

  MAPPING THE MINDSCAPE

  Subsequent personal experiments convinced me that people have much greater power in altering their mindscapes than they commonly recognize. As a writer, I discovered long ago that what I wrote in my more creative moments was often completely unrelated to what I had been planning to write. It was as if a hidden Muse had provided the thought and the inspiration for me. On those occasions, I have looked back on a piece of good writing with the sense of "How did I ever write that?"

  It is fortunate that I am a relatively proficient typist and can get my thoughts onto the computer almost as quickly as they appear in my mind. When I'm immersed in my writing, I'm hardly thinking about what I'm going to say. The ideas come to me, and I type them out. It is not hard, at such times, to believe in the idea of multiple minds.

  On one particular occasion, however, I decided to turn this idea into yet another experiment. I first placed myself in the deeply focused state by immersing myself in the Philip Glass music. As before, I placed my full attention on the light areas that appeared within my darkened visual field once I had closed my eyes. By this time, I had become rather good at entering the state of quietude. Now, however, I decided to extend it. To my surprise, I found that if I stuck with the exercise long enough, I hit not one but several points of second wind. Each time I felt tempted to end the exercise, I pushed myself yet further. Eventually, I extended the exercise for hours, remaining in a completely still, quiet position.

  The results from the exercise were every bit as dramatic as those from any psychoactive drug. After several hours of total focus, my proprioceptive sense was greatly altered. The slightest movement in my swivel chair felt overwhelming and disorienting, like I was dipping and diving on a roller coaster. I lost all sense of which side of the room I was facing. When I did open my eyes, normal objects looked unusually vivid in color and shape. It was as if the hours of reduced sensory input had recalibrated my senses, making me sensitive to normal stimuli the way someone long deprived of food might gain a vivid sense of taste.

  In the highly altered and attentive condition, I gained an appreciation for how artists and poets must see the world. The hours of complete darkness, almost totally free of thought and movement, made me exquisitely sensitive to the beauty of ordinary things in my room: the nuances of shapes and hues, the interplay of patterns on a tapestry, the richness of shadings created by the lights. I felt as though I could spend hours absorbing the beauty of it all. In the back of my mind, I also recognized that I was reacting quite uniquely to normal objects. My distinct realization was that my normal waking hours were so filled with stimuli—people talking, noises from roads, bombardments from television—that I spent much of my days in a state of overload without knowing it. I was like a glutton at a buffet, consuming so much each day that I no longer appreciated subtle and varied tastes.

  My working hypothesis, which I am presently testing with biofeedback, is that there is a direct correlation between the amount of time spent in an experiential exercise, the intensity of experience, and the openness to change that is possible in the heightened state. In other words, deeper and longer trances produce a higher measure of cognitive and sensory recalibration, enabling one to more readily shift his or her mode of experiencing. After long sensory reduction, I felt that the simple scent of a garden flower would be sufficient to generate a state of heightened experiencing that would be as great as a dramatic intervention in a counseling session.

  My recent efforts with forehead temperature biofeedback suggest that it takes a sustained period of quiet and focus to reach such dramatically altered experience. Indeed, the biofeedback readings do not begin to radically depart from baseline before 15 to 30 minutes of remaining still—and that is with some degree of practice. This suggests to me that people's normal states of mind are conservative: They are relatively resistant to short-term, sizable shifts. That would make sense because frequent large shifts would no doubt disrupt the continuity of daily thought and behavior. In order to function effectively in the world and to remain in control of their actions, people's states of mind must remain relatively stable.

  By exerting significant effort through meditation, biofeedback, and the like, people can override the mind's natural settings and induce magnitudes of shifts that approximate those that occur during trauma. This requires both time and discipline and, hence, is not experienced in the normal flow of daily life. Csikszentmihalyi's work, however, strongly suggests that particularly creative individuals, immersed in their work, do achieve a measure of focus and concentration similar to that attained in my Philip Glass exercises. If so, they have developed natural means for expanding their mindscapes and cultivating new modes of perception and behavior. Indeed, they may have expanded their capacity for evolution by overcoming the usual conservative mechanisms of consciousness.

  Can traders, I wondered, accomplish the same thing?

  EXPERIMENTS WITH TRADING

  Having improved my ability to enter this altered state, I moved to the next phase of my experimentation, which was to immerse myself in my usual homework before a day's trading, reviewing charts and indicator data to formulate hypotheses. I made a conscious effort to note everything but to avoid jumping to any conclusions about wh
at I was seeing. (I must say that the latter was difficult—patterns seemed to jump out at me with unusual distinctness.) Once I had poured over the information and conducted a few tests, I then decided to spontaneously type out everything that came into my head about trading the day to come. I typed it rapidly, not censoring any of the ideas. I also wrote it as if I were writing a newsletter for public readership, complete with advice about what to do in various situations.

  As with my earlier experiment, the writing came with ease. I found my fingers fairly flying across the keyboard. I was aware of what I was typing, but I was removed from it at the same time. It was a bit like watching my body do the typing.

  Before reading my written synthesis of the market information, I extended the experiment still further. I closed my eyes again and reentered the focused state. This time I wore headphones connected to the computer. I had highlighted the text I had written; and once I was completely attentive, I clicked on a menu item in my Dragon Systems "Naturally Speaking" program that allowed the writing to be read to me in a synthesized voice. The voice had a clipped manner of speaking with a faint British accent. It read to me what I had written, and I absorbed it in my trance-formed state.

  Listening to my own words spoken by another had an unusual effect, as if I were absorbing the thoughts of an expert consultant. The eerie and strangely irrational thought passed through my mind that I was hearing the voice of the Almighty. Nevertheless, I had the sense that I was hearing Truth:

  Extensive buying on Friday could not surmount the wall of resistance on Thursday, creating a line to trade against. Rallies that fail to break the line offer shorting opportunities, targeting Friday's lows as minimum objective. A break below Friday's lows has you shorting rallies. A sharp move above the wall on expanded TICK has you buying dips. Failure to rally in the morning will create weakness in the afternoon. Beware the disjunction of financial and industrial issues.