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Please clasp your hands, fingers inter-twined. Notice which finger is on top. Now undo your hands and rearrange all of your fingers as you clasp your hands again so that the other thumb is on top. This may take a bit of working out or some confusion. Keep your hands clasped for a while and notice how you feel. Notice what is going through your mind as you do this. If you have not done it and are just reading, please stop and do it.
Most people have a minor reaction doing this exercise. You may feel strange, awkward, unusual, uncomfortable and uneasy. Why is that? It is because you are not used to it. As a child discovers his or her hands, they eventually notice that they fit nicely into each other. The first way they do it is the way they will continue doing it. The first time was a brand new experience. Every subsequent repetition adds to the formation of a habit. Neurons in your brain line up creating pathways for you to repeat so that life gets to be easier for you.
Any behaviour that is automatic falls into this category: from brushing your teeth, to responding when someone calls your name. No thinking is involved, you respond automatically. You have formed a habit. Most of your habits are useful for you and save you time. On the other hand, some of your habits have outlived their usefulness. When you are faced with doing something different, you are contradicting set behaviour patterns in your brain. Your brain says “I do not have a prior memory of this. This is new.” It fires a little bit of adrenalin into your system to help you cope with the different behaviour.
Here is the important part: you often interpret this different behaviour as difficult. So you abandon it and go back to your old, familiar ways. Your brain is happy, as it knows what to do. You say: “You can’t teach an old dog new tricks.” This way of interpreting is a killer of new ideas, new habits, and new ways of doing things. You get stuck in your comfort zone, closed off to any new ideas.
This is very relevant in trading. A start-up trader may find risking their hard earned cash in a trade too much to bear. It is a different feeling and they may interpret this as difficult. But is it really? As there are no guaranteed trades, a calculated risk is something a seasoned trader gets used to. How? With repetition.
Here is another example. You are used to a bull market and prices have been climbing since March 2003. You are used to it. May 2006 changed things a bit. The market is either falling or indecisive. You have never seen this before, it is different. You do not understand short selling or are not used to it, different again. Have you labelled it difficult? Is it really difficult? Should you stay out until another bull run resumes? Can you see what is happening as a different pattern and get used to that it, so it no longer is difficult?
These are some questions to help you look at what you do and why you do it. If some of your patterns have outlived their usefulness, it may be time to do something different.
Believe, achieve
Sinan Koray
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