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THE HUMAN BRAIN
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First, humans do not have "a" brain; we have many brains. The right hemisphere, left hemisphere, and core are the main three brains.

In the left hemisphere (the part of your brain that is reading these words), 2 + 2 = 4. In nature, this is not true at the uni­ verse level or at the level of quantum mechanics. The "laws" of arithmetic are true only because we voted to make them true and we now teach them as "the truth." Ask adults why 2 + 2 = 4, and they will tell you, "Because it just does." Ask a second grader, and tYve truthful reply will be, "Because tlve teacher said so."

Our words and our concepts are an attempt to codify the world (chaos) to make it more understandable and more ma- nipulatable. Often, truth is lost in this process. Another way to say this is: we are chronic mapmakers. Our feelings about the world and other people, and our thoughts about the world and the markets are all a process of abstraction or mapmaking. When we characterize today's market as being "choppy" or "trending," we are making a map to assist us in understanding the behavior of the market.

When I was first learning to pilot a plane, the instructors stressed that, while navigating and orienting a flight map to the territory below, it is crucially important to examine the ter­ ritory first, then the map. If you are lost and you look for cer­ tain reference points on a map, you can almost always find some similar points on the ground. In aviation, this sequence could get you lost and cost you your life. In the market, it can cost you your fortune. Never look at the map until you have ex­ amined the territory (the market itself) first.

Much trading research has turned out to be disastrous as a result of looking at a map first. Market Profile, for example, was the darling of the trading world in the late 1980s, Thou­ sands of traders thought it must be a godsend because it repre­ sented the market the way it "really is," making profitable trading easier. The effect has been just the opposite.

I, along with others, lost a great deal of money using this map. The problem is that Market Profile is based on parametric (linear) statistics—in particular, the concept of a normal distri­ bution curve. Normal distribution and the concept of standard deviation simply do not adequately explain natural behavior or the markets. Literally, we get "lost" in the market.

In a linear world, cause and effect are very predictable: the effect can be predicted based on the force and direction of the cause. In a nonlinear world, this relationship between cause and effect does not exist. This is why fundamental, economic, mechanical, and technical systems do not make profits consis­ tently in the market.

When we are not successful in predicting, the natural next step is to seek more information. In nonlinear systems, more information is often neither needed nor helpful. Complex be­ havior comes from simple iterations and nonlinear feedback.

The first step in learning how to use your brains for both better trading and better living is to realize that the way you have been "trying" to run your life and trading will always keep you bouncing like a yo-yo between temporary happiness (winning) and unhappiness (losing). This happens because you are working with the Type One underlying structure. You might want to reread the section on the structure of structure, in Chapter 4.

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