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THE THREE DIFFERENT TRADERS LIVING IN YOUR SKIN
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Ever wonder why you often get so confused in trading? One prominent reason is that there are three different traders living in your body. Not just three different parts of your brain, but three different personalities. To make matters worse, they all have different goals and operating techniques, and they don't even speak the same language. Three distinctly different personalities are active, and only one of them is in charge at any moment. The trader-in-charge can change quite frequently, creating an enormous amount of inner confusion.

One trader is a consistent loser who always tries to buy the high and sell the low. One is an expert analyst but not a good trader. Another is a good trader but so-so at analysis. The final trader is in charge of intuition, inspiration, and insight. Each plays a different role in your trading.

A right-left split in the brain was first investigated in epileptic patients who had the dividing mechanism (corpus collosum) severed to reduce seizures. The researchers agreed that different parts of the brain seem to have different functions. For example, most people do math with their left hemisphere and perform music with their right hemisphere.

This popular conception is accurate, but it is not adequate. There are many splits and separations in the brain: left to right (more than one), back to front, top to bottom, and inside to outside. Here, we will limit ourselves to the three functional divisions: (1) the left hemisphere, (2) the core (including the spinal column and its connections), and (3) the right hemisphere. Each part of the brain seems designed specifically for certain types of thinking and behavior. Our purpose is to understand our necktop equipment in order to use it more effectively in trading.

There are really three different people living inside your head—not just three brains, but three very different personalities. They act differently and they see the world in entirely different perspectives. In fact, they don't even speak the same language. It is as though you live in a three-room apartment that you share with two other people. One of you lives in the living room and speaks Spanish, one lives in the kitchen and speaks Italian, and the other lives in the bedroom and speaks English. None of them is bilingual. In addition, each of you has very different skills and abilities. Each is completely dependent on the other two for survival. This can be a real problem if you don't cooperate.

Any one of you may trade, but only one is in charge at any moment. This internal division constitutes a major problem for extracting continuous profits from the market. To get the three internal traders working together, we must examine how they work and how they perceive both the market and the world. As we study each part, we will compare its power, purpose, and uniqueness to the whole and to the other parts, as they relate to trading behavior. We will look first at the left hemisphere.

You are using the left hemisphere of your brain, a.k.a. the conscious mind, to read this material. Of the three participants in your trading, this is actually the most "imconscious." It is the only part of your brain that ever sleeps or goes unconscious.

The left hemisphere is the "idiot" of the trio we're study­ing. It is digital and sequential in design and can handle only about 16 bits of information per second. This limitation seems to be imposed by the speed limit at which neural impulses can travel in the nervous system itself. For example, when you are reading this page, light waves of varying intensity strike the retina of your eye and are converted into electrical impulses, which are then sent along the optic nerve to the back of the head. From there, after being sorted, they are sent to the association part of the brain, which is more toward the center of the head. The association part "re-creates" what we normally call writing (written or printed communications) and makes some type of interpretation based on factors already preprogrammed into the system from the core. It takes about 1 /16 of a second for all of this to happen.

The time "lag" of 1/16 of a second means that we never see "right now." We are always looking at history at least 1/16 of a second later. The lag also makes it possible for us to "see" movies and television as continuous movement. What is really on the screen is a series of still pictures, flashing at the rate of 30 frames per second. Our left hemisphere cannot handle 21 individual images per second, so our brain merges them and they are communicated as movement. When movement is communicated with a flashing strobe light, jerky individual still pictures are projected. These are close to what your eyes really "see" all the time but at a higher number of frames per second. Movement is in the human brain, not on the TV or movie screen.

The left hemisphere is your Tasmanian Dragon, your despot, your gremlin, your no-good, sneaking, conniving saboteur that messes up your trading. Evolutionwise, this is the youngest member of your brain group. It is sometimes described as your "thinking mind" even though it is the idiot of your three boarders.

The biological purpose of the left hemisphere is to analyze and make policy and judgment decisions: what markets to trade, what type of money management to follow, how much time to spend in the market, and so on. It performs primarily a planning function, not a "carrying out" function. The left hemisphere makes the "what" type of decisions, not the "how" decisions. It is the know what, not the know how area. You could not ride a bicycle or even walk to the bathroom if you had only this brain. In trading terms, it is the left hemisphere's function to decide on perspective. It is not the left hemisphere's job to implement or find good trade locations.

The left hemisphere is characterized by a number of behaviors and abilities that exist only in this part of your neural system. Because it can handle only about 16 bits of information per second, you get confused if you are talking on the telephone and someone in the room starts to converse with you. Your circuit breakers blow and you lose your temper because you can't understand either of the people talking with you.

The worldview the left hemisphere gives you is one of struggle. If you were to cartoon it, it would be like climbing a never-ending set of stairs (Figure 11-4). This eternal struggle is suggested by a defect in our learning. We have been led to believe that climbing these stairs is not only unavoidable but is the only thing worth doing in this life. To the left hemisphere, this is a "dog-eat-dog world" and we had better do it to them before they do it to us.

Characteristics of a Left Hemisphere Trader

Five activities or characteristics that are important to traders occur only in the left hemisphere. Whenever you are aware of sany of the behaviors described below, your left hemisphere is in charge at that moment.

1. Language. As you read this, your left hemisphere is running your show. No other part of you has the ability to read or speak the English (or any other) language. This part of you deals only with concepts; it does not deal directly with reality. All of your sensations come through the core, and the core controls your behavior. This is the primary reason that "positive thinking" does not work. The motto, "Every day in every way I am becoming a better and better trader" not only does not inspire but usually works in reverse because the core, which con­trols behavior, does not understand these words. Your sitting position as you read this, where your arms are, how the weight is going through your buttocks, the position of your legs, your respiration, heart rate, and so on, are all controlled "unconsciously" by the core. Dreams come from your core, which is why you never dream that you are reading a book. Your core cannot read the English (or any other) language. The only exception is what is known as lucid dreaming, which is only experienced when you are not really asleep. If you could change your positive-thinking sentences into core (dream) language (moving, flying, emotional scenarios, and so on), you would have much better results.

•  Time. The sense of past, present, and future exists only
in the left hemisphere. The core and the right hemi-
sphere exist only in the ever-present now. You can only
"get behind" or "hurry" from the left hemisphere. The
core and the right hemisphere are never in a hurry. You
don't hurry to grow your hair or digest your food.

•  Judgment. The sense of right and wrong, or better or
worse, exists only in the left hemisphere. The core and
the right hemisphere cannot imagine a "good" or a "bad"
trade. That judgment is made only by the left hemisphere.

•  No sense of humor. The left hemisphere is like Dr. Spock
in the Star Trek movies. Spock could reason deductively
and inductively but could not have feelings or fun. Feel­
ings come from the core and the right hemisphere.

•  Effort or struggle. Whenever you are struggling, the left
hemisphere is in charge. That is the only part of you that
can struggle. Any time you are talking or thinking in
language, are aware of time limits, are trying to make a
good trade, are not having fun and generally struggling,
you are trapped in the left hemisphere. A more accurate
description might be that you are addicted to the left
hemisphere. As we will see later, this makes you the
worst kind of trader. For example, if you feel the necessity
to put on a good profitable trade and make a profit of $500
before the market closes today, you are doomed to failure.

Why? You are using the wrong maps, the wrong objec­tive, the wrong tools, and the wrong part of your brain.

The philosophy of the left hemisphere is that you are re­sponsible for your progress. There is no elevator or escalator. You must lift yourself up the never-ending stairway by your own bootstraps. This part of you is constantly comparing your­ self and your progress to other traders: "Is their system or ad­ viser better than mine? Should I be in the same markets they are in?" When we hear of another trader's success, we defend our egos by countering with, "Yes, but do you know how they blew out last year?"

If none of this helps our trading, how does the left hemi­sphere contribute to our success?

The Two Functions of the Left Hemisphere Function 1: To ''Habituate" Behavior

The biological design of the left hemisphere prepares it for two primary functions. The first function is to habituate behavior: it is a learning tool. Remember when you were first learning to ride a bicycle? You were asked to mount a two-wheeled piece of machinery that could not even stand up on its own and then sit on it as it moved down the street. You probably thought you could never master turning, balancing, pedaling, and braking to make the bicycle go where you wanted it to. Your left hemi­sphere had to handle all the details in the beginning. Slowly, as you gained both experience and confidence, the core started taking care of the details. Finally, you never thought anything about riding. You simply climbed aboard and went wherever you wanted to go.

To "habituate" behavior means to turn it over to the core and let the core attend to the details. The left hemisphere is simply not equipped to handle all the millions of details involved in even a simple behavior. For example, if you are sitting down, place your hand, palm down, on your thigh. Now raise your index finger about an inch. No problem, right? Do you realize that to perform that simple movement required the coordination of dozens of muscles, not counting the thousands of neural impulses required to initiate, direct, monitor, and stop that movement? If you had to get up to go to the bathroom right now and only your left hemisphere was functioning, you literally would die before you arrived there. Neither can you trade easily and profitably by depending on your left hemisphere.

One of our major goals is to habituate most of our trading behavior. If we trade with only the left hemisphere, we will commit financial suicide. As we gain experience beyond the competent level, we habituate more and more of our trading behavior. Experienced traders call this developing a "feel" for the market. That feel, like all our feelings, comes from the core. Athletes call this "the zone." Tim Gallway, in The Inner Game of Tennis, calls it "Self 2."

Function 2: To Solve Problems

The second primary function of the left hemisphere is to solve problems. Should I buy a car? Should I go long the bonds? Should I trade at all? Problem solving is an important and dynamic function for traders. However, it is also an important reason why traders do not make continuous progress in their skill in trading and in building up a capital base.

Let's take a common example that may have happened in your personal trading. Assume that one of the main reasons you want to be successful in trading is to solve the problem of your lack of money. Suppose you get lucky and/or good, and the money starts rolling in. The problem that drew you to the market is now being solved. What do you think is going on in your left hemisphere? "Hey, I am working myself out of a job. What if I am not needed around here any more?" The left hemisphere, being a true bureaucrat, can't take that chance. So it does the only thing it can do: it creates more problems! How? Usually, by making dumb decisions that set up losing trades. Later in this section, we will develop a Profitunity technique that will eliminate this fear in the left hemisphere.

This tendency, so common in trading, pervades all of life. A general principle of human behavior is that as soon as we start to become successful, we tend to stop doing the very thing that made us successful in the first place. During a courtship, we are on our best behavior. We are thoughtful and considerate; we pay attention. As soon as the marriage is under way, we start paying attention to more pressing, more important information. We start taking our partner for granted. After a period of time, we may start wondering what happened. Similarly, as soon as we start to become successful in trading, we start taking the left hemisphere for granted. It comes back on us with a vengeance, bringing new and bigger problems to solve. It does not wish to lose its job of solving problems.

The script that most traders follow is: struggle, make a few good winning trades, and end up giving it all (and maybe a bit more) back to the market. The normal outlet is to blame the perversity of the market for not winning consistently. However, the real blame almost always belongs closer to home, inside the left hemisphere. This no-good gremlin is out for its own hide, not the good of the organism—you. Later, we will examine a number of ways to tame and train your gremlin like left hemisphere.

One of the most profitable insights in trading is a realization that continuous good trading is much more a process of "letting go" of ideas that don't work than one of doing more. When riding a bicycle, you don't constantly ask for other bikers' opinions, and you forget the struggle you had years ago when you thought you would never learn to ride a two- wheeler. Let's examine now this much smarter part of you— your core.

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