Trading expectations affect your results. How and why is this true? What can a trader do about it? Click here or in the video to discover and learn.
Let’s deconstruct the Extended Thought Model you will find in the video for a better understanding.
The conscious part of the mind is what you are using when you are paying attention to something at the moment, like reading these words.
The unconscious part of the mind controls the majority of everything you do, see, and feel. Since the unconscious controls so much, we need to mold it into what we want!
The brain has beliefs and expectations. Which is why we call the brain a forecasting machine.
When you meet your brain’s expectations, everything is normal. When you don’t meet expectations, you get an adjustment.
With an adjustment your brain compares the expectation to the circumstance and then it provides you with a thought about it. This thought may be conscious or unconscious. That thought is going to create an emotion.
Once you have an emotion, you think differently. Like Newton’s law that an object in motion stays in motion. The similar is true with emotions. Once an emotion has happened it tends to stay in your mind and can affect your actions. That emotion will change the way you are interpreting information and alter what you are paying attention to and what you are ignoring.
This will create an urge to do or not do something. Your conscious will consider that urge and attempt to create a story to logically justify acting on it.
Your brain will then make a decision to take a certain action or to not act at all.
The unconscious will evaluate the result against your expectations and beliefs and create a judgement resulting in an emotion about the action and the result.
The conscious may agree with this evaluation by either agreeing with it or ignoring it (When the unconscious is ignored, it assumes it is correct). When this occurs your beliefs and expectations are reinforced.
The conscious may also disagree with the evaluation by noticing it, and then disagreeing. When this occurs, your beliefs and expectations are altered.
A person is usually completely unaware of all of this happening in their brain. But it is always happening.
Can you see how this process could interfere with good trading decisions? Or how trading expectations affect your results? You can take control and profit!