The other day a trader wrote me and his letter is published here on the previous blog post… the following is the very end of that letter.

I’m curious about something. How is it that for thousands of traders, each of whom has his or her own personality, childhood traumas, cultural background, hang-ups, etc, all these things come out in the same few ways in trading? This may not be 100% true, but it certainly seems like most traders have the same few problems: impulse entries, exiting winners too soon out of fear, hoping losers will turn around, and hesitancy to enter a planned trade. This can’t be coincidental. What is your take on it? I mean, how is it that a trader in Singapore and a trader in Argentina or Kansas have echoes which produce the same trading mistakes?

The answer to this is the reality that we take a fractalized version of our own basic psychology and apply it (usually unconsciously) to the markets. The markets become past authority figures – and we fight them, hear their voice and react out of the past not the present. In psycho-dynamic speak, this is called “transference” and “the compulsion to repeat”. We actually come to a situation, perceive that situation and react to it with no reference to real-time. Our neurons are firing as they were wired. The FEELINGS we have therefore come mostly from the past… and our unconsciouses will work hard to keep us in that same template of feelings.

This needs to be analyzed for each trader MORE than the market needs analyzed … that is if they want to be consistently and reliably more successful overtime, It even applies to avoiding blowups for the already spectacularly successful.

On the surface, it is a fear to fear spectrum. Greed doesn’t even really exist – once you understand the whole concept of the context of feelings. And it is that – what I like to call the “fC” – and the “fC-E” – the feelings context and the feelings context echo that answers the aforementioned trader’s question. Figure out how it plays in your perceptions and reactions and … out… and you are almost “home free”.

(*Note to the “emotional finance” duo and to Mr. Howell … you all know this is NOT YOUR intellectual property. Please keep that in mind.)