This week we released an eBook about 12 trading myths, which formed the basis of a presentation I gave in New York last year at the CMT Annual Symposium. Download it for free here.
Topographical Map of your Psyche
I want to share a topographical map of the human psyche that I think has real practical value to our understanding of psychology in general and to our world of trading.
For those new to this newsletter, it is important to know that I base a lot of my psychological insights from the school of Analytical Psychology, made famous by C.G. Jung.
Today I don’t want to go into the detail of what he calls the psyche. Rather I want to provide you with a visual map of how the human mind works according to his teachings and draw a powerful insight from this understanding.
There are a number of strata (levels) to the psyche:
- your conscious part of the mind,
- your personal unconscious, this is all your collective memories that are not conscious, either repressed or forgotten,
- your collective unconscious, these are your ancestral memories and experiences common to all mankind that doesn’t form part of your personal unconscious.
- finally, there is your body, which Jung includes as part of your psyche and is what I want to focus on today.
I find it so fascinating that Jung includes the body as part of the human mind. We have probably all heard the term psychosomatic which is how we define a physical ailment caused by mental factors.
What Jung is teaching us is that the body is an integral part of the human mind/psyche. This means that when the human body is sick it can affect our state of mind, and vice versa a sick mental state can also affect our body. The model drawn above is showing that the body is connected to the mind.
With this picture in mind, I think it is vitally important to take stock of how our bodies feel when we are trading. If you find ourselves anxious with sweaty palms when you place a trade, take note of it. If you find that your back starts to ache when you have a position on, take note of it. Try and take note of all the changes you experience with your body when you trade. Write them down in a journal so that you can analyze what is causing these physical feelings. You will be amazed how much of these physical symptoms are clues to the way your mind is processing uncomfortable feelings.
I am not prescribing a cure for your trading by observing these somatic feelings in your body. What I am helping you do is bring unprocessed emotions up to the surface so that you can work through these emotions either by yourself or better still with a mentor, friend, analyst or coach.
Years ago I developed migraine clusters in what I initially thought was a random pattern. After noting these migraines in my trading journal I noticed a pattern; there seemed to be a correlation between the number of open trades across multiple symbols and the migraines. I did some further analysis once I had brought this observation to consciousness and realized that I was feeling out of control managing these multiple trades. By reducing the number of my open positions I eliminated most of my migraines.
In summary, listening to your body can give you a clue to your state of mind. In trading, this is valuable information that can help you increase your trading profits and lengthen your time in the game.