What is Neuroplasticity and How Does it Apply to Traders in the Financial Markets?
At the most basic level, neuroplasticity is our brain’s ability to change from new experiences, learnings, thoughts and actions.
The building blocks of the brain and nervous system are nerve cells called neurons that act as messengers, carrying information in order to communicate with our sensory organs, muscles, and other parts of our body. There are over 85 billion neurons in our brain which have the ability to be shaped and re-organized to form new pathways. These pathways can become stronger with repetition or weaker with lack of use. Our brain even has the ability to create new neurons through a process called neurogenesis. In other words, we actually have the ability to change our brain’s physical structure by interrupting old thought patterns and adding new ones.
Early researchers wrongly believed that the human brain was fixed shortly after birth (some time between infancy and childhood). But research has proven that the brain is extraordinarily flexible at all ages. Our childhood is full of formative years when we’re essentially being programmed and conditioned, and at some point when we finally reach adulthood we start to think it’s close to impossible for us to change. We have thoughts like: “This is just how I am”, “I need to stay true to myself” or “He/She was born that way”.
But the reality is that people can certainly change, especially if they consciously point their mind in the direction of their goals. Over time, we mindlessly develop automatic thought patterns and habits through repetition. But with purpose and dedication, we can take an active role in eradicating our bad thought patterns and reinforcing good ones. For most of us, our old selves (thought patterns, behaviors, habits, perceptions, beliefs, etc.) aren’t capable of achieving our goal (becoming consistently profitable traders).
Everyone is Wired Differently – Your Brain is the Hardware, But You Feed it the Software:
It’s important to realize that everyone is wired differently. We have our own individual circumstances and experiences, and our perceptions and reactions to those circumstances and experiences can vary drastically. Why is it that one person can view a particular experience as painful and reason to give up hope, while another person can view that same experience as a challenge and motivation to grow? They’re presented with the same information, yet see the information from completely different perspectives. It seems like it’s not the events themselves that shape us, but rather our beliefs about what those events mean. Take a minute or two to think about a few times in your life when a particular event happened and your own personal perspective on it was completely different from somebody else’s you knew – I’m sure you could name quite a few.
Throughout life, we’ve all formed our own insecurities, bad habits, biases, and defense mechanisms based on our own interpretations of various events and information. Unfortunately, we may not even consciously recognize the existence of many of them. These negative thought and behavior patterns have become such an automatic process in our brain that we barely, if ever, take notice of them. But that doesn’t mean we can’t change them if we want to. We just have to consciously work at it. The source of change is within us (our brain) and we just have to feed it better information (positive, empowering information related to our goal). So before proceeding, take some time to think about your own personal insecurities, bad habits, biases, and defense mechanisms that you would like to adjust or eliminate. Self-awareness is the first step in changing our disempowering attitudes and beliefs.
3 Steps to Facilitate the Rewiring Process – Train Yourself to Think Differently:
1. Adjust Your Self-Image
Regrettably, most people’s mental portraits of themselves are negative and distorted. We tend to dwell on our negative experiences of the past, and all too often consider ourselves losers or victims because of it. So take a few moments to consider how you typically talk to yourself – what’s the inner dialogue like? Is it positive and uplifting or negative and discouraging? Are you holding yourself back with negative thoughts and beliefs? If it’s mostly negative, then it’s time to replace those negative thoughts with ones that are more encouraging and validating. Have you had experiences of achievement in the past? I’m sure you have. Everybody has. So use them now as motivation. Imagine that “winning feeling” for your future that you’ve already felt in the past. Start dwelling on the positive, desirable goals you want to achieve instead of the negative, undesirable fears holding you back.
Now is also the time to forgive yourself for past mistakes and failures, and move on constructively. Also, take a close look at your life and realize where you’re placing conditions on your happiness: “When I turn 18, I’ll be happy”, “When I get married, I’ll be happy”, “When I pay off my mortgage, I’ll be happy”, and the list goes on and on. This type of thinking is nonsense, so release the attachment to happiness you have with them. Happiness isn’t a destination. It’s a lifestyle. You have to choose to live it. You might be thinking right now that all this positive self-talk seems silly, but think about how neuroplasticity can eventually cement these thought patterns into your mind. The more we actively practice having these positive thoughts, the more we condition our brain to think this way in the future. With repetition, new neural pathways will form and strengthen, while the ones we don’t reinforce or use will weaken and die. Over time, we can replace our old negative thought patterns with new positive ones. Negativity is no longer the default.
2. Use Visualization and Imagination to Describe Your Goal to Your Brain
In order to become a new and improved version of ourselves, we must vividly describe the new paradigm to our brain. Providing a detailed picture of who we want to become and what we want to achieve will direct both our conscious and unconscious mind toward that goal. If done correctly and with enough conviction, our mind will always be on the lookout for any information that can help us achieve the changes we want. Just think about the many great ideas that have come to people when they were doing something seemingly unrelated to the problem they were trying to solve. They described the problem so frequently and vividly to their mind that the answer came to them when they weren’t even consciously thinking about it. This is the unconscious mind at work. We just have to learn how to direct it. Where our focus goes, our energy flows.
If we constantly remind ourselves of our goal and visualize it vividly, it puts our entire being on the lookout for anything that can help achieve it. As crazy as it sounds, we should also imagine as if we’ve already achieved it. Our unconscious mind doesn’t know the difference between imagination and reality, so even just imagining that we’re already the person we want to be and achieving our goals can have a positive impact. There are many instances in which people who visualized correctly performing a specific task before actually doing it were able to execute it at a much higher level than those who didn’t take the time to visualize it at all. This proves that pure mental practice can sometimes be just as good as physical practice. Our brain is essentially interpreting our mental imagery as equivalent to to the real-life action. So if we simply imagine ourselves trading with a calm and composed demeanor, following our rules with discipline, and being consistent in our overall approach, then it will greatly benefit us when the real time comes.
3. Link Pleasure to Changing and Pain to Not Changing
What ties everything together for long-lasting success is our ability to attach pleasure to changing in order to become the new version of ourselves (a consistently profitable trader) and attach intense pain to not changing (staying an inconsistent, impulsive, and unprofitable trader). Some people link so much pain to changing, no matter what the situation, that no changes ever stick in their lives. But if they actually took the time to review the impact of changing vs. not changing on themselves, it would bring quite a bit of clarity to their situation. Take smokers, for example. They’ve made smoking a habit because it brings them a sense of momentary comfort, gratification, and stress relief. But then there are all the rather obvious negative aspects of smoking that include the cost, smell, and long list of health risks, among other things. So why do smokers continue to smoke even when they know the negative effects of it? It’s simply because they view changing as more painful than not changing. If at some point, however, they’re able to internally switch to it being more painful for them not to change, then lasting change becomes a real possibility.
They key to linking pleasure and pain effectively is with our own internal pressure. It can’t come from external sources. We have to make a real decision within ourselves and commit to achieving the result we want. If you’re currently an inconsistent, struggling trader and you want to become a consistent, thriving trader, you have to figure out within yourself what you’re going to do about it. Do you think changing your mindset is painful? What about the pain of not changing your mindset? What will it cost you emotionally and financially? How will your success or failure impact your family? What kind of momentum can the change create in your life? How much happier would you be after achieving the change? After answering these types of questions for yourself, you can see exactly what your deep-down desires and fears are. If we can associate a tremendous amount of pain to staying the same and exceptional pleasure to becoming the person we want to be, then we have a great chance of making a permanent change. But if we choose not to change, we’ll continue to get the same results. In nature, stagnation leads to dysfunction, disease, and death. The ultimate secret to success and happiness is consistently making progress toward our goals.
Mindfulness Meditation – Another Powerful Force in Rewiring Your Brain:
Most people approach mindfulness meditation with resistance and confusion at first, but soon realize that there’s no better activity for questioning their beliefs and becoming more self-aware. There’s a misconception that it’s religious, but it’s simply brain exercise that’s strongly backed by highly-regarded scientists, therapists, business leaders, and many others. It has been proven to reduce stress, anxiety, and depression, and improve focus, self-control, and creative thinking, among so many other great benefits. Having a consistent meditation practice is essential for successful traders, and best of all, it’s simple and free.
The point of mindfulness meditation is to focus inward, usually on an anchor like your breath. The idea is to relax and quiet the mind, but you’ll never be able to quiet the mind completely. Thinking is a natural function of your brain, so as thoughts pop up, we want to detach from them and become objective observers. It teaches us that even though we’re constantly having thoughts, we don’t have to identify with them, especially if they’re flat-out wrong, negative, or disempowering. A lot of people think it’s about suppressing thoughts completely, but it’s actually about becoming more aware of them, detaching from them, observing them without judgment, and then bringing our attention back to our anchor (in this case, the breath). There’s a sense of calmness that comes over you as you take measured and consistent breaths. You become more present, non-judgmental, and equanimous. All traders should sincerely commit to a consistent meditation practice in order to experience the benefits.
Trading is a Mental Discipline – You Either Control Your Mind or it Controls You:
Most people sacrifice what they want most for what they want now. In other words, they sacrifice their long-term goals by giving into their short-term emotional impulses. Just think about how many people you come across on a daily basis with their heads buried in their phones. Most likely interacting on some sort of social media platform mindlessly scrolling through feeds or desperately hoping for comments, “likes”, or “thumbs up” on their posts. Although some people don’t even realize it, these platforms are benefiting from our intense desire for short-term gratification. But giving into these short-term emotional highs comes at an extraordinary price. It’s less time and effort we have to put into the things we actually want long-term . Our ultimate goals and dreams become distant thoughts until eventually they’re completely abandoned.
But if you want real change to occur in your trading operations, or your life in general, then it’s time to raise your standards and change your beliefs. We don’t have to allow our programming of the past to dictate our future. If you’re a human with a functional brain, then you’ve been engineered for success. The tools are already within us (brain, neuroplasticity, neurogenesis, etc.) – we just have to feed ourselves the proper information related to our goals. Our thoughts, emotions, and behaviors are all habits which means they can be changed. So we don’t have to go through life believing everything others have said about us or even what we’ve said about ourselves in the past. It’s time to break through the ceiling of “who you are now” to “who you are becoming”. There’s no doubt that all breakthroughs happen from a change in attitudes and beliefs. This type of emotional mastery can help you improve every single aspect of your life (spiritual, physical, financial, etc.). Overall, life is all about problems and overcoming challenges. View them as opportunities to become stronger. It’s not about perfection. Take action, make mistakes, and course-correct as you go. If you’re not making mistakes then you’re not doing something worth doing. The ultimate joy in life comes from personal discovery and development.
But it’s not enough just to understand how to make positive mindset changes. You have to apply the information in order to see results!
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
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