Interpretations that would result in a more satisfying experience

ALIGNING YOUR MENTAL ENVIRONMENT 
Now we're going to start zeroing in on exactly how you can align your mental environment in order to 
accept the risk and function like a professional trader. Most of what I've discussed up to this point was 
designed to get you ready to do the real work. I'm going to teach you a thinking strategy that has, at its 
core, a firm belief in probabilities and edges.
With this new thinking strategy, you'll learn how to create a new relationship with the market, one that 
disassociates your trading from what it typically means to be wrong or to lose, and that precludes you 
from perceiving anything about the market as threatening. When the threat of pain is gone, the fear will 
correspondingly disappear, as will the fear-based errors you are susceptible to. You will be left with a 
mind that is free to see what is available and to act on what you see. Getting to this carefree, fearless 
state of mind, in spite of being burned over and over again, will take some work, but it's not going to be 
so difficult as you may think. In fact, by the time you've finished reading this book, most of you will be 
amazed at how simple the solutions to your problems really are. In many respects, a state of mind or 
perspective is like software code.
You could have several thousand lines of perfectly written code, with only one flawed line, and in that 
one flawed line there might be only one character out of place. Depending on the purpose of the 
software and where that flaw is in relation to everything else, that one misplaced character could ruin 
the performance of an otherwise perfectly written system. You see, the solution was simple: Fix the 
misplaced character, and everything runs smoothly. However, finding the error or even knowing it 
exists in the first place can take considerable expertise.
When it comes to the ideal trading mentality, everybody is a certain psychological distance away. In 
other words, virtually everyone starts out with flawed software code. I use terms like clicks or degrees 
to indicate psychological distance but these terms don't imply a specific distance. So, for example, 
many of you will find that you are only, let's say, one click away in perspective from the ideal mind-
set. That one click could represent one or two erroneous or misplaced assumptions you have about the 
nature of trading. As you reflect upon some of the ideas presented in this book, your perspective may 
shift.
To use the analogy of software code, that shift would be equivalent to finding the flawed line in your 
mental system and replacing it with something that works properly. People normally describe this kind 
of internal mental shift as an "ah, ha" experience, or the moment when the light goes on. Everyone has 
had these kinds of experiences, and there are some common qualities associated with them. First, we 
usually feel different. The world even seems different, as if it had suddenly changed. Typically, we 
might say at the moment of the breakthrough something like, "Why didn't you tell me this before?" or, 
"It was right in front of me the whole time, but I just didn't see it" or, "It's so simple; why couldn't I see 
it?"
Another interesting phenomenon of the "ah, ha" experience, is that sometimes within moments, 

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although the amount of time can vary, we feel as if this new part of our identity has always been a part 
of who we are. It then becomes difficult to believe that we were ever the way we were before we had 
the experience. In short, you may already have some awareness of much of what you need to know to 
be a consistently successful trader. But being aware of something doesn't automatically make it a 
functional part of who you are. Awareness is not necessarily a belief. You can't assume that learning 
about something new and agreeing with it is the same as believing it at a level where you can act on it. 
Take the example of my client who is afraid of snakes. He is certainly aware that not all snakes are 
dangerous, and that learning how to make a distinction between the ones that are dangerous and the 
ones that aren't would not be difficult.
Will learning how to make these distinctions suddenly cause him not to be afraid of "non-dangerous 
snakes"? Can we assume that his awareness will drop down to a level in his mental environment where 
he can now interact with snakes without fear or immobility? No, we cannot make this assumption. His 
awareness that some snakes aren't dangerous and his fear of snakes can exist side by side in his mental 
environment, as a contradiction to each other. You could confront him with a snake and he might 
readily acknowledge that he knows the snake is not dangerous and wouldn't hurt him; but, at the same 
time, he would still find it extremely difficult to touch the snake, even if he wanted to. Does this mean 
that he is doomed to be afraid of snakes for the rest of his life? Only if he wants to be. It's really a 
matter of willingness.
It's certainly possible to neutralize his fear, but he will have to work at it, and working at anything 
requires sufficient motivation. Many of us have what we know to be irrational fears and simply choose 
to live with the contradiction because we don't want to go through the emotional work that is necessary 
to overcome the fear. In this example, the contradiction is obvious. However, in my many years of 
working with traders, I have uncovered several typical contradictions and conflicts surrounding the 
issues of risk and responsibility, where holding two or more conflicting beliefs can easily cancel out 
your positive intentions, no matter how motivated you are to be successful.
The problem is that none of these contradictions are really obvious, at least not at first glance. 
Contradictory beliefs, however, aren't the only problems. What about assertions like "I'm a risk taker," 
that traders typically assume have dropped down to the functional level of a belief when, in fact, the 
underlying dynamics of the way they perceive the market indicates they are doing everything possible 
to avoid risk. Contradictory beliefs and nonfunctional awareness represent flawed mental software 
code; code that destroys your ability to stay focused and accomplish your goals; code that makes it 
seem as if you simultaneously have one foot on the accelerator and the other on the brake; code that 
gives learning how to trade a mysterious quality that will be challenging in a fun way at first, but 
usually turns into pure, unadulterated exasperation. When I was in college in the late 1960s, one of my 
favorite movies was 
Cool Hand Luke, 
starring Paul Newman. It was a very popular movie back then, so 
I'm sure some of you have seen it on late-night TV.
Luke was in a Georgia chain gang. After he escaped and was caught for the second time, the warden 

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and guards were determined not to let Luke make fools of them a third time. So while forcing him to do 
an inordinate amount of work with no rest and giving him intermittent beatings, they kept asking, 
"Have you got your mind right yet, Luke?" Eventually, after considerable suffering, Luke finally told 
the prison bosses that he had his mind right. They said that if he didn't, and tried to escape again, they'd 
kill him for sure. Of course, Luke attempted another escape, and true to their word, the guards killed 
him. Like Luke, many traders, whether they realize it or not, are trying to have it their way by beating 
the market; as a result, they get financially and emotionally killed. There are easier, infinitely more 
satisfying ways of getting what you want from the market, but first you have to be willing to "get your 
mind right." 
CHAPTER 5