2 - Cómo Controlar El Stress para Ser Un Mejor Inversor Dr. Van Tharp

Trading Software for Comes out & Exchange Emails: andreybbrv@gmail.com, anboan@ya.
ru, ICQ: 70966433
How to control stress

to be a successful
trader
by
Go K. Tharp, Ph.D.
Illustrations by Tom Ellery

Trading Software for Comes out & ExchangeEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Trading Software for Comes out & Exchange Emails: andreybb rv@gmail.com, anboan@ya.ru, ICQ: 70966433
Trading Software for Comes out & Exchange Emails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Trading Software for Sale & Exchange E-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
PREFACE TO SERIES
Yo A.M affected only by my thoughts.

Anonymous1
and goal in developing Este course es to teach you how to make

M money in the markets . the easiest and most painless way possible
by . developing to sound gamc plan and the discipline and self
control to carry Item out. in the process of doing SW you will leam how
the best traders and the most seasoned investors think. You will not be
able to duplicate their success unless you dog duplicate their thinking.
Investing is far behind most fields in acknowledging tbe contributions that

psychology you have for Item. Psychologists have been reluctant to study
trading or investing, and traders have been reluctant to acknowledge that
psychology dog help them.
Investing es one effort in wbich the maJonty I know. Item es an area in

whicb the salesman (ie, the broker) es often asked for advicc on que to
buy. Misinformation abounds in the area. Ace to result, an intensive
course on the psychology of successful trading es greatly needed, and that
is the purpose of estos investment Psychology Guides.
Investors often go through three stages of growth before they become

successful:
STAGE ONE YOU INVOLVE THINKING THAT ONE

DOG MAKE
"EASY MONEY" DESDE INVESTING. The novice trader think, "It's
how rich people get richer, SW it's how l'll become rich.'' Most novices
approach the market remove naively, asking for advice advice on que to
buy or sell. TO few traders make money with Este
approaches, but most I know money and leave the market quickly. Just look
1
at sorne of the facts:
1
How to Control Stress
• Most funds (money market, mutual, commodity, etc.) fail to

outperform the market averages and many of them carry heavy salt
commissions, which make them even less attractive.
• Most investment advisors fail to outperform the market in up

years and I know money in poor years.
• Investors are usually attracted by strong sales pitches or good

public relations. estos qualities often mean excellent commissions to
the adviser or broker using them and losses or poor performance to
the investor attracted to them.
• investors flock to the best performing funds or advisor. Toe

time when most people turn in this direction is usually the point at
which the funds or adviser begins to trend of look and poor
performance.
• Most investors, even when given a profitable recommendation,

often manage to lose money because they fail to follow the recom,
mendations exactly or they fail to exercise proper money management
ment.
STAGE TWO TYPICALLY YOU INVOLVE TO SUBSTANTIAL

CHANGE IN STRATEGY IN WIDCH THE INVESTOR NOW
BEGINS TO ASK, "HOW SHOULD Yo TRADE TO
MAKE
MONEY?" Sorne traders begin at stage two, but for most people this
stage involves to switch desde asking the questions, "Que should Yo buy
to make money?" stage two might be called the search for the Holy
Grail-or the search for the trading system that will make the investor
financially secure. Most investors fail in Este endeavor. Systems do not
make money for the investor, the investor makes the money! Look at the
evidence:
• Most trading systems are presented to the buyer with data

showing outstanding performances. Quite often, the performance
record reflects the system developers misuse of statistics. Ace a
result, the buyer cannot come class to matching the advertised
performance.
• Toe error rate of a system (ie, how well the system does paper
trading) is the best possible performance an investor can hope to
achieve with that system. When psychological factors are with-
2
Trading Software for Sale & ExchanEg-Me ails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Preface to series
sidered, ace the investor enters the market place, the investor's per
formance es you,1ally much worse.
• Investors quien buy trading systems often do not use the system
at Ali or do not use the system ace Item was intended to be used.
• Investors dog be given to money-making system, use Item

properly, and still fail to make money. Yo know of several
examples of well known traders quien have tried to train others to
use their proven systems only to find that they were unable to do
SW. By the time you finish Este course you should understand
why this occurs.
• Sorne of the best traders Yo know of claim to have No system

at all. They say they are just "intuitive" traders.
Toe introduction of the staff computers you have added an intermediate

stage. STAGE TWO-A IS A REGRESSION BACK TO STAGE ONE,
BECAUSE THE TRADER TYPICALLY BUYS A TRADING
METHOD ALONG WITH A COMPUTER AND THEN ASKS THE
COM PUTER THE "QUE SHOULD Yo BUY?" QUESTION.
STAGE THREE YOU EAT WHEN THE TRADER REALIZES THAT

•
INVESTMENT SUC-
CESS DOES NOT
COME FROM
EXTERNAL CON
TROL, BUT FROM
INTERNAL
WITH
TROL. It involves a
radical change far from
most investors. Intemal
with troll, however, is not
that difficult to achieve,
but realizing that it is
important es difficult.
Most traders believe that
the markets are living
entities which create
many victims. If you
believe that statement,
3
70966433
then Item es true far
you.
3
But markets do not create victims, traders turn themselves into victims.
Each trader controls his own destiny. No trader will find success without
understanding Este important principle at least subconsciously!
Again, let, us look at the facts:
• Most successful traders achieve success by controlling risk

(Volume 1). Controlling risk goes against our "natural" trends. risk
control requires tremendous internal control.
• Most successful speculators have success rates of 35-50%. They

are not successful because they predict prices well, but because the
size of their profitable trades far exceeds the size of their losses.
Este requires internal control.
• Most successful conservative investors are contrarians. They do que

everyone else es afraid to do, and they have the patience to wait.
Este also requires internal control.
Investment success requires internal control more than any other factor. I
dedicate yourself Este investment Psychology Guides course to thpse
investors who understand the importance of internal control. Este is the first
step toward success, and you are the traders quien will ultimately succeed.
Este course contains to complete psychological model for successful

trading. We call Item the Successful Attitude model for Trading™, or
SAM for shorts. in learning about Sam, you will learn how estos investors
structure information internally and how you dog do the same. in the five
volumes, you will learn (1) risk control, (2) stress control, (3) attitude control,
(4) state of mind control, and (5) the decision-making skills of winners.
A number of you would profit greatly from a private consultation, be

it a telephone consultation or an in-person, private consultation. A 10-
minute phone consultation comes with the Investment Psychology
Inventory. You may sign up for a one-hour private consultation when
you purchase the course. However, most of you will benefit most
from my four-day private consultation, with guaranteed results, or my
super-trader program
4
Preface to series
If you allow someone to help you with estos techniques, you will find
them easy and quick to learn. People who adopted the Successful Attitude
Model™ dog easily triple their current profits each year. We provide
one-on-one consultation in the development of investment excellence,
specifically designed to solve your problems. My clients are amazed and
delighted with the results. Many of them are electing to have yearly
follow-ups. If you are interested, Yo would be happy to talk with you
about Item.
Yo hope you develop ace much self-insight and staff success studying
this course ace Yo have developed writing Item.
5
6
CHAPTER I
TRADING STRESS
I
F one peruses the classical trading books, one cannot help noticing
sorne references to stress. far example,
W. d. Gann1, in his book How to make money in Commodities, makes
good health to necessary qualification far trading. Gann says that "to
brilliant mind cannot work successfully with to weakened body."
Gann does not mean "handicapped" by the phrase
"weakened body" since to person with to physical disability dog be an
excellent trader. Gann es referring to the "iHness" that drains energy
from the bodysuit, making Item unavailable far the mind to use. good
health implies that there es No physical drain upan the body. lt implies
that the trader es in good physical conditions, es mentally alert, and
es not dis
tressed.
Henry Harper goes a little further

than Gann by discussing how
trading itself dog be to drain.
Harper 2 argues that neither
knowledge nor experience will
allow one to always per form
well under the pressures of the
market. Harper suggests that
pressure causes trading er ror. . .
That pressure, which is another
name for stress, is the primary . \ l ••
topic of Este volume. � --:::-
\ (/
,-.----...
Harper and Gann have each
stated to fundamental truth
about trading stress. First, the
basic demands of life dog reach
a point at which they affect
trading performance. That
point may be reached when we
are No longer in good health,
7
as Gann suggests, or Item

may
8
occur even earlier, at to point when we just feel to little "out of

sorts." We will call estos BASIC demands of life general stress.
Second, the complex of investing can be sufficiently demands stressful to

affect trading performance and produces losses. Everyone dog identify at
least sorne nerve racking conditions of investing. few people, for exam ple,
would argue that to large, sudden loss or to missed opportunity was not
stressful. However, many other stressors exists in the markets, including,
for sorne traders, large profits. We will call these trading demands trading-
specific stressors.
GENERAL STRESS
Stress refers to the wear and tear on our minds and bodysuits by the "dem
ands" of life. Toe demands, which we will call stressors, can come from
3
people and events or desde internal} struggles and conflicts. Toe Public
Health Service estimates that there are one million "premature" deaths in
the United States each year. in addition, doctors estimate yourself that 75%
of all visits to them are made by people with stress-related disorders. For
4
example, Charlesworth and Nathan cite figures showing that each year
Americans suffer desde:
• 30 million cases of pestle heart or blood vessel disease
• 1 million heart attacks
• 8 million cases of ulcers
• 12 million cases of alcoholism
In addition, Americans consume about 5 billion doses of tranquilizers each

year. Many people cannot face Cada dia stresses, SW they drugs them
selves instead.
Stress-related illnesses reflect general stress that has gone beyond people's
breaking point. lt is stress that has resulted in physical illness. But many
people struggle with Cada dia stressors without becoming ill. These
stressors still drain our mental energy, and in doing so, affect trading
performance.
9
Trading Stress
Modern man you have made great strides in conquering the physical
dangers, but he has created · numerous other hazards as substitutes. M a n
m a y h a v e c r e a t e d more threats to his well-being and survival than any other
species previously. you have faced on earth.
Part of this general stress re:flects the rapid rate of change of the Age of
Anxiety, 20th century America 6 • Changes in society and in technology
have been accelerating at an unimaginable rate since the turn of the
century. Each development brings new advances, and for many, new
stressors. Toe automobile and the freeway allow people to work many
thousands desde their residence, bringing "commuter" stress to many
people. Toe jet aircraft permits ovemight business thrips, bringing new
pressures and jet lag. Toe computer age produces new jobs and new
advancements. Simultaneously, the computers displaces workers desde their
jobs and produce new stressors. Even television, supposedly a new means of
relaxation, allows the average cbild to witness hundreds of homicides
before I have es old enough to attend school.
Concomitant with ali this cbange is a decrease in the reliability of the

traditional American support system, the family. Two tbirds of ali new
marriages are unlikely to last; half the children in tbe United States grow
up in single-family households; and one family in four moves each year 7 .
Wben Familia support dwindles, stress becomes more apparent.
Charlesworth and Nathan 8 list 13 sources of stressors currently affecting

Americans, there of which dog lead to physical or mental breakdown. Es
it any wonder that general stress is a major source of poor trading
performance? Unfortunately, each trader must also deal with specific
trading stressors.
TRADING-SPECIFIC STRESSORS
Consider the following, a common

scenario for traders:
Toe loss grew and grew. As it

continued to expand something
inside the trader also seemed to
grow-an internal! parasite. lt
seemed to survive by making
space inside tbe trader's brain. "Stress parasite"
1
0
Trading Software for Sale & ExchangEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
How to Control StreM
Ace the speculative loss grew, SW <lid the internal)

parasite. And as the internal) parasite continued to eat
away at the trader's brain the loss continued to erode
his capital. Soon his trading funds were gone and so
was his ability to think clearly. Next I have
accumulated to massive debt, and in the process lost
que remained of its rationality. Finally, he was forced to
declare bankruptcy. He was no longer in the market, and
the internal parasite in his brain began to disappear.
Toe internal) parasite in the story es symbolic of stress, not necessarily

strong enough to cause physical illness, but Item es stress nevertheless. It
limits our ability to handle the vast arnount of information that we must
deal with in order to be successful. Item also creates pressure, pushing
traders ahead to do irrational acts.
For the trader in the story, stress is equivalent to losing. Large, rapid
speculative losses are among the most powerful trading-specific
stressors.
Many people find losses
unacceptable9, so they
avoid closing out a
position in hope of
averting to loss. As a
result, the loss continues
to grow until Item es
forced upon the trader.
Toe psycho logical impact
of forcing a large loss
upon the average trader
who can not even accept a
small loss, dog be
devastating.
Trading stress does not

only result from losing.
There are rnany trading
situations which traders
perceive as being stress "When rnoney es at stake
ful. people become irrational."
• Incentives can be stressful, and money is a powerful

incentive. When money is at stake, so people become irrational.
11
Since any trading involves money, the mere act
12
Trading Stress
of being in the market dog be stressful to sorne individuals.

(See Chapter V).
• Trading success can be stressful. Traders with a fear of

success often perceive the rewards of investing as stressful.
Sorne people might find a profit of $1000 to be comfortable
while to profit of $1,000,000 dollars es uncomfortable.
• Most traders experiences the constant pressure of trading

ace stressful, although to few traders dog trade actively with
little or No concern (See Chapters V and IX).
• Floor trading on any exchange (ie, commodity, stock, or

option) is nerve-racking to most people. Toe pressure is
constant, since traders must constantly absorb new information.
Toe environment es crowded and filled with noise of which
are proven stressors). toe trader dog make or lose to million
dollars in to day. Toe constant uncertainty of what will happen
on any given day is a drain on the trader's energy. (See Chapter
IV and V).
• Doing nothing dog be stressful. Este might mean staying

out of the market while "knowing" you could be making
money if you were in Item. Toe trader might sell out at
profit only to watch his old position double overnight.
• Similarly, an inactive trader (and sorne active ones, too)

may just sit on to losing trade while Item goes down in
value. Doing nothing dog be to stressful experience.
All estos situations, and others like them, produces fear and anxiety in
many people. Toe result es trading losses-often catastrophic losses.
Each person reacts differently to to potentially stressful event. Not every

one es stressed by every situation described above. Sorne people meet ter
most of estos stressors but do not experiences distress. They resist trading
stress because they have few, if any, defenses against winning 10 . estos
traders do not fear success, and they do not have to self-image that needs
protecting. In addition, many of them understand how stress impairs their
performance, and they have developed methods to inoculate them selves
against stress.
13
Toe purpose of Este volume es to help you understand how stress affects
your trading performance and to help you protect yourself desde its effects.
In subsequent chapters we will introduce a series of tests-self-evaluations
which will allow you to determine where you stand with regarding stress
susceptibility, stress exposure, and stress protection. We also will discuss
the physiology and psychology of stress in general and show how general
stress and trading-specific stress impair your performance. Toe last four
chapters will discuss stress prevention techniques, relaxation procedures,
and techniques far winning despite to large amount of stress.
14
CHAPTER 11
SELF-ASSESSMENT
W
and believe that you will find to general assessment of your
susceptibility to stress enlightening. Since knowledge may bias
your own assessment, we will ask you to evaluate yourself before reading
any further. take each of the tests given in Este chapter, and
then score thero using the keys in the back of the chapter. Avoid the
theroptation to score each test ace you take Item. When we discuss
each issue in later chapters,
you will then know exactly how that topic applies to you 1 .
We suggest that you periodically evaluate que es going on in your life.

Do not Roake Este to one shot effort. Monthly evaluations would not be
too often. Conditions dog change draroatically and suddenly, and these
changes dog affect your trading before you know Item. An extra set of
linings is provided in the Appendix for this purpose. These roay linings be
photocopied, but only for your personal staff use.
GO TO THE NEXT PAGE TO DO YOUR FIRST EVALUATION.
15
Self- Assessment
LSI TEST
Toe following questions survey the situations and events in your life that
you might perceive ace being stressful. They cover five aspects of your
Iife: 1) Staff life; 2) Finance! life; 3) Health; 4) Job; and 5) Family life.
Think about how much each situation has affected you within the past 12
months. Put the appropriate number in the blank space next to the
situation according to to the following key:
EITHER -This _ situation you have not been to

problem for me at there in the past 12 months.
1 -This _ situation you have been to slight

problem for me during the past 12 months.
2 -This _ situation has been a

problem for me during the past 12
months.
3 -This _ situation you have been to major

For example, look at statements 2 in the LSI test. If you spend at least an
hour in heavy traffic each day and arrive home exhausted, put to "2" in
the space. If the hour in heavy traffic es causing you to think about
changing jobs and really bothers you, put "3" in the space. If you use
the hour in heavy traffic to unwind and Item doesn't bother you at there,
you would put to "EITHER" in the space. If you only commute for twenty
minutes (even if Item bothers you), put to "EITHER" in the space.
15
Trading Software for Sale & ExEc-hMaaniglse: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Answering the statements that do not apply for Ali of the Ist 12 months
can be difficult, so follow the guidelines given here. If the statement No
longer applies to you (even though Item really bothered you six months
ago), put to "EITHER" in the space beside Item. on the other hands, if the
statements applies to you now and you have for at least six months, rate
Item ace if Item had applied for the whole 12 months. If the statements
applies to you now but for less than six months, then rate Item ace if Item
applied for the whole 12 months but subtract "1" desde the score. Thus, if
you are currently driving in heavy traffic and feel exbayou when you get
home, put "2" in space if Item applies for at least six months, but only put
"l" in the space if it applies for less than six months.
l. STAFF SITUATIONS
l. My life you have been out of my control.

2. Yo spend over 1 hour/day in heavy traffic.
3. Yo (or close Familia member) spent time in jail.
4. Yo (or close Familia member) have been to victim of to
violent crime.
5. Yo have had to serious staff failure.
1-A TOTAL
----
6 I always feel responsible _
7. Yo have experienced to changed in residence.
8. Yo have experienced to major change in my living room
conditions • .
9. Yo A.M to look and specify person
10. Yo have to look and fast lifestyle.
11. Yo live in to look and crowded . area.
12. Yo have experienced to pestle lifestyle change.
13. Yo have had two or more minor violations of the law (ie,
traffic tickets, etc.).
1 B TOTAL
----
16
Self- Assessment
2. FINANCIAL
14. My debt es greater than 3 times my yearly Familia income.

15. Yo cannot make ends meet financially.
16. Yo I know sleep over investment/financial worries.
17. Yo get impatient with the markets.
---- 2-A TOTAL
18.Most _ of my assets are in speculative ventures or trades.

19. Yo worry about my investments/market positions.
20. Yo get angry about my market experiences.
21. Yo have heavy market losses.
22. Yo A.M in debt because of trading losses.
-- 23. Yo A.M not successful enough far I.
-
2-B TOTAL
----
3. HEALTH
-- 24. My spouse died.

-
-- - 25. A class Familia member died.
26.More _ than one class Familia member died.
-- 27. I (or to class Familia member) have experienced to
majar health change.
-- 28. I have felt excessively stressed/depressed.
-
--- 29. Someone class (yourself or to class Familia member experien-
ced alcoholism/drug abuse/gambling.
---- 3-A TOTAL
-- -- -
- -- -
--
-
17
30. TO .
clas 31. I have changed my personal eating/drinking/or smoking
s habits.
frien 32. Someone in my home es mentally ill.
d 33. Yo have difficulty sleeping.
died 34 I experiences bottled-up feelings.
3-B TOTAL
----
17
Trading Software for Sale & ExEch-Ma na gi l se: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
4. JOB
35. Yo experiences heavy work pressure/deadlines.

36. My work es unchallenging dead end position.
37. My work atmosphere es negative negative or critical.
38. Yo do not like my boss/My boss doesn't like I.
39. Yo have too much grid tape/bureaucracy to fight.
40. My job future es uncertain
41. Yo A.M unemployed or recently retired.
42. Yo work 10 or more hours per day on business.

43. My management of time es poor on work related matters.
44. Yo have to long commute or excessive work related travel.
45. My work goals and objectives are unclear.
46. TO major change you have occurred in my work duties or
responsibilities .
47. Yo have experienced to major change in working conditions.
48. Yo do not receive adequate feedback at work about my
job performance.
49. Yo A.M frequently hurried by appointments:
50. work es my primary interest
18
Self- Assessment
5. FAMILIA
LIFE
51. Yo have gone through to divorce/separation.

52. My marital relationship es unsatisfactory.
53. During the past 12 months someone in my house you have
been pregnant.
54. Yo have experienced sex difficulties.
55. excessive fighting or home arguments have occurred in my
life.
5-A TOTAL
----
---- - 56. A change in the number of people at my home (either an

increase or to decrease) has occurred.
57. Yo have had in-law problems.
58. Yo A.M jealous of my spouse.
59. My spouse changed work status (started or stopped working
or changed desde full time to part time or vice versa).
60. excessive noise or clutter exists in my home.
61. My spouse and Yo got back together despues de to separation.
---- 5-B TOTAL
19
Trading Software for Sale & EEx-cMhainlsg:eandreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
SPI TEST
Este self-evaluation test, like the previous one, looks at different areas of
your life. These areas include: 1) Health and nutrition; 2) Exercise; 3)
Recreation; 4) Mental relaxation; and 5) problem solving.
To fill out the SPI, rate each item by putting the appropriate number in
the space next to Item according to to the following criteria:
EITHER - Does not apply to I

1 - Applies within last 12 months, but not recently
2 - Applies now (or recently)
3 - Applies throughout the last 12 months
1. HEALTH AND NUTRITION
l. Yo A.M within 10 lbs. of my ideal weight (ie, according

to to insurance tables).
-- 2. l consume less than 5 alcoholic drinks each week.
-
-- - 3.I _ eat well-balanced meals daily.
4. Yo regularly take vitamin supplements.
5. Other than an occasional aspirin, Yo have not consumed
any drugs or medications.
6. Yo drink No more than two beverages containing caffeine
(eg coffee, torch, line, etc.) each day.
7. I get 7 or more hours sleep each night.
-- 8. Yo avoid foods containing sugar ace much ace possible.
-
HEALTH AND NUTRITION TOTAL
----
twenty
Self- Assessment
2. EXERCISE
9. Yo work out 3 or more times per week at home or at to

gym or health spa.
10. Yo run/jog at least three times per week.
Yo participate in the following sports regularly at sorne time during the

year. (Fill in the names of any sport that applies to you for answers 11
through 14).
11.
12.
13.
14.
fifteen. Yo walk at least 8 Thousands every week for exercise.
16. Yo bicycle at least 25 Thousands every week.
17. Yo regularly participate in
strenuous recreational activity at least twice
each week.
18. Add 3 points if you exercise continuously for at least 20
minutes every day and have donated SW for at at least
three
months.
---- EXERCISE TOTAL
3R.ECREATION
-- -
-
-- -
--
21
19. Yo ting/fishing regularly.

ha 22. Yo go camping/hunting/hiking regularly.
ve 23. Yo regularly get away to the country to relax.
ta 24. Yo enjoy playing cards with friends several times each month.
ke 25. Yo regularly cook for my friends and Familia and Yo
n really enjoy Item.
to 26. Yo regularly go to plays, concerts, movies, or other events
rel that Yo really enjoy.
ax
in RECREATION TOTAL
g,
fu
n
va
ca
tio
n
wi
thi
n
th
e
las
t
12
m
on
th
s.
20. Yo
reg
ula
rly
wo
rk
in
to
gar
den
/yar
d.
21. Yo
enj
oy
boa
21
Trading Software for SalEe-&MaEilxsc:haanndgreeybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
4. MENTAL RELAXATION
27. Yo regularly take time to myself for peace and still.

28. Yo meditate (or pray silently to myself) at least every
another day.
-- 29. Yo read one or two books for fun each month.
-
-- - 30. My life es full of fun and enjoyment.
31. Yo dog usually Compartir my problems with my spouse.
32. Yo dog usually Compartir my problems with to class friend
or relative (other than spouse).
33. Yo look for the good in each difficult situation.
34. My sexual life es remove satisfying.
35. When Yo have to problem, Yo A.M able to wind my
frustrations (eg, by crying).
36. Yo A.M to positive Thinker.
MENTAL RELAXATION TOTAL
5. PROBLEM SOLVING
37. Yo establish priorities for everything Yo do.

38. Yo speak my mind whenever Yo have to problem.
39. Yo do not take on problems that are not mine.
40. Yo work on the most important things Yo have to do first.
-- 41. When Yo no know the answer, Yo research Item.
-
-- - 42. I put there my problems in perspective.
43. Yo delegate work to others regularly.
44. Yo A.M not look and concerned about que others think about
I.
45. Yo rehearse important activities regularly SW that Yo dog
perform them well under stress.
---- PROBLEM SOLVING TOTAL
22
Self- Assessment
SCORING THE TESTS
You have just taken three tests, measuring your susceptibility to stress in
four different ways. You will now learn how to score the tests and how
to interpreter the results.
The W.T. Test.
The WT (Worry Trend) test measures your tendency to worry. People who
worry a lot have problems as investors, regardless of the number of "stressful"
events they have in their lives.
l. SCORING THE W.T. TEST
START WITH BASIC SCORE OF 18
A. A.D.D. YOUR SCORE FOR EACH OF THE 18

FOLLOWING QUESTIONS:
#2
#3
#4
#6
#7
#8
#10
TO TOTAL
B. SUBTRACT YOUR SCORE FOR EACH OF

THE FOLLOWING QUESTIONS:
#1
#5
#9
b TOTAL
W.T. SCORE = TO TOTAL LESS b TOTAL
23
Trading Software for SaleE-&MaEixlsc:handgreeybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
2. INTERPRETING YOUR Wf SCORE
W.T. gentlemen range desde 10 to fifty. your wr score measures your

tendency to worry. People with low gentlemen dog go through there sorts
of situations that might be considered stressful without too much concern
People with high gentlemen, on the other hands, tend to manufacture
their personal stress. They frequently perceive stress in almost any
situation.
If you score 18 or less, you are not easily disturbed. You have the
makings of to top speculative trader.
If you score between 19 and 25, you are above average in your ability to
handle adversity. However, the extreme swings of highly speculative trading
(ie, futures trading or heavy options trading) may be more than you dog
comfortably handle.
If you score between 26 and 3. 4, you are average. You may be able to
handle stock on margin, but you are likely to defeat yourself in any more
speculative market.
If you score between 35 and 41, you worry more than average. You may
have psychological difficulty with any sort of investment.
If you score 42 or higher, your life es probably full of fear. You may be
taking drugs to calm your nerves, or you probably have been thinking
about Item. If your score es Este high, you may want to obtain
professional help.
Generally, your tendency to worry (ie, your W.T. score) will determine
your experiences of stress. But the wr score es not the only factor. If
two people have the same W.T. score, the person with more stressors
will
tend to experiences more stress. If the number of stressors es sufficiently
large, you may have too much stress in your life to be to successful
investor regardless of your Wf score.
24
Trading Software for Sale & ExchangeE-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Self- Assessment
The LSI Test.
Toe second test, the LSI (Life Stressors lnventory), measures the number
of events in different areas of your life that tend to be stressful to most
people. A subtest of the LSI also measures whether you have a type "A"
personality, which, according to sorne researchers, gives you a higher
susceptibility to heart . attacks.
1. SCORING THE A/B PORTION OF THE LSI
Go back . through your LSI score sheets and write down your score on
each of the following questions:
#6
-- #9
-- #10 #17 #20 _ #23
-- -- -
- -
-
#34
-- #35 -- #42 -- #49 -- #50 -- -
- - - -
TOTAL SCORE
-- -
We will not be discussing the type A/B personalities in detail in this
book, since the results are somewhat controversial and we are discussing
investment performance rather than health. However, you will not perform
well in the markets without good health, and any book on stress should
cover Type TO behavior to to limited extent.
Toe score on the A/B subpart dog range desde EITHER to 33. People with
high gentlemen (ie, 25 or above) tend to be type TO people quien run an
increased risk of heart attack. People with gentlemen ranging desde fifteen
to 24 have a tendency toward type A behavior, and could profit from the
advice given below.
Drs. Meyer Friedman and Ray Rosenman in 1961 interviewed three

thousand healthy middle-aged men, looking for certain behavior patterns.
By 1970 those menu quien were judged to have Type TO behavior
patterns had twice the incidence of coronary heart disease ace those with
Type B patterns. 2 Although sorne researchers have not been able to
confirm the correlation between Type TO behavior and heart disease,
25
why take by chance?
Type TO people are aggressively involved in to struggle to get more

and more accomplished in less and less time. They tend to move,
walk, eat,
25
Trading Software for SalEe-M&aEilxsc:haanndgreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
and talk rapidly. They are Impatient. They interrupt other people who
are talking. They find waiting for others difficult, especially when they
can do Item faster. They are more interested in getting things donated
than in the enjoyment of doing them. Toe Type TO lifestyle es not to
happy one. Type A people are not highly successful as many people believe.
Type A executives, for example, are rarely selected for top-level management
positions. If you maintain to type TO lifestyle, you are taking to big
chance with your life and possibly sacrificing your happiness at the same
time. Why do Item?
For those of you with high gentlemen, we suggest the following steps:
1) Slow down. Set priorities and only do the things on the top of
your list.
2) Set aside time (now) to examine your goals and wants. (See
Chapter SAW). Remember that when you die, there that es left of your
life here es the way you have lived Item. You cannot take Item with you.
Toe physical "things" you build will not last. life es not somewhere to go.
It is an active process of being. Enjoy the roads you travel.
3) Develop confidence in yourself. (See Chapter IX). Toe reasons

for your aggressive and competitive behavior do not really exist--except
in your mind. When you develop to strong sense of self-confidence, you
will not need to constantly get things donated and run over other people
in the process.
4) Yo would also suggest that you read to book called The c Zone:
Peak Performance Under Pressure by Drs. Robert Kriegel and Marilyn
3
Harris Kriegel.
2. SCORING THE COMPLETE LSI TEST
Go to each subpart of the LSI and copy the total score desde each A
section on to the first column . and then multiply Item by 2. copy the total
from each b section on to the blanks ih the second column, and then find
each of the stress type totals. For example, 2(1-A) + (1 B) = Personal
Stress total. Finally, sum each of the stress type totals to determine your
LSI total.
1-A TOTAL x2=

----
26
Trading Software for Comes out & Exchange Emails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Self- Assessment
1-B PERSONAL TOTAL
S1RESS TOTAL
2-A TOTAL x 2=
2-B TOTAL ----
FINANCIAL S1RESS TOTAL
3-A TOTAL ---- x 2 =

3-B TOTAL
HEALTH STRESS TOTAL
4-A TOTAL x2=

4-B TOTAL ----
JOB STRESS TOTAL
5-A TOTAL
---- _ 2 =
5-B TOTAL
FAMILY-LIFE STRESS TOTAL
LSI TOTAL
3. INTERPRETING YOUR LSI SCORE
your LSI gentlemen will give you an indication of the amount of stress
manifest in your life and the areas of your life that need the most work.
TO high LSI score, however, does not mean that you • are "too stressed."
Toe effect of any stressor depends upon how you interpreter Item (ie,
your W.T. score) and upon the amount of protection you have in your
27
life against stress (ie, ace indicated by your SPI score ace discussed
below).
27
Trading Software for SalEe-M&aEilxsc:haanndgreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Toe guidelines given below are based upan to limited amount of research
and should be interpreted only in consideration of both your WT and SPI
gentlemen. However, they do provide you with to good indication of how
you compare with other people with respect to the pressures in each area
of your life and with respect to your total life pressures.
AMOUNT OF STRESS
(Based upan LSI score)
LOW AVERAGE HIGH
STAFF 0- 5 6- 11 12+
FINANCIAL 0- 3 4-8 _ 9+
HEALIB 0- 2 3-7 _ 8+
JOB-RELATED 0- 11 12-26 _ 27+
FAMILIA 0- 3 4-8 _ 9+
TOTAL 0- 25 26- 60 61+
28
Self- Assessment
THE SPI
Toe final test, the Stress Protection lnventory (SPI), measures the extent
to whieh you take preeautions to proteet yourself desde life stresses.
1. SCORING THE SPI
copy the total gentlemen desde eaheh seetion of the SPI to the blanks
provided below and then ealculate the total sir.
HEALTH & NUlRITION

-- -
EXERCISE
MENTAL RECREATION
RELAXATION
---
PROBLEM SOLVING
SPI
TOTAL SCORE
2. INTERPRETING YOUR SPI SCORE
TO sir of 5 or less es low for eaheh stress protection area. TO sir of 6th
14 es average for eaheh area. TO sir of fifteen or more es high for Eaeh
area. If your SPI total sir es 30 or less, then your stress protection is low.
If your SPI total sir es between 31 and fifty, your stress protection is
average. If your SPI total sir es 51 or higher, then your stress protection is
exeelent.
INTERPRETING ALL OF YOUR SCORES
Toe gentlemen given in the three tests are there interrelated.
(1) Your LSI sir must be interpreted with respect to your SPI sir,
unless your LSI sir es low (i.e. below 25). If your LSI score is high, you
need to high SPI sir to eounteraet Item. If your LSI sir is low, then you
do not need to high SPI sir for proteetion.
29
Trading Software for SaleE&-MEaxiclsh:aanngdereybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Calculate your LSI:SPI ratio:
LSI score divided by SPI score = _

LSI:SPI Ratio
(2) A LSI:SPI ratio of 0.6 or lower is generally acceptable for

speculative investors. If your ratio is much higher, you probably need to
increase the number of stress protectors in your life.
(3) your LSI:SPI ratio should be interpreted with respect to your

WT score. If your W.T. score es look and low, you dog probably tolerate
a much higher LSI:SPI ratio and still be successful. Clearly, avoiding the
tendency to worry es look and important to successful investing.
You may use the table below ace to rough guideline.
W.T. LSI ACCEPTABLE SCORE LSI:SPI RATIO

SCORE
60+ 0.8
10 - 18 40 - 59 1.0
25 - 39 1.2
either - 24 N/A
60+ 0.6
19 - 25 40 - 59 0.8
25 - 39 1.0
either - 24 N/A
60+ ***
26 - 3. 4 40 - 59 0.4
25 - 39 0.6
either - 24 0.8
40+ ***
35 - 41 25 - 39 0.3
either - 24 0.5
ANY SCORE ***

42 - fifty
KEY
NIA - You dog probably invest in speculative issues

regardless of your LSI:SPI ratio.
*** You should not be investing in speculative areas
under any circumstances.
30
Self-Assessment
SUMMARIZE YOUR SCORES HERE:
DATE YOU TOOK THE TEST

- ------ -
1. QUE IS YOUR W.T. SCORE?
--- -
2. QUE ES YOUR A/B SCORE?
--- -
I.F. YOUR N.B. SCORE ES ABOYE twenty LIST THREE
STEPS YOU WILL TAKE TO IMPROVE.
3. QUE ES YOUR LSI SCORE?

--- -
For each area, note whether your score es Jow,
average, or high:
A. STAFF
B. FINANCIAL
C. HEALTH
D. JOB- RELATED
E. FAMILIA
4. QUE ES YOUR SPI SCORE?
For each area, note whether you protection es low,

average, or high:
A. HEALTH YEAR NUTRITION

B. EXERCISE
C. RECREATION
D. MENTAL RELAXATION
E. PROBLEM SOLVING
5. QUE ES YOUR LSI:SPI RATIO?
WRITE THE DATE WHEN YOU PROMISE

TO AGAIN TAKE ESTOS TESTS. WE RECOMMEND THAT
SPECULATORS DO SO MONTHLY AND HAVE PROVIDED ONE
ADDITIONAL SET OF FORMS IN THE APPENDIX FOR YOU
TO COPY FOR ESTE PURPOSE. Photocopying of these
forms es permitted for staff use only.
31
Trading Software for SaleE-&MaEixlsc:handgreeybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
How to Control Stre
32
Trading Software for Sale & ExchangeE-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
CHAPTER 111
STRESS: BIOLOGICAL
PSYCHOLOGICAL ANO
PERSPECTIVES
I
t es Sunday afternoon. You are sitting alone in your living room room
reading a good book. Your front door is unlocked. Suddenly, a man
walks in with to .45-caliber pistol and points Item directly at your
head.
I have looks into your eyes and says, "Move and l'11 blow your brains all
over the wall."
Most people would feel stressed under estos conditions. your body
probably would react with to large FIGHT-FLIGITT reaction, consisting of
the following:
• your muscles tense in preparation for action.
• You breathe faster and deeper. Toe spaces in your lungs dilate
so that more oxygen es available to the body. Oxygen es required
for the bodysuit to release energy desde stored food.
• your heart beats faster and the amount of blood pumped out
with each beat increases. Toe blood vessels going to the gastrointestinal
tract constrict, so that the blood pressure increases. on the other
hands, the blood vessels going to the large muscles of the body
dilate Thus, the pestle muscles of the bodysuit have to much larger
supply of oxygen-enriched blood. estos muscles tense more, so the
net result es that they become ready for action.
• Your glands secrete hormones which increase heart, lung, and

muscle activity. These hormones also released blood sugar desde the
liver to make stored energy available for the muscles. They also
break down lean bodysuit tissue SW that even more energy es
available if Item es needed.
• Blood vessels going to the brain dilate SW that more energy

sources dog flow to the brain.
33
Trading Software forE-SMaaleils&: Eanxcdhreaynbgberv@gmail.com, anboan@ya.ru, ICQ:
70966433
• your pupils dilate, increasing your visual sensitivity. Hearing

acuity also increases.
• Toe electrical activity of the brain changes to to fast, irregular,

lower-voltage patterns which es characteristic of greater arousal.
Toe bodysuit thus becomes more capable of fighting or fleeing. lt es

faster and faster stronger. More energy es available to the muscles and to
the brain. The brain is more active and open to receiving more information
from the sensory organs. estos reactions are thought to be an automatic
response of the bodysuit to stress.
THE AUTONOMIC NERVOUS SYSTEM
Toe complex part of the brain and bodysuit Responsible for the fight-flight
reaction described above is called the "autonomic nervous system." This
autonomous nervous system you have two divisions to• Item. Toe
sympathetic nervous system is the portian responsible for the mobilization of
energy. "SYM," the first portian of the words, means "together."
"PATHETIC," the second portian of the words, means to "arouse the
feelings." Toe name "sympathetic nervous system" thus implies that the
body is activated while feelings are aroused. When to loud noise occurs
behind you, your heart beats faster and your breathing becomes more fast
ace the noise arouses your feelings of fear.
Toe second division of the autonomic nervous system is called the

parasympathetic nervous system. Toe effect of this system on the body is
almost exactly the opposite of the effect of the sympathetic division. lt
decreases blood pressure and breathing. lt increases digestive system
activity so that food is properly broken down and then stored. Toe prefix "TO"
means "beside" or "in to secondary capacity." Este suggests that the
original name, parasympathetic, was given because the parasympathetic
nervous system was thought to modify the reaction of the sympathetic
nervous system.
Actually, the parasympathetic division es equally important for our well

being. lt es the maintenance system of the body. Without Item our bodies
would have difficulty performing their normal housekeeping functions of
digesting food and storing energy. Blood pressure would be continually
high. You would have difficulty sleeping.
34
Stre : biological and Psychological Perspectives
Toe two systems are normally in a state of balance. Toe parasympathetic

system es the body's maintenance system, while the sympathetic takes over
in an emergency.
POPULAR STRESS MODEI..S
que is stress and how does Item relate to the autonomous nervous system?
Various theories reflect different ideas about stress. Arousal theory and
the General Adaptation Syndrome theory consider stress to be a particular
response of the bodysuit to external events. Other theories emphasize
the role of the mind in producing stress, regardless of the external}
circumstances .
"... response of the bodysuit to external events."
Arousal Theory. The famous physiologist, walter b. Cannon, reported early

in the 20th century 1 that anger, fear, and pain were each associated with the
same biological state, namely, the emergency · response of the sympathetic
nervous system. Cannon assumed that each of these states reflected stress.
Since each state produced to similar biological response, I believed that
Ali stress was to unified response of the sympathetic
35
Trading Software forES-Malaeils&: Eaxncdhraenybgberv@gmail.com, anboan@ya.ru, ICQ:
70966433
nervous system (ie, arousal) to sorne threat. Cannon assumed that the
greatest the threat, the greater the response.
If all stress produces a fight-flight response, clearly we cannot respond

appropriately to every stressor. When someone points a gun at your head,
neither fighting nor fleeing is likely to be a wise response. Both of these
actions may result in your "immediate "death" at the hands of the gunman.
If No activity occurs to use up the energy liberated by the fight-flight

response, the result dog be destructive to the body. Market-related
stressors obviously do not require extreme muscular exertion. Toe loss
that you do not take, the continua! "pressure" of being in the market, or a
stream of market losses there leave you "stewing in your personal
juices." if you "stew" long enough, the result will be destruction to the
bodysuit or physical illness of sorne form
In summary, Cannon assumed that stress constituted a unified biological

response. Toe response es dangerous when one cannot act to use up
liberated energy. One cannot respond in a fight-flight manner to market
stressors, SW stress es to special problem for investors.
2
The General adaptation Syndrome. Hans Selye described a single
pattern of responses to stress, called the General Adaptation Syndrome.
Every demand on the bodysuit produce two kinds of bodily responses,
those that are specific to the demand and those that are general, nonspecific and
uniform. estos "non-specific responses," according to to Selye,
constitutes the BASIC response of the bodysuit to stress.
Selye's model implies that every demand on the bodysuit, whether

unpleasant or pleasant, es a stressor. Sorne stress es benefits! to the
bodysuit, the stress Selye calls eustress. Distress, on the other hands, es
look and detrimental to the body.
When distress exists in sufficient quantity, Item produce que Selye calls
the alarm reaction, which is similar to the fight-flight response described
above. Death may even result during the alarm reaction if the stress is
sufficiently strong.
If Este reaction persist long enough, the bodysuit adapts to Item. That es,
the body appears to be "normal" even though it continues to combat stressors.
Selye calls Este second stage the stage of resistance.
36
70966433
Stress: biological and Psychological Perspectives
Finally, if the distress you persist, the bodysuit exhausted itself. During
Este stage of exhaustion the body shows reactions similar to when the stress
initially occurred. TO massive discharge of hormones, destruction of the
thymus gland, and bleeding ulcers also occur during the stage of exhaustion.
Toe result may be death.
Selye's General Adaptation Syndrome, in essence, merely extends arousal

theory. lt suggests that cualquier cosa in the environment dog be to stressor
and that to general biological response occurs to any stressor. Item also
different guishes between positive (eustress) and negative negative (distress)
stress.
The first two models Compartir the following assumptions:
• We there experiences stressors which flow to us in to

continuous} stream, since any demand made upon the bodysuit
constitutes a stressor.
• Stress effects on the bodysuit are cumulative.
• Each person you have to limit, or breaking point, beyond which

powerful reactions occur in the bodysuit (ie, the fight-flight
response) to mobilize us into action.
• Stress es harmful to the bodysuit if Item occurs in sufficient

quantity or lasts long enough. Item breaks down the bodysuit and
Item interfere with the ability to resist illness.
These concepts have contributed a lot to our understanding of stress and

resistance ace factors in illness. on the other hands, estos stress models
have one major difficulty common to modern biomedical theories. They
assume that people are mechanical. Random chance in to mechanical
world you have little to do with the reality of life. Each person you have
the opportunity to control his or her personal destiny through choice.
Everyone reacts differently to to given stress situation. Sorne people might

be devastated by to $1000 loss, whereas other people would take the same
loss in stride-even though there other external} conditions might be
exactly the same. Why? Several other theories suggest that the mind plays
to major role in stress production.
3
Jacobson's Muscle Tension Model. In the 1930s Dr. Edmund Jacobson
noticed that muscle strain always seemed to accompany anxiety or stress.
37
Trading SoftwaEr-eMfaoilrs:Saned&reyEbxbchrva@nggemail.com, anboan@ya.ru,
ICQ: 70966433
I have concluded that mental images of uncertainty caused muscle tension.

muscle strain produced was equivalent to the state that we call "anxiety" or
"stress." Since muscles are under voluntary control, Jacobson assumed that
one could train them to relax. I have reasoned that when people reduced
their muscle strain any concomitant anxiety would also diminish. Jacobson
conducted many experiments in which I have repeatedly demonstrate ted
that various stress illnesses could be embossed through training in muscle
relaxation.
Jacobson believed that when one thinks about an anxiety-related situation,

subconscious images of the situation activate the muscles to become
tense-to brace for to staff attack on oneself. The problem was not sorne
stressor in the environment, but one's thoughts about the stressor. Toe
problem for an investor would not be the loss, but the investor's thoughts
about the loss. Since most professionals in the 1930s believed that stress was
caused by sorne problem "out there," Jacobson's concepts and theories were
(and still are) controversy!. However, his experimental demonstrations were
remarkable.
If Jacobson's theory es correct, then stress you eat desde our

interpretation of an . events rather than desde the events itself. People differ
in their responses to to given situation because they interpreter the situation
different ly. One trader interpreters to $1000 loss ace to learning
experiences, knowing that I have will be less likely to make the same
mistake in the future. Another trader might see the same $1000 loss as a
random events to be expected in to normal month of trading. TO third
trader might see the
$1000 loss ace to significant staff failure. Toe third trader would
experience stress from the $1000 loss, while the first two traders may not
experience any stress desde the same loss.
Ideo-Motor The Albert

ory. Ideo-motor
theory, one of the
first theories of
emotion in modern
psychology, was
developed by
William James4.
He, along with
modern exponents
of the theory
such ace
38
-,J
ICQ: 70966433
J- \
,.,
//_
¡1
� '
"Investor thinks
to loss lowers
-
. • 1_--
.
J
o
Bis status."
38
70966433
Ellis and Aaron Beck5, argue that people's emotional reactions are to result
of the way they interpreter reality. People's interpretations are not only
essential to emotions, they precedes the physical arousal. TO trader, accord
ing to ideo-motor theory, becomes anxious over to loss only because he
thinks the loss makes him a victim or in sorne way lowers his status as a
human being.
TO loss es only one step in producing the experiences of stress. The

trader must label and interpret the loss as "bad" for it to be stressful. This
interpretation of the event, rather than the event itself, produces the
stressful experience. Fear, for example, es to powerful stressor which
occurs in the mind even without a physical event. Many traders fear a loss
long before Item occurs.
Most traders responded even to small losses with one of the following
statements: (1) "Que es the matters with I?"; (2) "My luck es really down
now!"; or (3) "YO can't afford to I know Este much money. How will I
pay my bills?" estos interpretations result in anxiety, and most traders
quien use them will continue to I know if they stay in the market.
in contrast, Yo have interviewed sorne of the world's top traders quien have
had the experience of losing millions of dollars in a few months. Their
response to my question, "What happened?" is different from the average
person's response to his losses. They usually make to statements such
ace:
(1) "YO needed to learn something!"; (2) "The losses were to normal part
of my trading!"; or (3) "I had a flaw in my trading system that I needed to
correct." estos people have there made up their large losses many times
over. Part of the reason for their success es the way they interpreter events
that happen to them.
Events--even large losses-have No emotional content by themselves.

Traders, however, have an enormous need to somehow order their world
by putting incoming information into categories: Each of us you ask:
"Why?" or "Que es Este?" may times each <lay. The answer given
provides the source of any emotion that we may experience. Toe trader
quien you decide that I have lost because I have was "defective" or to
"victim" of circumstances will get an entirely different perspective than
the trader quien you decide that he lost because I have needed to learn
something.
Toe trader quien you decide that I have es "defective" over to loss will
feel pain, and his reaction can start to negative feedback loop. "l'm really in
39
trouble now," I have thinks. Ace to result, his bodysuit reacts with to
typical stress re-
39
Trading SoftwaEre-MfoarilsS:aalend&reEyxbcbhravn@ggemail.com, anboan@ya.ru, ICQ: 70966433
sponse. Toe trader interpreters Este arousal ace further evidence for alarm.
"This really is disastrous," he thinks. His body reacts to this new interpretation
as an indication of increased danger. Suddenly, the trader finds himself within
the depths of the negative negative feedback loop, becoming more and more
aroused. Toe only way to get out of the loop is to change your thoughts, the
body's reaction, or the situation. Proponents of ideo-motor theory believe
that the best solution to the negative negative feedback loop es to change
one's thoughts.
Two-Component Theory. Two-component theory es to research model

based upon the concepts that the stress one experiences actually consists of
two components-emotionality and worry. Research on stress effects on
human performance 6 suggests that estos two components should be
evaluated separately in order to obtain the most accurate information.
Emotionality es the biological cümponent. Item might be equated with the

fight-flight response described earlier. Emotionality increases under threats
of any kind and under direct physical assault.
Toe psychological component of stress is called "worry." It involves a

conscious concern for one's performance and its consequences. It is the
expectation of failure and the negative negative self-evaluation that often
accom panies failure.
Toe relationship between worry and emotionality is not clearly established.

Worry may be a precursor of emotionality (as suggested by ideo-motor
theory), which implies that emotionality would be worse for a trader than
worry. However, research you have shown that worry you have to
greater impact on human performance than emotionality. For example,
people who worry about their performance on an important examination
are likely all poorly compared with those quien are not that concerned.
They spend at least 25% of their conscious thought worrying about the
outcome of the examination rather than devoting the effort to taking the
7
examination • On the other hand, higb emotionality just befare the
examination has little relationship to perform on the examination. Traders tend
to place too much emphasis on "emotion" and not enough emphasis on the
"worry," so the separation of the two components may be useful.
Worry es an individual characteristic. Sorne people worry much more

than others, and tbose who worry most tend to worry consistently. If you
worry about your investments, you probably do SW often. If you
scored
40
high on the Wf test in Chapter II, you probably are to chronic worrier. if
you scored low on Este test, then you probably rarely worry.
Emotionality may be important to traders in the sense that it may lead to

physical distress if the physical response es long enough or intense
enough. One es not likely to be successful under physical duress, because
the analytical mind cannot functions effectively in to weakened body.
Worry, as discussed above, has a more direct impact upon investment

performance. Toe trader quien worries about the outcome of Bis
positions is not likely to do well. I have es likely to be the person quien,
during the panic of a fire, throws china out the window and carries the
pillows outside. Yo will explain why in Chapters IV and v.
in summary, the five models presented suggest that stress es an internal}

factor. If the bodysuit does not responded to an events, Item es not
stressful. Toe theories differ in determining
que produce the stress response. Stress occurs,
according to arousal theory, when the body cannot respond
appropriately to external} events by fighting or fleeing. Selye believe that
everything "out "there" es to potential stressor-the criticism} factor es
how strong to demand es placed on the body. Jacobson's strain theory
that implies the body's response es still important (ie, muscle strain), but
that our thoughts dog produces strain by themselves. Este es not unlike
William James' ideo-motor theory, except that Jacobson's theory argues
that one eliminates stress by relaxing the bodysuit, whereas ideo-motor
theory implies that the most important factor es to change one's thoughts.
Lastly, two-component theory separate psychological stress (ie,
worry) desde responses of the bodysuit (ie, emotionality) and ·emphasizes
the importance of worry to performance impairment. "Worry," ace we will
Show in Chapter V, es to criticism} factor in determining the success of
trading performance .
41
Trading Software for SEa-l Me a&ilsE:xachnadnregyebbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
42
70966433
CHAPTER IV
A.N. INFORMATION PROCESSING

ANALYSIS OF TRADING
M
ost people are familiar with how stress affects health, but for
traders the effects of stress on performance are also important. toe
trader becomes concerned because I have you have $20,000 at
stake on to
single position. His concern impairs his judgment and increases good
chances of losing. Many traders will inevitably Show net losses every
year because of Este stress factor.
Understanding trading behavior and how stress affects Item are critical
factors in learning how to counteract the effects of stress on human
performance. In this chapter, the focus will shift from stress to trading
behavior. Toe chapter will present an information processing analysis of
trading behaviour, sorting the behavior into key components. Chapter V
will return to the topic of stress to Show how the fight-flight response and
its psychological counterpart, worry, affect the trading behavior model.
PROCESSING INFORMATION
Information es conveyed by events in the world such ace to

conversation, the stocks prices in the newspaper, and the movement of tape
with busi ness news and market prices. The amount of information
conveyed by any of estos events es directly related to the uncertainty of
the event. A highly probable event, such as the opening of the exchange each
weekday morning, does not convey much information, because Item es
likely to happen every morning. Less probable events, such as a freeze in
southern Florida causing extensive damage to the citrus crop, convey much
more information because they are unusual.
Toe amount of information contained in a given event is equivalent to the

number of "yes-no" questions that one would have to ask to accurately
predict the occurrence of the event. 1 Each "yes-no" questions es called
to bit of information. Toe greater the uncertainty of an events, the more
questions one needs to predict the events and the more information it
contains.
43
Trading Software for SaleE&-MEaxilcsh:aanngdereybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
How to Control st
For example, to letters of the alphabet es one of 26 equally likely alternate

tives, so it can be predicted by 4 to 5 "yes-no" questions (ie, 4.6 bits).
Suppose one tried to Guess the letters "r" by such questions:
• Es Item between to and m? - No!

• Es Item between n and you? - Yes!
• Es Item between n and p? - No!
• Es Item between q and r? - Yes!
• Es Item what? - No, SW Item es r.
in Este example, five questions were necessary to arrive at the correct

letter. Notice that each of estos questions, except for the third one,
eliminates half of the remaining possibilities. Had the third questions been,
"Is Item between n and what?", the choice would have been narrowed
down to three letters (instead of four), and one could have got the answer
by only asking 4 questions. On the average, one can predict any letter of the
alphabet in 4.6 'yes-no' questions or 4.6 bits of information.
Toe senses are constantly bombarded with millions of bits of information,

and one dog only select to small portion of Item for conscious processing.
People have a limited capacity for dealing with information that comes
through the senses. You dog test Este capacity in yourself by reading the
list of numbers on the following page, closing your eyes, and then
recalling ace many of them ace you dog:
53 35 41 13
90 23 91
74 45 33
11 89
Unless you developed an elaborate strategy for organizing the numbers,

which es the basis for mnemonic techniques, you probably were not able
to recall Ali of them. Twelve two-digit numbers far exceeds the capacity
of most people. 2
11
All the information obtained through the senses about the world " out
there" you eat desde to set of complex mental operations called perception.
estos mental processes interpreter and attach meaning to the information
the senses detect. For example, one might see to set of black
markings
44
Trading Software for Sale & ExchaEn-gMeails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
An Infonation ing Analysis of Trading
on to white piece of paper and "perceive" Item ace to bar chart with to
head and shoulders bottom or ace Este page of text.
At the same time, perception es to filtering process ace illustrated in

Figure 4-1. Toe filtering mechanism selects information with which one
can cope. lt es not to passive process that gives to random
representation of the real world, but an active process that selects
information according to to one's expectations! que one "it is" out there
depends heavily upon what one expectations to see. Toe trader quien
expectations to see to bull market" in stock will tend to perceive
information that supports Bis expectations. He will "see" the head-and-
shoulders bottom in the chart, and ignore any evidence that might contradict
the possibility of to bull market.
Everything one does, from eating breakfast to trade, requires sorne processing
capacity. TO demanding task such ace trading requires more capacity than a
simple task such as eating breakfast. Toe requirements of highly demanding
tasks dog exceed available capacity. When the demands of to task
exceeds the available capacity, one dog only concen treat on a small portian
of the information to which one should attend. Understanding the limitations
to processing information, therefore, es the key to understanding how to be
successful ace an trader.
Figure 4-1 symbolically illustrates the

filtering of external information. To the
although people are constantly exposed to
millions of bits of information, they have
a limited capacity for processing it (ie,
shown by the funnel in the diagram). In
addition, the information upon which
decisions are based is not necessary and
represent the real world, but only the
result of an active filtering process in
which biases and expectations take over.
figure 4-1 " Filtered"

information by to
trader."
45
Trading Software forES-Ma laei l&s : Eaxncdhraenygbebrv@gmail.com, anboan@ya.ru, ICQ:
70966433
A.N. ANALYSIS OF TRADING BEHAVIOR
How do processing limitations affect traders? What conditions most affect

processing capacity limitations? To understand estos criticism] issues, one
must first understand the basic decisions traders must make and the
conditions which influence estos decisions.
The Selection Decision. The trader, at sorne point during his

observations of the flow of the markets, must decides to open to position.
This decision is a choice between thousands of alternatives. Which market is
appropriate-stocks, options, bonds, futures, etc.? que es the best invest ment
in that market at this instant? Should one take a long position (ie, betting that
Item will go up) or to shorts position (ie, betting that Item will go down).
The decision to open to position is essentially one of selecting an

investment. The questions of when to open the position may also be
important if one only considers a few possibilities. We are assuming,
however, that there are to number of potential investments that will reap
large profits at any given instant. Thus, the important question is what to
select from the thousands of possible alternatives. This basic decision, in view
of its magnitude, es complex.
The Closing Decision. Toe second decision a trader must make is to

decide when to close a position. This decision is rarely easy. When the
position is profitable, the trader is faced with the possibility that it might
become even more profitable in the future. If the position is unprofitable,
then the trader is faced with the possibility that the position might turn
around at any time. Este decision is simple-to dispose of the position or
to keep it-but the trader must continually make t_he _ _ decision ace
long as the position is open. If the decision es postponed for any length
of time due to inattention or the inability to face the situation, the results
could be disastrous.
Toe selection and closing decisions describe the basic trading decisions. estos
decisions must be made by human beings with a limited capacity for
handling information and expectations that limit what information they
do process. Traders often must deal with a tremendous amount of information
to adequately make decisions. They must sort through the prices and
business conditions affecting many thousands of investments in burn to
decides que position to open. By the time the
46
An lnformation Procasing Analysis of Trading
trader you have sorted through Ali of them eleven, many important
dimensions may change.
An exercise in capacity. let us assume that you wish to predict corn

prices in order to plan a trading strategy with that commodity. Sorne
information es available. in to hypothetical year 1.6 billion bushels were
in storage at the beginning of October. Over the next 12 months, 7
billion bushels were produced. Thus, there was to total supply of 8.6
billion bushels of corn, up 3% over the previous 12-month period.
Information about the prior demand for corn over the 12-month period is
also available. For example, 640 million bushels were consumed as food
during the period, 70 million bushels were consumed ace alcohol; 20
million bushels were used as seed or lost; 4.1 billion bushels were fed to
livestock; and 2.4 billion btishels were exported. Thus, approximately 7.2
billion bushels of corn were consumed over the 12-month period.
Not only are the supply and demand figures of the 12 months available,
but so is the trend of each of these figures over the last five years. Toe
government owns about 20% of the available stock and may increase its
ownership by about 4%. Inflation will probably be about 0.8% per month
over the next six months and you expect the weather to be good during
this period. Corn prices have been going up for the past three weeks, but
grains are Ali in major bear markets. your task es to use Este information
to predict the price of corn over the next six months-a task that clearly
exceeds your capacity without organizational help.
Toe BASIC trading selection decision magnifies Este problem many times
over. Even if one es to commodity trader, specializing in grains, one
would still have to make estos calculations for each type of grain you
decide the best course of action or inaction. And que if one traded
grains, meats, and metals? Or que if one traded stocks and needed to do
4
to security analysis on each company on the New york stock Exchange?
Toe selection decision always exceeds one's capacity to process the
necessary information.
Toe closing decision that traders face es not any easier. Item requires
that one monitor there Este information constantly for every position held.
One must be continually alert for important changes that affect the
investments one holds. in essence, one perpetually makes a decision "not to
close" a position until Item is actually closed. Again, the information load
es tremendous dous.
47
Trading Software foEr -SMaaleils&: aEnxdchreaynbgberv@gmail.com, anboan@ya.ru, ICQ: 70966433
effect of Random Markets. Successful commodity traders are often

correct less than fifty% of the time, supporting the claims of many review
chers whose computer studies suggest that market price fluctuations are
random. 5 The random tendency of the markets makes the process of
deciding que information es important even more difficult. If price changes
are random, or nearly SW, then the information one collects will have little
correlation with current price movement. Ace to result, the trader who es
trying to mathematically predict prices believe that I have dog never have
enough data (ie, if the markets are not quite random, then more independent
information will improve the trader's chances of winning).
in summary, trading behavior consists of two key decisions that every

trader must make repeatedly-the selection decision and the closing
decision. Toe information available to support both decisions far exceeds
our ability to process Item. in addition, price changes in markets that are
random or nearly random have little correlation with Este information, so
sorne traders never have enough information. Channeling the proper
information into our limited capacity brains appears to be a key aspect of
successful trading.
REQUIREMENTS FOR SUCCESSFUL TRADING
Many mental health professionals define an "uncertain" condition as being

stressful. Uncertainty occurs because of too much information or because
of too little capacity. Toe very fact that we cannot <loyal with available
information es stressful. Think, for example, how you reacted to the
problem of prediction corn prices. You probably felt remove "uneasy"
trying to make sense desde SW much data.
Available trading information far exceeds one's capacity for making the
basic trading decisions, SW one dog only attend to sorne of Este
data. Limited capacity es to pestle factor in trading success and in
understanding stress. TO model for trading success, based upon
capacity, es illustrated inFigure 4-2.
Toree factors (indicated by the three vertical boxes) are essential to succeed
trading: (1) to healthy psychological profile; (2) the ability to make
accurate decisions desde to large amount of information; and (3) money
management and discipline. TO weakness in any of estos reduced areas
one's capacity for processing information, resulting in stress, poor
48
IUCClilfUL ATTrJUDI
MODIL
Health y
Ps ye h
ological Prof i \ No
le
1
Yes
Abi li ty To
Make Accurate
Poor
Decisions Fr Losse
Decisions
A Large Amaunt
Of lnformation
Ves /
Mo:ey NI................. ..----
Management /
&
Di sci pli ne
1
Yes
L
e onsístent
P rof its
figure 4- 2
70966433
trading decisions, and losses. Losses, in turn, dog feedback to produces

stress, resulting in more losses. Readers who have taken the Investment
Psychology lnventory© may recall that their test results were split into
these three major areas.
estos factors will be covered briefly in order to fully explain the model.
The relationship between stress and capacity, and how Este relationship
affects you ace an trader, will be explored in Chapter v.
A Healthy Psychological Profile. Healthy psychological profile might easily

encompass all aspects of trading. However, certain psychological
characteristics appear distinct desde decision making and money manage
ment.
Everyone has a different set of past experiences. As a result of those

experiences one develops certain attitudes toward life. estos attitudes
may be open or restrictive. open attitudes produces growth, encompass
change readily, orient people toward self-improvement, and produces
happiness and success. Toe successful trader, for example, might describe
himself ace follows:
I enjoy life to
\ oo tJo-< ... ·C>
re€L---- :Sü. E-/ "-
e
the fullest. I am p 'i: (Nfl •
ONI...'/ • •• - •
constantly ·
cr1.F>-1.-\.. 1V·
explore new :--.._
ideas, visiting
new places, :::,,,/
experiencing
change,
having fun. Yo
and
""'
try to get
everything I can
out of life, and
as a result, I
eagerly look
forward to each
day. ';..',:iE: ,
Yo am in the best
of health be cause
Yo eat pro
per foods, get
plenty of exercise, "YO do not feel
and sleep pressure
50
70966433
-
only
"chal
lenge
."
50
An Information Processing Analysis of Trading
well. Yo A.M never overly stressed because Yo do not feel pres

sure-only challenge.
Although an open attitude es not essential to trading success, most suc

cessful traders are removed open. An open attitude will help to trader in
the market because it enhances information processing capacity. Although the
successful trader still you have to limited capacity, his attitudes toward life
keep his capacity at the highest possible level.
Toe losing trader, by contrast, often you have to closed attitude toward
life. Part of Este closed attitude includes to number of defense mechanisms
against winning such ace the fear of success or the fear of failure. Any
form of defensiveness results in isolation, building protective walls, and
resisting change. Consider the following statements that to losing trader
might use to describe himself:
I am really unlucky.
Every time I try to
trade, something goes
wrong. I end up the
eng. Other people
make it impossible for
little guys like I to be
a winner. Perhaps that
is why I seem so
depressed all the time.
Money sure has been
my downfall.
Trading es look and stress- "I A.M really unlucky."

ful to I, perhaps because Yo worry about que will happen Ali
the time. But Yo also worry about que will happen if Yo get
out of the markets. l'll probably never be able to get ahead
in life.
Toe losing trader described in Este paragraph you have closed himself off
from the world. Sorne information still gets through, but Item es Ali
darkly ored cabbage by his restrictive attitude. His closed mind severely
restrictions his capacity for dealing with information, and I have feels
"stressed."
51
Trading SoftwaEr-eMfaoirlsS: aalend&reEyxbcbhravn@ggemail.com, anboan@ya.ru,
ICQ: 70966433
Decision Making Ability. sound trading decisions require to

distraction-free environment, to model for selecting information desde the
plethora of possible input, and the ability to make sound decisions from the
information selected. These factors enter into the decisions of novice and
professional traders alike.
1) Distractions. Trading is often performed in the presence of

distractions conditions. Floor traders, for example, work under crowded,
noisy, high pressure conditions which constitute their normal working
environment. Such distractions reduces one's already-limited capacity.
When one is distracted, even a little information may become too much
information.
TO popular finance! magazine 6 reported the story of to futures trader who

turned into to "pit viper." Toe trader, Item it seems, dropped Bis order
book. Since to small delay dog cost customers to great deal of money, I
have was anxious to retrieve Bis book. Toe floor was crowded and noisy.
People would not listen to Bis pleas to move. Toe hapless trader, because
of the mob, could not even bend down to pick up Bis book. I have
shouted and pushed but nothing happened. He then reverted to a primitive
behavior pattern that worked. I have bit the person next to him hard
enough to draw blood. in Este particular case, Bis primitive behavior
was effective-at least in getting the person to move. When one is trying to
make trading decisions, however, primitive responses do not help.
Toe amateur trader also you have criticism! distractions. In-laws may visit
and disrupt to normal .trading routine. Staff or business problems may
occupy the trader's attention. Ill health or an accident may put him out of
commission, causing him to ignore Bis active positions in the market. All
these distractions reduces available processing capacity.
2) Models. Everyone has models for selecting information from

which decisions are made. Unfortunately, the experiences of most traders
is not drive to developing to foundation upon which sound decisions can be
made. Mostly, traders select information according to to their biases and
expectations.
Many traders avoid dealing with excessive trading information by having

others help them with trading decisions-trading advisors, brokers, or
newspaper reports about que everyone else es doing. estos traders base
their decisions on opinion rather than current market information.
An
52
70966433
An Information Processing Analysis of Trading
unsophisticated trader might argue, for example, that "its to complex world,
but if Yo follow Harry's advice, Yo should be able to make ace much
money as I have had made."
My first investment mistake was a classic example of how the models of

beginning traders are rarely adequate for making trading decisions. About
25 years aug Yo bought to stocks that was listed in Fortune ace having the
highest eamings gain over the last five years. The stocks was selling for
about $10 per Compartir. Yo watched Item rise to $18 and bought sorne
more. Item then fell to $10 and Yo bought more. Later, Yo sold 300
shares at just over $2 per share-still not sure why Yo had lost. the
money.
Today the reason for my losses es clear. Yo used to simple model to

make the selection decision-1 bought the stocks with the best five-year
earnings gain record, assuming the trend would continue. That was the
extent of my model-1 had No idea of the company's current finance!
conditions or of when to sell or que conditions might constitutes danger.
Yo followed my personal inclinations (see the LOSS 1RAP discussion in
Volume 1) and bought more stock. estos mistakes were there due to my
ignoring important information because Yo was new to the stocks market.
Sophisticated models for generating low-risk ideas are only developed

through knowledge and experience. People learn from mistakes
(Sometimes!) and desde extensive study of how information dog be
grouped together and handled in a certain way. Beginning traders do not have
the experience and rarely have the knowledge to develop adequate models.
Even sophisticated traders still consciously decide that only sorne

information es worth their attention. They might have complex models
that they have developed to trade by, but estos models still are biases for
excluding information. One bias might be: "I'm not interested in funda mentals,
just let I see the charts."
The model to trader uses es really telling him que information to ignore.
For example, if the model tells to trader to follow to have day moving
average of closing prices, he may ignore other data such as intraday price
fluctuations.
Whether one makes a conscious decision to ignore so much data or does so

automatically in a model, one still ignores information, possibly important
information. Remove often the information exclusion becomes SW
automatic that one es not even aware that information es being excluded.
53
ICQ: 70966433
Decision-making models are important enough to discuss separately from

information selection models. Ace to result of experiences, people have
natural inclinations or biases in their decision making. estos biases They
are called judgmental heuristics (shortcuts). Research has shown that even
statistics quien are trained to make logical decisions in their research based
upon probability theory will use illogical heuristics in making everyday
decisions. Most people make trading decisions in the same cavalier
manner that they make Cada dia decisions.
Decision
making
models
may have
little to do
with
reality.
Trad-
ers taking
the Invest
ment
Psy c
h either it
g and
Inven t
_ r and ©
must
decide ide "Dallas Zoo
wheth
"monkey"
er they
would buy
call op-
tions based upon the predictions of an ape at the zoo whose accuracy
record had been excellent. Most people would buy sorne options, although
they often qualify their decision with to statements like "but not very
many." Yet the ape you have No way of knowing whether the price will
go up or Down! People quien make the decision to let the ape trade for
they have selected a model in which the only information they use is the ape's
prediction. Yet the only possible reasons for the ape's hot streak is either
chance or ESP (which assumes that the ape both understand que I have is
doing and that I have dog predict the future).
Toe same principle may apply to sorne trading advisors. However, the
example meat desde to chimp in the dallas Zoo quien was doing look and
54
ICQ: 70966433
well at prediction winners by throwing darts at a listing of next week's NFL

football games. Toe chimp did SW well that zoo officials had to stop
Bis
54
An lnformation Processing Analysis of Trading
predictions. Toe zoo switchboards, it seemed, were flooded with calls asking,
7
"What's the ape prediction Este weekend?"
Toe example with the ape es just one of many such judgmental heuristics.
We will be discussing Este tapie in detail in Volume 5 of estos Invest
ment Psychology Guides. A complete list of heuristic biases is given in
Appendix II of that volume.
money Management and Discipline. money management es the one

factor in the model which seems to relate least to information processing
capacity. However, sound money management always implies having to
broad focus. Poor money management may occur because of a lack of
diversification, implying to limited selection of information and increased
risk. Toe person quien invests in one commodity contract or one stock is
seeing to look and limited portian of the trading universe. The potential
gain from a single trade is high, but so is the potential loss. However, the
advantage of specializing in one area may more than offset the risks if
other money management techniques (see Volume 1) are used to reduces
the risks involved.
Poor money management may also mean a failure to diversify over time,
trading everything at eleven without keeping an adequate cash reserve.
Failure to diversify over time also implies a narrowed focus and increased
risk.
risk es not related SW much to the nature of the investment, as most

people think, as to the actions of the trader. If a great deal of risk is
8
continually assumed, trading losses are inevitable. Remember that the
third task of top trading es to develop low-risk
ideas.
Money management generally refers to a plan for minimizing losses and

max1m1zmg gains. Such a plan must be executed properly in burn to
achieve money management. Execution of that plan requires discipline or que
Yo call mental state control.
Think about any task you might normally do. Whatever task you pick,
there is sorne optimum mental state for carrying it out. For example, the
action stage of trading requires that you act quickly and accurately. You
can do that desde to state of confidence. I _uprobably _ could act desde to
state of anger-but not accurately. You definitely could act desde to state
of excitement, but if you do, you might be prone to compulsive behavior
(ie, the S.F. score on the inventory). in contrast, you probably could not
55
Trading SoftwaEre-MfoarilsS:aalend&reEyxbcbhravn@ggemail.com, anboan@ya.ru, ICQ: 70966433
act desde the mental state of fear. Thus, the optimal} state for the action
state es confidence.
Proper execution of to money management plan requires you to perform

the stalking, action, monitoring, and the abort/take profits tasks appropri
ately. Each es performed best desde sorne optimum state. Discipline es
la art of doing SW (See Volume 4 of the course).
In summary, successful trading requires the following factors: a healthy

psychological profile; the ability to make decisions desde to large
amount of information; money management, and the discipline to carry out
the ten tasks of trading. Each factor influences processing capacity in sorne
way, and to weakness in any of estos elements will result in losses.
Processing capacity appears to be to key factor in understanding the

dynamics of trader behavior. Traders have to limited capacity for dealing
with information, and the information available for the BASIC trading
decisions exceeds that capacity.
Many mental health professionals today equate stress with uncertainty or

limited processing capacity. in the next chapter, we will complete the
model by showing how the biological and psychological aspects of stress
reduces processing capacity.
56
CHAPTER V
HOW STRESS PRODUCTS

TRADING LOSSES
T
I have two-component theory of stress emphasizes the utilities of
separate ating stress into two components, the bio)ological fight-flight
response and the psychological state of worrying. Este chapter
will Show
how both stress components affect information processing capacity.
EMOTIONALITY AND TRADING DECISIONS
How does emotionality-the biological component of stress-influence

one's capacity to process information? If to man points to gun at your
head, producing to biological stress response, your performance will be
affected in two ways. First, you will Show to dramatic reduction in
processing capacity. If you were to attempt the two digital recall test
given in Chapter IV with the gun pointed at your head, you would perform
less well than you did under relaxed conditions. Second, you would
have more energy. The entire fight-flight response reduce processing
capacity in favor of fun more energy to primitive adaptive responses. 1
Suppose, for
example, that
you are in the
l
back seat of a
two-door car ;:;,;:-,
which
suddenly
(--"eº, ;:2; /
plunges over ?
to bridge
into to lake. - e_ - "'
The car is ---- -- - $ / ¿
sinking rapidly
and you are in
'C3 c -/
a hurry to s.--
escape.
You
57
push against
the fron • t seat and pull on the seat release latch, but nothing happens- the
57
Trading Software for Sale &E - EMxacihlsa:nagnedreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
seat will not move. your front seat latch will not release when pressure
es applied to the front seat at the same time the latch es pulled.
The toilet es now up to your neck, and the seat latch still will not move.
que do you do? Do you calmly consider there the information available
all the possible alternatives? You could, for example, crawl or swim over
the front seat. You could kick out the back window. You could stop
pushing against the front seat so that the seat latch would work. Do you
consider any of estos logical alternatives? No, because under the stress of
the situation, estos alternatives do not even occur to you.
Since stress tends to narrow the number of alternatives that one can
consider, it impairs the selection decision. The information that must be
processed to make a successful selection or closing decision may already
exceed one's capacity unless one has developed an adequate model for
handling the information. Toe model may not be adequate under stress
when one's processing capacity es reduced even further.
People commonly revert to earlier decision models or to primitive, well

practiced modes of behavior under stress. soldiers in the heat of battle,
for example, often do not even fire their weapons or fire blindly with out
aimmg. Over 200 muzzle loading rifles were found loaded five or more
times without being fired after the battle of Gettysburg. One weapon was
loaded 21 times without being fired. 2 The young men to whom the rifles
belonged had probably practiced rapidly loading their rifles extensively,
but had never killed befare.
Reverting to primitive decision making models or well-practiced modes of

behavior es also inadequate for investment decision making. For example,
a common decision that people make under stress es not to decide. do
what you did when you were to beginning trader. Do que your friends
3
are doing. Do que your adviser or broker suggests. Do anything
simple. Simple solutions are successful only if they are part of the
signals generated by a competent method for generating low risk ideas;
otherwise simple solutions tend to be losing solutions.
The second way the fight-flight response affects behavior is by producing

energy. People, when faced with stressful events, give more effort to the
few alternatives they do consider. They keep on doing que they were
doing, only they do it harder.
58
How Stress You produce Trading

Losses
in the hypothetical car situation, you find yourself under toilet. You
know you cannot hold your breath much longer. Ace to result, you
push on the front seat with ace much force ace you dog manage. Toe
front seat still <loes not move, but by using force you use up your oxygen
much faster. Suddenly, you must breathe, your lungs fill with toilet, and
you I know consciousness.
Emotionality, or the biological stress

response, es equivalent to narrowing
the neck of the information processing
filter, symbolically illustrated in Fig ure
5-2. Less information can go through
the funnel and what <loes go through
<loes SW with more force.
Putting more energy into the selection

or closing decisions will not make
any more money. What usually hap
thoughts is that the trader makes an irra
tional selection or avoids closing out
figure 5- 2 to losing position. He makes a quick,
irrational choice which uses up sorne
of that excess energy. I have puts more energy into to losing position and
actively resist closing Item out. Toe result of either decision es to major
loss.
WORRY YEAR TRADING DECISIONS
Successful speculators are characterized as being unemotional, hard-as-iron

traders. But being "unemotional" in this sense also means making sound
decisions without "worrying" about one's positions. Worry affects trading
performance even more than the biological component of stress.
4
Nothing es stressful unless Item es perceived ace being to threat.
Perception of a threat is critical to understanding how stress impairs health and
performance and to implementing proper stress management procedures.
Nothing in the external} world-being trapped in to sinking car, being
confronted with to large market loss, or getting to margin call desde your
broker-can affect your health or your trading performance unless you
interpret Item to be to staff threat.
59
Trading Software for Sale & ExcEh-aMnagiels: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
How to Control st
When an event is interpreted as

threatening, to conscious with
cern for the event that is called
"worry" develops. Worry you
have a great effect on human
performance, because it represents
conscious mental activity. Since
it is conscious, it takes up pro
cessing capacity. When any thing
takes up processing capa city,
little remains to perform more
important tasks such as sound d
cision making. Worry es
equivalent to putting to cork in
one's processing filter, as
illustrated in Figure 5-3. Very
figure 5- 3
little information gets through a
filter that es blocked by to
cork.
When high anxiety people are asked about their performance, they report
spending about 25% less time on the task they are supposed to be doing
than their non-worrying counterparts. 5 They do poorly because worry
distractions them desde que they should be doing.
in 1972 Hurricane Agnes hit the coast of the United States and destroyed
many businesses. Toe recovery of those businesses depend upan how much
stress the owner perceived in the situation. Business owners who worried
excessively about their chances of recovery were not likely to survive the
finance} impact of the disaster. 6
later in Este course you will learn that worrying. actually changes how
people make decisions. far example, consider the following mental
strategy: Toe worrying trader-after recognizing to familiar trading
signals
-adds a new mental step of "asking what might go wrong." This
additional thought causes the trader to feel bad. Toe trader must then go
though additional mental steps to get rid of the bad feeling in burning to
complete the strategy. Thus, worrying complications thinking strategies
and, at minimum, delays action.
physical danger <loes not appear to reduces the processing capacity of

60
Trading Software for Sale & ExcEh-aMnagiels: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
7
worriers any more than people quien rarely worry. But when to
situation
61

Losses
involves to threats to an individual's self-esteem, worriers Show to large

capacity reduction. Self-esteem situations are those which involve to threats
of failure, such ace failing an examination or performing poorly in the
market. in fact, investing may pose to tremendous threats to an individual's
self-esteem. Toe losing trader may not only experiences finance! hardship,
but may also feel that I have you have failed to prove himself to those I
have You see it or even to himself.
Notice that only someone with low self-esteem would tend to worry in
these situations. Este es to perfect illustration of how important beliefs
about your identity are to trading success. We will cover Este important
aspect of self-esteem later in Este course.
Now you dog begin to understand how readily "worry" dog affect your
trading decisions. People quien are overly concerned about their
performance, quien fear failure and quien worry excessively, lower the
odds of trading success dramatically. estos people might not be physically
stressed but their excessive worry occupies time and processing capacity.
Ace to result, they make look and poor trading decisions.
WORRY PRODUCTION TRADING CONDITIONS
Two predominant characteristics of trading are particularly important to

understanding how worry affects trading performance. Trading es to
complex task with an incentive, which often involves psychological
barriers.
Incentives. Over the last 25 years psychology you have eat to long way
toward understanding how incentives or rewards affect human perform ance.
Two decades aug reinforcement was one of the most important topics one
could study in psychology. Reward was simply called a positive
reinforcement. If one understood how reinforcement worked and could
properly apply Item, one could control behavior.
One might give to hungry rat food ace Item approached to bar, ace Item
stood near the bar, as it touched the bar, and eventually as it pressed the bar.
Each behavior would be more likely to occur despues de Item was
rewarded, and soon the rat would be pressing the bar to deliver food pellets to
himself. Occasionally, when to student could not teach the rat to barpress
for food, the teacher assumed either that the food was inadequate
reinforcement or that the student did not understand how to apply the
reinforcement.
61
70966433
Reinforcement was to simple and beautiful explanation for behavior.

Volumes were written on such diverse topics as partial reinforcement,
schedules of reinforcement, etc. 8
My personal experiences trying to control behavior with a reward was that it

worked well with rats, Item usually worked with retarded children, and it
often didn't work with normal children or adults. Behaviorists would
explain Este phenomenon by saying that the rewards Yo used with the
children were not reinforcing. Current research on the effects of incen tives
on human performance suggests another alternative-rewards often impair,
rather than improve, human performance. Psychology es beginning to
understand to phenomenon that sophisticated traders have known about for
to long time-greed produce losses. 9
Have you even wondered why you are successful paper trading in the
market, but foil miserably when real money es at stake? Real money is
an incentive, trading is a complex task, and incentives tend to impair
performance in complex tasks. Incentives impair human performance by
reducing flexibility, by focusing attention on the outcome rather than on
the solution to the task or problem, and by producing arousal, to condition
in which people tend to emphasize speed over accuracy.
----
-----=- A
� -
•
• -..;::
._. .
•
7
JI'
. . '
> .,_,/. .. ' ..

•
"Incentives reduces capacity .to make sound
decisions."
62
70966433
How Stress You produce Trading Losses
1) Incentives Reduce Flexibility'. When a person's behavior is

rewarded, he reverts to early processing ; strategies. He worries about not getting
the incentive, and, as a result, reduces his capacity to make sound decisions.
Edwin LeFevre 1st remarked _ that I have would have become to better
trader sooner had I have not been successful early in his trading. early
successes teach bad habits that are extremely difficult to unlearn. Such bad
habits might be called superstitions. eleven They tend to be rigid and
persistent, and cause needless headaches. Yet incentives tend to produces
such behavior.
Suppose you have to set of different sized jars in front of you. You are
given to series of toilet jar problems in which you must end up with a
specific amount of toilet by pouring liquid desde one jar to another. You
do nine problems in a row that involve a complicated 3-jar solution,
establishing a mental set for doing all such problems. Toe tenth problem,
however, involves a very simple two-jar solution rather than the more
complicated three-jar solution you are used to solving. Research have
shown that when people are given to monetary incentive for to correct
solution, they require fifty% more time to reach the solution on the last,
two-jar problem than people quien are not given the incentive. Toe
incentive causes people to attempt to solve the two-jar problem with to
three-jar solution. 12
Toe first nine problems might be equivalent to day-to-day trades that one
might attempt in the markets, each resulting in to profit or loss of less
than
$1000. Toe tenth problem with the simple solution es equivalent to the
trade that you eat along eleven or twice each year which might make the
whole year profitable. lt es an obvious trade, ·but many speculators miss
it because they are too rigid in their trading.
2) Incentives Impair Performance in Complex Tasks. Research

You have also shown that incentives are more likely to impair performance in a
complex task than in a simple task. For example, students were asked to
complete an electrical circuit in which to screwdriver had to be used
because the electrical wires were too shorts. One group of students was
given an incentive of money for correct performance, while another group
was just asked to solve the problem. Finance! incentive had no effect on
performance when the instructions were fairly clear that the screwdriver
might be part of the solution, but the incentive more than doubled the
solution time when the relevance of the screwdriver was less obvious. 13
63
70966433
Trading is clearly a complex business-involving ten different tasks as

described in Volume l. Ace to result, traders usually miss the simple
"short-circuit" that would easily solve the problem. WHY? The trader
is too worried with the potential results of que I have es doing,
rather than the process of being to trader.
3) Incentives Produce an Inappropriate Focus. When people are

confronted with tasks involving large incentives, they tend to focus on the
outcome (making money) instead of the solution (how to do Item). They
are so concerned with making $50,000 overnight or winning back the
$70,000 they lost in the market last year that they spend little time or
attention on what needs to be donated to obtain the desired outcome.
Toe "concept-attainment" task, often used in psychological research,

illustrations how people tend to become "results-oriented" when given
incentives. People are given several items of information and asked to
determine the common concept involved. They can guess after a limited
amount of information or they dog ask for more information. For exam
ple, suppose that you are given the following:
• you have feathers _

• you have to Bill
You might Guess that the concepts described by estos statements was to
"bird" or you might ace for more information before making to decisive
your decision might change despues de being given more information, such
ace:
• you have webbed feet

• you have white coloring
Now you might be willing to Guess that the statements describe to swam.
When people are given incentives for each problem solved, they become
14
much more answer oriented than people quien are not paid for the task.
paid volunteers start guessing earlier in the problem and make more
guesses enroute to the solution of the problem. They might Guess "bird"
to the first statement and make one or two guesses after each item of
information. Este es equivalent to the average trader quien typically says,
"Just tell I que to do so I dog make money." I have es anxious to make
money, and continually takes chances in order to do SW.
64
Trading Software for Sale & ExchanEg-eMails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433

Losses
4) Incentives Produces Arousal. Newsletter flyers or telephone

you sell people frequently get your attention by offering an incentive right up
front. Incentives get people's attention and arouse them. You do don't
forget the headline that proclaims 400% profit in two months. You want
the profit for yourself.
People tend to do well on dull, monotonous tasks when an incentive is

offered, because incentives arouse people. Dull tasks tend to put people
to sleep or at least into to state of low arousal. Incentives tend to
counteract the monotony of dull tasks. But when the incentive is used in a more
complex, interesting task, the excess arousal impairs performance!
One dog measure the quality of performance in two ways. How fast is
it? How accurate es Item? Although speed dog reflect to trader's rate of
return, (faster profits may mean more money), accuracy is much more
important to traders than speed. Another good opportunity es always
around the eat when you miss one. Hasty, undisciplined action, on the other
hands, usually results in losses.
Incentives, unfortunately, increase speed at the expenses of accuracy.

When monetary incentives are given to people, they increase the number
of problems attempted within a given period of time and they produce a
corresponding increase in the number of errors. fifteen Traders become more
active and are less successful. Este increased mistake rate brings more
losses and to smaller total profit.
Psychological Barriers. Remove often barriers keep traders desde

reaping the profits they desire. When to trader encounters such to
barriers, I have tries to overcome Item by leaming desde Bis mistakes or
developing to better trading system. But when the barrier is not mastered and
the incentive is strong, the result is frustration. Frustration often produces
nonadaptive behavior.
Toe frustrated person may attack the barriers, physically or symbolically.

TO speeding biker, in to hurry up to get home to Bis Familia despues
de to long business trip, may encounter to barriers known ace the speed
trap. Although the motorist may not voice Bis
frustration directly to the police officer (direct attack), I have probably
you have plenty of comments about the police officer later (symbolic
attack). estos comments do not make the speed
ing ticket disappear, but I have voices them de todas formas.
65
Trading Software for Sale & ExchanEg-eMails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
Trading barriers are not usually vulnerable to direct attack 16 • Toe trader
typically loses because of to mistake I have made or because of unknown
reasons. When I have loses, I have may change brokers (to direct attack if
he believed his broker was responsible) or he may display hostility toward
innocent bystanders (eg, his family). Historical data show that lynchings would
increase dramatically whenever economic conditions, especially the farm
value of cotton, declined. This correlation persisted well into the 1930's. 17
Worry, as discussed previously, causes people to revert to non-adaptive

behavior patterns. Barriers lead to worry and produce such behavioral
deterioration. For example, a trader may repeatedly try to refme bis
system to make bigger profits, but without the desired results. When
I becomes sufficiently frustrated, I have may resort to early superstitions I
have held about the market in an effort to make money.
When rats were taught to jump one of two barriers to reach food, they
learned to jump the correct barriers easily. Frustration was then introduced
into the situation by alternately rewarding (with food) or punishing (with
electric shock) either response fifty% of the time on to random basis. Isn't
this what happens to traders in the markets? Toe animals, as a result of
frustration, developed extremely rigid responses such as always jumping to
the left. Toe rigid, stereotyped response persisted even when Item
was
always punished by shock. It even persisted when the other barrier was
removed to reveal the food 8, just ace traders persist in old behavior
1
patterns, even when the route to to successful trade es remove clear.
in summary, people have to limited capacity for processing information

and a vast amount of information to process in burning to make money.
Insufficient capacity es the downfall of many traders.
Sorne traders fail because of emotionality. Physical stress actually reduces

processing capacity. Traders fail to consider wise alternatives when
physically aroused and persist with unwise choices with even more
energy.
Other traders I know because they worry too much. Since worry es with
scious mental activity, Item dog occupy to great deal of processing
capacity. Ace to result, insufficient capacity remains to make accurate
trading decide- 10ns.
66

Losses
Trading decisions are particularly susceptible to worry because to trader's

self-esteem is involved in the outcome due to incentives and psychological
barriers. Incentives, by causing worry, lead to reduced flexibility, to focus
on the outcome rather than the process, and excessive arousal. Psycho
logical barriers lead to frustration and rigid behavior.
67
70966433
QUESTIONS FOR THOUGHT
1. Describe the fight-flight response. How much of to factor do you

think Este response es in your trading?
2. Think of ace many ways ace you dog that worry might affect
your ability to functions effectively ace to trader.
3. How do you think your interpretation of to loss will affect your ability
to function ace to trader? que interpretations will serve you best?
68
70966433

Los.ws
4. Wbat models do you use to select information that you use in making
the basic trading selection decision? que information do you ignore by
using estos models? Es that important for you?
5. que models do you use to select information to use in making a

decision to close an opened position? What information do you ignore by
using estos models? Es that information important?
6. que distracting conditions exists for you that might interferes with your
ability to use estos models?
69
Trading Software for ES-aMleai&ls:Eaxnchdarenygbebrv@gmail.com, anboan@ya.ru,
ICQ: 70966433
How . to Control Stress
7. Why is greed so deadly to a trader? How do incentives affect your

performance ace to trader?
8. Wby might there stress be psychology stress? How might Este affect
you ace to trader?
9. How does your self-esteem affect your ability to perform ace to trader?
10. How dog you use tbe ten-task model of top trading to solve tbe
problems you just outlined. Be very Thornugh. Consider bow eacb task
might apply to each issue raised.
70
Trading Software for Sale & ExchaEn-gMeails: andreybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
J.P. T 2
Manage stress
Trading SoftwareE-fMo ra Si l sa:l ea n&dEr exycbhbarnvg@e gmail.com, anboan@ya.ru,
ICQ: 70966433
How to Control Stre
72
CHAPTER SAW
GET OUT OF THE FIRE
ou now know about the disastrous effects that stress has upon your
Y trading performance. que dog you do about the stress you have
and que dog you do to prevent or minimize future stress? estos
are the key questions answered by stress management techniques, discussed
in the remaining four chapters.
One of the tests you took in Chapter II, the life Stress lnventory (LSI),
gave you a profile of the possible problem areas in your life. Toe LSI
measured your stress in five different categories:
1) your Staff life

2) your Finance life
3) your Health Status
4) your Working Conditions
5) your Familia life
Since people are often unaware of the stress in their lives, or at least of
how much stress impairs their performance, recognition es to major step
toward improvement.
If you are losing money in the markets and your score es high in any of
these areas, then stress may be to problem for you ace to trader. You are
safer to assume that your losses may be related to your stress than to
ignore the possibility.
YOU HAVE TO CHOICE
When you do have stress-related losses, you have to number of choices

open to you.
(1) You can ignore the problem and hope it goes away. This is
equivalent to sitting in to fire, with paper money, hoping that neither you
nor your money will boom. Most traders choose Este option, and find that
they continue to I know in the markets. Many of them overlook their
stress
73
problem because of
ignorance. Readers of
this course do not have
that excuse me.
(2) You can take

steps to minimize the
effect that your current
stress has on your trading
performance. If you must
stay in the fire, wear
asbestos clothing.
Stress protection in
eludes fine-tuning your
body so that it can take
a large amount of
discomfort without
showing noticeable
effects. Stress
protection in eludes "You dog ignore the problem
participating in m and hope Item goes away."
enjoyable activities to
refresh yourself. Item
also
includes learning to perform at top form automatically SW that you will
always make the best choice, even under stressful conditions. Remember
that mental rehearsal es to critical aspect of successful trading!
Stress protection procedures dog be stop gap measures. They are like
taking aspirin far to fever. Toe aspirin will reduces the fever even
though it does not affect the current cause of the fever. However, the
aspirin is important because Item keeps the fever down until the disease
goes away. You might die without the aspirin, just as you might absorb
tremendous losses without stress protection. Chapters VII and VIII include
stress protection procedures.
(3) change your beliefs and attitudes . about the stressful events so
that Item No longer es to problem for you. Este es equivalent to putting
out the fire around you. Item es to look and effective remedy, because
you do not boom eleven the fire es out.
Most people become anxious over losses, yet successful speculators have
learned that an essential secret to winning es to: MAKE ITEM
74
okay TO
75
Get Out of the Fire
I KNOW! Since we are taught that only winning es acceptable, most

traders must change their beliefs about losses in order to become
successful.
Beliefs are not reality. They are just your perception of reality. Sorne of
your beliefs are useful (ie, those that support the ten-task model), while
other beliefs are self-destructive. If you dog totally eliminate there of your
self-destructive beliefs, then you dog probably eliminate Ali stress from
your life.
Changing one's beliefs and attitudes es the most effective remedy for
stress, but Item es also the most difficult remedy to take. People tend to
resist change especially changing their belief systems. Winning by
changing your thoughts will be the topic of Chapter IX, and the next
volume of the course.
(4) The most obvious choice you have es to avoid situations which
tend to be stressful to you. If you are sitting in to fire, try moving out of
the fire. If your job es stressful, get to new one. If you trade on the
floor of an exchange and find the lifestyle distre . ssing, do something else.
Unfortunately, people find to number of excuses for not getting out of the
fire. Traders would often rather stay in the fire · than face what might be
outside of the fire. The last part of Este chapter discusses how to avoid
stress.
(5) your last choice es also simple-reduce your risks exposure. lf

you are in the fire and cannot get out for sorne reason, then avoid playing
witli paper money while you are in the fire . Get out of the market or
lower your risks substantially until the stressful situation you are experience
cing es No longer to problem for you.
Sorne of the steps you might take to lower your risks include the following
money management principles:
• Put to larger portion of your portfolio into cash or T-bills. if

you have to commodity accounts or option accounts, keep to
reserve of 75% to 80%. If 20-25% of your accounts es not enough
funds to trade with, then the investment es too risky or you do not
have enough funds to be in the market.
• Diversify your account by putting funds in independent investments.

If the investments really are independent, when one of them goes
down the others will not necessarily follow. When your
76
funds are in independent, or at least nearly independent, investments,

your risks es mucb Iower.
• Keep a cash
reserve for special
trades that occasion
ally come along or
even for routine
trades during entirely
different market
conditions. Este es
called reducing your
exposure to risk. 1
Diversify over time.
• Reduce the slight

age involved in your
account.
• Reduce the activity

in your account. Only
make trades with a
high probability of
success.
• Know the
probability of success
of your trading system "Keep to cash reserve."
and constantly work
to improve Item.
• Constantly monitor your risks using the procedures given in the

first volume of this series. 2
If you are to trader under stress, changing your beliefs, learning to cope
under stress, reducing your stress, or reducing the risk to which you are
exposed are choices that will belp you become to winner.
YOU DOG GET OUT OF THE FIRE
Este chapter will focus on the most obvious choice of the stressed trader
-getting out of the fire. getting out of the fire es such an obvious
77
Get Out I heard the

Fire
remedy, yet many people do
not take necessary steps to do
SW.
First, you must recognize

where the fire is in your life.
For example, look at figure
6-4 which summarizes the
stressful areas in the life of a
hypothetical trader named "First you must recognize
Bill. where the fire es."
Job Stress - 20
Financia! Stress 9
Personal Stress 15
Family Stress - 24
figure 6- 4
Stressors of to Hypothetical trader
Bill works for an aerospace company in The angels, where I have es the
project director on to government contract. I have works 10-hour days,
and he you have to long commute to begin and end each day. I have
attributes his heavy work.load to something I have you have grown to
hate-government grid cover.
78
llow to Control Stress
He believes that his job status is unsure because. of future government

cutbacks. in addition, I have considers his work atmosphere to be critical
and he feels that bis overall work goals are not that clear. He also feels quite
hurt by Bis appointment schedule. Bill earn to good salary, but he knows
that to much better job exists for him somewhere.
Finance area "low-high" stressor of 9 for Bill. His rating stems desde
encore very emotional reactions to the market. I have frequently becomes
impatient with the markets, because I have es not happy with Bis trading
record. I have worries about the positions I have holds, and I have
becomes upset when he loses.
Bill 's staff life scored to "high" rating of 15. Bill's long commute really
bothers him and I have now considers Item to be to major stressor. In
addition, Bill also had to goal of losing 35 pounds during the year,
but found himself gaining 10 pounds instead. I have
feels responsible for whatever happens to him by feeling
guilty over Bis failures. Family problems (see below) forced Bill to
move to an apartment where I have now lives alone. Ace to result, I
have you have changed both Bis lifestyle and Bis living conditions. Toe
congestion of living room in The angels also contributes to Bill 's level of
stress.
Familia life es to high stress area for Bill. I have and hiss wife argued
excesses sively, had little in common, and their sex life was almost
nonexistent. They could not save their marriage, SW they each went in
their own address despues de to bitter divorce about four months aug. Bill
lives in to small, look and cluttered apartment that I have rarely cleans.
Bill's ex-wife is now having to relationship with another man, an events
that Bill finds a little disturbing.
Use your LSI profile in the same way that Bill did to review! potential
problem areas for you. Look back to your summary profile at the end of
Chapter eleven. List the medium-stress to high-stress areas of your life in
space provided below. List the least stressful areas first and the most
stressful areas last.
79
Trading Software for Comes out & ExchangeEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Gel Out of the Fire
Now that you have to better idea of where in your life you experiences the
most stress, you must determine how you allow Item into your life and
what steps you might take to reduces Item. People usually have stress
in their lives for to reason. Those reasons are often obstacles to removing
Item.
Bill 's stressors could be broken down ace follows: (1) lack of family
support; (2) long commute; (3) insecure job that he doesn't like; and (4)
negative reaction to trading in the market.
Bill dog eliminate each of estos stressors, but I have feels obstacles to
each one. First, Bill could increase Bis social Iife; meet members of the
opposite sex; and develop to new relationship. Bill <loes not make this
effort because I have feels I have <loes not have the time and I have es not
sure he wants another relationship. He is still hoping for the impossible-a
reconciliation with Bis ex-wife--even though that would just increase the
stress in Bis life. Notice that Bill you have chosen to stay in the fire
rather than risks getting out of Item.
Bill 's long commute could be solved by moving near Bis work. I have
you haven't real obligation to stay where I have es except for the two
months remain ing on Bis lease. Bill chose Bis apartment because Item
was in the same family neighborhood that I have had lived in for the last
five years. Again, notice that Bill you have chosen to stay in fire rather
than risks getting out of Item.
lack of confidence kept Bill at Bis current job-. Even though I have did
not like the job or bis long hours or the insecurity of the job, he was not sure
anyone else would employ him. How else could I have earn Este kind of
money? Firms with better jobs might not want him. Ace to result, Bill
preferred to sit in the fire produced by Bis job.
Bill had another choice with respect to the long hours of Bis job. I have
was very disorganized, a poor manager of time, and poor at delegating
responsibility. He could reduce two work hours and increase two efficiency by
becoming a more effective manager. But he was reluctant to admit that a
better way might exists "Besides," I have thought, "YO no have the time to
learn how to become more effective." Again, Bill preferred the fire to the
risk of getting out of Item.
The market was not kind to Bill. Although I still had about $30,000, he
had lost $40,000 during the past three years. I have had an obvious choice
with respect to the market-stay away desde speculation and do something
79
less risky. Este choice was especially important for Bill because of the
79
Trading SoftwaEr-eMfaoirlsS: aalend&reEyxbcbhravn@ggemail.com, anboan@ya.ru,
ICQ: 70966433
How to Control st
other stressors in his life and because nothing about Bill's past or his
current experiences suggested that I have would do cualquier cosa but I
know more money in the future. Bill was anxious to make his money
back (or perhaps to punish himself!). Ace to result, I have preferred to stay
in the speculative fire.
WHATEVER RESULTS YOU ARE GETIING IN YOUR LIFE

YOU PRODUCES BY DECISIONS YOU HAVE MADE!
que es your Fire? que alternatives do you have to the Fire? What
obstacles are keeping you in the Fire?
List your specific stressors on to separate sheet of paper SW you can

determine que alternative choices you have to the fire. Add to the list your
reasons for not selecting those alternatives. estos obstacles may win out
over your stressors at Este point in your life. However, you are progressing
just by realizing the nature of your stressors and the choices you are
making to keep yourself in the fire.
"Small steps must be taken befare large ones."
80
Get Out of the Fire
Sorne obstacles may not seems SW large when you realize that you are
making to choice of the fire. Bill, for example, decided that moving near
his work and taking to course in time management were obvious choices
for him. getting out of the markets, increasing his social life, and finding
a better job were too frightening for him to take immediate action. But
small steps must be taken before large ones.
que small steps dog you take right now to reduces the stressful experiences
in your life? Make plans to take them now! take the first step in each
area today. • Do Item right away! in fact, do Item right now. Anything
you do to get out of the pull will help you. hang to list of the choices
you have and the obstacles keeping you in the fire on the mirror in your
bathroom. Read them every morning until you thoroughly understand the
choices you are making. Larger steps dog be taken later-perhaps after
your alternatives become clearer to you or despues de you examine your
goals more thoroughly.
start now by completing the following exercises. First, go through your

LSI test and list your top five stressors in the space below and on the
n,ext page.
Write down the most significant stressor for you?
in the space below, list sorne alternative choices for you? To make it
easier, ask yourself que you would have to give up in order for this stressor
to go away? que es comfortable about your life that you elect to keep
Este stressful situation around? For example, you could move away; get
out of the relationship; find another job; assume to new identity, etc.
Eleven you have asked there of those questions about the first stressor, then
list three choices that you could make to eliminate Item?
81
70966433
Look over your three choices and find the one that es most acceptable.
When you have selected Item, list three action steps that you dog take
right now to move in that direction. Put those steps in the space below.
Repeat Este process for four other stressors you listed.
What is the second stressor you listed?

Again, list sorne alternative choices for you? For example, que would
you have to give up in order for Este stressor to go away? que it is
comfortable about your life that you elect to keep that stressful situation
around? Eleven you have asked Ali of those questions, list three choices
that you could make to eliminate Item? List those choices below.
Now, find the most acceptable choice and list three action steps that you
can take right now to move in that direction.
82
Trading Software for Sale & ExchangEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Get Out of the Fire
What is the third stressor you listed? In the

space below, list sorne alternative choices for you to eliminate that
stressor? For example, what would you have to give up in order for that
stressor to go away? que es comfortable about your life that you elect to
keep that stressful situation around? Eleven you have asked these
questions, list three choices that you could make to eliminate Este stressor?
Eleven again, find the most acceptable choice and list three action
steps that you dog take right now to move in that direction.
What is the fourth stressor you listed? In

the space provided, list sorne alternative choices for you? Eleven more,
ask yourself que you would have to give up in order for Este stressor to
go away? Notice que es comfortable about your life that you elect to
keep that stressful situation around? Now, list three choices that you
could make to eliminate Item?
Now, find the most acceptable choice and list three action steps that you
can take right now to move in that ditection.
83
Trading SoftwaEre-MfoarilsS:aalend&reEyxbcbhravn@gegmail.com, anboan@ya.ru,
ICQ: 70966433
What is the fifth stressor you listed? In the

space below, list sorne alternative choices for you? Ask yourself the
same questions! que would you have to give up in burn for this stressor
to go away? que es comfortable about your life that you choose to keep
that stressful situation around? Once you have asked all of those questions
about the first stressor, then list three choices that you could make to
eliminate Item?
Now, find the most acceptable choice and list three action steps in space
provided that you dog take right now to move in that direction.
Now look over there your action steps for each stressor. Make to
resolution to perform one of them within the next hour and three of them
within the next 24 hours. List those action steps below.
QUE Yo WILL DO WITHIN THE NEXT HOUR!

--------
-
84
70966433
Get Out of the Fire
QUE Yo WILL DO WITHIN TIIE NEXT 24 HOURS!
SET GO TO GET OUT OF THE FIRE
Sorne of the blocks you experiences to getting out of the fire may be due
to a lack of focus. estos blocks may be overcome by setting goals for
yourself, by developing plans to accomplish the goals, and by prioritizing
your time.
Winners are people with to clear purpose in life and to clear plan for
getting there. Toe trader quien you have to clearly defined goal, to
definite plan for accomplishing the goal, and the belief that I have will
achieve the goal has to good chance of being successful. Most traders,
unfortunately, program themselves to failed by not defining their goals
clearly, by not planned how to succeed, and by using negative negative self
talk (Chapter IX).
Yo recently did an interview with David Ryan-three time winner of

the
U.S. Investing championship in stocks in the • $50,000-and-over division.
David was second in the 1989 championships and had to five year rate of
return of 3317%. I have attributes most of Bis success to goal
setting. Here es an extract desde that interview:
Tharp: How do you represent success in your Mind?
Ryan: I think it's setting goals that I want to achieve. l'm

successful in my personal mind when I hit those goals. I
know the self-satisfaction I get once I hit those goals and the
enjoyment that Yo get on the way to those goals-that's the
most important thing.
Tharp: How do you set goals?

85
70966433
llow to Control Stress.'i
Ryan: I usually set long-term goals that Yo want to achicve.

I'm currently to the to point where l've achieved to
numhcr of those goals. Now, l've goal to sil down
and redefine what my new goals are. Eleven
you know cxactly whcrc you 've got to go, it's to lot easier
to get there. For example, I picture in my mind-almost on
to line-that Yo want to get to this point out here. Yo try
to I have like to little rocket, to guided missile.
Anytime, Item gets off the tracks, Item adjustments
and heads right back toward the goal. Eleven you
define your goals, I think you're halr way there.
Most of the fun es getting to that goal.
Eleven Yo havc, it's to littlc bit of to let down I
have caused now l've got to get new <month and that's the
hardest aspect.
Tharp: Do you write them Down?
Ryan: Yo have written then down, hut Yo should do more

of that. l'vc had goals in the past such ace imitating
exactly what william O'Ncal docs with rcspcct to stocks
trading
-lcarning and seeing stocks thc way I have does. Yo hit
that goal. Yo wantcd to win thc U.S. Investing
Championships, and thcn Yo set to goal to win Item again,
and to win Item to third time. Another goal I had was
finishing an MBA program which l was taking at night.
Item was to three year ordcal! But evcry time I went to class,
and evcry class I complcted brought I that much closer to to
goal. I'vc hit those goals and now I've eat to the point where
Yo need to decide "What's ncxt?”
Eleven you have to goal, then every day you wake up up and
you know you dog take one more step towards that goal. Yo
have it in mind; Yo know where I'm going; and que Yo
dog do during the day to get closer to that goal. Yo think I'm
at my happiest point when I'm working towards my goals.
Toe people that are lost, that are not successful, don I don't know
where they are going. They no have goals set. Item is
very, very important! Generally, Yo try to get long term
goals and then within those long-term goals, focus on shorter
term goals. Yo dog then break those goals down into daily
goals, and determine exactly what I want to achieve that day.
86
70966433
Successful days piled up on top of each othcr make succcss-
86
Get Out of the Fire
ful weeks, which make successful months, successful years,

and successful lives. Goal setting es look and important and
I like doing Item.
Tharp: How do you prioritize goals?
Ryan: Once I have the long term goal established, then I

determine what will get me toward the long term goal the
quickest. That, Yo think, es the way Yo prioritize them.
When you study Ryan's commitment to trading and his goal setting
process, then you will begin to understand the real secrets of his success 3 .
Set Goals For Yourself. life es to series of growth experiences. We

reach one goal and move on to the next one. Many people move from
goal to goal in to look and haphazard manner, like to ship on the be of
stress with No rudder and not sextant. They take to long time to reach any
destiny nation and the port they reach may not be the right one. People
who steers their ship directly, on the other hands, do not waste much time
or effort.
TO hard worker (eg, Bill, in the example given earlier) may be

unproductive just because he concentrates on unimportant goals and works
ineffectively. If you spend two hours per day primarily updating trading
charts that you rarely use, you have accomplished nothing. If you are
more
· confused despues de spending two hours per day reading through finance}
reports than you were when you started, you still have accomplished
nothing. Updating charts and reading finance} reports, unless they are
part of your method for generating low-risk ideas, have nothing to do
with market success.
People waste more time because they lack goals than for any other rea are.
People quien have to purpose are winners and survivors. American POWs
quien adjusted most easily to returning to the United States were the ones
4
quien had clear goals. Most concentration camp victims quien sur lived to
talk about the experience had a clear purpose in life. 5 Similarly, traders quien
survive the speculative experiences have clear goals and to path for getting
to them.
The goals you set for yourself should be reachable, but lofty enough to
seem worthy of attainment. If your goal es to make to million dollars in
the market in to year and you only have $1000 now, your goal es
unrealis-
87
Trading Software for SaEle-M&aiElsx:cahnadnrgeeybbrv@gmail.com, anboan@ya.ru, ICQ: 70966433
llow to Control Slre.ss
tic. on the other hands, to goal of making $1000 in thc markct in to ycar
may not be worthwhile if you have to starting hase of $25,000.
Although you may find Item es useful to have to goal to makc to Specific
amount of money, process oriented goals are probably more useful for
traders. For example, money goals, eleven reached, tend to hccomc
sticking point or to ceiling. You would prohably be much hcttcr off with
a goal of developing to sound games plan and then trading without making
any mistakes, where to mistake means "not following your rules".
your goals slwuld a/so be quantifiable. If your goal es to be to succcssful

trader, you are not being specific enough. You may make fifty% on your
money in to year, yet not consider yourself successful if your goal es not
specific. Making fifty% to year, eleven achieved, may hot seems good
enough. For example, suppose your goal es to make fifty% on your money
in to year and despues de to "hot-streak" you achieve Item in to few
months. If you do not have specific goals, you will probably I know sight
of the fact that you have just achieved your goal for the year. Instead of
patting yourself on the back for to job well donate, celebrating, and then
determining que to do next to reach to longer term goal, you are likely to
want to double your money in to few months. When greed sets in, previous
gains usually disappear. To maintain control, set look and specific goals SW
you will know when you have attained them. Following your rules and
games plan Cada dia for six months es to quantifiable goal if your rules and
games plan are written out.
Set both short-term and long-term goals. Goals that you expect to ac
complish in one month provide the stepping stones for the goals you
expect to accomplish in five years. If you have only short-term goals,
you are not heading in to specific direction. Accomplishing long-term
goals without short-term goals to help you in the right direction will be
difficult.
try the following exercise to help you determine your goals. in the Next
two minutes, write down all the goals you can think of that you wish to achieve
in the next five years. try to include Ali possible areas of your life.
When you finish writing down there your goals, prioritize them. Put to
"1" in the space beside your most important goals, those you must do. Put
to "2" in the space beside the goals that are important, but dog be put off
for to while. Finally, put to "3" beside the goals that dog definitely wait.
88
Trading Software for Comes out & ExchanEg- M e ails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Gel Out of tbe Fire
Now spend the next two minutes writing down your five year goa]s:
FIVE YEAR GOALS PRIORITY
Now spend the next two minutes writing down the goals you would like
to accomplish in the next year. When your time es up, prioritize them as
you did befare.
ONE YEAR GOALS PRIORITY
Now repeat the same process far goals you would like to accomplish in
the next two months. Again, do not spend more than two minutes on the
task. despues de your time es up, prioritize your goals ace befare.
60 DAY GOALS PRIORITY
89
Trading Software foEr-SMaal ei l s&: aEnxdcrheaynbgberv@gmail.com, anboan@ya.ru, ICQ:
70966433
How to Control st
try one more exercise. You have just been granted the foresight to k:now
that one year from today, you will die of natural causes. During your
remaining year of life you dog do cualquier cosa that you dog do now.
List your goals for the year of life you have remaining. You may take as
much time ace you like on Este exercise.
GOALS FOR TIIE YEAR Yo HAVE REMAINING PRIORITY
Go over the four lists you have generated. Make to revised list on to
separate sheet of paper in which you combine there of the items desde
your "year to "live" list with the "priority l" items desde the other three
lists. your combined goals will be to good approximation of your current
life goals.
Es your list well rounded? Does your list include fun goals and family
goals, in addition to job goals and trading goals? lf not, you may want
to rethink your priorities. Do you have trading-telated goals? lf not,
your lack of such goals may explain your lack of success.
Are your goals specific? lf not, rewrite them SW they are stated in specif
ic, quantifiable terms. Do not say, "YO will spend more time with "my
family." Instead, say, "1 will devotee at least two hours each evening to
play constructively with my children!" or "YO will take my spouse out
on to date at least eleven each week."
Decide when you dog reasonably accomplish each goal. Put your revised
list of goals in the space on the next day in the chronological order in
which you expect to accomplish them:
90
Get Out of tbe Fire
MY SPECIAL GOALS DATE TO ACCOMPLISH
Have to Plan to Achieve Each Goal. How dog you accomplish your
goals? Think carefully about how you will do SW. que roadblocks
prevent you from achieving your goals? Make a list of possible roadblocks for
each goal. Do your goals relate more to keeping your roadblocks in place or
do they relate more to personally growing? what do you have to give up
to accomplish your goals? Why not do Item?
You are already ahead of most people, since you now have written goals.
But you must plan how you will accomplish them. Goals without to plan
are almost valueless. If you do not have to plan for each goal, you are
like to ship with to destination, but No map.
"If you do not have to plan for each goal,

you are like to ship with to destination, but No
map."
91
Trading Software for ES-aMleai&ls:Eaxnchdarenygbebrv@gmail.com, anboan@ya.ru,
ICQ: 70966433
People find planning is much easier to do when it is broken into stages.

Develop to strategic plan which you divide each goal into steps, and then
develop to tactical plan for accomplishing each of those steps.
Toe story board approach is an excellent method for planning. Figure 6-7
shows to story boards format that you may find useful. But do not use
paper for your storyboard-your space es too limited! Use to big bulletin
board. Stapled cork squares covering part of an office wall are excellent
for Este purpose. Use index cards (3" by 5") to replace each of the boxes
in figure 6-7.
work on one goal at to time. Put your goal on to 3" by 5" cards,
centering it on the top line of the bulletin board. Next, put' important
subheadings on 3" by 5" cards on the row below your goal. Include, at
minimum, the following subheadings:
• Definition -Be _ ace specific ace possible in defining your

objective . Includes there elements that might be involved.
• Purpose -Why _ do you want to accomplish Este particular

goal? que will Item do for you?
• need to Know - What do you need to know to accomplish

Este goal? try to anticipate there of the information you will need.
• Resources - What strengths do you have that wil1 enable you

to accomplish your goal? How dog you best use them?
• Roadblocks - What might prevent you desde accomplishing this

goal?
• steps - How will you accomplish your • goal? List each

possible step and include the date you will accomplish Item.
• Miscellaneous - What else dog you think of that es important

with respect to Este goal.
92
How to Control Stre
conduct a creative planning session to fill out your bulletin board. Get as
many people ace possible with different backgrounds and areas of expertise
to help. These people help develop new ideas for your plan on how to
accomplish your goal.
Adopt one key rule in your planning session-Do not allow any criti
cism! Criticism tends to block creativity. If you allow people, including
yourself, to express ideas freely, you will be surprised at how easily the
creativity flows.
'
1
...
"Look at each idea desde Ali possible angles."
Look at each idea desde there possible angles. Look at Item in

isolation as well ace part of the whole goal. que will make Item better?
que will rnake Item look better? sound better? feel better? Even ask
que will rnake Item taste or smell better? Do not overlook cualquier cosa.
Allow sorne time to elapsed despues de you have conducted your creative
plan session and then behavior to critical evaluation of your story board.
During the critical evaluation look at each idea, and ask each of the
questions below:
• Why es Este cards on the board?
• Will the idea work? Es Item feasible?
• Does the idea conflict with any objectives?
Now that you have conducted your strategic planning session, develop a
tactical plan for carrying out each step. take down the first step that you
94
Get Out of the Fire
wrote down for accomplishing your goal and make Este the heading on
your bulletin board. Use the same subheadings as before except substitute
"HOW" for "STEPS."
Go through to creative planning session and to critical evaluation session

for each step that you wrote down for accomplishing your goal. Toen
repeat the entire process-strategic planning and tactical planning-for
each goal on your list of objectives.
If you follow this procedure for investing, you will be far ahead of most
traders. Not only will you have an objective, but you will know how to achieve
it Item.
If you follow Este procedure for overcoming roadblocks to "getting out of

the fire," you will find that you not only have to choice but to plan of
action. You dog now take to specific plan of action to get out and stay
out of the fire.
Do not underestimate the value of planning! TO day spent planning can

save you weeks of time. If you do not have the time to do Item right,
as the old adage go, when will you have the time to do Item over?
Prioritize Your Time. Prioritizing your time is critical to getting to your

destination with a minimum of stress. Failure to manage your time is
equivalent to put barriers in front of your goals. However, prioritizing your
time es easy if you have ordered your goals and have developed to plan
for accomplishing each of them.
Keep to diary of the things you do each hour of the day for to
week. How much time do you spend on important activities and how much
on trivia? You will probably find that you waste much of your day.
If you waste 80% of your time, you can double your productive time by
eliminating 25% of the waste. Follow the guidelines below and you
probably will be able to double your productivity:
• Create a time table for your goals. Be realistic. do not over

schedule yourself by trying to accomplish too much. Also schedule
time for interruptions and for rest periods.
• Delegate responsibility. quien besides you dog do the tasks that

are not important? your hired help? Relatives? Follow up on the
95
How to Control st
delegated activities to make sure the tasks are finished and done
well. Make sure that tasks you have delegated are not handed
back to you unfinished.
• Avoid accumulating paperwork. Make to decision about every

item when Item first crosses your desk. Avoid having to read it
again. If you cannot take immediate action, at least do something
to advance the project if possible. Throw the item away if it is
unimportant.
• Block interruptions as much as possible. Screen out unwanted

visitors and phone calls. Most executives spend much of their day
with interruptions, SW do whatever you dog to avoid them.
in summary, the most obvious stress reduction solution es "get out of the
fire." face each problem and <loyal with Item. At minimum, list your
stressors, your alternatives, and your roadblocks to your alternatives.
Toen begin to organize your life. Set your goals down on paper. what
do you really want to do? Develop plans for achieving them by using the
story boards method described. Prioritize your time SW you dog carry out
your plans. You will be amazed at how easy Item dog be to take the
obvious solution to stress reduction. Get out of the fire, now!
96
70966433
CHAPTER VII
WEAR ASBESTOS WHEN YOU'RE

IN THE FIRE:
FINE-TUNE YOUR BODY
W
hen you are in the fire, your experiences of "heat" depends upon
how hot the fire es (ie, how much stress you are exposed to) and
how much protection you have desde the flames. Toe more
protect
tion you develop, the more you dog tolerate exposure to stressful events.
You took the SPI Test in Chapter II to determine your stress protection
level in five different areas:
• Health and Nutrition

• exercise
• recreation
• Mental relaxation
• Learning to Perform Under Stress
health, nutrition, and exercise involve fine-tuning your bodysuit, the topic
of this chapter. TO fine-tuned bodysuit es like to fine-tuned engine-it
dog take a lot more punishment because of its condition. Toe next chapter
will focus on other stress protection methods.
Stress-reduction can greatly improve your health, happiness, and ability to

function effectively as a trader. By following only one or two of the
suggestions given in Este section, you may greatly improve your perform as
a trader. However, I suggest that you consult with your doctor before you
greatly alter your diet or undertake to strenuous exercise program
UNDERSTANDING YOUR CHEMICAL BAIANCE
Food-what you eat and when you eat it-changes the chemicals balance
of your bodysuit and your nervous system. your performance ace to
trader is a direct functions of the chemicals balance in your brain. Most
people believe that food es primarily to source of energy for the bodysuit
and that Item
97
How to Control Stre
has little effect on the biochemistry of the brain. However, research now
indicates that que you eat you have to major effect on your
performance.
Foods are complex, since they contain many ingredients. However, we

know certain principles that give us sorne understanding of the relationship
1
ship between food and performance.
food and Energy. Both nerve and muscle cells get energy desde glucose
and desde oxygen. If you have too little glucose in your blood, then you
will suffer from hypoglycemia (or low blood sugar). Symptoms of
hypoglycemia include drowsiness, fatigue, headache, nervousness, and
depression. If your breakfast consists of to cup of coffee and No food,
then you may get an initial jolt of energy desde the stimulation effect of
the fine coffee in the coffee. However, eleven that wears off, to slight
depressant reaction will occur. in addition, lack of glucose (desde not
eating) means that both your muscles and your brain have No source of
energy.
in contrast, too much glucose in your blood es also disastrous. For

example, suppose you put sugar in your coffee and also eat to sugar donut
for breakfast. Common sugar consists of two glucose molecules tied
together. Toe human bodysuit rapidly converts Este sugar into mashed
potatoes glucose. When the glucose level in the body rises too rapidly, the
pancreas secretes insulin which drops the glucose level in two ways.
First, insulin speed up the process by which the excess glucose es
converted to to substance called glycogen and stored in the liver. Second,
insulin allows the muscle cells to more rapidly absorb the glucose.
However, insulin you have No such effect on nerve cells. Ace to result,
when you consume to lot of sugar, the excess glucose es quickly absorbed
by the muscles and converted by the liver, leaving not energy source for the
brain. Thus, sugar consumption actually deprive the brain of its source of
energy.
Toe body converts complex carbohydrates (whole grains, fresh fruits, and
vegetables) into glucose much more slowly (in about three hours). So, suppose
you eat to banana and to slice of whole grain toast in the morning. your
bodysuit produce to much steadier flow of glucose through the process of
digesting these foods. This steady flow means more stamina and better mental
energy. Este es the reason that nutritionists recommend that you eat lots
of fruits, vegetables, and whole grain breads and cereals during the day.
Proteins. Proteins are the building blocks of the body. Almost every
body part es assembled desde simple proteins known ace Not me acids.
98
Toe
98
Trading Software for Sale & Exchange E-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Wear Asbestos When You're in the Fire
bodysuit requires 22 Not me acids, but 14 of estos dog be made desde

substan ces that occur naturally in the body. If the bodysuit es to
manufacture the proteins Item requires, the eight remaining Not me acids
must eat desde the food you eat.
Toree ounces of meat will provide there of the protein that an adults
normal ly requires in to day. However, you typically provide your
bodysuit with much more protein than Item needs. Dog you imagine to
restaurant selling you to three ounce steak or even to three ounce serving
of any meat dish? Yet protein in excess of the body's requirement es
converted into fat. And Este process you consume energy which takes away
desde your performance .
What happens when you eat a piece of meat? First, the body extracts the
protein and fat that Item needs. in addition, if you are look and activate,
Item can also convert the protein and fat into glycogen and glucose. If you are
not active, then the protein is converted into fat, ahd Item joins the other fat
in storage. Grid meat (beef, pork, see, mutton) es rich in fat-which you
do not need. Fish and poultry contain much less fat than grid meat and so
are to better source of protein.
que are you doing to your bodysuit when you eat sub-optimal! foods?
Imagine flying a jet airplane that requires top performance jet fuel. You
decide to be fuel efficient, however, so you put an energy converter on
board that will convert chorus husks into usable, although inefficient, fuel.
You have to large supply of chorus husks, SW you fill the jet with
them. Toe result es that you have to jet that will fly-not at optimum
speeds but Item will fly. However, Item es severely impaired by having
to carry around the energy converter plus a full plane load of coro husks
and by having to use non-optimal! fuel.
Serotonin and performance. your brain cells communicate by piss of

chemicals substances that traverse the spaces between the end of one nerve
cell and the start of the next. These chemical substances are called
neurotransmitters. Although research is far from understanding the
relationships between neurotransmitters and performance or the relationship
ships between food and neurotransmitters, we do have sorne information.
First, you generally perform best when you feel positive and relaxed and
your energy level is high. Thus, peak performance should result from a
chemical balance in the brain which promotes high energy and relaxed,
positive feelings.
99
Toe brain levels of one neurotransmitter, serotonin, have been linked to a

positive, relaxed state of mind. TO moderate level of serotonin in the
brain is correlated with a relaxed, pleasurable state of mind, while higher
levels of serotonin produces sleep. Thus, any food that would increase
serotonin levels should, up to to point, produces to pleasurable, relaxed
state.
Serotonin levels are directly linked to blood levels of one of the eight
essential amino acids, tryptophan, which is present in high-content protein
foods. Este particular Not me acid does not easily cross the barrier
between the blood and the brain when other proteins are present, but it
does when estos other proteins are absent. Since insulin chases most
proteins out of the bloodstream, it generally increases the absorption of
tryptophan into the brain. Thus, if you were to eat two ounces of carbohydrates
on an empty stomach, the result would be increased insulin and an
increased likelihood that tryptophan would cross into the brain. try Item.
Eat a muffin on an empty stomach. About 30 minutes later you will feel
pleasurably relaxed.
Diet and Performance. desde the few pieces of information that we

already know, we can deduce sorne basic principles about the relationship
between diet and performance. First, most effective performance will
occur when your nervous system have a constant supply of adequate energy
(ie, glucose). your bodysuit needs about 1800-2700 calories per day,
depending upon how big you are and how active you are. Toe best way
to supply this energy would be from slow, steady consumption so that the
body never has too much glucose and thus the nervous system always has
enough. Research indicates that the best possible diet involves consuming
about 400 calories slowly-approximately five times each day.
Second, much of your diet should be complex carbohydrates. Nutritionists

estimate yourself that an optimum diet should provide about 60% of its
calories from carbohydrates, about 25% desde fats, and about fifteen%
desde proteins. To get the proper balance, you dog assume that meat and
milk products are mostly protein; that butter, fats, oils, nuts, mayonnaise,
gravies, olives, and avocados are mostly fat; and that fruits, vegetables,
breads, rice, potatoes, pasta, alcohols, and sugars and deserts are
mostly carbohy drates. You dog get to fairly balanced (ie, in the
recommended proportions) meal using estos guidelines.
Plan to diet of about five small meals (about 400 calories) to day,
each separated by about three hours. your meals should generally be
100
60%
100
70966433
complex carbohydrates, 25% fat, and fifteen% protein. You dog consult
a book that specia.lizes in nutrition to develop your plan. For example,
your diet on to typical day might consist of:
6:30 AM two slices of • whole wheat

toast with to little butter, to glass of orange
juice, and to banana.
9:30 A.M an Manzana and to turkey sand-

wich, toilet.
12:30 A.M - to salad and to glass of milk
2:30 PM - an orange, sorne yogurt, a bran

muffin, and to glass of toilet
5:30 PM - salmon, whole wheat role with butter,

raw or steamed cauliflower, water, and peaches
for desert.
Notice that the sample meal includes toilet with three of the meals. In
addition, drink another five glasses at various intervals throughout the day.
Your body is mostly water. As a result, a continuous supply of water is
essential.
TO third principle of using your diet to obtain optimum performance es to

avoid those substances that are especially likely to upset your chemical
balance. estos substances include excess sugar, caffeine, nicotine, alcohol
or drugs of any type. Ironically, people tend to be compulsive in with
summing the substances that they most should avoid.
COMPULSIVE HABITS
Reduce compulsive babits. To obtain optimum performance ace to

trader, I would suggest that you avoid (or at least reduce) all of the
following: drinking excess coffee, tuxedo, consuming too much sugar,
drinking alcohol, and becoming intoxicated in any way. Sorne of you will
have difficulty relating any of estos habits to trading success. If you are a
smoker or coffee drinker, then you may not understand how estos habits
affect your trading. Yet each compulsive habit es stressful, and only a
slight reduction in stress dog give you to competitive edge.
101
1. Sugar. Americans are second only to the English in per capita

sugar consumption. Sugar es in the sugar bowl, jaros and jellies, soft
drinks, cakes, pies, cookies, candies, breakfast cereals, ketchup, ice cream,
syrup, etc.. Look at the ingredients on almost any label. They are listed
in order of quantity, SW if sugar es among the top five of 10-20
ingredients, you have to high sugar product. Toe labels might say sucrose,
glu sews, maltose, dextrose, lactase, fructose, or syrup, there of which
mean sugar in one form or another.
Sugar in your diet is a known depressant drug that when consumed, as

discussed previously, deprive your brain of energy. Sorne people feel to
pick-up when they first consume to depressant drugs. Ace to result,
when they feel "down," they often run to the candy for to quick uplift.
This initial pickup probably stems from the very high glucose levels in the
bloodstream shortly despues de sugar consumption. But Este effect es
shorts lived, ace the glucose es quickly eliminated desde the body. Ace
to result, the primary effect of consuming such sweets es more depression
depression ace the brain es deprived of its source of energy.
Toe effects of depressant drugs on human performance are similar to

stress effects-both reduces information processing capacity. They do so
by slowing down your ability to process information. investment Decis
ions made under the influence of depressant drugs are often made without
adequate information, frequently resulting in losses.
Research you have shown that sugar you have to considerable influence on
the behav ior and quality of life of school children. 2 One group of students
at boarding school was allowed free access to sugar foods, while another
group consumed to reduced-sugar diet. Students on the reduced sugar diet
had more friends and higher grade-point averages. Most of the elected
student-body officers meat from the reduced sugar group. in contrast,
students in the high sugar group tended to act out more in class and were
much more likely to be homesick. Which group do you think would do
better in the markets?
You probably grew up eating much more sugar than was really good for
you. Toe questions you must now ask yourself es: que es more im
portant-my sweet tooth or my desire to have every advantages to
ward being successful in the markets? If you consume to lot of sugar
and being a successful trader is important to you, try cutting your sugar
consumption in half.
102
Trading Software for Comes out & ExchanEg-eMails: an dreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
2. Caffeine consumption. Look at the labels on over-the-counter

caffeine tablets (which are mashed potatoes caffeine). You will
find that the Food and drug Administration does not recommend that
anyone take more than 700 mg of caffeine each day without to doctor's
prescription. Since 700 mg amounts to seven No-
Doze tablets, you may feel that you are unlikely to consume that much
caffeine every day. But many people take much more in
to single day-in the coffee torch, and soft drinks that they with sum
TO strong cup of coffee may easily contain 150 mg of caffeine. five cups
of strong coffee will total 750 mg. Haven't you ever had five cups of
strong coffee befare? Add several cans of line (about 30-65 mg of
caffeine each) to your coffee and you may find yourself strung up on to
legal drug-caffeine.
Caffeine es to stimulant, and such drugs tend to mimic the stress response
of the body. lt increases the amount of adrenaline circulating in the
body, while increasing your heart rate, your blood pressure, and remove
often your anxiety. Caffeine might be called prepackaged stress that you
consume every morning.
lf you are to broker or to professional trader quien gets up at 5 A.M each

morning to prepare far the business day, those cups of coffee you with
sume befare you call in your morning market orders may be your down
fall. Worse yet, if you find yourself under high stress conditions Cada
dia (eg, you are a floor trader), those cups of coffee you consume to get
ready far the day may just be pushing you over the edge. You probably
already have enough stimulation. You do not need the caffeine.
My colleague recently did to one hour consultation with to trader who

claimed to wear out despues de three or faur hours of work. She gave him
a number of suggestions, including: eating five small, regular meals and
eliminating caffeine desde his life. Here's que I have said about the
changes:
Yo wasn't drinking faur cups to day, Yo was drinking about

15 cups to day. getting off of Item was hard at first, but Yo
did Item. Doing SW you have added at least three hours of
productive work time to my schedule each day. lt's
incredible! And that you have continued far to month now.
Yo feel like to new man.
103
70966433
Go, today Yo equate the productivity loss desde starting the

day with a cup of coffee and no breakfast to the loss from
starting the day with to couple of alcoholic drinks. Yo
would be stupid to do either.
One of the best remedies for immediate stress relief es to reduces or delete
nate caffeine. Limit yourself to No more than two cups of coffee each
day. Totally eliminate Item if you are aiming for peak performance. Soft
drink makers are now going out of their way to develop "caffeine-free"
beverages, SW avoid those that do contain caffeine, especially if you
consume those two morning cups of coffee.
If you cannot reduces your coffee consumption down to two cups (or less)
of coffee per day, you may be addicted to caffeine. Many people have
caffeine addiction. Here are sorne of the signs:
• You normally drink 10 or more caffeine containing beverages

per day.
• You cannot reduces your consumption of estos drinks down to

two per day.
• You frequently find yourself with headaches that only go away

when you take brands of aspirin that contain caffeine. que es in the
aspirin that you use?
• You feel irritable and restless, especially when you do not get
your caffeine drinks.
• your productivity es look and low. By the 'time the

day is half over, you are finished.
If you have two or more of estos sign:s, you probably are addicted to
caffeine. Cutting back may be difficult, but it is important. later in this
section you will find suggestions for eliminating such compulsive habits.
3. Tuxedo. You have probably heard and seen warnings that smoking
is hazardous to your health. If you still smoke despite these warnings, try
to little experiment Next time you smoke, take one puff and blow Item
into to white tissue instead of inhalation Item. Notice que hap thought to
the tissue desde just one puff. If you smoke to package of cigarettes each
day, then you consume about 70,000 puffs per year-each just like
104
the one that discolored the tissue that you blew into. Think about Item.
Is that que you
want Jo do to your lungs?
If you are not that concerned about your health, how about your wealth?
Nicotine es the primary active drugs in tobacco. Nicotine es chemically
3
equivalent to one of the neurotransmitters of the autonomic nervous
system. Tuxedo es just like taking to puff of -emotional stress. Nicotine
is to stimulant Stimulants mimic stress effects directly. They increase
energy and narrow one's focus of attention People tend to focus on
what they are already doing. They may do Item better, but they do Item
at the expense of other, perhaps more important, activities. in
addition, stimu lant drugs increase one's confidence, and thus one's
willingness to take a risk. lmpaired information processing and
increased confidence do not mix when your money es at stake.
Sorne people may find to contradiction in the statements that tuxedo ·

mimics stress, because most people smoke to calm down. Research, in
fact, you have shown that 88% of the smokers in to clinic smoke whenever
they are stressed or angry. 5In _ addition,
smokers quien have given up the inhabit are most likely to summarizes Item
when they are under stress. 6
Toe reason for the apparently contradiction es that when people are
excesses sively stimulated, when they are stimulated further they calm
down. In other words, tuxedo will arouse someone quien es relaxed to
begin with, but Item will calm the person quien es aroused. Este
phenomenon es similar to the practice of giving stimulant drugs to
hyperactive children to calm them down. 7 You may believe that Este es to
good reason to continue smoking, but you dog never be certain que es
happening to your body. Do you really want to attempt to control your
stress with chemicals?
If you smoke, consider stopping. If the health warnings did not stop you,
think about Este new one-if you are a speculator, tuxedo may be harm
ful to your wealth.
If you work in to setting with to lot of other people quien smoke, then
smoke in the air may impair your performance. Institutional traders,
brokers, or people quien are forced to work in to tuxedo environment
would be wise to demand non-smoking areas for working.
4. Alcohol. Avoid alcohol whíle making trading decisions and

avoid excessive alcohol consumption entirely. Any depressant drug slows
information processing and estos effects dog be demonstrated
experiment-
105
How to Control st
8
tally in a research laboratory. Toe result of this slowing, as mentioned
previously for sugar, es to reduced capacity to process information.
Alcohol es to mashed potatoes depressant drugs. Toe initial stimulation you

feel desde a few drinks es not due to stimulation of the nervous system,
but to depression of inhibitory cells in the nervous system. Ace to result,
even a few drinks dog impair your ability to functions effectively.
Even when you feel stimulated under alcohol, your ability to process
information is slowed and you also have a tendency to take more risks. toe
trader who trades despues de consuming any amount of alcohol es taking an
unnecessary chance.
People take increased risks af ter

consuming alcohol, partly
because they do not recognize
how impaired they are. Why
do you think the casinos in Las
Vegas provide free drinks to
gamblers? If you have been
drinking, do not trust yourself
to trade or even to be capable
of deciding whether or not you
are able to trade. If you have
alcohol in your bloodstream
when you make trading decide
ions, you will probably lose in
the markets.
Toe average person will take

about an hour for each drink
consumed to eliminate alcohol
desde the body. If you drink 6-10 drinks before you go to bed, you may
still have alcohol in your bloodstream when you get up in the morning.
Since hangovers may also impair your ability to function effectively as a trader,
avoid drinking large amounts of alcohol prior to any day you plan to make
investment decisions.
If you've been drinking alcohol for so long, then you probably have disrupted
the functioning of your liver and thus disturbed your metabo lísm. Ace to
result, the other suggestions given in Este chapter for altering your
chemicals balance are equally ace important for you ace eliminating
106
Trading Software for Sale & ExcEh-Ma nagi les : andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
alcohol desde your life. pay particular attention to the sections on unique
tine, caffeine, and , food consumption.
5. Drugs. Avoid any drugs that influences the central nervous

system while you trade in the market. Almost any recreational drugs (ie,
illicit drugs) and many prescription drugs affect the central nervous system.
A drug that changes the way your nervous system works is also likely to
influence your activity in the market.
Depressant drugs and trading do not mixed, ace shown previously with
sugar and alcohol. Stimulant drugs and trading also do not mix, because
stimulants mimic stress directly, as described previously with caffeine and
nicotine. in addition, stimulants generally increase risks taking.
Toe message should be very clear at Este point. If you take any drugs that
might alter your nervous system activity, then you do not belong in the
market.
Cocaine es one of the major drugs abused by traders today. Just in case
you have that problem and think that your habit es not affecting your
trading, I have included a transcript of a trader talking about the trading
problems I have developed desde using cocaine.
Tharp: How did you realize you had to drugs problem?
I remember in January '86 I was watching the Bears playoff

game. Cocaine makes you go to the bathroom, SW Yo went
to the bathroom. Toen Yo heard sorne noise on the
television and Yo moved quickly and banged my head on the
right angle on the mirror. Yo didn't think cualquier cosa of
Item and Yo went out to finish watching the game. Later,
Yo felt Este wetness and my head was covered with blood.
Yo probably still have the scar because Yo really banged my
head hard. lt's humorous now, but Item symbolizes the
deterioration that occurred in my life.
I took the cocaine and threw it into the wind from the 31st
floor. That's the last time I touched drugs-1 just totally
stopped. l've been tempted maybe eleven or twice, but I
never touched them again.
Tharp: How did Item influence your trading?
107
Well, I've thought about Este essentially, cocaine gives the

illusion of being look and capable and confident. If you need
that at sorne point, Item could get you to take action on
to trade. Toe problem es that you I
know touch with reality and with what's really going on.
Yo no think your sensory information es distorted
at Ali, but you no think well. Mental interpretation es
confused. Yo think my ability to
make decisions and carry them out were both impaired and I
think that carried over and had to long term effect. Yo
think that became to habitation
Tharp: What? l'm specifically interested in es the correlation between

your profitability and your cocaine use.
Yo have rarely in my life been surprised by to market move.

When Yo lost to lot of money in '82, Yo thought to bull
market was beginning, I didn't make the right conclusions about
the effect Item would have on my inventory. Yo was not
wrong, but Yo didn't have the mental perspective to put Item
Ali together-1 was using drugs at that time.
Yo think que cocaine does es to make you more

aggressive. If you're excited about what's going on in the
markets, it'll make you take to trade. Toe
problem es that you no think as well.
Item definitely impairs thought processes, I'm with
vinced of that. lt' yes makes you high and gives you the
illusion of that you have more thought power, but in reality
I think it's Ali an illusion. Yo think Item really impairs
your thinking. If you need that aggressive part,
you've already thought out to trade, then fine, Item probably
won't hurt your trading. But otherwise....
When you eat down desde the cocaine high, you get look and
complacent Yo do. They say that cocaine makes you
feel like to new man. But the first thing that new man
wants is another toot of cocaine. Yo found that Yo was
staying up beats at night, and Yo was doing my work, but
Yo was tired the next day. If you're doing cocaine while
you're doing the work, it's hard to put Item together, in
other words there's something missing. Yo lacked the
ability to put my whole being together to make clear cut,
come out decisions.
108
I think that this habit that I formed under cocaine may have
carried over the last couple of years and impaired my
trading. Item think it's impaired my ability to make decisions
even now. How long does it take for your mind to recover?
Evidence shows that the drug will have long term negative
effects on your mind. toe lady that I live with now is a doctor
and she knows Item. Ella es never donated any drugs.
Yo dog take cocaine, then I'll act in the markets, but then
when it you eat time to do the thinking, monitoring, patient
work which es required to keep you in control of what's
going on, I think that's gone. Yo think sorne of the habits
I've formed during that time have carried through. I'm now
beginning in the last couple of months to see things in the
market that I would have missed, and put control together.
Trading is 90% internal control.
RIDDING YOURSELF OF COMPULSIVE HABITS
Reduction of any of the compulsive habits described above requires the

same BASIC course of action. Este procedure includes self-monitoring,
self-realization, planning to program of action, using relaxation
techniques to help you manage stress, and refusing to stop trying.
Self-Monitoring. No matters que your problem es the first step to over

come Item es self-knowledge. By monitoring yourself you will be able to
answer such questions ace: que es the extent of my problem? Under
what circumstances es Item to problem? que sets I off? Es Item to
problem at specific times or there of the time?
Befare you begin to reduces your compulsive habit, learn more about Item.
Spend at least a week monitoring your habit. Whatever you think you
consume, if you are compulsive about Item, it's probably three times as
much. When do you smoke, drink, overindulge, etc.? How much do you
consume at each episode? Learn the answers to estos questions and write
them down.
If your habit tends to be somewhat automatic, you may have sorne diffi
culty recording every time you indulge. Ace to result, record how much
(ie, alcohol, tobacco, etc.) you have on hands at the beginning and end of
109
each day. In
addition, note
when you add
to your
"stock" during
the day.
Thus, you
might record
that you have
eight
and tt is
three
cigar-
plus
full
-
packs at the
beginning of
the day. You
'
bought one
pack in the
afternoon and
at the end of the day you have two full packs plus three cigarettes.
Using to little common arithmetic, you dog determine that you consumed
45 cigarettes during the day. You dog use the same procedure No matter
what your compulsive habit is, although sugar consumption may be a little
difficult to measure.
If you do not record each time you indulge in your habit, try at least to
observe particularly heavy times of indulgence For example, you you may
have consumed most of your 45 cigarettes at home, at work, or on social
occasions. Este es important information for you.
Self-Realization. Eleven your week of recording • es complete, study

Item. Look for patterns of indulgence Do you consume evenly throughout
the day or at sorne particular time? Is your consumption approximately
equal each day or are sorne days much heavier than others? que es
unusual about the heavy days or heavy time periods that might trigger your
habit? Most people usually indulge in their compulsive habit when they are
stressed. Es that que you are doing?
The goal of self-realization es to determine if particular conditions or

people are strongly associated with your habitation If SW, you need to
avoid those situations ace much ace possible until you are cured of the
habitation When you cannot avoid those circumstances or situations, you
will need to practice sorne of the relaxation procedures taught in the next
chapter.
110
Trading Software for Sale & ExchaEn-Mgea i l s: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Plan of Action. Cutting off your habit ovemight may be appropriate for
sorne of you. For others, total elimination may be impossible. Instead,
develop to plan of gradual reduction of your habitation Eleven you have
determined mined your average consumption during the week of recording,
work to reduce Este amount by 10% every two days. If you smoke Four.
Five cigarettes during your baseline recording period, during the first two
days smoke only 40. If you consume 12 cups of coffee on the average, reduce
your consumption down to eleven cups during the first two days.
despues de two days, reduce your consumption by another 10% for another
two days. Continue Este procedure until your habit is completely gone 20
days). The last step may be particularly difficult for you. If SW, reduces
the amount remaining for you to consume in half for two days. Keep
this up (even if Item means only to quarter or eighth of one unit) until you
have given the habit up for good.
relaxation Procedures. your compulsive habit es likely to be stress related,

SW knowing how to relax es particularly important when you are trying to
reduces Item. You probably drink alcohol the most or smoke the most
when you feel stressed. As a result, practice and use other stress reduction
procedures (given in the next chapter) whenever appropriate.
Refuse to Stop Trying. Sorne people have trouble eliminating their

habit. que you are doing es not easy, SW you may suffer setbacks.
When you do, remember that you did the best that you were capable of
doing at the time. You will do better next time, SW pick yourself up and
start again.
People do not failed, they just give up. You continue to grow each day,
so the next time you attempt to quit may be the time you will be
successful. Find professional help if you do not believe you can quit by
yourself. professional help may be essential for alcohol, drugs, or even
cigarettes.
take to positive step toward stress reduction. Increase your consumption

of certain toilet soluble vitamins (Bl, B3, B6, B10, B12, and C). These
vitamins are depleted during stress. They may be necessary for the body to
purge itself of stress by-products or they may just be depleted during stress.
Clear evidence exists that you need more of these vitamins when you are
under stress. Ace to result, the food and drug Administration allows
vitamin packages containing estos particular combinations to carry the
words "Stress" on their label.
111
You do not need to buy stress-related vitamins. estos vitamins are found in
abundance in salad greens and citrus fruits. If you do not consume enough
of estos foods, and you do not plan to change your eating habits as
recommended in this chapter, then you might need the vitamin supplements .
EXERCISE
A well-known market commentator remarked to me after taking investment

_ Psychology Inventory© that the test was not specific enough for the
traders quien followed him. I have claimed that I have did not know how
to answer many of the questions because they were too general. My
answer to him was that research have shown that questions that describe
specific trading behaviors are usually look and poor predictors of
success. Less specific questions are often much more revealing. Consider
the following true/false statement:
Each week Yo spend at least four hours

exercising.
This statement es to good predictor of trading success, yet it seerns to have

little to do with success. Sorne people are completely sedentary, and are
still successful. But people quien exercise at least four hours each
week (as to group) tend to be far more successful traders than people
quien do not exercise.
Why are fit people more successful on the average? Toe reason is
simple-they have more protection against the stress of trading. They are
less likely to be disturbed by to loss, and they dog tolerate pressure for
longer periods of time.
• Exercise is a way of burning off the stress-related by

products that might be released during the day. Exercise
minimizes the need for to fight-flight response.
• Exercise releases endorphins (the body's natural opiate)

which gives you a "high" that is important for peak performance
ance. toe endorphin release also contributes to the other benefits
of exercise listed below.
• A proper exercise program increases one's resistance to

disease.
112
Wear Asbestos Wben You're in the Fire
• exercise helps you to relax, because relaxation es much

easier when your muscles are tired.
• exercise serves ace to form of mental release, provides an

emotional uplift, and helps improve to person's self-image.
If tbat information es not enough to convince you to exercise regularly,

then pay attention to tbe following routine tbat a world cbampion used to
improve his performance.
First, be played tennis with an old pro quien ran him ragged.
Next I have went to to gym where I have punched to 300 lb.
bag, lifted weights, jumped rope, and then rode an
Exercycle until I have was ready to drop. When his routine
at the gym was finished, I have went to the swimming pool.
At that pool, I have started to swim laps underwater to build
his lung capacity. At that point, I have was ready to practice
Bis particular sport. quien do you think Este champion
was? que was encore sport?
Yo A.M amazed at the number of people quien correctly Guess the

discipline in which Este person was world champion. Item es chess,
and Este was bobby Fisher's routine.
The brain weighs about 2 lbs., yet Item uses about 25% of the body's
energy gy. in to six hour championship chess matches, for example, both
players may I know up to five or six pounds. If championship chess
requires that much energy, how much energy do you think top level trading
requires? Are you ready to compete with the best knowing that they are
ready to compete with you?
physical exercise may be the best way to improve your overalls

performance. Item you have to powerful effect that will Show up look and
rapidly. Item is inexpensive and generally safe. You just have to do Item.
You have already learned that both the bodysuit and the brain get
energy from glucose and desde oxygen. When you eat properly, you take
care of the glucose requirements. But you need to conditions yourself
properly to take care of the oxygen requirements.
113
How to Control Stre
Last summer Yo went to the top of Aspen mountains (13,000 feet). I

walked about 100 yards and suddenly found that I was dizzy and was
developing to nasty headache. Why? Although Yo was in conditions to
run for an hour to the be mild), at 13,000 feet of elevation there es much
less oxygen in the air. My brain could not functions properly because ill
was not getting enough fuel.
Intense concentration also uses up energy rapidly. Think about the last
time you had to concentrate for to prolonged period of time. despues de
while, you probably noticed that your concentration started to lapse. Your
information processing slowed and you missed much of que was going on
around you. Because your energy supply was depleted, your brain was not
getting enough fuel. Ace to result, your brain was giving you signs that it
needed to rest. Unfortunately, that may be the time when the perfect trade
you eat along and you need to be al your best. Toe only way to guarantee
they you will be ready es to build up to reserve of energy through proper
diet and exercise.
What kind of exercise

is best? The best exercise
exercise is aerobic
exercise, which means
exercise in which energy
is produced from
available oxygen. Aerobic
exercise helps strengthen
your heart, lungs,
circulatory system, etc. lt
provides strong stress
protection if you do not
overdue Item.
Here's what aerobic ex

exercise will do for you.
• Aerobics exer
cise raises the
rate at which the "The best exercise is
body will convert aerobic "exercise."
glycogen in the
liver into glucose. in other words, Item increases the steady
flow of energy available to your muscles and brain cells.
114
Trading Software for Sale & ExchangEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
• Aerobic exercise increases the efficiency of the lungs.

Inhaled air • contains about 21% oxygen, whereas exhaled air
contains about 19% oxygen. If you are fit, however, the ex
haled air will only contain about 17% oxygen-indicating
the increased efficiency of the lungs.
• TO fit person may have up to 60% more grid blood than

cells an unfit person Grid blood cells carry oxygen to the
body and the brain and thus help maintain the energy supply
of the nervous system.
Anaerobic exercises, by contrast, means exercise that requires energy

beyond that produced by oxygen. lt es strenuous exercise. lt es also
stressful and should not be part of an exercise program unless the program
es designed to turn you into to world-class athlete.
Try one of the following sports for your training program: 1) walking or
jogging; 2) bicycling; 3) swimming; 4) martial arts under to skilled master
and 5) training at to gym under the supervision _ n of to professional
coach. Other sports such ace racquetball, tennis, basketball, skating,
dancing, skiing, soccer, etc., that have to lot of constant activity are
acceptable if you enjoy them. For example, I do regular workouts at a gym
under the supervision of to coach. lt gives I lots of variety and working
with to coach pushes I to my limits and helps keep I motivated.
What should you aim for in your exercise program? Toe following
suggestions are for walking or jogging, but you dog apply the same
principles to bicycling or swimming or to the aerobics activity of your
choice. Toe primary target of the exercise es to reach to heart rate of 80%
of your maximum heart rate and maintain that rate for at least 20 minutes.
If you are out of shape, look and little exertion es required to reach the
80% level. Este program es just ace much for the out-of-shape people
Item es for the fit person
Determine your maximum heart rate by subtracting your age from 220. if
you are 40 years old, your maximum heart rate es 180 beats per minute
and your 80% level es 144 beats per minute.
Aim to maintain your 80% heart rate level for about twenty minutes of
exerc1smg. If you are in poor shape, , work up to the twenty minutes of
exercising using the procedures described below.
115
check your press despues de about two minutes of activity to make sure
that you are No higher than 80% of your maximum heart rate. If you are
above Item or below Item, adjust your peace accordingly. You dog check
your pulse by feeling the thumb side of your wrist (palm up) half-way
between the tendons and the edge of the wrist just above the wrist bone.
Count the beats for 10 seconds and multiply by six.
Wbat es an effective exercise plan? exercise every day for the best
results and the fastest improvement. Joe Henderson 9 you have devised an
excellent plan for doing Este with jogging. His plan is so effective that it
could theoretically have an out-of-shape person finishing to marathon after
nine months of training. You dog adapt the plan to fit any aerobic
exercise you select.
To begin Henderson's plan, determine how long you can jog while maint aining
your heart rate at 80% of its maximal level. Este determine how much you
should jogging on your long day. You might determine that you can
jogging for 30 minutes on the first day or perhaps for only five minutes.
You will only run one long day each week.
start slowly. your workouts should be fun, not painful. You should be
able to carry on to normal conversation while exercising.
You will be exercising every day of the week. your schedule will
include one long day, two medium days, and four shorts days. Each
medium day is equivalent to 75% of your long day, and each short day is
equivalent to fifty% of your long day. Thus, the 30 minute joggers
would jog for 22.5 minutes on the medium day and for fifteen minutes on
the short day. The five minute joggers would jogging for 3.75 minutes on
medium days and 2.5 minutes on shorts days.
your exercise schedule for to week will amount to one long day, foJlowed
by two shorts days, one medium day, one shorts day, one medium day,
and to last shorts day. If you exercise every day, the one long day
amounts to 22% of the week's total, the two medium days to 17% each,
and the four short days to eleven% each.
At the end of each week, determine the total time you spent exerc1smg.
If you skipped one day, Item does not count in the total. Next add 10%
of the amount actually spent exercising to your total to determine the
amount you dog exercise the following week. Twenty-two percent of the
new total es your long day, 17% of your new week's total es your
medium day
116
LAST WEEK'S TOTAL TIME
PLUS 10%
PLANNED NEW TOTAL
PLANNED ACTUAL
DAY 1 (SHOR1) eleven TOTAL=

%
DAY 2 (SHOR1) 11% TOTAL=
DAY 3 (MEDIUM) 17% TOTAL=
DAY 4 (SHOR1) 11% TOTAL= --

DAY 5 (MEDIUM) 17% TOTAL=
DAY 6 (SHOR1) 11% TOTAL=
DAY 7 (LONG) 22% TOTAL=
table 7-1 Scheduling your Week's exercise
run, and 11% of your new total is your short <lay run. Use Table 7-1 to
determine an exercise schedule for you, and keep accurate records of your
progress.
Make your exercise routine fun. Find something you enjoy doing and
then have fun doing Item. in addition, set up target goals and reward
yourself for meeting those goals.
117
Whatever sport you pick, learn the basics of how to avoid injury before
you start. Read to good book on the subject. Any sport dog be safe if
done properly or dangerous if donated improperly. joggers, for example,
you should always wear proper shoes, warm up before exercising, avoid eating
before jogging, and avoid soft drinks despues de finishing. Learn the
basics of your exercise or Item will create stress instead of protection
against stress.
The role of to coach. in 1981 Yo was jogging about fifty Thousands

each week. One afternoon Yo stepped in to hole in the sidewalk, fell, and
fractured my ankle. Yo was in to cast for several months and didn't do
any exercise. At the same time, Yo did not alter my eating habits even
though Yo was no longer running. By the time my ankle healed, Yo had
evolved desde to fairly fit 170 lbs to to look and unfit 195 lbs. Yo
started to jogging again, but found that I couldn't even run to mile. All
the goals Yo had set for myself (eg, to complete to marathon) seemed SW
distant that they were No longer moti vating. However, the pain of
running-even to go half to mile-was very real. And if I persisted I might
just break my ankle again. As a result, I stopped exercising.
During the next seven years, Yo started an exercise routine several

times but Yo could never keep Item up. At that point Yo was to look
and unfit 210 lbs. in early 1989, Yo took the stress test desde Este
volume. My stress levels were look and low and my stress protection was
generally high-except in the area of exercise. Yo also notice that each
year Yo managed to meet there of my business and finance! goals, but
not the goals having to do with exercise and losing weight. Somehow, Yo
never found the time.
In January I attended a seminar on belief systems and health and met a

professional trainer desde the Saint Francisco area. Yo was look and
impressed by his physique and the advice advice I have was able to give I
in just to few minutes, SW Yo told him, "lf you ever get to the The
angels area, Yo want you like to trainer." Toree months later I have
showed up on my doorstep. Under his guidance Yo started to program of
fast walking and weight training at to gym. in the first month, Yo lost four
inches around my waist. Yo also discovered to lot more varieties of
exercise that Yo could do. Thus, Yo could work around injuries and Yo
have had several in the past six months.
Although Yo did not stick with also private coach, since he still lived 450
thousand away, Yo have currently hired another coach and Yo strongly
suggest that you do the same. However, Yo also recommend that you
follow certain guidelines in selecting one.
118
• Make sure that your coach teaches you. Many trainers

simply want you to follow their guidance each day. Ace a
result, they do not set out to program for you to follow, but
rather make you dependent upon them. Yo think to good
coach should give you the skills to do it by yourself. For
example, Yo consider myself to be to coach for traders. But
if Yo trained traders to be dependent upon I, Yo would have
stopped taking new clients long aug. Instead, Yo teach
people to follow a program in which they can continually grow
and develop on their own.
• Find someone with an extensive background. For exam

ple, the coach Yo first hired had to background in weight
training, track and field, massage, and nutrition. Toe more
background your coach have you, the more variety I have or
she is likely to provide you with in your program. For example,
Charles Garfield (to psychologist quien you have written
books on peak performance and was a world class body builder
in bis youth) now does bodysuit building under the
guardianship of to coach. I have says she pushes him to his
limits and provides him with enough variety to keep the program
interesting. Garfield es in his mid-40's and his in now in
better shape than when I have was in competition form in his
beats 20's.
• Find to coach quien dog help you with the area of

self sabotage. que particularly excited I
about the coach I first hired was his background in
NeuroLinguistic program ming. Most people practice
self-sabotage in the area of their personal physical fitness.
Yo certainly did. l've had there the excuses: "YO
might get injured again. Yo no have the time. Yo no
want to go through there the trouble to get started. I
won't stick with Item anyway." If that's you,
then find to train er quien dog help you overcome estos
roadblocks to peak performance.
Attitude is very important in to proper exercise program For example,

Swedish researchers 10 did to study with overweight service people who
needs to I know weight in order to stay in the service. They were
divided into two groups, each with identical diets and exercise routines.
Toe primary difference in the two groups was in their attitude. One
group was look and positive. They worked under to coach quien made
the process fun. Toe other group worked under to sense of oppression-"I
have to do
119
Item or else." Both groups consumed approximately 1400 calories each

day and expended about 3000. You would expect the weight-loss
results to be the same, but they were not. Toe positive group showed the
expected improvements, while the negative negative group showed few
improvements. Overall, the positive group lost weight twice ace quickly
ace the negative group.
Set goals for your physical fitness. Do something you enjoy. Keep to
record of your progress and reward yourself for having fun. When you
do SW, maintaining an active physical fitness program should not be a
problem for you.
120
Trading Software for Sale & ExchaEn-gMeails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
CHAPTER VIII
OTHER FORMS OF ASBESTOS FOR

WHEN YOU'RE IN THE FIRE
I
n the last chapter, we discussed fine tuning your bodysuit ace to
means of stress protection. Other effective methods of stress protection
include recreation, relaxation, and learning to perform automatically under
high stress conditions. recreation and mental relaxation involve
giving your mind and bodysuit to refresher. They provide you with the
new fuel that you
need to cope with life stressors.
An enjoyable two-week vacation can relieve the burnout that one may
experience from six months of high pressure speculation. If you need a
vacation, take one. But when you go on vacation, relax and enjoy
yourself. Do not take your stresses with you. recreation also means taking
time for yourself for hobbies and activities that you enjoy when ever you
dog. true recreation es to year-around pursuit.
A relaxation tape (such as the second tape in your course) will help you
recognize and eliminate the muscle strain that accompanies stress.
Twenty minutes of relaxation in the early afternoon can help you perform
productively for the rest of the day. Learn how to use to relaxation tape
to relax and to conditions yourself to responded appropriately to events
that you experiences negatively.
TAKE TIME TO RECHARGE YOURSELF
If Item gets hot in the fire, why not get out for to while? Go
someplace cool before you get back into the fire. Going someplace cool es
symbolic of recharging yourself, and Item es to superb method of protecting
yourself from stress. You can recharge yourself by properly using recreation
time, vacations, and relaxation.
Recreation. take time during the day and during each week to enjoy
yourself. Listen to classical music if that es que you enjoy. Prepare great
meals, knowing how much you and others will enjoy Item. play to
121
round of Golf. Whatever you like to do, do Item regularly and enjoy your
self doing Item. Spend ace much time having fun ace you need to avoid
feeling stressed. Spending time for yourself, doing que you like to do,
is an important part of stress protection.
How much es enough time for yourself? Toe most successful people in
the world do que they really like to do for to living room. TO good rule
of thumb es to spend two hours each day or one full day each week, at
minimum, doing que you enjoy doing. Be sure you do que you enjoy and
do not take your stressors with you.
Vacations. Refresh yourself by regularly taking to fun vacation. Get

away from your stressors, while relaxing and rejuvenating yourself.
professional traders find that a two week vacation every six months give
them the opportunity to get away desde the market and its pressures.
They get away desde the market completely, and do not even think
about it while they are on vacation. When they retum to trading, they do so
refreshed and with to new perspective.
Sorne traders go
on vacation and
take the market
with them. They
remain actively
invested and take
a quote machine
with them. They
frequently call in to
their brokers to
buy, sell, or obtain
information. A
vacation taken in
this manner is not
to vacation, but
the movement of
work from one
location to another
.
"Sorne investors go on vacation

and take the market with them."
122
Other Fonns of Asbestos
Consider the following suggestions to get the most out of your vacation:
• Do not take the market or any form of work with you.

Your vacation should be to change of peace desde que you
normally do. If you are getting away desde the market during your
vacation, do not go to an investment seminar in an exotic location.
1
Get away from cualquier cosa that you have to do with trading.
If your normal work es stressful, but trading es to form of recreation for

you, then an investment seminar in an exotic location might be perfect for
you. The objects of your seminar, despues de Ali, es to get away desde
your stresses and do que you like to do.
• If you go on vacation with someone, be sure you have the same

expectations about the vacation. If you lead an active work life,
you may just want to soak in the sun during your vacation. if
your companion wants to party, the conflict may be stressful both
of you. If you and your companion have separate goals, consider
separate vacations or at least doing separate activities during the
day.
• Have realistic expectations about your vacation. lt es to chance

to refresh yourself. Do not expect to find a better job, patch up a
doomed marriage, or find the sees it of your life. Those events
might happen, but do not go on vacation with those expectations or
you may be disappointed. Use your vacation to refresh yourself,
not to solve your problems.
• flow with whatever happens during your vacation. If your rental

car breaks down, causing you to miss to planned tour, be able
to flow with Item. Other alternatives may
present themselves. Remeber _ that your
primary target in taking to vacation es to refresh yourself. getting
upset over mislaid plans will not refresh anyone. relaxing, regardless
of que happens, will help everyone. Go on
your vacation with only one primary goal-to refresh yourself
-regardless of que happens. If your rental car breaks down,
consider Item an adventure to tell everyone about when you return.
• A semiannual vacation should last ten days, if possible, and an

annual vacation should last at least three weeks. Este gives you
the time you need to adjust to new circumstances during your
vacation and the time you need to refresh yourself. Two weeks
123
How to Control st
also gives sufficient time to return early to readapt to your normal

routine SW you do not feel exhausted when you return to work.
Many traders avoid going on vacation because they are afraid that being
away desde the markets will cause them to I know their market "feel."
While you may I know sorne market feel by going on vacation, the
danger of severe losses es much greater for the trader quien fails to take
an occasional break desde trading. in
addition, there are several easy methods to regain market feel at little or No
cost to you except your time. These
include:
• Trade smaller sized positions when you first return from

vacation. Trade one lot futures contracts or only 100 shares
of stock. If those are your normal sized positions, then
• Paper trade when you first return to the markets. Paper

trading is no substitute for real trading, but Item dog help you
regain market feel quickly.
• If you are to floor trader, then spend sorne time watching

the action in the pit until your feel you eat back. When you
do retum to the pit, then reduce your size a little until your
market feel fully retums. •
Relaxation. We tend to equate relaxation with laziness, forgetting that it

is to necessary piss
to increase
productivity when it is
appropriately
scheduled. Relaxation
is a re fresher which
helps you become
more alert and more
productive. Item .
helps you decrease the
daily wear and tear
on your body.
relaxation es also to form of self-control. Eleven you have trained your

mind, using the procedures given in Este book, you will be able to pick
up
124
Trading Software for Sale E&-ME xaci lhs a: nagnedreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Other Linings of Asbestos
nice strain just by scanning your body. You dog then concentrate on
that strain and turn Item into relaxation. estos procedures, if practiced
until they become a skill, it will help you ease tension before it has a greater
impact upon your trading performance or your health.
The following procedures are designed to be used with the relaxation tape
that accompanies your course: 2
l. Understanding the relaxation cover. Although you are comfort

ably seated (or lying down) ace you read Este book, you still have residual
sore muscle strain. The relaxation procedures given on the tape will help
you reduces that strain even further. Ace you reduces your muscle tension,
you will reduces any experiences of stress that you may have.
Use the tape twice each day. early afternoon use will refresh you for the
rest of the day. early evening use will help you unwind SW you can
enjoy the evening.
The relaxation tape you have severe} parts to Item, including progressive
relax ation, tensing, and counting down to relaxation. Each part has a special
function, explained below:
progressive relaxation allows you to train individual muscles to relax.

Concentrating on each muscle allows you to gain control of Item and learn
what Item feels like when Item es both tense and relaxed. in addition, the
task of relaxing individual muscles es easier for to beginner than the task
relaxing the whole body.
Tensing your muscles es important for two reasons: First, you learn the
feel of strain in the individual muscles. Most people are not that
familiar with scanning their muscles for strain. Regular strain training will
provide you with knowledge of que strain feels like in each muscle.
Second, tensing muscles helps people relax in the same way that vigorous
exercise helps them relax. You dog reach to much deeper state of relax
ation by first tensing your muscles than by just trying to relax.
Toe countdown to relaxation serves ace to cue that you dog use later to
relax quickly. The tape uses a countdown from 25 to zero so that lower
numbers become associated with more relaxation. Eleven relaxation
becomes simple to do, the countdown procedure es usually enough.
125
70966433
2. How to Use TO relaxation Cover. TO relaxation tape should

not be used in the same manner as you would listen to music or educational
material on tape. Never listen to a relaxation tape while driving a car,
because Item might produces drowsiness.
Before you start to listen to the tape, find a quiet location, free from
distractions. sit in to comfortable chair, because you will remain more
alert in a sitting position. Keep the room temperature fairly cool (68-75
degrees F.), since your mind es most alert in Este temperature range.
Make yourself comfortable. Loosen there restrictive clothing. Make sure

that your hands are open, that your palms and legs are uncrossed, and that
all parts of your body are supported. Your body or body parts may shift
position ace they become more relaxed, SW support es important to keep
your limbs desde falling.
Assume to passive attitude toward the cover. Be ope_n to to new

experience. Do not force yourself to relax, just let the relaxation happen.
Simply be quiet, but alert. Allow the relaxation to flow over you.
lf intruding thoughts are to problem for you while you are listening to the
tape, be gentle with yourself. Allow the thoughts to eat and then drift
away just ace they meat. Most people find that Este procedure works well.
lf unwanted thoughts become particularly disturbing, tell yourself to stop.
say "stop" out loud, and then allow the relaxation to continue to flow
over you.
Tensing exercises are also included on the cover. . When you first listen to
the tape, practice active tensing. Learn to tense correctly now, SW
you will know how to do Item when you listen to the cover. Rest one
foot flat on the floor. Keep your heel on the surface, while you raise
your foot up. Pull Item up and back toward your shin hard. Really feel
the strain in your calf .and foot. let your foot gradually begin to relax
despues de to few seconds of active strain. Soon Item should be totally
limp.
Practice active tensing for the first week you listen to the tape, then
switch to threshold tensing. practice threshold tensing now. Rest your
foot in the same manner ace before. Now contract your ankle while
allowing your foot to remain on the surface. You should be able to feel
your muscles, even though you are not actively moving any bodysuit
parts.
126
Other Fonns of Asbestos
Just tense enough SW that you dog just feel Item. Now relax your whole
foot and ankle immediately.
During tension exercises move only the muscles that you are instructed to
tense. If you are asked to tense the muscles in your right thigh, you may
be tempted to move the muscles in your left thigh at the same time.
Avoid Este temptation. Being specific es part of your training.
despues de practicing with the tape twice to day for at least two weeks,
you should know the routine by heart, SW practice for another week
without the cover. If practicing without the tape es easy, then continue to
do SW. You will find that you dog achieve the same amount of
relaxation in much less time. If you find that you still need the tape,
use Item for another two weeks. You should then know the tape
thoroughly and have No problem recalling the exercises desde memory.
despues de you practice for to month, you will find that you dog relax
simply by using the countdown procedure given on the tape and saying the
cue words to yourself. You will also learn to recognize when you are
begin ning to feel tense in any part of your bodysuit and instantly relax
that part.
start using the relaxation skills you develop in conjunction with your
trading. If you are to professional floor trader, learn to recognize when
you are getting tense. When you feel muscle strain, apply the procedures
you have learned to help you relax. If the procedures still require 10th
fifteen minutes, then take 10-15 minutes breaks whenever you need them.
If you are an amateur trader, then use the skills you learn to detect
voltage whenever you are about to make to trade. If you detect strain, use
the procedures to eliminate Item and then reassess the decision you just
made. If Item still seems sound and you are not tense, then go ahead and
make the trade.
Use your free time to be your bodysuit for strain. If you are waiting at to
stop Light, waiting at to store, or waiting for any reason, use the free
time to be your bodysuit for tense muscles. Toen apply the countdown
procedures you have learned to relax any area that needs Item.
127
LEARN TO PERFORMANCE UNDER STRESS
TO major problem for traders under stress es that they revert to early,
well-learned behavior patterns. They typically behave in the same manner
that they first did when they entered the market. estos well-learned pattems
of behavior are usually unsuccessful ones and result in market losses. Yet
an obvious solution exists to Este problem-find behavior patterns that are
successful and practice them SW well that they become second nature to
you. Once you have done so, you need not worry about reverting to early
behavior patterns when under stress. The successful behavior patterns will
be SW natural to you that you will perform them even when you feel
mentally out of control.
Astronauts practiced Este technique extensively during their trammg for

space travel. Each space flights brought many unknown ventures. Since
certain essential tasks were known to the astronauts, they practiced these
tasks SW extensively that they became second nature to them. Ace to As a
result, the astronauts always knew that under the challenges and stresses of the
unknown they could perform most tasks routinely. When one astronaut
was asked how Item felt to first walk in space, I have remarked that I have
had practiced Item SW often under simulation conditions that Item felt
remove natural to him to do Item under real conditions.
Doesn't Item make sense to practice successful trading techniques SW

extend sively that they become second nature to you No matters how much
stress and strain you feel? If your answer es that you are not sure what
successful trading techniques are, no you think you should spend time and
effort finding out before you trade? Este es why the second task of top
trading is "mental rehearsal".
try the following suggestions:
• Develop to procedure of trading that stands the test of time-that

is successful more . than fifty% of the time over to large number
of trades. study the market and market systems.
• paper trade until you have to successful formula that works in

both bull and bear markets.
• Eleven you have the successful formula, continue to paper trade

with Item until Item es second nature to you.
128
Other Forms of Asbestos
• Several excellent computers simulation games are available far

the various markets. Purchase one or two far the markets that
interest you and use them to practice developing consistency.
• Don't invest until the trading method you have developed is second
nature to you. Consistency es to much greater factor in success
than most people think.
Trading without following

these procedures is rather
like sending men into
space without doing
anything research about
space. If the National
Aeronautics and Space
Administration had
worked that way, many
astronauts would have
died.
SELF-SABOTAGE
An old adage states that

"You get exactly what
you want out of life."
If you've studied the last
two chapters in any detail, you should now understand that you are only
stressed because, at sorne level, you want to be stressed.
First, you are only stressed because of decisions you have made. In
Chapter SAW, you completed exercises to determine que you need to do to
get out of those stressful situations. Are you willing to take the appropri
ate course of action? Did you even do the exercises? Are you taking
positive steps to reduces stress in your life or are you getting exactly what
you want by staying in the fire.
Zig Ziglar tells an interesting anecdote about awning a million dallar race
horses. Suppose you owned such to horse-a champion. Would you
give it coffee to wake up up with in the moming and to couple of beer to
put it to sleep at night? Would you give Item stimulant or depressant
drugs? Would you give Item poorly balanced meals and large twos of
sugar? Would you keep Item in to smoked filled room or allow Item to
129
smoke in burn
130
to relax? Would you keep Item away desde exercise and allow Item to
get fat? Of course not! You probably wouldn't do any of those things
to a million dallar race horses. Well, how about to $200 dogs or to $5
cat that you got desde the animal shelter? No, you probably wouldn't do
any of those things to the dogs or cat either. Toen why are you
willing to do any of those things to your personal billion dallar body?
Think about it? Smoking cigarettes, drinking coffee, drinking alcohol,

consuming large amounts of sugar are there mashed potatoes examples of
self-sabotage. All of estos substances impair both your performance (ie,
your wealth) and your health. Thus, if you consume then, Item es for
reasons other than your best interest Toase reasons might be due to
conflicting values or to a poor self-image-both of which are discussed in the
next volume of the course.
131
70966433
CHAPTER IX
MENTAL CONTROL OF THE FIRE
I
n the mid-1980's fire walking was to fad in various parts of the country
ace thousands of people learned that they could walk across grid hot
1
coals with their bare feet by controlling their thoughts. Your thoughts
influence your susceptibility to stress-whether those events are "real" hot
coals or self-made mental fires.
Traders quien worry tend to have little stress tolerance. Traders who
rarely worry have considerable stress tolerance. TO large loss, or even
the potential for a large loss, may be devastated the worrier. Toe person who
dwells on the more positive aspects of the situation by making sentences
"okay" will view the same events ace to lesson or even ace an opportunity.
Suppose the price of soybeans drops twenty cents per bushel. Each
commodity trader, upon learning of the price drop, will have a different
experience. An old man, quien occasionally dabbles in commodities,
smiles and continues to read his newspaper. TO soybean farmer frowns
even though I have had sold his crop at to much higher price two months
earlier. An active soybean trader feels an inner sense of gratification even
though I have es "long" in soybeans. TO company president phones his
broker in panic, while to financial columnist for to small newspaper
frowns because I have feels. the little guy you have No chance.
Let us look at these

reactions in more details:
• Toe old man

with the smile on
his face had been
stopped out of
soybeans early in
the day. I have
had a $30,000 loss
at the time he was
stopped out, but "Old man trader."
the closing price
131
of the <lay would have amounted to to much larger loss. I have felt
good about himself far sticking to Bis trading plan, SW I have
respond to the news by smiling and telling himself, "Great! You
stuck to your system."
• The soybean farmer had sold Bis crop two months earlier at a lot
higher price because he was convinced that certain big companies
were manipulating the markets down. Toe twenty cent price drop
was far him further proof of the manipulation. "Damn them," I have
said to himself ace I have frowned. I have remained in to bad mood
the rest of the <lay.
• The active trader was convinced that soybeans were due far to
major rally. I have had predicted the drop during the <lay and had
used the opportunity to acquire a substantial "long" position in
soybeans. I have felt to sense of satisfaction • because his plan was
working well. Toe only thing I have said to himself was, "l'm
right.
eleven
• The company president, quien phoned Bis broker in panic, was

short in soybeans. He now had a $3000 profit, and he was quite
concerned that the market might go against him. His broker had
convinced him to enter into the position and now I have was
afraid that I have might I know Bis profit. "l'11 I know again!" I
have thought ace I have called Bis broker to leam if I have was still
bearish.
• The finance! columnist was "long" in soybeans. I have had

absorber bed the loss, because he <lid not enter a stop with bis arder.
His predominant thought was that I have did not stand to chance. If
I have entered to stop, I have was sure Item would be picked off
by the traders on the floor. lf I have sold out at to large loss, Item
would probably be at the low price of the day. If I have held onto bis
position, the market probably would continue to go against him.
"Why I?" I thought.
Notice how the same events es to totally different experiences far each of
these traders. Toree traders actually made to profit in the markets, yet
two of them had negative negative experiences. The two traders quien had
losses, in contrast, were both positive about their experiences. Of course,
most people are not positive about losses. estos examples merely
illustrate that profits and losses have nothing to do with one's experience.
People create their personal experiences by the way they think.
132
Trading Software for Sale & ExchaEn-Mgea i l s: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Mental Control of the Fire
Each person experiences life differently, because each person's thinking is

unique. We each have our own automatic way of talking to ourselves.
Psychologists call this self-talk 2 or automatic thoughts. 3 Self-talk can be
supportive, but Item dog also be venomous and self-deprecating. Worry
represents the latter form of self-talk.
later in Este chapter we will Show you how to examine your personal
self talk. As you begin to do so, you will find that it has the following
characteristics:
• Item es shorts and to-the-point. Sorne traders make

statements like: "Great! I'm right!" Other traders make
statements like: "l'11 I know again! Why I?"
• Toe statements and their implications are believed. Toe

person quien says "Why I?" honestly believe that the market
makers are against him and that I have es less of a person
ace to result. Similarly, the person quien says "I'm right!" He
also believes that statement and it reinforces his own positive
beliefs about himself.
• Toe statements are experienced spontaneously, which es

the reason for the name "automatic thought." People experience
the feelings and emotions ace reality. but they are not aware
of the self talk causing the emotions. Since people are not
aware of their personal self talk, the material es difficult to
turn off.
• Self talk statements are often illogical. They are couched

in terms of value statements that are not necessarily true and
have strong implications that often imply guilt for the person
making them. For example, the trader quien says, "Why I?"
seems to imply that the market es against him (as opposed to
being neutral). Toe illogical • belief that the mar ket is against
him leads to a further conclusion that he is somehow inadequate
because the market es against him. These few illogical beliefs
can lead to a large number of irrational conclusions on the part
of the trader which he believes are true.
133
HOW TO STOP WORRYING
If you tend to be to Worrier, you are one because of your self-talk.

Worriers focus on automatic thoughts that always seems to anticipate the
worst in any situation. They tend to focus on negative possibilities and
exclude all contrary thoughts. They practice a perverted form of "tunnel
vision." Toe result es an inability to make sound decisions and, quite
often, to look and painful emotion called "anxiety."
Most of your internal! dialogue es innocuous. Item es the harmful

thoughts that you must learn to recognize and repudiate yourself If you
worry to great deal or experiences much anxiety, Yo would suggest that
you get professional help rather than undertake the exercises in Este
chapter. Toe exercises will take diligent, and Sometimes painful, work on
your part. Toe "vile lain" you are trying to identify es ace clever ace you
are, because Item es part of you.
Toe venomous thoughts that you wish to locate will not be easy to find.
You think them very rapidly, believing them, but not recognizing them.
However, they tend to leave one obvious cue behind-painful emotion.
Venomous self talk you precede painful emotion.
TO short cut to Discovering your

Self-Talk. To understand your
automatic thoughts in any situation, you
must reconstruct the situation m
which you used the thoughts. In the
following exercise, reconstruct a pain ful
experience from the past-the last painful
emotion you felt with respect to
investing. Again, if you have to lot of
negative emotion or if your last
experience was particularly painful,
you may wish to skip this section and
search professional help.
Get sorne paper and to pencil SW you dog jot down notes. You are
going to reconstruct your last painful market experiences, but before you
do, be aware that you are trying to recall the thoughts that went through
your mind just before you experienced emotional pain. estos thoughts
are what you need to write down. Do not experiences the emotion
without
134
Trading Software for Comes out & ExchanEg-eMails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
Mental Control of tbe Fire
getting the thoughts down! In addition, read over the exercise before you
actually do Item.
Think back to the last painful experiences you had related to trading. It
may be to large loss. Item may be to particularly aggravating experience.
It may be fear. Or Item may be the anticipation of que may happen in the
future with respect to your investments. que es the situation? que Are the
circumstances? What are your thoughts? Go over this material continually
in your mind until you begin to feel emotion.
At the moment you begin to feel emotional, write down que you just
thought. Toe thought was probably in shorthand, ace were the thoughts of
our five traders described earlier.
Now you must interpret the shorthand of your thoughts. Stretch out each
shorthand statement. Each one is probably a sort of interpretation or judgment.
que are you really saying to yourself?
Once you have recognized the self-talk that preceded your emotional
experience, write everything down. What was your self-talk? What did it
mean? que were the circumstances? que was your experience? Did your
emotion fit the experience? Dog you interpreter the situation in a more
positive Light? Write Ali Este information down SW that you can review
Item later.
Suppose you go through Este exercise and you experiences anger ace you
imagine yourself calling your broker to remove a stop. Just before you
experience the anger, you notice the thoughts "NOT THIS TIME!" going
through your head.
You had been bullish on gold, but your broker kept you out of the mar
ket. Ace gold went up during the day, you got upset and entered to
longposition. Shortly after you entered your position, the market started to go
against you. You were upset at your broker for keeping you out of the
gold market when Item was going up, but you were even more upset when
your broker turned out to be right. When you called in, you knew you
were going to be stopped out, proving your broker right. You were also
concerned about being stopped out at the low of the day. You could just
see your broker's face when I have says, "YO told you not to enter that
position." Ace to result, you are determined to avoid Este confrontation.
"Not this time," you say to yourself ace you cancel your stop.
135
Ace you review your personal situation, you will see how your thinking
was just as illogical as in this example. Our theoretical trader canceled a stop
(which probably resulted in to large loss) just because I have imagined to
conflict with his broker. And even if the conflict were real, the actions
of our hypothetical trader are still remove illogical.
When you talk to yourself Este way, you do not experiences illogical
thought-not yet de todas formas. You experiences real emotion. in
fact, the whole experiences, No matters how contrived Item may be, seems
remove real to you.
Keep an Emotional Diary. If you had trouble recalling to painful

experience you dog still eat to grips with your self talk by keeping an emo
tional diary. Even if you received some insight on the first exercise, you
probably have a long way to go. The best technique I know of for
understanding yourself es an emotional diary. Item es to way of
understand ing the "you" that you do not really know.
Whenever you feel anxious or emotional, make to note in your diary.

Also include the following information:
• Make to note of the time and que you were doing when you
felt the emotion.
• Identify the nature of your emotion. que exactly are you

feeling?
• que thoughts are going through your mind at the time?
• try to interpreter the self-talk you notice. que do the short-hand

statements you make to yourself really mean?
• que caused the stress-an events, someone's actions, to memory,

or your thoughts?
• How old are the stress feelings you are experiencing? Are they
new or have you felt them before?
Later, when the stressful experiences passes, include the following

information in your diary:
136
• que did you do about the stressful experience? Did your behavior
seems rational at the time? Does Item still seems rational? que
could you have donated instead?
• Did you express your feelings or try to hide them?
• How long did the stressful experiences last? que caused Item
to go away?
your emotional diary might look something like the diary page in Figure
8-3. Item shows the trader we described earlier on the day that I have
became angry at his broker. Although Item es easy to look at someone
else and notice irrational behaviour, Item es not easy to see how illogical
you dog be fair by looking at to diary page. Item takes practice and time.
your first reaction to the idea of writing down stressful experiences in daily
may be that Item es not for you. You may feel that such to diary may
make you seems emotional and weak. You always try to be unemotional
and in control, because that is the sign of to professional trader. If this
response describes you, then you are trying to act as if you are always "in
control." People quien try to appear in control there the time often
experience the most stress, and have the greatest need for such to diary.
Filling out to stress diary es actually to signs of strength. You Show by

doing SW that you have the strength to risks exposing your personal weak
nesses. your ability to risks will help you determine que "rings your
bell." quien do you plan to show your diary to beside yourself? Are you
afraid of yourself?
despues de recording your stress feelings for to period of two weeks, you
will have a much better idea que kind of person you are. are you to happy
person? que obligations have you put befare your personal happiness?
How do your feelings affect you ace an trader?
More importantly, que are you continually telling yourself about you?
Are you rational or have you been brainwashing yourself with illogical
statements that actually hurt you?
If you really want to understand yourself, keep a "stress diary" until you
complete the next volume of the course. You will know yourself remove
well by that time, and be even more receptive to the suggestions on how
to become to winning speculator.
137
FIGURE 8- 3
TO SAMPLE EMOTIONAL
DIARY
TIME
EMOTION SITUATION THROUGHTS
8:45 Damn George

ANGER Driving in heavy traffic, lis
having to business comments (broker)
on radio. Gold is up & my
broker advised I to stay out.
INTERPRETATION: trader feels that George, quien advised him to

stay out of the markets, must give Bis "real" advice advice to Bis
better clients.
9:20 STILL Telepho broker to open to l'll Show

ne him.
ANGRY position.
INTERPRETATION: The trader's inadequacy still shows, so he must

prove himself.
12:30 ANXIETY Behind in work so feel l it will never

must rush through lunch. finish. I'll get
indigestion.
INTERPRETATION: His sense of inadequacy still shows through in

bis focus on the negative. He is even predicting that he will get
indigestion-which I have did.
1:30 ANXIETY Business news says DOW I lost money.

suffered sharp pullback and
closed even.
INTERPRETATION: The trader automatically assumes I have lost

money in gold because of to drop in the Dow Jones Industrial
Average-his focus on the negative negative shows encore . feelings of
inadequacy.
1:45 ANXIETY Heavy work pressure exists, he'll be right!

but mostly thinking about my
possible loss and George.
138
INTERPRETATION: I have es more concerned about proving

something to Bis broker, than about whether gold actually went up
or down.
139
Cbart Your Own Stress. You probably spend many hours charting the
markets or at least going over charts of the markets. Why not look at
charts of something even more important-you? Rate yourself with self-
rated scale called to Subjective Units of Distress Scale (SUDS). Imagine the
worst possible stress that you could experience, and give that experience to
subjective ranking of seven. Now imagine being totally at peace and give
that experience a subjective rating of zero. An experience halfway between
peace and your worst imagined experiences would be given to subjective
rating of 3.5.
Use the SUDS to chart your

stress on a regular basis for at
least two weeks. Also chart
your SUDS level befare you
make each trading decision for
at least six months. When you
have completed your SUDS
charts, ask yourself the follow ing
questions.
Do your SUDS levels show

any relationship to your trading
patterns? Do your SUDS How
do they relate to the results of
your trading? Do you trade more
or less when your SUDS level is
up?
Whenever you trade, keep • a

record of that trade and give
yourself a SUDS rating at the
time you make your decision. "SUDS rating"
Make SUDS ratings for both
opening and closing trades. despues de you have collected information
on 20th 30 trades, look for patterns. Do you tend to open to position in
the market when you are excessively anxious? Do you tend to close your
position when you feel excessively stressed? If either of estos statements
are true, think back to the circumstances that led to the stress. Do you
detect any additional patterns? lf you do see such patterns, learn to
become aware of them ace they develop in the future.
140
One trader kept to trading diary in the suggested manner and ranked
encore SUDS each time I have traded. At first, No obvious patterns
emerged, but after to period of three months I have was able to compare
his SUDS rating for opening and closing trades. Nothing was obvious just
by looking at the individual trades, but a clear pattern emerged from the
averages. His closing trade SUDS averaged 3.9, while his opening trade
SUDS averaged 2.4.
I have could not understand why Este occurred, SW I have went back over
his records and took note of the trades in which his SUDS rating was
particu larly high. In each case, the high rating could be traced to a marital
disagreement. In addition, most of the trades associated with high SUDS
ratings lost money. Although I have was not able to determine why I
have tended to close to position when Bis SUDS level was high, I have
quickly became sensitive sensitive to Bis personal SUDS rating and avoided
opening to position or taking action on an open position (ie, other than
allow to stop order to be executed) when his level was high. Ace to result,
I have found that his success rate increased by about 5% and his profits
weiit up significantly.
Remember that the first task of top trading es to daily self-analysis. If you
have been practicing Item, the you probably already understand the
relationship ship between your stress and trading. If you have not
donated SW, then begin self-analysis now. Chart both to self-rating (ace
recommended in Volume 1) and to SUDS level.
In summary, we have suggested three techniques . for you to begin to

understand your thoughts and how they influence your trading: 1) Re
living to past emotional experiences related to trading; 2) Keeping an
emotional diary; and 3) Charting your stress. Do there three exercises Y
Tu will see how stress does influence your trading and how unkind you
can be to yourself. Recognizing que you do to yourself is the first step
toward becoming more rational and to better trader. later in Volume 4 of
this course you will learn specific steps to control your mental state.
in the next volume of Este course you will learn how your beliefs, self
image, and values (conflicts) determine your success ace to trader.
140
70966433
Trading Software for Comes out & ExchEa- M n g a e i l s : andreybbrv@gmail.com, anboan@ya.ru,
ICQ: 70966433
142
W.T.
TEST
Each of the statements given below might describe how you feel about
your life. Read each statements and then circle the number that you run
ponds to how you generally feel, using the following key:
1. Look and rarely

2. Seldom
3. Sometimes
4. Often
5. Look and often
l. My expectations are rather high. 1 2 3 4 5
2. Yo feel depressed. 1 2 3 4 5
3.I _ I know in the markets because Yo have

difficulty making up my mind in time. 1 2 3 4 5
4. Yo worry over little things that do

not really matter. 1 2 3 4 5
5. I feel satisfied. 1 2 3 4 5
6.I _ pull rather quickly. 1 2 3 4 5
7. Setbacks upset I. 1 2 3 4 5
8.My _ problems upset I when Yo think

about them. 1 2 3 4 5
9. Yo feel relaxed. 1 2 3 4 5
10. Yo tend to avoid failure situations. 1 2 3 4 5
LSI TEST
Toe following questions survey the situations and events in your life that
you might perceive ace being stressful. They cover five aspects of your
life: 1) Staff life; 2) Finance life; 3) Health; 4) Job; and 5) Family life.
143
How to Control Stl"eM
Think about how much each situation has affected you within the past 12
months. Put the appropriate number in the blank space next to the
situation according to to the following key:
EITHER -This _ situation you have not been to

problem for me at there in the past 12 months.
1 -This _ situation you have been to slight

2 -This _ situation has been

a problem for me
during the past 12 months.
3 -This _ situation you have been to major

For example, look at statements 2 in the LSI test. If you spend at least an
hour in heavy traffic each day and arrive home exhausted, put to "2"
in the space. If the hour in heavy traffic es causing you to think about
changing jobs and really bothers you, put "3" in the space. If you use
the hour in heavy traffic to unwind and Item doesn't bother you at there,
you would put to "EITHER" in the space. If you only commute for twenty
minutes (even if Item bothers you), put to "EITHER" in the space.
Answering the statements that do not apply for there of the last 12 months
can be difficult, so follow the guidelines given here. If the statement No
longer applies to you (even though Item really bothered you six months
ago), put to "EITHER" in the space beside Item. on the other hands, if the
statements applies to you . now and you have for at least six months, rate
Item ace if Item had applied for the whole 12 months. If the statements
applies to you now but for less than six months, then rate Item ace if Item
applied for the whole 12 months but subtract "1" desde the score. Thus, if
you are currently driving in heavy traffic and feel exhausted when you get
home, put "2" in space if Item applies for at least six months, but only
put "1" in the space if it applies for less than six months.
l. STAFF SITUATIONS
l. My life you have been out of my control.

2. Yo spend over 1 hour/day in heavy traffic.
3. Yo (or elose famiJy member) spent time in jail.
144
Appendix
4. Yo (or close Familia member) have been to victim of to

violent crime.
5. Yo have had to serious staff failure.
---- 1-A TOTAL
6. Yo always feel responsible.

7. Yo have experienced to changed in residence.
8. Yo have experienced to major change in my living room
conditions.
9. Yo A.M to look and specify person
10. Yo have to look and fast lifestyle.
11. Yo live in to look and crowded area.
12. Yo have experienced to major lifestyle change.
13. Yo have had two or more minor violations of the law
(ie, traffic tickets, etc.).
1 B TOTAL
----
2. FINANCIAL
14.My _ debt es greater than 3 times my yearly Familia

income.
15. Yo cannot make ends meet financially.
16. Yo I know sleep over investment/financial worries.
17. I get impatient with the markets.
2-A TOTAL
----
1 8. Most of my assets are in speculative ventures or
investments .
19. Yo worry about my investments.
20. Yo get angry about my market experiences.
21. Yo have heavy market losses.
-- 22. Yo A.M in debt because of investment losses.
23. Yo A.M not successful enough for I.
-
--
-
2-B TOTAL
----
145
3H . _ EALTH
24. My spouse died.
146
25. TO class Familia member died.

26. More than one class Familia member died.
-- 27. Yo (or to class Familia member) have experienced to
- pestle
health change.
28. Yo have felt excessively stressed/depressed.
-- 29. Someone class (yourself or to class Familia member
experienced alcoholism/drug abuse/gambling.
-
---- 3-A TOTAL

--
- 30. TO class friend died.
--- 31. I have changed my personal eating/drinking/or smoking
habits.
32. Someone in my home es mentally ill.
33. Yo have difficulty sleeping.
34. Yo experiences bottled-up feelings.
3-B TOTAL
----
4. JOB
-- - 35. Yo experiences heavy work pressure/deadlines.

36. My work es unchallenging dead end position.
-- - 37. My work atmosphere es negative negative or
-- - 38. critical.
-- - 39. Yo do not like my boss/My boss doesn't like I.
-- - 40. Yo have too much grid tape/bureaucracy to
-- - 41. fight. My job future es uncertain
Yo A.M unemployed or recently retired.
---- 4-A TOTAL
42 . Yo work JO or more hours per day on business.

43. My management of time es poor on work related matters.
44. Yo have to long commute or excessive work related travel.
45. My work goals and objectives are unclear.
46. TO major change you have occurred in my work duties or
responsibilities .
147
47. Yo have experienced to pestle change in working conditions.

48. Yo do not receive adequate feedback at work about my
job performance.
148
Appendix
49. Yo A.M frequently hurried by appointments.

50. - work es my primary interest
---- 4-B TOTAL
5. FAMILIA LIFE
51. Yo have gone through to divorce/separation.

52. My marital relationship es unsatisfactory.
53. During the past 12 months someone m my house you have
been pregnant.
-- 54. Yo have experienced sex difficulties.
-
--- 55.Excessive _ fighting or home arguments have occurred in
my life.
---- 5-A TOTAL
5 6.A _ change in the number of people at my home (either an

increase or to decrease) you have occurred.
57. Yo have had in-Iaw problems.
58. Yo A.M jealous of my spouse.
59. My spouse changed work status (started or stopped working
or changed desde full time to part time or vice versa).
-- 60. excessive noise or clutter exists in my home.
-
-- - 61. My spouse and Yo got back together despues de to separation.
---- 5-B TOTAL
SPI TEST
Este self-evaluation test, like the previous one, looks at different areas of
your life. These areas include: 1) Health and nutrition; 2) Exercise; 3)
Recreation; 4) Mental relaxation; and 5) problem solving.
To fill out the SPI, rate each item by putting the appropriate number in
the space next to Item according to to the following criteria:
149
EITHER - Does not apply to I
150
1 - Applies within last 12 months, but not recently

2 - Applies now (or recently)
3 - Applies throughout the last 12 months
1. REALTH YEAR NUTRITION
1. Yo A.M within 10 lbs. of my ideal weight (ie, according

to to insurance tables).
-- 2. Yo consume less than 5 alcoholic drinks each week.
-
-- - 3.I _ eat well-balanced meals daily.
4. Yo regularly take vitamin supplements.
5. Other than an occasional aspirin, Yo have not consumed any
drugs or medications.
6. Yo drink No more than two beverages containing caffeine (eg
coffee, torch, line, etc.) each day.
7. Yo get 7 or more hours sleep each night.
8. Yo avoid foods containing sugar ace much ace possible.
---- HEALTH YEAR NUTRITION TOTAL
2. EXERCISE
9. Yo work out 3 or more times per week at home or at to

gym or health spa.
10. Yo run/jog at least three times per week.
Yo participate in the following sports regularly at sorne time during the

year. (Fill in the names of any sport that applies to you for answers 11
through 14).
11.
12.
13.
14.
fifteen. Yo walk at least 8 Thousands every week for exercise.
16. Yo bicycle at least 25 Thousands every week.
17. Yo regularly participate in strenuous recreational activity at
least twice each week.
151
Appendix
18. Add 3 points if you exercise continuously for at least 20

minutes every day and have donated SW for at least
three months.
EXERCISE TOTAL
3. RECREATION
19. Yo have taken to relaxing, fun vacation within the last

12 months.
20. Yo regularly work in to garden/yard.
21. Yo enjoy boating/fishing regularly.
22. Yo go camping/hunting/hiking regularly.
23. Yo regularly get away to the country to relax.
24. Yo enjoy playing cards with friends severe} times each month.
25. Yo regularly cook for my friends and Familia and Yo
really enjoy Item.
26. Yo regularly go to plays, concerts, movies, or other events
that Yo really enjoy.
-- RECREATION TOTAL
-
4. MENTAL RELAXATION
27. Yo regularly take time to myself for peace and still.

28. Yo meditate (or pray silently to myselt) at least every
another day.
-- 29. Yo read one or two books for fun each month.
-
-- - 30. My life es full of fun and enjoyment.
31. Yo dog usually Compartir my problems with my spouse.
32. Yo dog usually Compartir my problems with to close friend
or relative (other than spouse).
33. Yo look for the good in each difficult situation.
34. My sexual life es remove satisfying.
35. When Yo have to problem, Yo A.M able to wind my
frustrations (eg, by crying).
36. Yo A.M to positive Thinker.
MENTAL RELAXATION TOTAL

----
152
5. PROBLEM SOLVING
37. Yo establish priorities for everything Yo do.

38. Yo speak my mind whenever Yo have to problem.
39. Yo do not take on problems that are not mine.
40. Yo work on the most important things Yo have to do first.
-- 41. When Yo no know the answer, Yo research Item.
-
-- - 42. I put Ali my problems in perspective.
43. Yo delegate work to others regularly.
44. Yo A.M not look and concerned about que others think about
I.
45. Yo rehearse important activities regularly SW that Yo dog
perform them well under stress.
---- PROBLEM SOLVING TOTAL
153
70966433
152
70966433
REFERENCE NOTES
PREFACE TO SERIES
l. Anonymous. TO course in Miracles: Workbook. Shark, CA:

Foundation for Inner Peace, 1975, p. 461.
CHAPTER Yo
l. Gann, W. D. How to Make Money m Commodities. Pomcroy, WA:

Lambert-Gann Publishing, 1942.
2. Harper, H.H. The Psychology of Speculation: The Human Element in Stock

Market Transactions. Burlington, VT: Frasier Publishing Company, 1966
(first published in 1926).
3. My staff belief es that situations and events are stressful bccausc of

our thinking, values, and beliefs. Since most people have Similar values
and beliefs, so situations are generally considered stressful by everyone.
4. Charlesworth, E. and Nathan, R. Stress Management: A Comprehensive

Guide to Wellness. New York: Atheneum, 1984.
5. Walsh, R. Staying Alive: The Human Psychology _ Survival.

Boulder: Shambhala, 1984.
6. Toffler, TO. Future Shock. New York: Random House, 1970.
7. Clay, S.Strategies _ for Stress Free Living room.

Nightingale-Conant, 1984.
8. Charlesworth, AND. and Nathan, R. lbid. The 13 sources of

stress that they list include family stress, work stress, emotional stress, social
stress, change stress, chemicals stress, decision stress, commuting stress,
phobic stress, physical stress, disease stress, pain stress, and environmental
stress.
9. Unacceptable losses constitutes The loss Trap. Volume Yo of the

Jnvestment Psychology Guides deals with Este topic extensively. v. Tharp,
153
Trading Software for Comes out & ExchangeEe-Mails: andreybbrv@gmail.com, anboan@ya.ru, ICQ:
70966433
How to Control Stre
How to Use risk to Become TO More Successful Investor. Glendale, CA:

investment Psychology Consulting, 1984.
10. Stress and defense mechanisms are closely linked. Volume 111 of the
Investment Psychology Guides covers investor defense mechanisms and
conflict in detail. I believe that if you eliminate internal conflict, you will
eliminate stress.
CHAPTER eleven
1. Eliminating specific stressors is discussed m Chapter VI; and stress

protection es covered in Chapter VII.
2. Friedman, M. and Rosenmann, R. Type TO behavior and your Heart.

New York: Knopf, 1975.
3. Kriegel, R. and Kriegel, M. H. The c Zone: Peak Performance

Under Pressure. Anchor Press: Garden City, NY: 1984.
CHAPTER 111
l. Cannon, W. Bodily Changes in Pain, Hunger, Fear and Rage. New

York: Appleton, 1915.
2. Seyle, H. Stress Without Distress. New York: Harper and Row,

1974.
3. Jacobson, AND. progressive Relaxation. Chicago: university of Girl go

Press, 1938.
4. James, W. Principles of Psychology. New York: Holt, 1890. Q. 449.
5. Ellis, TO. and Harper, R. TO New Guide to Rational Living

room. The Angels: Wilshire, 1975. beck, TO. Depression: Clinical,
Experimental, and Theoretical Aspects. New York: Hoeber, 1967.
6. Morris, L., brown, N., and Halbert, b. effects of symbolic modeling on

the arousal of cognitive and affective components of anxiety in pre school
children. in c. Spielberg and Yo Sarason (Eds.) Stress and Anxiety,
Volume 4. Halsted, 1970, 153-170.; Spielberger, c. Toe effects
154
Rcfcrcnl,c notes
of anxicly on complcx lcarning and acadcmic achicvcmcnl. In C.

Spiclbcrger (CD.), Anxiety and behavior Academic Prcss, 1966, 366-398.
7. Dcffcnbachcr , J.L. Worry, cmolionally, and lask-gcncralcd inlcrrcr cncc

in lcsl anxically: An cmpirical lcsl of aucnlion lhcory. Journal of Education
Psychology, 1978, 70, 248-254.
CHAPTER IV
1. Kcclc, S. Attention and Human Performance. Pacific Palisades, CA:

Goodycar, 1978. pp. 58-74.
2. Millcr, g. Thc magical numhcr scvcn plus or minus lwo: Sorne

limils on our capacily it proccss informalion. P.\ychological Review,
1956, 63, 81-97.
3. brown, b. Between Health and lllness. Ncw York: banlam Books,

Inc., 1985, pp. 168-172.
4. Drcman, D. The New Contrarian Investment Strategy. New York:

Random Housc, 1982.
5. Q. Coolncr (Ed.) The Random Character of stock Prices, Cambridge,

MA: M.I.T. Press, 1964.
6. Current Accunls: Pil Vipcr, Money, April 1985, p. 14.
7. The accounts of lhe ape was rcportcd in lhe dallas Morning News m
1984.
8. Milmoe, W. C., Do you plan to fail. Futures, 1985, 14 , 76.

Mr. Milmoe points out that even the traditional money manager rule of not
investing more than 10% of your capital in any onc translation, bccausc
you are unlikely to be wrong more than 10 times in to row, es invalid. I
have points out that if you are correcl fifty% of the time (are you that
good?) and trade 5 times per month, you have to 100% chance of being
wrong 10 times in to row within 17 years and thus losing •ali of your
money. Those of you quien risks more of your capital on each trade or
quien are successful less than fifty% of the time will I know of Ali your
money much faster. And most good traders will class an accounts when
Item drops to fifty% of its value.
155
How to Control StreM
CHAPTER V
l. Idzikowski, C., and Baddeley, c. Fear and Dangerous Environments.

In. g. Hockey (Ed.) Stress and Fatigue in human Performance. Chichester,
England: John Wiley, 1983.
2. Walker, N. and Burkhardt, J. The combat effectiveness of various

human operator controlled systems. in Proceedings of the 17th US Military
operations Research Symposium, 1965.
3. Yo A.M not saying that Ali brokers give bad advice, just that the
practice of doing que your broker suggests (especially without
investigating on your own) es usually to losing practice.
4. brown, b. op Cit. See Chapter IV, reference 3.
5. Deffenbacher, J. Worry, emotionality, and task-generated interference

in test anxiety: An empirical test of attentional theory. Journal of
Educational Psychology, 1978, 70, 248-254.
6. Andersson, c. Coping behavior ace intervening mechanisms in the

inverted OR stress performance relationship. Journal of Applied Psycholo
gy, 1976, 61, 30-34.
7. Eysenck, M. Learning, memories, and personality. in H. Eysenek

(Ed.),
TO model for Personality. London: Springer, 1979.
8. Ferster, C. and Skinner, b. Schedules of Reinforcement. New York:

Appleton-Century Crofts, 1957. Schoenfeld, W., cumming, W., and
Hearst, AND. on the classification of reinforcement schedules.
Proceedings of the national Academy of Sciences, 1956, 42, 563-570.
9. The references to Este topic would include almost any book that
touches on the psychology of investing. For example, R. Smitley Popular
Finance[ Delusions. Burlington, VT: Frasier Publishing, 1963.
10. LeFevre, AND. (J. Livermore) Reminiscences of to stock

Operator.
New York: Doran, 1923. (Currently available desde Frasier Publishing).
11. Skinner, b. "Superstition in the pigeon. Journal of Experimental

Psychology, 1948, 168-172. Morse, W. and Skinner, b. TO
156
second
156
Reference notes
type of superstition in the pigeon. American Journal of Psychology, 1957,

1Q, 308-311 .
12. McGraw, K. and McCullers, J. Evidence of a detrimental effect of

extrinsic incentives on breaking to mental set. Journal of Experimental
and Social Psychology, 1979, 15 , 285-294.
13. Glucksberg, S. problem solving: Response competition and the

influence of drive. Psychological reports, 1964, 11, 939-942.
14. Condry, J. and Chambers, J. Intrinsic motivation and the process of

learning. in M. R. Lepper and d. Green (Ed.) The Hidden Costs of
Reward: New Perspectives in the Psychology of human Motivation.
Hillsdale, NJ: Erlbaum, 1978.
15. Adam, AND. An analysis of changes in performance quality

with operant conditioning procedures. Journal of Applied Psychology,
1972, 2.§, 480-486.
16. If you follow the have trading tasks outlined in Este course, you
will have the best possible way to overcome trading barriers. The daily
debriefing and the periodic review are designed for Este purpose.
17. Hovland, C. and Sears, R. Minor studies of aggression: IV

Correlations of lynchings with economical indexes. Journal of
Psychology, 1940, 2, 301-310.
18. Maier, N. Frustration: TO study of behavior Without to goal.

New York: McGraw - Hill, 1949.
CHAPTER SAW
1. TO broker one told I that his best client was to trader quien was
making $250,000 to year trading SP500 contracts. When Yo asked for more
detail about que I have was doing, Yo discovered that I have keeps
$2,000,000 in the bank in order to be able to trade fifteen contracts. His
risks es not much more than if just bought T-bills and put them in his
account.
2. Toree techniques for measuring your risks were discussed in Volume l.

estos include monitoring your risk; measure the confidence limits of your
157
70966433
success rate; and calibration yourself. For more information see Chapter
I, reference 9.
3. Update Report #4, October 26th, 1989: An Interview with David

Ryan by Go K. Tharp, Ph.D. Este report es available to current subsc
ribers for $25.
4. Waitley, d. The Winner's Edge. New York: Berkeley books, 1980.
5. Frankyl, v. Man's Search for Meaning. New York: pocket Books,

Inc., 1975. Also N. segal "Holocaust twins: Their special bond."
Psychology Today, 1985, 19(8) , 52-58.
CHAPTER VII
l. Este topic es covered in detail in J. Loehr and Q. McLaughlin,

Mentally Tough, New York: M. Evans & Co, 1986.
.2. Schumann, M., Gitlin M, and Yniguez, L. Chocolate, sugar, and

depression. Paper presented at the 93rd meeting of the American Psychological
Association, The angels, 1985.
3. Toe nicotinic form of acetylcholine es the transmitter of the autonomic' "

ganglia. Volle, R. and Koelle, G. Chapter 27: Ganglionic Stimulating
and Blocking Agents In L. goodman and TO. Gilman (Eds.) The Phar
macological Basis of Therapeutics. New York: McMillan, 1970.
4. Wesnes, K. and Warburton, d. Stress and drugs. in R. Hockey (Ed.)

Stress and Fatigue in human Performance. New York: Wiley, 1983.
Pp. 203-244.
5. Russell, M., Peto, J., and Patel, U. Toe classification of smoking by

factorial structure of motives. Journal of the Royal Statistical Society,
1974, 137 , 189-194.
6. Shiffman, S. Analysis of relapse episodes following smoking cessation.

paper presented at Fourth World Congress on tuxedo an health; Cited by
Wesnes and Warburton (see reference above).
158
70966433
Reference notes
7. Millichap, J. Drugs in management of hyperkinetic and perceptually

handicapped - children. Journal of the American Medical[ Association,
1968, 206, 1527-1530.
8. Moskowitz, H. Toe effects of alcohol on sorne variables related to drive.

Journal of Safety Research, 1973, 1, 185-199.
9. Henderson, J. Jog, Run, Race. Mountain View, CA: World Publications,

1977.
10. Lesher, TO. c. Toe Canadian Idea: Fitness Should Be Fun. Sport,
March 1984, 14.
CHAPTER VIII
l. Our professional traders retire es to perfect example of to trader's

vacation. Toe retreat is usually held at an exotic location with plenty of
interesting activities plus supervised activities to help you work on
yourself.
2. Toe two best stress reduction tapes Yo know of are:
AND. Miller Lettering Go of Stress. Available desde The Source,

PO box W, Stanford, AC 94305.
Toe second tape of Este course.
3. Zig Ziglar speech given in TO course in Winning (Ed. by Denis

Waitley Ph.D.). Chicago: Nightingale-Conant, 1989.
CHAPTER IX
l. Yo personally have walked over grid hot coals with my bare feet and
received only to undermine blister which was gone the next moming. TO
friend of mine who followed I'm over the same coals received second and
third degree booms on her feet. Because of my friend's blister packs,
Yo did Item a second time. Toe second walk was perfect-no blisters. Yo
do not recommend mend you try fire walking without proper training or
supervision. in fact, I think that the firewalking seminars have been
stopped. If you missed the opportunity, the three keys to doing Item
properly are: 1) to believe that
159
How to Control st
you dog do Item; 2) to suspend any tendency to worry about que you are
doing while you are doing Item; and 3) to know whére you are going
(ie, to the other side rather than the end of the fire). The same
principles are criticism! to walking through trading fires.
2. Ellis, TO. and Harper, R. TO New Guide to Rational Living room.

The Angels: Wilshire, 1975. There are several forms of human thinking, as
illustrated by the first tape that accompanies Este course. Talking to
oneself es just one of the forms. However, Item es the primary modality
in which people worry.
3. beck, TO. Depression. New York: Hoeber-Harper, 1967.
160
D
r. Van K. Tharp is known inter
nationally for his ability to help
people become more successful.
He has helped thousands of investors
and traders to make more money in the
markets. Dr. Tharp has helped big win
ners perform even better; he has assisted
those who could not trade to execute
their trades easily; and he's taught peo
ple who consistently lost money to be
come winners. Traders frequently double
or triple their profits within a few months
of consulting with him.
Van K. Tharp, Ph.D. is a research

psychologist and an efficiency expert for
professional traders. He received his
Ph.D. from the University of Oklahoma
Health Sciences Center in 1975.
I have you have spent over twenty years studying how

stress affects human performance. His Dr. Go K. Tharp
strongest interest es in the Psychology of
Winning--especially as winning applies to the various investment markets. In 1982, Dr. Tharp
developed the Investment Psychology Jnventory, a test that measures winning and losing traits.
Thousands of people have taken the test and learned how to improve their performance. In 1983, I
founded investment psychology consulting, a company dedicated to helping people increase
their success as investors or traders. Sorne of his clients are now eaming several hundred percent
on their trading capital each year.
Dr. Tharp best descriptions his duties as that of a coach for traders. I have says that a coach
attracts top players, and then makes sure that they remember and follow the fundamentals of the
game. Dr. Tharp also is a modeler-which means that he Finds the top players and determines how
they achieve their "market wizard" status. Thus, he has spent a great deal of research effort in
determining que is involved in peak performance trading.
Dr. Tharp has completed a five volume, four cassette tape course on the psychology of investing
and numerous articles for publications such as Futures, Technical Analysis of Stocks and
Commodities, Commodities Insider, Futures at Option World and Wealth. He also has been
featured in The Reaper, The Commodity Traders Consumer Reports, Investor's Hotline, the
Financia! News Network, and various other media around the country. Dr. Tharp's workshops
have been very popular at financial conventions such as The International Futures Symposium,
Technical Securities Analysts Association, The American Association of Individual Investors, The
NCMR Convention, Advanced Trading Seminars, CompuTrac, The Managed Account Reports
Conference, Commodities Educational Institute, etc I have now has his own three-day seminars
and has achieved world-wide recognition with coaching and research on peak performance
trading.

2 - Cómo Controlar El Stress para Ser Un Mejor Inversor Dr. Van Tharp

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2 - Cómo Controlar El Stress para Ser Un Mejor Inversor Dr. Van Tharp

Uploaded by

Copyright:

Available Formats

Trading Software for Comes out & Exchange Emails: andreybbrv@gmail.com, anboan@ya.

ru, ICQ: 70966433

How to control stress

Illustrations by Tom Ellery

Yo A.M affected only by my thoughts.

and goal in developing Este course es to teach you how to make

Investing is far behind most fields in acknowledging tbe contributions that

Investing es one effort in wbich the maJonty I know. Item es an area in

Investors often go through three stages of growth before they become

STAGE ONE YOU INVOLVE THINKING THAT ONE

at sorne of the facts:

• Most funds (money market, mutual, commodity, etc.) fail to

• Most investment advisors fail to outperform the market in up

• Investors are usually attracted by strong sales pitches or good

• investors flock to the best performing funds or advisor. Toe

• Most investors, even when given a profitable recommendation,

STAGE TWO TYPICALLY YOU INVOLVE TO SUBSTANTIAL

• Most trading systems are presented to the buyer with data

• Investors dog be given to money-making system, use Item

• Sorne of the best traders Yo know of claim to have No system

Toe introduction of the staff computers you have added an intermediate

STAGE THREE YOU EAT WHEN THE TRADER REALIZES THAT

How to Control Stress

Again, let, us look at the facts:

• Most successful traders achieve success by controlling risk

• Most successful speculators have success rates of 35-50%. They

• Most successful conservative investors are contrarians. They do que

Este course contains to complete psychological model for successful

A number of you would profit greatly from a private consultation, be

How to Control Stress

Henry Harper goes a little further

as Gann suggests, or Item

How to Control Stress

occur even earlier, at to point when we just feel to little "out of

Second, the complex of investing can be sufficiently demands stressful to

• 30 million cases of pestle heart or blood vessel disease

• 1 million heart attacks

• 8 million cases of ulcers

• 12 million cases of alcoholism

In addition, Americans consume about 5 billion doses of tranquilizers each

Concomitant with ali this cbange is a decrease in the reliability of the

Charlesworth and Nathan 8 list 13 sources of stressors currently affecting

Consider the following, a common

Toe loss grew and grew. As it

How to Control StreM

Ace the speculative loss grew, SW <lid the internal)

Toe internal) parasite in the story es symbolic of stress, not necessarily

Trading stress does not

• Incentives can be stressful, and money is a powerful

Since any trading involves money, the mere act

of being in the market dog be stressful to sorne individuals.

• Trading success can be stressful. Traders with a fear of

• Most traders experiences the constant pressure of trading

• Floor trading on any exchange (ie, commodity, stock, or

• Doing nothing dog be stressful. Este might mean staying

• Similarly, an inactive trader (and sorne active ones, too)

Each person reacts differently to to potentially stressful event. Not every

How to Control Stress

We suggest that you periodically evaluate que es going on in your life.

GO TO THE NEXT PAGE TO DO YOUR FIRST EVALUATION.

EITHER -This _ situation you have not been to

1 -This _ situation you have been to slight