Home Advanced Psychology and trading Attaining trading mindset – Best ways to train your brain

Attaining trading mindset – Best ways to train your brain


People are different because their minds are different. It means that if someone can perform a task successfully, you should also be able to do it but differently. In this article, we will learn about developing a model to achieve a successful attitude. Your success depends on how you use your mind.

Quality of information

You should understand that the large amount of information that you face daily is low quality and cannot be used for prediction. Since the information is of low quality, you need to depend on mental strategies for making profits.

Levels of quality information

The best quality information is described by behaviour. The performance measure of an individual is also quality information. When you kick a football, you receive quality information. You get auditory feedback from the sound of your kick. And visual feedback when the ball is in air. You will immediately know if you have kicked it well or not depending on whether you scored a goal. High-quality information provides immediate feedback. If the information delivery is taking longer, poor is the quality of data.

When it comes to investment-related information, the trader may take the advice of his advisor, read a newspaper, read the financial report of the company, or ask an investment expert. Some investors take information from charts after plotting moving average, oscillators, market profile, Bollinger bands etc. Thus, most of the data is coded and recoded and far from the original source.


When traders make losses, they think it is their fate due to which they are in such a bad condition. But not many people realise that it is the poor quality of information that is the culprit most of the times. Do not try to hold your fate responsible for your action. Most traders attribute their misfortune to having a “magic system”.

Internal representation

Any information that you receive, your mind will represent that information to you in a special way. This is known as internal representation. Your internal representation is like a map. It acts as a guide to behaviour. It gives you choices. Big investors have a lot of choices because they have complex maps. Novice or unknowledgeable traders have simple maps that give them a few choices. Based on their maps, people respond accordingly. They can differentiate between market signals and systems in terms of their value. Whether you respond to a signal or not, your response has nothing to do with the signal itself. It all depends on your internal representation of those signals. Similarly, when you are trading the markets, you are trading your beliefs and not the markets itself.

How to produce internal models?

Internal models are developed through three main processes: generalisation, deletion and distortion. First, you need to understand how these processes work. This will help you in expanding your internal models and choices. You will need to use these processes continuously. The critical aspect is how precisely you use them. Precision allows you to model the processes in a way that increases your choices rather than limiting them.

Generalisation – When you say “trading options is risky unless I learn it thoroughly”, it means your generalising your thoughts based on your experience in the market. Never investing in options again might limit your choices but at the same time limits numerous losses in the future. Each generalisation statement is useful in some context and not in other. When you generalise anything, you explore the internal model by asking yourself specific questions about the subject. For example, when you come to a conclusion “I will never invest again”, others will ask you a number of questions to understand your internal model. The questions can be:

  • Will you NEVER invest again in future as well?
  • Is it in any particular market that you will not invest?
  • What will happen if you decide to invest again?
  • Are there any situations in which you will reconsider your idea of not investing?

Deletion – Deletion filters out that section of the world that we are capable of handling. It can be useful or painful. If you have expectations about the market that might be wrong, then you are deleting money-making opportunities. On the other hand, if you delete the piece of information which is not useful to you, then the deletion will prove useful to you.

Distortion – When people are generalising things, people tend to shift because of sensory information o support their generalisation. These shifts are called as distortions. After a lot of experiments with different people, it showed that people an expectation then distort input to match it. You see what you expect to see. Distortion is strongly related to fantasy. It prepares you for situations before it occurs. Experienced technical analysts distort from reality as they observe chart patterns. They are capable of noticing patterns that the average person cannot see looking at the same chart. They have learned this in a particular way.

Final words

The market cannot be held responsible for your trading losses. Investment information of low quality should have little meaning to you. Investment success depends on how your brain represents that information to you. Generally, the more choices you have, the more chances of you being successful. By examining your generalised statements, you can expand your alternatives to you. You need to explore the structure of your internal model. You should know what details have you used to represent your experience. You should then make changes to your internal model by looking at what works for you and what doesn’t. You could also take the reference of a successful trade. Determine sub-models if necessary. You will see that the result is just pure magic.


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