Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
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Come to the edge, he said. They said: We are afraid. Come to the edge, he said. They came. He pushed them, and they flew...Guillaume Apollinaire
Many years ago I idolized the Rock Band U-2. For me, it was all about the guitar player called “The Edge.” I remember watching every video and buying every album just so I could follow “The Edge” through his career and try to find out as much about him as possible. I learned that his real name was David Howell Evans, but that he got his nickname from his love of heights. He would walk without fear on the edges of bridges or very tall buildings. Others said his nickname was because of the angular features of his face, particularly his nose. None of that mattered to me because I was enthralled with his guitar playing and the way he looked back in the day.
Then, something changed. First of all, he got married to a belly dancer. More than that, his physical appearance made wonder why I even thought he was handsome. He started to age, and, in the aging, he lost everything about him that made him The Edge for me. In a sentence, the Edge lost his edge!
Now, older and wiser, I think more about how “The Edge” relates to trading and what it takes to become successful as a trader and investor. In order to introduce the topic of Trading Edges, I want to go back a bit and focus on the emotional and behavioral aspects of a trade.
As John Lansing and I have been sharing with you for many years, technical analysis is about plotting emotions on a grid. The trader who is able to grasp this concept is going to be ahead of the pack of traders. Markets move on emotion as traders trade their money and beliefs. Markets are made up of human beings, and human beings are emotional creatures. There is no way to get around this. Anyone who tells you to trade without emotions is denying one of the essential elements that separates losing traders from winning traders.
A mantra of www.trending123.com is, “Your rat brain is out to get you!” What does this mean? It means that you are either a victim of your primitive, emotional, old, limbic rat brain, or you are not. If you do not recognize, accept and embrace that you are a human being with human emotions, you will be defeated by these emotions. If you are in touch with your rat brain and acknowledge that it will always lead you to make mistakes based on fear and greed, then you have taken a major step along the path to trading mastery.
Neurobehavioral trading is a new way of thinking about trading . As such, there is more than a little resistance to it. One of my missions over the coming years is to bring neurobehavioral trading into the core of trading and investing. This can and will be done, but there is great opposition to it. Why? For one thing, it is in its infancy, and is a little over seven years old. As with any new theory, there are ideas around the periphery, but we struggle to bring these to the core. It takes time.
In my opinion and experience, there is no way to deny the significant role that behaviors play in the trading and investing process. Every day a new piece of evidence appears that confirms the concept that traders bring themselves and their brains into every aspect of trading and that the human brain is the most powerful trading tool. With this come irrationality and neuropsychological biases.
The only way for a trader to succeed—i.e., perform in a consistently profitable fashion—is to have an edge. Those of you who have coached or mentored with me for any period of time will recognize immediately that I continually stress three critical elements of trading: risk control, money management and edge. But what is an edge?
In simple terms, an edge is what separates the amateurs from the professionals. An edge refers to that specific brain (synaptic) strategy that you have practiced until you are as familiar with it as breathing. Over the coming months, I will introduce you to some fundamental neurobehavioral concepts and thinking biases that will put you on the road to finding your own personal trading edge.
A definable edge requires a mental process that feels like intuition. Profitability grows when we act spontaneously after internalizing prior trading experiences…Alan Farley
Until Next Time,
Good Trading and (Revitalized) Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
P.S. Every week, I send you a Trading Wisdom designed to make you better, smarter, more balanced traders. Today, I want to ask you, “How are you doing?” Please join me and your fellow traders at the message board and tell us which of my Trading Wisdoms have been most helpful in getting you on a path to profitable trading. How have you used my methods and insights to make big money or avoid huge pitfalls? Tell me what you think, and your favorite Trading Wisdom may be featured in my upcoming book! Stop by today!
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