How You See Affects How You Trade

Dr. M. Woodruff Johnson

How often have you seen something that upon closer examination turned out to be something

very different? Or, have you ever looked at the price action and acted upon what seemed to be

a perfect price pattern; then wrote your plan, executed the plan, and summarily were stopped

out; only to go back to what you thought was the price pattern that now looked entirely

different?! It was like a dream. What you perceived was predicated upon how you “filter”

information. You interpreted what you saw through mental models of how the world appears to

be. In other words, what you “see” and interpret as reality is created by internal working

“models” in your mind. Mental models of the world are formed in your earliest years of 

development and continue to expand throughout years of living. These mental models or

paradigms are built around everything that you have learned and make up the conscious and

unconscious beliefs that motivate you to both good and bad behaviors. Additionally, these

mental models or programming also involve how you perceive the world; in other words, the

lenses we use to “filter” information. There are as many ways to filter data coming into the

brain/mind for processing as there are people on the face of the planet. And, it’s important to

understand some of the more general ways that filters work. In this way, you will be able to

promote changing what you do through how you do it. If you are getting results that you don’t

want then you must change something. But, it is very difficult to change in the “right” direction,

if you aren’t clear about objectives and the direction to begin with. Doing things differently as a

result of seeing and experiencing things differently is what we are talking about and this is the

beginning of making changes in your trading in order to get better results.

Let’s look at some of them:

Associated/Disassociated Filters

Associated filters are distinguished by your perception of an event and imagining it from being

“in” your body. Think about one of your most recent trades. If you are able to experience it

again by hearing the sounds through your ears, seeing the charts through your eyes, and

touching the keys of your computer with your fingers, you are filtering the event in an associated

way. If on the other hand you saw yourself as though you were an outside observer and

experienced yourself as if in a movie, then you are dissociated.

Why is this important? The ability to associate or dissociate is a fundamental skill, with each

state offering different benefits in order to at times experience feelings, emotions, and events as

though you were there in an associated fashion, or to distance yourself from unpleasant, or

traumatic situations. Difficult events can sap your strength and compromise your resolve. It is

not only helpful but also empowering to be able to dissociate and distance yourself from those

events. When you distance yourself, you are actually detaching as well from the intensity of the

emotions; which can be very supportive in honing your focus in the trade. This is quite helpful if 

you are dealing with a trade that went sour, or the memory of a past trauma. Additionally, you

can manipulate the filter by exaggerating the distance as you see yourself far away and hear the

sounds of the experience from a distance. Conversely, uplifting and supportive visions of what

you want can be used by associating into the experience and feeling, touching, tasting, smelling

and seeing what it will be like when it is achieved. And, in this instance, dissociation can be used

as well to “see” and otherwise experience yourself in the future reality in order to clarify it in

your mind as “you are achieving it.” And here’s something you probably didn’t know: with

 

regard to stress and trauma, those that relive the memories in an associated way add to their

stress and experience longer lasting and more intense emotions because they inflict the intensity

of the event as though it were happening again and again. Those with the lowest levels of stress

are able to dissociate and detach from the experience.

Past/Present/ Future Filters

Some people have a penchant for the past; among other things, they are enamored with back

testing. On the other hand, many will tell you that back testing will only tell you what the price

action did in the past under those circumstances. Others prefer to be in the present, and still

there are those that are firmly ensconced in the future. For instance, questions like: What’s for

dinner? How long until we get home? What’s next on the agenda? All look to the future. There

is no right or wrong, good or bad, but it does present a filter for how you communicate with

yourself regarding what you see and how you process the information. One thing is for sure,

when you trade, it is critical that you be in the Now of the trade. You cannot live in nor can you

trade in any other moment but this one; and if you are distracted by the past or the future then

you will be diminishing your trading power significantly.

Internal/External Filters

Internally-referenced people rely on their feelings, thoughts, images and voices as evidence of 

being correct, appropriate or being fulfilled. Externally-referenced people look to evidence

outside of themselves for validation of their opinions and ideas. Your preference will play a big

role in the way that you trade. If you are externally referenced, you are more susceptible to the

influence of the “experts” and prone to heed the opinions of others while in a trade. People who

are independent in style are usually internally referenced. They may listen to the opinions of 

others but rarely do they depend on them for validation of their own proclivities. When they

have analyzed a trade, they feel confident. Conversely, people who are more driven by an

external perspective will place a substantive portion of their confidence in what the pundits have

to say. Again, the important thing is to be aware of how you think, embrace reality and find a

balance that honors your own analytic abilities, but appreciates outside resources as beneficial

modes of additional information.

Towards/Away From Filters

If you envision a goal, personal or professional, short or long term, it’s important to be aware of 

how you are thinking about the goal. Are you envisioning what it would be like to have the goal

(how it feels, looks, smells, tastes, and sounds)? Or, are you inundated by all the ways that it

might fail and haunted by what that failure will feel, look, smell, taste and sound like? This is a

very important filter to be aware of. A towards filter engages your subconscious, especially if it

is sensory rich, and the subconscious relates to it as though it were real. Those who have this

filter are much more likely to attract and achieve their goal. Those who think of what they don’t

want (especially in a sensory rich way by feeling, seeing, smelling, tasting, and hearing) are

more likely to attract or achieve just that. This is especially important when putting your

purpose, mission, goals, and profit objectives together.

 The important thing here is to become aware of your filters and when appropriate to deliberately

and by design use those filters to more easily direct you to the results you want. For instance,

identify your goals and make them specific, measurable, achievable, results oriented and time

 

bound. Next use a towards filter to catapult you in the direction of the goal with focused

intention. Then associate, that is, float down into the body of your future and see, hear, and feel

through your body’s senses what it will be like to experience achieving that result. This is living

by design and not by default. Take control of your trading and your life one event, one tool and

one deliberate action at a time. In order to achieve consistent success, you must bring and

maintain your A-Game at your trading platform and find out how to do that.