Have you ever wondered why you act without thinking or proper judgement when you are extremely emotional like fear, anger, anxiety etc ?. When you look back after the emotional episode, you may wonder why you acted the way you did, why you abandoned your intelligence and thinking mind. To better understand this, it is important to know how our brain is wired and how it responds to situations by accessing the stored knowledge base.
A really good book to learn more about the mental game is The Mental Game of Poker by Jared Tendler. Even thou the book is aimed at Poker players, the problems and solutions outlined in the book are applicable to our everyday life situations. I use the techniques to help me deal with emotional swings while day trading the stock market.
Following are extracts from the book. I highly recommend the book if you are interested to explore more on this topic and of-course to improve your poker game !!!.
Adult Learning Model (ALM)
Initially described as “Four Stages for Learning Any New Skill”, the theory was developed at the Gordon Training International by its employee Noel Burch in the 1970s. The Four Stages of Learning provides a model for learning (wikipedia).
- Unconscious incompetence
The individual does not understand or know how to do something and does not necessarily recognize the deficit. They may deny the usefulness of the skill. The individual must recognize their own incompetence, and the value of the new skill, before moving on to the next stage.The length of time an individual spends in this stage depends on the strength of the stimulus to learn.
- Conscious incompetence
Though the individual does not understand or know how to do something, he or she does recognize the deficit, as well as the value of a new skill in addressing the deficit. The making of mistakes can be integral to the learning process at this stage.
- Conscious competence
The individual understands or knows how to do something. However, demonstrating the skill or knowledge requires concentration and thinking. It may be broken down into steps, and there is heavy conscious involvement in executing the new skill.
- Unconscious competence
The individual has had so much practice with a skill that it has become “second nature” and can be performed easily. As a result, the skill can be performed while executing another task. The individual may be able to teach it to others, depending upon how and when it was learned.
Consider the example of learning to drive a car. When you were a child, you barely knew what a car was, let alone learning to drive one. This is Unconscious Incompetence. When you were a teenager, you became much more aware of driving and perhaps frustrated about not knowing to drive. You became conscious about your incompetence. Now remember the time when you started to learn driving. You really had to think about the whole driving process, using the turn signal, how to shift a gear or how to stay in the lane. This is Conscious Competence.
After driving for years, you no longer think about every action required to drive a car, your skill come naturally and with little effort. You can handle driving, listening to music, talking to passengers and handle extreme driving situations, all without much thought. This is Unconscious Competence.
Emotional Response System
The knowledge base of the brain is organized in a hierarchy. The first level is all of the most important functions of the brain are stored, such as heart rate, breathing, balance and sleep / wake cycles. Unconscious Competence is also there. Second level of the brain is the emotional system. Third level is the mental level containing all of the higher brain functions such as thinking, planning, perception, awareness, organization and emotion control. Here is the Rule:
“When the emotional system becomes over active, it shuts down higher brain functions”. Jared Tendler – The Mental Game of Poker ™
If your emotions are high, you make poor decisions because the brain prevents you from being able to think straight. The following also happens:
- Your mind goes blank
- You overweight the importance of some information or fixate on irrelevant information.
- You know the right answer but it is as if your head is in a fog.
- You fall back into bad habits.
Unfortunately when emotions are overactive, the loss of higher brain functions is something that no one controls. It is the hardwired part of the brain that is not going to change.
You may try to control the emotions before it reaches the emotional threshold and shutdown the higher brain functions. Steps for monitoring and controlling emotions are outlined in the book.
When you combine this rule with ALM model, you get a perfect snapshot of the skills in your Unconscious Competence. When your emotions are too high and you cant think, you loose access to the skills that you are currently in the process of learning – Conscious Competence. So what is left ? Unconscious Competence. Jared Tendler – The Mental Game of Poker ™
Any skills that you want to master should be in your Unconscious Competence thru practice, practice and more practice. This is particularly true for a skill like trading. The analysis you perform, the parameters you check before entering a trade should be your second nature thru practice, practice and more practice. Traders who chase multiple trading systems and in the lookout for a holy grail often fail for the same reason. They are exposed when emotions strike.