going lower and bounced two and three ticks higher than what was his original entry point, he went ahead and bought one contract. From there he was supposed to wait until the market rotated back up to test the resistance which was 10 ticks higher than his originally intended entry point, but now it was only seven ticks away.

Instead of waiting for the market to rotate to his objective, he got out of the trade as soon as he had a two-tick profit. A short time later when the market rotated up to the resistance area, he did the same thing that he did in the first trade. He didnt get in at his price because he thought the market was going to keep on going; it didnt, and he sold three ticks lower than he originally intended and then got out for a one-tick profit, not waiting for a full rotation.

When we talked about what he did later on that day, he was extremely displeased with himself. He made himself accountable, but he did not do what he was supposed to. He didnt get in at the price he intended or out where he intended, "leaving several ticks on the table," so to speak. This is a very wealthy man who only had to risk two or three ticks at the most to find out if the trade was going to work and couldnt do it. By the same token, he was so desperate for a win that he couldnt wait for his profit objective, stating that he couldnt hang on because he has been burned too many times.

Obviously his backlog of negative experiences had nothing to do with the markets behavior or the probability of any particular strategy working or not. What was even more important, however, was his lack of acceptance for his current level of skill development. His intense anger over his performance clearly indicated that he could not accept where he was at or the results it produced. That first day was not a positive experience for him, even though he had his first winning day in a long time. His lack of self-acceptance certainly wont help him hang on to winning trades in the future; in fact, he will be digging himself into a deeper hole that he will eventually have to work his way out of if he wants to achieve the success he desires.

As time went by, he became increasingly more confident with his ability to define an opportunity with a high probability of success. Almost every trade he put on would immediately go in his favor, so he would rarely find himself in a losing trade. But each day was also becoming ever more exasperating because he was still only holding on for a one- or two-tick profit and leaving several ticks on the table as the market rotated to test the next level of support or resistance.

What was even more difficult for him to deal with was that many times he had bought the low or sold the high of the day. Of course, he didnt know at the time it was going to be the high or low of the day, but looking back, he just couldnt deal with the fact that he only got one or two ticks out of it.

I knew the pressure was building inside of him because each day he had more excuses related to the market for why he wasnt doing what he was supposed to and had less and less tolerance to listen to anything I had to say about the situation. All these excuses were just an indication that he would not accept who he was in relationship to who he desperately wanted to believe that he already was. He was obviously indulging himself in illusion. To be the person he wanted to believe he already was would require that he learn how to be patient, acknowledge who he now was so he could concentrate on what he needs to learn and forgive himself for what he believed to be his past mistakes and inadequacies.

However, this would be very difficult because being impatient with other people had always got him what he wanted as long as he was dealing with people who perceived themselves as weaker than he. So why should he have to learn how to be patient now? Besides if he was patient with himself, it would make it difficult to justify his impatient, intolerant stance toward others who didnt "leam" fast enough or made "mistakes."

I didnt hear from him for a while and I just assumed that he wasnt doing anything different. Then one day after the close he called to tell me that he was going to start trading a 20-contract position. Otherwise nothing else about what he was doing had changed, except that he had several winning days in a row consisting of one- and two-tick winners.

I knew he was setting himself up for a big losing day, although 1 didnt indicate this to him in our conversation. In his mental system he was reasoning that by trading a larger contract size he would make enough money to prove to himself and everyone else that he had finally arrived, that he was a successful trader and that he was not a person subject to deep-rooted fears. Not being one to stand in the way of "progress," all I said was that I didnt think it was very prudent for him to be trading a 20-contract position, since he hadnt developed the psychological or mechanical skills to handle a position of that size. He grunted and hung up the phone.

The next day he lost almost $3,000.00 trading 20-contract positions. He gave back to the markets all his profits, plus more, from all his successful efforts over the last two and a half weeks of trading. At that point he was ready to listen to a plan on how he could learn how to be more accepting of himself and how to hang on to his winning trades.

The following is another example of a trader who has learned self-acceptance. This trader works for a local brokerage firm, manages hedge positions for financial institutions, and also trades for his own account. I started working with him on a fairly regular basis about three years before the experience I am about to relate.

He called me one day to tell me how proud he was of reversing his position on his last trade of the day. He said he cut his losses without hesitation and reversed his position from being short to going long. He was delighted that he felt no conflict, resistance, or mental anguish. He recognized what needed to be done and he did it. However, shortly after he did his reversal, one of the floor traders, who worked for the same firm filling customer orders, called him from the floor with some friendly advice that he should get out of his long position.

Now, my client had resolved long ago that he would not place any significance on another traders perception of the market. He had excellent knowledge of the markets and believed he could trust his ability completely to define opportunity and make assessments of the potential for the market to move. At least he thought he believed he trusted himself. After he got the phone call, he knowingly allowed himself to be influenced by what this floor trader had to say and exited his position. Within 10 minutes of doing so the market (bond) rallied 15 ticks, just about what my client originally thought it had the potential to do when he put the position on.

He left 15 ticks on the table because he let another trader influence his perception of the market. However, he did not view this experience as a missed opportunity. He viewed it as an example of how he hadnt, as of yet, completely released himself from other peoples opinions of the market. He didnt miss an opportunity because given the environmental conditions he was working under (someone calling him was an environmental condition he had no control over other than not to place any significance on the information); he simply was not psychologically prepared to take advantage

of the opportunity. If he had been psychologically prepared, he would have stayed with his original plan, realizing that someone elses perception of the market isnt going to be any more objective than his. Furthermore, considering the skills he had already developed, their objectivity would usually be a lot less.

As you cultivate a stronger belief in self-acceptance, you will then realize how the market reflects back to you your level of skill development along with the information that will indicate what you need to work on to become ever more successful. Each moment will then become a perfect indication of your skills and your degree of self-valuation, giving you a solid base from which to improve and learn.

You will eventually understand at a very practical level how you are always doing the best you can because your outcomes will be the result of your depth of insight into the nature of the market environment and your ability to act on whatever you perceive.

There wont be any reason not to accept these results as you increase your understanding of how to adapt yourself to suit any particular set of environmental conditions and realize the power inherent within this understanding. If you were to deny this perfection of the moment (a lack of self-acceptance), you would, in effect, be denying yourself the kind of information you need to grow into the skills you are attempting to learn. You cant grow or expand if you are denying the existence of environmental information that would clearly indicate your level of development. Nor can you acquire effective skills when you try to build from a base of illusion about the nature of the environment and yourself. If you wont acknowledge your true starting point, you cannot take the next most appropriate step in the development of any skill you intend to learn.

The most essential component in the process of transformation is learning how to recognize and then clear out beliefs that argue for the status quo, beliefs that defend against the intrusion of environmental information you refuse to consider, and learning how to read the environment in a way that will clearly point to the most appropriate path to fulfilling yourself

PART III

Building a Framework for Understanding Ourselves