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than joy, even if it is boredom) compared to the happiness we were feeling. When our focus shifts from joy (no concept of time passing) to "I cant wait for this to end," our sense of time slows down in proportion to the unpleasantness of the experience.

In the physical environment, experiences take place in moments of time that pass one after another, in linear fashion. What we experience in moments of time (through our physical senses) is transformed into electrical energy and stored as a memory relative to the degree of impact of the experience. Memories dont have any restrictions imposed on them by time because energy isnt physical. Time is one directional, whereas in our mental environment we are free to think about our memories at will or by just wanting to. We can experience them as a mental image, mental sounds, mental tastes, and so on. Each of our memories makes up a part of our identity, and because they exist as an energy form, they have the potential to act as a force on our behavior. Regardless of whether we are conscious of these specific forces or not they cause us to move through the environment in certain ways corresponding to what we have already experienced to create more experiences and more memories.

Essentially, what I am stating is that our existence straddles two very different dimensions simultaneously. We live in and perceive three-dimensional space, and, as a result, our physical senses are subject to the limitations of time, where one moment passes after another in straight linear fashion, whereas we think in a dimension where time and space as it is perceived in the physical environment doesnt exist. Now, there are some very important psychological implications within the concept that time and space dont exist in the mental environment, implications that have to do with our ability to experience happiness, fulfill our needs, and achieve our goals, which are all basically synonymous. However, before we address these implications, you will need to understand how experiences are stored in varying degrees of positively or negatively charged energy, what I call the "quality of energy" our memories are stored in.

How Memories, Associations, and Beliefs Manage Environmental Information

From the moment we are born into this world, our existence acts as a force on the physical environment. We take up space that cannot be occupied by anyone or anything else. And, in mm, the physical environment acts as a force on our physical senses, creating a cause-and-effect relationship between ourselves and the environment. It is important for you to note now and for the rest of the book that I am defining the physical environment in the broadest sense possible, as everything outside of ourselves, including other people. Now, at the most basic level, we create experience for ourselves by the mere fact that we exist. To exist implies that our senses are alive and that we are interacting (acting as a force) with the environment, altering its makeup and consistency as we move through it. For example, our movement and behavior set off an endless series of chain reactions that alter the landscape in some way, shape, or form. And even when we arent actively changing or manipulating the environment in some way, we are still taking up space and thus subjecting ourselves to atmospheric forces, as well as causing changes in the makeup of the atmosphere from our breathing.


The experiences that result from this constant interaction with the environment will be transformed into electrical impulses of energy. As electrical impulses of energy, the experiences will carry an electrical charge. The charge will be either positive or negative, depending on the kind of impact the environment had on our senses. For example, a crying baby is acting as a force on the environment. More specifically, the baby is creating a sound that is acting as a force on the eardrums of everyone in his vicinity. How the environment responds to this force will create experience for the child and determine the electrical charge or quality of energy that is recorded in the babys memory.

"Quality of energy" is the relative degree of positively or negatively charged energy in which the experience is recorded. For example, if the environment responds to the child with a soothing caress, expressing love and a sense that his needs will be taken care of, then the experience will be recorded in the childs memory with some degree of positively charged emotional energy. The degree of posi-tiveness will depend on the intensity of the experience, that is, the degree of impact the environment had on the childs senses. Pleasant, happy, joyful, and loving experiences will result in the storage of positively charged energy. If, however, the environment responds harshly, in such a way as to have a violent impact on the childs senses, by screaming (assaulting his eardrums) or slapping him to produce physical pain, then the experience will be recorded in the childs memory with negatively charged emotional energy to the same degree as the intensity of the experience.

There are two basic components that make up the quality of energy in which our memories are stored. The first is the polarity of the charge, which could be positive, neutral, or negative. The second component is the intensity of the charge ranging from extreme positive, which would be an experience of maximum intensity creating a feeling of elation, to extreme negative, which would be an experience of unbridled terror. Quality of energy is an important concept for you to understand because it affects the type of beliers we form about the nature of the environment, which in turn affects how we perceive information and interact with the environment.

The Characteristics of Positively Charged Energy

Positive energy is expansive. It promotes mental growth or learning by creating a sense of confidence, which in turn results in an openness to explore and discover the unknown. I am defining the unknown as anything that exists as a possibility in the physical environment that does not yet reside in some form in ones mental environment. Positive energy perpetuates our natural, childlike sense of curiosity and wonderment toward the environment that we are all born with.

By following the interests of our natural sense of curiosity, we interact with the environment to create experience and learn something previously unknown to ourselves, thus generating a sense of excitement about life, as well as increasing our ability to operate in the environment more effectively because we are continuing to learn more about the way things exist. There is a direct relationship between how much we have allowed ourselves to learn about the nature of the environment and the degree of negatively charged energy in our mental environment. I am stating it this way with the emphasis on the negative because learning will take place quite naturally if there isnt anything in the inner environment to stop it. In other words, an absence of fear (negatively charged energy) is a critical factor in determining whether or not we will make ourselves available to learn anything new and continue to grow mentally.

For example, playfully throw a child up in the air and catch him and he will beg you to do it over and over again. This is his way of interacting with the environment to perpetuate the feelings of a positively charged experience. Positive energy is expansive, compelling us to interact with the environment to create more experience for ourselves. The more we experience the more we learn about the nature of the environment. The more we learn about the nature of the environment, the better able we are to interact with it more effectively to fulfill our needs and achieve our goals Positively charged memories give us that sense of confidence that allows to step out to try something new resulting in mental growth.

The Characteristics of Negatively Cha-ged Energy

Now, throw the same child up in the air for the first time, as in the earlier example, but instead of catching him, accidentally drop him,

and not only will he not ask you to do again, he will cower in terror at the very suggestion. The difference in his behavior, of course, is the result of the differences between the two experiences. In the first example, the experience was pleasurable, resulting in the storage of positively charged energy. In the second example, the experience was painful, resulting in the storage of negatively charged energy-Regardless of whether we were acting as a force on the environment (behavior motivated by our sense of curiosity) and got an unexpected or unintended painful reaction, or the environment, uninitiated by ourselves (other than the fact that we exist), acted as a force on us in a way that resulted in pain, the experience will result in the formation of a negatively charged memory Painful memories will generate fear, causing us to perceive the environment as threatening in its ability to cause more pain in some future moment. The way we will perceive it as threatening will correspond to our memories of the experiences that resulted in pain in similar circumstances or conditions (the things we fear in the environment are those things we have learned to recognize as threatening).

In contrast to the feelings of confidence and well-being that result from positively charged experiences, fear acts as a limiting or inhibiting force on both our behavior and our perception of environmental information. I am sure that everyone reading this book at some point has experienced the effects that fear can have on ones behavior. It can cause us to run from an obviously dangerous situation or completely immobilize us to the point where our body will not respond to any conscious command. Fear drastically limits our choices. It causes us to interact with the environment in ways that are limited to the structure of our memories, regardless of what the environment may be offering in the way of a new experience, or it causes us to avoid an experience completely. Interacting with the environment results in experience, and experience results in learning. If we experience the environmental present based on our individual past, or completely avoid experience altogether, we arent learning what is being offered or available to be learned about the natu of the environment.

The net result of a painful experience is that it creates a negatively charged memory, which in turn creates and perpetuates a cycle of fear. Cycles of fear then create cycles of discontent and dissatisfaction because we avoid experience. When we avoid experience, we

cut ourselves off from the joy we feel when we are learning. Just as positive cycles are expansive, negative cycles are degenerative. Our painful memories keep us from learning how to interact with the environment in effective and satisfying ways that would result in happier and more fulfilling lives because we arent learning what we need to know to experience something different.

Fear limits both our range of behavior and our perception of environmental information. The ways in which it limits our behavior are obvious. However, there are many ways in which fear acts on our perception that arent so obvious; in fact some of the ways can be very subtle and difficult to recognize, until one learns what to look for. As traders, it is essential that you be able to observe the markets behavior from an objective perspective. To observe objectively you will need to learn how to recognize a variety of subtle fears that will destroy your ability to be objective without really knowing it. This is a subject I will cover in much greater depth a little further on. However, before I can do so you need to understand the nature of associations and how perception creates an energy loop between the inside mental environment and the outside physical environment.


Associations seem to be a natural characteristic of the way in which we think. That is, our brains are wired in such a way as to link similar forms of environmental information together automatically We do this in basically two ways. First, there is a natural propensity to label people and objects based on some prominent characteristic and then categorize them into associative groups. After we categorize the groups by sex, hair color, skin color, profession, economic status, educational background, and so on, we then associate whatever experience or knowledge we have about the group with everyone and everything that has those same characteristics. For example, if we have a painful experience with a person who has a skin color different from that of our own, we will automatically associate everyone with that skin color with the qualities of that one experience.

The second way we associate is by linking extraneous sensory information with some event. We will automatically associate what

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