Read The New Market Wizards: Conversations with America's Top Traders Online
Authors: Jack D. Schwager
There are a number of standard techniques. For example, one method involves telling the subject that his or her arm is a rigid piece of steel, and then instructing the person to extend the arm horizontally. If the person is really hypnotized, you won’t be able to push the arm down, regardless of the force applied—even if the subject is a physically weak person.
Was there anything memorable about your first trading client?
I would like to say that the procedure was immensely successful, but the truth is that the person didn’t experience any overnight transformation. It took many years before I realized why hypnosis was very effective with some traders but not others.
What is the reason?
Some traders have a valid methodology that they have adequately back-tested and that their conscious mind is happy with. These are the traders who can usually be helped through hypnosis. The only thing hypnosis can do is to inform the subconscious mind that the person now has a valid methodology that the conscious mind has already accepted.
But you must first be at that point.
Absolutely. For a novice trader to try to become an expert trader through hypnosis is like a novice chess player seeking to become a master through hypnosis. The point is that a certain proficiency level is necessary before hypnosis can help.
Besides aiding in your transformation from losing trader to winning trader, how else did the exposure to hypnosis affect you?
It’s no exaggeration to say that hypnosis changed my perception of reality.
In what way?
I discovered that there was another world that I was totally unaware of: the subconscious. I realized that the subconscious mind had the power to overcome the conscious mind. Today, of course, I no longer think in those terms. I now understand that the subconscious and conscious minds have to be in harmony. The more closely the conscious mind is aligned with the subconscious, the easier it is to generate winnings. To keep those winnings, however, your subconscious mind must believe only one thing: that you deserve your winnings.
Is the absence of that belief the reason why people lose in the markets?
YES! YES! YES!
How can you be so certain?
Because I’ve seen the process time and time and time again.
Could you give me an anonymous case history?
A few years ago, I worked with a man who had traded very successfully for over thirty years. All of a sudden, he started losing six-figure amounts monthly. He had been losing this amount for about five consecutive months when he came to me for help. It turned out that the onset of his losing streak coincided with his being left by his wife, who was a much younger woman. As soon as I helped him realize that the breakup of his marriage was not his own fault and that his wife’s affections went only as deep as his pocketbook, his trading began to change dramatically. Within three days, he was breaking even, and within another three days, he was making money. Once he had begun winning again, I questioned him under hypnosis. “Have you changed your method?” I asked.
“No,” he replied.
“Are you feeling more confident?” I asked.
“Yes,” he answered.
“What has made the big difference?” I inquired.
He replied, “Robert, I feel I deserve my winnings again.”
Why did he feel he didn’t deserve his winnings?
That was exactly my next question. Apparently, he believed that the breakup of his marriage was due to his inability to perform sexually at the same level he had as a younger man. Because at the subconscious level he felt that he had failed his wife, he was punishing himself by losing in the markets. He felt he didn’t deserve to win anymore because of his inadequacy.
Is the implication that people always lose because they feel that they don’t deserve to win?
No. Some people lose because they feel they don’t deserve to win, but more people lose because they never perform the basic tasks necessary to become a winning trader.
What are those tasks?
Typically, how do you work with someone who comes to you for help in improving his or her trading?
The first thing I do is go though a series of about thirty questions that have only one purpose: finding out if the person has a methodology.
What do you do if you determine that the person doesn’t have an effective methodology?
I tell them, “Go home; find yourself a methodology; and then see me if you still need to.” Hypnosis is not a crutch. If you don’t have a methodology and trading plan, all the hypnosis in the world won’t help you.
Does that happen frequently?
It’s not uncommon, but the typical person who seeks me out is serious about trading and already has a trading plan. The problem, however, is that in the past, this person may have suffered so many losses and so much pain using another methodology that the new trading plan is not permitted to seep through the subconscious mind as a new reality. In other words, the belief system has to be altered.
Are you implying that the subconscious sabotages the trading?
Exactly. Every time you have a losing trading plan, the memory is etched in your subconscious. The more losses, the deeper the impression and the deeper the pain. Let’s say you start trading with Methodology A and take many losses. You then stop trading for one or two years. After much research and careful testing, you develop Methodology B, which your conscious mind is convinced is valid. However, the losses from your previous Methodology A are so ingrained in your subconscious that whenever you contemplate making a trade, the adrenaline starts to flow, and the fear of executing a trade arises. Some traders are literally immobilized by this fear at the moment when they need to act. This is the “freeze” that I encountered when I returned to trading years after my first painful experience.
If you have truly back-tested a methodology and are employing an effective trading plan, your conscious mind is already aware of its validity. It’s your subconscious mind that prevents you from taking correct action in the market. The problem will persist until you convince the subconscious in a very direct manner that the new methodology is valid and that it has to forget about the old methodology.
How is this transformation achieved?
We must erase the previous pictures of impending financial disaster and paint new pictures in beautiful colors, showing a happy, confident, and successful trader. Through deep-relaxation techniques, achieved through hypnosis, we can bypass the critical faculty of the conscious mind and establish a direct connection to the subconscious mind. Deep relaxation or hypnosis is a state of mind, not a state of sleep. Because the subconscious mind is nonjudgmental, it will accept new input as facts. By informing the subconscious mind that the old fears are no longer valid and that the trader now has a well-tested and confident plan, the subconscious mind will begin to accept this new reality. One cannot truly be a winner until the subconscious mind is fully in tune with what the conscious mind has set out to achieve.
Do you ever have people come to you saying that they want to be traders, but when you put them in a hypnotic state you find that they really don’t want to be traders after all?
Absolutely. This situation arises with alarming regularity. Some people try to punish themselves through the market. Of course, this all occurs on a subconscious level. There are people who feel they have to make retribution for some real or imagined wrong they have done to another person. For some people, the channel is suicide; for some people, it’s doing their job poorly on purpose; and for some people, it’s losing money in the markets—even though they may know better.
Quite simply, there are some people who just shouldn’t be trading. By putting them under hypnosis you find that these people are not really comfortable trading; it’s not their calling. When I find people who fall into this category, I bring them to and inform them as to what transpired during hypnosis. I tell them, “Here’s your money; I can’t help you. Do yourself and your family a great favor and forget trading.”
Is there a typical reaction when you present this type of person with the advice to give up trading?
Total horror. I’ve even been threatened with physical violence. “I’ll bash your f–ing head in!” one person shouted at me after I gave him this advice.
Can you describe a specific situation in which you advised a client to give up trading?
One person hated his wife but didn’t have the courage to divorce her. Ironically, it was his wife who had sent him to me. He was a successful professional man who had been trading for two years and losing money steadily. Under hypnosis, it came out that the only way he saw out of his dilemma was to make himself church-mouse poor so that his wife would walk out on him. The strategy was to make his financial losses look legitimate. He couldn’t make himself look bad through his own profession, because he was so good at it. So every month in which he made X thousand dollars in his profession, he would give back X thousand plus in the commodity markets.
Did he admit all of this under hypnosis? Or was this your analytical interpretation?
I asked him straight out under hypnosis, “Are you getting back at your wife? Do you feel that if you lose enough money in the markets, she’ll walk out on you?”
He exclaimed. “That’s the idea!”
That was his subconscious talking?
Absolutely. In his conscious mind this man would never admit to this motivation.
Was this a person who believed he wanted to trade?
Not only did he want to trade, he felt he had to trade. He emphatically told me, “I love to trade the markets. I prefer trading to my profession.”
Any other unusual case histories come to mind?
There was one rather humorous situation that occurred while I was still in London. One day this man came to me and said, “Mr. Krausz, I’ve heard good things about you. I don’t know whether you can help me, but do you ever work with traders’ wives?”
“It would be a first,” I admitted, “but I suppose it could be done. What seems to be the problem?” I asked.
He said, “Every day, my broker sends me my runs, but I never receive them. My wife pinches them.”
“What do you mean she pinches them?” I asked.
“She hides them from me,” he answered. “She meets the mailman and intercepts my statements before I ever get them. At first I didn’t realize what was happening. I called up my broker and asked him why I wasn’t getting my statements. However, he insisted that my daily runs were being sent out regularly. I am now convinced my wife is pinching them.”
I said, “This is ridiculous. Can’t you go out and meet the mailman first?”
“I can’t go!” he exclaimed. “The mailman comes in the middle of the trading day; I’m busy watching the quote screen. We’ve got to find out why she’s hiding my statements.”
“Why don’t you simply ask her?” I suggested.
“She denies it,” he answered. “Go on and get her on the phone yourself. You’ll see that she’ll deny everything.”
I called his wife and said, “I have your husband in my office. Exactly what is the problem with the missing statements?”
She replied, “Mr. Krausz, I promise you that I never touch his mail.”
So I asked her, “What then do you think happens to his statements?”
“He hides them himself,” she answered. “He never opens them.”
I thought to myself, That’s very interesting. I thanked her, hung up the phone, and said to her husband, “Why don’t we just have a short hypnotherapy session right now; no charge. Maybe I can help you in figuring out how to handle your wife with this problem.”