HOWTOBEAMASTERTRADER

NOWANDZENSTAYINGINTHEZONE

Askanytraderswithexperienceandtheywilltellyouthatprofitingfromtradingis90percentmental.
Andthatremarkistrue.Thequestionis:Whatisthat90percentallabout?Youneedtolearnaboutthis
fromatraderandnotapsychologistorsome"mentalpractitioner"whohasnevertradedprofitably,
muchlessmadeagoodlivingattradingoveraperiodoftime.Youmustfindoutwhatthismentalpartis
allabout.Thisbookisaboutgettingintoandtradingfromwhatathletescallthe"zone."InarecentNBA
playoffgame,MichaelJordanmadeanastounding55points.Intheinterviewimmediatelyafterthe
game, hewasaskedtoexplain hisamazing performance. His answerwas:"Iwas inthezoneand
couldn'tgetout."Michaeloftenreferstothezoneashis"fourthgear."Whataproblem!Inthischapter,
wearegoingtoengineeratechniquefornotonlygettingintothezone,butstayinginitbyflowing
(surfing)whiletradingandprobablymostimportantofallgettingbackintoitwhenyoufalloutofit.
Professor Mihaly Csikszentmihalyi, the former chairman of the Department of Psychology at the
UniversityofChicago,callswhathappenedtoMichaelJordan,andothers,flow.Infacthehaswrittena
bookwiththatasitstitle.Hesaysflowoccurswhenanindividualreachesastateofconcentrationthatis
sointenseitamountstoanabsoluteabsorptioninaparticularactivity,whichmaybeinthecontextof
sports,business,trading,orlife.IamgreatlyindebtedtoDr.J.MitchellPerryandSteveJamison,who
pointedoutthatthisprocesscanbegeneratedandthatitworksandgetsresults.Intheirresearch,they
havetakenmuchfromathleticsandapplieditsuccessfullytobusiness.Wearegoingtomakeitspecific
totradingandinvesting,whichcanbeevenmoreimportantingivingyouthekindoflifestylethatyou
want.Thestateofflowsoabsorbsapersonthatitprecludesdoubt,anxiety,andfear.Alldistractions
seemtofallaway,andoptimumwinningperformanceshappen~automagically."Itisastateofmind
thatcanbecharacterizedbytheterms:
1.Selftrust.
2.Engrossingerljoymen'.
3.Focusedrelaxation.
Flowinginthezoneiselusive.Mostofusexperienceagreatdealoffrustrationattemptingtogetinto
and/orstayinginthisstateforanyperiodoftime.Ourinabilitytoremaininthisstatefrustratesour
ability to get desired results and/or compels us to use our primary defensive mechanism,
procrastination. Justasarunnynoseisasymptomofacold,procrastinationandnotgettingdesired
results are symptoms of being out of the zone. Our most formidable opponent is none other than
ourselves.AsPogosotruthfullyputit,"Wehavemettheenemyanditisus."Itisourmisusedmental
technologythatbeatsustotheground.Thismisuseoftendiscouragesussomuchthatweconsider
simplygivingupandleadinga"regular/normal/average"life.Ourgoalistogetinthezoneandflow
whileusingthesametechniquesto"automagically"takethestressfromsuccess.
RIGHTBRAINTRADINGFORLEFTBRAINPEOPLE
Ourcurrenteducationalsystemisheavilyloadedwithleftbrainlearningandneglectsourrightbrain
zone.Abouttheonlyactivitythatreallyteaches howtogetintothezoneisathletics.Mostofour
teachersneglectthe"coaching"aspectsoftheirjobandsubstitutetheinferiorstandardizationofrote
learning.Thereistoomuchmath(leftbrain)andnotenoughmusic(rightbrain),andthathampersour
success andenjoyment oflivingandwinning.What weknowforsureisthatthestandardwayof

thinkingthatwelearnedinschool(includingespeciallybusinessschools)isnotveryrewardingand
producesmanymorelifefailuresthansuccesses.Incommoditytrading,forexample,over90percentof
alltraderslosemoneyconsistently.Thereasonisthatthecommonmodeofthinkingisnotproductivein
thenaturalisticworldofthemarkets,andlosingratherconsistentlyproducesadiminishingenjoymentof
our tasks. We will examine the power of logical trading based on the proper use of our mental
equipment rather than the bipolar thinking of win/lose. By moving from left hemispheric (digital)
thinkingtorighthemispheric(analog)thinking,wewillgainfinancialandworryfreepeace.Wefind
thatChaosgivesuschoice,andbyrightchoosingwecreateeverythingwevalue.Welearnthatthe
markets workjustlikeourminds,andbyunderstandingourminds wecanusethemarkets inany
fashionthatsuitsus.Wemustgettoknowouropponent,whomwewillnameJoeGremlin("JoeG").
TheconceptofgremlinsbecamepopularduringWorldWarII.Theywereblamedforanythingthatdid
not perform as it was designed to do.Joe G is the product of bipolar thinking and is our biggest
roadblocktoflowinginthezone.Inthischapter,wewillexaminewhatadvantagesandattributeswecan
bringtobearonthisproblemofenjoyingmaximumperformanceandwinningconsistently.Wewill
formulateaprocedureofgettingintothisflowautomagicallywheneverwechoose.Wewilllookinside
ourbrain/mindtoseehowwetrapourselvesbythethoughtswethinkandthewordsweuse.Finally,
usingequipmentwealreadyhave,wewilldeviseagameplantouseinourtradingandinourlives.We
willtuneupourmotortoqualifyforanyracewechoose.Ourownbestspeedwillbringvictory,prizes,
goodfeeling,andajoyoflivingunknowntomostpeople.Letmewelcomeyounowtotheportalsof
yourownpersonalzone.Youaregoingtoloveit!
THENEXTWAVE

TheKeyRule:"Beaware"
Iusetheterm"beaware"inthehyphenatedformtoremindustonotonlybeawarebutalso"beware"
bygettingtoknowyourowngreatestopponenttosuccessinthemarketsandinlife(JoeG).Onceyou
gothroughthismaterialandusethesetechniques,YOUWILLNEVERLOOKATABARCHART
THESAMEWAYAGAIN.

THEPARADOXOFPROFITS

Oneofthemostinterestingparadoxesinourworldishowwehavescrewedaroundthewholeconceptof
producingresultsandgettingoutstandingperformancefromourselvesinanyactivity.Itisobviousthat
ourcurrenteducationalsystemisnotproducingconsistentlysuccessfultraders.Governmentemployees
andpeopleonwelfareandentitlementsnowoutnumbertheproductivepeopleintheUnitedStates.And
ourgovernmentseemstobeinawarwiththecreativeandrich,producingaprejudiceagainstanyone
whomakesagreatdealofmoney.Thisprejudiceisjustasinjuriousasandmuchmoreinsidiousthan
themorepubliclydebatedgender,racial,orreligiousprejudicethatwesupposedlyspendsomuchtime
fighting.Whydon'twespendmoretimeenjoyingproducingasweflowthroughthewavesofourown
zone?Mainly,becausewedon'tknowhowtodistinguishormovebetweenworkandplay.Thehighest
paidgroupofindividualsinthiscountryistheprofessionalsportsstars.Theymakemuchmorethan
mostCEOsoflargeFortune500companies.TheCEOsaregenerallypaidbecauseoftheperformance

ofthousandsofemployees;thesportsstarsarepaidfortheir"individual"performance.Wearemost
interested hereinourownindividual performance intrading andinvesting.Wedonotwanttobe
dependentonotherpeople.Let'sgodeeperintothisdifferenceandnoticethewordsusedtodescribe
thesetwoverydifferentworlds.TheCEOgoestoWORKintheOFFICE.TheathletegoestoPLAYon
thePLAYINGFIELD.Isthereahinthere?Muchmorethanahint.Theanswerliespreciselyinthat
distinction.Playingandflowinginthezonecomefromtherighthemisphereofthebrain.Workingand
toilingarealwaysinitiatedandcontinuedonlyinthelefthemisphere.Whentheplayingfieldbecomes
theworkplace,theathleteknowsthatitistimetogetout.The1997HoustonRockets(myhometeam)
included some of the world's bestever players, including three of the alltime fifty best: Hakeem
Olajuwon,CharlesBarkley,andClydeDrexler.IntheplayoffroundagainstamuchyoungerUtahJazz
team,thepresskeptpointingouthowmucholdertheRocketswere.SomewereplayingintheNBA
whentheiryoungeropponentswerestillingrammarschool.Mostoftheteamhadchampionshiprings,
andin1997theiragedidn'tdefeatthem.Basketballhadbecomeaprofession,andtheyhadlostthejoy
ofplaying.AfterlosingthefirsttwogamestotheJazz,EddieJohnson,whohadplayedfor15years,
cameoffthebenchandmade34pointsin26minutes.Thecrowdstartedyelling"EDDIE,EDDIE."
Johnson'sfacelitup,anditwasobvioustotheentirebasketballworldthat,thisnight,Eddiewasinthe
zoneandcouldn'tgetout.Hewasplayinghisheartout.Thesmileonhisfaceonthefrontpageofthe
HoustonChronicletoldtheentirestory.Sportsatthislevelisnotworkitis"handsoff"play.Itisthe
same feeling that you had when you first learned to balance a bicycle without your hand on the
handlebars.Remembershouting,"Look,Mom,nohands."ThatisthefeelingEddieJohnsonhadthat
nightinMay1997.HecameoffthebenchandwasworshippedbytheHoustonbasketballfans.The
teamcaughtEddie'sfire;theystartedplayingandsmotheredtheJazz.ThefirststringoftheRockets
wereallstanding,leadingthechanti'EDDIE,EDDIE.jiTheHoustonnewspaper'sheadlinesummedit
upwiththeheadline"Theyallplayedwelltonight."Theonlywaytoreachthatparticularlevelofplay
istogetintothezoneandtheflow.Theparadoxofthiswholeendeavoristhatweweretaughtallthe
wrongwaysofgettingintothezoneandfewornoneoftherightones.
THEDIFFERENCEBETWEENWORKING
ANDPLAYINGISHOWYOUHANDLECHAOS
TheScienceofChaoshasgivenusthemostpowerfulandinnovativetoolofthepast2,500years.
Unfortunately, even the term Chaos carries a connotation of "complex, difficult to understand,
unwieldy,"wheninfactitisalmosttheopposite.Chaosisnotdisorder,butratheramuchhigherform
of order. To get a handle on understanding this new science, simply substitute the term "NEW
INFORMATION"inplaceof"Chaos."Let'sexamineverycloselyhowthisrelatestowinningorlosing.
Wheneverweencounternewinformation(Chaos),wehavetwochoices.Theonewealmostalways
chooseistofitthatnewinformationintooldcategories:"Isn'tthatlike..."or"Itremindsmeof...."
Thisseemsanaturalresponselinkingsomethingnewtosomethingweareaccustomedtodoing.We
are attempting to "organize" this new incoming information in order to give it familiar meaning.
Familiarityletsusfeellessriskandmorepredictability;wefeelwehavesomecontrol,andthemore
control we have the less fear we have. This is the key. We compulsively organize new incoming
informationtowardofffear."Idon'tknowwhatthisyoungergenerationiscomingto;wewerenever
likethat."Translation:"Thisnewincominginformationfromthisyoungergenerationdoesnotfitmy
oldcategoriesanditreallyscaresthehelloutofme."Inthemarket,weattempttocomparethisyear's
actionwithlastyear'sorthemostrecentcrashorwhateverwecandraguptotalkabout.Theproblem
withorganizinganythingisthatassoonasitbecomesorganizedittakesonalifeofitsownandits

primarymotivationistosurviue.Everythingfromjuniorpromstopoliticalpartieswantstoensureits
ownsurvival.Fourorganizingforcesmovemoremoneyaroundthananycountryonearth:
1.War.
2.Medicine.
3.Insurance.
4.Religion.
Nonationhasasmucheconomiccloutasanyoneofthesefour.Askyourself:Whatdotheyhavein
common?Exactlywhateveryorganizationintheworldhas,includingyourbrainstructure:survival.
1.Warbreaksthingsandkillspeople.
2.Medicinepatchesupthosewhoweren'tkilledandmakesthemavailabletofightagain.
3.Insurancetakescare,financially,ofthesupportersandkinofthosewhowerekilled.
4.Religiontakescareofthosewhoarekilled.
Thecommonthreadissurvival.Anoldcountryandwesternsonglyricpointsoutthateveryonewantsto
gotoheavenbutnoonewantstodie.Survivalisthemotivationthatkeepsorganizationstogether.And
allfouroftheaboveorganizationstapintoourownpersonaldesiretoliveratherthandie.Morethan
anything,wewantthisorganizationwecallaourselvesntogoonsurvivingandnotdie.Inthemarket,
whentrendsgoonlongerthanweexpect,wecallitmarketmania.Rangeboundmarketsalsoseemto
goonlongerthanweexpect. The usualwayanorganization attempts tosurviveis byfitting new
informationintooldcategories(Figure111).Wewilldistortthisnewinformationinwhateverwayis
necessarytokeepouroldcategories(organization)alive.Webeginlearningthisaroundtwoyearsold
whenwefirstdecide,"Iwantitmyway."Weoftenrefertothiseraasthe"terribletwos."Itisjustthe
beginning.
TheMostImportantQuestionWeCanAskIsHOWDOYOUHANDLENEWINCOMING
INFORMATION?
YowTwoChoicesAre:
(a)Massage(distort)ittofitintoOLDCATEGORIES(createsoverwhelmand/orboredom)or
youcan
(b)LettheNewInformation(Chaos)Organizeitself(whichmeanslettin~~o=RI5K).
Figure111Handlingnewinformation.
Thequestionnowarises:Whatotherwaysaretheretodealwithnewincominginformation?
Actually,thereisonlyone:Letthenewincominginformationorganizeitself.Scientifically,thenew
Science of Chaos, nonlinear dynamics, and/or fractal geometry are about the only approaches that
emphasizeallowingthenewincominginformationtoorganizeitself.Thenewviewpointsaystodeal
withnewinformationbylettingitorganizeitselfwithaslittleinterferencefromoldcategoriesasis
humanlypossible.Inartandmusic,itisknownascreativityorimprovisation,anditisapparently
generatedandhandledwithourlittleusedrighthemisphere.ThesimplestorganizationIcanthinkofisa
hydrogenatom.Itcontainsoneproton,madeupofthreequarks,andoneelectron.Itjustcan'tgetmuch
simpler than that. These two particles, the electron and the proton, come together to form this
organization.Intheroomwhereyouarenow,trillionsofthesesmallorganizationsarefloatingaroundin
theair.Theyarejustdoingtheirthingandfollowingthepathofleastresistance.Onthissameplaying
field,therearesomemuchmorecomplexorganizationswecalloxygenatoms.Theoxygenorganization

isaboutsixteentimeslargerthanthesmallerhydrogenorganizationand,likethehydrogen,trillionsof
theseatomsarefloatingaroundtheroomyouareinnow.Withthatmanyatomsbouncingoffeachother,
they are bound to come into each other's gravitational field. Atoms, like planets, have their own
gravitationalfields.Infact,onewaytolookatgravityisthatitistheprimaryforcethatattemptstohold
currentorganizationsintact.Whenyougettired,youcanliterallyfeeltheearth'sgravitationalpulltrying
togetyoutojoinit.Ifyougettiredenoughyouwilljust"letgo"andjoinmorecloselywiththeearth's
largerfieldyouliedown.Ifeverythingelseisworkingproperly,this~givingup"willallowyour
organizationtorecoup,gatherenergy,andgoonitswayabitstrongerfortheexperience.Backtothe
atoms.Thisfeelingofthepresenceofanotherorganizationisnewinformation,andherecomesthemost
crucialdecisionanyorganizationcanmake(Figure112).Thatdecisioniswhetherto
TheMostImportantQue~tionWeCanA~kis:Whatdow~dowithNewInformation?A)Fit
intooldcat~goriesB)Letitor~aniz~elf
Figure112Themostimportantconcept:Whatdoyoudowithnewinformation?
"letgo"ofthecurrentorganization,or,morelikely,tokeepthecurrentorganizationand"distort"the
newincominginformationintooldcategories.Infact,99.99999percentofthetime,thehydrogenatom
makesthechoicetoholdontoitscurrentorganizationandremainahydrogenatom."Afterall,"itmight
say,"eversinceIcanremember,IhavebeenahydrogenatomandIsupposethatiswhatIshouldbeand
IfurthersupposethatIwilljustremainthatwayithasalwaysbeengoodenough."Wedoexactlythe
samethinginthemarkets,andthatiswhatkeepsusinourcurrenttranceofeitherlosingorlimitingour
winnings. But here is the kicker: About 0.00001 percent of the time, the hydrogen atom makes a
differentdecision.Itmakesa"TRANCEENDINC~"decisionto"ietgo"andjustseewhathappens.
Insteadofdistortingtheincoming"newinformation"(Chaos),it letsthenewincominginformation
organizeitself.Thedifferenceisthatinsteadof"solvingtheproblemofnewincominginformation"(the
gravitationalpull),itallowsrealcreatiuitytocomeinbylettingthenewinformationorganizeitself.The
resultisWATER,whichisverydifferentfromeitherhydrogenoroxygenatoms.Basically,ithasno
characteristics of either of its components. It has literally "tranceended" to a different and more
complicatedorganizationthatalsogivesitmorefreedom.Nowithasachoiceofbeingnotonlyagas
(steam)butalsoaliquid(water)orasolid(ice).Withthehigherlevelsoforganization,morealternatives
ofbehaviorarecreated.Weknowthatthemarketisatleastafivedimensionalanimal,soitisno
surprisethattradingatwodimensionalchart(priceandtime)leavesalotofroomforimprovement.The
entirebasisoftheProfitunityapproachistotapintothesehigherandsomewhatmorecomplicatedlevels
to"tranceend"ourlosingbehaviorandcreatemoreprofits.Onespecificpartofourorganizationthat
doesmoretodefeatusthananyotherpartisour"beliefsystem."Allbeliefsystemscreateatranceof
oneleveloranother.Whenthehydrogenatomdecidestogiveupandletthenewinformationorganize
itself,itisnecessarythatitbeinaplayfulmood.Itis,inhumanterms,inthealphabrainwavepattern;it
feelssecure,focused,andrelaxed.Wemustsharethatsamespacetocreatetradingatahigherlevel.So
thereisamplejustificationforstudyingthecomparisonbetweenworkandplay,andhowworldclass
athletesgetintotheirownzones.Whenwethinkaboutsports,wepicturethembeingplayedona
playingfield.Weask:"Whoisplayingthisweekend?""Doyouknowthescoreofthegame?"Onthe
othersideofthisequationistheobviousfactthatWORKISWORK.Whenyougotowork,youwork.
Youdon'tgotoworktoplay.Mostpeoplecan'tevenimaginethatconcept.Youspendsomeofthe
moneyyoumakeatworktopaytoseeothersplay.Nowthereisaninterestingconcept.Thereseems
littletoconnectyourworkingandtheirplaying,buttheyallarethesamegame.Wejust"play"itina

differentmanner.Whileweallwanttoperforminanoptimummanner,we(theworkers)andwe(the
players)goatitinveryoppositeways.
I'mafirmb01ieverinthetheorythatpeopleonlydotheirbestat
thingstheytrulyenjoy.Itisdifficulttoexceiat
somethingyoudon'tenjoy.
JackNicklaus
AccordingtoJackNicklaus,youdoyourbestonlywhenyouarereallyenjoyingwhatyouaredoing.
Youaresofocusedontheprocessofwhatyouaredoingthatextraneousthoughtsarenotpresentyou
havenoanxiety,youarerelaxed,youtrustyourself,andyouhaveahighlevelofconfidenceinyour
abilities.Anygoalisexponentiallymoredifficulttoaccomplishifyoudisliketheexperience.Whenyou
areonaroll,itiseffortless,smooth,andfun.Inotherwords,youareinthezoneandflowingwiththe
experience.Youarelettingthenewincominginformationcreateyourlifeandyourexperience.Perry
andJamisonpointoutthatwhenyouareinthezone,fourconditionsarepresent:
1.Enjoymentyouarehavingablast.
2.Focusyouhavekeenawarenessandalertness.
3.Relaxationyouarefreefromextremeanxiety.
4.Selftrustyouhaveconfidenceinyourjudgment.
Noneoftheaboveconditionsisdescriptiveofwhatwearetaughtaboutmakingalivingand"working."
AccordingtoWebster'sdictionary,thesynonymsforworkare"labor,toil,grind."Itsaysnothingabout
enjoyment,play,fun,andsoon.Whatwehavelearnedinschoolandinourcultureisthatworkandplay
areopposites.Mycontentionhereisthatprofitabletradingandinvestingismuchmorelikeplaythan
work.Deepinside,weeachknowthatweperformbestwhenhavingagoodtimeandnotworryingabout
theoutcome,butwehavebeentaughtthatitisnecessarytosuffer.Igrewupinaveryfundamental
Protestantatmosphere,wherethemeaningoftheverbtribulate wasexplainedeverySundaymorning.
Wewerealsotaughtthattoomuchenjoymentwasthedevil'sworkandwewouldpayforthatenjoyment
overandoveragaininhell.Wenowknowthatwearethatdevilandhell'sgatekeeper.Enjoymentand
employmentwereneverconsideredtobesynonyms.Mostofthetimeswhentradersfeel"Ishouldbe
workingharder,"theyarewrong.Theyshouldbeworking"easier"andmakingsurethattheyaretaking
the"work"outof"trading."Ifyouhavebeen"workinghard"attradingorlearningtotrade,Istrongly
suggestanoppositeapproach.Lessenlightenedcoachestellus,"Nopainnogain,"andweacceptit
becauseitfitsperfectlywithourerroneouslearning.Whatitshouldsayis:"nopainnogainyou're
insane."
DoyouknowwhywearesouptightinAmsrica?Becausethe
Puritanscameollerhereandthereallyfunpeoplestayedbehind.
RoseanneBarr

THEBIGTRAPTHETWOOPTIONLIMIT
"Winorlose"isatwooptiontrap.Itcreates"polarthinking."Itplacesallpossibleresultsintoawinner
orloserclass,andtherewillalwaysbemillionsmorelosersthanwinners.Butthatdoesn'tstopus;check
outtheLottoplayers.Thenewspaperscarrystoriesaboutthewinnersbutneveraboutthelosers.Our
efforthereisaboutwinning,learning,accomplishing,andtakingthestressoutofsuccessfultrading.

Polarthinkingdoesnotallowthesealternatives."Winningisnotthebestthing,itistheonlything."
Wheneverweputonatradeormakeaninvestment,weimmediatelymonitorthemarketand/orother
people'sopiniontoseewhetherweareawinneroraloser.Wethenbecome"floorandceiling"traders:
wearehappilyontheceilingorsadlyonthefloordependinguponhowwearedistortingthenew
incominginformationintotheiroldcategories.Actually,thewin/losescenarioisaloseonlysituation.
Soyouarechampionthisyear.Onedaysoon,someonewillbreakyourrecordandthenwherewillyou
be?Noonewritesaboutthesecondbest.Sometimes,winningcanbeevenmorestressfulthanlosing
becausethenextquestionisalways:"Whatareyougoingtodototopthis?"Legendarybasketballcoach
JohnWoodenofUCLAwassoawareofthedangersofpolarthinkingthathewouldnotallowtheuseof
theword"win."Healsowouldnotpermithisplayerstousetheword"beat"whentalkingaboutthe
otherteam.Heinsistedtheyusethephrase"outscoredtheotherteam."Woodenwaswellawareofhow
dangerouspolarthinkingistoperformanceandenjoyment.Polarthinkingisequallydestructiveinthe
stockandcommoditymarketsIntradingandinvesting,asinsports,itisalwaysactuallyjustyouagainst
you. Analysis,buying,selling,profits,lossesallcomedownsimplytothelevelofperformanceyou
areabletobringoutofyourself.Theharsh"win/lose"frameworkwilldestroyyourpotentialandyour
happinesswhileraisingyourstresslevelandyourbloodpressureandshorter.ingyourlife,yourprofits,
andyourenjoymentofliving.Let'sexploreinmoredepththeproductofpolarthinking.Polarthinking
createsadevilthatsitsandwhispersintoyourleftearorsometimesmovesintoyourbrainanddecides
tolivethereforeverunlessyoutakechargeandkickthatdevilout.Onceyoudo,youcantellhimthathe
isjustnotwelcomethereanymore.
~radingisastateofbeing,notdoing.

MOREABOUTJOEGREMLIN

Thereisacritical,judgmental,negativevoiceinallofus.Partofitistherenaturally,butmostofit
has been learned from our teachers. We use it against ourselves to judge, intimidate, and threaten
ourselves.Thepricewepayforthisfreeloaderisourownpersonalinitiativeandthesuccesswecould
haveifthatpartofuscouldbekeptincontrolorusedjudiciously.OurpersonalJoeGtakesmostofthe
joyoutofliving.OurJoeGisbornwithus,anditsjobistokeepusoutoftrouble.Inthemarket,it
becomesourriskrewardwardenandgenerallyevaluates,fromanegativestandpoint,everymovewe
makeandeverythoughtwethink.Wheneveryouhaveapositive,lifeenrichingthought,JoeGraisesits
criticalheadtopointoutallthethingsthatmightgowrong,includingameteoritethatjustmightfallon
ourheads.Throughoutourlife,anythingthatgoeswrongoroffcourseisasignaltoJoeGtojumpup
andsay,"Itoldyouso,""Youshouldn'tbetradingwiththatmanycontracts,""Youaregoingtolose
everythingthatyouhaveeverworkedfor."
AFEWWORDSABOUTTHE
GREMLINTAMINGPROCESS
Tamingyourgremlinisasimple(nottobeconfusedwitheasy)process.Itcanevenbeanenjoyable
processthattakespracticeandpersistence.Tamingyourgremlinrequiresthesortofeffortimpliedby
wordslike"allowing"and"letting,"notbywordslike"trying"and"straining."Threebasicprocessesare
involvedintamingyour
1.Simplynoticing.

2.Choosingandplayingwithoptions.
3.Beinginprocess.
TheproblemwithJoeG'spolarthinkingisthatwehaveonlyoneoption.Itisablackandwhiteworld.
"Allabortionsarebad,""AllIndiansarelazy,""Youcan'ttrustlawyers,"andsoon.Thinkwhatwould
happenifwehadonlytwochoicesatatrafficlight.(Oops!MyownJoeGalmostsaidaredlightinstead
of a traffic light.) What if there were no yellow lights. Every light you approach would bring up
anticipationandfearthatthelightmightturnredwithnowarningandyoumightbeintrouble.Thatkind
ofsituationisaroadblocktoyourcreativityandyourprofitability.Itislikepointingapistolatyourown
headandwonderingwhetherthegunisloadedornot.Noonehasthepoweroveryouthatyourgremlin
has. To tame him, you must start by simply noticing. To simply notice is to "beaware"to pay
attention.Itisimportanttonoticehowyouare,notwhyyouarehowyouare.Thinkingaboutandsimply
noticingaretwoverydifferentactivities.Thinkingabout remouesyou fromyourpresentexperience.
Simply noticing puts you in contact with your present experience. Simply noticing is much more
excitingandproductivethanthinkingabout.Simplynoticingisatool.Whenyouaresimplynoticing,
youaregroundedinreality.However,whenyoufocusyourawarenessonyourthoughts,fantasies,
ideas,andmemories,youareinvolvedintheworldofmakebelieve.Itisoftenhelpfultodescribethis
gremlinandletussharewithyouourviewofourowngremlin.Ourgoalinthissectionisforyouto
glanceathowselfhurtfulitisforyoutoentertainthisgremlin.Considerthetremendousdamagethatit
doestoyoueverydaythatyoulistentoit,becausewheneveryoulistentoit,ithascontroloveryou.
GremlinFreeTrading
Highlypaidprofessionalathletesareoftenthoughtofasgettingpaidtoplaychildren'sgames.Whatwe
oftendon'tseeisthattoperformatthislevel,theathletesmustplaythesegameslikechildrenwitha
spirit OI seiftrust, awareness, enthusiasm, belief, imagination, enjoyment, and, most of all, being
completelyinthepresentmoment.Wheneverwearecompletelyinthepresentmoment,thereisn'ttime
orspaceforgremlinstoactup.Inthisflowinginthezone,wearecompletelyinvolvedintheprocess
ratherthantheprize.Andthiscanhappenonlywhenwereallyliveinthepresent.Sothefirststepin
tamingJoeGistosimplynoticehimatwork.Awarenessisyourtool.Itwillallowyoutodifferentiate
yourselffromyourgremlin.Toputthisinthehereandnow,takeamomentandjustfocusonyour
breathing. Do it now and just be aware of what is happening. Most people change their style of
breathingassoonastheystartnoticingtheprocess.Youprobablystartedtotakedeeperbreaths.That
wasnottheassignment.Youwereonlytobecomeawareofyourbreathing,nottochangeit.Orperhaps
youstoppedbreathingforamoment.Whatisreallygoingonisasearchforaproblemtosolve.Howam
Isupposedtobebreathing?Youwerelookingforanoldcategoryinwhichtoputthisinstruction.Let's
doanotherexercise.Thistime,Iwantyoutosimplymakeyourself(orfakeit,ifyouneedto)yawn.
Becomeawareofwhatishappeningasyouareforcingtheyawn.Foralmosteveryone,atacertainpoint
inthefaking,theyawntakesonalifeofitsownandbecomesreal.Thatexactpointwhereittakesona
lifeofitsownisthedifferencebetweenthinkingaboutandallowing.Whenitisonitsown,youare
allowingandyoucanbecomeAWARE.Tryinghardistheoppositeofallowing.Let'sdooneother
simple but noteasy exercise. The assignment this time is to dosomething youhave already done
probablyahundredtimestoday.Youcertainlyknowhowtodoitwell,onlynowlet'sdoitonpurpose.
Hereitis.Swallowfivetimesasquicklyasyoupossiblycan.Beforeyoureadon,tryitnow.Whatwere
yourresults?Withmostofusitgetsmoredifficulteachtimeandmanysimplycannotdoitfivetimes
withoutpausingforawhile.WhatishappeningisourJoeGisnotequippedto"allow"and"letgO."
Theonlywaytoswallowcorrectlyisto"letgo"andletourmind/bodydowhatitiscapableofdoing.
Thinkaboutit.Thefinalexercisetodorightnowistoplayasimplegameof"NowIAmAwareOf."
Usingonlyonesenseatatime,andgoingveryslowly,simplyfocusyourawarenessononeaspectof

yoursurroundingenvironmentafteranother.Slowly,asthoughtscomeintoyourmind(aproductof
Chaos),simplynoticethemandletthemgo.Gentlychannelyourawarenessbackbyreturningtothe
phrase"NowIamawareof....'~YourJoeGwillnotwantyoutospendanytimeatallwiththis
exercise.Infact,ifyouarereadingthisandhavenotdonetheseexercises,thatisasuresignthatyouare
NOTAWAREatthis moment. JoeGdoesn'tlike youtobeawarebecauseyoumightchangethe
environment, and any change means a change in categories. Joe is the KEEPER OF THE
CATEGORIES.Heknowsthatcloudingyouractualexperiencewithpreconceivednotionswillkeep
youfromexperiencingtheexcitementofthecurrentmoment,andheiswellawarethatexcitementisa
prerequisiteforenjoyingthislife.JoeGwantsyoutobelievethatifyougooverandoverthefactsand
factorssurroundingthemarket,atrade,and/oryourself,youwilleventuallyfigureyourwayoutofthe
currentdilemma(oflosing).Heprefersyouto"thinkabout"ratherthan"experience."Heknowsthat
whenyouareexperiencingyourfeelings,yourawarenessiscenteredonyouratherthanonhim,and
whenyourawarenessisnotonhim,hehasnoeffectonyou.Inourprivatetutorials,weinsistonthe
participants' experiencing the market and trading while they are attending. Many of them who
consistentlylosewouldprefertojustcome,listen,takenotes,andthenworkontheirtradingathome
wherenooneiswatching.ThisisaCatch22anddoesn'tworkbecausetheyarepermittingJoeGtorun
theirtradinglife.Wedon'tallowthat.Often,theywillmaintain,"Iwanttolearnmyownwayandatmy
ownpace."ComeinJoe,youcanbeinchargejustasyoualmostalwaysare.
Ichangenotb~tryingtobesomethingotherthanIam,
ehangeb~beingfullyawareofhoP~Iam.
AncientBuldhistsa~ing

REALITYANDDUALITY

JoeGwillinsistthatyourowncategoriesandapproachtolifearenecessarytoyourwellbeing.
Hemayevenfrightenyouwithcatastrophicexpectationsofafutureoflosing,remindingyouofthe
nastyconsequencesofyouractsinpastsituationswhenyoudidnotlistentohim.TamingJoeGdepends
onyourbeinginreality,notinduality.Whenyouareinreality,whichmeansthatyouarelettingthe
newincominginformationorganizeitselfratherthandistortingitbystuffingitintooldcategories,your
energyflowseasilyandyourperceptionsareaccurate.Youfeelwholenessandan"intouchness"with
themarketandreality.When,ontheotnerhand,yourenergyistiedupininternalconflictcreatedby
havingtoknowwhichcategorytofitthenewinformationin,youdon'thavemuchenergyleftoverto
experiencetherealityofthemarketandenjoyyourbodyortheworldaroundyou.Inthisstateofbeing,
youwillfeelanxious,disgruntled,bottledup,and/orempty.Inshort,youwillnotenjoyyourself,the
market,ortrading.JoeGmuchprefersthatyouliveinthisstateofduality.Havingspentacareerasa
psychologistdealingwiththeintegrationofmind/brain/body,Ihaveseenundetectedgremlinscause
asthma,heartattacks,colitis,headaches,backaches,neuroses,psychoses,andjustaboutanyothersort
ofailment,includinglosinginthemarkets.
ACLOSERLOOKATGETTINGINTOPROCESS:
WHYWORDSAREIMPORTANT

Beinginprocessmeanspayingattentiontowhatishappeningnow,notwhathappenedaminuteagoor
whatmighthappeninthenextfiveminutes.AsRamDassputsitsowell,"BEHERENOW."Often,
whendoingworkshopsfortradersaroundtheworld,westartoffbydisplayingthefollowingonaslide
orwrittenonaboard:
Opportunityisnowhere
Thenweaskthetraderstowritedownthatphrasecorrectly.Over95percentwrite:
OPPORTUNITYISNOWHERE
Only5percent(andoftenless)write:
OPPORTUNITYISNOWHERE
Theindicationisclear.With95percentofus,JoeGremlinisincharge.Nomatterwhichwayyouread
thesign,youhave~Ireadymadeajudgmentaboutthefuture.Thefirstway(OPPORTUNITYISNO
WHERE)isexclusive.Thesecondway(OPPORTUNITYISNOWHERE)isinclusive.Ifwereadthe
signthe firstway,wehave already madea judgment about thefuture. Itcomes straightfrom Joe
Gremlin,ourCriticalAdviser.Italsoputsusautomaticallyintothefutureandprejudgesthefutureas
beingarotten,norewardland.Wehavejustdoubledtheoddsagainstoureverwinning.Thepartofus
that is in charge (Joe G) is against us, so what chances do we have? Basically, none. I like the
illustrationofavideotaperecorder.Thetapeontheleftreelisthepastandthetapeontherightreelis
thefuture.
CONTENT
Past
Guilt
Anger
Sadness
losses
PROCESS
PresentThepoweroftheProcessH~heretheMusicis

POLART~IINKING
CONTENT
Future
PreparingforLosses
Doubt
Fear

Anxiety

INTAMINGYOURGREMLIN,DONOTMAKENEH~RULES.INSTEAD,Sll~lPLY
NOTICE;
BEATCHOICE,PLAYU/ITHOPTIONS
ANDBEINPROCESS

Therecordingheadisthepresent,andresultswillalwaysbeinthepresent.IntamingyourJoeG,you
get a vantage point by using your awareness for grounding yourself. Spotting and grounding your
gremlincanoftenbeverychallenging.Hewilltrytoaskyoutobelieveinthelimitsthathehassetfor
you.Andheknowsthatifhecangetyoutobelieveinthoselimits,hewillalwayshavecontrolover
yourpotential.IfyouareunawareofJoeG'shabitsandbehavior,hehasadecidedadvantage.Youcan
detectJoeG'sworkwhenyoubegintohear"Youcan't"comingfrominsideyourhead.JoeGissmart
enoughtomixintothecan'tssomerealcan'tslike"Youcan'tfly,""Youcan'tgrowanotherthreeinches
taller,""Yo~can'tgrowyounger."Thenhewiilmixinsomecan'tsthataren'treallycan'tsforyou.One
effectivemethodofdealingwiththisstrategyistochangethewordcan'tinto~won't"or"will"or
"choose" or"choose not to." Next, youmight addthe words "until now." Forexample you might
change:
Ican'tmakeaprofittrading
to
Ihavechosennottomakeaprofitintrading
to
UntilnowIhauechosennottomakeaprofitintrading
to
Now,Ichoosetomakeaprofitintrading.
Asyoureadthesestatements,canyoufeelinyourbody/mindJoeG'sgriplooseningjustabit?Ifyou
can,thatisawonderfullygreatsignaterrificomen!Infact,ifyoureallydofeelthatdifference,the
battleisover;itisjustamatteroftime.JoeGhasbeentryingtokeepyouinatunnelofnoresults,and
youhavejustfoundthesecretofgettingoutofthetunnel:LETGO.ThequestionthencomesupthatifI
let go I cannot know exactly what might happen, and not knowing would produce anxiety. One
definitionofanxietyis:thegapbetweenthenowandthen.Thewaytoeliminatethatgapissimplyto
stayinthehereandnow.JoeGwillalwaysattempttoconvinceyouthatpreservingyourcategoriesand
habitsisthesameaspreservingyourlife.
Itismoreimportantthatyoubeabletoregulsteenjoymentwithin
~ourself,regarllessofoircumstanoe,thanitisforyoutoboableto
modifycircumstances.Itsimplycomesinhand~moreoften.
RichardD.Carson

APSYCHOLOGICALTOOL

Whenyoudriveyourcar,youarealmostalwaysinthefuturewhereyouaregoingandthatiswhy
yousometimesdon'trememberpassingthroughatown,althoughyouobviouslydiditwellenoughnot
tohaveanaccident.Thereasonyoudon'trememberdoingitisbecauseyouwereinthefutureandnot
thinkingaboutthepresent.Rememberhowexasperatedyougetwhenyouarebehindpeoplewhoare
drivingwithfearofhavingawreck?Theyaresocarefulthattheyaredangerous.Haveyouevergunned
theenginesoastoquicklygetaroundsomeonewhoisbeingtoocareful?What'shappening?TheirJoe
Gremlinisinchargeandworkingovertime,thrustingthemintothefuturewithfearofhavingawreck.
Gften,theyeitherdohaveoneorcausesomeoneeisetohaveone.Theyarenotinthezoneortheflow,
andtheybecomedangeroustothosewhoare.YourrelationshipwithJoeGislifelong.Beginnowto
acknowledgehimfully,rememberingthatacknowledgmentandentanglementarenotthesame.
Themessageofthe1960s"turnon,tunein,and
dropout"haschangedforthemillenniumto:
"dropintothepresent,getinthezoneandflow."
Wheneveryourattentionandenergyleavethepresentanddropintothefictitiouspastorfuture,
youmightaswell"turnoutthelights;theparty'sover,"asDonMeredithusedtosayonMondayNight
Football.
APSYCHOLOGICALTOOLWHATEVER
YOUFOCUSONEXPANDS

Ifyoufocusonpasthurts,losses,anddisappointments,theywillexpand.Ifyoufocusonallyouare
goingtodointhefuture,thefuturewillexpandandmovefurtherawayfromthepresent.However,if
youfocusonthepresent,itwillexpand;yourwinswillbehere,now,inthepresent.Rememberwhen
youpurchasedyourlastnewcar.Allofasuddenthatparticularmodelandstylestartedmeetingyouat
almosteverycorner.Didhalfthepopulationjustbuythesamecarasyou?Ofcoursenot;yousimply
startedfocusingonthatmodel,andyourattentionreceivedthecommandtoNOTICEthatcarclosely,
andsoyoudid.Itisthatsimple;thatisthewayitworks.Whateveryoufocusonexpands.Ifyoufocus
onprocess,processexpandsandisfollowedbyaninevitableexpansioninpositiveresults.
Focusingoncontentortheprizetakesyouawayfromprocessandproduction.Wetelleveryone
weworkwiththatthemostinappropriatequestiontoaskattheendofthetradingdayis:"Didwemake
anymoney?"Thatisirrelevant!Theonlyrelevantquestionis:"Wereweintunewiththemarket?"You
willhavesomedayswhenyouwillindeedbeintunewiththemarketandlosemoney,but,overall,you
willbeawinnerinmorewaysthanjustprofits.
WEBOMETRY
Webometry,ourparticularapproachtotrading,hasdevelopedoveralmostfortyyearsofactivelytrading
inthestockandcommoditymarkets.IwasofferedwellintosevenfiguresforthisapproachifIwould
(1)notshareitwithanyoneand(2)quittradingitmyself.Thisofferwasmadebyaworldrenowned
traderwhoisinthesamefinancialandtradingclassasGeorgeSoros.Iturnedtheofferdownbecause

thepricewasmuchtoolow!Webometryisoursummarydescriptionofourapproachtothemarket,
whichwehavecoveredthoroughlyinpreviouschapters.Itistakenfromthestrategyofspiders:
1.Youbuildanicewebsurroundingtheenvironmentyouarenowin.Afteryouhavecompletedthe
web,yougotothemiddleandsimplywait.
2.Onceabughitstheweb,youleavethecenter,getthebug,bringitbackhome(thecenteroftheweb),
eatit,rest,relax,andwaitforthenextbugtohittheweb.Wedothisintradingbyplacingbuystops
abovethemarket,andsellstopsbelowthemarket,andthenjustrelaxingandlettingthemarketdecide
whichpricewillhitthewebfirst.
3.Animportantspiderobservationatthispoint:Thespiderdoesnotcareorworryaboutthebugsthat
donothittheweb.Itknowsthatthroughouteonsoftimeandbillionsofgenerationsofspiders,there
havebeenenoughbugsforallthespiders,anditcansurvivequitewell,thankyou,onwhatnature
providesforit.Astraders,weknowthatbyusingthiswebometryapproachthemarketwillprovidefor
usquitewell,andweneednotworryaboutthefutureaslongasourwebisintact.Wheneveryouare
trulyfocusingontheprocessofperformanceinthepresenttense,youareinastateofBEINGratherthan
a state of DOING. In that state, your mind will effortlessly and automatically begin to seek out
supportingevidence,information,andopportunitiestohelpyouwinintradingorwhateverelseyoumay
beinvolvedin.
4.Astraders,wehavelearnedthattherereallyisaHolyGrailanditcanbeexpressedinthesefive
simplewords:WANTWHATTHEMARKETWANTS!Isn'tthatgreat!?Wedon'thavetobossandrun
themarket.Wesimplyhavetorelax,spinourweb,andwait.Thatisthefocusofgoodspidersandgreat
traders.
Thereisanoldsaying:"Thinkyoucanorthinkyoucan'teitherway,youwillberight."Thatsayingis
truebecausewhateveryoufocusonexpands.
Ionlycareaboutonething,thepresent.
Jimm~Johnson,coachoftheMiamiDolphins

THECYBERNETICSOFTRADING...ANDTHINKING

CyberneticsisaGreektermthatmeans"steersman"orthemanwhocontrolsalargeboatwitha
smallrudder.Today,thattermhasascientificandmarketmeaning:"leverage."Itmeansthatasmaller
objectcancontrolandhasthepowertomoveamuchlargerobject.Forexample,acommoditymargin
of$2,000cancontrol~0timesthatmuchinbonds.Optionscreatelargeleverageinthestockmarkets.
Thissameconceptworksinourthinkingalso.Wordsarerudderssmallobjectsthatcontrolmuch
larger concepts and processes ofthinking oranalysis. One ofthese larger objects is you and your
potentialperformanceinthemarkets.Noticethewordsthatareusedinanyadvertisinginanewspaper
oronradioorTV.Thesepowerwordshavetheeffectoftakingyouintothefutureandmakingyou
believewhateveryouarehearingorreading.Advertisersknowthepowerofwords,andtheychoose
themwithextremecare.TheyknowthatyouandIwillreactinpredictablewaystothesewordsandthey
(theadvertisers,throughtheirwords)therebycontrolus.Theycangetustovoluntarilytakemoneyout
ofourpocketsandgiveourmoneytothem.Thatisthepowerofleverage.Thatbeingtrue,itbecomes
extremelyimportanttoexaminethewordsweusetoleverageourselves.Thisleverageisevenmore
importantthanthefinancialleveragewegetwithcommoditiesandoptions.Ourwordstoourselves
become habitual and therefore unnoticed and unexamined. We can divide our language into two
categories:(1)inclusionand(2)exclusion.Forexample,ifafamilygoestoWaltDisneyWorldandyou

askthechildforhisorherreaction,thechildwillprobablysay,"Itwasgreat."Thatisthelanguageof
inclusion.Asktheparentsandtheywillmostlikelyrespondwithsomethinglike:"Itwasn'tbadnotas
crowdedasweexpected,andthepricesweren'treallythatbad.Allinall,itwasn'tabaddayatall."That
isthelanguageofexclusion.Noticehowachilddescribeswhatiswhilemostadultsdescribewhatisn~t.
Thechiidismoreintouchwithrealityandisnotashabituatedastheadults.Inourparticularculture,the
longerwelivethemorewebecomehabituatedtothelanguageofexclusion:"Themarketdidn'ttreatme
allthatbadtoday."ThelanguageofexclusionisasuresignthatJoeGremlinisincharge.Speakingin
thelanguageofnegatives,JoeGtellsuswhatisn'tinsteadofwhatis.Hehatestostayinthepresent.He
loves equallythepastandthefuture,andfinds waysoftalking aboutwhatisn't.Remember when
Richard Nixon said, "I'm not a crook." He never said, "I am innocent." Politicians are excellent
practitionersoflettingtheirJoeGremlinruntheshow.Lately,politicalcampaignshaveturnedtotallyto
JoeGremlintactics.Eachcandidatetalksaboutwhattheopponentsarenotinsteadoftalkingaboutwhat
they are. "JoeGremlinSpeak"isalsothelanguagewemostoftenuseamongourselves.Ifwelikea
certainanalysis,wesay,"Thatisn'tabadsetup."Doesthatmeanitisagoodsetup?Ifwefeelgood,we
say,"Ican'tcomplainaboutmyhealth."Doesthatmeanwereallydofeelgood?"Nobodygivesyoua
betterdealthanwedo."Doesthatmeanthatyougiveagooddeal?Whoknows?Whatwedoknowis:
thatkindoflanguagedoesnotproduceresultsbecauseeveryexclusionaryresponseislimitingandputs
JoeGremlinincharge,andJoeisnotawinner.WhenJoeGremlinspeaks,wepayforitinattitudeand
performance.Joeiscautionaryratherthancompelling,selflimitingratherthanexpansive.Joemoves
ourfocusfromwhatistowhatisn't.Ontheotherhand,thelanguageofinclusionisanacceleratorwhen
itcomestoperformingandwinninginthemarket.Remember:
Ourwordscreateourimagesand
Ourimagescreateouremotionsand
Ouremotionscontrolourperceptionsand
Ourperceptionscontrolourperformanceand
Ourperformancecontrolsourprizes.
Solet'sgettheorderstraight.Whenwestartdowntheappropriatepath,theresultstakecareof
themselvesthroughthecyberneticprincipleofleverage.Thelanguageofinclusionmovesfromideas
andanalysistotradingandprofits.Oneofthemaincharacteristicsofwinnersisthattheycantakeabad
situationwiththeoddsagainstthemandturnittotheirfavor.Thathappensbecausetheirunderlying
structuremakesitso.Noonewinsallthetime.Iftheydid,therewouldbenogame,includingthegame
oflife.Losersalwayshavealarge,fullydevelopedJoeGremlinwhoisusuallyruiningtheshow.From
theselosers,wehearJoe'svoicesaying,"Thisalwaysseemstohappentome,""Ialwaysgetintoolate,"
"Theflooralwaysseesandrunsmystops."Apieceofpricelessadviceis:
KeepYourEyeoffthePrize.
HowmanyLottoplayershaveyouheardsay:"ThisistheweekIamgoingtowin."Don'tgetmewrong.
Winningisgreat.That'swhytheyinventedscorecardsandP&Lstatements.Butkeepingyoureyeon
theprizeletsJoeGsneakinandgrabtheruddertosteeryouinthewrongdirection.Hecreatespressure,
andpressuremakesyoustupid.Beinginthezoneisthesamethingasbeinginprocess.Andbeingin
processmeansbeingintheeverpresent hereandnow.Successislearningandimproving,morethan
winningtheprize.Lifeitselfisajourneydesignedtobeenjoyedduringthe process ratherthanonly
whenlookingforwardtotheprize.Togetintothezone,youmustbeenjoyingyourself.Theworld,the

market,you,andIallworkthroughthesameunderlyingnaturalprinciplesof~giveandtake,""advance
andretreat."Whenyoubreathe,youinhale,takewhateveroxygenyourbodyneeds,andthenexhale.
Whenyougetintothezoneandstarttoflow,yousurgeforward.Whenyougetasetback,aswealldo,
yourecoverquicklyandsurgeagain.Thisisexactlywhatamarketdoes,whetheritistrendingorrange
bound.Trendingmarketssurge,thenmoveback,andthenbegintosurgeagain.Inarangeboundarea,
themarketsurgesandthenturnsaroundandsurgesintheotherdirection.Theunderlyingstructureof
both is: surgerecoversurge. Surge means focus, awareness, and selftrust during and after the
performance.ThenJoeGremlinshowsupandwantstosharethestagewithyou.Thatgivesyouthe
opportunitytorecoverquicklyandgetonwiththenextsurge.Mostofusdotheopposite.WeletJoe
Gremlinruntheshowandthenworryaboutwhywecan'twininthisgame.Ifthatisyourproblemor
evenapartofyourproblem,wewilloutlineaprocessofgainingcontrolbackandtradingthemarketthe
wayyouknowdeepinsidethatyoucan.Ifyoudidn'trealizethis,deepinside,youwouldn'thavespent
allthatmoneyonlectures,courses,books,software,andothermaterials,totrytomakeithappen.If
whatyouareiookingforcouldbefoundinthepiacesyouhavebeenlooking,youwouldnotbereading
thisbook.Wearegoingtomakeithappen,intheeverpresentHEREANDNOW.Thisisourgameplan
forhandcuffingJoeandlettingtherealyoucomeoutandplay.You'llplaylikeachild,withthesame
intensityandthesameenjoymentofwinning.Thefirstthingyouneedisananchortokeepyouintouch
withreality.
TheAnchor
Neuro Linguistic Programming (NLP) practitioners use what they refer to as anchors. Anchors are
rituals that bringoneselfbackintouchwiththepresentbycreating aspecific repeatingpattern of
behaviorpriortoperforming.These"pretask"routinesbringthemindandbodyintofocusinpresent
withandemphasizetheprocessthatisabouttobegin.ItissaidthatHoudini,oneoftheworld'smost
famous performers,hadextreme stagefrightthroughouthisentirecareer.Hehadaroutine thathe
alwayswentthroughjustbeforethecurtainopenedonanyperformance.Hewouldjumpupanddown
againandagainwhilerepeatingaloud,"Ilovemyaudience,Ilovemyaudience."Andwhenthecurtain
wasclosedafterhisperformance,theaudiencealwayslovedhimback.Noticeworldclassbasketball
playersshootingfoulshots.Theyalwaysrepeatthesamepreliminaryroutine.CharlesBarkleytwirlsthe
ballthreetimesandthenbouncesitonthefloorfourtimes.Thisishispreperformanceanchorortrigger.
Itgetshimintothepresenttenseandthealphabrainlevel.Someactsclearourmindandplaceussolidly
inthepresent,fullyfocusedonthejobweareabouttodo.Weareallcreaturesofhabit.Whenyoutook
ashowerthismorning,Iwouldbetthatyoudriedoffexactlythewayyoudidyesterday,lastweek,and
lastyear.SowhynottakethispowerfulforceofhabitanduseittoputJoeGremlininhisplace?The
primarypurposeofananchorritualistomakeitmucheasiertorelaxandfallintoyour"comfortzone,"
whichallowsyoutofocus,puttensionaside,andstayinthepresent.Thefamiliaritymakesthezone
easytoreach.Youhavedonetheseritualsmanytimesbefore,butmaybenotonpurpose.Intraining
people to become successful speculators and traders, we also insist that they do what we call the
morningpages.ThisideacamefromJuliaCameron,acreativitycoachwhoworkswithcreativeartists
whohavebecomestuckandlosttheircreativity.Weinsistthatwhentraineesgetupinthemorning,the
firstthingtheymustdoaftergoingtothebathroomissitdownandwritethreepages.Itdoesn'tmatter
howtheystart;theyaresimplyrecordingtheirthinking.Iftheythink,"Idon'thaveanythingtowrite
about,"theywritedown"Idon'thaveanythingtowriteabout."Wehavehadmorepositivelifechanging
feedbackfromthatoneexercisethanfromanyotherswehaveeverdoneinover40yearsofbeinginthe
marketandworkingwithtradersandinvestors.Thereasonthisritualgetssuchastoundingresultsisthat
itgetsJoeGremlinoutofyourlefthemisphereandletsyoudropintoyourzoneandflowmoreeasily.
Whensomepeoplefirsthearofthisrequiredtask,theysay,"Ohno,Icouldneverdothatonaregular

basis."Inacoupleofweeks,theychangetheirtuneto"Icouldneverdowithoutthis;ithaschangedmy
lifeandIwilldoittillIdie.nIpersonallydoiteveryday,rainorshine,feelinggoodornot.Itclearsthe
deckandletsmefreemyselfofallthenegativesuccessbashingselftalkfromJoe.Andoneofthebig
featuresisthatitproducesaritualtodoeachmorningbeforeanythingelse.
Repetitionbringsfsmiliarity,andfamiliarit~is
theoppositeoftheunknown.
~tellenLellenkron
Afterthisritual(orwhateverotherritualfeelsgoodtoyou)issecurelyinplace,youarereadyforthe
nextstep:preformingyourperformance.Inthisstep,youvisualizewhatyouaregoingtodo.Jack
Nicklaussaysthatheseesamentalmoviebeforehehitseveryshot.Inhismind,hehasnevermisseda
putt.Whatagreatwaytogetintothezoneandflow.Thisvisualizingisacatalystthatgetstheenergy
moving.Inthemorningpages,weoftensuggestthatyoucarryonadialoguewithJoeGremlin:askhim
whathewantsthisdayandwhatitwouldtaketogethimoutofyourwaysothatyoucancreateresults.
Often, startlingly impressive truths come from Joe. Many psychological experiments have been
conductedwithsportsparticipantsforexample,dividinggroupsintodifferentpartsandhavingone
partactuallypracticearoutinelikeshootingfoulshotsinbasketball.Anothergroupspendsthesame
amountoftime"imagining"andvisualizingthattheyareshootingfoulshotsbutarenotonthecourtand
donothaveabasketballintheirhands.Afterweeksofhavingbothgroupsspendthesameamountof
timeontheirrespectiveactivities,thevisualizingonlygroupusuallymakesthesameimprovementas
thegroupthatwasactuallydoingtheexercise.Thisshouldimpressonyouthevalueofthementalself
talk weengageinall dayeveryday.Justmake surethatall yourselftalkis inclusiverather than
exclusive.
WHATBIOFEEDBACKISALLABOUT
Basically,weknowthatourbrainsproducemeasurableamountsofelectricalcurrenteveryminute
ofourlives.Thesevaryingcurrentsproducedifferentpatternsintheformofwaves,andtheshapeand
frequencyofthesewavesdependonwhatwearethinkingaboutatthatmoment.Forexample,your
brainwavepatternwhileinalargewinningpositionisverydifferentfromthepatternwhenyouarea
significantloser.Therealquestionhereiswhetherthebrainwavepatternistheresultoftheperception
ofthesituationoristhecauseofthesituation.Thesedifferencesinbrainwavepatternscaneasilybe
measuredandmonitoredonanoscilloscope.Thebrainwavesthathavebeenmoststudiedarethealpha
brainwavepatterns,whicharebetween7and13cyclespersecond.Thisfrequencyseemstobuilda
contextwhereonefeelsfocused,relaxed,selfconfident,andcreative.Itismorethancoincidencethat
thesearethesamewordsusedtodescribeone'sfeelingwhileinthezone.Forourtradingtrainees,we
preparedaseriesofeightaudiocassettesspecificallydesignedtoteachthemhowtogetintothealpha
zonequicklyandeasily.Thesearenowavailabletothegeneralpublic.Thisconceptisimportantto
understandbecausethisisexactlythewaythatgoodvisualizationworks.Byvisualizinganactinthe
context of the alpha wave frequency band, your mind actually programs your entire mind/body
configurationtodropintothezoneandbegintheflow.Itisquiteimportanttonotethatwearesaying
youadrop"intothezoneratherthaneffortfullyaclimbup"intothezone.Gettingintothezone,likegood
trading, is much more an activity of ~letting go"rather than doing something difficult. Letting go
producesaTRANCEENDINGexperience.Infact,effortisalmosttotallycounterproductivetogetting
intothezone.Toaidinlettinggoanddroppingintothezone,therearefourkeys:

1.Forgettheprizeandfocusontheprocess.Seeyourselfputtingonandmanaginggoodtradesrather
thancalculatinghowmuchprofityouaregoingtomakewitheachtrade.Visualizetheprocess.
2.Beveryveryspecific.Generalitiessimplydon'tworkwiththispartofthemind.Forthemindtogive
orders,theordersmustbeunderstandableandextremelyspecific.Specificitycomesfromdetail,and
detailsshouldincludeallthesenses.Seeithappening,feelithappening,hearithappening,smellit
happening,andeventasteithappening.Detailsarethefuelofvisualization.Themorefuelyouhave,the
morepoweryouhaveandthefurtheryoucangoonthisparticulartrip.
3.Makeitgood.Visualizetheentiretradeprogressingperfectly.RememberwhatJackNicklaussaid:he
nevermissedaputtinhismind.Ittakesabitofcouragetoseeyourlifeandtradingasperfectionwe
usuallydismissthemwith"justgoodenough"oraThatisjusttoogoodtobetrue.~Itwillbeasgoodas
youmakeit.
4.Ifsomethingisworthdoingatall,itisworthdoingoverandoveragain.Whilewhatwecallthe
morningpagesaredesignedtobedonethefirstthinginthemorning,werepeattheactivityatanytime
ofthedaywhenwehaveaproblemorneedtogetourmindsstraight.Ihaveoftenawakenedduringthe
nightthinkingaboutsomeproblem.After turningand tossingforawhile,Igetupandwritesome
pages.Thishasneverfailedtoeitherfindanappropriatesolutionordismisstheproblem.WhenTiger
WoodswaswinninghisfirstMastersTournamentinAugusta,Georgia,youmayhavenoticedthatashe
waswalkingdowneachfairway,hedidpracticeswings.Mostlikelyhewasprogramminghisarmsand
shoulderstorememberexactlyhowhisbodyshouldmoveonthenextshot.Thesestepsarelikesettinga
thermostat.Ifthethermostatisworkingproperly,youneedonlysetitandforgetit.Theresthappens
automagically.Apsychologicalaxiomstatesthatwewillseesomethingwhenwebelieveit.Thesteps
above will set your belief thermostat to the degree that you may see whatever you desire. The
combinationofbelievingandseeingopensupyourperceptivemechanisms.Themeansofdeveloping
yourwishingbecomeasclearandobviousasthenextstepwhenclimbingasetofstairs.
Inthep~ollinceofthemind,whatonebeliellestobetrueeitheristrueorbecomestrue....
Johnlilly,ProgramminganlMetaprogrammingthellumanBiocomputer
At this point, we have created an anchor, a reference point, and a thermostatic setting for our
performance,andwehavecompletedourvisualizationoftheprocessinrichandvarieddetailsthatwe
repeatwithenthusiasm.Nowisthetimetoturntheheatupabitandnotchupourperformanceto
anotherlevel.Intradingandinvestinginthemarket,wehaveidentifiedthefivedifferentlevelsof
performanceshowninFigure113.Thelevelyouareondeterminesyourresultsinanyendeavor.Each
ofthelevelsshownisreallya"trancelikestate."Weareaimingfora"tranceending"experience.You
endthetranceyouareinbylettinggo,givingupwhatyouthinkistrueaboutthatlevel.Otherwise,there
isnoroomtoletthenewlevelin.Ifwesitandstruggleforhigherperformancewhilelivingwithour
twovalued bipolar thinking/philosophy, we get into a vicious circle. Polar thinking leads to
procrastination,whichleadstofurtherpolarthinking,whichleadstofurtherprocrastination.Itbecomes
aseeminglyneverendingmerrygoroundride.Howdoyouturnitupanotch?Simple.Iamsurethat
youhavehadthisexperiencewhiledrivingdowntheroadinyourautomobile.Youhearafavoritesong
ontheradio.Youautomaticallyrespondbyreachingoverandturningupthevolumeabit.Youractis
responsive,automatic,andpleasing.Itisjustthateasytodoanythingwewishtodo:wesimplyrespond
withnoindecisionorcontinualdeliberation.Intrading,mostofusspendendlesstimerehashing,taking
onemorelook,callingthebroker,andwastingotherextraneousenergy.When
Figure113ThefiveLeve~softrading.

wetutorpeopletobecomeindependentspeculators,weuseastopwatch.Ourgoalistoanalyzeany
chart,onanystockorcommodity,andknowexactlywhattodo,andwhen,in 10secondsorless.
Anythingbeyondthatis"mentalmasturbation."Lettinggoofthiamentalmasturbationiswhatturningit
upanotchisallabout.OneofmyteachersyearsagowasFritzPerls,whoatthattimewaslivingat
EsalenInstituteinBigSur,California.Heoftenobservedthathumanbeingsweretheonlyspecieson
earth with the capacity to interfere with their own growth. The steps to getting into the zone and
beginningthefloware:
1.Anchor.
2.Visualize.
3.Turnupthevolume.
Thereisstillonevitalsteptotake.ThispageisbeingwrittenonadaywhenEddieJohnsonofthe
HoustonRocketswonthefourthgameintheNBAplayoffroundagainsttheUtahJazz.Hesanka
27footthreepointerwithsixtenthsofasecondtogo.Heimmediatelyjumpedstraightup,threwboth
handsintheair,andranfullspeeddownthecourtintothewaitingarmsofhisteammatesandcoach.He
enjoyedtherewardofhisoutstandingperformance.Youneedtopatyourselfonthebackforgood
performance.YouhavegottenJoeGremlinoffyourbacksoyoucouldperform,andyousurelydon't
wanthimcomingbackandjumpingonyouagain.Grantyourselftherighttoenjoytherewardsofyour
labor.Otherwise,therei8agoodchancethatyouwillfallintothetranceofalwaysperformingand
neverenjoying.Justlikebreathing,youbreatheoutwniiepiayingandyouinhaletherewardsofgood
play.ItisOKtogetexcitedaboutyourselfandyourperformance.
U/hatIdobestissharem~enthusiasm.
Bill6ates,Microsoftfounder
Therejustisn'tmuchinthisworldthatbeatsoutstandingperformancewhenyoucanbeyourown
bestfan.Sofar,thisisallgreat.Butcanitbethatwayallthetime?No!Lifeisneveraflatplane.It'sa
seriesofhillsandvalleys,andonceyougettothetopofanyhillthenextmovehastobedown.No
matterhowhighyouareonthewaveyouaresurfing,itwillcomedown.Sowhatdoyoudowhenyou
feelthatyouhave"lostit"?Howdoyoufindthenextsurfablewave?Thebestprescriptionistoask
yourselfaseriesofquestions.Thefirstquestionis:EXACTLYWHATISGOINGON?Ourbody/mind
hasamazinglybrillianttechniquesforinformingusofexactlywhatisgoingon,butmostofthetimewe
paynoattention.Werespondtomemoriesandwordsratherthanthepresentsituation.Wheneveryou
falloutofthezone,youwillnoticethatyouarestationingyourselfeitherinthefutureorinthepast.
Stayinginthehereandnowisthebiggestgatetoenteringthezone,anditisimpossibletostayinthe
zonewithoutbeinginthehereandnow.AwarenessputsJoeG,yourcriticaladviser,intohandcuffsand
storeshimsomewhereinthebackroom.Whenyouaskyourself,"WhatamInoticingnow?"thecontent
ofwhatyouarenoticingbecomesirrelevant."Iamangry,Iamfrustratedwithmylosses"ismuchless
importantthanthefactthatyouaretakingback,fromJoeGremlin,controloveryourconsciousness.
YouareplacingyourselfbackintoPROCESS.Itisimportantthatthequestionsyouaskyourselfbevery
specificandtheanswersmustbejustasspecific."Ifeellousy"isathoughtlessanswer.Whatisitthat
youfeellousyabout?Givetheanswerssomecolorandspecificity.Specificsforceyouintothepresent
tense,intobeingrightherenow.ThishastheeffectofsedatingJoeGsothatyoucangetbackintothe
gameofwinning.Youmustbebrutallyhonestwithyourselfandcutthroughsenselessandgeneral
answers.Simplynoticingbringsyoubackintocontrol."OK,soIhaveaskedmyselfthesequestionsand
IamnoticingthatIcertainlyamnotinthezoneandIamnothavingfun.SowhatdoIdo?Thiswhole
situation ismakingme feelpowerless."Youaresoright.Theprimaryquestionis:HOWDOWE
REGAINTHISTEMPORARILYLOSTPOWER?Welookatouroptions.Rememberthattheland

minethatwewanttoavoidisthebipolarthinkingofJoeGremlin.Joeknowsonlytwooptions,butwe
know our options are unlimited. The very fact that we are noticing the reality of the situation
automaticallymakesanumberofnewandcreativeoptionscometomind.Theseoptionswouldneverbe
noticedbyJoeG.RememberthatJoeenjoysbeingapassivevictim,andwearelookingforaction
alternatives.Atthisstage,thenumberofoptionsyounoticeismoreimportantthanthecontentofthese
options.Don'tletJoeconvinceyouthatthereareonlytwooptions:winningorlosing.Thisisnot
PROCESS.Optionsalwaysexist.Icancontinuetowritenow,orIcangotobed,orIcangoforaswim
orawalk.Therearealwaysoptions;aslongaswearestillbreathing,wecanconjureupatleastacouple
ofoptionsperbreath.JoeGwantsustoplaythesameoldtunesoverandover,andthat'swhyweget
stucklikeabrokenrecord.Joelikesthatoldtuneandknowsitwell.Wewanttobemoreinnovativeand
discoversomethingnewandwewill.OurattitudemakesTHEDIFFERENCE.Afterthegenerationof
newoptions,thenextquestionis:WHATCANILEARNFROMTHESEOPTIONS?Thislearning
becomes a door to more selftrust, and selftrust leads to the alpha brain wave frequency, which
enhancesourperformanceandputsusontheflowpathagain.ThePROCESSofflowrecoverflow;
flowfallbackgetbackflow;surfthewaverelaxlookforanotherwave,willkeepyouinthezoneand
cantotallychangeyourprofitsinthemarketsandinyourlife.Whathaveweaccomplishedbynoticing
andgeneratingoptions?WegotJoeGoutoftheway.Whatwemostneedatthispointistoregaintrust,
belief,andconfidenceinourselves.Onegoodwaytodothisistosimplyask:"WhatamIlearningfrom
myoptions?"Thelearningprocessisempowering.Weliketousethisformulainourtutorials:
E+R=W
Experience(E)plusReflection(R)equalsWisdom.Experienceisonthexaxis,Reflectionison
theyaxis.Byusingboth,wegetathreedimensionalpictureofthesituation.Wisdomiswhatallowsus
to hang in there in adverse circumstances and end up winners rather than whiners. We have now
experiencedthezoneandflowedinsideofit.Wehavesurfedandfalienback,paidattentiontowhatis
happeninginthepresent,andcreatedvariousoptions.Wehavereflectedontheoptionstoincreaseour
wisdom, and here we sit. What next? The final question is: WHAT AM I GOING TO DO
DIFFERENTLY?Thisquestionobviouslyeliminatessomelessproductiveoptions.Ourselfbeliefis
nowreturning,andwemustchoosewhatournextactionswillbeandhowtheywillbedifferentfrom
thepreviousones.Itishalftime;thegameiscertainlynotover,butwe'rebehind.Whatdowedo?First,
we look at reality (we are losing because . . . ). We could try some options, but we know from
experiencethatsomeofthemwon'twork,sowedecidewhatourbestalternativesare.Atthispoint,our
moralestartstobuildandwebegintothinkthatifwedothisandthendo this, wecouldwinatthis
game.ThefinalquestionistopickthebestoptionandTHENDOIT.Probablythemostpowerful
advertisingsloganevercoinedis"Justdoit!"Whenyouhearthosewords,youimmediatelythinkof
Nike.Thosethreewordshavecreatedbillionsofdollarsinprofitforthatcompany.Atthisstage,the
slogancanbeyourmostpowerfulallyalso.ThosewordscanputJoeGbackinthecellarwherehe
belongs."AllthissoundsreallyOKbutIamstillskeptical.ThiscouldbejustanotherSundaysermon.
HowwillIreallyknowifitisworkingorifIamdoingthiswholethingproperlyornot?"Thatisagood
questionandithasasimpleanswer.Youwillnoticethatyoureallyfeelgreat!Youwillfeelthepower
thatcomesfromdeepwithin,andwillrecognizethatitisyourpower,notborrowedorstolenfrom
someoneelse.Youwillrealizethatyourlifeandyourpotentialarelikeadeepwell,andnomatterhow
manytimesyougothere,youknowthatthenexttimeyoutrytodrawwater,itwillbeplentiful,tasty,
fresh,andsatisfying.Onefinalquestion:Whatdoyouthinkaboutallthis?Areyougoingtoreaditand
say,"Soundsgood,"andthenplacethisbookonyourshelf?Perhapsyoumayevenunderlinecertain
passagesthatstrikeyouasbeingparticularlyrelevanttoyourcurrentsituation.Well,thatjustwon'tdo
it.YouhaveyourTranceEndingprogramhere,butyoumustsupplythepractice.Otherwise,mostifnot

allofwhatyouhavelearnedwillbelostandforgotten.Youneedtoputtheseprinciplesinpractice
TODAY. Then, about a month from now, go over your notes and any passages you may have
highlightedinthismaterial.Rememberhowmuchfunitistosurgerecoversurgeagain.That'sreal
tradingandrealliving.Ifyoudothis,youwillfindthatthebestspotonearthisflowingdownthezone.
MAYYOlJLIVElNTHEZONEANDFLOWFREELYFOREVER.
SUMMARY

AsIamwriting,Iamsittingonmysecondstorybalcony,lookingoutontotheocean.Ihavejust
finishedarelaxingsessioninmymeditationroom,whichisnexttothetradingroom.Thismorning,
beforethemarketopened,Iworkedoutinmygyminthegarageandthentookanhour'ssailwatchinga
magnificentsunriseoverthewater.Icamein,hadanicebreakfast,andbeganmyanalysisofhowIplan
totradetoday'smarkets,whichtooklessthantenminutes.ThenIfaxedinmytradesandamspending
mostofthedaywriting.WhenthemarketclosesthisaMernoon,Iwillgetmyregularmassage.Tonight
Iwilltakemywifeoutforaromanticdinner.InafewweeksweareflyingourentirestafftoEuropefor
a vacation. The markets made all ofthis possible. Ours is oneofthe bestimaginable homebased
businesses.Ourmain occupation is trading ourownfunds. Inaddition, weperiodically train other
peopletotrade,thusfurnishingthemwiththepossibilityofasimilarlifestyle,alifestylethatincludes
freedomfromshakyjobsituations,difficultemployers,longcommutes,andlimitedincome.Thereis
also freedom from the employeremployee relationship, tough competition, government taxes and
regulations,thedailystruggletomotivateemployees,andthedifficultyoffindingcompetentpeoplein
today'sjobmarket.Youhavethefreedomtoliveanywhereintheworld.Wechosethewaterfrontfor
sailingandwatersports,butwearenearaninternationalhubairport,~owecanflynonstoptoalmost
anyplaceintheworld.Youhavethefreedomtosetyourownhoursandtotradeasmuchoraslittleas
youchoose.Youreporttonoonebutyourself.Youhavefreedomfromconsumerproblems,customer
relations,complaints,theft,returns,unions,employeebenefitplans,stockholders,andbestofall
fromboringmeetings.Youhavetotalfreedomfromlimitsonyourincome.Ittakesnomoreworktobuy
100contractsthantobuyone.(Itdoestakeamodicumofcourage,butactuallyverylittle,ifyoureally
understandthemarkets.)Youmultiplyyourincomebyincreasingthenumberofcon~ractsthatyou
trade,notbyworkingharder.Yes,itisquitetruethatmostpeoplelosemoneytradingandinvesting.
Thisisnotduetothemarketbuttotheirownindividualbeliefsystems.Whathasworkedforthemin
otherareasoflifedoesnotworkfortheminthemarkets.Thetwoessentialingredientsforsuccessin
tradingare:
1.Therighttools.
2.Therightattitude(whatwecallATTITOOLS).
AndthatiswhatthismaterialandtheProfitunitytradingapproachisallabout.TheRIGHTATTITUDE
usingtheRIGHTTOOLS.Inthismaterial,wehaveshownyoupreciselytherighttoolsthatwillallow
youtounderstandthemarketsothatyoucanjointhatelitethreetofivepercentofalltraderswhomake
moneyconsistentlytradingthestockandcommoditymarkets.Oneofthegreatestthingsabouttrading
andinvestingisthatyouneverknowitallandyoucanlearneveryday.Itrustthatthissharingofour
researchandinformationwillbeofbenefittoyou.Iinviteyoutojoinusinourcontinuingresearchinto
thebestwaysofenjoyingthislifestyleandfindingoutwhowereallyare.