Subtitles section Play video Print subtitles Hello, everyone. This is Adam Halpern with Indicator Warehouse. And I want to thank you all for joining us today. I have the pleasure of having Richard Friesen and Erich Senft, both with two of the most difficult last names you could imagine. So for those of you who don't know Rich, I met him, actually, when I was trying to build a trading assessment test. Because of our diversified trading system, I really wanted people to be able to get a sense of where their strengths resided. Do they tend to lead towards scalping, swing trading, whatever. And Rich will give you a little bit about his background, but he is the perfect match. He used to be a pit trader. Now he has a background in psychology and many, many other interesting things. He's definitely earned his gray hair. For those of you that don't know Erich, he owns and manages supportresistance.com, and he's also our lead educator. So I thought it would be perfect to get these two guys together and have a conversation. So with that, I will hand it off to Rich and Erich. I'm happy to be here. And my background started on the floor of the Chicago Mercantile Exchange, trading options on the S&P futures. And then I built a trading desk at the Pacific Stock Exchange on the options floor, trading options on equities. I ended up through some perverse things trading on the Chicago Board of Trade, trading options on wheat. And then I built an electronic exchange during the dot-com boom called ePIT systems. I have been working with professional traders, money managers, and active traders for the last decade, working with them to build their emotional, mental, and psychological strengths. And from this, I have developed a number of processes and found where people get stuck, where traders do those things, those behaviors that no longer serve them. And so I've been working, building a series of processes to overcome the major issues that traders have. So that's where I have been. That's what's exciting me today. And I'm just excited to talk about whatever Erich brings up. I know that he sometimes can be a little creative in his questions, so I'm ready. All right. Well, I'll try not to throw you too many curveballs. All right, so the first question-- fear. I think this is probably the biggest psychological obstacle that plagues traders. You're afraid to take a trade. You're afraid to pull the trigger. You're afraid of being wrong, and everything that goes with that. How does a trader deal with fear? Well, first we have to realize that fear is there for a very positive reason. We're still operating with our 50,000-year old brains. In other words, our basic neurology hasn't changed that much. And on the savannas and in the tribe, fear was a very positive contributor to our survival. And as a result, it's really deep into our brains. Now, the problem is that we're no longer on the savanna. There's no longer tigers. And we're no longer in a clan environment. But our brains haven't shifted. And as a result, because trading puts us as close as we can get to the edge of risk, of survival, of making that hunt and making that big kill, it triggers all the same things that our brain is used to from the savannas, early on. So as a result, we drop into fear. We drop into stress cycles. And we act the same kind of ways that we did 50,000 years ago. The problem is that those ways 50,000 years ago really helped us survive. But in a training environment, it almost brings us to the opposite behaviors of what we need to do. That's an excellent answer. It kind of reminds me a little bit of road rage too, that would explain what's going on on the highways. Yeah, the exact same thing. The whole survival thing. Yeah, we trigger that fight or flight. And there are some things you can do, and a couple of break state exercises. And I think that Adam can maybe drop those into the chat box for people who want links to the Flight to Freedom. There's an exercise there. And that exercise is basically a breathing exercise. What happens is, when we're threatened, our brains are great pattern matchers. And they see the pattern of the threat. We drop into our limbic system, and that's our more primitive animal survival brain. And it immediately gives us adrenalin cocktail. It immediately gives us what we need to move our large muscle groups. But it shifts our thinking also. And to get out of that fear state, we need to then interrupt that cycle. And what we can do is do a breathing exercise. And for those of you who are interested, you can go to that link, and there's the exercises there. And that breaks that state. Because what happens is, our limbic system puts in the adrenalin cocktail, gets us ready for fight or flight, and then it says, OK, is there a real threat? It does that first and then checks. So it checks with our more thinking brain, our neocortex. And if, in fact, the neocortex says, hey, there is a threat here-- because the neocortex is somewhat slower-- but if it evaluates and says it is a threat, then it goes back to the limbic system and says, OK, let's pump up that adrenalin again. And so for some of us, we can get into this cycle whereby the neocortex says, oh my god, we're in a panic state. There must be something wrong. The adrenalin says, the neocortex thinks there's something wrong. So we get into this cycle. So this is a break state that traders can do. Hm. That's really interesting. I had no idea. So a simple breathing exercise can actually help you refocus and give you some clarity on the situation and help you decide whether you should pull the trigger on a trade or perhaps exit a trade early. Well, it's not going to give you the decision process on that, but what it's going to do is break that cycle. So if your limbic system in the brain notices that you're breathing slowly and regularly, it will say, oh, there must be nothing wrong. So you can actually take a symptom and turn it into a cause and change the state of your brain. Then once you're not in the fight or flight mode, you have less fear, then you can take and say, OK, what do I need to do here, and make a decision. Well, that sounds a whole lot better than my method of dealing with it, which was usually just to hold my breath. Well, OK-- you can go another direction on this. And that is, another way to break that fear is to take some deep fast breaths until you start to feel lightheaded. You need to lie down for this-- is to lift your legs, lift your belly, clench your arms, clench your legs, clench everything as tight as you can and hold your breath and squeeze hard. Just hold that breath. Hold it until you feel like you're going to pass out. And then let it out. And what this does is it takes that fear state, builds that physiology that a normal fear state would do, by using your big muscle groups. And then when you release and breathe slowly, it's another way to break that fear cycle. I may actually try that one. That sounds pretty good. It's a great exercise. Yeah, no, that sounds fantastic. All right.