Day Trading Psychology: Managing the Jungle in Your Brain

Using the instincts we all have to be a better day trader.

It is a jungle in the stock market.
Day trading and hunters know the score.

Today's post is by Richard Friesen, CEO of Mind Muscle for Traders. Richard works with financial professionals and independent traders to increase their consistent profits using neuroscience. His online courses and intensive trading boot camps are well-known throughout the trading community.

An interesting way to look at day trading psychology is to compare it to our more primitive ancestors who were hunting and gathering on the savannas of Africa.

Hunting beasts that were faster, tougher, stronger and fiercer required a new level of skill that the humans brought to the savannas.

When in the jungle, the human had to manage a tremendous amount of variable information, much of which was unclear and made predicting the future impossible. As a result, over eons, our brains developed an incredible pattern recognition and pattern matching capability. This capability allowed us to take in a tremendous amount of data, truncate much of the information, take the remaining information and match it to patterns that would increase our predictive ability.

For example, if we were hunting antelope, the slightest change in the physiology of the antelope could give us a clue as to whether or not the animal was on the alert, perceived danger from a different source or whether or not we had been discovered.

This amazing ability to take in a lot of data in a complex adaptive system and mold it into refined information that helps us predict the future, also helps us to survive without the speed, toughness, strength, or fierceness.

However, it was not possible to have this amazing pattern recognition and matching ability in a conscious framework. With the vast amount of data possible both on the savannas and in trading, we do not have the conscious capability to process all that data. Our conscious brain calculates at a much slower speed than our limbic system and other pattern matching capabilities.

This means that as traders exploring our own day trading psychology, we need to understand that a big part of our trading strength comes not from our rational neocortex, but from the more primitive parts of our brain.

For the student of day trading psychology, this creates a whole new problem. However, I believe the problem we are about to look at is the right hard problem to work on. Trying to move our trading abilities to a Spock-like rational response is very difficult. Most books and coaches tell the trader to just be more disciplined. This is like a track coach telling a sprinter to simply “run faster.”

However, if we approach day trading psychology with the understanding that we need to use the more primitive parts of our brains for pattern recognition, then we are unleashing a powerful part of our human abilities.

The challenge is that in the heat of the moment it is very difficult to tell the difference between emotional trading responses and the more refined pattern recognition responses that come from the unconscious parts of our neural activity. This is where awareness training delivers real value for the student of day trading psychology.

Just like on the savannas, there were hunters that quickly succumbed to the fight or flight response with a shot of adrenaline cocktails.

They froze when they needed to throw the spear, or they ran when they needed to face down the beast. Traders are no different and our responses have not changed in the last 50,000 years of evolution.

The first step towards being able to use our incredible pattern recognition machinery between our ears and to be aware of our more visceral responses is to incorporate this model into our thinking. Once we name these different states of mind, then we can start to recognize, in real time, the state of mind we are in. 

Richard can be contacted at

Photo Credits: Simon Rawles/The Image Bank/Getty Images