The Way of the Dollar

callosum, which is the channel linking the two halves of the brain (Nobel prize-winner Roger Sperry was the pioneer ). The results were successful in ridding the patients of epilepsy –though at an unexpected cost.

It had long been known intuitively that each half of the brain performed different functions, rather than each supplementing the efforts of the other . The corpus callosum-section experiments confirmed that the function each of the halves of the brain is in fact radically different. The left half controls the right side of the body (in most people) and is the processor of language, logic and all forms of linear, analytical thinking. The right half handles all the holistic or gestalt thought patterns concerning relationships and wholes – music, shapes and patterns, pictures, intuitions, “breakthroughs” etc.

The two hemispheres are normally so perfectly linked (by the corpus callosum) that the two functions are inextricable in most people, though activity in each side is easily differentiated by an electro-encephalogragh

(EEG). The result of the bisection of the two functions in the case of the treated epileptics was stark. For example, if allowed to see out of only the left eye (controlled by the “right” brain) they could not read or write. And if allowed to see out of only the right eye, they were quite incapable of drawing a simple shape like a cube. For a useful introduction to the subject of left– and right-brained thinking, see Robert Omstein’s popular book The Psychology of Consciousness* (preferably in the original version).

Further studies have clarified the extent of specialisation of the two sides of the brain. Subjects with damage to the left side of the brain are able to recall poetry and songs –but no prose. Subjects with damaged right brains read, write and talk lucidly –but without any expression of emotion, or the slightest sense of humour. Young debutant musicians call mainly on the right, holistic sides of the brain: old hands exercise the left, analytic side almost exclusively. An urbane and intelligent professor of music, who proved to have suffered severe damage to the right brain, was The Man who Mistook his Wife for a Hat* in the famous account by the psychotherapist and author Oliver Sachs: at one pathetic meeting, the music professor accompanied by his wife, was taking leave of the brilliant psychologist, when he turned and reached for his wife’s head. He could not tell the difference.

The ‘right brain’ handles the thoughts that do not come in words or numbers.

Reading, writing and arithmetic are the first things taught at most schools –all left-brained activities. Languages and sciences follow later, and even the arts are taught as left-brained sciences, by left-brained teachers. Over the years, the mental approach of the child –which starts out with a right-brained domination –is bent progressively further and further towards the left side until the balance is usually reversed. The result is that most school– leavers, and graduates even more so, end up with a lop-sided mental balance dominated by logical, linear, analytical thought processes. “Vertical thinking*” is what Edward de Bono*, the modem pioneer of “lateral thinking*”, would call it (see The Use of Lateral Thinking*). The Taoist* would say the the Yang* had been over-developed at the expense of the Yin*.

Flight can be the fantastic soaring of buzzards, the effortless gliding of a V– formation of migrating cranes; or it can be the air-pressure difference of the lower and upper parts of a wing. Both kinds are valid descriptions. Because of its conditioning, the crowd looks at the currency market as engineering students look at aeroplanes: it misses the soaring and the

gliding. But the crowd’s view of things tends to be already discounted in prices, so it has little light to shed on future price movements. What Currency Bulletin calls “the underlying rationale” for a price trend is usually only sensed, when it first appears – before it has been put into words

– with the same kind of sixth sense that feels the soaring and the gliding. The most useful capacity in the business of anticipating price movement

– which is what trading is about – would appear to be pattern recognition: recognition of inter-relationships between price movement and a matrix of events including sentiment and news background, before such relationships have been verbalised. It’s a right-brained function, which is often called intuition. The crucial function of the left-brain comes after – i.e. rationalising and verbalising the patterns once they have been conceived, and determining whether they are consistent valid and usable.

Who are you?

When asked what traits identified the winning trader, Ed Seykota(in Market Wizards) replied: “1) He/she loves to trade; and 2) He/she loves to win.” Surely every trader wants to win? On the evidence, manifestly not.

Do you sincerely want to win?

This question has to be the starting point. Or Van K Tharp* is a well-known American psychologist who has spent the past decade studying what makes people win and lose in financial markets; that’s his profession. He has concluded that a commitment to win is the one quality that is absolutely indispensable to success in financial markets: not intelligence; not the desire to make money; not intuition as such; not anything else, in fact. He believes that in financial markets “anyone can win if they are committed to do so”: it’s just a matter of learning how.

Many other required attributes of winning traders in fact must necessarily follow from such a commitment: attributes like following a consistent method; doing careful homework; using a valid risk-management system. It’s quite simple: a trader who does not do these things is not committed to winning. This rules out an amazing number of market participants.

Well then, are most participants in some way committed to lose? With Freud, Eric Berne and others behind us we can consider that question levelheadedly– though it may be a bit exasperating if we ask it of ourselves. First think about the game of ‘hide and seek’. The payoff in hide and seek, as Berne points out (in Games People Play), is not to stay hidden but to befound

– after a suitable delay. If daddy’s too slow about it, Lucy makes a noise to help him. The fun lies in the chagrin of being found. You win by losing.

Wasn’t Jesse Livermore in some odd way committed to losing, as he did so often to the point of wipe-out, and at last, terminally? Wasn’t he playing hide and seek? What was the meaning of his remark in Reminiscences that “no man living can beat the stock market”. Wasn’t that what “the boy plunger” spent his trading life ostensibly trying to do? He knew lots of people who had beaten the market. The phrase looks remarkably like a parental injunction (“You can’t beat the system, kid”) that he carried with him from early childhood… to oblivion. Was his life, subconsciously and tragically, scripted to prove the injunction true?

So ask the question: “ am I committed to win; to lose; or to not-win?” Once we’ve answered it truthfully, we can take it from there. But we may have to think about it long and hard to get the true answer. And let’s not under– estimate the size of the problem of going from loser to winner. “ A losing trader is not going to want to transform himself into a winning trader .That’s the kind of thing winning traders do”, said Ed Seykota to Jack Schwager. The first step in the transformation is to recognise that you are a loser.

Yes. If you’re not committed to winning, you don’t possess the one indispensable pre-requisite for being a winner (according to Dr Tharp, who should know), so you are a loser, or at best a non-winner. It’s not easy to recognise that you may be a loser. We spend our lives protecting ourselves from