Getting To Grips With Your Lizard Brain!

At first, learning the fine art of forex trading is very much about gaining an understanding of the markets, what drives them and what influences them in the long and short term, and how you can use your newfound knowledge to your advantage when it comes to trading currency pairs.

But what you’re sure to find once you’ve got to grips with all the industry jargon and have established a trading routine for yourself is just how much of a journey of self-discovery trading actually is.

 

This is often something that surprises people when they first venture into the forex fray, but without introspection, without self-reflection and without developing your self-awareness, you’ll never reach the dizzying heights of success. If you’ve found yourself starting to plateau of late, this could certainly be one of the reasons why.

 

One of the biggest areas to focus if you want to become a better trader is your emotional management and regulation. Emotions need to be kept in check and trading needs to be approached at all times from a place of rationale and reasoning… but, of course, we’re people first and traders second, so this can be very hard to achieve.

 

It’s an area that the majority of traders struggle with when they first start out – and even seasoned pros need a reminder from time to time, so don’t feel disheartened if you do think your emotions are leading the charge right now. It all comes down to practice and arming yourself with the knowledge and skills you need to keep the end goal in sight at all times.

 

Part of the issue is that a lot of our behaviour is so ingrained that we often react to stimuli on impulse, without really thinking about it until it’s too late. Our innate natural responses kick in and we make decisions and take action based on an emotional process that’s largely out of our control.

This can be very difficult indeed to get a handle on but it’s a must if you want to drive success your way… and this is where deepening your knowledge of your lizard brain might well come in particularly handy.

 

So, now’s the perfect time to ask:

Just what is our lizard brain anyway?

 

The human brain is divided up into three major parts: The forebrain, the midbrain and the hindbrain. The forebrain is the biggest of these, making up the majority of the cerebrum, which is split into two hemispheres that are linked by the corpus callosum.

The structures found within the forebrain include the hypothalamus, the cerebrum, the pituitary gland and the limbic system… or the lizard brain, if you will.

 

The limbic system can be found deep in the middle of the brain and it’s often referred to as the emotional brain, because it’s so heavily involved in driving our behaviour and emotional responses to stimuli, particularly when it comes to survival behaviours such as fight or flight, feeding, reproduction and caring for our young.

 

When the lizard brain is triggered, it can assume control and bypass your neocortex (or thinking brain), which in turn leads to impulsive and irrational behaviour. 

 

Triggers like perceived threats to safety (financial, emotional, social or otherwise), stress, hunger and addiction can all activate your lizard brain, robbing you of logical thought and making you act and react in a more primal way.

 

Of course, it’s entirely natural to lose your cool and react without thinking from time to time. We’ve all been there once or twice and, no doubt, we’ll all find ourselves there again in the future… but what’s important is to learn to identify situations that could cause potential issues, allowing you to keep your reactions in check and prevent you from self-sabotaging as far as is practicably possible.

That’s often easier said than done, however, because unfortunately our lizard brain reactions are evolutionarily ingrained and you’re fighting against centuries of natural selection. 

 

Our limbic system is all about quick, protective reactions, which were incredibly important for our earlier ancestors, who were constantly facing all sorts of dangerous threats. Back then, ignoring the lizard brain’s warning system inevitably meant a somewhat sticky end. 

When faced with a threat, the lizard brain would look to past experiences and apply these to the current situation, cutting off your prefrontal cortex and forcing you into action without thought to keep you out of harm’s way and ensure your survival no matter what.

 

That was all very well and good for our ancestors, but it does pose something of a problem for us in the 21st century. Our lizard brains are unable to discern between physical threats and psychological ones, so it often fires up when there’s really no need, overestimating the danger and underestimating your ability to handle it.

 

The good news, however, is that it’s entirely possible to keep your lizard brain under control and you are still in the driving seat, able to make a choice between action and reaction… with a bit of practice, of course!

 

Beating your lizard brain for trading success

Keeping your cool is what trading is all about, staying calm and collected in the face of adversity but also in the face of success. 

Reacting impulsively to both positive and negative scenarios won’t see you reach the pinnacles of trading success, so it’s important that you’re able to develop your sense of self-awareness to such an extent that you’re able to stay in the driving seat no matter what, keeping your lizard brain on a very tight leash.

 

Devising long-term trading strategies based on in-depth analysis is the bedrock of any successful trading career, but when the lizard brain is in charge, our decisions are largely driven by fear and all our hard work goes out of the window. We act rashly, we take chances we wouldn’t otherwise take and our mistakes can cost us dearly.

 

Stress is likely to be the biggest factor for traders trying to keep their limbic system in check, so finding stress-busting measures that you can fall back on will certainly stand you in excellent stead.

 

First of all, don’t be afraid to take a step back if you need to. Stress affects how clearly you’re able to think and keeping yourself in a stressful situation means you can quickly find yourself in a downward spiral. 

 

Get up, move around, take a break, get outside, hit the gym, do some mindfulness breathing exercises… all of this can help you recentre, revitalise yourself and allow you to return to your desk with a fresh outlook and a calmer mind.

 

Secondly, start to tune into how your body feels. When your lizard brain is kicking in as an innate response, you’ll find that your body starts to give you physical cues, whether that’s an increase in heart rate, a sudden sweat break out or a tightening feeling in your stomach. 

These are all signs and symptoms to be on high alert for, so you can stop what you’re doing, take a few deep breaths, calm down and restore balance to both body and mind.

 

Intentional breathing is one of the very best ways to activate your parasympathetic nervous system in times of strife, stimulating the vagus nerve and sending signals to your brain to slow your heart rate down and lower your blood pressure. You’ll be feeling ready to attack the trading floor with a fresh perspective in no time.

 

When you’re not trading, there are also countless opportunities to strengthen and activate your prefrontal cortex (your thinking brain) so that when you do return to your laptop, you can do so with even greater confidence that your lizard brain won’t trip you up.

Creativing thinking, problem-solving and reasoning exercises can help you practise self-control, giving you the tools you need to remain calm while trading, regardless of what the day throws at you. 

 

Also known as grounding exercises, these techniques work to engage all five of your senses, focusing the mind on the present moment and activating the thinking brain as a result.

 

To get you started, try the 5-4-3-2-1 technique, where you name five things you can see, four you can touch and name, three sounds you can identify, two scents you can smell and one thing you can taste.

 

You might be sceptical at first but through regular practice you’re sure to find that you’re better able to respond in a more rational and calm manner to all sorts of challenging circumstances that may have flummoxed you in the past.

 

Good luck! Let us know how the lizard brain training goes!