I think understanding beliefs and how they impact our lives is the most powerful thing anyone can learn. I am going to tell you what I have learned and how it has changed my life.
When I was studying at university I made the decision I was going to become a share trader. The degree would be my backup but I wouldn’t need it because I was going to be a super-successful day trader.
The plan didn’t quite pan out in full but I did spend 2 years learning and experimenting with trading. It was exciting and I was pretty good – at one point I was making $2,500 in a week.
The thing which most people overlook is the extreme mental and psychological learning curve when it comes to trading. It is a complete re-wire. The experience completely changed my understanding of beliefs and how they could be used to design your life.
Beliefs are like a filter, they change the way we experience our lives. We are not born with any of our beliefs. The are acquired and they accumulate over time. We live our lives in a way that reflects what we have learned to believe.
Imagine for a minute you were born into a different culture or religion which had very little in common with your current one. Consider how different your life would be. It is probably not easy to imagine, but what you would have learned about life, nature and how the world works would be completely different to your current beliefs. Yet you would still hold these views with the same certainty as your current beliefs.
If you are someone who wants to choose where you want to be in life and what you want to be doing, I believe the fundamental building block is understanding how beliefs shape your life.
How your beliefs shape your experience of life
- They manage the way we perceive and interpret the information in our environment in a way which is consistent with what we currently believe.
- Beliefs create our expectations. (It helps to think of a expectation as being an belief projected forward into a future point in time.)
- Anything we choose to do is a result of what we believe.
- Our beliefs determine how we feel about the results of our actions.
Beliefs act as a filter
Pretend for a second a stranger comes to you with the following proposal:
“You can have free money! I have been given a bucket load of cash with the strict instruction to give it all away to anyone who clicks on this link.
Please take this money! I am begging you! I cannot possibly get rid of this quick enough. Again, all you have to do in order claim free money is click here.”
Firstly, for the purposes of this example lets pretend the link actually took you to a page where you would receive risk-free money straight to your account. The only effort you had to make was entering your personal details. Let’s also pretend the stranger actually had the money and was 100% genuine about their instruction to give it away.
Did you honestly believe that you were going to receive free money before you clicked on the link? If you had landed on a page, would you have entered your personal details in order to receive the money?
What is going on here…
But, wait a minute… why wouldn’t anybody want to click on the link, enter their details and receive free money?
It is safe to assume we could all read the request, but we still wouldn’t enter our details. One potential explanation is that most people don’t care about money. Although this is highly unlikely considering how much time is spent earning money.
So if we can agree, most people could both read the request and think money is important, then why would most people not go to the effort of entering their details in order to receive risk-free money for nothing? The environment was making available an experience that most people would love to have: someone giving them money with no strings attached. Yet everyone ignored the request. They must not have been able to perceive what was available. Hmmm… that’s hard to imagine, because the text clearly said “you can have free money”.
However, it’s not hard so hard to imagine if you consider that most people have a belief that “Free money doesn’t exist”. (It helps to think of a belief as being an energised idea about how the world works)
In order to reconcile the contradiction between what we have read “you can have free money”, to our belief that “free money doesn’t exist” we are forced to come up with reasoning. Our reasoning in this case might be that the stranger is crazy, his behaviour is too bizarre to possibly be true. Infact, we should probably be cautious and avoid interacting with this person in the future.
If you notice, the thought process described is consistent with the belief that free money doesn’t exist.
- When the environment originally said “you can have free money”, the words were not interpreted as they were intended.
- Making the decision that the person was probably crazy created an expectation of caution.
- How did each person feel about the situation? We can make a generalisation we each felt relieved that we had avoided a encounter with a scammer or crazy person.
State of mind = the truth
The feeling of relief that we felt is a state of mind. How we feel (in this case the relief) is always the truth. (Note: how we feel is the amount of positive or negatively charged energy flowing through our bodies and minds).
But the beliefs that cause a state of mind may not always be the truth, with respect to the possibilities our environment presents us with.
The relief we felt from avoiding the crazy person was not the only possible outcome. Imagine if we believed “free money does exists”. It would make it self-evident based on what we had read that we could and would receive free money.
There is another outcome for our hypothetical situation which could occur. Someone could take a “what if” approach. What if I temporarily suspend my belief that “free money doesn’t exist”. This what if approach allows someone to operate outside the confines created by their belief.
If I took the what if approach i.e. instead of ignoring the request to click on the link and enter my personal details, I decide to do it. As a result I promptly receive $1000.
Cha-ching! I am over the moon.
I get home and tell the first person I see “You are not going to believe what happened to me today….”. However, their negatively charged belief that “free money doesn’t exist” will cause them to filter the story in a way which is consistent with their own beliefs.
So how do we know what the truth is?
If beliefs filter our awareness of the information being generated by the physical environment, how do we know what the truth is? As opposed to our impression of what we see and understand.
First, we need to consider four things:
- The environment can express itself in an infinite combination of possible ways. For example you cannot possibly perceive all of the different ways every different situation could be interpreted by people.
- Our beliefs are a statement about reality not a statement of reality. (Unless we can find a way to perceive every possibility)
- Do you disagree with point 2? Think about it: If our beliefs were a 100% accurate representation of reality we would be in a constant state of satisfaction. As what occurred in physical reality would be exactly what we expected.
- The opposite of 3 is also true. When we are dissatisfied it is because we are operating with beliefs which are not working well in relation to the environment.
What is the truth?
It follows from the four points above that the answer is:
“The truth is whatever works.”
If beliefs put filters on what perceive as possible, and the environment can express itself in an infinite number of ways, then beliefs can only be true relative to what we are attempting to accomplish at any given moment.
Taking this a step further, we should aim to to hold beliefs so long as they are useful for what we are trying to accomplish. If a belief is not useful we should change it for a belief which is useful.
Or looking at it another way, if we are not getting the outcomes we want we should look to our beliefs to see which ones are limiting us. And take the necessary action to change the belief for one which is more useful. The same goes for our feelings: if we are not feeling the way we would like to feel we should look to our beliefs to our understand why that is the case.
A story from my life
The first year I started share trading I lost everything I had worked hard to save for the previous 3 years. It was shocking to say the least! The part which made it feel worse, it happened in a 72 hour time period. And I watched it from my phone. This was a few years ago, so I was being notified by SMS from my share broker. Every second hour I was receiving a message telling me the price of the security I owned.
I would do a quick sum on the fly….. $1k lost, ouch!….(that can’t get worse)….(biting my nails for the next 2 hours)….. Another $1.5k lost….this process repeated itself a few more times.
After I was over the feeling of defeat, I reflected on what went wrong. What did I do wrong?
I reflected by talking to a few people who I trusted and reading thoughts and stories from others I respected. I realised one of my core beliefs about the concept of trading was completely wrong and causing me harm: “With a reasonable degree of certainty, I can predict where the future price of a security is heading, namely whether it is going up or down”.
The reality (feedback from my results) was that I had no idea. I decided to adjust my belief accordingly “I have no idea where the price of a security is going, it is random”. This belief change was obviously significant as now I needed to have a different edge in the markets. No longer could I have a strategy which relied on me picking the direction of a price.
It took close to 18 months from the time I blew it all till when I jumped back in with a new belief and a new strategy. It proved successful. And I credit this success to my new found understanding of how beliefs impact my life.
Every problem, every dilemma, every dead end we find ourselves facing in life, only appears unsolvable because of our state of mind. If we want to change our state of mind we need to change the beliefs which are causing it.
- The beliefs we hold are a filter which change the way we experience our lives.
- Feelings are our state of mind and are always the absolute truth. But the beliefs that cause a state of mind may not always be the truth.
- The beliefs we should hold are whatever works.
- Beliefs should be measured by how useful they are in creating a desired outcome or emotion.
- Being aware about how beliefs affect you is the first step. Second is reflecting on the usefulness of each one. Third is changing existing beliefs for ones which are more useful.
If you are interested in learning more about beliefs, the truth and how you can use them, I can recommend a couple of resources: (Note: These are just starting points)
- The Art of Possibility by Rosamund and Benjamin Zander. This couple put forward a credo for understanding the world through a lens of possibility as opposed to scarcity and limits.
- Trading In The Zone by Mark Douglas. If you have even a slight interest in trading I would recommend this book. The biggest bonus is how you can apply what you learn to any area of your life.