The Art

and Science
of Trading
Course Workbook

Adam Grimes

Hunter Hudson Press, New York, New York

MMXVIII
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Copyright ©2018 by Adam Grimes. All rights reserved.

Published by Hunter Hudson Press, New York, NY.

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10 9 8 7 6 5 4 3 2 1
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Module 9–Practical Trading Psychology

Psychology is not an afterthought. In the first version of the Course, each Module had a component focused
on psychology, so the topic was taught throughout the course. One of the most significant changes in the 2017
revision was the most of the psychology-focused units were moved into the last Module.
There are two reasons for this change: progress in the psychological tasks of trading are more individual and
each trader will progress at her own pace. One of the most consistent pieces of feedback was that students would
find themselves working many units in the past on psychology while they continued to forge ahead with the
market pattern work.
Second, the ending of this Course really is the beginning. Putting the psychology and inner work here high-
lights the importance of this material, and should help the developing trader and experienced trader alike to
better integrate this material into their continued learning.
The readings, carefully selected from my blog posts over the years, are more extensive for this Module and
should be read carefully as they include some hints and directions that are not covered elsewhere.
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Section 1: Introspection

Introspection is not easy. We spend much of our lives lying to ourselves; some of this is even constructive, but
with can easily either over or underemphasize weaknesses or strengths. Looking at other people, we easily identi-
fy people who think too much of their abilities, or can probably also think of someone who we think should have
far more confidence. Having an accurate and balanced assessment of our strengths, weaknesses, and potential is
not normal, but that is your goal in doing this work!
First, we can define the scope of the project a little more clearly. We want to understand our:
• Skills and abilities, natural, developed, and as-yet undeveloped
• Core beliefs and principles
• Motivations
• Needs
• Fears
• Strengths and weaknesses
• Directions for growth
• Anything else that catches your attention as you work through the project
There is no right or wrong way to do this, but here are some ideas that work for other people. Feel free to
adapt and expand them for your own practice and exploration.
Sit down with a blank piece of paper and write stream of consciousness lists of your strength and weaknesses.
Spend time doing this, and come back to it every day for a week. At the end of the week, edit and categorize the
list. Reflect on the list, and let it grow over another week or two. Make sure that you bring your focused attention
back to this list several times each day, even if for only a few minutes.
Alternatively, make five lists (personal attributes, values, emotional characteristics, habits, needs and desires)
and work in filling out those lists.
Though this is introspection, you may find value in talking to people who know you well and getting feed-
back from others. It can be very helpful to work with people from different settings (friends, coworkers, family
members), but use their perspectives to spark your own work and self-reflection.
This exercise is an important part of knowing yourself. Once you have a clearer picture of your motivations,
strengths, and weaknesses, you will be better equipped to figure out how to shape yourself into the person you
want to be.
Be honest—not brutal, not cruel—be fair and honest with yourself. The goal of this exercise is to see clearly
and accurately.
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Section 2: Understanding Beliefs

Do not begin this project until you have completed both the Belief Inventory in the previous module, and
the introspection in this module. Once those two projects are done (and they will take considerable time to do
well), we can turn our attention to understanding our beliefs and motivations better, and to transforming some
of the limiting beliefs into beliefs that are useful and empowering.
To do this exercise, take your work from both the introspection and belief inventory, and focus on the beliefs.
Separate them into categories based on two criteria. First, is the limiting-empowering spectrum. For instance, a
trader might hold the belief that “money is dirty”, and it’s easy to see how that belief could limit all of his opera-
tions in the market. An empowering example of the same belief might be “I live in a universe of abundance.”
The second category is “how strongly you believe this.” Rank your beliefs on a scale from “deeply held, almost
certain to be true” to “very uncertain, and essentially a guess.” You should also mark beliefs that you believe
(deliberate word choice, there) are very important and not very important to you. Come up with a system that
makes sense to you.
You will need to trust your intuition on this project, and may well need to revisit it several times. It has only
taken me a few paragraphs to explain a profoundly important exercise. If you do this well, you will have a much
better understanding of who you are, why you are, and perhaps even have some insights for how you might grow
into the person you want to be.
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Section 3: Transforming Beliefs

Now we begin the fun stuff ! Here is where you transform the beliefs that have held you back, that have sepa-
rated you from your potential. Before you start, consider that this is work that might benefit from an outside per-
spective. A coach can be particularly effective as you do this work, but so can a friend, a therapist, or a counsellor.
Sometimes it’s much easier to see someone else’s limitations and problems than it is to understand our own. The
work you have done to this point has laid a strong and solid foundation for transforming your beliefs. You can
make great progress on your own (perhaps adapting your journal or self-talk for the project), but don’t be afraid
to avail yourself of some outside help. Even a few sessions with someone who is used to doing this work can be
life-changing.
You have arrived at your beliefs as the total of all your learning, thinking, and life experiences. Many of these
beliefs have been reinforced time and time again, and these beliefs form an important part of the fabric of your
reality. However, some of these beliefs are not true. Some of them are unimportant, but some of them are harm-
ful. If you want to change yourself—if you want to change the results you get from the Universe—one of the best
ways to do so is to change your beliefs.
I should say up front that the common approaches of positive affirmations (e.g., writing down a new belief
and saying it repeatedly, perhaps with strong emotion, every day, maybe while looking in the mirror, etc.) are not
usually very effective. We hold our beliefs, for the most part, because they are anchored in our perception of real-
ity. If we simply try to change a belief by force, our minds will rebel. (Take a silly example of trying to transform
the belief “I cannot walk through walls” with positive affirmation. That belief is going to be strongly reinforced,
no matter how you frame your affirmation!)
There is no one, right way to do this work. (Indeed, for some people the positive affirmation approach may
be very effective.) A framework that I have found useful is this:
Identify where you want to be or what you want to do, and then think about why you are not there.
Identify beliefs that have gotten in your way. These are limiting beliefs.
Think about these limiting beliefs. Where do they come from? Why do you believe these things? What an-
chors, things you see or experience, reinforce this belief and lead you to think it is true? What emotions and life
experiences are associated with this belief ?
Think about what this belief is doing. Every piece of your mental framework serves some purpose. If it’s not
a useful purpose, it’s at least intended to be useful—many things that become problems could be constructive in
another context. Think about why you believe this, and what it is doing for you. What are you getting from this
belief ?
Spend a little bit of time thinking about what you might be missing? Is it possible you are missing informa-
tion or misinterpreting experiences that you have always taken to support this belief ? You know there are people
in the world who don’t believe the same things you do. Can you imagine what it would be like to see through
someone’s eyes who did not have this belief ? How would that person interpret the data you think supports the
belief ?
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Working with intention—with responsibility, care, and love for yourself—you will likely see some paths
to transform your beliefs. Simply working through this approach will cause you to see the belief from another
perspective, to be able to question its foundations. You can choose, in many cases, to replace the belief with
something that is more constructive and more empowering. Perhaps here there is a place for some positive-affir-
mation-type reminders that can help you see the world through new eyes.
This is only the very surface of this work. If it interests you, you can easily find additional sources and mate-
rials that will carry you deeper. Change your beliefs, and you change your world. Change your beliefs, and you
change yourself.
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Section 4: Readings

From The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading Strategies by
Adam Grimes, Wiley, 2012:

346-374 (trader’s mind)

You may also find the following blog posts interesting and useful:

https://adamhgrimes.com/being-fully-present-in-the-moment/
https://adamhgrimes.com/we-have-met-the-enemy/
https://adamhgrimes.com/managing-fear-loss/
https://adamhgrimes.com/wins-land-of-loss/
https://adamhgrimes.com/pattern-interrupts/
https://adamhgrimes.com/improve-your-mental-game/

https://adamhgrimes.com/five-steps-to-trading-discipline-and-why-you-should-care/
https://adamhgrimes.com/the-discipline-rule/
https://adamhgrimes.com/the-illusion-of-control/

https://adamhgrimes.com/what-do-you-believe/
https://adamhgrimes.com/keys-to-trading-psychology/
https://adamhgrimes.com/thoughts-on-trading-psychology/

https://adamhgrimes.com/getting-worse-getting-better/
https://adamhgrimes.com/power-of-vulnerability/