The biggest block to our trading success is what I call our ‘default future'.  In our childhood we encounter events to which we develop strategies to enable us to be safe, secure and survive. In time, these strategies become automatic, unconscious responses. To the extent we come from a functional environment, is the extent to which we achieve success - the responses become our strong suits; to the extent we develop dysfunctional responses, is the extent to which we will ‘fail'. By functional, I mean ‘with the ability to deal with reality'.

But whether the responses are functional or dysfunctional, they key points is they are unconscious and automatic responses - and as such, until we become aware of them, they create a default future. In short, the responses are ‘what we don't know, we don't know' and until they become known to us, we are will continue to respond in the same way, especially during times of stress.

In addition, it appears that humans are hard-wired with two traits:

1. our decision-making process falls predominantly into the Impulsive or Risk Manager mode. It's important to understand that the terms describe a mode of behaviour we tend to fall into; we need to execute our trades in the manner best suited to one of the two modes to which we belong. For more information read: ‘Day Trade? [1]‘. And,
2. we invariable develop two unconscious strategies; the fixed mindset and the growth mindset. We have both but one tends to predominate. The fixed mindset says that our ability and intelligence is limited. Therefore our success is dependent on the talents we have. Since that too is limited to what we were born with, there is no point in seeking to improve and enhance it. This mindset is seen most clearly with talented individuals who do little to enhance their abilities e.g John McEnroe.  I would venture that this mindset predominates with those that enrol for the 'sure win, no effort' school of trading.

• The other mindset is the growth mindset that believes in constant and never ending improvement. It is the basis of the recommendations in the Cambridge Handbook of Expertise and Expert Performance [2] and in the book, "Talent is Overrated [3]". With this mindset, the we believe that success lies in our actions and it is up to us to achieve what we can with the talent we were given.

 Like our ‘default future', these traits are unconscious responses and not something that ‘we know, we know' or that ‘we know, we don't know'. Rather like our unconscious strategies they fall into the category of something ‘we don't know, we don't know'.

On Friday, I'll conclude the series by drawing the various strands together.