How trading, jazz, freestyling are neurally correlated

Ideas to unlock and control your trading potential

I recently went down a rabbit hole of freestyling and trading videos online, and came across Neurogal’s analysis of Harry Mack’s freestyling and what she thinks is involved in his freestyling performance. The links with what we do at the charts were immediately clear.

Harry Mack himself quotes jazz musician Charlie Parker:

“You’ve got to learn your instrument. Then, you practice, practice, practice. And then, when you finally get up there on the bandstand, forget all that and just wail.”

This idea of playing creatively, improvising from a known set of pre-recorded neural connections, is common across high-performance activities. The idea of getting in the zone, or flow, triggered by music or mental imagery, is well documented.

Neurogal’s thoughts on how Harry Mack can make such diverse connections across words, meaning, rhyme, metre and articulation (and likely dozens of other factors) focus on two particular areas of the brain:

  1. Medial prefrontal cortex (mPFC)
  2. Dorsolateral prefrontal cortex (dlPFC)

The first part, apparently having developed earlier in evolution than the second, gives us ideas, often acting on impulse. The second acts as a gatekeeper. She says what we find in freestylers who are studied under MRI, as well as other performers, is the second part, the dlPFC, disassociates from the first part (mPFC), presumably after 1000s of hours of practice, but perhaps also with a slight natural inclination to do so also. There are also apparently applications around pain responses and other self-control applications in this area.

This is a tricky one to relate to performance or trading directly because even the most self-controlled people, as in sports and poker, etc., can go on tilt and let their ability to boldly perform run completely uncontrolled and almost self-sabotage through complete impulse-driven activity.

But in “neurotypical” brains, the mPFC asks for permission from the dlPFC to act, and in the performers, this request is overridden. Go for it, trust yourself and your training. This reduces cognitive overload and allows a more direct and instinctive performance, albeit based on the patterns developed during the 1000s of hours of practice.

If you want to sound great you have to be 100% willing to sound bad Harry Mack

This is like the Gretzky quote: “You miss 100% of the shots you don’t take”. It’s essentially a numbers game, where each deliberate practice session (and it must be deliberate, as per the literature) levels up specific areas over time as small losses are dealt with and overcome. So an instinctive performance becomes possible only after masses of very rote and deliberate training.

How do experienced traders’ brains operate?

A study from 2017 carried out on 20 traders in an fMRI process discovered that:

Those subjects who described themselves as very self-confident, showed a lower or absent activation of both the caudate nucleus and the dlPFC, while more reflexive traders showed greater activation of areas involved in strategic decision making.

So there can be differences in how each trader approaches the market, and this is why there is never one strategy that fits all people.

The study states:

The neural correlates in DAT [Direct Access Trading] are similar to those observed in other decision making contexts. Trading is handled as a well-learned automatic behavior by expert traders; for those who mostly rely on heuristics, cognitive effort decreases, and transaction speed increases, but decision efficiency lowers following a poor involvement of the dlPFC.

By poor involvement, they seem to mean that lower involvement of the dPFC led to lower success rates:

The success of the trading activity, based on a large number of filled transactions, was related with higher activation of vlPFC and dlPFC.

Although their sample would be small, this would suggest that more systematic and less impulsive trading was preferable. So while there is no one strategy for everyone, there does seem to be only one approach that works. Self-control.

The study quotes others on testosterone and cortisol levels in the morning being predictive of performance, negative stimuli promoting risk averse decisions and vice versa, but goes on to say that they are aiming for a deeper look into neural correlates of financial decision making.

It seems from a brief look into this subject that traders need to engage their self-control gateways, but only enough to ensure they haven’t gone full tilt, with enough dissociation remaining to allow them to perform. This is a tricky balance to achieve.

Some days I’ll be like a mule who won’t be led. You can’t get me to open a trade. Others I’ll click with much too much ease. The way out of this, to more consistent performance, is perhaps if we do lots of deliberate (demo or low stakes) practice, and set up our environments to perform (music, calm, positive stimuli/inspiration) at peak, to try to overcome our complete risk and loss aversion, while still engaging our dlPFC via checklists and processes that keep us within the trained parameters.

In the end it was a great surprise to me that freestyling had anything at all to do with trading, but after a brief closer look, this is actually a well-studied link that could benefit from further, more specific exploration. Can we stimulate certain brain areas during a session? Can we tune our environments to support trading? Can we get our terminals to lock us out when we’re not performing? Does full or semi automation solve a lot of these issues?

I’ll wrap up with another quote, this time from Harry Mack himself:

The only mindset that’s going to serve you when you grab the mic to rhyme, is “I’m the greatest MC on the planet” […] Even if it’s your first rap […] Why would you be in any other mindset! […] It’s the only mindset that’s going to allow you to put your best foot forward.”


And further tips:

Break practice into isolated pieces

Practice to be ready when opportunity appears

…And much more, click the last link above for the freestyle masterclass he offers.

This concept of seeing improvisation and performance like an art form or process that you are working on perfecting, always, a craft, is what drives him to improve. He shuts off his inner critic. This comes from within, and he sets himself up for success.

I think we could learn a lot from that in our trading.

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Published by and tagged automation, education, forex, meta and risk using 1055 words.