One of the most common--and useful--tools in the cognitive-behavioral repertoire is guided imagery. Used properly as a component of a change approach, imagery can help to speed the change process. (See this valuable review article for background on the history, philosophy, psychology, and cognitive neuroscience of imagery).
Mental imagery is typically employed by the psychologist as a "stand-in" for real-world experience. Of particular importance to the psychologist, therefore, is the vividness of imagery. Imagery is useful for efforts at personal change to the extent that it can evoke the cognitive and physiological responses that would be present in the real-life equivalent experience. Imagery is thus far more than thinking about a situation; it involves attempts to recreate those situations in sensory detail. Consider, for example, the difference between thinking about a sexual situation and generating a detailed sexual fantasy.
Imagery is valuable because it multiplies experience. That is, a person can face a situation many times in imagery (and practice efforts at mastery) when it would be impossible or impractical to do the same in real-world experience. For instance, it would take me days of actual experience to comprehensively rehearse responses to various opening range situations in the market. In imagery, however, I can generate a panoply of scenarios and rehearse my desired responses to each. If, for example, my research suggests high odds of breaking a two-day range to the downside, I can vividly imagine this situation (repeatedly, with variations) and walk myself through how I would enter, scale into, and exit positions; where I would place my stops; how I would honor those stops; etc.
I refer to this application of imagery as mental preparation. We use the imagery as a stand-in for anticipated situations and then rehearse desired responses. Many times, this preparation is accompanied by efforts at relaxation (muscle relaxation, deep breathing) and concentration (staying focused on the imagery). This evocation of the calm, focused state is an important component of most biofeedback exercises and is associated with the activation of the brain's executive center: the frontal cortex. In a sense, when we engage in mental preparation, we are training the brain.
A second, related application of imagery is the reprogramming of emotional experience. This is relevant in situations in which we've developed negative habits or response patterns. Getting scared out of trades that start to (normally) retrace gains or failing to honor stop levels would be common examples among traders. For reprogramming, we purposely engage in vivid imagery to recreate (with many variations) the problematic situations. While we keep the stress-producing situation vividly in mind, evoking the associated cognitive and physiological responses, we make intentional efforts at coping. Such efforts could include the relaxation methods mentioned above, but can also include cognitive restructuring (exercises to reframe situations by thinking differently about them) and rehearsal of specific coping behaviors (practicing a trading rule during the challenging situation).
As you can see, imagery can be employed to either rehearse and cement desired responses or to undermine negative ones. A comprehensive approach to change will frequently use the two in tandem.
I encourage readers to return to my recent post on hot and cold cognition and re-read that article in the light of the above discussion of imagery. A nice way to think of imagery is as a bridge between "cold" and "hot" modes, helping us develop new ways of responding when we're in the heat of battle. The keys to success in using these methods are vividness, duration, variation, and repetition. Change is facilitated by new experience; the greater the experience you generate for yourself, the quicker and more profound the change. Readers interested in applying these methods to their own trading can check out the free articles on my personal site and the self-help guides on cognitive and behavioral techniques from my book on trading performance.
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