Trading Psychology – Use Mindfulness to Elevate Your Trading
Mindfulness can benefit the active trader in many ways helping to improve their trading and their trading psychology. Mindfulness can help reduce stress, increase a trader’s emotional intelligence, boost the trader’s ability to maintain concentration and attention, and even help the trader develop a greater awareness of the market environment.
Mindfulness is not well understood by the typical trader. Although it comes from Eastern traditions of Yoga, Buddhism, and Taoism and is often associated with spiritual development, mindfulness has many practical virtues not linked to any particular philosophy or spiritual practice. In its essential form, mindfulness can be described as simply “paying attention in a particular way: on purpose, in the present moment, and non-judgmentally.”
Mindfulness Skill: Concentration
Developing the skill of mindfulness can help the trader achieve their trading goals. “Paying attention in a particular way: on purpose” means that one’s ability to focus and concentrate is enhanced. When mindful, the trader concentrates at a high level. Distractions are ignored. The trader is purposefully focused on the market and nothing else. Like “being in the zone” for athletes who often report the experience of seeing the ball clearly and having ample time to react, the mindful trader is able to view the market more clearly and objectively. Mindfulness can help the trader integrate market tells from the chart background like evidence of supply and demand with the current bars on the right edge of the chart.
Mindfulness Skill: Mind in the Moment
Being “in the present moment” is a key aspect of mindfulness and of notable value to the trader. A trader gets in trouble when a sound trade setup is not taken because the last three trades were losers. Here, the trader is reliving the past and allowing it to influence action on a current trade. Often, a trader will worry that a trade will turn into a loser (living in the future) and cut a trade short. Mindfulness helps ground the trader in the present. When the trader’s mind is in the moment, better decisions are made without the influence of past trades or projections of the future.
Mindfulness Skill: Openness
Being “non-judgmental” simply means that we take what is presented to us without having a particular opinion about it. When mindful, we are better equipped to see things as they are – neither good nor bad; neither positive nor negative. For traders, being open to what the market is saying allows the trader to be in sync with the market. When mindful, the trader is much less likely to have a market bias or to take unproductive and risky actions such as countertrading a trending market.
How to Get Started
Mindfulness is a simple skill. Though simple, it does take practice. You can start with a simple exercise of mindfully watching your breath. You will soon notice your mind constantly wandering. You will train your mind to return to your breath. With practice, you will be able to catch your mind wandering into the past or the future while trading and then bring it back to the focal point of the market as it unfolds. Here are six steps to get you started:
1. Practice when you won’t be interrupted and make it a daily habit
2. Sit comfortably, limbs uncrossed, feet on the floor.
3. Watch your breath. Simply notice your breath by focusing on your abdomen rising and falling or the air flowing across the tips of the nostrils. Sustain focus on the breath.
4. Notice the mind will wander repeatedly. Don’t become upset by this. Gently return the mind to the breath – this is the goal of mindfulness.
5. Keep it short to begin. Five minutes is sufficient. Extend the time with experience.
6. Notice how you feel afterward.
To help you quickly develop your mindfulness skills, I’d like to invite you to claim your free, instant access Mindfulness Skill Builder, which I’ve developed especially for traders at: http://www.TradingPsychologyEdge.com/MindfulSkill
You will gain access to a guided mindfulness exercise to build your mindfulness skills.
From – Dr. Gary Dayton – TradingPsychologyEdge.com