By Rob Colville on May 13, 2016 in
By now, whenever most traders hear about any trading method, tip, or strategy that promises things like “Better results, less stress and anxiety, and more enjoyment,” they tend to think it’s too good to be true…and typically, it is! That’s why the mindful trading approach I want to share with you today isn’t a trade-specific strategy at all, but instead, a way of thinking that impacts all facets of our lives. And if you’re still unconvinced, well, let me tell you this: I’ve long been practicing mindfulness myself, and I wouldn’t be sharing this with you if it weren’t working for me.
So today, starting with a brief definition and discussion of what mindfulness really is, we’ll then move on to common yet concrete examples of how mindful trading can pay off for you, too. Your job is just to be open and unbiased, because even if you aren’t a big proponent of psychology, I’m certain that mindful principles can produce positive changes in not just your trading, but perhaps your life as well.
“Mindfulness is a state of active, open attention on the present. When you’re mindful, you observe your thoughts and feelings from a distance, without judging them good or bad. Instead of letting your life pass you by, mindfulness means living in the moment and awakening to experience.” (Source: Psychology Today)
More than some “Zen thing” or out-of-body experience, mindfulness is a state of awareness about your present thoughts, and an ability to intervene to block out judgmental or unproductive ones…you know, the same ones that routinely creep in and interfere with trading! Whether it’s fear of loss, or counting your profits before they are made, or allowing the results of your last trade to impact the next one, misplaced thoughts are highly problematic for traders, and mindful trading can be a wondrous solution.
So if you were once doubting how mindfulness and mindful trading could possibly apply to you, hopefully it’s crystal clear now. Here are some highly common trading scenarios and distinct ways to apply mindful principles in pursuit of more positive outcomes.
What follows are thought patterns that we face with each and every trading day, and not just in our market endeavours, mind you. Doubts, fears, and emotional reactions produce negative results in our lives, too, so even as you study mindful trading ideas, you might also look for ways to apply these same principles to your work, relationships, and more:
“What’s really causing this emotion, be it anger/fear/hesitation, etc.?”
While many traders aspire to trade “mechanically” and free from emotions, human nature often stands in the way. Thus, whenever you sense yourself hesitating on a trade, or spontaneously venturing out in search of more confirmation, or worrying about the impact of news and data, identify those thought patterns and accept that you’re having them, because it’s OK.
From there, though, mindful trading will help you come to proper terms with those thoughts. So, if you find that your emotions stem from that set-up not fitting your trade parameters, or because you’re coming off a losing trade and don’t want to sustain two in a row, then you can take appropriate actions in light of the truths that your mindfulness has helped you uncover.
“Is what ultimately concerns me something that’s within my control?”
Outside factors like economic news and data, the actions of big banks and institutional traders, and essentially anything related to the eventual outcome of your trades are among the many factors that traders can’t control. However, they also tend to create bother for traders, who will fixate on items they don’t have the power to change.
Mindful trading, in turn, will help isolate those misplaced thoughts, empowering the individual to clear their mental queue, leaving only thoughts about the present and ensuring plan compliance, which makes the most of the trade at hand without bringing outside factors into play.
“I will not let outcomes—positive or negative—determine my sense of self-worth.“
A big reason why trading, and too often, life, send us all on the proverbial “emotional roller coaster” is because we tend to live and die by our most recent results. For traders, we only feel as good or as capable as the outcome of our last trade. And, in life, a bad day at work or school, or having a fight with a friend, spouse, or loved one can quickly make us feel a diminished sense of self-worth.
Mindful trading in situations like these is especially valuable, as it can prevent overconfidence (in good times) or self-sabotage (in bad) before either starts. When you work to ensure that mindfulness prevails, you trade—and live life—on a more even keel, grounded firmly in the present, and feeling more control and less stress while you do it.
These are just a few initial examples of how mindful trading can help you achieve a range of objectives, from cleaner and more decisive execution, to reduced stress, more patient trading, and more! And, you can study mindfulness and other trade psychology skills in detail when you receive our newest trader psychology course, which is yours as a special bonus when you join the Lazy Trader member community. Click below to get started!