Today we explore the importance of mindfulness to a trader.
Another road trip to the mind.
Do you sometimes enter trades, and you have no idea why you did that? I do.
In the heat of live trading, sound judgment and trading rules often dissipate with the speed of candlestick movements.
You enter a trade before you are supposed to.
You close a trade because you fear the market is coming for your profit.
You move a stop loss because you think price will go back.
You add to a losing trade, hoping to recover from the loss faster when price retraces.
You make all these trading decisions thoughtless at times – you know you are not supposed to do them, but you do them anyway.
Later you beat yourself up for doing the exact things you promised you wouldn’t do at the beginning of the trading session.
Now, you can’t shake off the feeling of being under a spell.
You give back your profits and more of your capital to trading decisions you know you should not be taking with every trade.
It sucks, I know.
But, that is what happens when you are not in control of yourself, as reflected in the random trading decisions you make.
It’s time to bring order to how you approach trading. It’s time to master yourself.
In this article, we shall explore how mindfulness can help you with impulse control, which will improve your trading results.
Exploring the importance of mindfulness to a trader.
What is Mindfulness?
Mindfulness is the psychological process of purposely bringing one’s attention to experiences occurring in the present moment without judgment.
Most trading mistakes happen because traders fail to reconcile the realities and truths happening right now from prejudices baking in the oven of the mind.
- The reality of what the markets are saying now.
- The reality of how big a trading account is.
Instead, they base trade decisions on those things you can’t put the finger on, lurking in your head as emotions and wishful thinking.
In so doing;
- They miss trade opportunities
- Over trade
- Overleverage accounts
- And, break all their trading rules
All the variables you need to make trading decisions are happening now.
You have to be present at the moment to make them.
Why Is mindfulness important to a Trader?
The mind is so powerful; if you can’t get it to work for you, it will work against you.
Trading is one of the most mentally taxing occupations. I hope you know that. If you don’t soon, you will.
To succeed at trading, you need every bit of your mind to make the right trade decisions.
Yvan Byeajee of Trading Composure hits the right note when he says, “…trading forces you to get to know yourself and to ‘get your shit together’” in the lessons he’s learned from practicing mindfulness.
If you are not present at the moment, reading charts or your account balance for what they are saying, you will never make a sound trading decision.
You will instead be asking a lot from luck with every order you place in the markets.
That is not trading.
- Helps you to be there, conscious, and aware of what is happening now.
- It helps you see the charts for what they are saying.
- It trains you to be patient to enter or exit trades based on your plan.
- When things go according to or against the plan, mindfulness is an anchor; you are saved the rush and sinking feeling of an emotional rollercoaster.
- Emotionless trading = no more blowing accounts, no stress, no anxiety, better sleep, better trader => 💰💵💴💶💷🏦🤑.
Mindfulness will teach you how to control the mind during trading.
Mindfulness helps you master the trader in you. It enables you to become a disciplined and consistently profitable trader.
How to Become a Mindful Trader?
Being a mindful trader is simple. Be present—view charts without any bias, judgments, or expectations.
But, it is easier said than done.
The easiest way to get to this physiological state is by practicing mindfulness meditation.
There are tons of mindfulness methods out there, but Phil Boissiere has a ridiculously simple process.
He calls it the 3 x 3 method – 30 seconds to mindfulness.
If you start practicing today will change your trading results forever.
Watch his Ted talk of the method here.
The method is ridiculously simple; even a third-grader can do it, yet it helps ground CEOs and athletes.
First, name a physical Object.
Candlesticks, charts, whatever
Second, Take a deep breath
Inhale slowly, exhale slowly
Name an object and take a slow breath three times in a row.
Before you enter your next trade, stop for a moment, do the 3×3, and then enter a trade.
If you are a skeptic or before you scorn at mindfulness as just another middle-eastern fad, consider this.
A study on the Role of Mindfulness Meditation on Stock Trading Performance found that respondents who practiced mindfulness meditation more intensively reported better trading performance than individuals who did not and those who meditated less intensively.
The study reveals that meditation helps achieve higher trading discipline, which we all know helps stymie the lousy trading habits like over trading, panic or revenge trading, misuse of leverage, among others, that plague the amateur trader.
It works, I’ve seen it transform me as a trader. It will change you too.
Now, let’s get practical.
It’s one thing to close your eyes, take a deep breath, and another to see the results of these actions have the results you want to see in your trading.
To quickly see the results of mindfulness in your trading, you need to couple it with trading tools you already know.
Trading tools that will help you become a mindful trader fast.
Trade with a Trading plan and a strategy
By now, you should know you can never beat the market.
You can only learn to hop in and out when it does certain things – call them trade setups.
A trading strategy and a plan help you know when these opportunities present themselves for you to profit from market movement.
Use a checklist
A checklist is one of the best tools that will help you become a mindful trader.
It will give you a moment of pause to make sure that the trade has all the characteristics in your trading system.
Keep a trading journal
I’ve said it countless times. Keeping a trading journal is therapeutic.
You can only succeed as a trader when you are mindful enough to:
Know what makes you take or exit trades.
When you know what drives you decision making process.
Or when you understand how trading variables like strategy, timeframes, money, personal environment, affect your trading.
A trading journal will help you know because it keeps tabs on your trading process.
Last insights on mindfulness
Approach your trading decisions with a fresh mind devoid of expectations or fear if you get into the habit of practicing mindfulness.
The 3×3 method is an excellent place to start
This millennia-old practice keeps you present, focused, and objective.
Practicing mindfulness is a sure answer to how to stop the mind from trying to predict trading and focus you on the process that yields predictable results.
So, why not try it today? What do you have to lose?