An effective technique (recent advances in psychological science) can help traders to change significantly the manner of behavior. Many aspects of the new psychological techniques were taken from the Eastern spiritual tradition, where the human mind and its work have been studied for millenniums. Now the idea of mindfulness has changed the “landscape” of Western psychological science. Researchers suggest that mindfulness is a very useful skill. In particular, it can help to focus, minimize stress, overcome serious psychological problems and increase productivity in various activities, such as sports or trade.
It is extremely important for traders to reduce stress and increase productivity, because every day they have to confront emotions. Mindfulness skills will benefit about three things.
Mindfulness is the most effective way to increase focus. Like professional athletes who know that their concentration gets better when they are in a state of awareness, traders who foster the awareness skill begin to “see the market better”. Mindfulness increase focus and the ability to get into the market.
The Importance of the Present Moment
It is difficult for many traders to focus on the present moment instead they regret the past or dream about future successes. For example, a trader may miss the opportunity to enter a trade with high potential, because at the moment when the position should be opened, he thinks about some past losses. Or the trader does not risk and remains out of the market, even when there is every chance to make a good deal. A trader focused on the past or the future instead of the present cannot see important clues indicating a change in price movement. Another mistake is when a trader holds a losing trade opened. Mindfulness helps trader to be “here and now” and develop the ability to identify distractions.
Stress reduction and emotion management
Perhaps the main value of mindfulness is that it allows you not to trade on the basis of emotions.
Trade is an extremely stressful occupation. And when the trader is stressed, his desire to avoid even more stress is so strong that he starts losing the ability to focus on the trade. The attention of the trader is focused on his emotional state, not on the market. As a result, he makes one mistake after another, which inevitably leads to losses. Mindfulness helps to focus on what is necessary for the transaction. The isolation of emotion is called a split.
Mindfulness is now considered an important element of the psychology of trading, as it helps traders to perceive their internal state (including thoughts and feelings) from objective point of view. If we fight our feelings and thoughts we are only much taken with them. Instead of fighting, we must learn to focus on what we are doing. For example, athletes show better results when they are focused on the game, not on their internal state.
A person who has the skill of awareness begins to take his emotions and thoughts as passing events, instead of seeing them like something that requires immediate response. Thus, developing mindfulness is the best way to focus on trading and the market itself. There is no doubt that the development of mindfulness can greatly improve the efficiency of the trader. In addition to the above benefits, developed mindfulness reduces tension, relaxes, strengthens the immune system, relieves pain and makes mood better. This helps traders stay focused on their goals on the most important things — trading and their lives.