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The psychology of trading is an integral part of every one of us. Markets are a kind of living organism the development of which we try to analyze using a rational approach, which creates a gap between the expectations and the final result.
Today we’re going to talk about the best approaches and ways to find your inner peace when trading.
Last time we discussed the strongest emotional states of traders. We learned that extreme fluctuations can mess with our trading system, which puts our capital in danger.
How do we create a rational grounds for our decision-making so that out performance is as stable as possible?
It’s important we define the so-called “discontent” (being thrown off balance). We usually shift from a stable state when we find ourselves in an unusual situation. The situation triggers evaluation followed by a physiological response, and finally a reaction.
Just imagine that you have a trade open you were sure was going to get to the desired level in a moment, but when you check the chart again after 15 minutes, you find out the market has moved the opposite direction.
First, you think of a couple of swear words that would fit the situation, in the next millisecond your heart starts beating fast, and then you freeze still.
The moment isn’t pleasurable at all, but we’ve all been through it. It happens from time to time and it’s important we accept it. It’s worse if you find yourself in similar situations a couple of times a week, or even several times a day.
Imagine the influence of the frequents moments of shock as a lizard, whose tail you’re cutting off little by little. If you encounter a stress-filled situation every now and then, the tail has time to heal. But if it happens often, the whole lizard will eventually be chopped up.
The paradox is that when we’re emotionally distracted for too long, the regeneration stops and we slip into a vicious circle of irrational trades that continue to contribute to our demise.
What are the ways to calm our mind when trading?
1) Breathing
Sounds simple, doesn’t it? Who would’ve thought something as natural and automatic as breathing could regenerate our body, soul and spirit in a matter of moment? However, simply focusing on our chest contracting and expanding won’t do the trick, we need to breathe actively and deeply.
When breathing in, make sure the inhale is deep enough for the stomach to go up. When breathing out, make sure it takes at least twice as long as breathing in. Repeat as needed, ideally for a minute approximately.
2) Sports
Our bodies like sports. Give your body some movement and it will reward you. How? Firstly, your body will release hormones that will make you feel happy and satisfied. Secondly, you’ll (symbolically) wash away all the dirt your mind has been collecting all day.
If you’ve had a stressful day, you can choose between endurance sports (jogging, swimming, cycling) or strength sports (working out, sprinting, running up the stairs) – it depends on what you feel like doing.
3) Inducing Trance
This point sounds a bit dangerous, but it can be a very beneficial activity thanks to which you’ll be able to think about something else and enjoy the present moment. Trance can most often be seen in children who are playing. Their mind is focused on what they’re doing a hundred percent, and they’re enjoying it to the fullest.
You can do it too. Each of us has different hobbies and interests, so when trading emotionally distracts us, we should take a short break and do other things we enjoy. Taking into consideration of course whether you have some open trades that would need to be monitored or secured by Stop-Losses and Take-Profits.
For some people the “other things” they enjoy can be sports (as mentioned above), for some it can be manual activities (molding, making simple objects, woodwork), and for some it can be mental activities (reading, watching your favorite TV show / movie, playing a computer game).
There are countless things to do. Just choose or discover which activity you’ll enjoy the most and be in the moment.
4) Active Meditation or a Nap
If the stress is too bad to handle, you should take a 30-minute break and spend it in an environment where nothing will disturb you, so that you can regenerate quickly and freshen up the organism.
If the idea of meditation sounds good to you, you can sit comfortably in a room with dim light, control your breathing, and focus on images your brain starts to produce.
If you don’t feel like experimenting, you can have a nap. It’s not important if you fall asleep for at all. What’s essential is that your mind will get to a different place, where you’ll start regenerating. I recommend not napping for longer than 20 minutes, because if you fall asleep for longer, it could throw off your daily routine and you might have a hard time concentrating the rest of the day.
You can apply these four methods at any time of the day. If you’re suffering from long-term frustration, you should put trading on hold for a week or two and give yourself a strategic break. This break should give you enough time to calm your mind and return to trading in full strength.
Happy trading!
About the Author
Team Purple Trading
Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .
For more information on the risks of trading, click here .
P.M. Purple Trading is a trade name owned and operated by L.F. Investment Limited., 11, Louki Akrita, CY-4044 Limassol, Cyprus, a licensed Cyprus Investment Firm regulated by the CySEC lic. no. 271/15.
