Thursday, August 6, 2015

Mindfulness in trading

We’ve all experienced that response - the sinking sensation as we enter the trade on cue; watch it move into the money then do a quick reversal to juuust stop us out….before moving back into the money and hitting our target level. Why is it that the majority of the pain in that response comes from what happens after we get stopped out – when we are no longer in the trade? I put it down to an action-reaction instinct which is hard-wired into our make-up from a very early age. If we did well at school we got rewarded as a child. If we live good lives, we are told that we will be rewarded in the after-life. We work hard at our jobs and (sometimes) we get the bonus. Action and reaction. The pain we feel in the scenario sketched above comes from a breakdown of that axiom. Doing the correct thing and NOT getting what we regard as the just reward. So how do we bypass this hard-wired response? I think the answer lies less in the attempt to suppress the response but more in the mindfulness associated with appreciating that the response will take place, observing that it is taking place and simply understanding why it is occurring. Once we are able to naturally go through this process time after time, the energy behind the response tends to dissipate and we can safely take the next step in our trading career.

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