Improve this skill and you will improve your trading outcome

I rarely say that one skill can change an entire outcome. Usually, I opt for a balanced mixture of different skills. But with mindfulness, it’s different. If I need to choose one skill to train every day, it would be mindfulness.

Mindfulness changes the way you cope with stress, and can improve not only your mental health and overall well-being but also your physical health.[1] That’s because mindfulness helps you to distance yourself from your emotions, thoughts, and sensations. With mindfulness you are able to see what is going on, reflect on what is important and find suitable ways to achieve that. Mindfulness helps you to get in control of a situation. Oftentimes we want to create a space between a stimulus and our response. We want to be rational about what we do. And mindfulness creates exactly this short space to take deliberate action.

How does this work?

Mindfulness means you are aware of your thoughts, emotions, and sensations without judging them. It means you can recognize how you behave or feel. I don’t say you should be mindful all the time. But I say that mindfulness helps you to improve your trading big time. Mindfulness is a form of attention and every form of attention has it’s time. While trading, you should definitely switch between mindfulness and absorbing / acting. You should switch and include mindful reflection instead of only being absorbed by the market and acting based on your gut feeling. Because mindfulness helps you to overcome typical tendencies that many traders have: Cutting winners short, letting losers run, not getting in a good trade after a series of stops, or ignoring your trading plan due to overconfidence.

The good news: You can train this skill. You can learn to realize that you sense some anger, anxiety, or frustration – but you don’t act on it. You just recognize, what is going on in your body and in your mind. You can learn to reflect on what is going on - without judging yourself for feeling or thinking that way.

This kind of awareness can be a game changer. Because you will act on your thoughts and emotions – sometimes without realizing it (see this previous Post: “Listening to your own cast on the stage”). And if you are not aware of it, you may feel that you have lost control, that you don't know yourself or why you acted the way you did. You become angry with yourself or frustrated. You lose confidence in yourself. If you have ever experienced that – try mindfulness.

Find an app or some videos to work with. Write a daily journal where you reflect on your thoughts and emotions. Or just sit, close your eyes for some minutes and focus on your breath. Do it now. See what happens.

Dr. Hanna Hofmann

[1] Bühlmayer, L., Birrer, D., Röthlin, P., Faude, O., & Donath, L. (2017). Effects of Mindfulness Practice on Performance-Relevant Parameters and Performance Outcomes in Sports: A Meta-Analytical Review. Sports Medicine (Auckland, N.Z.), 47(11), 2309–2321.
Gardner, F. L., & Moore, Z. E. (2017). Mindfulness-based and acceptance-based interventions in sport and performance contexts. Current Opinion in Psychology, 16, 180–184.
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