TRADING

Trade psychologist Dr. Gary Dayton discusses how mindfulness, a learned skill, can help traders to sharpen focus and facilitate better trading decisions.

My guest today is Dr. Gary Dayton. He’s here to talk to us about "mindfulness" and how that can help us as traders to make better decisions in the market. Dr. Dayton, first of all, what is mindfulness?

Well, mindfulness is a quality of attention. It’s paying attention on purpose in the present moment without judgment. 

We typically are frequent flyers into the past or off to the future, and we tend to evaluate everything that comes into our awareness as either good or bad; "Do I like this, do I not like this?" Those are conditioned ways of thinking, habitual ways of thinking, that are not necessarily helpful to the trader. 

Mindfulness does a number of things, and in fact, the recent research is showing that it is actually altering brain structure.

Just 30 minutes a day over a couple of months will affect the centers of memory and learning, the emotional regulation centers of the brain, even things like perspective taking, all of which are important to traders and are positively influenced by mindfulness.

See related: Better Trading Through Mindfulness

The practice of mindfulness can help us to increase our focus and our concentration. Athletes often refer to this as being "in the zone." It’s a quality of consciousness where time seems to slow down, the complex patterns of the market become clearer, trading cues become clearer, our entries and our exits become sharper, all by mindful practice. 

How do I actually put that into practice on a daily basis? What am I actually doing each day? Is it 30 minutes before the market opens? 

That’s a helpful thing to do formally, but you can do it informally as well. 

Just noticing when the mind wanders if you’re talking with somebody. We all have this experience where we’re formulating our answer before the other person is finished talking. Notice that. Pause, refocus on the task at hand, which is talking to the other person and being attentive to them. 

More formally, you can sit for five minutes to start in a quiet area, watch your breath, notice when your mind starts to wander…and it will. It’s what the mind does, and that’s perfectly normal. The task is just gently to bring the mind back to the task at hand, which in watching the breath is the breath.

So it sounds like this is all about staying focused on the charts and the markets while the market is open and trying to keep those thoughts about what’s going to happen after the market closes or what’s been going on in our lives outside of that so that we can actually make better decisions.

Exactly, you know, trading is stressful. We’re dealing with risk and uncertainty and the fearful feelings that we have and the fearful thoughts of stress are uncomfortable. We want to get rid of them, and that tends to shift our focus away from the market and onto our fearful thoughts and emotions. 

Mindfulness, through the practice…and it’s not something that you can do once or twice and then we’re perfect at it. It takes time. Any good skill takes time to develop. 

Practicing mindfulness will help us step outside of our thoughts and feelings and allow us to do exactly that: focus on the market and trade from our core, not from what’s going on in the mind.

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