Better Trading Through "Mindfulness"

09/09/2011 10:00 am EST

Focus: STRATEGIES

Rande Howell

Founder and Owner, Trader's State of Mind

Practicing "mindfulness" has helped many traders stay focused and make better decisions based on objective facts. Rande Howell explains how to become mindful and make more money.

I am talking mindfulness with Rande Howell. Rande, what is mindfulness?

Mindfulness is becoming aware that you and your thoughts are not the same; that you and your biases are not the same; you and your beliefs are not the same. You almost step back and observe "Where do these come from?" 

Then it gives you a tremendous amount of freedom, and recognizing they are not you; you are no longer their prisoner. What happens is you realize that you can free yourself from them and you can move on.

That’s the essence of mindfulness, recognizing my beliefs, my thoughts are not mine, and the truth is they can be reorganized and I can become absorbed into a different set of beliefs. I can create those and out of that create a very different life.

Sounds like it is a difficult and long process; how do you first identify those elements within?

Wow, well the first thing is you calm the biological system down. That has been done for the last 5000 years through breathing and relaxation.

Herbert Benson, the great Harvard psychologist, took away all that and built the relaxation system. That allowed people to be able to disrupt the arousal of emotion and to be able to produce a calm state of mind.

From that calm state of mind, they discovered that it is natural to have this observer; this part that watches. Nurturing that and building that allows you to begin to really separate from your beliefs and thoughts. It gives you the ability to fine tune and reinvent your beliefs and your identity.

The steps that I would take to develop that; what would I do first?

First, breathing. What you discover very quickly in breathing is that breathing is a signature part of an emotion. When you are angry or when you are fearful, your breath is either stopped or it is shallow. What you learn to do is manipulate that breath because that actually interrupts the emotional state that is there.

When you are doing diaphragmatic breathing, doing that belly breathing, you ultimately are going to generate and manufacture a calm state of mind to work from; first thing.

The second thing is that then you start literally imagining watching yourself; this is done in the mind’s eye and you begin to recognize that I don’t have to fuse to thought. What I can do is step back, watch it, and as I watch it, tremendous freedom happens.

Beyond that, what is even more interesting is once you develop mindfulness as a skill, you can go looking for inner resources that already are within you—like discipline and partiality; so vital in trading—they are there in the same way that fear is there in your mind. So is discipline, so is impartiality, and they can be pulled into the awareness and they become part of the dialogue in the mind.

You can have discipline and impartiality trump that fear by this awareness?

Oh, absolutely. That is the game plan.

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