Sunday, July 09, 2006

mind( body) reaction to trading



It is easy for most people to learn how to recognize how their
body feels when in different states. An athlete who is in the
groove may feel keenly aware, yet relaxed overall. On the
other hand, an athlete who is “choking” will be tense, anxious
and rushed. Learning to pay attention to bodily reactions can
help a trader confirm when he is engaged in good behavioral
patterns or transgressing his own rules. He also can learn to
recognize how his body feels when a trade is working out and
how it feels in a losing trade.
Here’s a personal example. When I know a trade is working
according to plan and the market is doing as expected – even
if the trade has not yet kicked in – I find that I feel a level of
confidence where I do not feel compelled to look at the
screen. I do not feel bothered by anything and am relaxed
with a feeling of “knowing” that my position is a good one.
However, if I am in a trade and it does not “feel” right, even
if it has not moved against me, I find myself gazing intently
at the screen, my breathing is a bit more shallow, and I hardly
blink. Five minutes can pass by, and I will still be sitting
in exactly the same position in my chair.
I also am aware of certain patterns in which I engage when I
am starting to get tired or burned out. I know from experience
that I will be more likely to drop my guard at these points, and
so I will do best if I stop trading when I feel this way.
The longer a trader has been trading, the greater his awareness
that higher highs in the equity can still be foiled by
lower lows; this is the one thing to forever be on guard
against. Many winning sports teams have won championships
strictly by playing fabulous defense. However,
with trading the ultimate goal is to do more than just eke out
a living, but instead to truly capitalize on the occasional
gifts the market can offer. So, just as it is important to recognize
how one feels when in a state that can lead to errors
in judgment, it is equally important to identify with a
“Green Light GO” condition. This is when it is time to
pound the table and stay with a strong trend move.
Confirmation of a winning trade comes not just from indicators,
but also from our own bodily state, which will give
the feeling of being in sync.
Ultimately, the traders who make it in this business will be the
ones with the most perseverance. As time goes by, experience
will become a trader’s greatest asset. Each day, a trader gets
more experience as to what the best trades feel like and which
of his own behavioral patterns lead to trouble. Once he learns
the patterns that lead to mistakes, it is easier to make those
mistakes with less frequency. The fewer the unforced errors,
the steadier the equity curve in the long run.

2 comments:

K Karunakaran said...

It is ture, when a trader starts to learn about himself first, he will reduce and avoid all his bad trades first, the success follows thereafter. Nice article, thanks buddy.

boo said...

rish love
the more i read the more defth i have in my lossing pattern's of my day trading from monday i will watch my every mood & body language that gives me the ''green signal go ''

thank's sir,

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