Let’s be honest here. Day trading is a wild ride! Maintaining mental equilibrium and composure while trading stocks online is a big task. If only it were as easy as opening up the TradeZero trading software, executing the trades and waiting for the profits. In reality things are much harder than this. Our own emotions and lack of composure make trading much more difficult in practice than in theory. The best way to attempt to combat these dysfunctional tendencies is to trade mindfully. Here we examine what it means to be mindful when trading stocks online and break down some useful tips that can help day traders to trade mindfully and beat the inherent spontaneity involved in day trading.
What Does It Mean To Trade Mindfully?
To trade mindfully basically means to be present mentally while day trading. Mindful trading involves being constantly aware of our surroundings and our own mental state. A day trader sits in front of a computer trading stocks online for many hours on end watching charts. Watching and waiting for the signals to appear that warrant an entry for a chosen trading system. During these endless hours of waiting, the human mind can become ragged and disjointed. Focus often tends to wane and before long one gets distracted. Perhaps the day started with just three stocks on the watchlist. However, while waiting for the correct signals on the main watches, a day trader might be tempted to check out other stocks. Stocks that were not originally on the watchlist. There are reasons why these stocks were omitted from the original watchlist. However, the aforementioned boredom and lack of focus that is often inherent in day trading causes the trader to lose sight of what was originally the plan for the day. This often results in sub-standard and non-systematic trades being taken on stocks that just don’t meet the criteria for a trade . Basically the day trader is trading outside of their system and just pressing buttons. The trader is not trading mindfully. In order to regain mental equilibrium and return to trading within their system, the trader needs to regain composure and trade mindfully.
To trade mindfully therefore involves being totally present, aware, focused and alert at all times to the specifics of the day's trading plan and therefore ready to execute efficiently if, and only if, a correct play presents itself.
The Inherent Spontaneity Of trading stocks online
In addition to battling the inherent boredom and lack of focus outlined above, day traders must also deal with the inherent spontaneity of day trading. For every trading opportunity that a given trading system presents, there will usually be multiple scenarios that are close to being a play, but don’t quite meet the criteria. Usually these scenarios will present themselves very quickly, often in a matter of seconds. A day trader might be fully focused and aware of their emotions throughout the day and yet still be sucked in in an instant to a sub-standard play by this inherent spontaneity. Again, mindfulness is the key to combating these dysfunctional tendencies. Not only must a day trader be constantly mindful to trade mindfully by being aware of their emotional state, a day trader must also be constantly mindful of exactly what their system is. Yes, all day traders know their own trading system, yet the biggest problem many of us have is actually abiding by that system.
No matter how tried and tested a day trading system is, in order to trade mindfully, the day trader must constantly remind themselves exactly what their system involves while also being constantly aware of their emotional state and overall levels of focus whilst trading stocks online.
Useful Tips to Help Trade Mindfully
Meditation is an age-old practice originally used by Eastern cultures that has in recent years become a popular Worldwide phenomenon. Many scientific studies have proven that meditation helps to relax the mind and increase awareness or mindfulness. Many well known millionaire day traders such as Jack Kellog are known to meditate daily as part of their routine whilst trading stocks online. Personally I began meditating in my early teens and have found it to be beneficial in all aspects of life, especially trading. I have a hard rule that I am not allowed to login to my trading software without at least 30 minutes of prior meditation. I recommend this to everyone. I also recommend logging out of trading software intraday and meditating for 10 to 15 minutes, just to refocus the mind again and regain mindfulness. This can be especially beneficial after one or more losing trades, or even fortuitous winning trades that were taken despite not meeting all of the necessary criteria.
Breathing exercises are similar to meditation except that the eyes are open and one is focused on the charts. Many traders, myself included, can have the best laid plans yet fluff their lines when it comes to execution by exiting too early or holding onto a loser past the designated stop loss area. To help combat this and remain mindful while in a trade, I like to automatically close my mouth and practice nose breathing while in a trade. Nose breathing can help the day trader to calm down by activating the parasympathetic nervous system. This can be very beneficial while in a trade. Slowing down the rhythm of the breath is also beneficial. This can be done on its own or in conjunction with mouth breathing. The aim of both is to recenter the mind so that mental equilibrium can be maintained and therefore mindful trading can be executed.
When You Feel Like Speeding Up, Slow Down.
Again, due to the inherent spontaneity involved in day trading, a useful mantra for the day trader to repeat during the trading day is to slow down every time you feel like speeding up. You can even simply close down your trading software for ten minutes and take a break before loading it back up. Deep sea divers often use this phrase as a reminder to never panic no matter how fearful the situation might be. Day traders can also benefit from this mindfulness mantra.
Regularly Review Your Trading Rules
Having a set of trading rules and reading them slowly every morning before opening your trading software and trading stocks online is a good practice to literally keep in mind exactly what the objectives are for the day. This can be done just after meditation when the mind is clear and calm. The ability to trade mindfully will definitely be enhanced by this practice.
Leave Your Phone Down!
Research has shown that excessive smartphone use is associated with impaired emotional regulation, impulsivity and declining cognitive function. Obviously all of these things are very important for day traders. Many day traders have their trading software on their phone. To trade mindfully and steer oneself towards being a better trader, it is imperative in this modern era to self regulate screen time and smartphone use outside of market hours. This is also relevant during market hours. Randomly checking Twitter during market hours is just not a good habit.
Maintaining high focus and avoiding inherent spontaneity are two of the biggest challenges that a day trader will face whilst trading stocks online. Practicing mindfulness can help day traders to both maintain their mental composure throughout the trading day and also in the heat of the moment. To trade mindfully takes practice and patience. These traits can be improved upon by meditation, breathing exercises, reviewing plans and rules before the trading day begins and also by cutting back on smartphone use.
Frontiers (August 18, 2022). Excessive Smartphone Use Is Associated With Health Problems in Adolescents and Young Adults (https://www.frontiersin.org/articles/10.3389/fpsyt.2021.669042/full)
Healthline (August 18, 2022). 12 Science-Based Benefits of Meditation (https://www.healthline.com/nutrition/12-benefits-of-meditation#The-bottom-line)
Ecologic Dentistry (August 18, 2022). Parasympathetic Breathing: Why Nose Breathing is Better for You(https://ecologicdentistry.com/the-importance-of-parasympathetic-breathing/)
This content (“Content”) is produced by John Maher. The Content represents only the views and opinions of Mr. Maher. Mr. Maher’s trading experiences and accomplishments are unique, and your trading results may vary substantially. TradeZero does not endorse the Content and makes no representations or warranties with respect to the accuracy of the Content or information available through any linked third party sites. The Content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any security. Trading securities can involve high risk and potential loss of funds. Mr. Maher is compensated by TradeZero for producing the Content and may also receive compensation for customers he introduces to TradeZero.
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