Dr. Hendlin, I am an avid reader of your columns, and think they are really great. I have taken a transcendental meditation course and found that it has made me very calm and more objective. I'm thinking of taking some advanced meditation courses. Do you think meditation aids trading? If so, how? -- A.A.
Let me begin by disclosing my position: the half-lotus. Over the last 30 years, I've spent thousands of hours sitting on a meditation cushion in this cross-legged position. I've published many articles and
a book on various aspects of meditation and psychotherapy. And I'm sometimes
quoted in the media on this topic.
I state this background not because I'm shamefully immodest but to make my experience and bias clear: I'm a big fan of meditation in its various forms, not only for trading but also in the broader living of one's life. Here are some of the effects of meditation practice that are useful for traders:
Calming the mind and quieting the body.
Most forms of meditation, when practiced earnestly, help calm the internal chatter and physical agitation of stressful activities like trading. On the mental level, this works through learning to slow down thoughts or even cut them off entirely, resulting in less obsessing over trades that have gone wrong.
Because the ability to stay present-centered is heightened, we become less likely to get lost in ruminating over what happened with that losing trade a half hour ago. It is also easier to abandon preconceived notions of what the market "should" be doing, and instead respond to what is actually happening. Because rumination is lessened, it is also easier to mentally disengage from the market when the trading session is finished.
Physically, the body is quieted through deepening the breath and slowing the pulse, heart rate and brain waves. This stilling of the body spills over to our everyday habits. For traders, this means many of the nervous mannerisms that are typically evoked by the anxiety of having money on the line may be lessened or eliminated. The ability to sit back and be patient with the market is increased. And it means less stress from trading, and therefore less stress-related illness.
As the questioner noticed, even introductory meditation practice results in a calming and more objective tolerance that may be used during the tumult of market gyrations. With further experience, this equanimity can only be disturbed by more aggravating and prolonged market upsets. This makes coping with news surprises, sudden price spikes and all the other market externals easier to manage. Anxiety over unpredictable events is lessened, and panic is much less a knee-jerk reaction.
Clarifying the thought process.
last week's column, I discussed working more precisely with one's train of thought, to gain a stronger sense of being the chief engineer of what often feels like a runaway train. Some forms of meditation are specifically geared toward helping identify, clarify and feel more in control of our thoughts. Enhanced clarity leads to more insight into the motivations for our actions.
This, in turn, leads to less confusion and better decisions while trading. With all the data bombarding us during trading, the clearer our thinking, the better we can distinguish foreground "signal" from background "noise." Consequently, we don't spend so much time feeling overwhelmed by the pace of the market.
Creating mental space between thoughts and actions.
A very valuable result of a calmer mind and clearer thinking is the ability to create a mental space between thoughts or feelings and actions. By "space" I mean a gap between the awareness of an impulse to do something and the decision to actually go ahead and do it.
While trading, this means fewer impulse-driven actions, as the creation of mental space leads to a greater ability to feel anxiety, fear or excitement, but not the need to have to act on them. This leads to less regret for trades carelessly made from momentary impulse. It also means fewer errors that are due to anxious actions such as hitting the wrong keys.
This mental space is also important in allowing us to more comfortably know when and how to sit back, watch the passing parade of quotes and
Tempering the emotions of fear and greed.
Importantly for traders, having some mental space helps temper or blunt feelings of fear or greed during trading. There is a greater sense of emotional control, in which emotion can be acknowledged but does not have to dictate our course of action. We can even learn to trust our feelings to help us make the right decisions, rather than fear that they can only be a hindrance.
Meditation encourages a reflective inquiry into our lives, which facilitates valuing all of the simple pleasures of life that are unrelated to making, accumulating or spending money. This indirectly allows us to temper our greed during our trading and makes for a broader perspective that is useful when so much of our thinking and trading behavior are focused on money.
Trusting independent decision-making.
Another benefit of meditation practice is a stronger sense of trusting our own judgment. Because we are on "speaking terms" with ourselves, we feel more confident in performing and trusting our own analysis. There is less nagging self-doubt to get in the way.
This means we are more comfortable taking a contrarian position, or simply able to assess the market and possible trading strategies without relying so heavily on the opinions of others. We are less swayed by the tug of friends and associates. And there is less of a need to have our assessments confirmed by others.
Concentrating over prolonged periods.
This is one of the most direct and immediate benefits of meditation practice. Concentration on the market is sharper and it endures over a much longer period. Combining this with the healthy use of periods of withdrawal by taking breaks, it is possible to stay focused for the whole market session with minimal distraction.
This results in less boredom and less careless decision-making. Fewer errors are made from lapses of concentration, both in judgment and mechanical computer entry of positions.
A final word of clarification and caution.
The above benefits are all
of meditation. I am
proposing that you trade while in a zonked-out meditative state!
I'd advise being skeptical of anyone advocating that you pursue a mystical "trading zone" that supposedly is composed of a special brain-wave pattern. It is one thing to talk about a "trading zone" as a metaphor for a relaxed, flowing sense of awareness and mental acuity. It is quite another to equate this "zone" to any specific brain-wave state.
I can tell you unequivocally that the last thing you want to do when locked in a deeply meditative
brain wave state is to punch computer keys to buy stock or watch endless streaming quotes.
But with steady practice, the side effects of meditation may indeed assist the process of trading. And in this practice, you come to find out that
meditation is more than what you think.
Steven J. Hendlin Ph.D. is a clinical psychologist in Irvine, Calif. He has been in private practice for the last 25 years, investing for the last 20 years, and actively trading online as a swing trader and long-term investor since 1996. He is the author of
The Disciplined Online Investor
recently translated into Spanish. He is pleased to receive your comments and questions for publication in his public forum columns at
firstname.lastname@example.org, but please remember that he is unable to provide personal counseling or psychotherapy through the mail.
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