Interested in improving your trading acumen?I came across a recent study by British researchers that indicated that higher amounts of testosterone in the morning was correlated with bigger
Cortisol is a hormone often associated with prolonged physical and mental stress. Too much of it can make your immune system weak and become susceptible to physical illness. As it was analyzed during the study, the researchers noted that cortisol levels seemed to be strongly related to a traders feeling of uncertainty or lack of market predictability, as opposed to be related to loss or failure. As it would seem, seasoned traders or investors, expect that loss or failure is part of the risk-reward formula for their job description, and consequently, can overcome feeling "stressed" by it. However, they were navigating markets fraught with uncertainty, potentially contributing to a smaller appetite for risk. Thus, cortisol levels increased during the process of making tough risky trades within the context of uncertain and volatile markets. It would seem to me that these two hormones can operate synergistically if one could learn how to harness them. Achieving the Optimal Balance The most interesting finding ascertained by this study, was that traders who came into work with higher levels of testosterone and anticipated profit, were the most productive at the end of the work day. However, increased levels did not appear to be significantly related to the outcome of having a profitable day of trading. Thus, these findings suggest that a trader's mental and physiological warm-up or pre-game each day is essential for keeping levels of testosterone up, which may relate to a better day and higher returns at the closing bell. Additionally, this study highlights the role of cortisol in measuring a trader's stress while working within uncertain and unpredictable markets. It is normal to have stress with some cortisol secretion. However, too much prolonged stress may hamper one's physical health over the long run.
I always coach my clients on the importance of achieving emotional discipline in their trading and personal life. Too much irrational exuberance or the flipside, too much pessimism, can lead to very negative outcomes in terms of investment performance and quality of life. Achieving a fine balance seems difficult, but not impossible. Mind Over Hormones My new book for advisors, traders and bankers, Bullish Thinking: An Advisor's Guide for Surviving and Thriving on Wall Street, offers strategies for achieving emotional discipline during times of uncertainty and distress. In previous columns on TheStreet.com, I have emphasized taking proactive steps in reducing stress on the job by taking control over how you perceives your work environment. By managing perception of the frenetic and volatile markets, you can buffer yourself from harmful stress that could send your cortisol levels to the moon. This mental and behavioral intervention is known as Bullish Thinking. This study's findings underscore the importance of starting your work day with testosterone flowing through your veins -- just not too much of this hormone. If the level of this hormone is down, there are both psychological and behavioral strategies for raising it. Once it is up to an optimal level, it is important for a trader to eradicate any irrational or grandiose thoughts that could set them up to become overconfident and too aggressive when it comes to taking risks. Much like baseball players who try to get an edge by taking HDH to enhance their performance, traders who execute strategies under the influence of too much testosterone, can be in for very negative long term consequences -- both physical and financial ones.
Good Morning, Returns Per this research and my qualitative experience in my practice, it seems logical that your mood, confidence, "pre-game" activities and level of testosterone play a significant role in how you will perform in terms of investment returns. If a trader realizes that their testosterone needs a boost, here are some strategies for bringing this level up, without the need for illegal and harmful substances like HGH. If you follow these suggestions and monitor your thought patterns, you can keep your emotions in check. So here is how you can increase your testosterone levels naturally: 1. Balance your diet with carbohydrates and proteins. Make sure to include peanuts, garlic, cabbage, and broccoli. 2. Do not skip breakfast or lunch. 3. During the business week, cut out binge drinking with alcoholic beverages. 4. Exercise frequently as a routine, but allow for sufficient rest. 5. Get about seven hours of sleep per night. 6. Increase the frequency of your sexual activity. For more on bullish thinking, read Dr. Alden Cass' "Open Book: Think Like a Bull, Avoid Disaster."