By Admiral Markets
Dear Traders,
Have you ever felt a strong urge to check your email, social media or news instead of doing your work?
With distractions all around us, it comes as no surprise that we sometimes struggle to maintain our focus when trading.
This article offers insight on how traders can balance focus, mind wandering and alertness to achieve better trading decisions.
By the end of this post, we will discuss:
Free Reports:
In
The Organized Mind, Daniel Levitin postulates that human brain operates in four different modes:
Being alert for changes in our environment (point 4) is continuously regulated on a subconscious level…
…which stems from the past when humans needed to be ready in case of a sudden danger.
As for the first three points, the brain can only operate in one mode at a time.
To put it simply, the brain cannot focus
and mind wander at the same time, it has to be one or the other.
The transition when changing focus or when moving from focus to mind wandering is regulated by the so-called attention switching mode.
The cost of switching attention is high.
Basically, every time you switch attention, you use up a ton of energy.
Eventually, our brain reaches a point of fatigue.
For traders, the most important takeaway is that attention switching
feels good.
It becomes a vicious circle of you brain demanding new impulses.
Before you know it, you become addicted to a constant stream of new but shallow impressions without learning from them.
Ultimately, you feel like
something has been done…
…yet in reality, you most likely completed smaller, irrelevant and unimportant tasks.
For instance, you start your trading day by emailing a friend…
…then chit-chatting about the upcoming NFP and listening to the TV.
Suddenly, half the morning has passed but you never had the opportunity to really work on the market analysis.
The high cost of switching attention is also why multitasking is inefficient.
Unfortunately, I know this all too well but I have learned from my mistakes.
So here are my tips on how to stay focused while trading.
The best approach is to start the trading day with a lighter task before moving on to the most important and difficult item on today’s list.
Otherwise, you’ll have a higher chance of postponing the big task you begin with.
Another tactic is to set up clear and separate segments of the day where you:
For example, it is best if traders first complete a segment of analysis, then move on to trading, followed by a block of trade management and evaluation time.
Another example is to read email, social media and news later that day or in the evening in one block, rather than spread it over the entire day.
Of course, if you’re managing a trade every few hours, it’s not considered multitasking – that’s trading discipline.
Segments are important but in some cases traders just need to perform smallers tasks, like moving a trail stop-loss.
Of course, that’s not all of my tips on maintaining focus.
Check out the video below to find out more.
The best performance is usually experienced when people are in a state of mind called
flow.
Flow occurs when a task:
Once people are in the flow, productivity and quality are very high and time moves by quickly.
The flow is only achievable if the task is in your
circle of competence…
…which means that you know the topic well.
For traders, this has the following consequences:
Focus and flow allow traders to concentrate with 100% devotion to the charts, analysis, setups, trades and evaluations.
Last note:
…don’t worry if you have not reached the flow state when trading…
…the path forward is to focus on improving your trading skills and soon it will become part of your circle of competence.
Mind wandering is sometimes seen as a waste of time and the opposite of being productive.
Ironically, there are many advantages.
First of all, creativity is actually at its peak when your mind wanders.
Secondly, by allowing your mind to wander, you start thinking outside the box and bump into solutions at unexpected places.
Your subconsciousness actually keeps on searching for answers in the background.
Do realise, though, that you really need to
allow yourself to wander – mind wandering under pressure leads to nowhere.
Of course, be careful
when you are mind wandering.
For traders, mind wandering is the best after or before trading.
During trading, you want to be fully focused on analysing and trading.
Our takeaway is this:
Do you think this article can help you achieve a mental edge in trading?
Be sure to check out our other educational efforts – from
live webinars to brand new Zero To Hero course.
Having recently earned the
Best Educator 2016 award, we at Admiral Markets are confident in our ability to educate to inspire traders.
Cheers and safe trading,
Chris
Source: Quick guide: how to keep your mind on target
Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.