Meditations on Trading - Lesson One: Finding Balance
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This article focuses on the importance of having the proper mental and emotional approach to trading. It is the first in a planned series of articles that will help traders gain insight on how they can improve their trading through a better understanding of their own minds.
Balance is the first lesson I learned myself that led to being a better trader. I was anything but balanced in the very beginning, spending countless hours watching charts, taking way too many trades, and watching with great anxiety as my over-leveraged trades went against me. I'm sure this is a very common and perhaps familiar scenario to some of you, whether currently or at some point in your trading endeavors.
In Tai Chi or Qigong we are always seeking balance, and trying to align ourselves with the Tao or "the way". When you are aligned with the Tao things seem to unfold effortlessly. You stop fighting yourself and live much more in the moment. Everyone has certainly experienced times where everything just seems to be going perfectly with little effort, and also times when you can't seem to get anything right no matter how hard you try.
Trading often reveals how balanced you are in a brutally honest fashion. If you are centered you will be making logical choices and if you are unbalanced you will be making emotional decisions, possibly caught up in such a whirlwind you are unable to stop yourself.
To find balance in trading the first step is to become aware. You can create awareness by simply slowing down. If you are not breathing in a relaxed manner you should not be entering a trade.
I encourage you to spend a few minutes practicing the following simple exercise before you begin trading for the day
Rest your hands on your lower abdomon (also known as the lower dan tian).
Close your eyes
Breath slowly and deeply in a very relaxed fashion. Do not over-exaggerate your breath. Try to feel your abdomen slowly expand as you inhale and contract as you exhale
Just focus lightly on your lower abdomen while taking several breaths
After several breaths you should remind youself to be aware, remain patient, and trade calmly today
To some of you this exercise may seem silly. Perhaps so, but give it a try for a few days and see if it makes a difference. This simple exercise accomplishes some wonderful things in regards to trading. It calms you, provides focus, and most importantly brings you into the present moment.
From a Tai Chi perspective we start to shift from Monkey Mind to Alligator Mind. In which state do you think you'll make better more balanced decisions? When your mind is all over the place or when you can sit calmly for hours waiting for just the right moment to act.