In a culture where it seems like hard work will be an edge, many traders mistake the type of work that will indeed create the best results. Trading is not only an intellectual exercise but a physical and emotional one as well. It follows then that an edge or at a minimum, the approximation of an edge, can be had through tending to one’s physical and emotional dimensions.
Call it psychological or mental capital but whatever you call it, pay attention to yours. All attitudes, moods and outlooks are not created the same. The question is what are the warm-up exercises you can do to optimize the totality of your mental state?
List One – The Simple and Obvious Ways to Improve your Bottom line
1. Track your sleep – and trade very little or not at all when you are lacking.
2. Note emotion generating events from outside trading – and be very careful about entering trades when you are frustrated over anything outside of trading.
3. Take breaks to work out or at least walk around or mediate DURING the trading day – and disrupt the negative effects of decision fatigue.
List Two – More Sophisticated Ways to Increase your Psych Capital
1. Routinely expect to feel a fear of missing out – and be putting that fear into words so that its power to cause you to take action is dissipated into language.
2. Assume that your basic personality is going to impact your emotions about a trade – and instead of trying to intellectually over-power a need to be smart or win for example, put those feelings into words also (for the same reason). Yep I know it’s hard to image saying to yourself “I want to look smart” or “I /desperately/ need to have a winner” but what if doing so would improve your bottom line? Research is emerging that says this relatively simply exercise garners enormous power against acting out or acting on the emotion.
You see, the thing about emotion is that in and of itself, it’s a only a feeling. Some feelings are helpful – like the intuitive pattern recognition ones or the feeling of confidence in your preparation – and some are not – like the frustration over your last exit. In order to benefit from the helpful and reduce the negative impact of the non-helpful, you have to set yourself up to know the difference. You have to set yourself up to be able to act on the helpful and not act on the unhelpful. Planning and executing a strategy for mental or psychological capital does exactly that.