Saturday, June 21, 2014

Paying Attention to Your Attention

A major topic in my recent webinar was the importance of maintaining an attentional focus that can keep us from frustration and undercontrolled trading, as well as anxiety and overcontrolled trading.  This post from the Lifehacker site makes some excellent points about the importance of focus and how we can sustain unbroken attention.  One very important point is that distractions can be both internal and external.  Only by paying attention to our attention can we identify the distractions that trigger a loss of concentration. 

This is important, because brain studies show that distractions cause lapses in performance as well as focus.  Focus is a kind of braking system for the brain:  it stops us from traveling down the wrong path.  As the research literature on willpower suggests, our braking resources are finite:  every time we are distracted and have to regain attention, we use up some portion of our brain's glucose.  By minimizing distractions, we maintain our brakes and maximize the degree to which our resources are deployed in the service of our goals.

Consider all the noise and conversation on a trading floor, not to mention the constant barrage of inputs from chats, news sources, and social media.  Many trading environments are poorly set up for sustaining focused attention.  Indeed, it is not coincidental that when I have discussed with traders meditation and biofeedback as optimal disciplines for building focus, the action steps have inevitably required getting off the desk.  Our work environments are set up to maximize information flow, not attention and concentration.  In that sense, our trading screens are more like slaloms than racetracks:  they require frequent braking and prematurely deplete our cognitive resources.

It's all well and good to write in a journal and exhort oneself to greater levels of discipline.  The fact of the matter, however, is that such discipline will always remain beyond our reach if our trading environments act as cognitive vampires, draining us of our willpower.  

Trading colleagues kid me because my trade station consists of a laptop with a single screen.  No multiple monitors, no chats, no newsfeeds.  If I'm watching the ES futures, I need to click and bring up a fresh screen to see how bonds are trading or how sector correlations are behaving.  What I've found is that the frequent clicking and bringing up of screens facilitates fast cognition:  by making me active in recruiting information, the process engages me in pattern recognition.  Interestingly, if someone converses with me during this process or if I take a phone call or try to answer a message or email, the flow state is broken and with it goes my pattern recognition.

Working on my trading, I recently found that my entries were not as good as my exits.  The reason for this is that I was entering the market shortly after following it intensively but before I was in any kind of flow state or "trading zone".  By the time I had processed market action during the life of the trade, I was highly focused and exited quite well.  

As a result, the change I made to my process was to follow the market intensively before the open and place one or more paper trades that I had to follow intensively.  That seems to be enough to nudge me into the flow by the open, without depleting my brakes.  Notice in this example how it is a change in process that yields the psychological/cognitive shift.  By maximizing focus, I minimize distraction, avoid poor trades and subsequent frustration, and maximize those willpower resources so that I can stay true to trading plans.  In optimizing trading process, we can optimize trading psychology.