Saturday, April 30, 2016

Perfecting The Pause: From Emotions To Emotional Intelligence

Wouldn't it be nice if we could rewind the good times and fast forward when things aren't so good?  While life doesn't (yet) come with a game console, we do have the ability to pause the action in our life.  It turns out that ability to hit "pause" makes all the psychological difference in the world.

Traders commonly make the mistake of treating their emotions as problems.  They want to banish frustration, greed, fear, and boredom from their experience.  The reality is that these emotions provide information: they are there for a reason.  We can either become aware of emotional experience and make use of it, or we can try to banish it and run the risk of having those emotions drive our next decisions.  The problem occurs, you see, when we are not fully aware of our emotional experience, when we're not mindful.  That's when frustration or boredom can drive actions that we would never take otherwise.

Hence the value of the pause function.

Pause provides us with the opportunity for mindfulness.  When we pause and interrupt our activity flow, our attention can switch from external to internal and we can gain self-awareness.  This enables us to identify what we're feeling and why we might be feeling it.  For example, I noticed earlier in the week that I was feeling a bit antsy, wanting to put on a trade that seemed to be setting up.  Long (and sometimes painful!) experience has taught me that trades placed when antsy are as likely to be those notorious Fear Of Missing Out trades as well-conceived ones.  Indeed, in the incident this past week, all my signals had not lined up.  The trade was setting up on short-term criteria (buy an oversold condition), but made absolutely no sense on the higher time frame (weakening market; inability to make new highs on buying pressure).  Pausing allowed me to nix the trade--and save a good amount of money.

Music that was all played notes and no pauses would lose its ability to move us.  Speech that is all words and no pauses would be near incoherent.  Pauses are as much a part of meaning as actions and expressions.  A life lived without pause is a life lived mindlessly.  Creating pauses during the day and week allows us to stand apart from ourselves and ask the important questions.  Pauses give us control, allowing us to be truly active and not merely reactive.

Pause is what turns emotions into emotional intelligence.

Further Reading:  Training The Brain For Mindfulness