A recent blog post outlined the process of diagnosing the problems that may be leading to drawdowns and poor performance. This post will be part of a series for the forthcoming trading psychology online encyclopedia on the specific approaches and techniques for addressing those problems when psychology is at their root.
Behavioral approaches to the change process involve skills building and especially the formation of new, constructive habit patterns. When we engage in behavioral methods, we are literally teaching ourselves new action patterns: replacing problem patterns with new, effective ones.
The first behavioral method that I have found to be helpful for trading problems is relaxation training. In relaxation training, you teach yourself skills to calm both mind and body. My favorite relaxation exercise is to listen to absorbing music--I find instrumental music preferable to music with lyrics--while controlling the rate and depth of your breathing. You perform this exercise seated in a comfortable position and in a quiet environment, free of distraction. While focusing on the music, you breathe deeply and slowly from the diaphragm, but not in a strained or exaggerated way. If you notice your mind wander, you simply refocus on the music, perhaps following a melody line or beat from a specific instrument. During this time, you stay very still and make your breathing increasingly deep and slow.
It usually takes 15+ minutes for beginners to get themselves "in the zone" with the deep breathing and focus. As you practice (mornings and evenings are great times for practice), you will find yourself quicker and quicker at entering the calm, focused mode. It's not unusual for a trader experienced in relaxation methods to completely center themselves with just a few deep breaths. My experience is that the longer the relaxation session, the deeper the state you can enter. Sticking with the exercise for 30+ minutes can induce a very focused and clear state of awareness.
A variant of this relaxation method is known as "progressive muscle relaxation." In this method, you start at one end of your body (your toes, for example) and--while listening to music and slowing and deepening your breathing--you slowly tense and relax those muscles. So you might curl your toes gradually and tightly and slowly release them. Once you've done that, you work your way up the body, lifting and releasing your feet, then tightening and releasing your calf muscles, etc. Eventually you work your way to your head and tensing and relaxing your brow and forehead. All of this typically takes 15+ minutes.
The progressive muscle relaxation works for two reasons. It calms and focuses you, but it also turns your conscious awareness to your body and away from day-to-day and trading stresses. This "gearshift"--the alteration of your state of consciousness--is common to all the major approaches to counseling and psychotherapy. It's a very important principle: to change a behavior, you first have to shift your state. Learning a new skill in a new state accelerates the process of internalizing that skill.
The key to success with relaxation methods is practice, practice, practice. It's like any skill: mastery comes from repetition.
Relaxation methods are valuable as preventive tools. You can practice getting "in the zone" before you start trading and during breaks in the trading day to ensure that you avoid overconfidence, frustration, and discouragement. It is difficult to get worked up if mind and body are greatly slowed down. Doing the muscle relaxation midday is a great way to get into your body and return to markets in a fresh state.
Relaxation methods are also valuable tools when you catch yourself overtrading or anxious and avoiding opportunities. By temporarily pulling back from the screens, you can center yourself relatively quickly and return to markets far more calm and focused. I often find myself regulating my breathing during trading, thereby sustaining the state practiced in the relaxation exercises.
Relaxation techniques are a first building block for other, more detailed behavioral skills and so they're a great place to start your skills building. For more detail on relaxation and other behavioral methods, you can check out the behavioral chapter in The Daily Trading Coach. In the next post in this series, I will illustrate how relaxation methods can be combined with self-hypnotic suggestion for targeted behavioral change.
.
Posts
