Saturday, May 30, 2009

Three Uses of Biofeedback for Traders

A reader recently asked me to post on the topic of biofeedback. It's a topic that I have touched upon as a "best practice" in trading. My interest in biofeedback began with work that I conducted in Syracuse in hemoencephalography and continues to this day with heart rate variability feedback to help traders stay "in the zone".

As I stress in the Trading Coach book, "Biofeedback is a tool for training yourself to control the arousal level of mind and body." The basic idea is not unlike that of meditation: physiological self-control is a gateway to emotional self-control. That is, if you can control the body, you gain significant control over mind. It is difficult to be emotionally worked up if you are cognitively focused and physically relaxed.

The three most common applications of biofeedback for traders in my work are:

1) Relaxation - Traders will take breaks during the trading day and use the biofeedback to achieve and sustain reduced levels of arousal (reduced heart rate, lower galvanic skin response, etc.). This can be a very effective way to break patterns of frustration and overtrading.

2) Building Concentration - To stay in the zone with respect to heart rate variability readings, it is necessary to not only sustain relaxation, but also to remain focused. It is that state of calm focus, maintained over time, that produces the rhythmical HRV patterns displayed by the biofeedback software. In this sense, the biofeedback sessions are a kind of cognitive exercise routine, in which people build their capacity to sustain focus over time.

3) Behavioral Exposure Work - I deal with exposure techniques extensively in the Trader Performance book, as well as the Trading Coach text. The idea of exposure is that you can mentally rehearse problem patterns while sustaining a state of focused concentration, thereby reprogramming those patterns. The biofeedback helps people rehearse threatening trading situations *while they control their stress levels*, thereby enhancing self-control.

Perhaps the greatest benefit of biofeedback, however, is the most subtle. As I point out in the latest book, "Access to intuition requires a still mind." By learning to clear our mind and sustain a high level of focus, we become more attuned to the cues from implicit learning that lead to our best trades.