Friday, February 19, 2010

Physical Health, Cognitive Functioning, Emotional Well-Being, and Trading Performance: Frontiers for Trading Psychology

There are close relationships between physical and mental health: emotional stress can affect the immune system, physical exercise can impact mood, and emotional well-being is associated with favorable health effects. We also know that emotional stress can impair decision-making.

What is less clear is how our physical level of well-being affects the decisions we make.

The recent posts have focused on factors that interfere with the cues that comprise our intutive feel for markets, including anxiety. Might it be the case that stress impairs decision-making by switching our attentional focus to our bodies (and ourselves) and away from the pattern recognition that could lead to good decisions?

Might it further be the case that, at a higher level of cognitive and physical conditioning, we could become especially sensitive to subtle pattern recognition cues and make decisions that, on the surface, would make us look lucky because of enhanced access to our gut feel for markets?

Finally, would such conditioning entail a training of attention and concentration, so that we process more from our environments?

If we think of trading as akin to athletic competition, what conditioning exercises would place us in the best competitive positions?

I think these questions address some of the most interesting, challenging, and least understood areas within trading psychology.