Saturday, November 26, 2016

Trading Market Flows by Sustaining the Flow State

The flow state is one in which we become highly absorbed in our activities, losing a sense of time and experiencing deep pleasure.  A great example of flow comes from the drumming movie mentioned in the previous post.  The drumming greats are not explicitly thinking about what they are doing, what they should do, or what they should have done.  The skill is flowing through them, and they are performing in a profoundly fulfilling zone.

The capacity for operating within a flow state is one that can be developed.  Indeed, we can look at deliberate practice as a training ground for flow.  As we tackle one challenge after another, we also extend our capacity to sustain the flow state.  Flow requires an ability to operate outside our comfort zones, but our limits of willpower make it difficult to stay outside our sphere of comfort.  A fascinating study by Judith Lefevre found that people experience flow more often in work than in leisure, and yet they are more motivated to seek leisure than work.  She notes:

"It is possible that the higher levels of concentration and activation in flow cannot be tolerated by most people for extended periods of time.  In making the choice to spend their leisure time in the low challenge, low-skill context rather than flow, the workers may be indicating their preference to rest from the demands of work, even at the cost of an overall reduction in the quality of experience."  p. 317

If the research on flow is correct, then much of traditional trading psychology is wrong.  The elite athlete, drummer, or chess player does not achieve flow by controlling emotions, imposing discipline, or basking in awareness of their feelings.  Rather, flow is achieved by shifting to an entirely different state of consciousness, not by rearranging the components of normal consciousness.  That different state requires sustained, relaxed focus and immersion in experience.  That shift of state is one in which we experience ourselves and the world differently.  It's also one in which we become sensitive to patterns in the world around us.  A wonderful portion of the drumming movie pans to the lake surrounding the camp and the sounds of the insects and lapping water.  It is impossible to not hear a poly-rhythmic drumming in the sounds of nature--something we would have never apprehended prior to watching the film.

 It is in this context that Campbell's observation is profound:  when we follow the bliss of operating within the zone, doors open to seeing the world in new ways.  Patterns that are hidden to us in normal, distracted consciousness pop out when we in a flow state.  In our normal state, we try to perform well; in the zone, performance flows through us.

Are you trying to correct your mistakes while you're trading?  Are you trying to avoid poor trading practices?  If so, you're trading in a flaw state, not a flow state.  Flow requires a loss of self-awareness; not thinking positively or negatively about ourselves, our P/L, or our performance.  

One of the greatest dilemmas we face as traders is that we benefit from following our bliss, but we are limited in our capacity to sustain bliss.  It may well be the case that the greatest value of preparation for trading and review of trading is the exercise of the capacity for relaxed concentration.  In building our capacity for flow, we cultivate the state of consciousness in which we're most sensitive to the flows of markets.

Further Reading::  Why It's Important to Go With the Flow State