Think Mindfulness Doesn’t Apply to Trading? Think Again

Mindfulness and Trading

Mindfulness and TradingMindfulness and trading: Most traders I talk with are interested in mindfulness as a way to improve trading.  Once in a while, though, someone will have an unfounded objection to mindfulness. For example, Ricky, a currency trader, said, “Isn’t that going to make me passive and not want to take money out of the markets?”  Nothing could be further from the truth.  Mindfulness and trading go together nicely.

Mindfulness, Marines, Athletes & Corporations

Today, mindfulness is even used by the US Military.  A marine unit scheduled to deploy to Afghanistan Mindfulness and Tradingconducted its training with mindfulness. Some in the unit were taught meditation and mindfulness techniques.  Their initial reaction to sitting quietly in meditation was, “This is ridiculous!” But in the days leading up to deployment, the unit went through one last training event: an intensive, highly stressful war-game exercise designed to imitate what they would soon be facing.  Those who learned mindfulness had significantly better response to the stresses of that training. They felt more relaxed, had a better physical reaction to the high stress, and recovered more quickly. Seeing these results in their comrades, those marines who initially shunned the mindfulness training now wanted to learn it.  The study was recently published in the American Journal of Psychiatry.

Many now practice mindfulness on a routine basis.  Executives and employees at Apple, McKinsey, Target and Google represent a few of the corporations that encourage the practice of mindfulness. Members of the Seattle Sea Hawks practice mindfulness as a part of their preparation for competitive games.  Even traders at Goldman Sachs come for company sponsored mindfulness training “in droves.”  Goldman’s classes, according to this article, “… have waiting lists several hundred long.”

Mindfulness for Traders

Mindfulness has numerous benefits for traders, too.  Brain scans show growth in the area associated with decision-making and shrink those areas associated with loss aversion and the stress response.  One of the most valuable of all the numerous benefits has to do with what we tell ourselves.  Through mindfulness, we can learn that all those unhelpful and critical voices in your head are really just lies.  The voice that that tells you to “get out” of a winning trade and then chastises you for cutting that trade when it continues in your direction will be seen for what it is when mindful–just thoughts.  And those highly toxic, self-critical voices saying you’re “not good enough” will be seen for exactly what they are–lies.

Mindfulness and Trading

 

 

Are Trading Experts Really Expert?

Trading Experts

Trading ExpertTrading experts are relied upon by many traders.  Trading, as everyone soon learns, is a difficult business.  Much needs to be learned when it comes to trading well.  Trading technique and method must be mastered, sound money management skills practiced, and the trader must learn the ins and the outs of the mental side of the game.  All of this requires study, introspection, practice and a willingness to uncover one’s foibles and correct them.  It’s a lot to assimilate, and even then, difficult to implement.

Enter the trading expert who offers advise on what the market will do next, which stock to pick, how to trade them and other supposedly sagacious advise.  Presumably, these folks make the trading game easier.  But do they really?  Certainly, there are some great experts out there, but like in any profession, there are also a lot of average trading experts out there, too.

I detail this in an article I wrote for TraderPlanet along with some suggestions for those who are looking for a reliable trading expert.  The article is at this link: Are Trading Experts Really Expert  Enjoy!

Dr. Gary Interview on Trend Following Radio

Dr. Gary Interview on Trend Following Radio

Dr. Gary InterviewDr. Gary was interviewed recently by Michael Covel on his Trend Following Radio.  Michael Covel is the author of two classic trading books: The Complete Turtle Trader and Trend Following.  Michael also runs Trend Following Radio with over 2.5 million listeners.  I am proud to have been invited onto the show by Michael.

This is a wide-ranging and lively interview where we discuss mindfulness, yoga, and a surprising turnaround in a particularly depressed patient by unconventional means that originally sparked my interest in mindfulness and the acceptance and commitment approach to psychology.  Michael has me define mindfulness; how I went from a clinical psychologist to integrating money, markets, trading, and investing into my work.  We talk about the importance of a trading process; looking at the lessons and research of psychologist and noble laureate Daniel Kahneman; the endowment effect; price action as a heuristic; the importance of an exit strategy; why mindfulness is the most important skill a trader can develop, and my new book, Trade Mindfully.

Michael Covel is an expert trader and an excellent interviewer who kept me on my toes with the insightful questions he asked and the topics we covered.   If you have an interest in trading and/or trading psychology, I think you will enjoy this interview.

Here’s the link:

Dr. Gary Interview with Michael Covel on Trend Following Radio

Trading Crude Oil

Trading Crude Oil is getting better and better, especially when we apply Wyckoff and VSA principles.  Here is a three-part look at the last full trading day of last week—Thursday–trading crude oil.  We are trading the crude oil futures contract.

Trading Crude Oil-Part 1

Trading Crude OilA sell-off in the overnight market stabilized and we had a rally just prior to the open of the US session.  The market held its gains and gave us a Wyckoff Spring and then light volume tests for a nice trade to the top of the trend channel.

We could have ended the day trading crude oil at this point, but there was more activity in this market.

Trading Crude Oil-Part 2

Trading Crude OilAfter the first hour of the US session, crude oil began trading lower.  We see the tell-tale signs of supply entering and short opportunities emerge on hidden upthrusts.  These setups traded to the lower end of the trend channel.

Trading Crude Oil-Part 3

Trading Crude OilFor anyone still interested in trading crude oil on Thursday, we have two additional trades to the short side and two additional trades to the long side.  A hidden upthrust and a top reversal market the end of weak rallies for two solid short trades.  Two nice Wyckoff Springs (the first with a 2-bar bottom reversal) gave the late-day trader two high odds opportunities for long trades.

Trading crude oil off of the intraday 750-tick chart with the Weis Wave and classic Wyckoff and VSA principles is a great way to trade this market as seen by the ample opportunities on this day.

Currency Market Volatility – Wow!

Currency Market Volatility

Currency Market VolatilityCurrency market volatility gave quite a shock this week.  The huge expansion in volatility across the currency market caught many hedge funds and larger operators flat-footed.  Many were positioned in the currency market or had trades closely tied to it and had to scramble to get out of positions due to the substantial increase in volatility this week according to the Wall Street Journal.

Could we have seen the currency market about to become highly volatile before it happened? Well, I don’t know about that, but we could see that a pullback of some degree was likely.  I discuss the currency market volatility in this week’s video blog, and why the downdraft was so large (hint: it has to do with the hedge funds).  I also walk through a Wyckoff analysis of the US Dollar futures (DX) and give a trading few ideas regarding currency market volatility.