If we are to be profitable traders, we need to maintain control over our emotions. We must not let our emotions get the best of us and divert our attention. Our attention should be concentrated upon the markets and when there are changes in the market we should be able to keep our composure. According to Dr. Ari Kiev, a trading expert, this type of approach is called “centered trading.”
We learned what it is like to become a centered trader in interviews with master traders. When asked about maintaining focus in the face of disappointment, one experienced trader said, “You can’t let what just happened ruin what’s about to happen.” He said that successful traders are able to acknowledge that they made a mistake and then move on to the next trade. Another well-known hedge fund manager stated that while all traders have setbacks, it is important not to view it as a defeat. He compared it to playing sports and noted, “As soon as you lose the ball, you’ve got to head the other direction. You don’t have time to think about it or cry about it. You’ve got to move. Your awareness of what’s happening allows you to do that. You must look at what the markets are saying, position yourself, and don’t think about the situation fully until the game is over.”
As a centered trader, we have to ability to zone on the important details of a trade. We don’t put our attention on the consequences of our actions when involved in making the trade, we put past errors behind us and don’t even consider what will occur in the future. We also keep ourselves from responding emotionally. We may have thoughts about the past and future, but we let those thoughts go as quickly as they enter our mind, just as in meditation. In this mindset, we view the market from an alternate angle. As we become more centered, we become less distracted. It isn’t easy becoming a centered trader, but it is possible with practice.
According to Dr. Kiev (1998), there are steps we can take to become a more centered trader.
The first step is to become aware of automatic negative thoughts. These types of thoughts often occur unconsciously and can have an impact on our trading. Once we become more aware of these negative thoughts, we can choose not to listen to them.
Then, says Dr. Keiv, we should change the language we use when describing trading. For example, using the metaphor of a battle to describe trading, implies violence. Instead, we can create positive imagery in our mind, like the trading floor being a calm place to be.
He also suggests taking our ego out of trading. Dr. Kiev states, “you need to stop focusing on your image and surrender to the Tao or the path before you.”
Finally, and most importantly, he tells us to begin some type of meditation in order to develop our ability to become centered. This can entail traditional meditation or alternative exercises including using reading, exercise, dance or singing to find our center.
It will take a lot of practice, but it will help to steer us from letting those emotional, automatic negative thoughts from entering our consciousness and impacting upon our trading. This will inevitably lead to our being more focused and profitable.