Can “Mindfulness” Improve Your Trading?

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Head in the clouds: is your mind full or are you mindful?

You’ve no doubt heard of this buzz word, a concept that has been heralded as the answer to everything from stress management to dealing with past traumas.

Mindfulness is the new yoga but, like yoga, the practice of being mindful dates back hundreds of years and has its roots in several ancient cultures. The big question you need to consider is:

Can incorporating more mindfulness techniques into your daily life make an impact on your trading? And, if it can, how do you go about it?

Interested to know more? Read on then.  

Mindfulness – The Low Down

In order to apply this concept to your day-to-day trading life, we first need to understand the nitty gritty of what mindfulness is and what it isn’t. One common misconception is that the practice is simply just a form of meditation, a clearing of the mind if you like. While pure meditation has a valid seat at the table of improving mental health and reducing stress, mindfulness operates along a slightly different path.

Rather than clearing your mind of all the clutter that flies in and out of it and of all the strong emotions you’re feeling, mindfulness asks you to pay attention to them.

Yes, the fleeting thought about where to have lunch can be safely ignored. However, if you’re feeling angry, sad or ridiculously excited, then these emotions are where you need to focus your attention.

Or sit with them, a phrase you’ll hear frequently among practitioners.

What do you do while you’re “sitting with them”?

You go through the process of recognising and acknowledging how you feel without attaching blame or judgement. In a way you become an observer of yourself in a slightly detached manner.


Here’s an example: you inadvertently experience a 10% drawdown and it couldn’t come at a worse moment. You blame yourself and you’re frustrated and angry. You also feel tempted towards some rash decision making that you know will not make things right but might just make you feel better.

You take some time out and find some space for some mindful thinking, acknowledging all the emotions that are battling inside you and paying attention to where you are right at that moment in time. You, to a certain extent, can also roll back (some call it the “reply”) in time and re-experience “them” if you feel there were too many types of emotions involved.

You take a few minutes to focus in your breathing. Then you go away and start making some better decisions from a place of calm and acceptance.

That, in a nutshell, is mindfulness practice. Or at least a version of it.

In truth, mindfulness can be practiced in several different ways and you’ll find plenty of general information about it on websites like

Experts believe it has a place in many aspects of life outside of work. It can help you to focus in on that big sporting event, help you deal with phobias and become part of your warm- up before a long run or heavy lifting session.

But in your world, the fast-paced often stressful environment of the trader, how can mindfulness play a bigger part?

(Pause here and try to answer the question before you continue)

Drilling Down: Mindfulness and Trading

If there’s one person who holds the keys to the doors of both the trading world and psychology, it’s Dr Gary Dayton. Dayton is a trader by profession but also holds a doctorate in clinical psychology and certificate in human performance and sport psychology from Rutgers University.

He has spent years observing and honing various techniques to get the absolute best performance from traders and works with businesses teaching everything he has learnt through a long and successful career.

If getting peak performance is a problem the answer, he says, is mindfulness.

Picture this scene: things aren’t going quite as well as you’d hoped with a trade and you’re beginning to panic that you might make a loss. Your mind is starting to experience stress and you can feel the pressure bearing down on you like a physical weight. To cut a long story short, you back off. At that moment you feel relief, you haven’t made a loss. All is well.

However, you keep an eye on your trade and it goes on to do well, to meet the objectives you hoped to achieve had you stuck with it. You have that duality of feeling, on the one hand being relieved to have avoided a loss while on the other blaming yourself for walking away and missing out. Were you right to walk away? Yes, you avoided a loss and the horrible feelings that you’d begun to internalise but you also missed out. This knowledge leads you to make erratic trading decisions in a bid to balance out this state of mental affairs.

It’s this erraticism that Dayton seeks to address and has plenty to say on how to be a better decision maker. He would tell you that getting out of your own head is where the power to good decision- making starts, the power of mindfulness:

“Mindfulness enables us to stand apart from our thoughts and feelings, even the ardent, insistent ones. Mindfulness is more than a calming technique, it’s a mental skill that provides invaluable benefits to traders.”


And here are the two key benefits you can take away.

1 Knowing that your thoughts and feelings are just that: thoughts and feelings and they don’t have to control you


2 Using that knowledge to make better judgements that lead to repeated successes

Want to know how to make this happen? Here’s how.

How to Become More Mindful as a Trader

Like many things that are worth doing, learning mindfulness techniques means starting from scratch and building from the ground up.

Steve Ward, a performance coach who works with traders among other high-pressure professions, recommends you start with breathing.

Whether you start with a ‘Mindful Minute’ focussing in on your breath, how it feels, the movement of your chest and so on or go for a full ten minutes of focussing in on your breath, it’s up to you. The key is to do it daily, to make it a part of your daily routine, to turn it into a habit. Find the same time each day to start this process and build it up from there.

Outside that initial starting point you can also take some time out when work starts to get frantic and you can feel your mind starting to race. It’s at this point you could start by taking a ‘Mindful Minute’ to focus on your breathing and stay in the present. Just those few moments alone will help you to stay out of your head and help with rational decision making.

Other mindfulness practitioners recommend that alongside breathing techniques you might also acknowledge or name the emotions you are feeling.

Note: Trading in the zone (read here) is a similar but different concept that is revisiting.

Let them pass by you and keep breathing as you let that happen. This may not be something you can spend time doing at work but if you extend your practice to the weekend or evenings it can help rid your mind of some toxic emotions that might affect you during the daily grind.

You might also incorporate other, more physical actions. Leave the phone at home and go for a ten-minute walk, acknowledging where you are and what you are seeing. Or you might carry out a mindful task from start to finish. This could be washing the car, reading a passage from a favourite book or making and drinking a coffee with no stimulus and no interruption.  Just you and your thoughts.

Practitioners say that as well as experiencing the two trading benefits above, regular practice will lead to: less stress, better focus, less impulsive behaviour, better emotional intelligence and resilience, and feeling better physically.

These, in turn, lead to better decision making. Decisions that are not led by emotions but by clear headed thinking, rather than panic or stress.

The Takeaway

While you might love the cut and thrust of your job, the way it takes you out of your comfort zone with the highs and lows of gains and losses, it can sometimes feel less like a science and more like a rollercoaster of emotions.

Employing some mindfulness techniques is a way to take back some control. More importantly, to be able to fully trust that the decisions you are making come from a place of logic and reason.

Your experience and your instincts are what make you a great trader, use this psychological tool as a way to exploiting those talents for maximum return. Think calm, think mindfulness and prepare yourself mentally for greater success on the trading floor.

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