Last updated on May 7th, 2020
Have you ever had trading sessions where when the ink is dry, you know you could have done better? Maybe you missed a perfect trade setup, stepped outside your trading plan, or simply had a moment of fogginess where you drew a blank while starting at the charts.
You are not the only one.
Any trader who has been at this game long enough has experienced those exact things a few times. Maybe even today.
So what is the problem? Why do we “zone out” during a trading session?
It is a problem with focus….or lack of.
Losing focus when trading is not the problem. The problem is in recognizing when you are not fully focused and minimize the frequency of this happening.
Freedom Is A Double-Edged Sword
This is possibly one of the biggest points of trader failure. Although it’s not exclusive to the retail trader the ‘freedom’ that trading brings can also be the Achilles’ heel of their performance.
It is far too easy to “drift off” when we don’t have someone that will prod us awake as you would in a more “job like” atmosphere.
Broadly, I believe that the core of focus comes from mental, physical and emotional endurance and robustness. The problems come when a facet of one of these cores degenerates and then chaos theory starts to kick in.
Problems often breed more problems.
So here is a list of the things which I feel may inhibit or contribute to a trader’s ability to fully focus:
This is one of the roots to trading success. Without a level of self-belief, how are you going to have the will and determination to trade well or to do those ‘tedious’ preparation tasks each day? This belief must come from within. You must truly believe that success in trading is within your grasp.
Anything less than 100% belief that you will end up on the right side of the finish line is a ball and chain that will keep you from success.
“Low self-confidence isn’t a life sentence. Self-confidence can be learned, practiced, and mastered–just like any other skill. Once you master it, everything in your life will change for the better.” –Barrie Davenport
We all should know by now the importance of a good diet for general health, but it’s also imperative to mental function. If you don’t want to have a great diet all the time and you enjoy a beer, just make sure you have a healthier diet during the trading week. It’s an easy compromise to make.
It’s not difficult to start the trading day off with the right foods that will help you during the trading session. This blog post features breakfast foods to help you focus better, is a quick read, and a quick fix for those who stumble to find a good breakfast.
Although we all know how important exercise is for our health, it’s also extremely useful to help maximize our mental abilities and to reduce the levels of not especially useful hormones. For example, cortisol in particular is not a useful ‘trading hormone’ and regular exercise can help lower ‘normal’ levels.
Implementing some type of exercise into your daily routine will help you fight of the stresses of the day and potentially increase your level of performance.
Meditation isn’t for everyone but doing some form of activity which allows for deep levels of relaxation and reflection is I believe of great benefit. It leaves you calmer, more balanced and better able to maintain performance over longer periods of trading.
If you have never read any study about the benefits of meditation, you could start with: The benefits of meditation you never knew
The ability to sustain levels of concentration over short and long periods of time can have great impact on a trader’s performance. Great trades can come in the first minute or after several hours of a trading session, so it’s important to keep your eye on the ball as much as you can.
+ Emotional balance
Some traders can actually use strong emotions to perform better, but for me it’s important to remain more balanced. Emotional imbalances can frequently take place either due to trading or due to outside influences.
Trading imbalances usually manifest in the form of being “on tilt” to borrow a poker term. This is why loss limits are of sacred importance.
The ability to maintain emotional balance in the face of a bad run can come with experience. Outside influences to emotional balance come in many different guises. You might have a new baby or you might have a big argument with your partner.
It’s important if you trade at these times, to flag up the possibility that you may be already out of emotional balance.
+ Level of distraction
Even if you trade from an office, there are always going to be other things going on which might distract you from your trading. However, if you trade from home the possible levels of distractions can be pretty intense.
The trouble is that family members in particular rarely fully understand the distractions they can cause you. You need to think of a way to protect your trading time somehow from these distractions.
Perhaps you can have a “no contact” time span where nobody is to disturb you. This is the time where there is no t.v., no phone conversations, nothing that will distract you from your purpose – to be an effective trader that takes advantage of every opportunity dictated by their trading plan.
Trying to work out what is going on at the best of times can be a tough task. So trading “blind” having not done any preparation for the trading day is just going to add to the difficulty of the task and take your focus away from properly executing your trading plan.
Do the work before and use trading time to concentrate on trading. Have a schedule that you adhere to so you are ready to go when the bell rings. Like a fighter stepping into the ring, if you are using that time to prepare or just “jumping in”, you won’t make it past round one.
+ Clear strategy
I know this sounds simple, but many people do not even have a comprehensive and clear trading strategy. So whenever they trade, they formulate best tactics on-the-fly. They don’t stick to a plan because they don’t have one or it isn’t thorough enough to account for common situations.
Planning should be done pre-trading, so if you find there are situations coming up where you are not sure what you have to do, take your plan away and define the necessary rules.
+ Clear goals
Having clear goals might seem like an obvious thing. “I want to make a ton of money” for example. But exactly what is your long-term plan to do this? What are your performance projections? With a better grasp of where you are within a long-term plan, you are more likely to push on and be more accepting of inevitable bad days when they come.
Trading is never an easy task. But if you turn up in the best possible state, ready to go then you’ll give yourself a much better chance to perform to the level that you know you are capable of. Try to improve one thing from each section and I’m pretty sure your level of focus will improve!