I have around 30 trading books on my bookshelf (some pictured). There is probably another 15-20 on my Kindle and close to a 200 trading articles, books and videos on my trading machine. They deal with indicators, candlesticks, astro trading, trend trading, time studies, psychology and all kinds of other methodologies.
Yet there are a few areas sadly neglected that can help to maximise your trading profits.
Here are 6 things I have found that aren’t in those books.
- Drink. 2 hours before you are to start your trading day drink copious amounts of water. This is especially important for those who like to trade first thing in the morning. Studies have show it takes approximately 2 hours for hydration to have any effect on the body. A mere two percent drop in hydration will make your short-term memory so fuzzy that you’ll be unable to remember your friends’ names, have trouble doing basic math, and forget where you put your keys. Not exactly priming yourself for a good trading day.
- Wee. As a result of the first point, before sitting in front of your trading screen, go to the toilet. Studies here in Australia have proven the distraction from needing to go to the toilet while driving is the same as having an alcohol reading of 0.05 (the legal limit here). Trading while drunk, not a good idea.
- Wait. Don’t trade in the first half hour of sitting at your screen. Don’t confuse this with the lore of not trading the first half hour of a market open, just the first half hour of sitting down for your trading day. This is especially relevant for 24 hour markets, but can apply to all. Use this time to set your emotional balance, catch up what you have missed and make sure your tools are in working order. If you find you are missing trades, then you need to start earlier, not trade quicker.
- Breathe. Deeply. In a 2005 a review and analysis of several studies, Richard Brown, MD and Patricia Gerbarg, MD reported that yogic deep-breathing techniques were extremely effective in handling depression, anxiety, and stress-related disorders. Trading covers all of those areas in spades.
- Listen. Music has been proven to alter moods, change brain patterns, sooth anxiety and distract the mind from unpleasant emotions. Depending on your trading style, find a playlist that will compliment the mood you need for your trading style. I day trade, and so LMFAO fits in nicely, that, and I just love watching their film clips.
- Visualise. I know, it sounds all new-age and fluffy, but the evidence is there that visualising a task can prepare you for it’s physical form. I know visualisation is a big part of SMB Capital’s (@smbcapital) training regime, and it is has proven itself in many other areas for you to take notice. A University of Chicago study on basketball free throw shooting pitted one group who physically practiced 30 days straight, against another who only visualised the act of shooting. The group that physical practiced improved by 24%, the group who only visualised with no physical practice, improved by 23%.
These are just the very basics of what the start of my trading day involves. Once these are done, only then are we good to hit the markets. Now I need to go wee wee.