3 PRINCIPLES OF CONSCIOUS TRADING

3 PRINCIPLES OF CONSCIOUS TRADING

Until recently, meditation has been considered to be something esoteric.

Nothing convinces people stronger than the social proof and science. A large amount of scientific research about the beneficial impact of meditation on a human being and appearance of a large number of famous and bright personalities of modern times, who praised this practice, resulted in mass recognition of the meditation efficiency all over the world.

Conscious trading, without doubt, is a serious advantage in the market fight. The founder of one of the biggest hedge funds (Bridgewater Associates) and guru of diversification Ray Dalio (whose wealth is estimated at USD 17.7 billion) considers meditation as one of the key factors of his success.

If this practice helped Ray, it could well be that it might help you. Maximum trading efficiency is what really important for all traders without exception. If meditation may help you to take advantage of the whole potential of your natural abilities, why not to try to apply it in the trading practice.

In this article:

  • Consciousness is a state to which every trader should be committed
  • High concentration is not enough
  • Practice consciousness in trading

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CONSCIOUSNESS IS A STATE TO WHICH EVERY TRADER SHOULD BE COMMITTED

An effort to reach the state of consciousness is a form of meditation. The goal of this practice is to find your true identity at this very moment and fully realize what takes place around you. Consciousness is a special state which ensures clarity of thoughts and ability to focus regardless of external factors. Just imagine how this disposition is useful for traders.

Objectiveness is an ability without which a trader cannot be successful. It is not that difficult to develop it as many people think. You just need to develop trading skills systematically and pointedly, focusing on following the rules of your trading system.

It is very easy to go out of focus and make a mistake inadvertently, especially for an intraday trader. Deconcentration of attention could result in the descending spiral effect as soon as you try to bring your losses back.

Constant being in the current instant during trading cannot be overestimated.

HIGH CONCENTRATION IS NOT ENOUGH

The ability to set priorities, accept and interpret an endless flow of trading information is not a simple but quite realistic objective. Perhaps, you will not be perfect in everything but you will always have a possibility to improve the level of your mastery having applied certain efforts.

It is important to realize that it is impossible to stay focused without a proper training. You will permanently ‘extinguish fires’ and jump around during trading without a proper understanding of the market conditions, which you face, and what you should expect from the market.

The market will always take you by surprise and every time you will try to puzzle out the idea which lies in the foundation of each situation. Such a trading approach is extremely tiresome and emotionally exhausting. It will be difficult for you to stay completely concentrated during the whole session.

PRACTICE CONSCIOUSNESS IN TRADING

Today we will speak about three basic principles of the conscious trading, applying which you will be able to stay concentrated all the time. Observation of these principles could become an excellent strategy of reducing the stress factor impact for you.

  • Preparation for trading.
  • Monitoring the market.
  • Calmness during trading.

Preparation for trading

We speak here not only about standard preparation for every trading session. You should have a certain framework, which you should use when the market sends you certain information. In other words, you should formulate a system of actions for different scenarios. It will help you to stay focused in different situations, since you will have a certain behaviour template for any situation.

Impartial monitoring of the market

All traders monitor the market regardless of their level of mastery. However, the quality of this monitoring will depend on a number of key factors.

You, as a trader, should be up in arms. The market generates an endless flow of information, in which you should clearly identify proper conditions for executing a trade in accordance with your trading system. You should clearly understand exactly what you look in the market for. This would allow you to be alert at the right moment and help you to avoid many stressful situations.

Such monitoring should be impartial. The wish to see certain things in the market could motivate you to look for confirmation of false ideas. Such an approach will bring you to a dead end. It is a self-deceit. Beware of such psychological traps.

It is important to stay focused during trading. As soon as a trader learns to trade consciously, the majority of distractions will not have a serious impact on him. However, in any case, a trader should build a friendly and favourable environment for trading.

Make sure before starting to trade that there is nothing distracting on your computer table. Turn off your phone, make sure you are not hungry and your family knows that this is your working time – do everything possible to ensure that nothing distracts you from trading.

Staying calm when making trading decisions

It is not easy for a trader to stay calm all the time but it is absolutely necessary for survival in the competitive market fight. Everybody knows that emotional trading often results in losses.

For example:

  • being outraged a trader can execute a senseless trade in an effort to have revenge upon the market for the earlier made losses;
  • being exalted by a series of profitable trades a trader can find himself in an unfavourable situation due to his overconfidence.

Emotions not only can make you take unreasonable trading decisions but also distort perception of useful information.

Every professional trader should aim at staying calm and focused and being ready to act. Ability to reach this state largely depends on your attitude towards your trading results.

Every trader needs to accept the fact that losses, made in the result of trading by the rules of a trading system, do not pose a threat but are standard expenditures (as Mark Douglass teaches in his ‘Trading in the Zone’ book).

It is necessary to constantly practice the ability to adequately react to loss-making trades. Even if you clearly realize that irritation from making losses has a destructive impact on your trading, you will nevertheless face uncontrolled emotional states when your trading account shrinks. Simple understanding is not enough. that is why you should permanently develop adequate emotional reactions to the current developments.

Try to apply the above principles in your trading. Consciousness in trading will definitely increase your chances for success. We hope that this article has been useful for you. See you next time!

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