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Getting All Caught Up in Trading

Your state of mind, which is the condition or position of thoughts and emotions, governs your results. For instance, the state of fear can unleash a torrential cascade of fight/flight neurochemicals. These neurochemicals hijack your ability to think clearly and make you the recipient of scathing hyper-critical comments in the form of inner voices that immobilize you causing massive disruptions in following rules and keeping commitments.  Let’s be clear, there are many states of mind, both good and bad; however, the state we are talking about is Flow.

Woman focusing on a stock chart

Have you ever been so involved in a sport, competition, board game or book where you lost track of time, seemed to be doing it effortlessly and felt you were at one with everything? Then you were in the zone, the pocket, the groove and you were in Flow.

What is the Flow State?

The flow state has been described as being caught up and moved by a river of experiences, like being fully alive. It’s been touted as in harmony with the environment around you. It appears to happen most easily when you sing, dance or play sports; but it can happen at work or when you’re having a good conversation. When in the flow state, attention is focused on a limited field with full concentration, action and awareness merge and there is a freedom from worry about failure.

Benefits of Achieving the Flow State

Those who achieve the flow state have fully prepared for their endeavor and are at their ultimate high-performance position with optimal consciousness where they feel and do their best. It is an auto-telic (self-rewarding) experience and is at the core of every world-class medal. It is likely responsible for every major scientific break-through. Fortune 500 companies have built entire philosophies around the Flow concept where top executives have declared that they are five times more productive in flow.

Flow can enhance creativity from as much as 500 to 700% and learning is jacked up due to the prolific encoding of information.  Also, the amount of time it takes to go from novice to expert, 10,000 hours according to research by Anders Ericsson, in flow is reduced by as much as half. This is of special interest to new trading students who are often overwhelmed by how much they must learn in order to incorporate the concepts. Flow silences the inner critic by shutting down the executive parts of the brain, causing decisions to be made more by the unconscious thereby making it seem seamless and easier. Flow accelerates the path to Mastery – flow is hackable.

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The neuroscience of Flow and why it works

The first thing to recognize is the brain is an energy hog.  It represents only 1.5 to about 2% of total body mass yet it uses about 20% of total energy intake. So, the brain is always looking for a way to conserve precious energy.  As attention increases and sharpens the brain begins an efficiency exchange and starts shutting off parts of the pre-frontal cortex, which is where executive functions reside; that is, where the high-level decisions are made. This part of the brain regulates the sense of time as well.  As the pre-frontal cortex shuts down the passing of the time is distorted and the individual feels like they are in an elongated Now.  In other words, we are better, faster and all aspects of human performance become magnified.

Neurochemicals are another reason Flow is so powerful. Neurochemicals are performance enhancing feel-good drugs that are made in the pharmacy that is the brain. When they are released they make people stronger, and quicker. People also report that their senses are incredibly heightened.  It’s an addictive feeling associated with excelling at something difficult; also called in scientific terms autotelic (self-rewarding).  Researchers feel that flow states involve the source code for intrinsic motivation, which is a very powerful and useful item to experience when trading. Below is a list of those brain chemicals.

  1. Norepinephrine is also known as adrenalin and provides the kick, the rush, the energy that propels the system to charge up the metaphoric hill. 
  2. Dopamine lowers the signal to noise ratio which means more focus and greater pattern recognition.
  3. Endorphins provide that runner’s high and have you feeling no pain, like superman.
  4. Oxytocin is the brain’s love drug. It strengthens social bonding and connections causing  a person to feel at one with the activity.
  5. Anandamide prompts lateral thinking and the linking of disparate ideas. You begin to connect the dots.

So, this is quite a cocktail of super-powered support to help you in the trader trenches.

How to Achieve the Flow State

There are a number of conditions that foster Flow; topping the list is having clear goals every step of the way. Another is to ensure a balance between challenges and skills where the challenge is approximately four percent beyond the skill level. Another important condition is that there be substantial risk.  Of course, trading offers ample financial risk along with emotional and social risks.  It’s important to mention here that fear and other emotional pain is equal to if not greater than physical pain; and they are both processed in the same parts of brain.

Now, let’s briefly look at the four stages of the Flow State in order for you to build your flow state at will.

  1. The front-end phase is termed Struggle. This is where you become strenuously engaged with a problem. It is loading and overloading the brain. For example, learning to play chess or the OTA core strategy to trade. Typically, it involves pushing the self beyond known limits.  The moment things seem too difficult most want to step away, but in the struggle phase, if you are truly passionate about wanting to learn, you step into it and are pushed to attack your physical and mental limits.
  2. The Release phase is next. To release means to be free from what holds you back. You let everything go, taking your mind off the problem and seeing where it takes you.  You find that you’re going from conscious processing, a slow, energy inefficient way of handling data; to a fast, highly efficient unconscious processing.  You are able to categorize much more data in diverse ways.
  3. Flow is next. This is where the brain releases nitric oxide, washing out stress hormones and releasing the feel-good neurochemicals.
  4. The Recovery phase is last and on the back end of the flow state. This is not a feel-good state because the feel-good neurochemicals have been depleted and the body must recover & rest.  It’s a time for resilience and emotional management. If this phase is not managed well you will experience spikes of cortisol (the stress hormone) which block the flow state progression. Moving from flow directly into struggle again reduces the ability to remain on task with focused awareness making you more susceptible to distraction or worse, quitting.

So as you can see, this is a powerful way to set yourself up for bringing and keeping your A-Game at the platform. The above advantages of the Flow State are only the highlights of this marvelous mindset that researchers are learning more and more about with every new study. The really fantastic realization is that you can tap into it right now.

Joyous Trading

 


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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