Mindfulness for Traders and Active Investors

Mindfulness is a hot topic in trading, investment and risk-taking, however few people really understand what it is, how to use it effectively, and how powerful it can be.


What exactly is Mindfulness?
Mindfulness is a westernized secular concept, with deep roots in Buddhist philosophy and practice, which is

gaining increasing acceptance as a powerful tool to help people reduce stress and anxiety and to more fully focus and engage with the immediate task in front of them.

Jon Kabat-Zinn, Professor of Medicine at the University of Massachusetts Medical School, is the person generally accredited to adapting Mindfulness for use in the west. In particular he was influential in developing ‘Mindfulness Based Stress Reduction’ (MBSR), a highly effective tool for helping people with chronic depression, anxiety and stress.

In the past few years, use of mindfulness has expanded beyond the fields of medicine and is now being employed in a wide array of fields to help enhance performance in areas where focus, concentration and resilience are vital. Some of the areas where mindfulness is now practiced include education, the military, business, sport, performance arts, and investment management.

What is Mindfulness practice?
Mindfulness is the continuous practice of being in touch with the present moment. Jon Kabat-Zinn, describes it as follows: “Paying attention in a particular way; On purpose, in the present moment, and non-judgmentally.”

Kabat-Zinn himself was inspired and influenced by the Vietnamese Buddhist monk ‘Thich Nhat Hanh’. Hanh sums up what I believe Mindfulness is aiming to achieve in the following quote:

‘The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present. All we need to be responsible for is the present moment. Only the present is within our reach. To care for the present is to care for the future.’

Development of a Mindfulness practice, using regular meditational techniques, aims to help a person achieve a relaxed, non-judgmental awareness of their thoughts, feelings and sensations so that they have a direct knowing of what is going on inside and outside them self, in real time. Each and every person can, with the help of guidance, develop a practice which suits their particular lifestyle and challenge.

How does Mindfulness help trading and investment? Practicing "mindfulness" has helped many traders stay focused and make better decisions based on objective data, beliefs and facts. Through mindfulness you become aware that you, your thoughts, your biases, behaviours and beliefs are not one and the same. Mindfulness allows you to step back from the fray and observe yourself and your reactions to be more aware of what is happening within yourself and around you.

One of the most destructive practices one engages in when trading is that of self-judgment. This may involve comparing oneself against ideal levels of performance, against your own very high expectations, against your beliefs in the inflated expectations others have of you, or against various alternative better outcomes. Self-judgment is rarely positive, and no matter how accomplished or happy one is, they may often hold on to negative self-judgments which have the power to undermine one’s confidence and self-belief. Self-evaluation is different to Self-judgment, Self-evaluation is observation of one’s own actions, but where the message is not laced with the poison of self-judgment or self-criticism. Traders with a well-developed mindfulness practice, and a mindful way of being, are more conscious and aware of them self, their actions, and their re-actions to events and news. They are able to gain control of themselves, and can start directing their resources and energies in a productive manner. One can never control the market, but they can have greater control of themselves, of how they see the market, and how they react to the market. This, together with a sound trading and risk management strategy and practice, should enable one to be a more productive and profitable as traders and investors.

Chrysalis Performance Consulting Ltd

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