FX COACHING
• Checklists – Harvard Surgeon Atul Gawande, author of ‘Te Checklist Manifesto’ tells of how they reduced surgical error in hospitals significantly when they introduced checklists pre, during and post-op. Whilst checklist may not be sexy, and may have the feeling of ‘more paperwork’ the fact is that they work – would you want to fly on a plane where the pilots had not done their pre flight checks? – and Gawande stresses that they should be short and effective. Checklists can be particularly effective in reducing errors in situations which are common and where processes are more automated.
• Become more mindful – mindfulness is a phrase used by neuroscientists to describe the experience of being in the present moment and is the opposite of being mindless where little conscious attention is being paid to what is happening. Mindfulness is a skill and can be gained through meditation or attention training
and
by actively focussing on having your attention in the moment – can be practised when you are eating, drinking, walking, exercising – and the research by neuroscientists shows that the benefits of such practise include greater cognitive function, a heighted awareness of unconscious processes, greater executive function, a stronger ability to control urges and impulses, greater behavioural control and improved ability to process information. Te rise of the use of mindfulness over the last decade is probably best illustrated by its use by the US Marines who have utilised the 8 week Mindfulness Based Stress Reduction (MBSR) course before deployment to active duty in war zones.
• Consider being a Satisficer rather than a Maximiser – Satisficer is a combination of satisfactory and suffice and is best summed by getting to the point where a decision is ‘good enough’. At the other end of the continuum is the maximiser,
30 FX TRADER MAGAZINE April - June 2012
where perfectionists live, where there is an almost endless search for all the required information to make a decision. Generally satisficers are happier than maximisers and deal with bad outcomes to their decisions more effectively and are able to move on to the next one more quickly – anyone day trading would want to be more towards the satisficer end. Einstein said it beautifully ‘keep it as simple as possible, but no simpler’.
• Regulate your emotions and energy – good decisions come from harnessing the right emotions; you cannot make a decision without emotion but you need the right ones. Professor Sam Wang a neuroscientist at Princeton advises ‘Try to avoid making a decision at an emotional extreme’ – extreme stress, extreme anger, extreme confidence even
extreme happiness.
Developing the ability to manage your emotions is an important part of the decision process, recognising your mood and emotional state at decision points is a key skill, having the discipline to not trade if you are at an extreme, and developing the ability to regulate your emotions
through changing your self-talk and/or your physiological state such as utilising breathing techniques or other relaxation approaches. Underpinning emotional management is energy management, being healthy and well which is helped by factors such as sleep, nutrition, exercise and getting sufficient rest and recovery.
SUMMARY
Making trading decisions, under conditions of risk and uncertainty is not by nature easy to do, but by developing your understanding, increasing your awareness or implementing a simple technique or strategy you can enhance your decision making and improve your trading performance.
Steve Ward
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