How Meditation Can Transform Your Forex Trading

Forex trading calls for a sharp mind, quick decisions, and a cool head. Some people seem to be naturally blessed with these traits, but chances are, they are doing a lot of background work to keep this mindset together. In many cases, that work involves a daily meditation routine.


At first glance, you may not think that the cut and thrust world of forex trading has much to do with the world of meditation. You may even feel hostile to the idea of taking part in a ‘woolly’ practice, which seems to be the antithesis to the hard facts and figures of the fast moving trading markets.


However, forex trading actually calls on powerful human emotions such as fear and greed, which we are all predisposed to feeling, and are especially acute when we are under pressure and faced with the prospect of gaining or losing a lot of money!


Successful traders understand that the best way to stop these emotions from negatively impacting their decisions is not to try and suppress them, but to learn how to manage them effectively. This is where meditation techniques come in. Here’s why it could make you a more effective and profitable trader.


Meditation calms the ‘monkey mind’

You may have heard of the term ‘monkey mind’ to refer to a state of poor concentration. It’s a Buddhist expression, and it is used to describe the way the mind wanders from thought to thought while we are not properly focused on a task. Psychologists sometimes call this state the ‘default mode network’ (DMN).


While we all need some mental space to be alone with our thoughts sometimes, the more time we spend doing this, the less helpful and productive it becomes. This is because the mind tends to have a negativity bias. That is, it naturally tends to foreground negative thoughts and past experiences rather than positive ones.


This was once useful from an evolutionary point of view, because it tended to stop our ancestors from being eaten by predators or starving to death in the wintertime, for example. However, now it is a much less useful trait. Of course, sometimes we still need to be alert to danger or learn from mistakes, and we shouldn’t ignore warning voices.


However, when negativity becomes our default mindset, it can hold us back from achieving our goals. Our wandering minds can ruminate over the mistakes we made in the past, or worry about the future, rather than recall pleasurable or positive thoughts that uplift and sustain us.


If you tend to have a critical inner voice, as many people do, allowing your mind to ruminate freely tends to amplify it. This can stop us moving forwards in life, or being as productive and successful as we have the potential to be. It’s a constant drain and distraction on our mental and emotional energy.


It’s not difficult to see how this state of mind can affect your forex trading, which calls for a laser focus, self-belief, and mental discipline. The good news is, it is possible to conquer this unsettled and restless state of mind through meditation techniques.


How to shut down the monkey mind

The most effective way to train a wandering mind is to learn how to focus on the present, through mindful meditation. This way, whenever you find your attention fragmenting, you can quickly collect yourself and bring your thoughts  back to the moment. It is this calm and focused mindset that often leads to successful trading decisions.


You will find that you are less prone to speculating about the ‘what ifs’? You will be less easily swayed by every blip in the market, and less inclined to follow the herd when a piece of economic data or geopolitical event is rocking the boat. In short, your decisions are more likely to be objective and clear sighted.


To get yourself in the right mindset for meditation, first find a quiet and comfortable place to sit, that is free from distractions. Many people like to meditate first thing in the morning, or before bed. You can spend as little as 10 minutes on meditation, or as long as an hour. As you notice the benefits, you may wish to increase your practice a little each day.


Avoid meditating in direct view of your desk or laptop, or anything that reminds you of trading, or your day job. In fact, try and avoid focusing on anything visually interesting at all, but keep your gaze soft and slightly downwards focused. Wear loose comfortable clothing, so you can breathe freely without any restrictions.


When you are sitting, pay attention to your posture. You should sit up straight, with relaxed shoulders, your chin should be parallel to the floor, and your feet hip width apart and resting just under your knees. Your hands should be placed palms down in your lap. Some people prefer to sit on the floor, and adopt the lotus or half lotus position.


The next step is to focus on your breathing. Breathe only through your nose, and notice how your belly rises and falls as you breathe in and out. At some point, a thought will pop into your mind, such as something you need to do later on that day, or a reflection on a past event.


Instead of dwelling on the thought, let it go. It can be helpful to visualise intrusive thoughts as clouds floating across a sky, or leaves floating by on a stream. Concentrate on the rhythm and physical sensations of your breathing, to bring yourself back to the present.


Eventually, you should notice that your regular breathing is having a calming effect on your central nervous system. At first, 10 minutes is probably the most you can manage. However, as your focus and concentration grows stronger, you may find that 15 or 20 minutes is the optimum time for meditation to really make a difference to your day to day mindset.


If you find that you become impatient or distracted, don’t dismiss the idea or become cross with yourself. Treat yourself with compassion, and just calmly centre yourself and bring your focus back to the present. Meditation isn’t a game of success or failure; it’s a gradual process of developing an objective, observer’s worldview.


Remember that learning mindfulness is just like any other training programme: you don’t expect to be match fit after one trip to the gym; you accept that it is a steady process that will develop over the coming weeks and months. The more you practice mindfulness on a regular basis, the better your powers of concentration will become.


Some people find it useful to listen to an app which talks them through the process. There are dozens of free meditation tools that can be downloaded straight to your phone, and have different daily exercises for you to try. Even just setting your timer can help too, because you are not tempted to interrupt your meditation to check your watch.


How to fit mindfulness into daily life

If you are constantly pushed for time, juggling a family, a full-time job, and your trading commitments, a daily meditation routine may seem like an impossible luxury. However, it is possible to incorporate mindfulness into ordinary activities. Here are a few ideas.


If you take exercise, even a 10-minute walk at lunchtime, this can be an opportunity to practice mindfulness. Focus on the rhythm of your feet as they carry you along, and notice the pattern of your breathing.


When you are in the shower or brushing your teeth, concentrate on the movements of your body, and the sensation of the warm water, the taste of the toothpaste, the scent of the shower gel, and so on.


How to draw on mindfulness when you are trading

Of course, eventually you will need to apply what you have learnt to your trading. When faced with a tense moment, such as when the markets begin to turn just as you were about to achieve a profit target, get yourself into that objective mind frame. This doesn’t mean you should ignore what is happening, but it can buy you a moment to consult your trading strategy, rather than make a hasty and panicked decision that you will regret later.


Mindfulness meditation alone isn’t enough to be a good trader of course, you need to be backed up by a well-informed trading strategy, that is aligned to your trading goals. You should work out in advance what your risk tolerance levels are, so that you are not tempted to trade with more capital than you can afford.


With instant forex funding available, it has never been easier to enter the world of forex trading. It’s perfectly possible to learn how to be a successful trader through mastering technical skills and knowing what your limits are. However, mastering your emotions and thought processes will really bring you up to a whole new level of the game.


Every decision you make matters, and in forex trading, those decisions should be clear sighted and logical. This is why learning to separate your thought processes from your emotional responses is such a powerful tool.

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