Forex trading with instant funding can be a very lucrative activity for the highly motivated individual. The notoriously volatile forex markets offer the potential for great rewards, but tapping into this rich seam takes exceptional focus and self-discipline. These attributes can be hard to attain, particularly with the constant churn of distractions in today’s online world.
Here’s a look at why concentrating on a task for long periods of time can be challenging, and some practical steps you can take to improve your focus and discipline when forex trading.
Why is the human mind prone to distractions?
We are all human, and our minds are not designed to focus for long periods of time on a single topic, but rather to constantly jump from thought to thought, rather like a monkey swinging from tree to tree. This is why difficulty focusing, or a restless and unsettled state of mind is sometimes referred to as ‘monkey mind.’
Concentrating on a demanding task means keeping a network of brain functions in action, including the frontal cortex, which is the part of the brain that overrides our impulses and keeps us on track.
This takes up more energy than simply letting our minds wander freely from thought to thought, and as we are naturally evolved to conserve energy, our minds tend to drift away from the hard work.
How can we keep a wandering mind in check?
A wandering mind is not actually a bad thing, because it can be a creative process, or a chance to see problems from a different perspective and come up with a solution. If you have ever had a great idea in the shower or when you are doing nothing in particular, this is probably why.
Conversely, deliberately sitting down to try and solve a difficult problem can often feel as though you are banging your head against a brick wall. There is a theory that the brain needs a certain amount of external distractions to help it fulfil its natural processing functions. Once it is sufficiently occupied, it will find it easier to focus on what’s important.
This may be why some people prefer to work in a slightly messy environment with some white noise, rather than an extremely tidy and silent office. However, we are all different and some people may just have a lower tolerance for distractions than others.
Find your comfort level
The brain is constantly seeking new stimulation, so trying to force it to focus on just one task may be counterproductive. If you pride yourself on multitasking, it may not be the best approach for forex trading, because this is weakening your ability to concentrate on one task at a time.
In the digital era, many people are emotionally hooked on social media and cannot resist checking their phones every time a notification pings, because it can provide an instant dopamine boost to hear from a mate or get a like or share.
However, this can seriously eat into your time and your mind will never be able to achieve the state of flow needed for more detailed work. Turn off all non-essential notifications and put your phone out of reach if you find it an irresistible distraction during working hours.
Some studies have shown that the mind is only capable of concentrating for 90 minutes before needing a break of 15 minutes or more, so bear this in mind when you are planning your work schedule. Using this break wisely may also be able to boost our ability to concentrate when we get back to work.
Techniques to improve concentration
Exercise helps to boost circulation and therefore the amount of oxygen and nutrients that are available to the brain, so if possible getting in a quick walk or workout on your break may be beneficial. If exercise is not possible, then meditation may be another option.
Regular meditation can also boost concentration levels, by training the mind to focus on the present moment through paying attention to the breath, our surroundings, or the perceptions of the five senses.
When thoughts naturally wander, the key is to gently direct them in a non-judgemental manner to the present. This is a method that many people find useful for managing stress as well as boosting concentration.
In fact, research has shown that the prefrontal cortex of the brain performs much more poorly when subject to stress, including trying to force it to concentrate for long periods without a break. Therefore, not factoring in breaks, meditation or exercise into your daily routine can be counterproductive.
If this all sounds rather far removed from the world of business and forex trading, it’s worth noting that some of the world’s most successful business people and entrepreneurs start their day with 15 or 20 minutes of meditation to get them in the right mindset.
Time-blocking
Most successful forex traders will tell you that they stick to a daily routine to give structure to their trading patterns. This is especially important for forex trading, because it can be an open-ended task with never ending research and analysis to do. If you don’t take charge of your schedule, your schedule can end up taking charge of you.
This can lead to you gradually leaching time from other areas of your life that are important, such as cooking and eating well, socialising and spending quality time with your family or partner, or exercising or maintaining hobbies and interests.
It’s important to maintain your work-life balance to avoid burnout and ensure that your mental and physical energies are topped up. The other danger of not sticking to a routine is that it is more tempting to deviate from your trading plan and make irrational decisions or impulsive trades.
Time blocking is a method of time management that involves dividing your day up into blocks of time that are dedicated to certain tasks, as well as breaks and leisure activities or personal administration.
This helps you prioritise your most important tasks and stick to a schedule. It is not set in stone and you will probably make changes and adjustments as you go along, but it provides structure and discipline for your day, which naturally goes hand in hand with forex trading.
The clear structure puts a full stop on open-ended tasks, and gives you self-imposed deadlines to hit so you can move on to the next task. This helps you to focus, use your time more effectively and prevents you from overlooking essential tasks.
If you are not used to working in a highly disciplined manner, you may not be able to manage more than a couple of hours of time blocking at first. Gradually build it into your day so you get used to maintaining your focus rather than constantly jumping between tasks.
Concentration is like a muscle that gets stronger the more you use it, so regard it as a mental gym workout, and gradually step up the intensity over the course of a few weeks.
Be realistic about what you can achieve, and don’t overburden yourself with weighty expectations. Reward yourself for small wins, and don’t become excessively negative or angry when a trade doesn’t go your way. This is a normal part of forex trading, and it is a marathon, not a sprint, so remain positive and patient.
Have a trading strategy and stick to it
It goes without saying that you should have a solid trading strategy and risk management strategy in place, so that you are not making random trades that would be no better than gambling.
Set clear objectives and have a predetermined entry and exit strategy for each trade. Do not be influenced by market volatility, rumours or peer pressure to deviate from your trading strategy; only do this in exceptional circumstances when there is clear and objective supporting evidence. Keeping a journal can help you to remain accountable to your goals.
Avoiding overtrading
Part of the discipline of forex trading is recognising when you should step back and leave well alone. Novice traders can take some time to realise that less is more, and that placing fewer high quality trades is more fruitful than placing many weaker ones.
Overtrading may also be driven by a ‘fear of missing out’ or FOMO, where it seems that the perfect trade is just around the corner. The truth is that there is no such thing as a perfect trade, and the pursuit of it will eat into your time, resources, and profit margins.
New traders can also be easily led by their emotions and unconscious cognitive biases, which can encourage them to become greedy in their pursuit of profits or overly fearful and cautious about making a loss. This means that they never achieve a level of consistent profits.
This undisciplined approach to trading may be exacerbated by a ‘lucky break’, or a trade that turns out well even though you didn’t follow a carefully structured trading plan. This unjustified success can lead to overconfidence, and the sense that you might have a natural instinct for forex trading.
The fact is that forex trading is all about the opposite of instincts; it is about learning to recognise and avoid subjective thought processes, and learning how to make objective decisions based on a balanced and unbiased assessment of all the evidence.