Sunday, June 04, 2017

How Do You Warm Up For Trading?

Notice how in most performance activities, top performers engage in warm up exercises.  Singers, musicians, athletes--all have their warm up routines.

What is your trading warm up, and are you truly warming up the functions you want to exercise?

Some time ago, I learned a simple trick for getting rid of any nervousness or tightness before giving a talk to an audience.  I showed up to the auditorium early and greeted guests as they arrived.  I chatted with them before the talk and generally had a good time.  By the time my presentation was ready to begin, I had already been speaking for a while and many people in the audience were familiar.  Exercising sociability as a warm up helped me be more engaging with my audience.

So it is with all warm ups.  We exercise the functions we most want and need to employ.  That means different warm ups for different performers.

Here are a few warm up exercises that come to mind for traders:

*  Self-awareness activities - Meditation and visualization exercises help us enter a calm, focused, self-aware state.  By warming up our self-awareness, we make it difficult to lapse into frustrated overtrading.  Reviewing journal entries to mentally rehearse our goals and how we will pursue them is an excellent self-awareness warm up.

*  Flexibility activities - I love to mentally rehearse different market scenarios as we approach the open.  The scenarios include how I would respond to early weakness or strength, what I would look for in a range or trend day, etc.  Contemplating many market possibilities helps ensure I don't get locked into any one.

*  Aggressiveness activities - Many times the difference between a decent trading day and a great one is the ability to take enough risk when solid opportunities are present.  Pumping up with active physical exercises while mentally rehearsing aggressive trading tactics in the right situations acts as a way of priming good risk taking.

*  Creativity activities - Scanning many markets prior to the open and/or watching many stocks in premarket trading can many times serve as an alert to early influences on the market(s) we're trading.  When we look at many things and identify commonalities, we can detect important market themes that may well persist into the trading day.  Conducting these scans in a team format, interactively, can further warm up our creative thinking.

No serious actor/actress, musician, or athlete considers going into a major performance without warming up.  Warm ups practice the functions we most want to employ.  Your trading warm up should put you in the mental, physical, and emotional state you need to be in to do your best trading.  Many, many trading problems occur simply because the right functions were never warmed up.  Your warm up should be your way of priming the functions you're employing when you're trading at your best.