Friday, February 25, 2011

Does POISE = The ZONE?

The words poised and zone are not just nice, fluffy concepts, they are rooted in a specific psychophysiological state called coherence that has a unique internal signature depicted by a heart rate variability pattern that looks like a smooth rolling wave. Teaching traders to access this state of coherence and repeat it with masterful consistency, especially when under the pressure of volatile markets, is a necessary risk management intervention we are using in our coaching work with traders.


Mark Douglas says a psychological zone is not a condition you can will yourself into the way you can will yourself into a feat of endurance. It is a state of mind you find yourself in that is inherently creative. Usually if you start thinking about your actions at a rational or conscious level, you pop right out of it. Even though you cannot force or will yourself into a zone, you can set up the kind of mental conditions that are most conducive to experiencing "the zone." Douglas called this a positive winning attitude, and we at Even Keel call it POISED 2 PERFORM (P2P).

The essence of what it means to be poised or in "the zone," is that your mind and the market are in sync. As a result, you sense what the market is about to do as if there is no separation between yourself and the collective consciousness of everyone else participating in the market. If this sounds a bit strange to you, ask yourself how it is that a flock of birds or a school of fish can change direction simultaneously. Traders who have experienced being tapped into the collective consciousness of the market can anticipate a change in direction just as a bird in the middle of a flock or a fish in the middle of a school will turn at the precise moment that all of the others turn. However, setting up the kind of mental conditions most conducive to experiencing this seemingly magical synchronicity between you and the
market is no easy task.

There are two mental hurdles to overcome. The first hurdle is learning how to keep your mind focused in what Douglas calls " the now moment opportunity flow." In order to experience synchronicity, your mind has to be open to the market's truth from its perspective, not what you want it to be. The second hurdle has to do with the division of labor between the two halves of your brain. The left side of the brain specializes in rational thought, based on what we already know. The right side, specializes in creative thought, which is not fully known and therefore taps into an inspiration, a hunch, or a sense of knowing that usually can't be explained at a rational level. By definition, true creativity brings forth something that didn't previously exist. 



As you can tell, there's an inherent conflict between these two modes of thought, and the rational, logical part will almost always win unless we take specific steps to train our minds to accept and trust creative information. Without that training, traders usually find it very difficult to act on hunches, intuitive impulses, inspirations, or sense of knowing. The founder of the Institute of Heartmath, Doc Childre in an interview on demystifying the zone describes the zone as follows. 
People have talked about “getting in the zone” for years and the zone has become a popular buzz word with dozens of books written on it. But what the “zone” actually is has been hard to pin down, leaving it mysterious and almost unapproachable. Our research suggests that people have within them a place of higher consciousness where life and all kinds of experiences can be processed from another level of intelligence, which we term heart intelligence. It’s a state of heart/brain synchronization that’s within all people. There have been many different disciplines to approach it - spiritual and yoga disciplines, breathing, visualization, physical training, etc. These approaches are all akin to each other, yet describe different slices of the pie. They all lead to a higher intelligence potential that is within the human capacity to unfold. The zone is not a place - it’s a state of consciousness where your higher motor faculties and intuition merge in liquid coordination. You don’t just push a button to get there. Entering the zone is an internal developmental process. 
There is a gradated and practical process for increasing zone awareness potential. It starts with the understanding and management of your emotions. Without a trader stepping up the management and balance of their emotional system in day-to-day trading, they won’t have enough internal power to shift to upgraded levels of zone consciousness. It’s important to understand there’s a big difference between what some call the float zone (airy, mushy) and the high performance zone, which is relaxed and poised, yet instantly supplies the appropriate energy for the situation at hand. It’s a cued up bio-response state, a heart intelligence activation where your mental, emotional and physical systems are working energetically in sync, like a well-programmed algorithm.

The Institute of Heartmath has created a software called emWave, designed to help increase effective coordinated action in the now, whether your executing a trade or making a difficult decision in life. The software helps you get into alignment with the intuitive intelligence of your heart. It’s important to understand that the heart is not just a blood pump. Neurocardiologists know that the heart has its own intrinsic nervous system or “little brain” that intuits, senses, feels, and remembers, and sends this information to the big brain.

The emWave is an interactive learning system with a pulse sensor that monitors and provides real time feedback of your heart rate variability (HRV) or heart rhythm pattern. HRV is used by doctors as an important indicator of stress levels as well as mental and emotional fitness levels. Heart rhythm is different from heart rate. Your heart rate changes with every beat and the emWave plots the beat-to-beat variations to reveal your heart rhythm pattern. The heart rhythm pattern reflects activity in your sympathetic and parasympathetic nervous system, which together regulate and control 90% of your body’s involuntary functions—hormonal and immune response, digestion, and so forth. When you feel tension, anger, anxiety, stress, your heart rhythm pattern becomes jagged and disordered. When you manage and shift your emotional state to a poised attitude or positive feeling, your heart rhythm pattern becomes more ordered and coherent.

With practice a trader can learn the feel of coherence and flow so they can shift back into that state when needed. This develops confidence and inner trust when faced with the challenges of uncertainty. The emWave can be used within a pre-trade routine, similar to stretching and other exercises before playing a sport. It will help prevent choking by adding rhythm to your brain-muscle coordination and provide quicker energy recoup when under pressure.

Listen to a professional trader who’s been in the business for approximately 2 years describe his experience with emWave. He used heart rate biofeedback several times per day in a disciplined and consistent manner; the positive impact was seen dramatically in his P&L throughout the 12 months we worked together. What we learned from this trader is that a structured process of refining his trading strategy and deliberate practice of self-regulation skills significantly improved his confidence, emotional stability and overall trading performance. The audio depicts 2 time periods roughly 4 months apart.


Monday, February 21, 2011

Can traders learn something from a BIRD that's poised 2 perform?


The heron is a fascinating long-legged and long-necked wading bird frequenting lakes and rivers worldwide. It flies majestically, tucking its long neck in; unmistakable due to its large frame.

For such a big bird its hunting method is awesome. Standing in shallow water, absolutely still for several minutes at a time before suddenly striking at frogs and fish with incredible speed and accuracy.

Watching herons is breathtaking and also carries many life lessons when converted to human behavior and the art of trading for a living.

The heron plants its long legs firmly, body motionless, grounded so as to become one with its surroundings. Calm, quiet and aware it waits with alert senses and presence. Total focus, total concentration; channelling its entire body into patient poise, as it waits with statue-like demeanor.

From unhurried grace to swift agile motion the heron snaps in the blink of an eye to feed. Then, it returns to stillness, quiet, calm, alert concentration once again.

DOES THIS HAVE ANYTHING TO DO WITH TRADING FOR A LIVING?
ANSWER THE FOLLOWING QUESTIONS AND LET US KNOW WHAT YOU THINK.

Can you raise your alertness and tune into your surroundings like the heron?

Can you heighten your senses and remain grounded in the present moment?

Can you remain calm, gentle, patient and occasionally still, even motionless?

Can you blend speed, agility and finesse?

Can you balance aliveness with an unhurried nature?

Can you remain in touch with the nature of the markets – alive to opportunity?

Can you mimic the poise of the heron to enhance your trading performance?
________________

The nature of this poised bird has a lot to teach a trader about how to hunt for opportunity.

Is being POISED necessary for achieving high performance in trading?

Once again, POISED is a balanced state of readiness to act in one's own best interest and function in the service of performance values regardless of shifting thoughts and emotions.

The Pre-trade routine is the first component of POISED and is likened to the pre-shot routine in golf, it is deliberate, sets in motion a sequence of repetitive actions that helps a trader SEE opportunity, FEEL confident and TRUST their ability to execute at the right time. Preparation for a trader can include items such as a healthy breakfast, physical exercise, positive thinking or meditation practice, overnight market research, reviewing economic data releases, preparing potential trade scenarios, clarifying a daily execution goal and some form of emotional regulation routine.

Poised traders we coach enter their pre-trade perspectives into a digital document or shared calendar to enhance accountability, tracking and follow through with written insights. We’ve come to experience that if it’s not written or recorded somewhere, a trader can’t track what he/she did, and more importantly, they miss out on an ingredient of deliberate practice that supports development of expertise, namely, reviewing the path to making errors.

Our rationale is that in order to grow the mental muscle of confidence, we need the trader to do relevant tasks that demonstrate to themselves that their “walking the talk.” We’ve used Google apps, specifically the calendar and document applications that allow not only the trader to record and track progress, but when shared, allows a supportive coach to monitor and motivate dedication to the process. For example, traders can easily cut and paste pictures of charts with text and support/resistance lines into a online document for a richer collaborative experience, and even print it out and place it near their computer to help them adhere to their plan.

One trader experienced tremendous benefit from the pre-trade routine process by developing a market narrative on five different markets each day. He would rank the potential opportunities in order to help him scale his trade lot sizes ahead of the day. This enabled him to execute more efficiently when the scenario in his narrative took shape.

Another tool in the pre-trade box traders have used is heart rate biofeedback to train themselves in the art of emotional risk management. This software visually displays a chart formation that is similar to what a trading software program depicts. It provides a concrete representation of their emotional coherence (i.e., optimum state of readiness to execute decisions). By doing this for five to twenty minutes each day, a trader develops excellent self-regulation skills that assists them in beginning each day within a known and acceptable emotional range.

As you can see, getting prepared for the trading day takes sustained effort. It happens for an hour to two before the first trade is ever made; and can be likened to stretching before and after you go running. The best traders and algo systems are ready to take your money right now, thus, a trader needs to be at their peak state of performance prior to the open. POISED is not an option, it’s a necessity!

Do you believe a pre-trade routine (P) in trading is necessary for realizing consistent profits?

Poised 2 Perform: What does it have to do with trading?


Even Keel, a.k.a. POISED 2 PERFORM, is a trader-tested performance system that when deliberately practiced, prepares a trader to better navigate uncertainty and manage the challenges of opportunity. Poised, is a balanced state of readiness that enables a trader to execute coherent decisions with efficiency and confidence.

In future posts, we will be sharing a brief overview of how to organize your trading process via the POISED structure to help you think through and bring shape to your own performance routine. Our upcoming book will provide a more in-depth account of this structured, yet flexible, learning process, and its impact on enhancing a traders psychological competence and ability to secure consistent profitability.

Dedication to continuous learning, like the rising and falling of ocean waves, is the driving force behind a traders consistent performance improvement. On a daily basis, traders we work with review their decision making process to sharpen their edge and prepare themselves for the next days opportunity. This process of readiness, regulation and review, is a circular feedback loop aimed at keeping a trader even keel and moving closer toward opportunity. 

The POISED system was developed in Chicago, real time, with real traders, on real markets with real money. We engaged traders in daily dialogues during and after market hours employing collaborative web-based technologies that enabled traders to access subtle nuances of their moment-to-moment decision making.

The rationale that supported trade execution and risk management became the mental practice field where new thinking and refined strategies were born. It became evident to us as coaches, that through deliberate mental and behavioral routines prior, during and after active trading, a professional trader can consistently grow their confidence and decision making prowess to secure proportionate and stable profits. 

Next post: P (Pre-Trade Routine)