September 21, 2006

The Ideal Environment For Trading

When trying to trade at your best, the proper trading environment can make all the difference. For some people, the proper environment may be on the floor of the exchange, getting charged up from the traders yelling in the pit. For other people, the ideal environment may be sitting in a bathrobe with your dog at your feet. Whatever your ideal environment is, however, it's necessary to trade in this environment when you are trying to trade at your best.

Behavioral psychologists argue that the environment in which you trade can dictate how you think, feel, and react. The environment can even elicit memories and motives that influence your decisions and actions. Have you ever tried to sleep in a strange bed, but couldn't fall asleep? Perhaps it was the sheets, the lumpy mattress, or the noise outside your window. Whatever it was, it just didn't feel right. When you are at home in your own bed, however, it all feels right. You feel calm, comfortable, and relaxed. You fall right to sleep. It can be the same way with trading: The ideal trading environment can immediately put you in the proper, winning state of mind.

Working in an environment that suits you can greatly improve your performance. If you prefer a neat environment, it may be hard for you to concentrate when your workspace is cluttered with charts. It may be necessary to straighten things up before you can trade in a calm and relaxed manner. Some traders prefer a small cubbyhole with a desk and a few monitors.

From a psychological point of view, a workspace can have "stimulus qualities." What that means is that our thoughts and emotions can be linked to a particular workspace environment. For example, your family room with a big screen television and theatre quality sound can be associated with relaxation and fun. It may be difficult to work in that environment, even with the television set turned off, because the space is "conditioned" to thoughts, feelings and motives of entertainment. Similarly, when you are sitting at your dining room table, you may naturally think of eating rather than working. And when you are in your bedroom, you may naturally think of sleeping. Each environmental space has a specific set of thoughts, feelings, and motives associated with it.

There are times, however, when we "condition" multiple thoughts, feelings, and motives to a particular environmental space. For example, you may eat, sleep, and watch television in your family room. When you do multiple activities in the same space, the space loses some of its "stimulus value." In other words, when you find yourself in a space that has multiple uses, it can elicit a variety of thoughts, feelings, and motives. You don't want this to happen to your trading workspace, however. When you enter your trading workspace, you want to immediately feel energized and ready to trade.

It may be necessary to take specific steps to ensure that your trading workspace elicits a winning mindset. It is necessary for your trading workspace to be distinct. It should not be in a space where you engage in other activities such as eating or sleeping. Your workspace doesn't necessarily have to be an entire, separate room, although a dedicated room for trading would be ideal. You can merely use your desk as a workspace if that is all you have. The key is to keep the space distinct, though. Don't eat or sleep at your workspace. If you feel like eating, sleeping, or even daydreaming, it is better to get up and do these activities somewhere else so as to preserve the positive stimulus qualities of your workspace. By keeping your workspace distinct, it will elicit only thoughts, feelings, and motives related to a winning mindset. Also keep in mind that a workspace can be "conditioned" to elicit thoughts, feelings, and motives that are associated with a pessimistic mindset. If you are stuck in a rut, your workspace may become associated with a bleak outlook. Don't under-estimate the power of the space. If you get a negative vibe from your workspace, it's vital to trade somewhere else for a while until you regain your mental edge. Once you return to profitability, you may be able to return to your old workspace and "re-condition" it so that once again it elicits a winning mindset. Where you trade can make as much of a difference as how and what you trade. When you trade in an environment that elicits a winning mental edge, you will trade at your peak.

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