Trading is not just about finding the best trades; it is about how you consistently handle yourself as you grind your way to your various financial goals.
So, a winning trading psychology is a real competitive edge, and many of the world’s most renowned traders and investors use meditation to help them develop and maintain such an edge –they begin their day sitting on a meditation cushion.
For instance, Ray Dalio, founder and CEO of Bridgewater Associates, the world’s largest hedge fund famously said:
Meditation, more than any other factor, has been the reason for what success I’ve had.
Dalio has even built many of the principles he learned as a long-time meditation practitioner into his firm’s culture.
Hedge fund manager Paul Tudor Jones also meditates. Here’s what he said about the practice:
Meditation has helped me become a better individual, mentally, spiritually, emotionally.
Tudor Jones became famous in the 80s and is known for his macro trades, particularly his bets on currencies and interest rates.
Linda Raschke, a veteran trader featured in Jack Swagger’s Market Wizards, is also a fan of meditation. She said:
Ultimately, it will help you stay in control of yourself.
Meditation – A Training For The Mind
Meditation is the act of training your mind the same way as hitting the gym for your body. No wonder it’s become so popular with the finance crowd. In fact, meditation classes and workshops at Goldman Sachs have long waiting lists–hundreds of names long– according to Bloomberg.
And it’s understandable: no one wants to lose out on a possible competitive edge.
Here are some of the latest research findings I have found on the advantages of meditation:
- Harvard Medical School’s 2005 study found that meditation can increase the thickness of your prefrontal cortex. This is the part of your brain that is associated with attention and self-awareness.
- A 2009 study by Aarhus University of Denmark found that long-term meditation leads to thicker brain stems.
- A 2010 study by the University of California, Davis found that meditation can increase your attention span.
- Harvard Medical School’s 2010 study found that meditation can increase the density of gray matter in areas associated with memory and learning, self-referential processing, emotional regulation, and perspective.
- The International College in Thailand conducted a 2014 study and found that meditation helps with job-related stress.
- A study by the University of Amsterdam in 2014 found that meditation was closely linked to attention to detail, creativity, and creative performance.
Now, this is just a small sample of the growing research that has been done on meditation’s benefits, and it clearly shows that the science is there and very promising.
But what about people’s subjective lived experiences? At the end of the day, that’s what matters, right?
Benefits of Meditation For Traders
Here are 5 benefits of meditation experienced by traders who consistently meditate:
#1- Meditation Helps Avoid Rash Decisions
FOMO, greed, fear, hesitation usually lead many traders and investors to make terrible financial decisions. While the masses are on a perpetual emotional rollercoaster, meditators are more composed and reflexive. They respond to challenges—rather than react blindly out of emotions and poor self-awareness.
#2- Meditation Promotes Independent Thinking
You can’t make money unless you think differently than the masses. You have to be an independent thinker to do well as a trader. Meditation helps you think for yourself by the direct insights it gives you into the human condition.
#3- Meditation Develops Your Emotional Maturity
Whenever you’re thinking differently, there’s a significant chance that you’re going to be wrong. So, overcoming your emotional barriers is so fundamental to making a good decision. Meditation helps you change your relationship with your emotions so it’s more empowering.
#4- Meditation Reduces Stress
Trading can be stressful. Of course, it does not have to be, but still, we make it so. And usually, the more stressed we are, the higher the odds of making dumb trading mistakes. As a mediator, you’re not immune to stress, but you definitely deal with it in more productive ways.
#5- Meditation Makes You More Sensible and Perceptive
Meditation helps calm and slow down your busy and overactive mind, and your life can greatly benefit from this. When you think less, you listen more and see more. You also approach issues in unconventional ways and are more open to the beauty in the world around you.
I Teach Meditation
I’m a long-time meditation practitioner, and the principles I’ve learned as a meditation practitioner, student, and teacher have helped shape how I view the market and the endeavor of trading.
In the Trading Psychology Mastery Course, I teach meditation and the philosophy behind it. I help you see the market the way I do.
Here are a few comments from traders who took the Trading Psychology Mastery Course.
I’m definitely more patient.
[…] and when that happens [FOMO], I just focus on the sensations of my breath and feel it coming in and going out. I pay attention to my thoughts and emotions, and I try my best to be present with them without holding on or pushing them away. It’s definitely a habit now and it’s made a big difference to my bottom line for sure.
For me, the big takeaway from the course is the idea of not trying to stop thoughts or emotions and instead learning to relate to them and watching them rather than becoming controlled by them. I’m not going to lie, it’s something I’m still working on, but I can see how this is positively impacting my life.
It helps slow things down so my mornings aren’t as erratic as before. I can focus better and act calmly. Thank you Yvan.
It helps me balance my tendency to gamble on low probability set-ups, just because of boredom, fomo, or what have you.
From Mark Donovan:
[…] greater awareness of my emotions for sure. When I automatically go into an investment thinking I’m right, it helps me shift my mindset from thinking “I know I’m right” to “How do I know I’m right?” It gives me a greater level of awareness. You know?
Yes, I’ve been able to stick with it. I do it every day. It helps me reflect on my mistakes and clear my mind to make better decisions in the future. Thanks for the course.
In the market, the greatest obstacle to rational decision-making is the “ego” and its defense mechanisms.
This takes various forms: a need to prove oneself right despite contrary evidence; the innumerable stories we tell ourselves to try to explain away something we don’t fully understand; the rigid attachment to certain outcomes; the refusal to think in terms of gradience and probabilities. And so on.
Meditation helps you address these issues by helping you understand your mind—your inner world—which then, helps provide clarity about the outer world.
Do yourself a favor: Cultivate a daily meditation practice. Whether you decide to learn it with me or someone else, do it for yourself.