Flow State Trading – How to Get Into the Zone // Ep. 78

In This Episode

• Trading in the Zone by Mark Douglas
• Why it helps to see yourself as immortal
• Heartmath Inner Balance app

How Do You Get Into the Trading “Zone?”

Getting into the Flow State is the best thing that you can do to improve your trading. Regardless of if you day trade or swing trade, getting into the right mindset will greatly improve your chances of trading in a peak performance state.

So we talk about a couple of simple things that you can do to get into the best trading mindset right now. They may seem overly simple, but they can work wonders for your trading results.

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Hugh:    Hi, Walter. People talk a lot about flow state and how that contributes to success in a lot of different areas especially trading. How do you get into a flow state? What do you think about how people should get into a flow state? I just want to hear your experience on that.

Walter:     For traders, it is probably that analogous situation like an athlete getting ready to run a hundred meters. I used to do that in high school, I did a lot of work on getting into the right state of mind. Get into the right start you know and stuff like that like basketball players.

Anyone who has done athletics like that even in high school or college, you would have some thoughts definitely around there, probably at least a routine to do. You can certainly do that when you are looking at the charts. If you are a longer term chart trader like me, you just want to be in that and sitting around looking at the chart.

I think it applies more to a lower time frame sort of in and out scalping type of traders. Where they really need to be on point in terms of what they would say is the flow state, I think. However, having said that I think that when it comes to trading there are some things that come up that you probably do not think about when you first get into trading. I will give you an example.

The fear of pulling the trigger. So if you are trading a system that has a lower win rate let us say it is a thirty-nine percent win rate. And, you are going to have a lot of losing streaks, you might get into a state of thinking, “Gosh, I had nine losers in a row. I do not want to have a tenth loser. I really do not want to take my next trade.” Of course, you do not take it and then that is the big winner for the month or whatever. That is typical.

I think one way to kind of get into the right mindset for trading, it does not really matter what style of trading you have. There is a really good story about this guy who wrote a book about risk. He hangs around traders and professional poker players, stuff like that. There is really a good insight from that.

What he was saying was that the traders or actually the gamblers — it is funny that I would mix that up but — the gamblers were saying that they kind of look at themselves as having an infinite lifespan. If you think about it, what happens when you do that is you would see the world differently.

If you knew that you were going to live a thousand or two thousand years, you would make different decisions in your life. That is what he said about these people. The way that they saw risk because they have these little, tiny edges but of course they saw that and they were so valuable over the long term.

So any one individual trade you can just kind of throw it out. Who cares? In fact, ten, twenty or thirty trades, who cares? Because it is the long term gains, as Einstein said. I do not know if he actually said it but people say that he said it. It is a trivial thing.

He said that compounding is the eight-wonder of the world. That is really true when you look at risk from a long term point of view. So I think probably one of the easiest ways to get into a pro-trading mindset is for any trader to think of themselves as living a long, long time. What would that mean for you and for your trading system, if that would be the case?

What would you do? Because you would not take giant risks, would you? You would not put ten percent of your account on any given trade if you knew that you had an edge and that the edge is going to play out over thousands and thousands of trades. I think that is really a valuable way to look at trading. Almost like you just live forever and that you want to be around or you want to have your trading account around to live through those good times.

I do not know if that is exactly what you are talking about because flow states are kind of more in the now sort of thing. Feeling the market and understanding where it is going to go. Sort of like the shorter term trader’s world or whatever. How do you see that when you are looking at the flow state?

Hugh:     First of all, I think it is really important that you have some sort of a routine like you’ve said. In high school, I did not understand why we did the same exercise over and over before a game. That is all it is getting you to a right mindset.

I think if you can get into some sort of meditation or you have an app that can calm you down is a start. What you said makes a lot of sense. I guess, I really never thought of it that way.

Hugh:    Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.

At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.

So, if you're interested in that, be sure to enter after this podcast is over. Alright, back to the episode.

Hugh:    If you know that you have an edge even if you are not in the flow state in that one session it won’t really matter because you are like, “Okay, I am factoring in a bad day into my system, into my numbers and I will just turn from this and go on to the next one.” So that makes a lot of sense to me. I think you are right in that.

The flow state really is more important in day trading or whatever. Instead of like, if you are a swing trader and not so much in my opinion. I think you’ve got to just experiment with different things. Figure out what works for you. It might be meditation for some people. Some people might need to take a nap before or something like that. Just try a bunch of different things and see what works.

Walter:     You really want to be in a situation where it is hard to shake your confidence and so that is preparation. Preparation is the key there and we’ve talked about that before. That is critical. What is the app that you use? I know that you are using Muse. The device that links up to an app. Is there anything else that you use in terms of meditation? I know that you are big into meditation.

Hugh:    Let’s see, inner balance.

Walter:     Inner balance, right.

Hugh:    So that little thing where you stick it in your ear and then you do the breathing. If you are in a certain zone, in terms of heart rate variability, once you are in that zone for a little bit and I consider that calm and collected. I will take it off then go to trade.

Walter:     It makes sense. I keep getting these ads because I think they know that I am into this stuff. I keep getting these ads from an app called Headspace. I do not know if you’ve seen that.

Hugh:    Yes, it is pretty popular.

Walter:     I keep getting that like this week especially so they must know. You know how they follow around and know what is going on.

Hugh:    Alright, cool. Thanks, Walter.

Walter:     See you!

Hugh:    All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.

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