As a forex trader, you are probably always on the lookout for the next tool that can help advance your trading plan, sharpen your strategy, and keep you at the forefront of your field.
However, has it occurred to you that the most useful tool readily available to you is your brain? And have you considered the advantages of reprogramming it to work to your advantage?
Here, we will discover how to build the habits and patterns that will ultimately lead you to forex trading success.
Our brains are in a constant state of flux. And it is this incredible ability to change and adapt that neuroscientists call Neural Plasticity.
So, what is neural plasticity, and how does it affect your daily life?
Your brain is more malleable than you think, with all your daily experiences shaping and reshaping it by the second.
A fascinating organism, the brain is made up of an estimated 100 billion neurons. These neurons are responsible for creating a total of 100 trillion neural connections. This is considering that each neuron may be connected to 10,000 others. That’s a lot of brain power that you can use to your advantage and trading success.
The connections between these brain neurons are called neural pathways. The more we think about or practice certain things, the stronger the related neural pathways will become.
Say for instance, that you tend to sleep in daily but would like to start an early morning exercise routine. By taking concrete steps to start exercising at 7 am, you will slowly build the habit of becoming an early riser. This will entail meeting with a personal trainer for example, buying new fitness gear, and going to sleep a little earlier each night. By committing to these actions every day, you are forging the path for stronger neural pathways, until it becomes a hardwired habit to wake up at 6 am and start your exercise by 7.
Likewise, when aiming to create a new fx trading routine, the actions you take daily will slowly begin to rewire your brain.
To support this, and according to the neuroscientist Michael Merzenich from the book “The Brain That Changes Itself” written by Norman Doidge, by practicing a habit under the right conditions, you can change hundreds of millions, and possibly billions of the connections between the nerve cells in your neural pathways.
How does this apply to forex or stock trading?
Forming the habits that determine your success in any endeavor requires persistent action. This will lead to forming new neural pathway connections, strengthening existing ones and weakening the connections no longer in use.
This means that by practicing healthy trading habits, you can start to let go of any destructive behaviors which have been holding you back and build a helpful routine to support your trading plans and strategies.
How you can start to build stronger neural connections
- Incorporate positive emotions
Fuel your thoughts and actions with strong positive emotions. This gives your thoughts the power to engage your neural pathways. For example, when closing a winning trade or having a good trading day, focus on the positive emotions related to this win, and even share it with your family or friends.
- Practice makes perfect
You can strengthen the new neural pathways that you have created into concrete habits through repetition and continued practice. Think about your trading goals and strategy; feel the joy of achieving these goals; and then put your strategy into action.
- Visualize your accomplishments
Our brains cannot really tell the difference between something real or imagined. Research shows that every time you are thinking, you engage and strengthen the neural pathways connected to whatever you’re thinking about.
So, spend a few minutes visualizing your trades. Decide that you will succeed at a set number of CFD trades for example today, and then set out to make it happen.
Meditation aims at disengaging the busy mind and allowing access to a much quieter state of being.
When you are stressed, your mind instinctively relies on the strongest neural pathways, and looks for the path of least resistance. Yet, to fully benefit from neural plasticity and succeed in creating different habits, you need to turn off your stress response, and stimulate the relaxation response.
For example, if you would normally let your trades run for too long, learn where to place the appropriate stop loss orders to minimize your risk. Or if you tend to compulsively check the news every 5 minutes, learn to let go and relax every once in a while.
When practiced daily, there are countless benefits to meditation. It promotes higher brain plasticity and leads to healthier cognitive and emotional processing. And we all know how important it is to steer clear of emotional trading!
The secret to sustained success lies in repetition. Whatever you focus on will surely flourish and grow.
These are general tips that you can apply in your daily life to focus your mind and rule out distractions. When you apply them to your forex trading, you will be pleasantly surprised at how effective these tricks may be.
Reference: Neural Plasticity: 4 Steps to Change Your Brain & Habits by Dr. Hilary Stokes & Dr. Kim Ward