Feeling stuck in a loop of procrastination and anxiety? Panicking because your strategy seems to have holes everywhere, causing you to lose profits? We have some proven tips backed by neuroscience to help you improve a trading strategy that’s not bringing you the desired results.
1. Master Your Moves: Write It Down
By writing down your tasks and allocating specific time slots for them, you’re engaging in a process known as external memory storage, i.e., offloading cognitive burden from your brain onto the external environment. This reduces mental clutter and frees up cognitive resources for more complex tasks.
Moreover, breaking down your trading activities into actionable steps helps facilitate a phenomenon known as chunking in cognitive psychology. Chunking involves grouping information into manageable units, making it easier to process and retain.
Finally, marking off completed tasks provides a sense of accomplishment, triggering the release of dopamine, a neurotransmitter associated with motivation and reward.
2. Own Your Focus
Imagine having a “Super Trader” software — a program with an exceptional success rate. You start downloading it, but switch to another tab at just 5% loading progress. This is a metaphor for a brain lacking focus.
Deep concentration on a single task engages higher-order brain networks responsible for problem-solving, decision-making, and creative thinking. This focus allows us to enter flow states, achieving peak performance and effortless productivity.
However, quick-content consumption challenges attention spans, leading to ADHD-like symptoms. This is why regaining focus can feel like unlocking superpowers for your brain.
The Pomodoro technique for enhancing focus can be a great yet simple tool to improve a trading strategy. Here’s how it works.
☝️
You may dream about many things, but in order to achieve them, you need to be realistic. Think about the amount of your investment, your strategy, and set a reachable goal based on that. Gradually, you will get there, but you need to take it slow. A realistic approach will remove a huge part of the stress, allowing you to make better decisions.
3. Set Realistic Goals
All success stories preach about dreaming big, but we advocate for dreaming SMART (Specific, Measurable, Achievable, Relevant, Time-bound).
Psychological research shows the importance of setting specific goals in boosting motivation. When your objectives are clear and attainable, your brain rewards you with dopamine, fuelling your determination to achieve them.
So, instead of dreaming big with “I want to be a rich trader,” think SMART. For example:
“I want to achieve a 10% return on investment within the next six months by trading stocks in the technology sector. This is how I’ll do it…”
4. Crush Fear with Logic
When the market doesn’t go where you expected, the associated emotions activate the amygdala, the brain’s centre for processing threats. This activation can trigger a fight-or-flight response, leading to irrational decision-making and errors. It may be difficult to concentrate on how to improve a trading strategy when emotions control your actions.
Research in neuroeconomics has shown that individuals who effectively regulate their emotions exhibit superior decision-making and risk management skills. Emotional regulation can be enhanced through:
- Solid trading plan;
- Predefined risk management strategies;
- Mindfulness and cognitive-behavioral techniques;
- Regular review and adjustment of the trading plan based on market conditions and personal performance;
- Diversifying investments;
- Focusing on the bigger picture and long-term outcomes.
Conclusion
By understanding the neuroscience behind trading activities, traders can effectively manage emotions, activate their brain power, and make smart moves in the market. So, equip yourself with these strategies, dive in, and watch your trading journey soar to new heights!
