Excerpt: Steve Ward — performanceedgeconsulting.co.uk — traders-mag.com, Dec 2007

Our state, physical, mental, and emotional, underpins our trading performance. All performance is state dependent. How we are feeling at any given time impacts on how we perform to some degree. Being able to access high-quality, performance-enhancing states consistently is therefore key to being able to trade your strategy successfully.

The Special Forces have a model known as the 3 S's that is used as the basis for developing elite soldiers, and it is highly relevant to the development of elite traders also.

S
State
Physical and mental/emotional state must be highly trained. State precedes everything else.
S
Strategy
The ability to develop and implement strategy. Useless without the right state to execute it.
S
Skills
Technical proficiency. A requirement, but never sufficient on its own. State and strategy must support it.

Coherence: The Peak Performance State

A series of techniques collectively known as the HeartMath® System have been developed that enable people to systematically self-generate and sustain a psychophysiological state known as coherence. This 'coherent' state is associated with a physiological phenomenon called Heart Rate Variability.

HeartMath System
HeartMath System Overview

The primary focus of the HeartMath techniques is on the intentional generation of a sustained positive emotional shift, which in turn allows the natural achievement of cardiac coherence. Studies show that the intentional use of these positive emotion-focused coherence-building techniques, on a consistent basis, effectively facilitates a re-patterning process whereby coherence becomes increasingly familiar to the brain and nervous system, progressively establishing itself in the neural architecture as a new stable baseline.

Heart Rate Variability Explained

Heart Rate Variability (HRV) is a measurement of the beat-to-beat variation in heart rate. As mental and emotional perceptions change, it has an impact on our heart rhythms. When stressed, angry, or under pressure, the heart produces a signal that is jagged and disordered. This is known as a chaotic state. Under coherence, the signal becomes smooth and regular.

How The Heart Activity Affects How We Feel

Heart Activity and Emotions
Heart Activity Impact on Emotional State
Chaotic State (Stress)
High stress, under pressure
Impaired decision-making
Slower reaction time
Emotional reactivity
Coherent State (Peak)
Calm, balanced, present
Enhanced cognitive function
Faster, cleaner reaction time
Emotional clarity and stability

During phases of coherence, individuals have been shown to have greater emotional and mental clarity, reduced self-perceived stress levels, better sleep patterns, and enhanced cognitive function. Traders may use these techniques whilst waiting to place trades, once in a trade, or to regain coherence after a loss, error, or setback that has disrupted their state.

The Pilot Study: Traders and Coherence

19
Traders
6
Week Program
2007
UK Study
9 retail (full and part-time) and 10 full-time professional traders, ages 21 to 45. The programme commenced with a psychometric questionnaire measuring performance-related factors including anger, anxiety, stress, positive attitude, decisiveness, and mental clarity. Traders then completed behavioural training and were requested to practise using the techniques over six weeks, including a 12-minute offline technique once daily, Monday to Friday.

Six weeks later they performed the baseline tests again, and the pre and post data revealed significant improvements.

Study Results
Six-Week Study Results

Pre And Post Data Chart

Pre and Post Data
Performance Metrics Before and After Training

Although by no means conclusive, the results of the pilot study show clear and significant improvement in aspects that are key to trader performance such as being mentally sharp and quick-thinking, motivated, perceptive, and relaxed. Interestingly, the period during which the programme was run involved some challenging market conditions, making factors such as resilience, maintaining a positive attitude, and staying focused particularly essential.

If a trader can perform to their potential consistently, assisted by maintaining peak states such as coherence, they will be optimizing their results, which may fluctuate in actual value due to market conditions, but remain consistent in relative value.

Steve Ward, Tradercourse Ltd

Benefits for Traders

Improved cognitive functioning: thinking, analysing, processing
Improved decision making: mental clarity and sharpness
Improved perception of opportunity in the markets
Improved emotional control: getting into the trading zone
Improved performance under pressure
Improved resilience: handling setbacks, losses, errors
Improved energy levels and concentration and focus
Reduced stress, anxiety, and improved sleep quality
The dual benefit

The techniques provide a dual benefit. They can be used to counteract the effects of pressure or negative emotions in the immediate moment, as well as providing long-term benefits through rebuilding the body's natural energy reserves, resulting in substantially enhanced feelings of wellbeing, energy, and confidence, and improving personal health and resilience.

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