Concentration In Day Trading

Concentration In Day Trading

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I know what many will think. How many times have you been told already to focus when you are trading? “I know. I get it - I have to focus.” Think again. Our minds can play games with our perception if we are not aware of it and so disrupt our ability to consciously process peripheral information. So what I want to champion here is not only the ability to focus for a long time, but how to focus properly. New traders often have less of an idea of what really counts as important and so find that either they are swamped with information they have little chance of making sense of or are completely missing potentially critical developments.

The classic experiment of a primate appearing in the middle of a basketball court is really quite unbelievable. It involves counting passes between certain players and then the random appearance occurs. Many who participate in the exercise will completely miss this fact until the clip is replayed to them and it is pointed out. It is because the mind is trained on counting the passes that the gorilla is missed.
How does the gorilla help you trade well? In essence, it doesn’t. The gorilla does not affect the number of passes and so it can be ignored as unnecessary to process. However, what it does do is help you to understand that the mind can filter out information in this way without you even noticing it.

What are the potential implications of this knowledge? As trading goes, especially at the moment, market focus and influences can change from one day to the next and even minute-to-minute. These changes may leave you in a mess especially when the original focus was an important piece of information in itself. We’ve all ended up kicking ourselves when we take a loss, then look back for causes only to see how obvious it should have been that the trade wouldn’t work. Part of that is emotion of course and not wanting to be wrong. But part of it is also not processing fully the other information around you.

How can we avoid such issues and even benefit from them? My argument would be that many participants have the same problem. It’s human nature. Most aren’t aware of it, don’t understand it or even just don’t have effective methods for countering it. Because of this, there are times when market focus changes too slowly. It’s also partially to do with how participants are already positioned, but how many things in trading can be attributed to just one factor? This clearly can create opportunity for the astute trader.

To think of the original experiment in another way, what do we think may be the outcome if the participants were asked to count the passes and to watch for anything unusual before the experiment is conducted? In the same vein, if you plan to monitor a set of variables both quantitatively and qualitatively in nature before you start to trade, you are likely to pick up on these changes more quickly than others. Many successful traders use checklists to ensure they look at all aspects of the market at set intervals and not just what their minds are currently focused on. This may seem tedious as much of the data will not have specific importance yet it does ensure you are tracking all factors which you understand to be of influence.

The other point I would stress is that physical condition can severely affect your ability to stay alert, especially when there are multiple points of focus. Just like anything else in life, we are far more effective at what we do when we are well rested and alert.

However you decide to monitor the continuum of the trading universe, make sure you have appropriately thought out which factors you need to watch and how you will ensure you do so at regular intervals.

About the Author:
James Kessick is a forex analyst with NetPicks. For more free day trading articles, webinars, interviews, and more visit http://netpicks.com/trading-tips



Article Originally Published On: http://www.articlesnatch.com


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