Are You Thinking Straight?

Humans really are amazing creatures, it amazes me every time I look at my little son Lachlan and see how much he can learn in a single day.

There is so much information to take in each and every minute, yet somehow our brains can process it and turn it into something we can understand (sometimes ;)).

In every day life we need to use both sides of our brain, the left and right, with each side taking on different roles depending on the stimuli, a truly adaptive super-computer, yet when it comes to trading, quite often we run on only half capacity.

If one dominates the other, then our thinking is lopsided, and we can't "think straight".

The different sides of the brain deal with different aspects of life, and when it comes to trading this applies also. The left side of the brain is the analytical side, it is the side that is structured, organized and processes patterns, while the right side is the side that is spontaneous, likes to act on hunches and identifies resemblances.

Can you see where I am going with this? (trust me there is some relevance to trading)

It is important to recognize which side of your brain dominates, if you tend to find it hard to stick to a trading plan, you often place a trade on a hunch, then wonder why in the world did you do that for, then chances are the right side of your brain dominates, however if you like to plan out every little detail, want to enter a trade on the exact pip and exit the same way, then you are probably left brain dominated.

Like any muscle in the body, if a muscle is weak, the only way to strengthen it is through exercise, and there is no reason why the brain should be any different.

Personally I am right brain dominated, I fight constantly with maintaining the discipline to trade effectively.

Yet some of my most profitable (I won't say best) trades were taken on a hunch, as the right brain processed patterns that my left brain just didn't know about.

Does this mean we should throw the rule book out the window and succumb to the power of the right brain? certainly not, as we need balance in everything, it means I need to work on my left brain, give it a good daily workout, find something that requires me to be disciplined, methodical and think ahead that I can do each day.

My solution? those damn sudoku puzzles, that actually drive me nuts, but require logical thinking to solve and so serve as a great warm up each morning.

... without an alert and healthy mind, your trading day is doomed ...

A great trader for me is someone who can see things in a market a step ahead of most others, yet has the discipline to implement a risk management plan around those trades.

That means this trader needs their right brain to be strong to recognize patterns and trends others can't see, but also have their left side strong enough to keep them disciplined and precise in their trade execution.

It might seem a trivial topic when talking about trading, but without an alert and healthy mind, your trading day is doomed.

Sorry if this seems somewhat obscure in relation to trading, but I bet there have been plenty of times you have traded tired, emotional, frustrated on irresponsibly, all signs your brain is not functioning at full capacity, and usually the days where your results are the worst.

Happy trading!