Long Posts

6 lessons my meditation practice taught me about trading the markets

Mindfulness dissolves the walls that mindlessness builds

I’ve been a trader since late 2006. I run my trading business full-time and that is how I make my living. I’ve learned more in the past 10 years than I have at any other point in my life, and I expect the lessons, the mistakes, the failures, and the successes (all intimately intertwined) to continue.

Trading for a living has taught me more about myself than I thought it would. Like a lot of you, I used to put trading and self-knowledge in two different categories, but now I’ve come to learn that proper trading is like anything else in life: it rests upon your ability to do it without resistance. And my meditation practice has been instrumental in the development of my capacity to do so. Yes, done properly, without delusion, such a simple practice can prove to be immensely rewarding.

Here are a few lessons that my meditation practice has taught me about trading the markets.
80%. Yes! 80% of success is showing up!

80% is showing up

The core skill of meditation is showing up. And showing up is not something we do once. It’s something we do over and over again. Is it easy? No. Showing up is sometimes very hard. You feel resistance of all sorts, your mind finds excuses, but that’s the whole purpose of showing up – it’s doing it no matter what your mind tells you. Showing up is the foundation of the practice of meditation and one of the keys to success in almost anything in life.

In trading, showing up (I also like to call it engagement) presents a couple of advantages:

  1. The more you trade (your proven system), you more you are improving your statistical chances of success. And how do you trade your proven system? You show up!
  2. It allows you to take advantages of rare (and potentially life-changing) opportunities in the markets. The more you trade, the more the likelihood of being at the right place and at the right time – you are always there, available, and ready.
  3. Showing up lowers your expectations and allows you to manage your trades with little emotional involvement. You are also less prone to being disappointed if a trade doesn’t work in your favor because if you show up, you know that there’s always the next trade. And the ones after. Trading becomes a process. 
  4. It allows you to make mistakes and go through failure while seeing that it’s not that big of a deal, contrary to popular belief. The only pre-requisite to that is that you have to trade small enough so that you can stay in the game and keep learning.

So, as we see, showing up is crucial to the endeavor of trading, and to my mind, the only failure is in not showing up.
Anchor this in your mind: It`s a process!

The process is everything

In meditation, one of the lessons we learn through our own experiences is this: when we think too much about an end result, it doesn’t happen. You see, many people come into meditation expecting bliss or some kind of “spiritual” states of mind.

Those states do occur once in a while but what’s important to understand is that the practice is not about experiencing those states. It’s just accepting the very ordinary states that present themselves to you however they are, and not clinging to them or trying to avoid them. It’s working with each and every one of them, gently and kindly.

When it comes to trading, it’s the same thing: People are usually attracted by the idea of trading for a living. It’s exciting. The potential is enormous and so it’s easy to get obsessed by an end goal of x amount of return by the end of this or that period. But, trading and meditation are both processes. You do a thing to the best of your abilities, and then you do another thing.

If you keep at it like that, a few things become a lot of things, one after the other, and before you know it, your results become tangible. But this is unlikely to occur if you’re obsessed with the idea of accomplishing incredible feats. You’ve got to have complete faith in the process and not even think about the end goal. The key is to focus on the small steps. It’s a marathon, not a sprint.
Get out of your own way

Your ego will destroy you

Unfortunately, a lot of traders out there have egos as large as the sky. They want to get rich so badly, and even their twitter names and profile pictures show this obsession.

I do not mean to be condescending by saying this but in my opinion, this is a terrible attitude to have in the markets because it shows one’s predisposition for short-term emotional gratification. These people are more prone to making trading errors born of fear and greed. How do I know this? In a not-too-distance past, I was one of these guys.

Those who get sucked up by this mirage of wealth and riches never get far. Trading can get ugly. It can be hard at times. Sometimes you make mistakes, you suffer the consequences, and sometimes you even work a lot with nothing but losses to show. Who breaks down in this case— is it the person who’s huge ego hangs onto every trade he places and every market direction, every piece of news? Or, is it the one who, day-in and day-out, remains calmly focused on his process, level headed, and detached…? The second person, obviously.

My meditation practice has taught me how to navigate the markets with inner calmness and resilience. I approach the markets in a completely selfless manner — I do not see myself in the markets at all. They don’t reflect back at me a feeling of inadequacy, or unworthiness, or lack. I just see them for what they are without any filters. And you can achieve this too. The only thing is that meditation is pretty much like going to the gym. The moment you stop being consistent with it, the changes you’ve been cultivating will gradually fade away. So, it’s a life-long practice.
Control? An illusion!

We have no control

Every moment that passes, you are moving closer to your death than ever before. You can only wish that you die of old age, but ultimately this is out of your hands.

For instance, at this very moment, the ceiling could fall on your head because the house builders didn’t do their job properly. You could step outside the next minute and have a guy texting on his phone run you over with his car. Who knows what can happen at any time? And, these things would be out of your hands because everything is happening out of a long and complicated chain of cause and effect which we don’t have any control over.

The rules that we create to govern society as a whole give us an edge in some ways, because they decrease the likelihood of something bad happening to us, so that we can live longer. Rules create a structure for human behavior. But this doesn’t create certainty, it just decreases the probability of something bad happening. And so, the certainty or the control we think we have, it’s an illusion.

If you think about it, you really can’t control the environment, you can’t control each individual person walking on the face of this earth, you don’t even have control over your own body. Every breath you take is unique and could be the last one. Every heart beat could also be the last one…

A consistent meditation practice has helped me understand this impermanence and uncertainty intrinsic to life itself. It has helped me to not fear those but appreciate them for what they are, not merely on an intellectual level, but also on an experiential level, within my body. And this is the difference between simple knowledge and wisdom.

And this wisdom, when acquired, inevitably gets poured into the way you trade. You see, many people know what do to in trading, but they can’t seem to do it because they lack this experiential understanding or wisdom. Somewhere in their mind, they know that markets are uncertain. At the same time, they hold beliefs that say the opposite of that. And they will act consistently on the beliefs that hold more weight and that is better anchored in them intellectually and experientially.

For instance, the belief that we can control things is deeply anchored in us, because we experience it every day of our lives. We think we have control over people, our environment, things, idea, etc.. it’s a beautiful illusion, but again, it’s just that: An illusion. And meditation can help dispel this illusion so that your vision of reality becomes more in line with the way things really are.

When you stop believing in certainty, you become more accepting of the realities of trading. Losses don’t hold the same kind of weight in your mind because you know (intellectually and experientially) that just like with success, it’s temporary. Everything is! And so, you stop trying to control your trade outcomes. You just sit back and let everything happen as they may while following your rules.
Your problem is this: You think you have time!

Time is your most precious asset

As I began trading for a living in 2006, although my initial start was bumpy (to say the least), I began realizing just how badly we all get screwed over by working for other people. My last job in date was in a casino. I was a count team member and we would count the amount of money generated by the casino every day – we’re talking about millions per day. And I guarantee you, I wasn’t getting paid enough for that job. In addition to that, they extracted the living life out of me and stole my time.

So, I’m grateful for taking the risk of failure and starting to trade for a living despite my rough start, because at least I did something that I liked. And it’s allowed me to see how much time I was wasting on other peoples’ goals and visions and dreams instead of spending that amount of effort and time on mine. And above all, with trading’s numerous challenges, it has allowed me to become a better version of myself.
Happiness? An inside job!

Satisfaction comes from within

All of the lessons discussed so far come from the same core place: Happiness has to be found within. It’s not to be found in external factors. You have to trust me on this, building a fortune in the markets is not what life is about. You might read this and raise your eyebrow, but it’s the truth. It’s only when you begin to sit in silence with yourself that you can clearly see this.

Sometimes, as I sit in meditation, I find myself in moments of genuine mindfulness. During these moments, no thoughts arise, and no thoughts mean that the conceptual mind that sees and recognizes things is absent. And so, nothing registers as a thing. I will look around, see the wall, my computers, the timer, I will hear sounds, and yet nothing actually registers as a thing. So, everything that we think we know about the world is just concepts… thoughts that we hold onto. But nothing is actually out there.

Life is a great mystery, you know. What a fucking adventure it is… And yet you mean to tell me that everything should revolve around money? Money is just a concept… it’s not even real, yet we organize our lives around it. And because of that, we make things serious… too serious actually, and we lose our child-like carelessness and curiosity.

The biggest lesson I’ve learned over the past couple of years, one that’s been far more rewarding than I ever thought, is that financial rewards are not that important. Of course you have to make a living, but I guarantee you, if you trade your greed in for curiosity; if you trade in your need for control for letting go; if you learn from every mistake you make, no matter how big or small; if you do something every day that advances you not in the direction of some far-off goal, but in the direction of your heart, paradoxically, that’s where the money is in the end ( at least in this field, as far as I’m concerned). I know that sounds cliche and all hippie-like, but there’s no other way to put it. That’s a truth that you can take to the bank.

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I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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