If you’ve seen the movie The Matrix, you are undoubtedly familiar with an iconic scene showing Neo and Morpheus going hand to hand.

At one point, we see a shot of Neo taking a big hit from Morpheus which causes him to fall to the ground. They then exchange the following dialogue:

Morpheus:
“How did I beat you?”

Neo:
“You’re too fast…”

Morpheus:
“Do you believe that my being stronger, or faster, has anything to do with my muscles, in this place?”
“Do you think that’s air you’re breathing?”

This is followed by a shot of Neo’s face that shows realization and understanding of Morpheus’s points.

The fight then continues, with both Neo and Morpheus’ performance approaching parity.

At which Morpheus says:
“What are you waiting for? You’re faster than this. Don’t think you are. Know!”
“Come on, stop trying to hit me and hit me!”

The next shot shows Neo’s arms moving twice as fast as Morpheus’, followed by a nervous look on Morpheus’ face. This shot helps the viewer see that Neo has just moved faster than what Morpheus can perceive, thus altering the matrix.

Fascinating scene….

Here it is, for all of you, visuals:

Too Much Thinking…

We’ll get back to that scene in a moment, but if you’re anything like me, your thoughts are pretty much impediments to the proper execution of your trading plan.

A little bit of introspection (and also looking into your trading journal) will undoubtedly yield the same conclusion –most of your trading errors originate from overthinking.

Here’s the typical pattern:

First, something happens – e.g. XYZ gaps down below your stop.

Almost immediately, you perceive the event.

Then, you interpret that event through the lens of your accumulated past experiences. And since ‘being wrong’ has caused you a great deal of pain in the past, you see this new event through the lens of pain.

Right after the event has been identified and categorized (placed in a mental box), emotions start to arise in response to the meaning you have given that new event (how you’ve categorized it).

Now the energy of the emotion demands action. You either freeze, go hide, or over-thinking some more — you essentially act in an automatic way based on your interpretation of that emotion and the event.

And this whole process happens within micro milliseconds. Literally!

Now, the fact is that there may be other ways to interpret an event. And sometimes, it may not be helpful to interpret the event at all. There may also be other ways to react to the emotional energy. And it may not be helpful to react at all.

Coming back to the Neo Vs. Morpheus scene, Morpheus was attempting to lead Neo to that same conclusion, that he had to let go of the overthinking mind so that he could drop to a level outside of concepts and interpretations and just be with what is.

From this moment of unparalleled presence, when one’s mind is calm, clear, and focused; when the process of meaning-making is suspended, performance usually goes through the roof.

As you may know, these moments are commonly called “flow,” or “being in the zone”, and accessing this state on demand is not that easy.

We live in a society that’s constantly bombarding us with stimulation; continually telling us to pay attention to this, to be afraid of that, to worry about this…

And not only that, but our mind also has a natural tendency to get unconsciously captured by this constant conversation we’re having with ourselves.

And all of this keeps us distracted from the present moment –this unique moment in our existence.

No matter what you do in your life, you’re really in two conditions while doing it:

1. You’re paying attention to the thing you’re trying to pay attention to.

Or,

2. You’re lost in distractions.

If you’re truly paying attention, in essence, you’re connecting to a moment in your life that’s deeply fulfilling and rewarding.

If you’re lost in distractions, by definition, you’re thinking about the past; thinking about the future, but you’re not here.

And so, that’s the first spell you need to break if you are to enter that state of flow on a consistent basis – you have to learn to be present.

How To Be Present

Before the market opens, come in early (say 10-20 minutes in advance); just sit there quietly, hopefully in a quiet room, and cultivate a quiet mind.

Focus on your breath — the autonomous, natural, automatic breath, not the self-directed one.

Observing the autonomous breath is interesting because it happens “outside of the ego.” Nobody is at home doing it, yet it just happens.

This is very important, so don’t forget that.

Now, this can be quite hard to do when you start out, so do not worry if you don’t get it at first. Just pay attention to the exact moment of breathing in. An unconscious impulse to fill your lungs with air becomes slightly conscious; this impulse triggers your “wanting to breathe.”

Try simply to observe that impulse without grasping, without attachment, without creating stories.

The stories will still be there naturally, but they will become less dominant over time if you commit to returning your attention to the breath when you have noticed that you got distracted.

The more you do that – the more you take some time for yourself to observe yourself before the market opens — the more you’ll be able to calm yourself before you enter the chaos of the market.

While people are losing their minds and jumping in and out of trades purely based on emotions (the first hour of the opening session is volatile for a reason), you’ll be able to handle your own emotions better.

This is an important edge. Don’t neglect it!

Here’s a meditation to help you practice this:

In The Zone

Occasionally, you will experience what is sometimes called “access concentration”. At this point, you’re ‘flowing’, you’re ‘in the zone.’ This is the point you’re fully engrossed in the object of focus. Your awareness rests effortlessly on it without wavering. Liking and disliking cease to exist.

Conceptual thinking dramatically decreases or completely stops. Thoughts can still appear, but they’re far in the background… weak… insubstantial. They inform you, like any other sense organ, as just another feeling, instead of psychotically dominating your world. Mind, body, and experience become one!

In trading, this is really the ideal state you want to inhabit.

A quiet mind is able to hear intuition over fear; a quiet mind is able to execute with boldness; a quiet mind is not afflicted by emotions — emotions might arise, but they do not torment you. So you’ll spot your trades effortlessly, you’ll place them effortlessly, and you’ll manage them effortlessly.

Everything will flow through you naturally… and you’ll feel it. You’ll feel when it’s the right time to take action, you’ll know… you’ll just know, and it’s going be an effortless process.

That said, unfortunately, you can’t always access ‘the zone.’ You can create the conditions for it to naturally arise, but you’re never sure if it will. Just like the market if you think about it. You can identify the right conditions in the market and place a trade accordingly, but you’re never sure if that trade will be profitable. And that in itself is a beautiful lesson in perseverance and consistency.

Conclusion

Flow is a very important concept in trading psychology that you’ll need to understand on your way to consistent profitability as a trader.

But it’s not always easy to inhabit that state on demand because a certain set of conditions need to be met for that to happen. And few people actually know how to do that reliably. Sometimes the mind has a mind of its own…

The good news is that I address that (and more) in the Trading Psychology Mastery Course. It’s a two week home intensive trader’s mindset program in which you learn to discipline your mind and develop wisdom, patience, resilience – all the qualities a good trader must possess.

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