"The Zone" is a place where every trader wants to be to perform at peak levels. The zone is a place where time is considered to slow down or almost stand still, where you feel acutely more aware of your surroundings, at one with your environment. This transcendent state is often called other things, such as a 'runner's high' for athletes feeling the endorphin surge released during physical exertion.
Mihaly Csikszentmihalyi named this experience (and the title of his book) "Flow", and he noted that people who are doing what they love to do tend to have the best odds of getting into this flow. They become totally absorbed in the present moment, with no distractions (can you say this about your trading?). He also called flow a mindset that is 'intrinsically rewarding.' This suggests that we should trade not only for the money, but also because we enjoy it on a deeper, more personal level. Great traders, like those shown in Jack Schwager's Market Wizards series of books, show a love of the trading game itself in addition to the desire to make money.
So how do we get ourselves into this flow state? Csikszentmihalyi defines six important prerequisites to allow entrance into the zone:
1) Confidence - As a trader, you must have confidence in your trading method, and believe that you will succeed if you implement your trading plan. This allows you to place your entries and exits promptly and thoroughly.
2) Focus - A narrow focus on the task at hand is required to get into the zone. Fears about the outcome and regrets about past losses do not exist here.
3) Visualization - A trader pictures what success look like, and gets in the zone through visual processing of data. Verbal cues can take a trader out of the zone.
4) Pleasure - When you enjoy trading, it raises the odds that you will participate fully and maximize your efforts. This increases your chances at achieving mastery which further increases your enjoyment. Those who view trading as work will feel a struggle to find great trades, while those who love trading will feel in harmony with the markets and opportunities appear more easily.
5) Relaxation - Once you get to the zone, you may tense up as you feel in new territory. Fear tends to bring you out of the zone. Stay relaxed to let yourself stay in the zone.
6) Excitement - Some tension can help performance, but too much intensity will create undue stress and hurt performance.
The other element traders need to get into the zone is preparation. Larry Bird hit key shots under pressure in basketball games because he had practiced so many times in the gym that his shots under pressure felt more automatic to him, which increased his confidence. Traders must spend the time necessary to make trading skills "automatic" and create winning trading habits. When you are totally focused, you cannot be thinking about technique or strategy. Preparation and practice allow you to develop the skills you need to stay in the zone.
Price Headley is the founder and chief analyst of BigTrends.com, which provides daily stock and options recommendations and education.
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