Visualization Techniques for Traders

By | September 10, 2021 4:03 pm

Visualization is a key tool for peak performers everywhere. When used properly, it can program your brain for success and help you to feel more confident and focused on your journey. I have practiced visualization often over the years and found it to be enormously valuable in my journey in the markets.

Visualization is a mental tool where you use images and imagination to achieve certain goals. However, there are many ways of using that technique. The substance of those images (and certain other things), will change depending on your purpose. Some people just want to have mental walkthrough of good day, while others want to set goals. This is a non-exhaustive list of the various ways that you can use visualization:

  1. Relaxation
  2. Mental practice [as reinforcement]
  3. Mental practice [as suggestion]
  4. Goal setting
  5. Managing emotions

Mental practice is the most important because you want to be reinforcing the right practices as often as possible—both the ones that you are already doing and also the ones that you want to do. A lot of mental practice is suggestive, where you are thinking about how you would like something to happen and then practicing that. For instance, you could be practicing having perfect discipline in your positions or maintaining an emotional even keel all day. Those would both be game-changers for your trading so you want to practice and suggest this reality as much as possible, even if you are not there quite yet. You want to constantly do mental practice, because it can almost the same impact as real practice or experience.

1) Coping With Stressful Events – By visualizing events that have, in the past, elicited the fight or fight response and simultaneously using constructive coping methods, traders can train themselves to cope with those stressors. An example would be to walk oneself through a trade that is stopped out and, during the visualization, rehearse the kind of self-talk that would be constructive in such a situation. So you would imagine the market going against you, getting out at your chosen spot, and then directing your thoughts to learning from the market action, rather than getting frustrated over the stop out.

2) Reinforcing Best Practices – Here is where you use visualization to anticipate what you plan to do during the trading day, walk yourself through various what-if scenarios, and prepare yourself to respond in a planned manner. The idea here is that the visualization is both a preparation for market action and a preparation to respond to opportunities created by that action. If you have encountered a situation in your mind many times and prepared yourself to act, you’re more likely to be ready to take the proper actions when that situation manifests itself in real time.

As top researchers have shown repeatedly, visualization is a powerful tool which suggests certain outcomes to our brain. These suggestions are processed in much the same way as real activities. There is the famous study that showed that the mental practice of free throws is as effective as actually shooting free throws.  Done properly, visualization can literally change the structure of our brain and lead to long-lasting changes. The changes that we seek become hard-wired and automatic. The peak performance that we long for becomes automatic.  This is the main reason to bother with visualization and mental practice: it’s one of the best ways to improve your overall performance in the markets

Breathing Exercise 1:

The 4-7-8 (or Relaxing Breath) Exercise

The 4-7-8 breathing exercise is utterly simple, takes almost no time, requires no equipment and can be done anywhere. Although you can do the exercise in any position, sit with your back straight while learning the exercise. Place the tip of your tongue against the ridge of tissue just behind your upper front teeth, and keep it there through the entire exercise. You will be exhaling through your mouth around your tongue; try pursing your lips slightly if this seems awkward.

  • Exhale completely through your mouth, making a whoosh sound.
  • Close your mouth and inhale quietly through your nose to a mental count of four.
  • Hold your breath for a count of seven.
  • Exhale completely through your mouth, making a whoosh sound to a count of eight.
  • This is one breath. Now inhale again and repeat the cycle three more times for a total of four breaths.

Note that with this breathing technique, you always inhale quietly through your nose and exhale audibly through your mouth.

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