WSCS Trading Combine: Lesson 5

Chapter 1: Change
Lesson 5: Transform Emotion by Trance-formation

Dealing with emotions is one of the biggest challenges for traders. Emotions are powerful forces that shift our behavior from Dr. Jekyll to Mr. Hyde. As traders, we can follow our plan flawlessly when calm, yet commit the most novice errors when jacked up on emotions.

In Lesson 5 of The Daily Trading Coach, Transform Emotion by Trance-formation, Dr. Brett shows us several ways we can reduce our emotional intensity in order to get back in the trading zone. As Dr. Brett notes, “If psychological methods can help people overcome post-traumatic stresses and anxiety disorders, they certainly can help us master our feelings in normal life situations [like trading].” This is one of the few times in life when you can make a monetary return on your therapy bills. Let’s see if we can beat the index!

I first learned about the power of breathing exercises and meditative states when I was a competitive athlete in high school. Since then I’ve had a passionate affair with learning about and practicing these helpful techniques. In Chapter 9 of The Daily Trading Coach, prop trader and partner at SMB Capital Mike Bellafore explains, “While trading, it is essential to quiet your mind so that you can accurately process the data that the market offers.” Also, a few days ago, The Kirk Report posted an awesome article “Learn How to Breathe.” In keeping with the great advice, for this lesson I want to focus on my favorite breathing exercise: Deep Breathing.

Deep Breathing

The best tool you can employ in any stressful situation is Deep Breathing. Changing the amount and pace of oxygen uptake to the brain has immediate and powerful effects. Physiologically, slow deep breaths lower your heart rate and blood pressure, increase oxygen and endorphins in the brain, and relieve tension in your muscles and head.

Short-term effects of inducing this response include feeling refreshed, calm, clear-headed, and in greater control. The long-term effects of inducing this response on a regular basis include improvement in concentration, energy levels, and peace of mind. The most important long-term effect is that your body becomes less responsive to stress hormones (which degrade your immune system, critical organs, sex drive, fertility, skin, hair, and much more).

First, exhale every last drop of air by sucking in your belly at the end (of the exhale) to squeeze out the last drop. Hold for a three count. Then, start by inhaling into the bottom of your belly and continue inhaling from the bottom up as your belly fills, then your chest, then the area around your collarbone. Hold your breath here for a three count. Then slowly exhale every last drop again.

You want to take a minimum of three deep breaths in and out. The more you take, the calmer and more controlled you will become. They are literally a quick injection of tranquility. If you lose focus on your breath, try counting your inhalations and exhalations. Make sure to spend a few minutes focusing your awareness on the calming effects before you resume trading. This will help reinforce the benefits and give you a reference next time you feel stressed.


I use Deep Breathing on a daily basis. Most recently, I used Deep Breathing when my watch list stocks were flat and the market was range bound on low volatility. I have been working on this blog a lot lately, so I have been trading much less than normal. So, when I finally had some time to completely focus on trading, I wanted to get some action. Unfortunately, the market was not complying (does it ever?). As soon as I noticed myself getting anxious and wanting to trade although all my setups sucked, I knew I needed to take some deep breaths. After a nice round of three, I more easily reminded myself to get my finger off the trigger and accept that I may not make any trades. This calm and logical realization was not available to me until I could, as Dr. Brett says, “trance-form” my emotions and clear my mind. Thus, if emotions are the poison, Deep Breathing is the antidote for a healthier P&L statement.

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