Biofeedback for Trader Psychology
(NOTE: This is not an advertisement! It's a report of my first attempts to
introduce biofeedback into my trading routine.)
Several weeks ago I advised in
the YTC newsletter that I'd bought an
emWave2 biofeedback device.
My plan was that I'd
experiment with it over the following 6-8 weeks and report on
it's effectiveness as a state management device for traders.
Quick summary... I like it... and
I'm going to keep using it!
How I Discovered The emWave2
I'd heard of biofeedback being
used by traders before, through the excellent blog posts and books by Dr Brett Steenbarger (see here for all three of his books
under the Trading Psychology heading).
But I'd never had any thoughts
of experimenting with it myself. The last thing I wanted to do was to be "wired
up to a computer" while trading.
Then two months ago I got an
email from YTC Price Action Trader reader, Jeff, in which he shared the
following article link:
This is quite an interesting
article about NFL kicker Billy Cundiff and his use of the portable emWave to
place himself into peak physical and mental state prior to performance. This got
me interested. And a quick search through Dr Steenbarger's old blog posts and
a review of his books, led me to the discovery on page 84 of
The Daily Trading Coach that the emWave is the same unit used by Dr
Steenbarger himself.
Now I was really curious... and I
just had to try one!
What is Biofeedback?
Biofeedback is the use of
instruments to monitor certain components of our physiological state. The
components
will vary depending on the device, but may include heart rate, brainwaves,
muscle tone or skin conductance. The intent is that through awareness of our
physiological state we may then take conscious action to either maintain the
state, or to place ourselves in an alternate desired state.
What Does the emWave2 Monitor?
The emWave2 monitors your heart
rate variability (HRV). The heart rate that you may be familiar with is an average
figure, usually expressed in beats per minute. I must admit though that I was surprised to find out how
much the heart rate actually varies from beat to beat when we're looking at
real-time data rather than an average figure. It cycles in an approximate
sine-wave pattern. When relaxed and operating with a peaceful mind our HRV
produces a smooth flowing sine curve (evidence of what is termed high
coherence). When stressed in either body or mind, the pattern becomes more
jagged and disjoint (evidence of what is termed low coherence).
Used as a portable hand-held
device the emWave2 provides us with a light display representing our current
level of coherence. Or attached to our computer we can also receive a graphical
display of our HRV.
That's my layman's understanding
anyway. If you want to read an article on the science behind emWave technology
and the measure of HRV, you can find it at this link here:
http://www.heartmath.com/personal-use/emwave-science-behind.html
How is Biofeedback Relevant to Traders?
Peak performance requires that we
place ourselves in (and maintain) our ideal trading state. Typically this is a
state of relaxed alertness; mind clear and body relaxed. The emWave2 requires
this state in order to display a high level of coherence.
As traders we can therefore use
the emWave2 in two ways:
-
Using it to place
ourselves into an ideal trading state prior to commencement of
our trading session; and
-
Using it to
monitor our physiological state during the session and to avoid
trading when evidence shows us influenced by stress. Relaxation
techniques (or a break from trading) may then be used to return
to our ideal trading state.
My Evaluation
I started my evaluation sceptical
about the validity of the science behind the emWave2 and how accurately it could
measure and monitor my physiological state. In addition, I have long
studied relaxation exercises of various types so wasn't sure I'd gain additional
benefit from the emWave2 beyond what I was already able to do.
So I put the device to some non-trading
tests and my concerns were quickly put to rest.
Experiment showed that I was
easily able to consciously move myself in and out of high coherence through
adjustment to my physical or mental state. A relaxed body with regular and slow
breathing and a clear and calm mind would bring me to high coherence. Tensing my body,
holding breath or adopting stressful thoughts and emotions all lead to reducing
coherence.
Testing the emWave while
trading gave me even greater confidence in the tool. Whenever it identified a
drift out of high coherence I was able to pause and consider my physiology.
Every time I was able to identify examples of either poor posture or tension,
irregular breathing, or mental or emotional stress. More often than not I find
I'm simply holding my breath. And Interestingly I find my focus often stuck
on the lower timeframe charts. Through identifying this I am able
to correct this deficiency.
I now have a high degree of
confidence in the accuracy of the machine in distinguishing between ideal and
less than ideal trading states.
You'll see in the image below an
example of my own HRV while trading relaxed vs trading with stress.
I do not
monitor these graphs while trading. I use the device in a completely portable manner. The
emWave2 unit sits on my desk and reads my HRV through an ear sensor. Generally I
find this to be quite comfortable and apart from the occasional problem with an
itch developing in the sensor area after about 20 mins, I find the sensor does
not distract me. The unit has two ways of reporting coherence. One is through
lights (green = high, blue = medium, red = low). The other is through a tone
which beeps each couple of seconds in high coherence, an alternate tone in
medium coherence, and no tone in low coherence. I'd prefer that the tones only
beeped when in low coherence. This is the zone I wish to avoid. Having a
constant tone when all is working well is distracting. I'd rather only be
distracted when the emWave2 has identified a problem.
But this is only a minor
criticism. The tones are easily turned off and I choose to use the light display
only.
My scan patterns have now been
expanded beyond my charts to also include the emWave2 unit. In this way I can
constantly monitor my current level of coherence. If it's medium I will simply
reset my posture and breathing and usually within 15 seconds it's returned to
green. If red, then I'll stop all trading and actively conduct a relaxation
session to get back to green. Again this takes only 15-30 seconds at most. This
is the key benefit for me - the ability to objectively identify a trend towards low
coherence, allowing me to reverse this trend and return quickly to my ideal
trading state.
Summary - And Why I Will Continue to Use the emWave2
The emWave2 is not specifically designed for traders.
However, like all types of biofeedback machines it does have application in the
trading world.
A key part of my trading (and I'd argue a necessary component in the success of
all discretionary traders) is to be able to maintain as close as possible to our
ideal trading state. Part of this relies on cultivating a clear and calm mind,
body and soul. I have for many years used relaxation and breathing techniques
for this purpose. And various triggers throughout the trading session to "check"
on my current state. Unfortunately though, any "check" of my state has been a
rather subjective thing. And it's widely known that a stressed person is less
likely to recognise and accept their current state of stress.
The beauty of the emWave2 is that it provides an objective measure of my current
state. This is the real value of this tool, in my opinion. I am no longer reliant on subjective assessments. The machine clearly
shows when I am not operating with the highest levels of coherence, and I can
then take appropriate action to correct this.
While I cannot quantify any improvement to my trading results, I can say that I
believe in the application of the emWave2. Whenever it's indicated less than
ideal coherence, I have been able to quickly identify where my mind or body are
stuck, in either tensed muscles, poor posture, irregular or shallow breathing
etc. Correcting these deficiencies does always result in the return of the
emWave2 to higher levels of coherence. So the tool does appear to work in the way
it's designed.
And if all goes according to plan, a clearer and more relaxed mind and body will lead to
improved focus, better decision making and (hopefully) greater profits.
Happy trading,
Lance Beggs
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