The application of Sport Psychology Theory in relation to the trading is more aligned to sport than you may think, here’s why:
When you see a pro golfer sink a put for Birdie, or a Formula One Driver put a car on pole position by thousands of a second, it’s easy to focus on technical skills and accuracy born from repetition. Yet the difference-maker is often invisible: the mental skills honed with sport-psychology techniques, born from theory.
The challenges facing a trader as the opening bell rings are surprisingly similar. Both sporting environments and trading environments demand rapid decision-making under pressure, emotional control after setbacks, and the confidence to stick to a predetermined plan, even when the scoreboard or chart differs to what we expected.
Below are three challenges faced by traders which relate to sport-psychology concepts:
Revenge Trading – Emotional Control
Seasonality of Trading – Performance Planning
Diversification in Trading – Adaptation Theory
So, what could be done for each of these issues? The below table suggests a practical strategy, based on Sport Psychology Theory, which could potentially address each:
| Trading Challenge | Applied Sport Psychology Concept | Strategy from Sport Psychology Theory | ||||
| Revenge Trading | Self-Regulation | Implement breathing practice into daily routine | ||||
| Seasonality of Trading | Periodisation of Mental Training | Map out Load/Recovery periods per seasonality | ||||
| Diversification in Trading | Cognitive Appraisal & Stress Adaptation | Appraisal script to evaluate situations in real time | ||||
With proper guidance and practice, applied techniques like the above have a surprisingly useful place in trading performance. Stay tuned for more thoughts and further details on this topic over the next week!
By Julian Hoare
