Interview with Dr Gary Dayton - Better System Trader

Dr. Gary Dayton has been an active trader since 1999, trading equities, futures and options.

He is a psychologist and holds a doctorate in clinical psychology and a certificate in human performance/sport psychology from Rutgers University.

He is President of Peak Psychology, Inc., a consulting firm that specializes in developing “peak” performance in traders.

Dr. Dayton stands apart as a trading psychologist in his use of the Mindfulness-Acceptance-Commitment (MAC) approach to peak performance, introducing traders to the practice of mindfulness to help them overcome fear and other unwanted trading emotions and develop the concentration and focus needed to trade successfully.

In this episode we discuss why traditional approaches to controlling emotions don’t work, the role of emotions in trading and how mindfulness can improve trading performance. He also shares some tips on how to get started practising mindfulness, the benefits it can have outside of trading and how the approach of Mental Parking can increase focus.

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Mindfulness is a very powerful method and technique traders can use

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Topics discussed

Comparisons of sports and trading performance
Traditional approaches to handling emotions in trading and why they don’t work
Why it’s impossible to suppress your emotions
Landing a plane in the Hudson River and what the Captains response teaches us about trading
The role of emotions and how experienced traders actually leverage emotions in trading
The concept of Mindfulness and the benefits to traders
How to use Mindfulness when trading
The evidence that Mindfulness can improve trading performance and how it impacts the brain
How to get started practising Mindfulness
How to use Mental Parking to increase focus and productivity
How exercise can improve mental and trading performance

Resources mentioned in this episode

Gary can be followed at his website tradingpsychologyedge.com and on twitter @DrGaryDayton
Recommended books:

Quotes

Even highly experienced traders still have an emotional reaction to the markets

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Emotions are part of us, they’re a part of our make up

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To try to control something that is useful to us is the absolute wrong thing to do

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Trying to focus, control or suppress fear is the wrong thing to do

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We don’t have much control over what our mind does

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Being mindful brings us into the present moment to focus on the right things

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Practising beyond the edge of your abilities is a really valuable thing

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Top tips from this episode

Here are few of my favourite takeaways from the chat with Robert:

The story of Captain Sullenberger landing the plane in the Hudson River – He experienced a number of strong emotions but he put all of his effort into focussing on the things that mattered at that point in time. He wasn’t thinking about the passengers directly, he was focussing on all of the steps required to land the plane safely, like the correct speed, angle of the plane and wings etc. As traders we can take the same approach in times of emotional stress, focus on the tasks that actually matter, like trade execution.
Being mindful brings us into the present moment – Being mindful applies not just in trading but other areas of life too. When we’re doing something that requires focus our mind can often interrupt us. I’ve started using the Mental Parking technique by acknowledging the idea and quickly jotting it down so I can get back to the original task. What I’ve found by doing that is I can maintain my focus for a longer time plus I often find that when I come back to the idea that interrupted me it’s not that important any more, it was just a distraction.