Dr Gary Dayton is a clinical psychologist, sports performance specialist, and active trader in futures markets. His approach to trading psychology departs significantly from traditional methods. Most trading psychology books tell traders to control their emotions, think rationally, and suppress fear. Gary’s research and practice point in the opposite direction: trying to suppress emotions does not work, and the attempt itself makes performance worse.
His framework – built on acceptance and commitment training and the practice of mindfulness – has helped traders and hedge fund managers develop the mental discipline to stay with good trades, cut bad ones, and maintain focus through the inevitable stress of live market exposure. In this episode, he explains why traditional approaches fail, what mindfulness actually is, and how to use it practically as a trader.
Watch the full episode below, then read on for the complete breakdown.
Why Traditional Emotion Control Does Not Work
The standard advice in trading psychology is to control your emotions. Be disciplined. Do not let fear or greed influence your decisions. Gary has been a practicing psychologist for over 20 years, and his experience is unequivocal: he has never met a single person who could control their emotions consistently.
The attempt to suppress emotions actually creates a feedback loop that makes them worse. Research from Harvard University over 30 years shows the mechanism clearly. When you tell yourself “I will not feel fear,” your mind monitors itself for fear. The moment anxiety appears – say, when a trade starts moving against you – the monitoring system immediately surfaces it, amplifying the very response you were trying to suppress.
“It’s as simple as that. Telling the mind not to have fear is giving the mind a command to monitor for it. Any little bit of anxiety immediately triggers that warning – fear is here, better gear up for it.”
Why Emotions Are Actually Valuable Information
Neuropsychological research with people who have amygdala damage – the part of the brain responsible for fear response – shows what trading without emotions looks like in practice. These individuals cannot adapt when reward structures change. They keep pressing bets that no longer work.
In a market context: if you had no fear response at all, you would keep buying in a bear market, buying every pullback as you had in the bull, and wipe out your account. The fear response is the mechanism that tells you something has changed and you need to reassess.
A study of experienced traders in the UK found that the most skilled participants felt fear and anxiety just as strongly as less experienced traders. The difference was that they recognised the emotion as information about what other market participants were also feeling – and used it to make better decisions. Less experienced traders responded to the emotion by walking away from the screen, reducing size arbitrarily, or cutting winning trades short. Both groups felt the same thing. Only one group used it productively.
What Mindfulness Is – and How It Works
Mindfulness has a 2,500-year history, but Gary presents it practically and without mysticism. At its simplest, it is the practice of directing your attention to a single object – typically your breath – and noticing when your attention wanders. When it wanders, you gently bring it back. That is the complete practice.
The reason this is valuable: most people have no idea how little control they have over their own attention. Start a five-minute mindfulness session and within 60 seconds you will typically find yourself thinking about dinner, a conversation from yesterday, or some worry entirely unrelated to the present moment. The mind generates mental chatter automatically. Most people never notice this because they have always been embedded in it.
Mindfulness does not silence the chatter. It changes your relationship to it. You learn to observe your thoughts rather than being fused with them. A thought becomes something you notice, not something you automatically act on.
The Acceptance and Commitment Approach for Traders
Gary’s framework is based on acceptance and commitment training (ACT), developed in clinical psychology. The core shift: rather than fighting unwanted thoughts and emotions, you accept that they are present, recognise them for what they are (mental events, not facts about the market or yourself), and continue acting in line with your trading plan.
“Your experience as a trader will always trump what anybody else says. Go through all the things you’ve done to manage fear – the self-help books, the exercise, cutting winning trades short to avoid negative feelings. Write them all down. Assess whether they have been helpful. My informed judgment is that they haven’t.”
The practical implication for traders: when you are in a trade and anxiety appears, you do not need to resolve the anxiety before continuing. You notice it, label it (I am having an anxious thought), and bring your attention back to the market and your plan. The emotion does not have to be gone for you to trade well.
Captain Sullenberger as a Model for Trader Performance
Gary uses the example of Captain Sullenberger landing US Airways Flight 1549 in the Hudson River after a bird strike destroyed both engines. In a post-incident interview, Sullenberger was asked whether he was afraid. He confirmed that the physiological response was enormous. He felt it. And then he did his job: levelled the wings, adjusted the nose attitude, managed airspeed, and brought the plane down.
This is what high-performance under fear looks like. Not the absence of emotion, but the capacity to act effectively with the emotion fully present. The emotion was information – it sharpened his focus. What it did not do was control his behavior.
Gary applies the same model to trading. You will feel fear when a losing position expands. You will feel greed when a winning trade starts to reverse. The goal is not to eliminate those feelings. The goal is to keep your behavior aligned with your plan despite them.
Mental Parking – How to Maintain Focus During the Session
One of the practical techniques Gary introduces is what he calls mental parking. During the trading session, distracting thoughts, worries, and plans will arise – this is inevitable. The mistake most traders make is to try to push these thoughts away or resolve them on the spot.
Mental parking means acknowledging the thought, mentally filing it for later, and returning attention to the market. Something like: I notice I am thinking about the email I need to send. I will deal with that after the close. Now back to the trade.
This approach accepts the thought rather than fighting it, which avoids the suppression feedback loop, while still redirecting attention where it needs to be. The practice of mindfulness strengthens the underlying ability to redirect attention – the more you practice noticing when attention wanders and bringing it back, the faster and more reliably you can do it in real trading situations.
Getting Started With Mindfulness as a Trader
Gary’s recommendation for traders who want to develop this skill is simple: start with five to ten minutes of daily practice. Sit quietly with no distractions. Focus on the sensations of breathing. Notice when your attention wanders – this will happen almost immediately. Bring it back without judgment. Repeat.
The benefits are not immediate but they are consistent. Over weeks and months of practice, the capacity to observe thoughts without being controlled by them becomes more reliable. Traders who have practiced this report being better able to sit in winning trades longer, exit losing trades faster, and maintain focus during volatile sessions.
Gary is also clear that this is not a substitute for a sound trading system. Mindfulness will not make a bad system profitable. What it does is reduce the behavioral errors – premature exits, revenge trading, paralysis – that prevent good systems from performing as tested.
Get the show notes & transcript
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- How Do Successful Traders Make Better Decisions with Matt Zimberg
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