The topic of our article this week, do you sleep at your trading desk? may not be familiar but a lot of traders experience it. Well, actually, in all likelihood you have never fallen asleep while trading…or have you? Many traders, along with countless people in all walks of life, are mentally, emotionally and physiologically impaired as a result of not getting enough sleep. This is referred to as sleep deprivation. On the surface this may not appear to be a major issue; but if we look a little closer there are a huge number of accidents, from traffic to operating heavy machinery to the many other mishaps that put life and limb in danger due to people being drowsy, which indicates that it is a big problem. And, of course, your trading can be greatly compromised by not getting enough sleep…and that is definitely an issue.
Let’s take a look at some of the major mental, emotional and physiological resources that we need in order to trade successfully. Trading requires the ability to think clearly and maintain a critical level of attention in order process and analyze pertinent information either in the chart or the news. Decision making is a mainstay of trading and clear cognition is required for good decision making. Memory is important; you must be able to not only remember what you have learned but be able to apply that knowledge effectively. Your emotions must be on an even keel; that is, balanced while remaining patient and calm. Because stress is part and parcel to trading, it is crucial that you are able to manage stress levels proficiently. Physiologically, it’s important to be healthy with good circulation, heart function and have other organs working well for stamina, endurance and overall physical performance. These are just a few of those internal “resources” that make trading possible.
Now, let’s take a look at just some of the issues that sleep deprivation can cause in your mind, brain and body. When you’re deprived of sleep you can’t function cognitively in a clear and coherent way. The brain’s prefrontal cortex (the executive part of your neocortex or gray matter in front of the brain) is involved in judgment and impulse control, and when it’s feeling the strain of sleep deprivation your decision-making and cognitive abilities feel the strain. Studies have shown that without proper sleep you are more likely to make risky decisions. While sleep deprived you are prone to act more aggressively and violate rules in the pursuit of illusory quick profits.1 When well-rested you’re more likely to remain true to the plan and follow your rules.
Memory is negatively affected as well. The hippocampus is a part of the brain that is involved with consolidation of long-term memory and this takes place mainly during sleep; for this and other reasons memory is impaired when you don’t get enough sleep. Now if that isn’t enough, your emotions and stress levels are negatively impacted too. Some of the ill effects of sleep deprivation are irritability, frustration intolerance, emotional volatility, moodiness and depression; to name a few. Also, when stress levels get beyond the threshold it reduces immune functions and lowers resistance to airborne pathogens making you susceptible to frequent colds and other infectious viruses along with increasing blood pressure and the potential for hypertension. While your body will forcibly shut itself down to catch up on sleep long before you could possibly die from sleep deprivation, sleeping less than four hours a night may put you at higher risk of death within the next six years.
Here are a few other items to consider. According to studies done by Harvard Medical School, a link between sleep deficiency and becoming overweight has been found. Lack of sleep lowers leptin, a hormone which tells your brain that you’ve had enough to eat; and it raises ghrelin, a biochemical appetite stimulant.3 This neurochemical imbalance prompts a craving for high carbs, salt and sugar which means that not only are you eating more, but you’re also eating unhealthy foods that lead to quick weight gain and the risk of obesity.
The above is just the tip of the iceberg with regard to the ravages of sleep deprivation. The normal healthy sleep duration as recommended by the National Sleep Foundation is between 7 – 9 hours.4 When you’re in the trader trenches you need and want every edge that you can get by optimizing your resources so that your highest and best trader is trading in your highest and best interests. Lastly, the question is do you sleep at your trading desk? hThe truth is alot of traders do and you can use some of the tools in the article solve them.
Written by Dr. Woody Johnson, Online Trading Academy Instructor. Dr. M. Woodruff Johnson has actively and successfully traded stock options, forex and futures since 2000. He is the former Executive Director of the Kaiser Permanente, Watts Counseling and Learning Center. He holds certifications in Accelerated Learning, Neurosensory Development and hypnotherapy, and he is a Certified NLP Master Practitioner. Dr. Woody is also an Associate Professor and teaches graduate psychology courses at Pacific Oaks College and Ryokan College. He has provided clinical staff services in hospitals and community clinics as well. He has a passion for helping others to achieve their goals and get the results in trading and life that they desire. Dr. Woody has been using mind/body healing techniques both professionally and personally with much success for many years. He is the author of “From Pain to Profit: Secrets of the Peak Performance Trader.”