The Breath and the Body

Why the cleverest trading-psychology framework in the world still fails when your hands are shaking, and what to do about it in the next sixty seconds.

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A trader I'll call Tom is a smart man. He has a graduate degree in mathematics. He has read every book in this book's bibliography, plus another two dozen besides. He can talk fluently about Kahneman's two systems, about the Saboteurs, about Hebb's rule and the four ingredients of plasticity, about the four EQ quadrants. If you quizzed him on the content of Acts 1 and 2 of this book, he would score in the high nineties. By every measure of knowing what to do, Tom is one of the best-prepared retail traders I have worked with.

Tom's hands shake before big trades. Not metaphorically. Literally. He once recorded a video of his right hand on his mouse, in the seconds before placing a trade about three times his usual size, and sent it to me as evidence. The hand was visibly trembling. He was also breathing through the top of his chest at about 22 breaths per minute (normal at-rest is 12 to 18), his shoulders were up around his ears, and his jaw was clenched in a way he did not realize until he watched the video.

Knowing the entire cognitive toolkit did not stop any of this. Tom would name the saboteur (the Loss-Averse Mouse, usually, occasionally combined with the Anchor). He would run STOP-THINK-ACT. He would remind himself, accurately, that his sizing was within his pre-committed risk envelope and that his historical data showed this kind of setup had a positive expectancy. The cognitive operations all ran cleanly. The hand kept shaking. The trade got entered late, mismanaged through the first ten minutes (because his attention was largely occupied by his physiology), and exited prematurely.