How Top Traders Change Their Mental States to Beat Negativity

Even the best traders and investors face losing streaks.

Steve Eisman launched a hedge fund after his famous Big Short call. It failed. John Paulson made a big call on gold after making billions on shorting the housing market. The call was wrong and his fund suffered large outflows. Bill Ackman’s single most famous short on Herbalife failed to meet his objectives, but did generate a Netflix documentary.

You get the picture.

When faced with a losing streak in the markets or any other aspect of work, you have two choices: wallow in negativity or do something to quickly change your mental state.

Learning to become a profitable trader is similar to many tasks in life that are worth doing. It requires consistent practice, determination and the ability to overcome setbacks. It’s not a question of if you will experience a loss in the market, but when and how often. How you react to a setback will have a direct impact on how quickly you achieve mastery, particularly in endeavors like trading that require steady practice over years.

Benefits of Changing Your Mental State

Having the ability to quickly change your mental state when pursuing a challenging goal is both extremely important to staying on track and can also be relatively simple and easy to do. What you’re relying on here is not deep thinking, soul-searching or anything intellectual. That type of work was already done. What you need when facing a situation that is negative is to change how you feel about it, and the most effective way to change how you feel is to change your physiology.

As notable market psychologist Dr. Van K. Tharp describes in the book Market Wizards, changing your mental state can be as simple as changing your posture:

For example, suppose you are at your desk and you become aware that you are in a mental state that you would like to change. Get up out of the chair. Walk away about four feet and then look at how you looked in that chair. Notice your posture, your breathing, your facial expressions. Then imagine how you would look if you had the sort of mental state you would like. When you can see that clearly, sit down in the chair again and assume the position that you just imagined. That exercise works fr almost any situation as it involves several important principles–changing your body posture, seeing yourself from a more objective viewpoint, and imagining a more resourceful state.

Van K. Tharp interview from Market Wizards

While this simple exercise will work great for many people, it’s possible it won’t be the most effective approach for your personal situation, at least not every time you experience a setback. The good news is that there are many different ways to change your mental state, ranging from the subtle to the extreme. Each method will appeal to a different set of people. It’s good to be aware of at least a few different approaches and how you can apply them.

Here is a list of approaches that can work to change your mental state by disrupting negative feelings and putting you back in a more optimal state to pursue your goals.

Stretching & Yoga

Like adjusting your posture, some light stretching and yoga poses can near instantly improve your mood and mental state. Numerous studies have noted a beneficial effect of yoga on mental health.

It may be challenging to do proper yoga poses if you’re at an office or in another professional setting, but there are many modified stretches and yoga poses you can do even at your desk, in public.

Here is one such list with six yoga exercises you can do at your desk.

For a more intensive approach, check out Yoga with Adrienne, who has multiple episodes on topics such as “Yoga for When You’re Angry” and “Yoga for Focus and Productivity.”


Visualization comes up repeatedly when discussing success in the markets, athletics and any high-performance activity.

The leading traders that Dr. Van K Tharp interviewed repeatedly stressed that mental rehearsal was key to their success. Visualization can be done as part of a routine, such as right before bed or after waking up in picturing how your ideal day will go. It can also be used “in the moment” to alleviate stress and change your mental state from riled up to calm in a matter of moments. Visualization can be combined with other mental state strategies such as meditation, yoga and deep breathing, or used in its own right.

This article describes how you can instantly visualize a peaceful scene to generate calmness when faced with a tense or stressful situation.

Deep Breathing

Breathing exercises are one of the fastest and most direct approaches to changing your mental state. There are a wide variety of breathing exercises that come from a variety of religious and cultural traditions, many of which emphasize meditative practices.

You don’t need to move to an ashram to benefit from deep breathing exercises and change your mental state from tense and stressed to calm and relaxed.

A great first step for learning breathing exercises is to download an app such as The Breathing App, which will guide you through an approach known as Resonance Breathing, which emphasizes deep breaths to activate your parasympathetic nervous system, which is a key to accessing a more relaxed state. Just a few resonant breaths can provide instant relief from whatever is stressing or frustrating you in the moment.


Meditation can be intimidating, but you don’t need to embark on a long practice to generate short-term benefits from it. There are plenty of great apps that offer guided meditations which can be set for as little as two or five minutes. Our favorite guided meditation app is 10% Happier, which features a variety of the world’s best meditative teachers offering different types of meditations, from ones designed to help you sleep to others designed to help you focus on work.

Meditation is increasingly proven to help reduce stress and increase clarity and focus. You don’t need to meditate for an hour at a time either, most studies have shown meditators receive benefits in about ten minutes, which makes it a perfect mini-break from work or studying.

Cold Showers

The power of cold water is increasingly appreciated and promoted from figures ranging from Tony Robbins to the “Ice Man” Wim Hof. Just like with meditation and deep breathing there are increasingly sophisticated ways to use cold water to change your mental state and potentially improve your outlook. One such approach is the Wim Hof method which you can check out here. The science is still out on the full range of benefits from this approach but less formal uses of cold water, such as simply jumping into a cold shower for two minutes can prove to be an exhilarating experience that will trigger an endorphin rush and potentially make you feel better.

Short Burst of Exercise

In the book Tools of Titans, Tim Ferris highlights how even a small amount of exercise can rev up your mental state and quiet mental chatter. The next time you need you’re struggling on focusing on your work or lacking a needed insight, get up from your desk and try just one of these very short exercise sets:

  • 7 push-ups
  • 20 jumping jacks
  • 10 squats

Any of those three exercises will be sufficient to get your blood flow up and let your physiology take over from any mental turbulence that was dragging you down.

Walk Outside (Preferably in Nature)

Walking has been a key staple of many successful and highly productive figures routines from Charles Darwin to Beethoven.

Walking, especially outdoors and in nature such as parks, forests, or nature trails offers a magnitude of mental and physical health benefits.

A strategic way to use an outdoor walk to change your mental state is to get up from your desk or office when feeling a mental block and go for a walk for at least 15 minutes. Avoid headphones and any other inputs and let your mind wander. When you return to your desk, you are much more likely to have found a creative solution to your problem and if not, you will have benefited from the increased oxygen intake and blood flow.

Like all of these tips, you will find more success the more consistently you practice this and mix it up with a variety of mental state changes.

Changing your mental state is one of the easiest and most effective things you can learn to do to help yourself, whether you are seeking to improve your trading profitability, learning a new hobby or just improving your consistency at your current day job.


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