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Is Caffeine Good For Trading?

IS IT RIGHT TO DRINK CAFFEINE DURING THE TRADING?

Caffeine, yes or no?

This is one of those questions that good traders should ask to themselves whenever they access the markets in order to pursue their daily profits. We all know that caffeine produces stimulating effects and increases the so-called cognitive power of our minds. Basically, we do things faster and more effectively. As we know, being the trading on Forex mostly an intellectual activity, therefore we tend to assume that coffee is a good help for our work.

But it’s not that easy.

Depending on its consumption, caffeine can produce various side effects. Obviously, one of the most common is the increase of irritability and nervousness. We now that both are emotions we want to reset during the trading. The more sensitive we are to our emotions, the less money we’ll make. This is the N.1 axiom we base our strategy on.

What should we do, then?

As usual, as Latins used to say, “Virtus in medio stat“, truth lies in the middle. After years of experience, I have understood that caffeine could be a good help provided that..and I underline “provided that”, my trading strategy allowed me to diminish my free will during my  trading management.

 

Let me explain you better.

Emotions and the stress involved in trading cause damages mostly once we have entered a trade. The typical mistakes are two and you all know them well:

1) Move the stoploss;

2) Do not respect the take-profits and close the trades before their effective achievement.

Fortunately, our strategy forces us to be very strict towards these two levels. The rules are clear and impossible to trample on. They are objective and not modifiable during operation. Before entering I will already know where to place the stoploss and which my two take-profits will be. I also perfectly know how and when I will have to move the stoploss if my trade falls into a positive territory. Everything will be precise and detailed, there’s no escape.

Furthermore, during my Personal Coaching programs I teach how to keep a precise diary where to note the most  relevant events during the trades which I have entered into. I chiefly explain how to manage success and failure, mostly binding them to the skills I have shown in following the rules rather than on the money earned one week or the other.

With a strict and cold  Forex System of this type, where emotions  play a secondary role, there is no reason to fear caffeine. Quite the opposite.

I personally drink it in moderation but constantly during the first part of the day and during what I call the Prime Time of the  Forex Trading (from  9 a.m. to 4 p. m. (C.E.T.) .

I therefore fully agree with this neuroscience academic who gives us some advice on how to use caffeine in order to improve the performance of our minds (Business Insider)

I am Italian and as you can imagine I love short shots of espresso;).Well, luckily they are included among the academics’ advice. Small but reiterated amounts during the day: this helps me a lot to allocate potential trades faster, to trace more efficient  trendlines on my graphics, to evaluate the whole of my Technical Analysis more efficiently.

It is also important to test the effects of caffeine on yourselves.

Each one of us reacts differently. For instance, I must stop drinking coffee in the early afternoon otherwise I cannot sleep well. Therefore, my advice is to start with very small amounts and then study your reactions. See how your heartbeats increase, as well  as your perspiration and irritability  during the trade. Note all this in your diaries  and adjust the amounts of caffeine on the basis of your personal experiences.

It is also important to assume caffeine together with other types of mind and body supplements in order to limit the side effects and just get the best out of our espressos. We will deal with this in the next articles.

 

Therefore, let’s summarize:

 

1) Learn a semi-automatic Forex System limiting your free will to the utmost;

2) Start with a low consumption and increase your intake slowly;

3) Observe yourselves and note  your reactions and results in terms of discipline and intuition in your diaries;

4) Accompany your caffeine with healthy food and proper dietary supplements.

See you next time…and enjoy your coffee!

 

Davide Franceschini | Founder of SurfingThePips.com

 

 

 

 

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