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A Trader’s Guide to Improving Sleep, Memory and Cognition
The yawn. The slouch. The vacant stare. We’ve all been there after a restless night’s sleep. You may not think too much of it, but chances are that there are more repercussions to not getting enough Z’s every night than you might realize. As a day trader, you’re going to REALLY need your sleep.
Most people think of sleep as downtime, or time when you’re not doing anything. Some people view sleep as a necessary evil—something that interrupts your productivity and doesn’t require quality.
Those people would be wrong. Sleep is important. While you’re sleeping, your brain is busy processing information, while restoring and strengthening itself. Your body is pre-programmed to perform these necessary steps. Ignore the necessity of this at your own peril.
Download this cheat sheet to learn 10 ways to improve your sleep.
One of the most important things that you will do today is sleep. Trading takes up a lot of brain power and, during the day, your brain is processing millions of pieces of information. You’re absorbing charts and graphs, company info, trading forums and online instructional videos.
Unfortunately for you, your brain does not process and store this information right away. It doesn’t save it immediately to the “hard drive,” so to speak. Instead, your brain uses its subpar short-term memory to quickly stash bits of information—and, as it is with a computer, there is a limit to how much stored information that this short-term memory can hold.
At the end of the day, we’re pretty much tapped for storage space. If we try to put any more information into it, it overflows and things get lost.
So, how does our brain solve this problem? At night, your brain takes everything that you crammed into your short-term memory bank and relocates it to a more suitable long-term location—your hard drive. This works well, if you have allowed for enough sleep time to accommodate this storage transfer.
Interestingly, if you’ve filled your brain to overflowing during the day, the last items that you cram into your short-term memory will be saved first. That’s why experts tell students to review important material right before bed. More of it will stick. This is what the scientific community calls “consolidation.” For you techies out there, this can be equated to defragging your computer’s hard drive.
What this means for people who don’t get enough sleep is that you’re predestined to throw away most of your short-term memory. You are not giving your brain the chance to lock in the information that you’ve obtained and so it will be gone.
As if memory improvement wasn’t enough, sleep’s role in cognition can’t be ignored. According to the National Institutes of Health, a lack of sleep, or an insufficient amount of sleep, negatively affects cognitive performance. This includes impairing your attention and decision-making abilities.
Various sleep studies indicate slowed responses, brief moments of inattentiveness, attention lapses, etc. And, these are just a handful of the cognitive impacts that a lack of sleep brings. This is a trader’s nightmare.
Chances are, if you are chronically sleep deprived, you are wasting a lot of time and energy making decisions, learning, and remembering. All of these, and many more, would be easier with a bit more sleep.
The nightmare scenario looks like this- You make a disastrous trading decision, overlook a fabulous opportunity or miss an important exit—costing you time and lots of money.
How Much Sleep is Enough?
The average amount of sleep an individual needs varies from person to person. Generally speaking, research indicates that women need more sleep than men and that children need more sleep than adults. Some newer research suggests that part of the reason children need more sleep is that their brain is absorbing more and ,therefore, learning more on a daily basis.
Again, generally speaking, people need between 7 and 9 hours of sleep each night. The problem is that, in a push towards maximizing efficiency, people today are shorting themselves on sleep. As a global society, we are spending less and less time sleeping and more and more time trying to get things done. But, we’re working harder, not smarter.
How to Get More Out of Your Sleep
Of course, getting the maximum quantity of sleep would be great. But, whatever amount of sleep you do get, you should get the most out of it. There are several ways to maximize the time you spend sleeping and to ensure that your time in bed is not wasted. These methods are adapted from sleep professionals, as well as neurologists.
1. Use your bed for sleeping. Just sleeping, (well… ahem…mostly), Don’t read in bed. Don’t watch TV in bed. Don’t play video games in bed. This sounds trivial, but if you follow this rule consistently, you’ll soon realize how much easier it is to fall asleep, when that’s all that you use your bed for.
Although it doesn’t seem like much, your brain will soon make a solid connection between bed and sleep and it will act accordingly. As nice as it may be for you to fall asleep while watching TV, the benefits of moving the TV out of the bedroom could be substantial. Try it and see!
2. Don’t exercise before bed. This is not an excuse to stop exercising. Just don’t do it before bed, or close to your bed time. When you exercise, your body releases adrenaline and increases your heart rate and body temperature—conditions that make it harder for you to relax and fall asleep.
And, the more out of shape you are, the longer it will take your body to return to normal adrenaline, heart rate and temperature levels.
We’re not contradicting ourselves here. People who exercise fall asleep more quickly and sleep more soundly. There is something to be said for being physically fatigued AND mentally fatigued. So, yes, please exercise. Just do it well before bedtime.
3. Watch that caffeine. The older you get, the more profound the side effects from drinking (or otherwise ingesting) caffeine are. This includes energy drinks, pop, diet pop, most teas and coffee.
Some people who have sleep problems don’t realize that caffeine may be contributing to their sleep woes. In their younger years, they could drink a few cups of coffee before bed and still fall right to sleep. That may have been the case then, but, as we age, we tolerate caffeine differently.
The half-life of caffeine is 3-5 hours. That means that between three and five hours after ingesting coffee, 50 percent of the caffeine has exited your body—and it can take over a day for 100 percent of it to completely clear your system. The rate at which you personally metabolize caffeine varies.
Coffee and tea contain the most caffeine, followed by colas, energy drinks and some other, clearer carbonated beverages. Cocoa powder and chocolate are also sources of caffeine. Weight loss pills are often jam-packed with caffeine. And, some pain relievers, such as Excedrin, Midol and Fioricet, use caffeine as a main active ingredient. If your doctor has prescribed any of these medications for you, ask him or her about alternatives, where appropriate.
4. Avoid nicotine. This one requires little explanation. Nicotine is a stimulant and it interferes with sleep. This, of course, is just one of nicotine’s many horrific side effects. Do without.
5. Skip the nightcap. There is a bit of a misunderstanding when it comes to sleep and alcohol. It seems like drinking would put you to sleep like a baby (a more apt expression would be “sleep like a cat”; babies sleep sporadically, while cats seem to sleep at-will).
Initially, this is true. You might fall asleep faster, after a glass or two of wine. But, later, as your body begins to process/metabolize the alcohol, it can disrupt your sleep. Save the wine for earlier in the evening, perhaps with dinner.
6. Get out. Years ago, doctors would encourage people to get out and get some sun. Your body needs about 10 minutes of full sun (no sunscreen, tank top and shorts) a day to get as much Vitamin D as you need. You can’t even get half of what you need from a normal diet.
But, with the prevalence and greater awareness of skin cancer, doctors are now reluctant to steer patients into the sun, particularly patients who are fair-skinned or who burn easily. But, daylight (not just full sun) is something that your body needs.
If you don’t step outside often—and, as traders perhaps we don’t do this as often as we should—your mind is not getting the proper inputs to decide when it’s time for sleep and when it’s time to be alert. Your internal clock, which normally does a bang up job deciding when it’s time to sleep and when it isn’t, can get messed up.
Your brain needs cues, including sunshine, to know when it’s “go” time. Without feeding it the proper information, like when it’s light outside, it won’t get these natural cues. Get out, even if it’s only for a few minutes. Ask your physician about how much sun is too much sun and about how much time you should be spending outdoors.
7. Red means stop. An hour or so before bed, you should take care to turn off the TV, Kindle, Amazon Fire, iPad, iPhone or whatever other gadget you own—anything that is back-lit with a hue of blue or green.
This includes any alarm clock that has a display in any color other than red, and nightlights and streetlights outside your window—unless they are red in tint, and all those power buttons on all your electronic devices.
All of these things have a blue/green background hue. This blue/green light tells your body that it’s day time. It’s time to wake up! The light is observable, even when your eyes are closed. So, even when you are sleeping, the blue/green tints are disruptive to something that sleep experts call your circadian rhythm.
In studies, mice who were exposed to a very dim blue/green nightlight 24 hours a day had disproportionately high rates of cancer. It is thought that the increase in cancer rates was attributed to their circadian rhythm (sleep/wake cycle) being out of kilter.
So, unplug those nightlights, invest in blackout shades (since you probably can’t turn off those streetlights) and put a piece of red film over your alarm clock, unless it already has a red display. You could also invest in a sleep mask, if all else fails. It’s amazing how much better you will sleep.
8. Establish a pattern. This one requires some discipline and sacrifice, but, if you’re already a successful trader, you are probably already disciplined. The rewards for this one are substantial. Ideally, you should go to sleep at the same time and wake up at the same time every day. This is not always easy, but the body is a creature of habit and having regular sleeping and waking times makes it easier for your body to know what to do and when.
9. Your bed and bedroom should be a sanctuary. This means that it should be a comfortable place to sleep. Your bedroom should be climate controlled. Not too hot, not too cold. Your bed should be comfortable and should provide plenty of back support.
Your pillows should elevate your head and neck to avoid a curved spine. Your sheets and bedding should be comfortable and non-distracting.
Of these 9 recommendations, this one likely requires the biggest monetary investment. Consider shelling out some money from your next big trade and investing in a great bed and bedding to improve your sleep. You will not be disappointed.
If you are unable to implement all nine strategies at once—or if the list simply seems too overwhelming—don’t despair. Making even one or two changes to how you approach sleep can make serious improvements in the way you trade. Start with the easiest one and work through the list, until you feel your sleep is adequate and you are satisfied with your own daily performance.