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AN INSIGHT
TO DAY TRADING

UNDERSTANDING THE EFFECT OF MUSIC IN DAY TRADING


Day traders require a balanced and positive mindset to be in the right state of mind during their trading sessions. That can be achieved through various measures. Sports, healthy nutrition and the right relationships are just a few examples, however, the trader’s direct environment respectively music can play an influencing role as well. Various studies have investigated the impact of music on the human mind allowing conclusions about the effect of music in day trading.


STUDY RESULTS

Harvard refers to a study by AARP in an earlier article revealing that music can have an impact to the cognitive and emotional well-being. People who listen to music regularly had higher scores for mental well-being as well as a reduced level of anxiety compared to people overall. A supplementary study published on Frontiers extends the positive effect of music in regard to cognitive performance. Research has shown that background music or music that plays while the listener is primarily focusing on another activity can improve cognitive tasks.


Another study published on Plos One presents further positive impacts of music in relation to stress reduction. In the research process, participants were exposed to a stressor and split into three groups whereof one group listened to relaxing music, others to rippling water and the remaining group received no auditory stimulation. Subsequently, all participants took part in a psychosocial stress test. The result indicated that listening to relaxing music had an impact on the human stress response and in particular on the autonomic nervous system.


Similarly, a study published on Wiley Online Library investigated the impact of music regarding motivation in connection to physical workouts. In the experiment, participants were cycling on a stationary bike at self-paced speed for 25 minutes. During that time, the participants listened to a playlist of different songs of various tempos. In the background, the researchers made minor changes to the music’s speed without letting the participants know and measured their performance. The music was left at a normal speed, increased by 10% and decreased by 10%. As a result, the faster played music resulted in increased performance in terms of distance covered, the speed of pedalling, and power exerted. On the contrary, slowing down the music's tempo led to decreases in the mentioned variables.


Moreover, a study published on Taylor & Francis investigated the impact of music with regards to the individual’s mood. Participants in that study were instructed listening to positive music for two weeks with the intention to improve mood. In contrast, other participants were instructed listening to positive music for two weeks as well but without the intention to boost mood. Later, the study's result indicated participants who had intentionally tried to improve their mood felt happier after just two weeks compared to those without the intention to improve their mood.


Further, a model by the Florida University shows the effect of music on the various brain areas.


CONCLUSION

Bringing the study results in relation to day trading, music clearly has an impact on mental factors that are highly crucial during trading sessions.


Improved cognitive functioning such as learning ability, thinking, reasoning, decision making, and attention are essential in day trading. Simultaneously, relaxing music has proven to reduce the level of anxiety and stress helping the trader to enter a more relaxed state of mind. That is accompanied by the effect of a positive mood when intentionally listening to positive music. On the other hand, fast-pace music indicated an increase in physical productivity which, however, can be considered a negative impact since traders are required to be patient and less active in terms of physical activities.


Finally, day trader music should be preferably relaxing and listened to with the intention to improve mood to the positive. In contrast, fast-pace music should be avoided.