The Colour of Trading — How Colours May Affect Our Trading Performance

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Here are the key points from our video ‘The Colour of Trading — How Colours May Affect Our Trading Performance’ that you can use as a reference guide or ‘cheat sheet’. The video is available on our YouTube channel and at the bottom of this article.

In trading, we know that our emotions and state of mind have a big effect on our performance and how we react to situations in the market. Surprisingly, it can sometimes be simple things that affect our moods and emotions, with one very simple thing being colours.

Therefore, as part of our continual search for more marginal gains in trading, we decided to understand more about how colours may affect our trading performance. You may recall us doing something similar with the subject of music, as we attempted to find the perfect music for trading.

Here is a summary (excluding black and white) of how the 4 different ‘psychological primary colours’ affect our mood:

Blue

A tranquil and cool colour, making us feel calm and relaxed. It has even been found to slow down your heart rate and blood pressure, so it is even calming from a physical point of view. However, blue can also be associated with feeling down, hence the saying ‘having the blues’ or ‘Blue Monday’.

Perhaps avoid using shades of blue if you’re having a particularly bad month in the markets.

Yellow

Often associated with happiness, cheerfulness or hope, but it is also associated with intelligence and an inquisitive mind. This sounds like the perfect characteristics for a person: happy, positive and optimistic but also intelligent and inquisitive.

However, yellow can also evoke irritation and anger. This could be because of the amount of light in the colour, which means the eyes have to focus a bit harder, therefore putting more strain on the eye.

Perhaps not the best colour to have as your chart background, but maybe a consideration for your trading room.

Red

From love and warmth, to anger and danger; red brings up a range of emotions. In fact, it can also signify power and dominance. Some studies have shown that in physical competition, red can actually improve performance.

From a physical point of view, red can also increase heart rate and blood pressure. However, the increased levels of excitement it can cause also means too much red can lead to anxiety.

It is often used for danger signs, so keeping us on edge during certain moments may be a good thing to a certain extent.

Green

Green brings out a lot of feelings of tranquillity and causes a calming effect. Many people also believe the colour to hold certain healing qualities.

As we know, in the markets we want to be emotionally neutral as much as possible. So being calm and tranquil is an ideal condition to be in.

Conclusion

All colours can have a positive and negative effect on our psychology. This is determined by your own personality, experiences and characteristics. Something that may be calming for one person, may be irritating for someone else.

This means, we need to experiment with different colours and not stick to default or accepted norms in terms of chart colours and other items you may come into contact with during your trading session.

We also need to be sure to use colours in a meaningful way, rather than choosing random colours for levels on our charts, as you may subconsciously attach meaning to these colours and lead to confusion in your judgement.

Colours are useful when there are specific things that you want to have highlighted. If there is a level or area on the chart that you want your focus to remain on bold, vibrant colours will keep you drawn to this. By keeping other information in neutral or cooler colours, you won’t distract from the main points you want to see.

For deeper explanations and more key points, check out the video below:

To learn more about our method of trading, sign up for our FREE Inner Circle, so you can get access to our exclusive 4-part video mini-series and learn the foundations of our approach. Click here to register.

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