BRETT STEENBARGER'S TRADING PSYCHOLOGY RESOURCE CENTER

Below are resources to help traders become their own trading coaches, improve their trading processes, and develop a positive work-life balance.  All the TraderFeed posts also contain links to valuable resources and perspectives.  

RADICAL RENEWAL - Free blog book on trading, psychology, spirituality, and leading a fulfilling life

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The Three Minute Trading Coach Videos

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Forbes Articles:

https://www.forbes.com/sites/brettsteenbarger/
  

My coaching work applies evidence-based psychological techniques (see my background and my book on the topic) to the improvement of productivity, quality of life, teamwork, leadership, hiring best practices, and creativity/idea generation.  An important part of the "solution-focused" approach that I write about is that we can often best grow by focusing on what we do well and how we do it--and then doing more of what works for us.  The key is to know our cognitive, interpersonal, and personality strengths and leverage those in the pursuit of performance. 

FURTHER RESOURCES

*  A Creative Way to Use TraderFeed 

*  Brett Steenbarger Bio

*  Brett's Books on Trading Psychology

I wish you the best of luck in your development as a trader and in your personal evolution.  In the end, those are one and the same:  paths to becoming who we already are when we are at our best.

Brett
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The Key Role of Emotions in Trading

 

9/16/2025 - Think about the mind state of the Olympic athlete or the Broadway actress or the neurosurgeon.  Above all, they are focused on what they are doing.  They are in the zone of performance, and they experience that zone to be pleasurable.  They're immersed in doing something they love.

The opposite state from being in the zone is being so focused on outcome that we can't enjoy the performance itself.  Imagine a basketball player constantly looking at the scoreboard or the actor anxiously scanning to see how the audience is responding.

When outcome becomes more important than the process of doing, we become attached to our ups and downs and lose the joy of being in the zone.  We learn most effectively when we're in the receptive zone that processes experience deeply.

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9/15/2025 - Hybrid trading is generally considered to be the use of quantitative signals and systems to support discretionary decision-making.  What I'm finding is that, for someone with short-term trading experience, hybrid trading can also be the use of discretionary pattern recognition to best enter and exit trades generated by quantitative signals.  In such trading, emotion actually supports quant trading.  When a signal starts playing out in real time, there is an "aha!" experience that says, "Now is the time!"  For example, a breadth pattern in which funds are flowing away from value and defensive stocks and toward growth shares might be significantly associated with positive market returns over the next two weeks.  When we see the market sell off on a short-term basis and then find support above its prior oversold level, our "aha!" pattern recognition alerts us to opportunity.  Emotion actually helps us get larger in the backtested trade.  The experienced trader often senses and feels when a researched opportunity is playing out, creating very positive reward relative to risk.  

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9/14/2025 - The most important emotions in trading are fulfillment and frustration.  When we tackle challenges that make use of our talents, we experience satisfaction and a sense of meaning and purpose.  When we tackle challenges either in ways that don't make use of our talents--or if we simply lack the talents necessary for success--we experience frustration.

To be sure, skill development is crucial to success and all performance challenges bring their own unique learning curves.  We don't travel those curves successfully, however, if we don't have the basic talents needed for success.  That is obvious in sports such as basketball and Olympic skiing; it's also obvious in the arts.  Traders often want to believe--and unscrupulous vendors are happy to promote--the idea that success is simply a function of learning the right skills.  Without core talents of information processing, pattern recognition, and multiple learning styles, attempts at skill-building will fall short.

When our approaches to markets fits our talents, our skill development is accelerated and that is intrinsically rewarding.  We enter the performance zone when we are aligned with our talents.  Trading can't be profitable if it's not deeply fulfilling.

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9/14/2025 - When traders reflect on emotion in trading, their first thoughts often go to impulsivity, greed, and fear.  What I've emphasized in the upcoming book is that the experience of positive emotion is necessary for trading success.  It is positive emotion that shows up as our first market alerts, as we sense opportunity before we consciously identify and make sense of it.  It is also positive emotion that pushes us to find learning lessons and inspiration even in our losing trades and days, and it's positive emotion that connects us with others so that we can all benefit from teamwork.  

The problem with overtrading and poor risk management is not just that they lose us money.  They also prevent us from the positive experience that we need to energize our trading growth.  Perhaps there is no better trading self-assessment than to ask ourselves whether our trading is giving us energy or draining us; whether our trading is inspiring us or whether it's holding us back from our development.  

If there is no positive emotional P/L to our trading, surely we will not reap the financial rewards of markets.

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9/12/2025 - There is a serious misconception among traders that sound trading is trading without emotion.  I would suggest that sound trading is trading with emotion but without attachment to emotion.  That's an important distinction.  To feel something is information.  We feel because something in life strikes us favorably or unfavorably.  If we become attached to that emotion, then it will dominate our subsequent actions.  If we can observe the emotion and treat it as information, we can use it to make better and better trading decisions.

As I noted in the previous post, my research has been identifying edges that play out over a period of many weeks.  I'll be discussing those in future posts.  As those edges play out, you can identify short-term market situations where traders are getting stopped out of positions that will ultimately play out.  You can feel the traders' panic, and you can use that emotion to enter a longer-term position with very good reward relative to risk.

A therapist feels a client's emotions, but does not become attached to those feelings.  Emotions are information, but only if we can become observers of our emotions.  Our trading problems result, not from the presence of emotion, but from the absence of focus.

(Re)Building Your Trading Career

 

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9/11/2025 - A great framework for building or rebuilding your trading career is the SWOT analysis:  Strengths, Weaknesses, Opportunities, Threats.

In keeping with the positive psychology perspective, I would suggest that the starting point for such an analysis is a clear, detailed assessment of your strengths and how those intersect with opportunities in the market.  Then you can figure out how to navigate your weaknesses and the threats that markets pose.

What are the edges in the market that you see most clearly?  What are the processes that you employ to best execute such edges?  How do you know that the edges you perceive today will be likely to occur going forward?

As I suggested earlier, it's important to know your edges--and your ways of exploiting them--so well that you could deliver an effective elevator pitch to someone who might want to invest in your business.  Tough question:  If you can't effectively pitch your business to others, should you really be investing your time and money in what you're doing?

I've been conducting a detailed analysis of the breadth measures that I track, both overall market breadth for the equity indexes and breadth broken down by stock market sector.  What has been eye-opening is that the edges I'm finding from the breadth measures are most pronounced over longer timeframes:  30-50 trading sessions.

I absolutely did not expect such a finding.

The implication is that I'm greatly underperforming the opportunity sets in markets by day trading.  Even the active investing of many portfolio managers misses such edges.  

Finding new and different edges in markets is the starting point for rebuilding our market careers.

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9/10/25 - An important principle that I emphasize with traders is "getting bigger by getting broader".  By finding and exploiting new sources of edge in markets--new strategies, new time frames, new markets--you diversify your trading business and can make money in a variety of market conditions.  When one strategy isn't working, others can kick in.

Many traders I've spoken with depend upon trending (and volatile) conditions to make money.  If the market trades in a range, they can get chopped up pretty easily.  Adding strategies that identify cycles in "choppy" markets and trading their short-term patterns can be quite profitable.  Often, those rangebound conditions are actually corrective periods in longer-term directional moves.  As I'll describe in an upcoming post, many breadth indicators are quite good at identifying those longer-term moves.  Armed with that information, we can view the flattish corrections as opportunities to pounce on the next directional leg.

Another way of getting broader is to trade relative relationships and take the overall market out of the equation entirely.  When we go long one market sector and short another and balance the positions for volatility, we have a way of making money regardless of what the overall market is doing, as long as our one sector outperforms the other.

When we have a diversified trading business, our income becomes more balanced; our overall P/L becomes less volatile; and we have a positive mind frame based on finding opportunities.  So often, (re)building our business means expanding our business and investing time and energy to create multiple income streams.

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9/9/25 - This series of posts has particular relevance for those struggling with their trading and those who are ready to take their limited success to the next level of performance.  It also has personal relevance, as I will be rebuilding my trading approach and process from the ground up--and will document each of my steps through my blog posts.  The idea is to help traders use their setbacks as opportunities to create success.

One of the first topics I tackled in my first book was manufacturing cars and trading success.  The example I gave was of U.S. car makers who ran assembly lines at a speed that would ensure that flaws would not occur.  That was contrasted with Japanese auto makers who intentionally sped up their assembly lines until problems occurred.  Then they jumped at the opportunity to correct the flaws and run the whole process faster.

For the innovative automakers, things falling apart were a step in success.

If things have fallen apart in your trading--or if you have fallen short of your goals and potential--the idea is to embrace the lessons of your experience and use those to remake what you do.

The first step in (re) building your trading career is conducting a careful assessment of what you've been doing and an equally careful assessment of where opportunity can be found.  That will be the focus of the next post.  Along the way, I'll be sharing my lessons and helping you extract your own.  Let's go! 

How We Live Life Is How We Approach Trading

 

9/8/2025 - I really didn't feel like going to the gym this morning.  I was tired, but I knew that I had to keep up with my workouts.  We get to this choice point often in life, where we know what we should do and part of us just doesn't want to make the effort.  It happens in markets as well.  Conducting that extra analysis; reaching out for more and different information; putting in the time for in-depth review:  all require effort.  Sometimes, we just don't want to push ourselves.

These choice points are points of opportunity.  We learn to expand our free will by exercising it--just like at a gym.  Eventually, what requires effort becomes natural and routine.  At the heart of personal growth is growth of free will.  

This is yet another way in which how we live our lives shapes our trading.  If we train ourselves for free will, we become capable of the efforts that will distinguish our trading--and all our undertakings.

I ended up going to the gym and quickly gained energy that will help fuel my day.  The right doing gives us energy.  When we're tired, the problem is often not a need for rest, but an absence of inspiration.

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9/7/2025 - The most recent post below made the point that how we live our lives shapes the attitudes and behaviors we bring to markets.  If, however, we become what we do routinely, then the reverse is also true:  Our trading impacts the rest of our lives.  If we become obsessive about our trading, can we expect to be sensitive to others and attentive to our personal needs?  If trading becomes an arena for frustration and impulsive actions, can we expect to live the rest of our lives in planned, goal-oriented ways?

How you are trading is shaping the person you're becoming.

That should either inspire you or frighten the hell out of you.

The only path to great trading is your personal path to greatness.  Great trading reinforces the ideals you pursue throughout life.

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9/5/2025 - In the long run, our trading processes can be no better than the processes with which we live our lives.  Can we expect to carefully structure and express our ideas and manage their risk prudently if we're not conscientious in our personal lives?  Can we expect a positive, motivated, energized trading mindset when our day-to-day thoughts are filled with frustration and negativity?  Trading with integrity comes from a life of integrity.  Making the right decisions and taking the right actions each day strengthens our ability to do so in markets.

My recent post about cats and creativity makes the point that finding unique ways to create loving homes for cats who have been neglected, abused, and/or abandoned has made me more creative and loving.  We internalize our daily doing.  Disciplined, creative processes for physical exercise, researching opportunities, and--yes--even feeding cats reinforce the right trading strengths.  

When we live with integrity, we trade with integrity.  

Living Your Ideals

 

9/4/2025 - Here's a valuable trading psychology exercise:  Identify your three greatest strengths in life:  What you do best and find the most rewarding and fulfilling.  Write those down.  Now identify, in detail, how you draw upon each of those strengths during each phase of the trading process:  how you generate trading ideas; how you find ways to express those ideas; how you manage the positions/risk; how you review your performance.  

If you don't draw upon your signature strengths at every phase of the trading process, can you expect to deliver your best performance and achieve your peak mindset?

This is why positive psychology is so crucial to trading success:  We cannot perform our best unless we consistently draw upon the best within us.

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9/3/2025 - How do we know if we're living the life that we're meant to be living?  How does our psychology tell us when we're on the right path--and when we're not?  

The surest way to never win is to play to not lose.  That's true in markets and poker, and it's true in our careers.  If something is truly meaningful to us, we have to go all in.  Anything less is self-betrayal.  We know we're living the right kind of life for us when our experience is fulfilling; when effort gives us energy and doesn't deplete us.

Fulfillment requires us to approach life as entrepreneurs.  We are building something special; something meant to be successful.  If we're comfortable in life, we're probably coasting.  We're not entrepreneurs.  

If there was only one big thing you could do in life going forward, what would it be?  Then start taking steps in that direction, as outlined below.  The fulfilling life is life lived without regrets.

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9/2/2025 - The opposite of living our ideals is living randomly, without intention.  The self-change process described below is actually a formula for living life intentionally by growing our free will.  The central skill demanded by trading is free will:  the ability to not be swayed by random thoughts, feelings, and impulses and to take risk in planned, conscious ways.  Trading, properly pursued, is the pursuit of free will and the development of our capacity to overcome reactivity and act upon our goals and ideals.  

When we understand this, then everything we pursue consciously strengthens our ability to trade, because it strengthens our freedom of will.  Pursuing goals and ideals in our relationship lives, in our physical development, in our work--all make us more self-directed people.  A trading journal, from this vantage point, is a game plan for growing our free will and becoming more consciously self-directed as traders.

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9/1/2025 - The positive psychology change process below applies directly to our growth as traders.  The idea is to make one process improvement at a time and implement it consistently for 30 consecutive trading days.  For example, a trader I worked with was frustrated by taking profits too early, but also by seeing profits reverse if he held onto positions.  He defined a trade structuring process where each idea was expressed in two ways:  outright and with an options straddle.  Implementing this on a small scale every trade for a month helped him refine the strategy, so that his psychology shifted to win-win from lose-lose.  Similarly, traders can make small improvements each day in their research processes and in their journaling.  When we continually work on improving our craft, we internalize the forward momentum and experience growth even during times of challenging P/L.  

What is a best practice that could improve what you do and how you do it, and how can you incorporate that into your trading (and trading reviews) every day?  We can't grow our trading if we experience ourselves as stagnant.

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8/31/2025 - Therapy is the application of psychology to understanding and overcoming one's personal problems.  The application of psychology to the achievement of our ideals is the essence of positive psychology.  What I refer to as positive trading psychology is the application of psychology to the achievement of our trading ideals.

But how do we become the people we wish to be?

The key idea is that we achieve our ideals by living our ideals each day.  When we do and do and do, we internalize our actions.  We don't change ourselves and do great things.  We do great things daily and evolve.

Here is a powerful framework for self-change:

Identify one thing that you would like to do each day that represents the person (or trader or spouse or professional) that you would like to become.  The one new thing you do should be something very doable, but also something very different from what you've been doing.  Perhaps I would like to get in better shape and have more energy.  So every day, I will run on the treadmill and keep track of my aerobic capacity.  I'll do that for a month and write down my progress each day.

When we do something the same way each day for a month, we turn an effortful behavior into a habit pattern.  By the end of the month of daily work on the treadmill and keeping a journal of progress, the aerobic workouts become part of my daily routine.  I then add a new desired behavior as my daily activity for the next month; perhaps making a conscious effort to spend quality time with someone I love.  Every day, I do something loving and, over time, I become a more loving person.  

By the end of a year of such monthly work, we have not only changed in many respects, but we gain confidence in our ability to change.  The cumulative impact of living our ideals brings us closer and closer to the happiness and fulfillment we're capable of.  

That is true therapy for the mentally well:  Each month, find a way to bring our real selves closer to our ideal selves and make that a daily routine.  Gradually we shape who we wish to be:  in trading, in relationships, in life.

Providing a home for abandoned, neglected, and unwanted cats has been a way I have worked on my own capacity to give for many years.  Part of my positive self therapy is creating a website for this work and reinforcing those ideals.  

Each day, every day, in the same ways:  be a little bit of the person you wish to be.  

Character grows from the ground up when we plant the seeds and water each day.

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Best Practices For Maximizing Your Psychology

 

8/29/2025 - I recently spoke with a hedge fund manager who had maximized his overall psychology by maximizing his *cognitive* strengths.  It's not well appreciated that making the most of how we process information helps us understand the world better and that brings us insight, opportunity, and excitement.  This portfolio manager took the extra steps of writing out his ideas, sharing with a couple of valued colleagues, and processing their responses interactively.  Many times this helped him cement conviction in his ideas and make the most of them.  The interactions also helped him make important modifications to his ideas.

Improving his trading process improved his trading mindset.  By processing information in more and different ways, he honed his ideas and grew his capacity for conviction and sizing.  Think of every way of processing ideas as a station in a gym.  We get the best workout by making full use of each station.  If we don't challenge our own ideas, the market will challenge them for us.      

8/28/2025 - We can maximize our psychology by broadening our opportunity sets in trading.  Both at hedge funds and proprietary trading firms, I've noticed that the most successful traders--and the ones with the best mindsets--are those that take many different types of trades in many different markets.  They move from market to market or stock to stock depending upon the opportunity set at the time.  They don't specialize to the point of only trading one market or strategy.  By flexibly shifting and trading where they see greatest opportunity, they are always opportunity focused.  On some occasions they might be very short-term in their trading; on some occasions they might be playing for breakouts and trending moves; on some occasions they may be playing response to news catalysts.  Opportunity comes and goes in any given market or strategy or time frame.  When we broaden our search for opportunity, we stay opportunity focused.

8/27/2025 - Here's another best practice for making the most of our trading psychology.  Several years ago, I conducted a study of the personality traits most closely associated with trading success.  The questionnaire assessed the "big five" traits and found many significant relationships.  Interestingly, different traits predicted success for different trading styles.  More on that topic in an upcoming post.  At the suggestion of a bright, successful trader, we added a questionnaire to the study measuring a sixth trait:  entrepreneurship.  Interestingly, entrepreneurship wasn't highly correlated with any of the big five, but it did significantly predict trading success.  Like anyone starting a business venture, the trader checks the boxes when it comes to questionnaire items such as:

*  I enjoy challenging projects

*  I like taking risks in most aspects of my life

*  I spot opportunities where others don't

*  I'm good at defining priorities and making an action plan

*  I love creative problem solving

*  I'm always looking for new ideas

*  I always try to learn lessons from my failures

The implications of this finding are profound.  The goal of our work should not be to catch this or that move in the market or to manage this or that emotion.  The goal should be to improve ourselves as entrepreneurs and develop the skills that will enable us to build a lasting, growing business.     

8/26/2025 - Create a structure for each day that commits you to spend time on activities that energize and develop you physically; activities that push you to love and care for others; activities that stimulate your interests and make use of your talents; and activities that challenge you and move you toward bigger picture, meaningful goals.  Every day should have fun time, meaningful time, energizing time, and close, loving time.  All of that is hard-wired into the daily and weekly calendars to ensure that you make your well-being your overriding priority--because that is how you'll have the most energy and passion to be effective in every area of life.  

As I describe in my upcoming book, a key to trading success is to discover the markets, strategies, and connections to others that bring out the best in what we do.  Frustrations and impulses are not the problem; the problem is that we never take the time to explore and experiment and find out what we're really good at.  When we structure our time positively, we bring energy to everything we do--including our learning and our trading.  As Professor Diener explains above, "Happiness is an ongoing process of fresh challenges".

Finding Solutions To Your Trading Challenges

 

8/24/2025 - The challenge for the individual, independent trader is to create their own "team":  to connect with serious traders whose strengths differ from one's own.  So, for instance, I might be strong in researching market patterns, but someone else might display their strength in how they express trades or in how they maximize reward relative to risk.  By networking with others, we create the possibility of virtual teams, in which each member can make the others better.  Indeed, this can begin by simply pairing up with just one like-minded, motivated trader who can benefit from your strengths and who can share their own.

Imagine reviewing each day's trading in detail with just one other dedicated teammate.  Their lessons each day teach you; yours teach them.  They help you extract learning from your mistakes and you do the same with them.  You increase the learning, you increase the engagement, you create a source of motivation that keeps you going during lean times.  We further our own development by participating in the development of others.  The solutions to our trading challenges are found in the strengths of those with learn with.

8/22/2025 - A major shortcoming of almost all coaching of professional traders is that it is conducted individually, not within the teams that they are part of.  The solution-focused framework described below is just as applicable to teams as to individuals--and often more so.  

Consider the possibility that the changes you want/need to make as a trader have already been made by someone on your team.  Suppose each team member already has a strength that you need to develop and that you have strengths that would benefit each team member.  

Now the goal of coaching is to be solution-focused within teams:  Find the exceptions to your problem patterns within the trading of one or more team members and make a concerted effort to model them.  Similarly, when you display a strength needed by a team member, you help that trader do more of what you're already doing well.

A good team is a combination of strengths and a community of traders that strengthen each other.  The trader you want to become is already present in some measure within your team.  This is a very important reason to not attempt to learn to trade in isolation.  All performance activities, in sports and in the arts, are learned through modeling and teamwork.  

8/21/2025 - The solution-focused paradigm is perhaps the most powerful framework for improving our trading because it naturally builds upon what we already do well.

The framework is this:

Find exceptions to your problem patterns:  occasions in which your problems do not occur or occur at a much smaller scale.  

When your problems aren't occurring, that is when you're doing something right.

Study what you're doing when you aren't having your problem, consider that as a possible best practice, and look to expand upon it.

For instance, one of my problems might be to take profits too early in a market move.  When I don't take profits early, it's because I have grounded myself in a longer timeframe perspective and have consciously identified a bigger picture target.  My confidence in the bigger picture idea, often anchored by research, outweighs the fear of losing my profit.

The exception to my problem pattern reveals a strength.

We develop as traders, not by focusing on our problems and negative emotions/patterns, but by identifying what we do when we make money and consciously "do more of what works".

Further Reading:

Becoming Solution-Focused in Our Trading

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How to Transform Ourselves: As People, As Traders

 

8/20/2025 - One of the most powerful paths to transformation is relationships.  A great deal of our development early in life is the internalization of relationships from parents, teachers, and other significant people in our lives.  We know from research in psychology that the quality of the relationship between therapists and clients is the single best predictor of success in making and sustaining changes in therapy.  The attachment to a mentor or colleague similarly helps us internalize their role modeling.  

A major challenge for individual traders early in their development is the absence of role modeling relationships.  Receiving teaching or coaching online can be helpful and informative, but it does not accomplish the transformation of a close relationship.  We develop expertise first by copying the work of successful mentors and then by synthesizing the learning and turning it into our own.  At the medical school where I teach, there are always multiple mentors in clinical training.  No one learns medicine on their own, and no one learns it from videos and websites.  We learn by doing, and we develop by learning from many role models in many settings.  Each role model is a path for development; multiple role models enable us to develop multidimensionally and uniquely.  This is why learning in teams is so powerful.     

8/18/2025 - Sound trading is training in intentionality, the capacity to establish and sustain purpose.  Quite literally, when we establish and follow trading processes, we train the brain to sustain purposeful action.  The enemy of good trading is not emotion or lack of discipline.  Those are the result of our failure to sustain the efforts needed to follow our best practices.  Our enemy is distraction and the inability to guide our thoughts and actions purposefully.  The small, repeated experiences referenced below are the ways in which we make efforts and turn those into routines.  That frees our minds for yet other, further efforts.  Process progress is measured in terms of taking purposeful behavior and turning that into reliable routine.  What takes effort day after day becomes relatively routine week after week and a natural part of us month after month.  We transform ourselves by turning our best actions into repeatable procedures and turning those procedures into reliable habit patterns.

If we're not building new routines and pushing new boundaries, we're stagnating.  The emotions that impact trading and that we hear so much about are simply the result of our challenges overwhelming our ability to sustain our best practices.         

8/17/2025 - In just a few months, the kitten we adopted has come a healthy young girl.  She began her time with us frightened and has grown into an active, playful, loving friend.  The transformation did not occur all at once.  Quite the contrary.  It was daily experience of feeding, holding, playing, and sleeping together that built a strong bond not only with us, but with our other cats.  The psychological principle here is that the most powerful changes occur through small, repeated experiences.  Doing new and different things--day after day--makes us new and different over a surprisingly short period--but only if those experiences are consistent and repeated many times per day.  Transformation is not accomplished by one big act of will.  It is achieved through sustained, consistent effort.  Day after day of loving Nomi turned a frightened kitten into a loving family member.  And changing our trading?  That occurs one trade at a time, doing the right things the right way--again and again and again.  

Doing new things renews us.

Further Reading:  The Naomi Principle - Overcoming Trauma

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How You Know You're Trading Well

 

8/15/2025 - Eight questions to assess whether you are trading well:

1)  Does your trading give you energy, challenge, and excite you or does it leave you drained and frustrated?

2)  What is one significant way in which you have grown in your trading over the course of this year?

3)  What is the one way you could most improve your trading and how are you working on that each trading session?

4)  How many people can you identify whose trading you are making better on a regular basis?

5)  How many people can you identify who are making your trading better on a regular basis?

6)  What have you learned this month from your greatest trading mistake?

7)  What have you learned this month from your greatest trading success?

8)  So far this year, what is your Sharpe ratio?  How does the average size of your winning trades compare with the average size of your losing trades?  What is your hit ratio (number of winning trades compared with number of losing trades)?  What are you doing--specifically--to improve your performance stats?  Can you truly expect to improve if you don't take the time/effort to keep score?

8/14/2025 - You know you're trading well when you can trace a clear evolution in what you do and how you do it.  Any great business evolves; it's not the same from one year to the next, one decade to the next.  They develop new products and services to replace older ones; they expand distribution; they make manufacturing more efficient; they offer new and different services to customers.  Great businesses keep score and know where they're performing well and where they are lagging.  

You're trading well when you develop new processes for generating ideas; an expanded range of ways for managing positions and risk; new markets and instruments to master.  The great trader spends as much time and energy on self-mastery as on market mastery, because success hinges on both.

8/14/2025 - You know you're trading well when you do a great job of being wrong.  The key question is, "How good are you at losing money?"  For talented directional traders, I've consistently found that win rates are not all that far from 50%.  Where those traders excel is in structuring trades to limit losses and allow for the possibility of large wins.  They don't just go long or short; they wait for flows to show them that the moves are happening *now* and then structure a trade with great reward relative to risk.  Then, if they're stopped out, they have plenty of dry powder and can step back and reassess their views.  Very often, a sound trade idea that doesn't work is telling you something about your market and can lead to an opportunity in the other direction.  Trading well means trading with an open mind and allowing losses to provide you with important information.  Trading well is trading flexibly, not with a fixed view and mindset.

Note that every trade is not only a view of direction, but also a view of volatility.  Where we take profits and let profits run captures our underlying view of how much the market is likely to move on our time frame.  Many times, traders focus on direction, not so much on vol.  You know you're trading well when you not only anticipation the direction of movement, but the extent of movement.  Trading well is trading with awareness, taking lessons away from winning trades and losing ones. 

8/13/2025 - How often are you in the "flow state" when you're trading?  In the flow state, we see markets differently and see things that we miss when we're not optimally focused.  If you're trying to find things to trade and attempting to not miss out, you're surely not in a flow state.  In flow, we are so focused on what we're seeing that opportunities come to us.  The patterns that we've reviewed and traded stand out when our minds are clear.  It is for this reason that it's a mistake to try to substitute positive thinking for negative thinking.  The best trading mindset is one in which we turn off our self talk so that ideas can come to us.  A great frontier for trading psychology is training our brains to stay in flow.  If we are scattered in our daily lives, can we expect to be focused in our trading?      

8/12/2025 - The quote from Rolf at Tradeciety captures an important dynamic.  The need to make money keeps us focused on short-term performance.  A desire for mastery keeps us focused on longer-term growth.  We know we're trading well when we are actively studying our performance as well as markets, taking away some learning--some important lessons--each day.  Here's a great psychological test:  If trading exhausts you, you know that you're a victim of the ups and downs of P/L and the need to make money.  If trading inspires you, you know that you're tapped into your growth as a trader.  Traders in professional settings are typically organized in teams, and they typically reach beyond their teams to connect with others, share views, and engage in mutual learning and development.  Great trading gives us energy.  Great trading processes immerse us in what we do well and what is meaningful to us.  We know we're trading well when trading is a platform for developing the best of who we are.

Best Practices for Building Your Trading Business

 

8/11/2025 - If you're building an enduring trading business, your review processes need to be as detailed as your trading processes.  Professionals in performance fields spend more time practicing, reviewing performance, and working on improvement as they do in formal performance.  The best reviews focus on opportunities you may have missed; what happened to your trades after you exited and how you could have managed the positions better; where you could have tactically added to positions and where you could have taken profits; etc.  In review, you're looking for the patterns in your trading just as rigorously as you look for market patterns.  Successful traders are motivated by the drive for improvement and mastery, not just the drive to make money.  Look at the trading journals you keep.  If you saw someone working on their trading the way you work on your trading, would you invest in them?

8/10/2025 - Your trading business should be grounded in some unique strength/experience that you possess and that others do not.  If you're not expert in some area, can you expect performance that reflects expertise?  What do you know and what do you do with that knowledge that makes you distinctive?  How are you special?

I'll just mention that my own trading is grounded in years and years of detailed study of patterns of stock market breadth:  overall market breadth and the breadth of various sectors.  These breadth patterns have an excellent historical track record of anticipating momentum/trend (continuation of recent movement) and reversal.  For example, when we see overall stock market strength in the major indexes but many sectors well off their highs and displaying poor breadth, the odds of reversal increase significantly.  

Note that we're near all-time highs in the broad equity indexes but well off our highs in small cap stocks, in the real estate sector, in the healthcare sector, in the regional banking sector, and lagging recent highs in the materials and energy sectors.  As of Friday, 449 stocks in the NYSE universe registered new monthly highs and 700 made fresh monthly lows.  We need to see breadth expand from here to keep the bull going.    

8/10/2025 - A unique challenge in building a trading business is that it takes optimism to sustain efforts across the ups and downs of P/L, but it takes realism to manage risk and limit losses.  A great principle is that, each day, you should know what--specifically--will tell you that your trade is wrong and you should get out.  That level should also be one that still allows you to recover your losses on your next trades.  In practice that means that the trade is different from the idea you are trading.  The trade is a risk-to-reward proposition that expresses an idea.  The idea may ultimately prove correct, but the trade is an attempt to capitalize on the idea here and now.  Even when we may hang onto an idea, it's important to be able to let go of the trade if the idea isn't playing out; i.e., if the marketplace is not recognizing that idea.  Conversely, it's important to recognize when the idea is truly playing out and to be able to treat it as more than a short-term trade.  Successful trading is a marriage of tactical and strategic thinking; being in the right mind frame is necessary for success but hardly sufficient.       

8/8/2025 - One of the most important lessons I learned early in my hedge fund career is that the best trading is planned, not reactive.  Indeed, every part of the trade--from the research of the idea to the timing/structure of the trade to the management of the risk--follows a plan.  That plan creates a replicable process that ensures we do the right things the right way with the right consistency.  This is yet another way in which your trading truly is a business.  The successful business does not operate by impulse and whim.  It follows best practices that have been shown to be profitable.  We cannot be our best selves and run our best businesses if we are reactive.

We can never be more planned in our trading than we are in our day-to-day lives.  If we are not living each day, each week intentionally, we unwittingly reinforce reactivity.  How we manage our risk ultimately mirrors how we manage our lives.  What will make today successful?  What will make this week successful?  What can I do right now to move forward with the plan for my day and week?  Living with purpose cultivates our ability to trade purpose-fully.

8/7/2025 - If you are approaching your trading business as a true entrepreneur, then you should be able to deliver an elevator pitch to someone who might want to invest their funds with you.  The elevator pitch would quickly summarize what makes you and your trading unique and why you are able to achieve superior returns relative to other traders in your space.  In the spirit of the below post, consider what your elevator pitch would be and whether you would invest with someone who delivered that pitch to you.  If you're truly running your trading as a business, you should be able to describe what you do, how you do it, and why it is uniquely successful in a short pitch.  If you don't have your edge thought through to that degree, should you really be investing in a strategy that you would reject if someone else brought it to you?  

8/7/2025 - Every serious trader is an entrepreneur.  We take the first step toward development when we make our trading business our business.  That means having a business plan, detailing our goals and the resources we need to reach those goals.  A great exercise that I've described in the past is to write out the business plan for your trading business.  Then put it away and read it carefully the next day, asking yourself, "If someone came to me with this plan, would I invest my money in their business?"  If the answer isn't "Hell, yeah!", perhaps we should rethink what we're doing with our time and energy.

A solid business plan for a trader describes in detail the opportunities pursued in markets and how those will be pursued; how capital will be allocated to trades; how risk will be managed; how performance will be reviewed and improved; and how new areas of business opportunity will be researched and developed.  Without sound business planning, can you truly expect to trade in a planned and sound fashion?       

Our Religious Beliefs, Our Spirituality, Our Trading: An Invitation

 

8/5/2025 - Life is a series of transitions, as we learn from the past and present and build a new future.  Each of our life's activities, from marriage and career to raising children, is also a series of transitions.  We build our lives by rebuilding our lives.  Just as we're created at birth, we re-create and renew ourselves.  Personal growth is not a smooth process.  It is a series of transitions and rebirths.  What is painful now is a birth pain for the person who will emerge.  How are your trading challenges meant to shape the person you're meant to become? 

8/4/2025 - Two pillars of success are the psychological dimensions of happiness and fulfillment.  Happiness is what brings us joy and fun; it makes us feel good, and it brings us emotional energy.  Fulfillment is different.  It is what is meaningful to us:  what brings us a sense of purpose and significance.  Many traders look to trading for happiness, but fail to pursue trading in a way that is fulfilling.  One topic we'll discuss in the upcoming online session (see below) is how we can bring greater meaning and purpose to our trading.  That is what is meant in Radical Renewal about trading from the soul and not only from the ego.  There will always be periods of profit and periods of loss in trading.  If there is nothing beyond P/L to make trading significant in our lives, we won't sustain the ups and downs.      

8/3/2025 - The reason we fail at trading is not because negative emotion takes over.  The reason we fail is that we adopt a trading process/approach that does not tap into what we do best and what we find most meaningful.  We copy some approach that we learn from another source with no assurance that the approach leverages our strengths and what gives us energy, meaning, and fulfillment.  (My book coming out early in 2026 tackles this topic in detail).  Suppose my greatest strength and source of inspiration is intellectual curiosity.  How is trading some mechanical indicator or chart pattern going to be fulfilling for me?  We fail at our discipline because we inevitably gravitate to who we are and what we do best.  Working on our negative emotions only doubles down on the problem.  The whole challenge of trading is to find approaches to markets that leverage our uniqueness and draw on our sources of energy.  Ironically, it is not our weaknesses that undermine us; it's our strengths.

8/3/2025 - Trading, properly pursued, makes us better as people.  When we truly train ourselves to trade well, we train ourselves to focus and listen to markets; to collaborate and learn with others, making everyone better; to reach a level of discipline and self-control where we can act with purpose and planning; to embrace our mistakes and learn from them; and to blend our analytical and intuitive capacities and act on opportunity.  Trading trains us to put our egos aside and make the right decisions at the right times for the right reasons.  Like all great pursuits, it pushes us from real to ideal:  to become more of the person we know we can be.  See below if you're interested in a free online session on the topic.  I don't solicit business at these sessions, but look forward to sharing and learning.

8/1/2025 - In my (free) blog-based online book Radical Renewal, I made a first attempt to explore the spirituality of trading, as opposed to the psychology of trading.  The key question I wanted to address is whether our spiritual development can benefit our development as traders.  As I explored the topic, it seemed to me that many trading problems are ultimately ones in which our egos get in the way of our performance.  The role of spirituality is to transcend ego, not simply eradicate negative emotion.  From that vantage point, the religious and spiritual beliefs that make us better people also can make us better at what we do:  in life and in markets.

I know, I know, I know, most of us are uncomfortable talking about our religious beliefs and practices and sensitive about not wanting to impose them on others.  It is rare indeed to encounter such talk in the field of trading psychology.  So we ignore a major dimension of human experience--which (ironically) may be the very problem that holds us back in our personal and trading success!

My own religious background is Jewish, and I regularly post to a website/blog, Integrative Judaism, that captures spiritual themes and lessons.  I'm continually surprised by how often these are themes that show up in my trading.  For example, repentance is a practice that shows up in many religious and spiritual traditions and that is particularly relevant at this time of year for those in the Jewish faith.  It is also something that helps us grapple with the ways in which we allow our egos to subvert our personal and professional lives--including our trading.

I would love to host an online session for traders of different spiritual/religious beliefs and share how these impact our trading--and our daily lives.  If this is of interest to you and you would like to be part of the sharing/learning, please feel free to email me at steenbab at aol dot com.  It would be fun--and hopefully enlightening--to connect a small community of spiritually-grounded market participants!

Thanks as always for your interest and support--

Brett