Tuesday, February 23, 2010

The Psychology of Those Who Win

Last year I gave a talk at a conference of traders and concluded the session by giving out my email address and phone number and inviting the attendees to contact me for any help they might need. I made it clear that I would not be soliciting them as commercial clients for coaching and that I would not charge them for time spent with them.

One of the participants approached me at the end of the session and expressed surprise that I would make myself so widely available at no charge. He noted that there were over 100 traders in the session and that I could easily be swamped with calls.

I smiled and simply said, "We'll see."

Within a two week period, I counted all the contacts that resulted and tracked who initiated them. It was a very easy task, because there was only one contact. It was from a very successful independent trader. No one else followed up.

And that's the way it usually is: Of the people with professed trading passions, only a fraction will sustain keeping any kind of journal or performance record; of those, only a fraction will use the journal and performance data to set and pursue concrete goals; of those, only a fraction will reach out for assistance in achieving those goals.

On the whole, people fail to reach high levels of success because they are not doing the things that successful people do: they are not on a path that can possibly lead to success. Traders can repeat positive affirmations and invoke positive images, but nothing replaces the hard work associated with preparation, practice, and focused work on oneself and one's craft.

The motivation to trade? Everyone has that. The motivation to be more than who you are: that's what makes winners.

And by the way, that one guy who did follow up and call me? He made well over $1,000,000 last year.

And he still calls.




Dr. Brett:

Our Prop Group is in Colombia, South America and now we are coaching traders in the US. What does a Colombian trader has to teach to a WallStreet guy? Well, it turns out that our model promotes team approach (2, max 3 traders) with a huge enphasis on traders log and videoblog of every trade. I am delighted with this article and I´m posting it everywhere. I would love to bring you to our country. You already have several hundred followers down here. With all my respect: Juan Villegas - Trader/Coach www.reditum.com

Jorge said...

Dr. Steenbarger,

First, a friendly reminder.

Second, many times I find myself tempted to contact you and ask you for help with my trading, but then I catch a glimpse of The Daily Trading Coach over my desk and say: "ok, let's first see if the answer is in there". And it is.

That's the problem with writing damn good books, instead of self-promotional crap... dummy... ;D

Thanks a million for all those free book-on-one consultations!


CBS said...

Dr Brett,
Will you ever visit Los Angeles. I would be very interested in attending any lecture that those 100 traders were privy to.
Thank You,

TradeMind said...

Dr. Brett,

Your Daily Trading Coach is the best trading psychology book i have ever read. If i were to recommend two books to an aspiring trader, i would choose "The Daily Trading Coach" and "Technical Analysis Using Multiple Time Frames".

But your book is the only book i continue to reference on a daily basis.

Thank You !!!

Best Regards,

Andrew Palladino.
Rochester NY.

Radek Dobias said...

I would definitely suggest not giving out your phone number on your blog. I can assure you that you'd have more than one caller.... as your blog attracts precisely those traders who are most interested in improvement.

As one of the previous posters points out, I also feel that your latest book has the necessary tools. I'd call only to say thank you for the awesome work you've been doing... and for the high level of personal integrity you've manifested.

DreamJOBZ said...

Dear Brett, G'day

I was speaking in Malaysia Traders conference last year. I have offered them same. Guess what, same result. No one follow thru. I just keep chargin'

Just remembered on quote, long on enthusiasm, and short on discipline.

Thank you. Live Awesome
Raj, DreamJOBZ

David said...

Dr. Brett,

When I'm not trading, I own and operate a personal fitness training company.

I make it clear to all my clients at the beginning of their program that it's PARAMOUNT to keep a daily food journal, tracking a variation of calories, portion sizes, etc.

And I continue to elaborate that my most successful clients all have one thing in common (besides training with me) -- they keep nutrition journals.

But -- even though they spend hundreds of dollars to work with me -- I can honestly tell you that 85% to 90% STILL do not journal.

...And virtually all continue to struggle losing weight!

Self-introspection is crucial to making changes in habits and encouraging self-growth. Whether your trading or losing weight.

David Duford

Adam said...

Brett ~

I must second and third Jorge's and TradeMind's comments:

DTC is a priceless resource that helps me refocus efforts when things get fuzzy, and helps me draw a positive outlook into my trading when returns grow thin.

It's also transformed how I read your already valuable work on TraderFeed, adding depth and breadth to the posts... which then often send me back to the book: a virtuous feedback loop.

A trader without DTC on his or her desk is lacking an important tool.

The single best trading psychology book ever written, it should always be within easy arm's reach of every professional and aspiring trader, every day.

Thank you.

No surprise that only one ~ and the most committed ~ trader followed up and is the one who continues to do so: trading returns follow a Pareto distribution ~ always have, always will.

Adam Sterling.

Michele said...

First, I have to thank you. It is based on your recurring advice that I finally started keeping both a trading journal and a performance log last August, and have kept up with both on a daily basis since then. I'd traded for several years before that with neither, and now I just shake my head wondering what I was thinking.

I have often found myself wanting to ask you for personal evaluation of my performance logs, but then I think of how you have a backlog of over 1000 emails in your inbox and all the work you do on a daily basis, so I content myself with just following along and reading.

nqtraderjay said...

Wow that's funny. I have a question for you. I am looking thru Psychology of Trading, and Daily Trading Coach for answers. I have been trying to omit feeling, but it is too strong. It affects my thinking. So I am trying to visualize the thing, like today, that triggers it. But not sure what to do with it after that. All I can come up with now is to look at how my system works and say to self that it will work again and look at my journal with trades using system with gains as a result, while admitting that I am feeling frustrated, or doomed. I am also trying to nail the name of the feeling(s). That sure would help, I know....

I'm blogging the whole thing now also. ...help. - J

Steve Willette said...

Dr. Steenbarger,
Thank you again for your inspiration and encouragement. I look forward to reading your blog during the week.

Just a personal note on journaling and performance evaluation.

My trading performance from 11/2009 to 1/2010 was not where I wanted it to be. I was getting really discouraged and wasn't taking the time to review my trading journal.

Then, a few weeks ago, I was contacted by a trader who was interested in purchasing the journal software I sell (the one I enter my own personal trades in). He had some good suggestions for improving the software.

I ended up adding some of his suggestions, and decided to go back through all of my trade journal entries for the past 2 1/2 years to include the information that was missing. I must say, I wasn't looking forward to entering all of the new numbers for all of my past trades.

But as I was updating the entries and reviewing the charts, I realized how important it is to evaluate my performance; something I wasn't doing. I discovered some mistakes I keep making, and also how I need to start setting some measurable goals.

I was also encouraged by some of my successful trades. It has helped me to hang in there.

If you ever decide to speak in the Southern California area, please post a message with the information. I would like to meet and thank you in person.


NQ Trader Jay said...

Thanks, I'll be reading tonight.

kom said...


I would like to tell that your blog is very good. Please, carry on your good work.

About goals and records I am not sure if is good for all traders. When I traded futures I made a lot of mistakes when I saw the records and the the profits rose. When the profits where high I used to be more risk tolerant. (This was when I started trading for living with low level of capital so leverage was the basic of the game.) And when I was risk tolerant I made mistakes and lost a lot of money. But the risk in a strange way.

After months of research and trying to figure what mistakes I made, the discovery was surprising to me. It was the profits that put pressure on my level of the risk. What was that? As my account has more equity and I used to have a certain risk on the level of that equity, the ammount of money in stake rose everytime the equity rose. But my mind couldnt afford the new absolute amount of money in stake in every new trade.

The problem was very strange because I usually tend to make a lot of winners trades in a row. And when my bets start loosing ground I stop trading or I trade less. So it was the winning that I couldnt understand and tolerate the new amounts of money in stake, every time that I made a trade.

So I figure that it was a mistake to have goals and the same level of equity risk in every trade. My mind couldnt work well beacuse It was the absolute ammount of money that tilted my brain and not the equity risk.

Today I work less with futures and derivatives but I still have the same problem. I just can rise the amount of money in risk in every trade after some months. I.e., for. ex., in every trade I put 1 000 dolares in stake. So until my account grows well and my mind can afford put 1300 dolares in stake, I will trade in the same way. The same 1000 dolares in every stake or bet.

So, I dont think that setting goals and to be focused in the money will help every trader. In my case doesnt work. Now I just look every month the returns and check the errors and try to figure where are my errors and If I need to change something.

Thanks in advance and good work.

Fiona said...

I'm not a trader. I never have been and probably never will be.

However, when I got linked to this post, I found that it struck a chord within me.

Great post, definitely applicable to anyone who wants to succeed at anything.

Andrew Ilardi said...

I can attest to Dr. Steenbarger kindness. While I was a undergraduate (some 3 years ago) trying to decide what I should pursue as a masters degree in, I emailed him. I was unaware of his internet fame so to speak. I only knew he had PhD is psychology and wrote about trading.

His reply was honest, sincere and well thought out.