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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A Different Kind of Trading Psychology Workshop

 

Many thanks for the interest in the trading psychology workshop.  Registration is closed at this time due to the large number of interested participants.  

6/17/25 - The most important issue for us to tackle is not how to trade or how to improve our trading.  The most important issue is to identify--clearly--what you are meant to be doing with your life.  What are your gifts and how can you leverage them to make for a better life and a better world?  And how does trading fit into that life vision?  More important than trading markets is investing in your life's purpose.  More on that topic during tomorrow's free trading psychology workshop.  See below for registration info - Brett

6/16/25 - What are your unique, distinctive strengths and how can you best apply them to achieve trading success?  In the free trading psychology workshop on Wednesday afternoon after the NYSE close, we'll tackle precisely that topic.  When you're aligned with who you truly are at your best, the right performance psychology naturally follows.  Instructions for signing up for the session are below; links will go out Wednesday AM.  Thanks!

6/15/25 - Below is the information for registering for the free Wednesday online workshop after the market close.  Here are three best practices I'll be sharing in the workshop: 

1)  Original research on stock market breadth and specific trading signals for trading the broad market.  This will include instructions for creating your own database and a unique exit strategy to help maximize winning trades;

2)  Three new forms of brain wave technology that can greatly assist us in maintaining an optimal trading psychology.  I believe these to be the most important game changers in trading psychology to come along in many years.

3)  How professional traders approach dangerous market conditions, as we're seeing currently because of the war situation in the Middle East.

I hope to see you after the close on Wednesday and look forward to each of us sharing best practices.       

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This coming Wednesday (June 18th) after the NYSE close (4:15 PM ET), I'll hold a trading psychology workshop online for traders looking for new ways to improve their trading.  The session will address the needs of traders who have achieved a measure of success and now who are looking to take their trading to that proverbial next level.  To sign up, send an email to steenbab at aol dot com and I'll email you a link to the session.

I'm looking forward to a different kind of trading psychology workshop.  Attendance at Wednesday's session is free of charge, but I ask that each attendee bring to the event one best practice that has helped their trading.  The best practice could be a unique approach to trading, an innovation to improve trading process and performance, or a fresh method for sourcing trade ideas.  I've mentioned in the past that a slogan at the medical school where I teach is "Each one teach one".  In Wednesday's workshop, I invite all attendees to be teachers and all to be learners, myself included!

In the session, there will be two ways to share your best practice:  1) You can bring them to the meeting and share them over the Zoom chat function or 2) You can send them to me in advance when you send your email to steenbab at aol dot com to get the link for the session.  

For those who send me best practices in advance, I'll send out an email blast  (email addresses will be private) and include all the best practices as they've been written up.  (Please let me know in your email whether you'd like your best practice to be anonymous or whether you'd like to be acknowledged by name).  This will provide a resource of best practices that can guide performance long after the session has ended.  

Whether it's by sharing during the session or by writing up and sharing ideas, let's all be teachers and learners and see if we can create a different kind of workshop--

Brett

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Understanding Your Best Trading

 

6/12/2025 - In the research I've conducted re: the personality and life history predictors of trading success, several factors consistently stand out.  One of those is the capacity for pattern recognition.  Successful traders are more curious than others and look at more things in a greater variety of ways.  This enables them to see patterns that, over time, they discover to be meaningful.

Many traders equate pattern recognition with the patterns they track on charts.  This is certainly one form of recognition, but not the type I most commonly see among hedge fund portfolio managers.  They collect a great deal of data on inflation, monetary policies around the world, behaviors of various markets, sentiment, economic growth, etc. and piece the information together to form coherent views of stocks, bonds, currencies, etc.

The identification of market cycles across different periods, as described below, is yet another form of pattern recognition.  I view this as a look from the "bottom up", since it assembles price and volume data across shorter to longer intervals.  In my own trading, I combine this with a "top down" view which looks for historical, statistical patterns in the market.  For example, in the chart above, we can see a cycle bottoming out across the various indicators described below.  At the same time, we had displayed very few stocks making fresh one- and three-month lows in the lead up to this period.  When we look historically, the absence of weakness is quite bullish, especially over a 10-20 trading day horizon.  Markets usually don't plunge until one or more sectors display deterioration.

The combination of the statistical pattern and the real time cyclical pattern produces a trading view with considerable supportive evidence.  That pattern recognition underlies our psychological confidence in our ideas--and our ability to size up positions.  I did not develop confidence in my trading by working on my psychology; I improved my psychology through better and better pattern recognition.

6/11/2025 - Above is a screenshot from yesterday's market in the micro-ES futures contract.  The previous posts in this series will explain much of what I'm tracking in real time.  The bars on the top portion of the chart represent the SPX futures, where the candles capture the high/low/close for each 15,000 contracts traded.  As a result, we're drawing relatively few bars in the overnight sessions and many more during the busier morning hours.  This helps identify market cycles.

The green and red lines going through the candlestick bars are the short-term (red) and longer-term (green) moving averages defined by the MESA Adaptive Moving Average system.  When the red line crosses above the green, it's confirming an uptrending move and vice versa.  Note that I track the identical cycle movements for shorter-term charts (2000 contracts per bar) and longer-term charts (50,000 contracts per bar).  I use the shorter-term crossovers to help trade the longer-term shifts in trend/cycle.

The vertical blue and red lines at the bottom of the chart represent the Woodies CCI trend measures, where blue is uptrending and red is downtrending.  The green and red dots above these lines represent significant buying and selling.  Together, with the adaptive moving average crossovers and across the shorter- and longer-term charts, these help visualize occasions when trends are dying out and reversing and when trending behavior is present.  It is the lining up of these patterns across shorter- and longer periods that identifies opportunities to ride the cycles and exit them.

This way of looking at markets may or may not be helpful for you.  It is my way of distilling a great deal of directional and cyclical behavior across multiple time frames.  What many traders see as "choppy" markets are often markets dominated by shorter-term cycles that are tradeable.  Similarly, what looks like trending markets are often markets dominated by longer-term cycles.  What is important from the perspective of trading psychology is that you find *your* way of representing and visualizing market behavior that aids your decision-making.  Many, many times traders become frustrated with markets and make poor decisions because they are locked into one time period and one type of market behavior and fail to perceive the contexts of market movements.

6/10/2025 - The foundation for cycle identification with the charts denominated in volume rather than time (see below) is the MESA Adaptive Moving Average (MAMA) system developed by John Ehlers.  This creates shorter and longer-term moving averages based upon the cyclicality of the market and then identifies crossovers between the shorter and longer-term averages.  I construct the MAMA on multiple volume-based charts, from very short-term to medium and longer-term.  When there are upside and downside crossovers at multiple intervals, that's when the cycles are lining up and it becomes possible to take a solid reward-to-risk trade.  All of this is easily constructed in the Sierra Chart platform.  I rely on the NYSE TICK measure during NYSE hours to get a more finely grained indication of buying/selling pressure to identify when short-term cycles are turning.  I outline all of this--and will present an illustration--to emphasize an important point in trading psychology:  We are most likely to work on our trading and refine our trading if we develop our own ideas based upon what makes sense to us.  Too often, traders attempt to copy others and then lack conviction to stick with their ideas.  The goal of this post is certainly not for traders to copy what I do, but to encourage traders to figure out what they need to do.         

6/9/2025 - A particular challenge for active, intraday traders is that market activity (volume/volatility) changes significantly as a function of time of day.  On average, there is much more volume and movement in US stock index futures, for example, during the New York Stock Exchange hours than overnight; there is much more volume and movement early and late in the day than at midday.  When we measure cycles in time units, we end up comparing apples and oranges.  If the underlying time series is not relatively stationary/uniform, we cannot identify cycles that are relatively uniform in frequency or magnitude.  When the X-axis of our charts represents volume, not time, each bar is a standard amount of volume traded and we draw more bars during busy periods and fewer during slow periods.  Cycles appear quicker or slower but are more uniform in composition.  When we create charts where the bars represent different volume sizes, we now can see when and how shorter-term cycles line up with longer-term ones.  The shorter-term cycles can guide execution to trade the longer-term cyclical movements.  It becomes easier to trade trends when we see these as the directional portions of longer-term cycles.  Illustrations soon to follow...       

6/8/2025 - What I've come to understand is that no amount of focusing on bad trading and trading mistakes is sufficient to create good trading.  Good trading comes from zeroing in on what you do well and what makes sense to you and then refining and refining your ways of capitalizing on those strengths.  My worst trading comes from focusing on (and chasing) trends.  My best trading comes from identifying cycles in markets and identifying when short, medium, and longer-term cycles are lining up.  Ironically, many of those trades might look like catching trends early, but those trends are simply the early phases of longer-term cycles.  It's the lining up of multiple cycles that creates the favorable reward-to-risk edge.  

Understanding those cycles not only allows for sound entries, but guides the process of holding trades.  If you're oversold across multiple periods and go long, there's little incentive to take profits when the shortest cycle turns to overbought.  Indeed, waiting for the shortest cycle to turn down while the others are still rising and far from their peaks can create opportunities to add to positions.  

The challenge of this approach to trading, which I'll be illustrating in the near future, is that until cycles align, the best trading is no trading.  The goal is to find a few meaningful "setups" and exploit them fully.  One of the most difficult forms of trading discipline can be the discipline to not trade.  That means that the disciplined trader needs the discipline of doing things other than trading during the majority of periods when cycles are not fully aligning.  When you know what to look for, your best trades come to you--and there is no need to chase random moves.   

Trading Psychology Principles and Best Practices

 

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Principle #5:  Trading is a team sport.  I recently described a number of ways in which teamwork magnifies our learning and spurs our performance.  Teaming up with other dedicated traders adds layers of accountability to our decision making; it also provides us with multiple inputs for trade ideas and ways of managing risk.  Many psychological challenges of trading occur out of frustration, due to limitations of trading in isolation.  When traders are committed to helping one another, there is no room for emotionality and impulsivity.  Ultimately, however, traders who develop their own expertise within a team provide unique and valuable input to one another, supercharging decision-making processes.  It is very rare to find elite talent that develops in isolation.  In sports, in academics, in the arts:  mentoring from experts/coaches and learning from peers supercharges performance.  Who is making you better every day?  Who are you making better every day?  It's great to learn in a community, but it takes teams to build the performance that comes from commitment.  

Principle #4:  Great trading requires the ability to invest.  A member of an Olympic basketball team will work intensively (with coaching/mentoring) on every part of their game--passing, shooting, defending, rebounding, etc.--and will spend further time to work on practicing new plays and strategies tailored to the vulnerabilities of the opponent.  They invest hours and days of practice to prepare for competition.  Similarly, the best traders invest time in every part of their game, from finding the best opportunities to refining entries, sizing, exits, and the structuring of positions.  Working with a coach/mentor adds a layer of accountability to the trader's efforts and helps traders focus those efforts in the areas needing the most work.  For the professional, much more time is spent in practice, review, and making improvements than in actual performance.  The goal is not simply to win a game or make money, but to become your very best in every aspect of what you do.  The measure of a great trader is found in what they do outside market hours.  

Principle #3:  The best trading proceeds from values, not needs.  This is related to the idea that great traders have a passion for markets, not trading.  The challenge of understanding markets engages our curiosity, fueling efforts to dig deeper and dig differently.  That is what uncovers fresh edges in markets.  The best trading teams that I've worked with are just as engaged in markets when they're not trading as when themes are active and prices are moving.  In trading, as in other performance fields, success is a function of the ratio of time spent practicing and preparing for performing vs. the time actually spent in performance.  We can only sustain such intensive, deliberate effort if we find something intrinsically rewarding in preparation:  we value the process of curiosity and discovery.

This is why trading based upon needs never works.  When we need to trade--when we need P/L--markets control us.  We're no longer engaged in a performance mode.  In trading, as in our personal relationships, deficit needs are a weak foundation for longevity.  The best relationships, including our relationships with markets, are based upon positive values.  They are expressions of who we are, not vehicles for what we lack and need.

Principle #2:  Know who is on the other side of your best trades.  Many of the best short-term trading edges come from exploiting the behavioral tendencies of others in the marketplace.  What that means in practice is, not that you simply avoid emotional trading, but that you identify the emotional trading of others and take advantage of their cognitive errors and overreactions.  We had a great example on Friday, when the SPX went down on meaningful selling pressure (as measured by the number of trades hitting bids; the number of stocks trading on downticks).  Eventually the selling pressure led to a situation where buyers came in (as measured by volume lifting offers; the number of stocks trading on upticks) and price moved higher.  From that point forward, there were continued bouts of selling that could not push the market to fresh daily lows.  The bears kept selling, even as price and volume were telling them they were wrong.  That contributed to a rebound that was every bit as potentially profitable as the prior decline.  

The people on the other side of your best trades are those slow to update their views and positions.  They are trading their ideas/biases and not truly tracking market activity and its shifts.  The open-minded ability to adapt rapidly is one of the most powerful edges for short-term traders.

   

Principle #1:  The best trades come to you.  I have consistently found that, if I begin my market day with a definite idea and a desire to trade that idea, I'm likely to lose money.  If, on the other hand, I enter the day having done research but then adopting an open mind as to whether or not the market will follow its historical tendencies, I'm much more likely to place winning trades.  Really good trades are not something I bring to the market.  Really good trades emerge from being immersed in the market.  Watching and watching, listening and listening to what the market is saying leads to moments where it suddenly becomes clear what is going on.  The idea will come to me (as happened yesterday) that buyers cannot push this market higher.  That leads to a nice short trade to fade what has been happening.  

When trade ideas come from immersion in the market, we experience a quiet confidence in those ideas.  Calm clarity is a sign that an idea has come to you--that you're not simply imposing your needs, your views, your desire to trade on the market.  One of the most promising practices in trading psychology is training the brain to more consistently operate in a mode of enhanced focus.  The best trading comes, not from controlling emotions, but from building our capacity to stay in the zone.  When we wait and wait and wait and track the market and track the market over time, we are doing the very things that help train our brains.  

Success comes from active patience.  That's when the great trades come to us.     

How Teamwork Makes The Dream Work

 

5/28/2025 - What I see happening in the best training of trader talent at hedge funds is a marriage of top-down and bottom-up analyses.  Top down analyses are often historical studies of how a stock or market has behaved under a given set of circumstances.  For instance, if a company reports earnings that are significantly above consensus, how does its stock tend to behave over subsequent time periods?  Or, if interest rates make a new month-long high, how do different stock market sectors tend to behave going forward?  The top-down analyses provide a big picture of where there might be edge going forward.

The bottom-up analyses are all about shorter-term pattern recognition and how a stock or market tends to behave when price and volume meet certain criteria.  For example, if a stock trades with high relative volume and breaks above a two-day range, how does it tend to behave during the remainder of the trading session?  

The marriage of top-down and bottom-up analyses aids trading psychology because traders understand what the edge is, why it is there, and what to do about it.  That broader understanding contributes to confidence in the idea and the ability to take meaningful risk when the odds are in the trader's favor.  Great traders, like great poker player, know the hands they are playing, the odds of winning with those hands, and how to best bet those hands.

5/26/2025 - So how do teams in professional trading settings help their members trade at their best?  They do so by exchanging ideas on:  1) Why to trade (what are catalysts for buying/selling); 2) What to trade (what instruments/stocks will best exploit the reasons for taking risk); and 3) How to trade (what would provide ideal risk/reward entries; what would be opportunities to size up positions; how positions would best be structured for risk/reward).  In other words, teams don't just share ideas for entering trades.  They collaborate to get the most from those trades.  What to trade is just as important as why to trade.  How to trade is just as important as what to trade.  When teams review their trading together, they internalize lessons in making the most from their ideas.  

5/25/2025 - Below we can appreciate how teamwork helps us make the most of our talents and accelerates the development of our skills.  Teamwork also builds our trading psychology, as we are motivated to help others and serve as a role model for them.  Basic training produces soldiers ready for combat in grueling circumstances.  The right training in markets similarly produces a robust mindset in the face of uncertainty and setback.

So how can individual, independent traders gain the benefits of teamwork?  A first step in the right direction is to find a trading partner who is committed to working with you and who you are committed to helping.  A two-person team more than doubles the benefits of sound trading processes.  By performing separate research and then brainstorming findings, a trading pair can generate ideas that neither had come up with on their own.  Similarly, when reviewing performance together, the lessons learned from our partners, combined with our own lessons, can stimulate creative ideas for making trading improvements.  

Too, working as a pair improves trading psychology as each member focuses on helping the other.  That keeps everyone constructive.  The interactions tap into social motivations, keeping both members helpfully engaged.  Training programs for traders and trading communities can be great places to start the search for trading partners.  Following traders who post on social media may also lead to useful collaborations.  

Teamwork creates synergies...even when the team is two.

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I work with a number of portfolio managers at hedge funds.  Here are a few facts about them:  

*  All of them have a history of success in financial markets; that is why they are managing hundreds of millions of dollars or more.  

*  None of them discuss with me emotional, impulsive trading, FOMO, revenge trading, etc.  The issues that trouble beginning traders are largely irrelevant to experienced, profitable market participants.  Through their training, they have learned to operate by clearly defined processes.

*  All of them work in teams.  The best teams consist of members who have their own unique strengths.  When everyone on a team is better than everyone else in some area, then everyone can make everyone better and the whole is much greater than the sum of the parts.

*  The best teams work as hard on their teamwork as on their markets.  They constantly look to improve what each person looks at, how they look at it, and how they communicate.  They work as hard on team goals as individual goals.  They review team performance every bit as much as they review their own individual performance.

*  The best teams work hard on maintaining a positive, supportive culture.  They take time outside market hours to play and celebrate, as well as to meet and plan.  The best team members support one another and motivate each other.  When I have observed teams at hedge funds and prop firms like SMB, for example, I've invariably noticed that they enjoy their interactions.

Being part of a trading community is helpful, but it does not substitute for being part of a committed team that coordinates trading efforts day in and day out.  Show me a performance field where people earn their livings from stellar performance and I'll show you a field where performance is a function of teamwork.  Even the Olympic athletes succeeding in individual events train as a team and benefit from the teamwork of mentoring and coaching.

Read this carefully:  A lack of discipline in trading comes from a lack of teamwork in training.  No one becomes a disciplined, elite soldier on their own.  It takes teamwork to make our dreams work.

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The Truth About Trading Success

 

Well, my latest trading companion is doing quite well, as can be seen from her picture at her 6-week birthday.  It's amazing how personality comes out even at that early age.  There is much that we inherit that helps shape our cognitive and emotional functioning.  This shapes our talents, many of which appear surprisingly early in life, influencing our development.  We are wired so that the exercise of our talents is inherently enjoyable.  In that way, we pursue what we are good at and what speaks to us, leveraging our talents with acquired skills.

Back in 2010, I explained to a number of companies that solicited my involvement that the reason I didn't want to partner with them was that they are cheap whores.  Can you imagine promising eager young people that anyone who works hard enough (and who makes use of your exclusive services) can become a successful professional basketball players, Hollywood actors/actresses, ballet dancers, or chess masters?  The idea is absurd, because we recognize quickly that no amount of classes or coaching can substitute for raw talent.  The reason elite performance is elite is because it leverages rare talent and the mentored building of superior skills.

The worst of the worst in the trading world are the services that breathlessly promise traders a path to being successful.  They appeal to the egos of vulnerable people and their desperate need for success and then explain that failure is a function of emotional trading!  Well, the reason the trading is emotional is because the traders so desperately need to feel like successes.  They are not leveraging talents; they are needy.  They overtrade and fail to manage positions well because they are trading for ego and self-worth, not for truly professional reasons.

The truth about trading success is that it only comes by leveraging what we have already been successful at, because that is where we find our talents and passions.  We cannot trade to become successful.  We can become successful at trading by drawing upon our previous successes.  But, of course, not all of life's talents translate into trading prowess.  It's interesting that most people would readily recognize that not everyone can make a living from sports performance or artistic activity.  They have trouble accepting that with respect to trading, however.

A desperate need to be successful is not a passion for an activity.  The ones with real passion and talent are just as motivated to study and understand markets as they are to trade them.  One of most important questions we face is:  What do I do superlatively well, and how can I express those talents in my relationships, in my career, in my personal pursuits?  Life's goal is to grow into the very best version of who you already are.

So we'll let little Nomi, the six-week old kitten, figure out what she loves doing and then structure her environment so that she can do lots and lots of what she loves.  As the saying goes, "If you meet the Buddha on the road, kill him!"  Our enlightenment--our path--is to be found within, not by following would-be gurus.  Your talents are your trail and will lead you to mentors who can teach you skills.  When we pursue our talents, we'll always have a positive life P/L.    

TraderFeed Takes a Vacation

 

Well, we'll be bringing a new friend into the home, beautiful Siamese girl, who is currently with her Mom (see below).  As we learned from Molly Ruth, there's much to be said for stepping back, rejuvenating, and stepping forward in a fresh mode.  During the break, I'll be finishing an added chapter to the Positive Trading Psychology book outlining cutting edge strategies for sustaining high performance.  I'll also be building out the brain training resources and applying them to daily trading practice.

And when not writing and adding to the family?  Margie and I just returned from a tour of the only Jewish synagogue designed by Frank Lloyd Wright (see below).  The integration of architectural design, American themes, and religious symbolism was truly awe inspiring.  

The theme here is to never, ever go stale.  Seek out new experiences, invest yourself in fresh opportunities, and always learn and grow.  The best vacations are those that step back in order to step forward anew.

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Training the Brain by Building Intentionality

 

4/27/2025 - Suppose you were to place yourself in a state of intensified focus/concentration as outlined below vis a vis alpha state brain training.  In this state of unusual focus and clarity, you simply absorb shorter- and longer-term charts of the overall market and the stocks that are on your radar:  those that are "in-play".  What you find is that ideas and insights come to you.  When we look at the right things in the right way, we can experience the intuition and inspiration that underpin true conviction.  We can train our brains in pattern recognition.

4/25/2025 - Every item on our daily calendar has the potential to train our brains for success.  When we intentionally push ourselves beyond our initial fatigue points, we find what philosopher William James called our "second wind" of consciousness.  We have much more in reserve than we realize we have.  This can be observed when we tackle something very meaningful and important.  Suddenly, where we might have been feeling a lack of energy, we find plenty of inspiration and drive.  If we use each daily activity to challenge our comfort zones, we find that we can exercise and develop our capacity for purpose just as we exercise and develop our bodies.    

4/23/2025 - A cornerstone of most writing/teaching/coaching on the topic of trading psychology is that emotions--and behaviors driven by emotional impulses--interfere with successful trading.  By that logic, if we can learn to control our emotions and ground ourselves in our trading plans, we are most likely to be successful.

In this post, I will explain why this is incorrect.  My forthcoming book, Positive Trading Psychology, will cover this topic in detail.

Consider:  If we possessed total free will, there would be no need for any kind of performance psychology.  We would be able to choose the right actions at the right times and optimize our performance.  Conversely, if we lacked free will altogether, there could be no work on our performance.  No animal, for instance, can purposefully work on its survival behaviors.

What makes us unique as humans is that we possess partially free will.  We have the ability to envision a future and select actions to bring us to our desired state.  We also have the ability to become distracted from our goals and live life aimlessly.  We demonstrate the capacity for intention, but we lack consistent intentionality.  In the words of Russian philosopher G. I. Gurdjieff, we live much of life "asleep".  Summarizing Gurdjieff's work, author/philosopher Colin Wilson asserts that "Western man's concept of knowledge is built on a fundamental error:  the notion that the acquisition of knowledge only requires intelligence.  It requires, in fact, a kind of action.  Consciousness needs to be put into its 'active gear'" (p. 64).

In short, we lack full intentionality because we do not consistently operate in our 'active gear'.  The challenge is not an excess of emotion, but rather a lack of training of the will.  

A common response to this issue is meditation.  If we can learn to control our bodies and our breathing, the logic goes, we will become more purposeful beings.  My work on this issue suggests that this is not necessarily the case.

For a while now, I have pursued neurofeedback training (EEG biofeedback) to learn to sustain alpha brain wave states over increasing intervals.  Using the Muse device and its app, I spend a predetermined period of time listening to the sounds of a rainforest.  When my attention wanders and I go into beta mode, the rain sounds increase.  When I focus with unusual intent and enter alpha mode, the rain slows and eventually stops.  In a sustained alpha mode, I can hear birds chirping.  The app tallies up the proportion of time spent in beta and alpha mode and also counts the bird chirps.  

Interestingly, when I engage in basic meditation work during the biofeedback session (controlling my breathing and maintaining awareness of my body), I am able to remain very still (as measured by the app).  I feel relaxed and emotionally calm.  But I do not enter the alpha state.  In other words, reducing the arousal of the body (just like reducing negative emotions) is not sufficient to maximize intentional focus.  

After a sustained period of EEG training, reduced rain, and many bird chirps, I feel unusually clear and focused.  It feels like being a detached observer of events rather than being involved in the world.  Everything seems to move more slowly.  That state is achieved, not by relaxing and being "present", but by effortfully intensifying my conscious focus to make the rain slow down and eventually cease.

Perhaps most important of all, when I'm in that detached state, my perception--of life and markets--is clearer and it's no problem whatsoever doing the right things.  Purposeful action comes naturally, not with tiring effort.

Perhaps traders fail to follow their plans for the same reason that most of us fail to consistently pursue our life's goals.  It's not that we're too emotional; it's that we operate with underdeveloped focus and intent.  An intentional life--and intentional trading--has to begin by training our brains to sustain the "active gear" of consciousness.  In a relative state of "sleep", we cannot sustain purpose.  That requires ongoing training and practice, not the usual ministrations of coaching or self-help.

Further Reading:

Beyond Meditation:  Using Biofeedback to Change Behavior Patterns

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Making More By Trading Less

 

4/22/2025 - Is your primary interest trading, or is your primary interest making money in financial markets?  What if you're wired as a slower, deeper thinker--not as a quick pattern-recognizer--and your path to success is waiting for longer and shorter-term horizons to line up for fewer trades that you can allow to breathe?  Perhaps the greatest trading edge comes from exploiting short-term participants who can't take heat and exit trades that ultimately work out.  Here is an idea that you don't often hear:  The best path to a positive trading psychology is to align your trading with your information processing strengths.  For many, many traders, staring at screens and pressing buttons is training for impulsivity and distraction.  Success comes, not from trading what you see, but from what you understand.  

4/21/2025 - Note the overnight action across macro markets:  US Dollar down, gold up, stocks down.  If we are going to be selective in our trading and limit the number of trades we place to only the most promising opportunities, it's not enough to rely on short-term "setups".  To profit from the bigger trades, we need to assess the kind of market we're in and align with the bigger picture.  Is the market trading thematically across international markets?  Is the market trading rotationally, with money coming into certain sectors and out of others?  Is the market trading with above or below average volume and volatility?  Successful trading begins, not with prediction, but with understanding.     

4/20/2025 - What if we set a rule for our trading that said we're only allowed one trade per morning and one per afternoon.  That's it:  two trades per day.  How would that impact our trading results?  How would that impact our trading experience, including our psychology?

Clearly, if we could only place one trade per morning and one per afternoon, we would have to make those trades count.  That means that we would have to be highly selective, trading only the opportunities that stand out.  In turn, that pushes us to define very carefully what goes into a top opportunity worth trading.  What instrument would give us greatest bang for our buck?  What time frame/holding period would we pursue?  How would we size our top opportunity?

What if focusing on the criteria of winning cements a winning mindset?  What if controlling the frequency of our trading places us in greater control of our trading--and our trading psychology?  What if we could use the time when we're not trading to better understand what is moving, how, and why?  

Making more by trading less and by trading very selectively:  that pushes us to clearly define our rules and create experiences of mastery.  When we are highly selective, we control our market activity; it can't control us.

Additional Note:  Limiting the number of trades per day as suggested above pushes one to be very explicit about what goes into an A+ trade.  That makes trading much more intentional and far less reactive.  An important question for traders is whether their approach to trading reinforces reactivity and impulsivity or whether their approach strengthens their ability to act purposefully.  If we can only trade once per morning and once per afternoon, we have to become quite thoughtful about what we're doing and why.  Great example of how a shift in our trading can change our trading psychology.  

Ideas That Can Reshape Your Trading Psychology

 

4/15/2025 - A bit later this week, I'll be returning to the Syracuse medical school where I teach and introducing psychiatry residents to research-backed ideas on how we can accelerate changes in thinking and behavior.  A key concept from the research literature is that we cannot make lasting changes while remaining in our normal, habitual states of mind and body.  Emotional arousal and fresh experience open us to change.  A major shortcoming of our trading psychology efforts is that we review performance and set goals without transforming our consciousness.  In upcoming posts, I will share my experience with intensifying focus/concentration and processing trading lessons while in a sustained switched-on mode.  I strongly suspect that just as important as what we rehearse is the state of mind of our rehearsals.     

4/14/2025   The best way to work on your trading psychology is by cultivating your intentionality:  your ability to sustain purposeful action.  The mind is like a muscle, and it becomes fatigued.  When our minds become overloaded, the result is distractibility and the inability to efficiently pursue goals.  Becoming emotional is often a result of this problem, not the cause.  By dividing your trading day, week, and month into discrete units, setting goals relevant to those units, and refreshing as you move from one time period to the next, you maximize your brain's ability to stay focused on your best trading processes.  

What would happen, for example, if you were an active trader and divided your trading day into morning (NYSE open to 11 AM ET); midday (11 AM ET - 2 PM ET); and afternoon (2 PM ET to NYSE close)?  Each of these time units would be treated as a separate trading "day", with their own preparation, review, and goals.  Most important, there would be time in between these trading "days" to refresh attention and focus, learn from the most recent action, and reset.  If each trading "day" had its own, unique P/L, then twice daily you would reset P/L and frame fresh goals.  Breaking up the day in such a fashion, frequently resetting/reviewing, and setting new goals, how likely would it be that you would lapse into emotional trading and go on tilt?  How likely would it be that any such lapse would extend through your day?  When we make time intentional, we build our intentionality and gain greater control over our trading--and our trading psychology.

4/13/2025 - For traders, the best mindset is a set mind.  Notice that I'm not suggesting that the best mindset is a *settled* mind.  The idea that successful traders trade in a Zen-like mindset of peace is contradicted by everything I've observed while working on trading floors at hedge funds and proprietary trading firms.  A set mind is a highly focused mind, a highly intentional and alert perspective.  That is the mindset of any competitive performer; it is the mindset of the best military units.  Switched on, processing and responding quickly.  From that perspective, what you do during your morning preparation for trading can either set your mind or distract it.  What would happen if traders made use of brainwave biofeedback exercises to sharpen their perception and thought before entering markets?  What if the brain needs warm up exercises every bit as much as the body before an athletic contest?  Among professionals, trading psychology is never about controlling emotions.  It's about sharpening focus and achieving the mindset of a set mind.   

4/11/2025 - What if you viewed each day of trading as a gift?  The losing days and missed opportunities are learning lessons you've been given to make you better.  The winning days and trades are also wonderful opportunities to show you who you are and what you do well.  Every trading day approached in a purposeful manner gives you a gift:  a P/L in terms of your growth and development.  In that mindset, you can approach every trading day with gratitude, acceptance, and purpose.  The only negative mindset is one where we turn down the gifts we're being given.  Each of us has a path to travel in terms of becoming better people.  For some of us, trading is that path.

The Purpose of Vacation

 

4/9/2025 - So much of trading success is knowing when to switch off and when it's time for all hands on deck.  I encourage those interested in studying markets (and learning from today's market) to track the short-term action in the NYSE TICK alongside price action in SPX.  There are several great tells for the big market reversal, including very negative TICK readings (<-800) that could not push the market to fresh lows (between 13:00 and 13:18 ET), followed by massive positive TICK readings (>1000) that launched the rally (beginning 13:19 ET).  We only see huge TICK readings when stocks are either all trading lower or trading higher at the same time.  That only happens when institutions are moving baskets of stocks.  The selling that could not move us lower set us up for buying that lifted us much higher.  Great, great market lesson.   

4/9/2025 - Trading crazy volatile markets is quite different from trading slow ones.  I have had to adjust my charts, so that I focus on bars representing 1000 contracts traded as my quickest "time" unit rather than 5000 traded.  This meant that the overbought and oversold levels I track with the adaptive moving averages are hit more quickly.  I use the NYSE TICK; Dow TICK; NASDAQ TICK; and SPX TICK to gauge buying and selling interest across different segments of the market and had to switch those to 15 second bars.  The same patterns that I track in slower markets--overbought signals at lower price levels; buying activity that can no longer push the market higher--show up at these higher frequencies, but there are more patterns that show up during the day.  The result is that I have to be much more switched on, which means I need to be able to take mini-breaks that allow me to reset.  I also find that I have to talk to myself more often to maintain focus on levels for entry, exit, etc.  The goal is to maximize attention and minimize distraction.  By adjusting my charts, limiting my trading to familiar patterns, taking frequent mini-breaks, and talking out my ideas, I help ensure that the market's frenzy doesn't become my own.  Whew!

4/8/2025 - There are two purposes behind every great vacation period:  getting away and getting to.  We get away from routine, and we relax and rejuvenate.  That's good, but not good enough.  We also need to get to something positive and inspiring, whether it's the company of relatives or an amazing culture we haven't experienced before.  If, indeed, we find a way to take a regular "vacation", how can we step back from work, but also step toward something that energizes us and inspires us for the coming week?  The busier the markets and the more challenging the trading, the more important it is to come back refreshed for another day and week of opportunity.  What is your routine for exiting routine?    

4/7/2025 - When we take a vacation, what are we vacating?  Our daily routines, our usual surroundings, of course.  But the right vacations vacate our usual frames of mind, opening us up to fresh experiences and expanded awareness.  Margie and I are traveling the Amalfi Coast in Italy, sharing the experience with children and grandchildren and taking in breathtaking views and bustling villages.  New experiences lead to novel frames of mind, and those can lead to powerful insights. 

Vacations are perfect opportunities, not only to recharge, but to reset priorities and forge fresh paths.  The risk, for so many who work hard, is that routine--essential to efficiency--eventually leads to staleness.  Yes, we need established processes to be consistent in our performance, and we also need to step back from routine to recharge.  Ideally, we take a "vacation" each day by stepping back from chores and routines and immersing ourselves in something interesting, exciting, and inspiring.  Without the larger vacations, however, we run the risk of losing the passion that comes from vision.  Getting away from life's details is sometimes the best way of getting in touch with life's purpose-- 

Keys To Sustaining A Positive Trading Psychology

4/4/2025 - A great trading psychology is a constructive mindset.  We can be constructive whether we have been making or losing money; whether we have exploited the opportunity set or fallen short.  We stay constructive when we constantly learn from experience.  What did we do well?  What could we have done better?  How can we take these lessons to our trading going forward?  Review, observe, plan, perform, and then review again.  The best mindset is one of ongoing learning and improvement.

So ask yourself how you have performed in recent markets.  There has been no lack of movement in March and thus far in April, but it's different movement than we saw earlier in the year and last year.  It's more volatile and it's more thematic, with coordinated selling by large participants across asset classes.  If you've underperformed, is it because you have missed the change in markets or because you've seen the change but have had difficulty finding good risk/reward trades amidst the volatility?  Is the problem with your trading ideas, or is it with the execution of good ideas?  That will tell you a lot about what to work on.

Great trading requires flexibility of focus.  It's helpful to see the big picture of markets and the larger trends and patterns of what we're trading.  Ideally we want to ride the patterns created by larger market participants.  But to do that, we also need to see the micro picture of markets and what we're trading.  We need to see what is setting up right here and now in order to turn a good idea into a superior risk/reward trade.  Flexible focus is what gives us the ability to size into solid opportunities.  

4/3/2025 - What if we need to do cognitive warmups before intensive activities like trading just as we need to do physical warmups before athletic contests?  What if we rehearse our best trading practices and review our market performance during states of heightened concentration?  How much more would we take in and make use of if we truly eliminated distractions during trading?  What if the answer to trading psychology is not to eliminate emotion and impulsive behavior but to heighten concentration so that reactive trading becomes impossible?

4/3/2025 - 

A positive trading psychology is not one of optimism.  It is a focused, flexible, and open mindset.  We want to absorb as much relevant information as we can from how our market is trading and how related markets are trading.  At short time frames and within our market, we'll see patterns setting up.  At longer time frames and across markets, we'll notice themes playing out.  So often, the themes (or absence of dominant themes) tell us what to trade.  The short-term price movement tells us how to trade it.  All of this requires the ability to sustain intense focus--and the ability to switch our focus from time frame to time frame, market to market.  Attentional focus, like muscle strength, is something that can be exercised and developed.  When we build our focus, we improve our trading psychology--and our ability to recognize and capitalize upon opportunities.  I believe this is the most promising and exciting frontier in trading psychology.    

4/2/2025 - 

Whatever we process most deeply, we are most likely to retain.  Many times, we work on our trading by doing the right things but in a shallow and distracted state of consciousness.  As a result, we don't make lasting changes and we wonder why we lack "discipline".

What if we can train ourselves to sustain a state of heightened attention and awareness?  What if we specifically review our best trading practices and our most relevant lessons from our recent trading while we're completely focused?

Could it be the case that we know exactly what we need to do in order to improve our trading, but are in the wrong mind state for internalizing our lessons?

That's a potential game changer; more to come--

4/1/2025 - 

We become what we repetitively do.

We internalize our experience.

Insight and emotional experience catalyze change.  Habits make our changes lasting parts of us.

What makes us fall in love is not what sustains loving relationships.  The failure to make loving acts part of our daily experience explains why it's so common to fall in love and end in divorce.

Many traders fall in love with trading and markets.  They fail to sustain their passion through small, daily acts of success and fulfillment.

Many careers begin in excitement and run aground in mind-numbing routine.

If our daily trading processes draw upon our greatest talents and interests, our experience will be fulfilling whether or not that day happens to be profitable.

What makes trading rewarding for you outside of P/L?  Is it the intellectual curiosity of finding new ideas and opportunities?  Is it teamwork and the opportunity to learn and teach?  Is it mastering fresh skills and adapting to unique challenges?

Every trading day should tap into the passion that brought you to markets.

Mike Bellafiore of SMB Capital emphasized the importance of grounding our trading one trade at a time:  by placing One Good Trade.  

Success comes from grounding our trading careers one day at a time:  starting with One Good Trading Day.

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The Psychology of Playing a Big Market Opportunity

 

3/30/25 - The tariff announcement on April 2nd carries a high degree of uncertainty and the selloff in US stocks to end the week was one sign of that.  Given an oversold stock market, an announcement that is more benign than expected could lead to quite a round of short covering.  An announcement that conveys elements of shock and awe could continue pressure on U.S. stocks and the U.S. Dollar.  What is important from a trading psychology perspective is that it's not necessary to *predict* what will be announced.  That is because whatever is announced will impact large market participants and create short-to-medium term trading opportunities.  In other words, successful trader identify what *is* happening and respond quickly.  They don't become caught up in what they think will happen or what should happen.  Uncertainty brings opportunity, but only when traders and investors perceive a shift toward greater certainty.     

Keys to Great Trading

 

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3/28/25 - The best trades occur when markets are trading thematically, with the themes representing the actions of the largest investors who move the most money.  I am watching the correlation between equity markets overseas (VGK, EFA, EEM) and the U.S. stock market.  Until recently, those had been moving in different directions.  If we were to have genuine trade wars, we could see a toll taken on global markets.  On the radar as a potential opp...nice example in real time of allowing a big picture to inform short-term trading.

3/26/25 - Quick shout-out:  TraderLion is coming out with a book published by Harriman House detailing the process of finding your edge in markets.  It is so important to understand markets in ways that make sense to you; only then can you have the confidence to take meaningful risk and sustain your risk-taking.  What has worked for me is a lining up of time frames, where I look at my markets (stock index futures) on three different time frames.  As I've mentioned previously, the X-axis actually isn't time; each bar on the chart represents an amount of volume traded.  So the short-term chart has bars representing relatively few contracts traded; the medium-term chart has bars representing a moderate number of contracts traded; and the longer-term chart has bars representing open-high-low-close for a large number of contracts traded.  The charts thus adjust to the busyness of the market.  I overlay the same technical indicators on the three charts and wait for signals across all three.  I then turn to my very short-term chart of the NYSE TICK to time my entry, looking for occasions when buying/selling are drying up and reversing.  I'm comfortable taking sizable risk when everything lines up, and I'm comfortable not trading when signals are mixed.  As a very bright and creative money manager taught me, so much of success comes from not needing to trade.      

3/25/25 - Yet another key to trading success:  The ability to recognize, in real time, when your market is lining up for an unusually good potential opportunity and then to be able to size up for that opportunity without losing sight of sound risk management.  Selective aggression is all about being willing and able to wait for the right opportunities and, when those arrive, being able to pounce decisively.  Very often, a meaningful part of overall profitability for discretionary traders comes from a relative handful of trading opportunities.  A key to great trading is being able to outline--in detail--the criteria for a true A+ opportunity and then having the discipline to wait for those criteria to be met and being able to go from waiting to pouncing.  In my next post, I will outline the high opportunity criteria that guide my largest trading.  

3/24/25 - Here is another key to great trading:  understanding market context.  Reading the "text" of the market--the short-term patterns that set up--is crucial to good risk/reward entries and exits, but what tells you the "context" of market action?  Is this setting up as a trend day?  Are we seeing a rotational day?  Who is in the market; how busy are we and how far could we move?  How does today's market fit into the pattern of recent trading?  Is there a theme driving trading across asset classes?  Who is setting up to be trapped:  Are buyers and sellers moving price effectively, or are we seeing signs of exhaustion? 

Great trading comes from looking beyond the market and time frame we're trading to see the bigger picture that will be driving price action.  The microscope helps us get the best price for our orders; the telescope tells us what to order and why.      

3/23/25 - What if a key to great trading is found in what you do during the time when you're not trading?  What are you doing between trades to generate ideas, to track shifts in what you trade, to track shifts in the markets that impact what you trade?  When I compared being a trader to being a sniper, I pointed out that "It's a beautiful feeling to plan one good trade, execute it to perfection, and then sit back and wait for the next opportunity.  Any performance skill, honed and executed with precision, is a kind of work of art.  I think the best snipers understand that".  

The artistry of great trading is found in what we are doing when we're not staring at screens and firing away.  Like the sniper, we succeed because of our focus during the 99% of the time that we're not firing.  Creative vision is what makes a work of art.  It is also what makes for artful trading.  Skilled traders have studied and experienced so many markets that they can recognize when a meaningful pattern is playing out.  What if we only traded when that creative insight came to us, when we saw--truly saw--how things were playing out?  The cost of overtrading lies not just in the P/L lost, but in the damage we inflict upon our capacity for creative insight.  Our job is not to make great trades; it's to have the wisdom and restraint to allow great trades to come to us.