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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What To Do When Your Trading Blows Up

 

10/30/2025 - Maybe the most difficult question we have to tackle after our trading blows up is whether trading truly is meant to be our path.  We might not truly know that until we take the steps below, get proper training, undergo intensive practice that builds positive habits, and truly internalize sound trading processes.  What we find during this re-education is that the right kind of trading either interests us and gives us energy or is a drain on our mental and emotional resources.  Each of us possesses signature strengths:  abilities that capture who we are at our best and that inspire us.  Trading may not capture our greatest strengths and might even thwart them.  If we're wired to be emotionally connected with people and help them or if we're wired for physical challenge or creative, artistic expression, trading will likely frustrate who we are as people and prove to be unfulfilling even when we make money.

The goal is not to trade.

The goal is to follow your bliss, because that is the path that will open your doors in life.

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10/29/2025 - If you hope to return to trading after a traumatic blow up, the key will be to return in a new way and in a safe way.  This means beginning afresh, with training and mentoring and exploring markets and ways of trading markets that actively engage you and that fit with your interests and strengths.  Very many times, traders blow up because they put their capital at risk without the proper training and guidance.  They have not learned from mentors, so they don't possess edges in different kinds of markets.

Once you get the training and mentoring to trade in new and promising ways, it is important to begin trading in simulation mode and then with small size so that you turn good trading into habit patterns.  Only repetition and practice can accomplish that.  To repeat the point below, the idea is not to try to make yourself disciplined, but rather to make good trading so habitual, routine, and automatic that you won't need to impose discipline on yourself.

If you're trading because you need to make money right away or because you need the thrills of risk-taking, then you're likely to put yourself on yet another blow-up path.  Trading out of need is a formula for overtrading and impulsive trading.

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10/28/2025 - So what is the next step in recovering from blowing up our trading accounts?  Once we step back from trading and deal with the hurt we've created--connecting with others, taking care of ourselves--we have to come to terms with what we've done and why we blew up.  It's not coincidence that every major spiritual and religious tradition addresses the issue of repentance.  To repent is to look at what we've done, truly acknowledge the painful consequences of our actions, and vow to never repeat those mistakes.  Our emotional/impulsive/tilted trading may have hurt our relationships, our health, and of course our financial well-being.  Facing all of that and experiencing the pain and regret from our actions is a powerful motivator for change.  In essence, we hit bottom and get to the point where our priority becomes "Never again".

It is only after we come to terms with the consequences of our faulty trading and make amends to those who have been impacted by what we've done (and how we've done it) that we can even consider returning to markets.  More important than returning to trading is committing ourselves to never make the same mistakes that brought us to this point.

And how can we prevent that?  By making sure there are always things in our lives more important to us than P/L.  By making sure we have income and savings to cushion us if trading loses money.  By making sure that we have a trading process so well learned and internalized that it becomes second nature.  It is not discipline that can successfully bring us back to markets; it's the power of habit--and turning our best trading into our most automatic routines.

We can only start over if we retrain ourselves.  

More on this to come...

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10/27/2025 - Let's take a look, step by step, at how people recover from trauma.  Trauma occurs when people's lives are shaken up.  Their security is lost; their future is threatened.  Painful outcomes intrude in their day to day thoughts and feelings, disrupting mood and outlook.  Trauma is a word we associate with stress.  A traumatic stress is one that occurs when our normal lives are threatened.

It's important to understand this, because it helps us understand why the first step in trauma is to remove ourselves from the immediate situation causing us stress and placing ourselves in the most supportive, secure environment possible.  Connecting with those who care about us; re-establishing a normal routine in life; focusing on activities that are rewarding and fulfilling:  all these help us return to a state of greater security.  

When we have helped create our traumatic stress through addictive/impulsive trading, there is something else that can begin our recovery.  It is not a coincidence that the first of the twelve steps of recovery among alcoholics is "honesty".  We need to own up to our roles in creating our problems and our hitting bottom.  No excuses, no avoidance.  We take responsibility for our actions at the same time that we seek support and routine.  Ironically, that can be the hardest step in bouncing back, but also the most promising one.  Once we take responsibility for what we've done, we re-establish the sense of control that allows us to bounce back and turn things around.

More to come...

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10/26/2025 - I have received a number of emails from traders in crisis.  They have lost money, and they have lost their dreams of success.  Instead of providing fulfillment, their trading has led to pain and anguish.  A large part of this pain is due to the fact that they blame themselves for their failure.  They recognize that they have not followed their rules and they feel that they have betrayed themselves.  In reaching out, they ask the difficult question, "Should I stop trading?"

Here is where being a practicing psychologist is different from being a trading coach.  A trading coach typically tries to help you with your trading.  A trading coach is invested in you continuing your trading because that continues your work with them.  A psychologist is focused on your health and well-being and that may or may not include trading.

Suppose we replace the term "trading" with the term "drinking".  A person could say, "I've tried to have a good time drinking and I want to go out with my friends.  I've had too much to drink at times and so I set rules to limit and control my drinking, but lately I've broken all my rules.  I wrecked my car and lost my job.  Should I stop drinking entirely"?

Well, that puts our trading problem in a new light.  We can become dependent on anything that produces big highs--and that dependence can create deep lows.  Indeed, our dependence on trading can create traumatic consequences for us, as this post points out.  In the case of drinking, it's clear that we need to take two steps:  1) stop drinking; 2) get help for the traumas our drinking has created.  That first step of stopping drinking and getting help is always the hardest.  That's why people with drinking problems who have hit bottom often reach out to groups such as AA--for support as well as advice and encouragement.  Connecting with others in healthy ways replaces the drinking.

So, if we've been trading impulsively and addictively and breaking all our rules, should we continue to trade with ever more vows of "discipline"?  Of course not.  We need to give ourselves time to heal from the traumatic consequences, and we need to find others who can support us in that healing.  Only after that period of healing has occurred should we consider returning to markets in a different and healthier way.  The goal is not to trade.  The goal is to live a happy, healthy, fulfilling life.

The first step is the hardest, but it can also give you energy, because it can be the first step toward a new life.      

Finding a Trading Lesson in Each Market Day

 

10/24/2025 - The single greatest trend I have observed in my recent years of coaching work at hedge funds is the growth of teams and the expanding role of teamwork in trading performance.  Interestingly, this has also been a distinctive trend at the proprietary trading firm SMB Capital.  I recently spoke with a member of an expanded team at SMB and it was clear that his trading--and his engagement in markets--had benefited from the sharing of ideas and mutual review of performance.  Because of the learning that had occurred within the team, this trader was exploring unique and sophisticated trading opportunities.

At the hedge fund level, teams have become the mechanism for learning, training, and promotion.  As they've grown, teams have tackled new markets and new strategies.  They share ideas and information daily and thus are able to see a greater range of risks and rewards than individual traders.  I predict this will become a dominant trend among those individual traders as well.  They will network with one another and create their own trading pods.  This will keep individual traders actively engaged and also tap into their positive motivations to learn and help others.  Connecting traders and helping them form their own pods is an important mission for trading communities going forward, as communities become teams of teams.  

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10/23/2025 - The common view of trading psychology misses an important reality.  Yes, our emotional and cognitive states impact our decision making.  Equally important, however, is that our decision making style impacts our cognitive and emotional states.  All of us have strengths and weaknesses in terms of information processing.  Some of us process information best if we focus on a limited number of things and go into depth in those, seeing what others miss.  Others benefit from a broad vision and finding patterns and themes that pull things together.  When we are processing information in line with our strengths, we find the experience meaningful and interesting.  When we attempt to make sense of things outside of our strengths, we typically struggle and experience frustration.  It's not just we lose money if we are in the wrong mindset; it's that we experience negative mindsets if we're doing the wrong things (i.e., if we're operating outside of our strengths).  

Yesterday's trade began choppy and range-bound and evolved into a downtrend.  Getting out of the weeds and seeing what was happening across sectors was key to perceiving and benefiting from the market shift.  It was the frustration of being in the weeds that prodded me to step back, look at the larger picture, and align myself with my best thinking.  We work on our psychology by refining our trading.  This is an important trading lesson.

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10/22/2025 - The idea of finding a trading lesson in each market day is to become better and better at recognizing and acting upon opportunity and better and better at sizing and managing risk.  That way, every day yields something we can improve and/or something we did well that we can build upon.  Suppose, at the same time, we find a trading psychology lesson in each day that we trade:  something we can take away with respect to how we approach our trading.  For instance, with yesterday's lower volume and volatility, I had to adjust expectations in setting take-profit levels.  On Monday, those expectations were lofty; on Tuesday, I had to focus on near-term levels that I thought could be hit on the move-to-move basis.  One of my Tuesday trades hit my target but didn't get filled.  I adjusted my expectations but not enough.  Flexibility in how we approach the day's opportunity set is an essential element of trading psychology for the active trader.

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10/21/2025 - Note how the early trading of the market today differed greatly from the early market action on Monday.  Sector performance was mixed; advance/decline numbers were not extended in either direction; TICK numbers were similarly constrained.  Unlike Monday, when holding positions to ride the trend paid out, today's trading rewarded nimble trading move-to-move.  Remember, the opposite of a trending market is not necessarily a randomly choppy market.  There are short-term cycles that show up when trends are not dominating.  The move-to-move trades exploit these cycles.  It's a great example of how our trading must change as market environments change; a valuable market lesson. 

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10/21/2025 - Growth as a trader is a continuous process of starting over, but always from a higher starting point.  As markets change and as our understandings of markets evolve, we become new traders who are experienced traders.  During this most recent vacation period, I've remade my research databases to highlight trading patterns based on market and sector breadth and now am integrating that information into my market views.  Yesterday was a rewarding day in which old understandings of trend days in markets joined together with backtested historical patterns of sector and market breadth to reveal opportunity early in the trading session.  

One new practice I'm following in my journaling is to identify a single, valuable trading lesson each day based upon what I experienced and learned.  The idea is to ensure that each session is a learning opportunity that can be carried forward to improve performance.  Yesterday's lesson was that, when we see unusually strong NYSE TICK, advance-decline stats, and sector performance from the earliest minutes of trading, we want to be prepared to trade a trend day by holding positions and taking advantage of short-term pullbacks.  Identifying the kind of market we're in provides us with a valuable game plan for the trading day.

   

Focusing on Opportunity

 

10/13/2025 - TraderFeed will be on vacation while I ramp up my research platform and apply it to these markets.  I look forward to sharing insights and experiences.  

Friday's market was a dramatic reminder that relying on visual inspection of chart patterns and technical indicators for trading has its limitations.  Once important news comes out, market participation changes (volume, volatility) and the patterns that had shown up in previous trading can no longer be counted upon.  For example, previous oversold levels that could be counted upon for bounces now might simply lead to further downside.  

The key takeaway is that *who* is in the market defines the nature of trading opportunity.  When volume and volatility expand due to increased institutional participation, only historical analysis of similar periods can provide insight into trading opportunity.

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10/10/2025 - One thing I've been able to appreciate from my breadth-based research is that opportunity is not distributed evenly in the market.  There are periods in which backtests show little to no edge going forward, and there are periods when the backtests show a very distinct historical bias toward directional moves.  These periods of opportunity are generally ones in which multiple backtests of market behavior conducted over different time frames line up--and those then line up with current price action.  An example would be a market that shows a bullish edge from 3-5 days out and also for 20+ days out.  Intraday, there is selling that cannot push prices to a fresh low, so that we get short-term oversold readings at higher price lows.  

These opportunities are not common, but they are unusually promising and profitable.  Sizing all positions equally (i.e., taking the same risk in great opportunity markets and modest opportunity ones) is inefficient.  Invariably, when I come across a very successful trader, I find someone able to:  a) significantly size up researched high opportunity trades and b) effectively manage the downside risk of these trades.  A meaningful percentage of their weekly and monthly profits comes from a relatively small percentage of their trades.

The key to this success is the ability to *objectively* define the very high opportunity opportunities and patiently wait for these to appear.  Despite the large opportunity, the successful trader maintains the ability to manage risk effectively even when trading very large size.  This is the essence of trading like a sniper, with controlled aggression.

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10/8/2025 - Starting Monday, I will be taking a break from regular posting on TraderFeed to set up my breadth-based trading platform and begin trading the patterns I've been observing in my research.  What I can share is that what many traders don't look at--how money is flowing from certain sectors of the stock market to others--is associated with non-random returns over time periods most traders don't look at (20+ days out).  An edge is not something that is present or not present in the market, but something that evolves as flows shift from day to day.  Our job is to understand and follow that evolution.  A major problem in trading psychology is myopia:  we so focus on the present that we lose sight of the edges from days and weeks ago that are impacting how markets trade now.  Every trading day occurs within a context.  We lose vital information when we only look at the day and miss the larger context.

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10/7/2025 - I've been speaking with trading coach Agnieszka Wood and an active member of the Australian Technical Analysts Association about the idea of an enriched format for coaching traders that could provide greater opportunities for performance improvement.  In the medical world, it's common, when a patient enters a hospital, for multiple physicians to collaborate on their care.  Each physician has a distinct specialty and they combine their areas of expertise to create a well-rounded treatment plan.  Every patient benefits from this collaboration, and the physicians gain the opportunity to learn from one another.

Why not bring this model to the coaching of traders and create greater opportunities for change?  Traders would meet with multiple coaches in a group setting and would bring their questions and challenges to the team of coaches.  One coach, for example, might focus on how changes in the trader's psychology could help their trading.  Another coach might emphasize trading improvements that could help the trader's psychology.  Because the team coaching is conducted in a group session, it is affordable for traders and also allows traders to learn from the questions of others and the multiple responses of coaches.  It's a dynamic learning environment: active and interactive.

We create greater opportunity when we innovate--in trading and in all areas of life!

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10/6/2025 - I am getting a number of emails asking for help with trading discipline.  The traders feel that they can identify opportunity, but then violate their rules/stops/trading plans in the heat of action.  They recognize that opportunity is only opportunity if we can act upon it in a planned, disciplined manner.  They are asking for advice that will help them instill such self-control.

The key psychological principle here is that trading rules must be internalized as trading habits before we can pursue meaningful risk-taking.  In other words, we have to:  a) define the rules for our trading that reflect our best practices; b) turn those rules into checklists and step-by-step templates for action; and then c) repeat the application of these best practices again and again in practice/simulated trading and then in small-size trading until they are internalized as automatic habit patterns.

We do not gain discipline by exercising self-control; we achieve discipline by turning desired behaviors into habit patterns.  Then we can act upon opportunity consistently.

The mistake many developing traders are making is that they're trying to make money--and take meaningful risk--before they've truly internalized their best trading practices.  Until they build robust habit patterns around their best trading, they will be vulnerable when market events distract them.

Of course, the other reason for practice/simulated trading is to try things out, learn from our successes, figure out what we do best, and capture that information as best practices.  If we attempt to trade before we fully understand what goes into our successful trading, we will fall victim to impulsive decision-making.

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10/5/2025 - No amount of changing your bait, casting your fishing rod differently, and improving your mental outlook will help you catch fish if you're fishing in the wrong body of water.  Many traders experience frustration in their work, not because of any intrinsic emotional problems and not because they need to tweak their entries/exits, but because they are not focusing their trading on the areas of greatest opportunity.  If what you're trading isn't moving much, no switching of technical indicators, trading styles, or psychological exercises will help you make significant returns.

Consider the U.S. stock market this past month.  Look at returns in semiconductor stocks (SMH) over that period; then look at returns in consumer staples shares (XLP) over the same period; and then look at regional banking shares (KRE).  Participants in those markets were fishing in very different ponds.

A major source of movement in the stock market comes from rotation from one group of sectors to others, as institutions pursue investment themes.  Catching these rotations is a great way to find the best fishing ponds.  It's important to make sure we're playing the right games before we work on improving the game we're playing.  

Trading For A Living Without Living For Trading

 

10/3/2025 - Perhaps the most powerful way of ensuring that trading for a living does not become living for trading is maximizing the quality of our time and experience outside of markets.  Research in psychology is very clear that experiences of happiness/joy and meaning/fulfillment are associated with more energy, better health, and greater productivity.  The connection that is particularly relevant to trading is that, when we live lives of joy and fulfillment, our perception is literally expanded.  We become more creative and more perceptive.  Conversely, when we are more stressed, we lose the capacity to clearly perceive what is happening around us.  

What are we doing each day to bring happiness to our lives?  To do things that are meaningful?  To connect with people who matter to us?  To engage in activities that energize us?  If our trading impoverishes our lives and takes away from these four priorities, we unwittingly cultivate a mindset that removes us from opportunity.  How well we live is intimately connected with how well we trade.

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10/1/2025 - How can you trade for a living without living for trading if you're a short-term/intraday trader?  Don't you have to be glued to screens to find and exploit opportunity?

As noted below, breadth patterns can be found on all time frames, including very short-term.  For those whose greatest talents involve pattern recognition, opportunities with the NYSE TICK and related TICK measures set up frequently--particularly when upticks and downticks across stocks can no longer move price meaningfully higher/lower.  Conversely, we can monitor advances/declines for a given index in real time and see when upticks/downticks are moving the broad market.  

What I'm finding particularly promising is using the longer-term breadth information to identify historical trading edges over periods of days and then using the intraday breadth patterns to identify when those edges are playing out here and now.  That means trading short-term, while being informed regarding the market's bigger picture.  While waiting for the opportunity set to line up across time frames, the market gives us time to engage in other activities, whether they be market research or getting other things done.  We don't have to be glued to screens to keep an eye on the setting up of intraday swings.  Alternatively, I've known traders who limit their trading to patterns that set up in the morning hours and who size those aggressively.  They make their money and then the rest of the day is theirs.

When we own opportunity, markets no longer own us.

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9/30/2025 - The greatest market opportunities occur on multiple time scales:  they set up on the short-term and also on the longer-term.  When breadth patterns show up in the smaller and bigger pictures, it becomes possible to ride the activity of the market's largest participants.

First off, breadth means that multiple stocks/subsectors/sectors are participating in a move.  That can only happen when institutions are allocating capital to the asset class or to one or more themes within that asset class.  When we break breadth down sector by sector, subsector by subsector, and when we break breadth down by factor/themes (growth/value; small cap/large cap; interest rate sensitivity), we can see how funds are flowing and join in that movement.

Second, breadth occurs on multiple time scales.  We can look at the number of stocks giving longer- and shorter-term buy/sell signals on technical indicators such as moving average crossovers.  We can also look at new highs/lows over different time periods.  Breadth can even be tracked effectively intraday through measures such as TICK.  My platform (Sierra Chart) follows real time upticks vs. downticks for the overall NYSE market, but also for small cap stocks, for SPX stocks, and for Dow stocks.  This makes it possible to identify in real time whether a given move is broadly based or limited to a particular group of stocks.

When we require patterns to show up on longer time frames as well as medium and shorter ones, we trade much more selectively, but participate in the most promising opportunities.  This enables us to trade for a living without having to live to trade.  Instead of chasing moving markets, we patiently wait for markets to give us their best setups.  We can also pursue different opportunities on different time frames and in different parts of the market, giving us many ways to win.  

This is an important reason why very talented, successful hedge fund portfolio managers almost never come to me with problems of emotional trading/tilt/frustration.  They are not trying to catch each move.  They are waiting for opportunities to come to them.  I have found the Barchart, Market Charts, Stock Charts, and Sierra Chart resources to be invaluable in collating my own database to track breadth-related themes.

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9/29/2025 - Here is the project I'm working on:

I have been creating a very large database of breadth-related information for U.S. stocks.  The database goes back more than 20 years and includes daily breadth information for the overall market (NYSE, SPX) as well as breadth information for individual market sectors.  It also includes the number of stocks giving daily buy and sell signals across multiple technical indicator systems, as well as breadth data broken down by factor (growth vs value stocks; small vs. large cap stocks; etc.).  The database, when it is completed, will provide a look at forward returns from 3 to 50 days out and identify when returns are statistically significant relative to average returns.

What that means is that I have all the previous days' signals that cover the current trading day, and I have new trading signals created by yesterday's action.  That allows me to identify when forward returns are most promising due to the lining up of different signals and the lining up of signals across different time frames.  

Intraday overbought/oversold criteria are used to time entries in the larger breadth patterns.  There is no intraday trading, however; the breadth patterns are meant to capture short-term swings and longer-term moves in the indexes and stock sectors.  That provides diversification by time frame as well as by market.

Rules define stop and take-profit levels, as well as money management criteria for adding and lowering position sizes based upon the shifting of odds as markets move.  This requires checking in on the market in the morning and afternoon, but does not require ongoing tracking of minute-by-minute action.

It's early in the game, but so far the project is profitable and is showing promise in terms of identifying the parts of the market with the greatest odds of success.  The inclusion of sectors creates multiple ways to win (for example, being long one sector with good historical odds and short another with poor odds and volatility adjusting the pair to be completely market neutral).  The balance of positions--across markets and across time frames--helps smooth the P/L curve.  

The most important finding so far, however, is that this approach has taken all of the drama out of trading.  It has freed me up for my many other life priorities and yet is every bit as challenging and fulfilling as short-term trading in terms of problem-solving and the search for opportunity.  It is possible to trade for a living without living for trading.  So many of the problems identified by trading coaches are a function of the drama created by becoming attached to short-term market behavior.  For me, the best way to work on my psychology is to trade within a framework that draws upon my greatest interests and strengths.  

Life is too short for drama.

Why Do I Sabotage My Own Trading?

 

9/28/2025 - An important change method in positive psychology is the solution-focused approach.  From a solution perspective, asking the question, "Why do I sabotage my trading?" is the wrong question.  What we want to ask is, "What might I be doing right when I'm not sabotaging my trading?"  It's when our negative patterns are not occurring that we might be enacting our own solutions.  For instance, I stopped making poor, impulsive trading decisions once I dedicated a meaningful portion of my profits to causes that I believe in.  That changed my mindset.  I was trading to help others--a powerful motivation for a psychologist!  Just as I would not act on impulse while helping a client in therapy, I won't do so if my trading is designed to help those in need.  By tapping into a new and more powerful motivation, the problem ceases to exist.  

I've seen this dynamic many times among traders who trade in teams:  they become much more consistent and disciplined because their motivation to not let others down is stronger than their need for momentary P/L.  What makes team-based trading so powerful is the opportunity to share many ideas and observations, but also the opportunity to draw upon social motivations that overpower our most negative impulses.  Structuring our trading the right way is the best psychological practice!

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9/26/2025 - A powerful technique for overcoming the patterns that sabotage our trading is to actively mentally rehearse those patterns while we are training our brains to stay calm and focused.  In other words, we vividly imagine drawdown scenarios, missed opportunities, and other situations that can hijack our mindset.  While we're engaged in those visualizations, we can be connected to a brain wave biofeedback device that tells us in real time when we're in the zone and when we're not.  We keep repeating the "tilt" scenarios in our visualizations until they lose their ability to disrupt our mindsets.  Repetition normalizes experience.  When we normalize negative market outcomes, they no longer sabotage our trading.  

Indeed, using breaks from trading to renew our focus through biofeedback work makes us more resilient in our emotional responses.  Rehearsing our trading plans and rules before the start of the market day while keeping ourselves in states of focus builds a resilient performance mindset.

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9/25/2025 - One of the most frustrating issues I hear from traders is that they find themselves not following their own rules.  This creates a double sense of failure in that they miss opportunities and also feel that they have sabotaged their own success.  In my own trading, this has typically occurred when fear of loss overwhelms sound planning.  Although a trade is working out, I may see very short-term price action going against me and quickly exit the trade.  Many times, that short-term countermovement is precisely where I could be adding to my position!

The cognitive techniques discussed in The Daily Trading Coach book have been especially helpful in eliminating this sabotage.  The idea behind cognitive work is that our problems occur because of how we talk to ourselves.  If we can learn to identify and challenge our negative thinking, we can distance ourselves from it and act upon our best judgement.  One variation of this work that I've written about is imagining that the things you're telling yourself are being said to you by a person you hate and who would want to see you fail.  Imagine that this enemy of yours is shouting in your ear to get out of the trade that's working for you because you might lose your profits.

What would you say to that person?  Chances are good that you would tell them to shut the f*ck up!

In other words, if someone you can't stand said to you what you're saying to you, you wouldn't buy into it.  You would clearly see that it's a sabotage.

Cognitive work helps us identify in real time how we're talking to ourselves so that we can decide whether or not to act upon it.  Many of our greatest emotional problems are because we've learned (and overlearned) negative thought patterns.  By thinking about our thinking, we can evaluate our situations more objectively and do what's right--in markets, but also in relationships and other areas of life.

I will offer more on how to change our thought processes in coming posts--  

The Power of Asking New Questions

 

9/24/2025  - On my cat site, I just described a learning lesson from our most recent family addition, Nomi Lyn.  What I suggested is that the best way to raise a kitten is very similar to the Montessori approach to education:  Expose them to lots of different materials, activities, foods, etc. and discover who they are by observing what they gravitate to and how they make use of their environment.  

But, wait.  What if we trained traders that way?  Instead of expecting them to follow a preset curriculum/guru, what if we exposed them to many markets, many ways of trading, many time frames, and many role models?  What if traders spent an extended time playing with markets in order to discover where they excelled and what spoke to them?

Could it be that much of the frustration newer traders experience in markets is because they're trying to fit a mold promoted by others rather than take the time to learn where their talents and passions truly lie?  What might a Montessori education for traders look like?  Perhaps what makes cats flourish is not so different from what nurtures our own development.

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9/23/2025 - Suppose the title of this post was "The Power of Asking Now Questions".  What questions are you meant to be asking in the here-and-now:  at each phase of the trading process?  What questions are you meant to be asking at the start, middle, and end of each day?  Each week?  The purpose of now questions is to align ourselves with our life's priorities, including our own best trading practices.  We can best view opportunities--in life and in markets--if we re-view what we've done and connect with our goals and priorities going forward.  We can't act impulsively or on habit if we're consciously asking ourselves now questions.  The greatest challenge of trading psychology is not the presence of emotion, but the absence of self-awareness.  How can we reach personal goals if we are not setting those in front of ourselves regularly?

One of my best practices is to use real time brain wave biofeedback to enter a highly focused zone and, in that state, review my priorities going forward.  By training the brain for focus and using the focused state to rehearse goals, we create a situation in which our best trading becomes anchored to our best states.  This is known as state-dependent learning.  Connecting to our now questions--and our now answers--every time we calm and focus ourselves allows us to control our trading by controlling our mental and physical states.

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9/22/2025 - Back when I was teaching full time at the medical school in Syracuse, I came across an interesting study about what distinguishes the most successful scientific researchers.  One of the conclusions was that the best investigators were great "question finders".  It wasn't just that they came up with new discoveries.  They asked better questions and those led to the discoveries.  

I believe this applies to trading success as well.  For example, a trader may have flat performance for a while and conclude that they're not trading well.  A trader better at "question finding" will view the flat performance as a mixture of good trading and not-so-good trading.  They will then drill down to the ideas they're trading, the ways in which they are expressing those ideas, the sizing of their trades; their timing in trading those ideas with entries/exits; etc. to find out what they're doing really well and what they need to improve.  

Viewing flat performance of a sector ETF or a stock index as a blend of bullish and bearish components is a similar kind of reasoning.  One trader sees a flattish stock market and sees no opportunity.  Another trader looks at sector performance and the behavior of various market factors (such as small cap/large cap; growth/value) and sees that the flat overall market masks meaningful moves in the components.  Question finding for the trader is looking beneath the surface to see what is moving most--and what is moving most reliably.  A smart trader looks for movement; a really smart trader looks for the consistency of the movement (Sharpe ratio).

The best traders ask more and better questions.

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9/21/2025 - Fresh questions can open the door to new answers and opportunities.  

No trading edge ever came from consensus thinking.

What if how sectors and subsectors rotate anticipates how broad indexes will trend?  What if some of the most important information is not just price and volume, but the price of one asset relative to another?  What if absolute value begins with relative value?

We look for direction on the chart of an asset when it's the lack of direction that alerts us to relative movement within that asset.

What if the most reliable moves occur at time frames higher than the ones we watch?

Are we trading to make money, or are we watching markets to trade?

What if our best trading comes from following multiple, independent positions over longer time frames and not from piling into short-term trades of individual positions?

What if we're focused on playing the game better when there's a better game we should be playing?

What if better trading doesn't come from better trading psychology?  What if a better psychology comes from trading what we see and understand best--and what provides the greatest opportunity?

New questions can take us to new places.

I long ago found that adopting the cat no one wants and no one is looking at provides the greatest opportunity.  Markets are not so different--

Why Successful Traders Fail

 

9/19/25 - Successful traders fail more because of stagnation than because they blow up.  They focus so much on "plan your trade and trade your plan" that they never create new, more promising plans to trade.  What creates a lasting business is thinking outside the box, observing different market relationships, and finding fresh sources of edge.  The excitement of discovery and the reward of doing new things keeps us actively engaged.  Drawdowns of P/L don't have to become emotional drawdowns if we're always exploring, always discovering.

The source of edge I'm currently working on is flat, "choppy" market conditions.  How do we make money when the market trades in a relatively narrow range?  One measure I've found helpful is what I call the momentum curve:  the percentage of stocks in the SPX that trade above their various moving averages, from 3 day to 200 day.  (I find the Market Charts and Barchart sites useful sources for this information).  This tells us when flat markets are occurring in uptrends or downtrends on higher timeframes.

A unique idea that came to me is that we can create momentum curves for each sector within the SPX universe.  Thus we look at the percentage of stocks above the different moving averages within the technology, consumer discretionary, utilities, communications, and other sectors.  What we can clearly see is that "choppy" index markets are hiding sector rotation.  During the choppy period, funds are flowing out of some sectors and into others.  Choppy markets are actually rotational markets.

It turns out that opens a variety of sources of edge.  More to come--

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9/18/25 - It is a challenge to make ourselves, and it's doubly challenging to unlearn what we've absorbed and remake ourselves.  When we fear to lose, we've lost opportunity and that is the great loss of all.  

Successful traders fail because they cannot let go of what has worked in the past to discover and develop fresh opportunity going forward.  All edges in markets have expiration dates.  Eventually they are discovered, exploited, and lose their unique value.  The successful trader is not one with an edge, but one who has developed the ability to cultivate new and different edges.

But that takes the ability to embrace uncertainty as well as the passion for learning new things.  Trading is not a journey to a destination.  It is a continuous process of evolution.  If we don't love change, change surely will leave us behind.  In developing the new, we renew ourselves.  

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.