New Techniques For Improving Trading Psychology

 

2/26/2025 - Well, the new book is finally available!  The subtitle says it all:  Turning personal strengths into trading strengths.  The big challenge for developing traders is figuring out what they do well and then leveraging that in their trading processes.  Yes, it's important to avoid trading on tilt, fear, greed, etc.  Doing less of the negative, however, will not achieve positives.  The important perspective that the book discusses is that your trading success will draw upon the same strengths that have created your life's successes to this point.  Think of your greatest accomplishments, your greatest areas of mastery.  Somehow, in some way, your trading has to leverage the talents and skills behind your life's greatest achievements.  

In this series of posts, we'll look at innovations in positive psychology that can improve our trading psychology and our trading practice.  The solution focus is one of the most basic innovations, where we turn our attention to situations in which our problems are not occurring.  We don't always trade with poor discipline.  We don't always trade emotionally.  What are we doing when we are disciplined and level-headed?  Is there something we're doing that we're not aware of that actually is the solution to our problems?  Many, many times, our best practices are hiding in the situations where our problem patterns are not occurring.  Let's journal those exceptions!  Let's learn from what we're doing right!

In the book, I describe the learning process at SMB Capital, where newer traders operate in teams with more experienced traders.  In some teams, the experienced mentor and the developing trader will share a joint account and make decisions together:  what to trade, how to size it, how to manage the risk, etc.  Yes, this is a great practice for learning trading, but notice how it is also a great way to study successes and identify best practices.  If everyone you team up with shares just one thing each day that they did well and breaks it down to show how they did it, imagine the acceleration of learning and development that would occur!  Even if you use a trading community to find just one trading buddy, that could greatly expand the development of your trading strengths.

Studying the one or two or three great trades you placed in the last week helps you internalize the ingredients of your success, but more importantly helps you internalize a sense for your own greatness.