7/22/2026 - In his book Become Who You Are, Ryan Bush points out that each of us has a "portfolio"--a collection--of virtues and personal strengths. He explains that "Pride is essentially the feeling of your virtue portfolio going up in value" (p. 208). And how do we increase the value of our portfolio of strengths? Bush recommends that we "simply create a daily activity schedule, designed to slightly increase the amount of virtue you bring out through your daily behaviors" (p. 209). By integrating work on our strengths into our daily calendars, each day becomes a workout that expands the best of who we are--and each day becomes intrinsically rewarding.
A good question to ask in this regard is "How will my trading today make use of the best of who I am?" In other words, in addition to a monetary P/L, we create a psychological P/L in which pride in our work becomes the gauge of success. Bush points out that such pride is the opposite of depression. Rather than feel worthless, we experience the gratification of realizing our best selves. It is very difficult to trade emotionally and on tilt if our focus is on being the person we most admire in ourselves.
Bush quotes Michelangelo: "Every block of stone has a statue inside it and it is the task of the sculptor to discover it. I saw the angel in the marble and carved until I set him free" (p. 230). Each of us is a block of stone. Each of us is also the sculptor. Trading, at its best, is art: What we visualize ourselves to be and carve within ourselves is what we set free.
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7/21/2026 - A fascinating book from Mason Currey is Daily Rituals: How Great Minds Make Time, Find Inspiration, and Get to Work. The book is a collection of work routines from a variety of talented and unusually productive artists, writers, scientists, and more. What Currey shows is that a daily routine is "a finely calibrated mechanism for taking advantage of a range of limited resources: time (the most limited resource of all), as well as willpower, self-discipline, optimism" (p. xvi). The key idea here is that routine can be the incubator of creativity and productivity. Recall yesterday's post about "deep practice". When we turn deliberate practice into an intensive routine, we supercharge our learning and that fuels creative accomplishment. That is precisely what we see among the Market Wizards: long hours of viewing and reviewing markets and trades and uncovering hidden patterns that can be converted into opportunity. Creative insight does not come from out of the blue. It is the result of regular, intensive effort.
In pursuing intensive routine, the great achievers tracked by Currey develop their capacity for intentional focus. Their routines are their gymnasiums. How they work is how they expand their capacity for sustaining creative effort. Writing of the philosophy of G.I. Gurdjieff, Colin Wilson points out that "Compared with what we ought to be, we are only half awake. Our fires are damped, our drafts are checked. We are making use of only a small part of our possible mental and physical resources". Creative geniuses have harnessed the power of routine and intensive deliberate practice to keep themselves awake. Their routines are not just routine efforts. Like the work in a gym, they are efforts that strengthen us.
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7/20/2026 - The previous post asked the question of why educational programs for traders rarely act as talent incubators. The instructors can detail patterns to trade and sound trading routines, but rarely if at all do we see the students reaching their desired levels of success.
The problem is that best practices require best processes for their implementation. Daniel Coyle, in his classic text The Talent Code, explains that success requires "deep practice". Not just repeated practice, but *depth* of practice. He gives the example of Clarissa, a clarinetist, who on first assessment does not appear to be especially gifted. She gets to a point in the music where she makes a mistake, she goes back to the beginning, she repeats the sequence again and again in different ways until it sounds right, and then she moves on in the music until she makes another mistake. Rinse and repeat. Gradually, she becomes a talented musician.
Deep practice is anything but review and repetition. It's an active process of trial and error that doesn't stop until there is mastery. An example I'm familiar with as a writer is that I will write a section of a chapter in relatively stream of consciousness fashion and then I will take a break and slowly read what I've written, changing sentences and sentence structures along the way. Then I reread the section. And make more changes. Eventually it reads the way I want it to read. By repeating this process for every paragraph of every page, I've learned to be a good writer.
Dr. Ellen Winner has called this process a "rage to master". It is the bridge that links talent and innate interest in a field with elite skill development. Traders who watch videos and take courses and then hope to trade successfully short circuit the process of deep practice. From Coyle's perspective, there is no depth whatsoever in what they're doing. Trading success is less about chart patterns and indicator readings and much more dependent upon what we observe among the Market Wizards: an intense rage to master grounded in deep practice.
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7/19/2026 - At one level, the coming Trading Psychology 3.0 book will be a review of all that we know about trading greatness. At a broader level, it will be a review of what we know about greatness in life. Trading, like all disciplines, is a path for self-development. In defining and refining our selves, we gain both self mastery and market mastery.
There is no lack of educational and training programming for traders, some of which attempts to detail the precise trading opportunities taken by the mentor. What is striking about all of these is that the great, great majority of the students participating in these programs never achieve distinctive success. They learn, but they do not master.
Why is this? If a highly successful trader lays out in detail what they are doing to make money, why can't developing traders replicate that trader's success? When we step back and think about it, this challenge is not unique to trading. Any great athlete can explain in intricate detail how they train and how they perform, but very few of their trainees will be able to win Olympic medals.
Trading Psychology 3.0 will propose a unique explanation for this phenomenon. A book title from Ryan Bush is Become Who You Are. It suggests that greatness comes, not from mimicking others, but from the intensive application of one's own talents, skills, and passions. Most education shows you how to be like the teacher. Rarely is that a path to elite success. "If you meet the Buddha on the road, kill him" is a Zen Buddhist saying that tells us that enlightenment can only come from within: from becoming better and better versions of who we already are. The path to your trading greatness can be found in what you are already doing greatly.
Our challenge is to become better and better versions of ourselves.
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7/17/2026 - How can we overcome the emotions that make it difficult for developing traders to master their craft? This will be an important topic in the Trading Psychology 3.0 book. Somehow, because of the structure of the training process at hedge funds, we don't see portfolio managers or team members going on tilt or overtrading due to FOMO. How can we develop the right mindset as well as the right trading?
The answer lies in the learning process. What leads to overemotional trading are the *needs* that we bring to trading. Specifically, if we *need* P/L (because of our financial situation or because of our self-esteem), then we're going to overtrade and overreact to make profitability happen. Great trading means knowing when to *not* trade. The best traders, as seen in the Market Wizard books, trade quite selectively: when *they* have the edge. They are driven to trade well and that makes them better and better over time.
At a hedge fund, becoming a money manager is a developmental process. First you might begin as a junior analyst, then you will expand your responsibility for researching good ideas, then you will trade a simulated "paper" book of your ideas with the mentoring of the portfolio manager to learn trading skills; then you will be allocated a small "sleeve" of capital to trade based on what you've learned. Gradually that sleeve can expand to the point where you become a co-manager and eventually can begin your own team. All of this occurs over years.
The developing analyst/trader judges performance based upon their learning and professional progression. Each day's P/L is irrelevant to the bigger picture of growth. The reason the developing money manager does not experience tilt and frustration is because they know they are meant to learn from losses. They are focused on their learning P/L, not their dollars and cents each day.
This is why it can be very helpful to participate in a quality training program for traders. The right mentoring keeps us focused on the big picture of our growth and away from trading ups and downs.
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7/16/2026 - What is the greatest impact on professional trading that I've seen from AI? Initially, AI was super helpful in terms of coding ideas from traders. Now we're seeing AI as a fast and deep research tool, capable not only of identifying promising trade ideas but also trading them. For the first time in years, I'm seeing teams actually shrink in size as the efficiencies of AI make the hiring of analysts and junior traders unnecessary.
There is, however, a more profound transformation coming from AI that will be explored in the Trading Psychology 3.0 book. With the ability to quickly research and identify trading opportunities and automate those, there is no reason why tomorrow's daytrader can't be a portfolio manager. In other words, the benefits of diversification and holding different positions that will thrive in different market environments will increasingly become an essential part of daytrading. Imagine a daytrader who simultaneously holds short-term positions in different stocks and different markets: some might be scalps, others might be intraday position trades, others might be swing opportunities. Now the trader's job becomes one of balancing the various positions, creating multiple ways of winning based upon rigorous research.
Many traders are looking to training and education sites for ways of playing the game better. Soon, however, it will become a different game entirely. Tomorrow's trader will look increasingly like today's hedge fund manager.
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7/15/2026 - The book Trading Psychology 2.0, published in 2015, was an effort to take trading psychology beyond the usual themes of controlling emotions and avoiding impulsive behavior to a look at the best practices of the successful traders I was working with at professional trading firms. A little more than a decade later it's time for an update. A number of excellent books have come out during that time detailing trading success. I've also learned a great deal about the specific trading practices that contribute to success and especially the overarching processes that help traders adapt those practices to ever-shifting market environments.At the heart of the new 3.0 book will be a good old fashioned literature review. In the academic world, where I've worked since the 1980s, one begins a research project with a review of all the important works that have been published, the answers they provide, and the questions they leave open. The idea is that, in true science, knowledge is cumulative: we build our understanding step by step, contribution by contribution. Trading Psychology 3.0 will review a large number of books written by successful traders and successful trading coaches to highlight what we know about great trading--and what still remains to be discovered.
One key idea from the 3.0 book will be the degree to which profitable trading is process driven. It is far more than searching for patterns to trade and setting stop loss points and profit targets. Process oriented trading incorporates a set of routines that examine markets and track the evolution of opportunity and an entirely separate set of routines to review performance and track improvements that have been made and that need to be made. It is the consistency and intensity of these processes--many of which are performed by teams in professional settings--that shapes profitability.
A forthcoming book by Brian Mazza, called Nothing Changes if Nothing Changes, draws upon the structure of physical development to identify what we need to do to train success in all areas of life. The idea of developing our trading as a training process is a powerful one, where the goal is not just improvement but transformation. If how we prepare for trading each day is not a true workout can we truly expect to transform ourselves as traders?
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