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

---

The Three Minute Trading Coach Videos

---

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
.

Key Ideas From Trading Psychology 3.0

 

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.

=======================  

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.

========================  

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.

======================

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.

======================    

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.

======================

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.

===================== 

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?

Lessons From Ayn Rand And Objectivism

 

7/14/2026 - The solution-focused approach to change is a straightforward framework for coaching ourselves to trading success.  You start by writing down all your trading problems: everything you've identified that you're doing wrong in your trading processes.  What have been the problems with your research and idea generation?  With how you express your ideas?  With your trade execution?  With your risk management?  With your trading reviews and planning for the next day?  In other words, you're breaking trading process down into components and identifying all the things that you've done wrong and that have hindered your success.

Now, in your weekly reviews, examine when each of those problems *did not occur*.  You're looking day by day when you didn't make mistakes in each element of your trading process.  Then you examine what you *did* do on those occasions.  The key to the solution focused approach is the understanding that, when you're problems are not occurring, you may (without even realizing it!) be enacting solutions.  When you're not messing up, you're doing something right!  Once you've identified those potential solutions, they become explicit goals to work on, so that you're doing more and more of what works for you.

Each day, you find one thing you did right and then you turn that into a goal for the next day and a habit for your trading going forward.  Over time you build your own set of best practices--and they're the ones that work for you, not ones you've picked up from a would-be guru.

What if, hidden in your trading, is the best coaching of all?  That's a complete game changer.

------------------------------------

7/13/2026 - The greatest psychological challenges faced by traders are not emotional disruptions.  We experience emotional dis-ease when we seek the wrong things in markets.  When we jump from market to market, time frame to time frame, looking frantically for "setups", we are controlled by P/L.  We are no longer in the mode of *understanding* what is going on and digging deeper to achieve better understanding.  Rather, we're desperately searching for profits.  So when we have profits, we feel good.  When we lose money, we feel like losers.  With P/L as our god, our feelings about ourselves ride with our results.  When we step back and strive for ever better understanding and mastery of skills, P/L becomes a scorecard, but not our god.  

"Trading in the zone" requires focus and intention (see below).  If markets control us, can we ever truly find the zone?  Wealth is the result of greatness; it cannot substitute for greatness.

======================

7/12/2026 - What is a heroic life?  It is a life of noble purpose, a life dedicated to a positive ideal.  Heroism begins with intentionality, the capacity to pursue desired ends.  Intentionality is the exercise of free will.  Life is a gymnasium in which we can expand our abilities to live purposefully.  When we live from moment to moment, day to day without effortfully pursuing chosen ends, we gradually lose our capacity to sustain effort.  There can be no heroism in a life lived randomly.

In the earlier series of posts on Market Wizards, we learned that a common characteristic of elite traders is the amount of effort they expend in pursuit of opportunity.  They spend long hours each day throughout the week reviewing markets, reviewing their performance, and uncovering new patterns to exploit in their trading.  This deep processing of market information enables them to see what others miss.  In absorbing more markets and more patterns, they find more and different opportunity.

The great traders pursue markets heroically.  They trade with intentionality, making each day a learning experience.  Interestingly, the best traders I have worked with approach life in the same way:  purposefully.  If you look at how they organize and manage their time, you'll see a continual focus on getting important things done.  The calendar thus becomes a tool in the development of their intentionality.  In effortfully pursuing purpose each day, they train the free will that ultimately creates their heroic trading.

=====================

7/10/2026 - Confusion is information.  When we are confused about what is going on in markets, that is likely because beneath our thoughts is some contradiction.  One line of thought and feeling lead us in a particular direction; another leads us somewhere else.  Such confusion is uncomfortable for many people.  We want to know.  We want "conviction" and the trades that come from deep inner certainty.  So what do we do with confusion?

The worst thing we can do is try to prematurely resolve the contradiction and push ourselves in one direction or the other.  That ignores one side of the confusion and often means that we're ignoring important information.  Great trades come to us.  When we try to make great trades happen, it's often because nothing is clear to us.  That is a caution light.

Ayn Rand, in her classic novel Atlas Shrugged, pointed out that "Contradictions do not exist.  Whenever you think you're facing a contradiction, check your premises.  You will find that one of them is wrong".  When we're confused in markets, we want to embrace that confusion and use it as a catalyst to check our assumptions.  Somewhere there is a premise we're operating on that needs to be challenged. 

Far from being a negative emotion, confusion is valuable information.  In checking our premises, we clarify our thinking--and that leads to good decisions in all areas of life.

====================== 

7/9/2026 - In the book Capitalism: The Unknown Ideal, Ayn Rand points out that "There is only one power that determines the course of history, just as it determines the course of every individual life: the power of man's rational faculty--the power of ideas".  The entrepreneur is one who pursues ideas in the marketplace, guided by a vision of unique opportunity.  From this perspective, we can define greatness as a life led entrepreneurially.  In other words, the great individual approaches life as a startup venture:  a pursuit of goals and ideals, not just as a succession of needs to be met.

So here is a good question for traders:  Apart from your life in markets, how are you living entrepreneurially?  What vision are you pursuing and realizing in your personal life?  Your relationships?  Your physical development?  Your personal interests?  What energizes and challenges you from hour to hour, day to day, week to week?  

Can we expect to sustain entrepreneurial purpose in our trading if we're living our lives reactively?  If we're not exercising our capacities for pursuing visions, will we be able to sustain our quest for trading success?  Entrepreneurship is a lifestyle--an approach to what we do in life.  Everything we pursue purposefully in life builds our capacity to pursue opportunity in markets.  We don't just try to lead a good life; we find the good life in becoming the leaders of each of our life's activities.

====================

7/8/2026 - A well-known quote from Ayn Rand is "To say 'I love you' one must first know how to say the I".  In other words, love is an expression and affirmation of who we are.  It is not meant to fill the void of an undeveloped self.  One important implication of this view is that need can never be the foundation for a successful relationship.  Love is a sharing of the positives of each person--their values, personalities, passions--not a desperate path for filling the voids when those things are missing.

We hear people talking about loving trading.  What kind of love are they referring to?  Is it the love of finding in markets the kinds of challenges and complexities that engage our greatest cognitive and personality strengths, or is it the love of trying to fill what is missing in life when one hasn't been successful in other arenas?  For love based upon fullness, losses are challenges to dig deeper, learn, and adapt.  For love based on emptiness and needs, losses are threatening.  Without P/L to fill the void, the needy person cannot tolerate the pain of digging deeper into markets.

When you enter a good romantic relationship, there is something about the other person that makes you want to dig deeper and get to know them better.  That's also what drives the person who truly loves trading--or any field of endeavor.  Those who fall in love are driven by positives; they're not running from negatives.  Markets can affirm who we are, but they can never fill what is missing.

====================    

7/7/2026 - It was way back in 1974 that I was on college vacation in Florida, sitting on a beach reading Ayn Rand's novel The Fountainhead.  It's a book about an innovative, creative architect who has to fight mediocrity (and more) to see his visions realized.  There's a loose parallel to the work of Frank Lloyd Wright, which is why Fallingwater has always held a special place in my heart.  There was a moment on the beach when I looked across the water and was struck by an intense insight:  *This* is what psychology should be all about.  Not just treating illness and solving problems, but helping people find "the hero in your soul".  From this perspective, the goal is to live a visionary life of values, purpose, and meaning.  The best way to sustain the fire of a heroic life is to stay connected to the greatness in others.  The best relationships inspire and a true positive psychology leverages that connection.

Wealth--in all its forms--is not a vision; it is the consequence of realizing a great vision.  When we pursue trading for wealth and without a vision, is it any wonder that we stumble blindly through markets?  The important question for any trader/entrepreneur is, "What is your Fallingwater?".  What is the vision you're pursuing that will guide your innovation and your success?  If you're not doing something uniquely, you'll never achieve unique and distinctive returns.  You'll copy what the gurus tell you, you'll pursue one funded trading possibility after another, and your fire will "go out, spark by irreplaceable spark...in lonely frustration for the life you deserved".  

True passion comes from purpose and true purpose expresses a vision of what is and what is possible.  What you see uniquely and distinctively is your vision and in its pursuit lies your heroism and your key to a meaningful life.  No guru will tell you that.  They want you to follow them, not your own vision.  When you discover something new and promising in markets and you feel the excitement of possibility, you know you're on your heroic path.  

Key Insights From The Latest Market Wizards

 

7/6/2026 - The epilogue to the most recent Market Wizards book explains that "Two critical factors limit the possibility of becoming a Market Wizard:  1) Not everyone possesses an ineffable talent and the emotional composition that would make this goal possible, just as not everyone has the innate genes and skill to be a world-class athlete; 2) Achieving extraordinary performance in the markets requires tremendous dedication, passion, hard work, and forgoing other interests and endeavors--a sacrifice that most people are not willing to make" (p. 318).

It's easy to see how the shortcuts developing traders often take to achieve success--watching videos and following the social media postings of gurus--just don't work.  It is only when we draw upon our "ineffable talent" that we develop the drive to hone our skills and become the best we can be.  Then, the hard work is not a sacrifice--it's fulfilling.

I'm working with someone currently who is working on a large research project to track swing patterns in the stock market.  The goal is to automate this research so that there is a constant flow of signals across multiple patterns and stocks.  The quant signals thus act as an analyst, informing when and where there is opportunity, when to step aside, etc.  The trader follows the best historical signals by looking at the charts of past successful trades and developing criteria for entering, exiting, etc.  Market history thus becomes his mentor.

What's the "ineffable talent" in this case?  It's the love of learning.  It's the joy of discovery.  When our process draws upon what truly speaks to us, the hard work becomes absorbing play and we can achieve amazing results.  That's the lesson of market wizardry.

====================      

7/5/2026 - Jason Berry's interview in the latest Market Wizard book contains a number of insights.  He mentions that he trains traders to "find triple-F trades: fantastic fill feeling.  These are trades where the market instantly goes in your direction" (p. 238).  He points out that he trades by following a trend "on different short-term time intervals, using 1-, 2-, and 5-minute bars.  By breaking down market activity into multiple short-term intervals, he is able to see quickly when trades are likely to go his way and when they are failing.  This allows for unusually good risk management.  If the trade doesn't work right away, it's not an A+ trade.

Berry also offers a unique perspective on trend behavior.  Markets don't trade the same at every hour of the day.  There are certain time periods for each market each day in which trends are most likely to continue.  "I trade each market during specific times every day.  I know how the markets move during those times.  I don't trade during the times of day when a market typically experiences choppy bars" (p. 238).  

Berry's trading is anything but mechanical.  He explains that "Innovation is one of my secrets to longevity in the markets.  My best trades often result from thorough research, where the findings are so compelling that they lead to trades with a high probability of success" (p. 241).  He reviews his trades each day and then again at month's end to refine his process.  

George Coyle, reflecting on Berry's interview, observes that the "gut feel" from repeated market study and experience allows Berry to quickly recognize when a market is behaving normally and when it isn't (p. 252).  Jack Schwager explains that Berry's ability to sustain "a trainee mindset" (p. 254), continually learning from changing market patterns, is essential to his success.

The idea that markets trade differently at different times of day and that certain times offer particular opportunity is, in my view, a game changer.  Success results from trading only when the odds are in your favor...not so unlike poker.

==================

7/3/2026 - Lukas Frohlich, interviewed in the most recent Market Wizard book, asserts that "If you don't have the willpower to fight through the pain, you shouldn't be a trader" (p. 164).  He observes that "The trading landscape is constantly changing, especially when moving between different liquidity brackets.  My job is simply to find the opportunities with the best expected value" (p. 166).  George Coyle, reflecting on Frohlich, points out that "It is unusual to find traders who can switch trading styles successfully, especially when the styles are radically different" (p. 167).  Jack Schwager, noting Frohlich's flexibility, observes "To succeed as a trader, you not only need strategies with an edge, but also the ability to use the right strategies in the right environment" (p. 169).

The clear implication is that even the best traders need to "have the willpower to fight through the pain", because there will always be pain (i.e., drawdown) when regimes change and what had been working no longer succeeds.  Psychologically, what is outstanding about Frohlich is that, not only does he not wilt under the pain of drawdown, he draws upon it to feed his creativity and trade with a radically different style.  Drawdown, for the trader who follows rules well, is a sign that the market has changed.  This requires rapid adaptation.

Great traders, like great companies, are adaptive.  They make and remake themselves to fit the new demands of the environment.  For the excellent rule follower, drawdown signals the end of one opportunity set and triggers the search for new ones.  Instead of viewing the drawdown as failure, the great trader responds to it as a call for creativity and adaptation.

===================  

7/2/2026 - In his interview in the new Market Wizards book, Kenny Sharkness observes that "Another pattern I've noticed is that many successful traders are former gamers, and they look at the market and speculation as a game.  They're more focused on winning the game than the money that results from winning" (p. 284).  In my research regarding success at hedge funds, this theme also came up.  Interestingly, the games that were most popular with active/day traders were different from those that appealed to portfolio managers with longer holding periods.  The active group loved video games, for example.  The money managers loved slower games of strategy such as chess and poker.

There's an important insight here.  Whatever will fuel your trading success will draw upon something you already do and have a passion for.  Yes, we learn unique skills as traders, but ultimately we channel our talents and interests to create our success.  One of the greatest challenges of trading psychology is to identify what we do well, how we do it well, and how we can draw upon those strengths to fuel our development as traders.

Sharkness also offers something revealing when he was asked what he would do if he were starting out today.  He responded, "I would try to get a seat somewhere with exceptional traders so that they could instill in me a sense of what is possible.  Seeing others achieve greatness inspires people to strive for the same level of excellence" (p. 286).  It is not just talent and skill that make for great traders; it's also a vision "of what is possible".  This is one of the great shortcomings of traditional mentoring and coaching in trading:  It focuses on correcting weaknesses, but rarely offers models of elite success.  A continual emphasis on problems cannot create a visionary mind frame of success.

====================

7/1/2026 - Lance Breitstein, in his interview in the latest Market Wizards text, makes a very interesting point regarding edges in trading.  He points out that "Most patterns are indeed noise, but when you align enough nuances, there are very specific moments in time that provide tremendous positive expected value" (p. 46).  And how did Breitstein identify these specific moments of opportunity, particularly after 11 consecutive months of losing money?  He spent his Sundays watching recordings of the trading sessions, focusing on "the most critical points each day" (p. 47).  He watched these at advanced speeds, thereby exercising his pattern recognition ability.  When patterns then showed up in live trading his "real-time trading felt slowed down" (p. 47).

What's the key insight here?  Once again we see the value of immersion in developing real-time pattern recognition.  To trade all week and then immerse oneself on Sundays to hone one's game takes determination and a real love for markets.  But the most important insight is that success does not rely on indicator patterns, but on "nuances" within these indicators that occur at "very specific moments in time".  In other words, what Breitstein found were the patterns within patterns:  the nuances.

The nuances that offer "tremendous positive expected value" can only be identified through extensive, focused exposure to market turning points.  George Coyle, in the book, points out Breitstein's "commitment to work harder than anyone else...He adhered to his plan regardless of whether he felt amazing or awful" (p. 77).  The insight here is that it is the intensity and consistency of effort that produces unusual returns.  We cannot find and exploit subtle nuances if we are only casually engaged with markets.

======================

6/30/2026 - It is fascinating to see that many themes cut across the most recent set of Market Wizards.  A few of these are demonstrated by Kristjan Kullamagi in his interview:

1)  Learning by immersion - Kullamagi insists that there is nothing original in the patterns he successfully trades.  He indicates that "I got them from other people...I haven't invented anything" (p. 27-28).  But he also explains, "I looked at thousands of historical charts and verified that these patterns occurred repeatedly" (p. 27).  Seeing firsthand that these patterns are reliable gave him the confidence to trade and bounce back from losses.  

2)  Innovation - George Coyle points out that "Kullamagi's amazing results came from playing where many say you shouldn't play" (p. 29):  very high volatility situations.  Jack Schwager explains that Kullamagi spent 60-80 hours a week for a decade honing his skills (p. 30) with patterns that only make money 25-30% of the time (p. 31).  Most traders would avoid such patterns, but Kullamagi has succeeded with them because of his ability to tolerate--and control--losses.  He's not playing the game better; he found a better game that works for him.

3)  Persistence - Schwager explains that "One of the critical qualities of Market Wizards is that they refuse to give up" (p. 33).  Their resilience comes from a deep belief in the rightness of what they are pursuing:  they see something unique and distinctive in markets and are not willing to walk away from that.  Kullamagi experienced several early setbacks, but retained his confidence and his quest.  

Great traders are intellectual entrepreneurs.  They delve deeply into markets and perceive unique opportunity.  It is the depth and beauty of their vision that provides them with the drive to overcome their learning curves and achieve success in their own, distinctive ways.

======================= 

6/29/2026 - One of the most insightful interviews in the latest Market Wizards book is with Simon Russo, who first became passionately attracted to music and then to financial markets.  Like many of the greats, he blew up multiple times in his early trading development, but retained the sense that "I had learned a lot about how to make money in the markets".  He wrote a letter to his parents explaining his decision to drop out of school and pursue trading.  In that letter, he explained that "It has never been about the money for me; it is about the path of self-discovery and mastery necessary to become proficient" (p. 97).  

Comparing music and trading he told his parents, "That is what attracts me so much to these two areas; you can never master them, and you have to be self-aware to excel at them.  You can't be a sheep or sell out to become a good musician or trader; you have to put in hard work and countless hours to get where you want to be.  And guess what?  Hard work and countless hours are the best part; it's what fires me up" (p. 97).

Later he noted to his parents, "I will not go with a Plan B because I am worried I will fail.  I have learned to accept and even welcome failure because I don't think you can ever truly succeed without failing first" (p. 126).  Jack Schwager quotes Russo, "I love every part of the process, the entire journey, not just the results.  I love studying and doing the research" (p. 129-130).  

What's the key insight here?  Passion comes from mission.  When we find something that speaks to us deeply, it becomes our purpose, our mission.  Quite literally, Russo found two areas that he fell in love with, so that "hard work and countless hours" did not tire or overwhelm him; they fired him up.  A mission is an organizing principle in our lives.  It is what gives us purpose and meaning.  It is what we are meant to do.  An important challenge for those who wish to excel in markets is to find something so meaningful in your trading that it becomes your guiding principle, your mission to develop.  Then the work will give you energy; it will never exhaust you.  

This is what positive trading psychology is all about:  discipline comes from love.  When we fall in love--in any sphere--our effort fuels our passion and our passion fuels our effort.

Unique Applications of Psychology to Markets

 

6/28/2026 - A key element in positive trading psychology is ensuring that your trading process draws upon the values and interests that bring your greatest happiness and fulfillment.  In other words, trading should be an expression of strengths that have already provided you with success, joy, and meaning.  

Here's a personal example:  What gives me the greatest well-being in life are long-term commitments to what I find meaningful:  a romantic relationship; having children; raising my rescue cats; helping people as a psychologist.  Being a significant part of the lives of others is the source of my greatest fulfillment.  

At various times in my life I've tried very active, short-term trading.  It has taken a very short time for me to realize that my passion lies elsewhere.  I enjoy discovering and making good trades, but it feels as though something is missing for me if that's all I'm doing.  

Conversely, I *love* research, finding new things, and sharing them with others.  That brought me to the academic world and is a big part of what is driving my latest market project, which is detecting patterns of breadth and market movement that accompany big trend shifts in the stock market.  That project is so interesting to me that I devote many hours each week creating and analyzing databases covering many years of market activity.  Sharing my findings with others who are equally passionate in their discovery process is tremendously fulfilling.

And applying the research to participate in big market trends is immensely gratifying.  Not because I love trading per se, but because I love discovery, sharing discoveries, and seeing discoveries validated.  It's great to be passionate about trading; also great to be passionate about investing oneself in markets and sharing those investments with others who are immersed in creative discovery.

What makes us most successful and fulfilled in markets is an expression of what makes us successful and fulfilled in life.  

===================  

6/26/2026 - Why is it that top performing traders who lead teams or who describe their "setups" and trading style online--even walking people through their trades--can't produce the same level of success among followers that they have had?  If trading can be boiled down to rules, patterns, and setups, why can't Market Wizard levels of success be replicated?

There is a parallel phenomenon in psychology.  Leading therapists map out their therapy in workbooks and manuals so that patients can overcome their anxiety, depression, etc. using the best practices of best therapists.  The problem is that it doesn't work.  The advice is sound, the exercises are evidence-based, but there is something to live therapy that cannot be replicated in a self-help guide.

And how about simply programming the top traders' setups and letting the computer do the trading?  Or programming the computer to take the role of therapist?  Why doesn't that work as well as live performance?

So much of trading success is based on what people trade, not just how they trade it.  So much of psychotherapy's success is based upon how and when it is applied.  When there is true mentoring, a person learns to replicate not only what the mentor says, but *how* they apply it.  The expertise of the mentor is captured in how they do what they do.  A painter could verbally describe all their strokes and colors, but no one would become a world-class artist by simply listening to such descriptions.

We learn by copying the masters.  We broaden our learning by working with multiple masters.  We develop our own style when we integrate the lessons from those masters.  Trying to learn on our own from books, videos, and websites doesn't work.  If it did, we'd see many more Wizards and masters.  No "trading psychology" can correct the injuries that result from learning a performance field the wrong way.

=======================

6/25/2026 - Professor Ed Diener, in his above quote, points to an important insight from his research:  Happiness is a process.  It is not just an emotional state that we sometimes experience; it is something that we *do*.  Happiness is actually a combination of two emotional states:  joy and fulfillment.  We are truly happy when we are immersed in what we love doing and in what is meaningful to us.  This is why relationships are such powerful vehicles for happiness: they can make us happy and they are deeply meaningful.

Many of our problems occur when we lack happiness in our lives and seek "feel good" activities as a substitute.  That is how we can end up eating and drinking too much, how we can become involved in drugs and other activities that feel good at the time, but are ultimately empty in terms of fulfillment.  What is fulfilling is what speaks to our values: what is most important to us.  It is what speaks to our souls.

Overtrading occurs when we lack fulfillment and turn to trading to fill our voids.  It is not merely a lapse of discipline.  Rather, we are missing something in our lives and are trying to make up for that by engaging in the thrills and profits of trading.  Of course, that ultimately creates losses and an even deeper sense of emptiness.  Conversely, many of the most successful traders I've known work closely with others--often in teams.  They enjoy the challenges of trading, but they also find the rewards of teamwork deeply satisfying.  For them, trading is more than exploiting setups and trade ideas.  It is a way of connecting to the aspirations of others and sharing aspirations with them.

When we read the Market Wizards interviews, it becomes clear that the happiness they find in trading is not only a place; it's a process.  They love to learn, they love to dig for opportunity, they love to learn with others and from others.  Trading, for them, is more than a feel-good activity.  It is a deep expression of who they are.

==================== 

6/24/2026 - In the Positive Trading Psychology book, I go into detail regarding the use of neurofeedback (real time feedback about our brain wave patterns) and its application to trading and trading psychology.  The key idea is that, when we learn to identify the brain wave patterns that accompany focus and good trading, as well as the patterns associated with frustration and impulsivity, we can ensure that we truly only trade when we're "in the zone".

What makes biofeedback especially helpful is that we typically see changes in our brain wave patterns *before* we are consciously aware that we're losing concentration, becoming frustrated, etc.  Once we see that our brain waves are no longer in our zone, we can step back and engage in exercises (such as meditation) that will return our focus.  That is proactive trading psychology:  working on our problem patterns before they actually occur.

I have also used real time heart rate feedback from the Fitbit watch as a way of monitoring calm vs. agitation.  Increased variability in heart rate readings is typically associated with poorer cognitive focus.  This often occurs at times of distraction and frustration, not always connected to markets.  Starting the trading session with a meditation routine can be useful in defusing such frustration.

The smartwatch also measures the quality of sleep each night, which I have found to be correlated with my ability to sustain focus.  These real time readings allow us to adjust our trading to our state, avoiding trading when we are not fully calm and focused.  Real time readings also help us identify what we need to do to start our days in the zone.  For instance, I know that drinking alcohol in the evening leads to lower sleep quality that night, which in turn leads to difficulty in sustaining concentration.  I also have learned that going to bed an hour earlier than usual and waking up earlier leads to better sleep quality and improved productivity in my morning routine.

Traders are like athletes in training.  We are most likely to perform at our peak if we keep our bodies and minds at their peak.  We don't have to wait for FOMO, greed, and fear in order to work on our psychology, and we can improve our psychology even when we're not beset with FOMO, greed, and fear!

==================== 

6/23/2026 - One of the great tragedies in the trading world is that trading psychology has become equated with the psychology of beginning traders, thus focusing on such things as discipline, emotional control, fear, greed, and frustration.  To use the analogy I often turn to as one who teaches at a medical school, it is as if we were to discuss the psychology of the emergency room physician in the terms that apply to beginning medical students.  Of course the beginner in any field has doubts, needs, ambitions, etc. and those can color decision-making.  What makes a professional a true pro is that they have moved beyond those initial self-doubts and concerns and now can focus on the challenges of peak performance.

An area of psychology that applies to the pros is the ability to access intuition in generating trade ideas.  Intuition is implicit or tacit knowledge:  it's what we know, but don't know that we know.  It shows up as gut feelings and flashes of insight.  Intuition comes to us; it's not something we can manufacture upon demand.

There are, however, things we can do to access and activate intuition.  The more things we see, the more things we can connect.  That is why, in the interviews of the Market Wizards, we find that so many of them spend hours and hours reviewing charts and markets.  They are feeding their heads with example after example, confident that intuition will capture the patterns of strength, weakness, reversal, and continuation.  

Because their review is conducted in a state of intense focus, the successful trader is not only seeing more things, but processing them more deeply.  The quality of focus--its sustained intensity--fuels the generation of intuitive insights.  To the outside observer, it simply looks as though the Market Wizard works harder than others.  It's more than that, however.  What makes the magic of a Wizard is how they work--and what that work generates in terms of intuitive learning.

=====================

6/22/2026 - When a psychologist/therapist speaks with a person, the truly important themes emerge when there is a discrepancy between *what* a person says and *how* they say it.  The mood and tone and body language suddenly don't fit with the meaning of the message.  That is the first sign of potential conflict, and it signals an opportunity for the therapy.  Growth occurs when we are physically, emotionally, and cognitively aligned.  That is when we're most open to absorbing new meanings from life and pursuing fresh sources of purpose.  

In markets, trends persist when there is an alignment between the behavior of the parts of the market and the market as a whole.  When the components of an index begin going their own way, that is an early sign that the market sector is losing alignment.  The tide is no longer lifting all boats; the winds are shifting.  Changes occur within the alignment of the market before those changes manifest themselves as clear price reversals and new patterns of movement.  

Listening to the market the way a therapist listens to a client--carefully gauging not only what is happening but how--allows for flexible trading.  Conviction makes convicts:  We become trapped by what we attach ourselves to.  When we listen with an open mind, the subtle shifts in market behavior become clear.  

The meaning of market action lies in *how* it gets from Point A to Point B.

===========================

What We Can Learn From The Market Wizards

 

6/21/2026 - In The New Market Wizards book, Jack Schwager asks Linda Raschke if she's concerned about giving away her trading secrets.  She replies, "I truly feel that I could give away all my secrets and it wouldn't make any difference.  Most people can't control their emotions or follow a system.  Also, most traders wouldn't follow my system, even if I gave them step-by-step instructions, because my approach wouldn't feel right to them" (p. 308).  She advises developing traders to "Start by finding a niche and specializing.  Pick one market or pattern and learn it inside out before expanding your focus" (p. 308-309).  She recommends that new traders *don't* look at charts and instead write down prices every five minutes from open to close and do this for an entire week.  Such immersion fuels pattern recognition--and, from the patterns we perceive, we can develop our own trading styles and methods.

"Only by acting and thinking independently can a trader hope to know when a trade isn't working out", she observes (p. 309).  Jack Schwager observes that "exuberant confidence appears to be one of the essential elements in exceptional achievement as a trader" (p. 310).  This confidence isn't simply a personality trait or the result of positive self talk.  It comes from immersing oneself in markets, discovering patterns that make sense, and "acting and thinking independently".  

The successful trader is an intellectual entrepreneur, studying and studying the market place, finding unique opportunities, and pursuing them with the confidence of one who has truly done their work.

=================== 

6/19/2026 - A fascinating example of Market Wizardry comes from The Next Generation book:  Kristjan Kullamagi.  George Coyle observes, "I found it incredible that Kullamagi achieved such astounding returns while risking 1% of his account on most trades" (p. 29).  On one hand, Kullamagi is "willing to rush headlong into extreme volatility" (p. 28).  On the other, he has a highly structured approach to trading, as noted by Jack Schwager:  "He has precisely three types of setups that he has traded for years and continues to trade.  Each of these setups is well-defined in terms of multiple characteristics..." (p. 30).  The edge here is the willingness to dive into volatile market situations, but in a very structured manner.  

Even so, Schwager observes that most of Kullamagi's trades are losers (p. 31), with only 25-30% of trades being profitable.  His unusual success occurs for two reasons:  1) being in volatile markets, when he wins, he wins big; and 2) his relentless risk management.  Early in his career, he failed multiple times, but "he persevered and ultimately transformed his small $5000 account into tens of millions in profit" (p. 33).  

The various Wizards achieve their results differently, but the combination of unique search for opportunity, rigorous risk management, and perseverance enables each great trader to find their distinctive road to success.  What Wizards don't do is lazily copy others.

=======================   

6/18/2026 - During my years working at SMB Capital, I had the privilege of working with one of the great traders included in the Market Wizards: The Next Generation book.  His name is Kenny Sharkness, but to those at the firm, he's known as Shark.  One of the qualities that Jack Schwager and George Coyle capture about Shark is his "multitasking".  Coyle explains that, "Sharkness succeeded with a trading method that requires such extreme multitasking that it sounds like a recipe for disaster: trading a continually changing list of a score of strategies over multiple timeframes" (p. 288).  Schwager adds, "A key component of Sharkness's success is his constant striving to learn what is working for other traders and then incorporating that knowledge to create new strategies to add to his repertoire of trading approaches" (p. 289).  

One of the ways that Shark achieves this ongoing learning is by journaling his best and worst trades each day and and noting, in detail, what he has done right and wrong.  Schwager observes that Shark's journaling also includes his psychology during his trading "as he notes how his moods affect his trading and vice versa" (p. 290).  

In the past, I've mentioned that one psychological quality distinguishing great portfolio managers is intellectual curiosity.  The research I've conducted at hedge funds suggests that cognitive strengths are every bit as important as emotional ones in terms of trading performance.  Through Shark's interview, we can see this curiosity first hand.  He is constantly learning, which means he is constantly adapting.  

When I first met Shark, what struck me were the number of screens open on his desk.  He literally looked at dozens of stocks over multiple time frames.  Driven by curiosity, he literally saw more opportunities than other traders, which increased the odds of finding really great opportunities.  When Shark began leading a team, that search for opportunity increased manyfold.    

Curiosity drives multitasking.  Multitasking drives learning.  Learning drives greatness.

====================  

6/17/2026 - In the Unknown Market Wizards book, Jack Schwager is interviewed and asked about his three favorite quotes from Wizards.  One of those particularly stood out from a psychological perspective.  Jim Rogers explained, "I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up.  I do nothing in the meantime" (p. 418).  In other words, Rogers doesn't hunt and hunt to find something to trade; his default mode is to "do nothing".  What drives Rogers is clarity.  If the opportunity is not clear and apparent, he doesn't take risk.

A different aspect of clarity is Schwager's favorite quote, which is from Bruce Kovner:  "Know where you will get out before you get in" (p. 416).  If a trader is very clear what would tell him his trade is wrong, then managing risk becomes a straightforward task, not something laden with emotion.

Achieving such clarity requires considerable experience, which is why the paramount priority for developing traders is surviving their learning curves.  When we've seen enough opportunities and understand what would tell us to stay in the trades and what we would need to see to get out, then decisions are no longer tainted with fight or flight reactions.

The great trades come to us as the result of deep pattern recognition.  That is why so many Wizards, in their development, have spent long hours tracking markets.  Not many traders have the inner security and confidence to sit and sit and sit, trusting that the right opportunities will come along.  And not many clearly know and accept what they'll need to do if those opportunities don't work out.

====================  

6/16/2026 - The most recent Market Wizards book, Market Wizards: The Next Generation, contains a number of gems.  In the interview with Lance Breitstein, he is asked whether he was confident he would succeed when he started out.  He replied, "I wasn't confident that I would succeed, but I was highly confident that I would outwork everyone at that firm."  Indeed, he spent hours recording his trading and reviewing key decision points on Sunday.  This extra exposure cemented his ability to recognize patterns in real time.  

For Breitstein, this was not simply experienced as hard work.  Jack Schwager points out "that for Breitstein, trading was like an elaborate game, something fun that he loved to do, just like he loved playing video games as a kid" (p. 80).  There's an important psychological point here.  Lots of traders work hard.  Many work long hours.  What makes the Wizard stand out is working long hours in what is known as the flow state:  being so immersed in what is fun that the learning becomes supercharged and internalized.

This is why many of the Wizards work just as hard when markets are closed as when they're open.  They love the discovery process.  They love the hunt.  They love markets, not just trading.  Those who love trading tend to overtrade.  Those who love markets will learn to master those markets long after trading hours are over.    

======================

6/15/2026 - A surprising percentage of the Market Wizards blew up at some relatively early point in their careers.  They were immersed in markets and aggressive in their pursuit of opportunity and their eagerness and ambition led them over their skis.  What was noteworthy among these expert traders--Paul Tudor Jones in the first Wizard book is a great example--is their resilience and their ability to learn from defeat.  The losses stung, but the successful traders did not allow the losses to define or control them.  They began their comeback in relatively short order.  They did not lose their belief in themselves, and they did not lose their drive to succeed.

Equally important, however, they did not simply return to what they had been doing.  The big loss led them to change their approach to trading in a way that prioritized risk management and avoidance of large losses.  Instead of going for large absolute returns, they focused on solid risk-adjusted returns, where the amounts gained relative to the amounts lost were high.  They redefined success and created a business that was sustainable:  financially and emotionally.

Again and again, we read the words of the Wizards and risk management comes up as a key element of success.  What I find noteworthy as a psychologist is that the high focus on managing loss does not come at the expense of excitement over discovering opportunity.  The Wizard has the unique ability to keep one eye on the horizon of growth and achievement and the other eye on the bottom line.