Monday, June 11, 2018

How Experienced Traders Make Use of Trading Psychology

I recently went through the tweets under the #tradingpsychology hashtag on Twitter.  It was interesting.  The great majority of postings were relevant to beginning traders and pertained to emotions interfering with decision-making.

What are key trading psychology issues that experienced traders deal with?  Here are three that I've recently worked on with portfolio managers and traders:

1)  Teamwork - How to build a team by hiring the right kind of junior professional; how to team up with other experienced traders in a way that offers quality for all; how to get more out of conversations with traders.

2)  Creativity - How to process market information in new and deeper ways to see patterns and relationships that otherwise would go unnoticed.  How to better integrate information at different time frames and/or across different markets.  How to better blend intuition and rigorous analysis.

3)  Self-Development - How to renew energy at the end of difficult days in the market; how to better review one's trading to identify what is and isn't working; how to more rapidly update views and adjust to market changes.

If I had to generalize, I'd say that beginning traders turn to psychology to deal with frustrations.  Experienced traders turn to psychology to hone performance.  At its best, psychology is a tool for learning from experience, not just a salve for emotional wounds.

Further Reading: