Tuesday, November 21, 2023

Building Yourself By Building Your Trading

The common view in trading psychology is that we can work on ourselves and that will help us better weather the ups and downs, risks and rewards, of markets.  Certainly that is true:  as I describe in The Daily Trading Coach book, there are many research-backed techniques in psychology that provide tools for handling stress, uncertainty, overconfidence, and negativity.

A complementary perspective, not as well appreciated, is that by working on our trading, we end up developing our strengths and building our capacity for leading meaningful and purposeful lives.  Indeed, how we work on our trading helps shape our ability to achieve our life's goals.  For example, in cultivating our creativity as traders--training ourselves to perceive opportunities that others typically miss--we become more creative in guiding our lives, from our relationships to our careers.

This raises the important question;  What is the purpose of your trading?  How can our trading provide us with a life P/L and not only financial rewards?  The short answer to this question is that, like a good gymnasium, successful trading pushes us to develop strengths that we don't currently make use of.  Every day, every week in trading challenges us to broaden and build who we are.

Monday's webinar has filled up; I will likely hold another one in the not too distant future.  For those who could not make the webinar, the next TraderFeed post will summarize the main points of the session, as well as topics raised in discussion.  Thanks for your interest!



Friday, November 10, 2023

Developing Spirituality Through Our Trading - Free Webinar

Radical Renewal is an online book written in blog format.  Each blog post is a chapter, covering a topic we rarely consider:  the spirituality of trading.  About a year ago, I wrote a popular post on "Evidence-Based Spirituality", detailing how spiritual practices have been found to boost our emotional and physical well-being.  Still, the concept of trading spirituality almost seems like an oxymoron.  After all, isn't trading about making money?!

We know that emotions can get in the way of trading, but why do rational people suddenly face problems like "tilt" when they are immersed in markets?

The answer that Radical Renewal proposes is that problematic trading comes from the ego.  Successful trading comes from the soul.

So what is the soul?  How can we develop our soul-fullness?  How can we make trading a renewing, fulfilling activity and not an activity that takes over our lives and depletes us?  What does recent research evidence tell us about how we can live lives of fulfillment and meaning?

On Monday, November 27th at 4:15 PM ET after the NYSE close, I will host a free online webinar on the topic of trading spirituality.  We will look very specifically at ways in which we can develop spiritually through our work in financial markets.  Signup info will be following...stay tuned.

A few questions to leave you with:  

*  What are you doing in your trading right now that is making you a better person?  

*  How does your trading benefit your personal relationships?

*  What is so meaningful in your trading processes that you can feel fulfilled even during inevitable periods of drawdown?

I look forward to seeing you soon--


Friday, November 03, 2023

Best Practices in Trading Psychology: Consistency, Innovation, and Balance


Traders I've observed over the years who have achieved consistent success display three important qualities:

1)  They trade with repeatable processes, so that their trades are planned and not reactive.  They have clear, structured ways of generating ideas, and they have clear structured ways of finding optimal expressions of their ideas; sizing positions based on those expressions; and managing the risk of those trades.  What we do repeatedly becomes relatively automatic:  it becomes part of us.  A great way to minimize emotional, reactive trading is to follow trading practices that are well-defined.  If we can capture what we do as a set of rules, we have the makings of a checklist that can guide our decision-making in the heat of the moment.  A huge part of developing as a trader is finding coaches/mentors who can guide you in the discovery of the trading processes best suited for you.  What are your personality strengths?  Your cognitive strengths?  Those will help determine how you generate ideas and manage the trades based on those.  Ideally, the rules and practices that comprise your planned trading are derived from your trading successes, not simply borrowed from others.  

2)  They are always finding new ways to win.  Consider a basketball team.  They practice a range of offensive plays and defensive alignments.  They might run the ball against one opponent; they might move from a zone defense to man-to-man for another.  A big part of coaching is helping a team adapt what they do best to exploit the opponent's vulnerabilities.  Similarly, markets are ever-changing and the drivers of market behavior shift over time.  The best traders evolve.  The goal is not simply to find a trade an "edge", but to exploit ever-changing edges in dynamic markets.  The best traders will explore and research, just like any successful company that conducts R&D to meet the needs of a changing marketplace.  Successful traders will push the comfort zone and look for advantages over time frames, markets, and strategies that are unfamiliar.  If we're not challenging and scaring ourselves periodically, we're not growing.  

3)  They achieve a balance between work and life.  Over the years, I've seen many successful traders burn out.  Their burnout is not necessarily limited to their trading; they sometimes blow up in their relationships or in their physical health.  It's romantic to think about work as our passion and being involved day and night in our quest for success, but that is not what makes for a sustained, successful career.  The goal is to find a lifestyle that sustains energy and passion over time.  That lifestyle typically includes activities for physical well-being and the emotional well-being of relationships.  It is not clear to me that we can sustain our love for markets and trading if we cannot sustain love in our lives.  It is not clear that we can sustain our energy and passion for trading if we cannot sustain physical energy in our lives.  An Olympic athlete knows the importance of staying in peak conditioning as part of training and preparing for success.  Each of us needs to find the peak conditioning in our lives that can sustain our best efforts in markets.

Approaching our trading in the right way is the best way to cultivate a positive trading psychology.  It's not that you'll magically trade better if you're in a better frame of mind.  Rather, you'll be in your optimal mindset when you approach trading the right way.  

Develop routines based on your strengths.  Push the boundaries in finding fresh opportunity.  Live a full life that maximizes your energy and mindset.  Identify what you do that is truly great and build upon that.  You are not meant for a life of mediocrity.  Have the vision to dream and the practical sense to pursue that dream, step by step.

Further Reading: