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

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The Three Minute Trading Coach Videos

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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
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An Effective Technique for Mastering Trading Stress

A key to understanding trading psychology is the recognition that trading is a performance activity.  Like sports or performing arts, we practice and prepare and then comes the performance event.  It's natural to have some jitters before the big moment and sometimes in the middle of performing.  That is why this form of stress is known as performance anxiety.  There are medications that can be of assistance in extreme cases of performance anxiety, such as beta blockers, but the majority of people can benefit from a simple psychological technique known as stress inoculation.

Inoculation, of course, is when we inject ourselves with a weakened form of a virus and activate our body's immune system.  This then helps us fight active viruses.  In stress inoculation, we use guided imagery and cognitive therapy to anticipate stressful events before they occur--and then to imagine ourselves coping successfully with those.  So, for instance, before a big public speaking event, I might visualize my audience and mentally rehearse the beginning of my talk.  I might follow that visualization with a scenario where audience members seem uninterested in the topic or imagined situations where I lose my place in the talk.  With each stressful situation, I walk myself through how I would handle it.  Like with medical inoculation, this arouses our psychological defenses--our coping abilities--so that we're prepared for difficult situations in real time.

This technique requires regular practice, but can be a regular part of daily preparation for active traders.  We can imagine our position going against us and getting near our stop; we can visualize not getting filled at our desired level; we can imagine negative thoughts that might intrude during the trade; etc.  During each mental scenario, we vividly imagine how--specifically--we would handle the situation.  By the time trading actually begins, we've been there and done that.  It is difficult for frustrations to get the better of us if they cannot surprise us.

In my next post, I'll share how this technique--and other stress management methods--can be integrated into our ongoing development as traders.

Further Reading:

Three Causes of Trading Stress and What to Do About Them

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A Powerful Framework For Improving Your Trading

 

The most recent post pointed out that our trading psychology challenges evolve as we move from being rookie traders to consistently profitable ones.  Newbies wrestle with the challenges--and inevitable frustrations--of learning markets and weathering periods of risk and reward.  Experienced traders look to build businesses and find themselves tackling new learning curves as they branch out to different markets and strategies.  The reality of a trading career is that the progression from startup trader to experienced one is not a linear path.  Because markets are ever-changing, the winning methods that we discovered at one period may lose much of their edge over time.  I've worked with experienced hedge fund managers who have had to remake themselves as their old strategies became overcrowded.  The learning curve of traders is thus more of a spiral than a straight line.  We always go back to learning, but at higher and higher levels.  

Over time, those who can't evolve become extinct.

The really, really good traders I've worked with continually try new things.  They are like business startups and incubators, innovating and uncovering what works.  I found that a good question to ask traders during the hiring process is to ask them to lay out their pipeline of new ideas.  Just as I would want to invest in a company with a large and promising pipeline, so I look to hire traders that are continually developing.

The most powerful framework for improving your trading is to imitate those innovative traders:  Try lots of new things, see what works, and then build on success.  In psychology, this is known as a "solution-focused" framework.  Over time, identify and study what you are doing when you're not having trading problems and when you're not losing money, because the odds are good that--at those times--you're doing something well.  "Do more of what works" is the motto of the solution-focused psychologist.  Whether you're a developing trader or an established one, look for opportunity, try new things to capture that opportunity, and then focus on and do more of what works.  

Quite simply, this is a formula for evolution.  If you cultivate more and more "mutations" of your trading, inevitably you'll find some that are uniquely effective.  A powerful framework for improving your trading is to discover and then do more and more of what you do well.

Further Reading:

Solution-Focused Trading

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Developing a New Trading Psychology

 

It's not well appreciated, but trading psychology is a developmental psychology.  The issues we face as noobs are not the issues we face as experienced traders seeking to be consistently profitable, and those issues are not those we encounter after years of success.  We evolve and our challenges--emotionally and in trading--grow with us.

Yesterday I went through a list of the traders, portfolio managers, and analysts I've met with over the past month.  Almost all are part of teams at very successful hedge funds.  All are managing portfolios of hundreds of millions of dollars if not more.

None spoke to me about FOMO, emotional trading, or issues of discipline or mindset.

None.

Please hear me out:  It's not that those issues are unimportant.  Rather, they are not dominant issues for those who are well along their expertise curves.  For example, beginning medical students are quite nervous about interviewing patients and performing even simple procedures.  Their emotions can interfere with developing a good rapport with patients.  Experienced residents in medicine no longer deal with that kind of nervousness.  They struggle to sort out complex diagnoses and unexpected reactions to treatments.  As they move along the path to expertise, their issues are less about themselves and more about mastering their work.

So it is in trading.

Once we achieve a high degree of self-mastery, our next challenges involve market mastery.  We learn to sort out supply and demand, risk and reward, across different time frames.  We learn to use the movements of other markets to help us understand our market.  Most of all, we learn who we are and what we do best and we become better and better at applying our strengths to our trading.

As beginners, we struggle with the inevitable negative psychology that accompanies risk, reward, and frequent losses.  As experienced traders, we wrestle with our positive psychology and discover who we are and how we perform at our best.

That is why the book I'm writing is about positive trading psychology.  It's about finding our unique, distinctive strengths and applying them to how we process market information and find superior risk/reward opportunities.

Greatness is more than the absence of mediocrity.  

Success is more than the absence of mistakes.

Expertise is more than a positive mindset.

Our challenge is to uncover who we are at our best and leverage that in the marketplace.  As we grow, we move from a focus on negative psychology to one of positive psychology.

Further Reading:

Greatness in Life and Trading

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