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?