Techniques for Mastering Our Trading Psychology

 

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9/4/2026 - We can learn so much about mastering our trading psychology by studying those who have already achieved such mastery.  Study the masters and you will learn about mastery.

Market Wizard Mark Minervini writes "Those who choose to win seek successful role models, develop a road map for success, and accept setbacks as valuable teachers.  They put a plan into action, learn from their results, and make adjustments until they achieve victory...Champions don't leave greatness to chance.  They decide that they are going to be winners, and they live each day with that goal in focus" (Think and Trade Like a Champion, 2017, p. 3).

Again and again in the accounts of the Market Wizards we encounter the idea that thinking like a champion precedes trading like a champion.  This is much more than eliminating negative thinking; it is living each day in a champion mindset.  In Market Wizards:  The Next Generation by Jack Schwager and George Coyle, Wizard Lance Breitstein described his attitude when joining the trading firm Trillium:  "I wasn't confident that I would succeed, but I was highly confident that I would outwork everyone at that firm.  That was the only thing that I had no doubt about" (p. 42).  Speaking of her training to eventually win a bodybuilding contest, Wizard Linda Raschke explains, "To start, there must be a robust methodology used to build a foundation, and this has to be applied CONSISTENTLY" (Trading Sardines, 2018, p. 197).  

What we learn from studying successful traders is that success is a function of commitment.  Before Olympians become champions, they must be wholly committed to winning their medals--and then bring that commitment to each day's preparation.  Dr. Ari Kiev, in The Mental Strategies of Top Traders (2010), quotes the Scottish Himalayan expedition leader W. H. Murray: "...the moment one definitely commits oneself, then Providence moves too.  All sorts of things occur to help one that would never otherwise have occurred...Whatever you can do, or dream you can, begin it.  Boldness has genius, power and magic in it" (p. 29).  

Extraordinary success begins with extraordinary commitment.

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9/3/2026 - In her book Trading Sardines, Market Wizard Linda Raschke points out that "Traders are always looking for the secrets.  Strategies, indicators, algorithms, anything to make money.  Most do not recognize the hard work it takes to do research and development" (p. 304).  During her development "all lessons were learned the hard way" (p. 52).  She succeeded in part because she had learned the discipline to play the piano for hours a day from childhood through adulthood.  Piano mastery required the ability to practice, practice, practice and work on the execution of each chord, each phrase.  That same mastery process--and that intense drive for mastery--is what we see among those who sustain success in markets.  Later in life, Raschke decided to take up bodybuilding and intensively worked on exercise and diet to eventually win a competition.  She had mastered the process of mastery.

Only a vision of success and a passion for self-improvement can sustain the efforts needed for elite performance in the markets.  The most powerful technique for mastering our trading psychology is the ability to tap into a personal vision that so speaks to you that it organizes your life and your efforts.  When every setback is a step forward in learning and mastery, then even losses can give us energy.  Great competitors love to compete, they love to win, but most of all they have a passionate drive for self-improvement.

What do you want to do well?  Really well?  So well, that you're willing to go all in to reach your goals?

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9/2/2026 - Our reactions to markets are a function of our self-talk.  How we process market events determines how we respond to them.  If we process a losing trade by criticizing and blaming ourselves, of course we'll feel like a loser.  If we process a winning trade by puffing ourselves up, of course we'll take too much risk going forward.  If we process a quiet, low-volatility market as boring and a threat to our desire to make money, of course we'll overtrade.

Every practice trading session in which we review/replay markets is an opportunity to rehearse the right kind of self-talk.  For the successful trader, that self-talk is about the market and the patterns showing up in market movement.  Every market tells a story...we look at how markets are moving together or separately and we can detect themes.  Understanding those themes points us to promising trades.  When our self-talk is about those themes, we reinforce a sense of mastery.  

A racecar driver needs to focus on the surrounding cars and the state of his automobile to know when to pass, when to slow down, when to make a pit stop, etc.  If the racecar driver is filled with thoughts and feelings of winning and losing, the distraction will inevitably lead to poor decisions.  How we talk to ourselves shapes how we feel about what we do--and ultimately what we do.

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9/1/2026 - Dr. Ari Kiev, in his book Trading to Win, points out that "When you trade from commitment--and do what you said you would do--you generate an extraordinary amount of energy.  You begin to see opportunities in the market that you couldn't see earlier" (p. 18).  He also explains that "Commitment to a specific objective is the most critical dimension of trading to win since it provides more of the focus and energy than any other single factor" (p. 94).

Notice that Dr. Kiev talks about goals in terms of "commitments".  A goal is not just something we write down and hope for.  It is the north star of all our performance efforts, because it is our "focus".  Having that positive focus allows our commitment to give us energy.  A goal is meaningless if it is not inspiring.

An alcoholic may express the desire and intention to no drink, but when he hits bottom and sees that he *must* change, then his intention becomes a commitment.  In the AA world, such a person may commit to 90 meetings in 90 days, building a community around the commitment and creating a daily focus.  Dr. Kiev points out that goals that are commitments are what inspires and guides Olympic athletes: every workout becomes a step in the realization of an ideal.

Many traders focus on how much money they want to make, how they want to control their emotions, how they want to find the next big move in markets--but they lack an overarching vision of the future.  That vision has to be lived out each day to bring it to reality and to energize our efforts even in the face of a drawdown.  Dr. Kiev teaches that "You create the future by speaking it and then living in terms of what you said...you create yourself by committing to a vision and then becoming the living embodiment of that vision" (p. 247).  

The ideal trading psychology is visionary *and* living that vision each day.

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8/31/2026 - Stress and anxiety are responses to perceived threat.  Our bodies are mobilizing in their "flight or fight" mode to cope with the danger that we sense.  Once we're in that fight or flight mode, blood flow shifts from our frontal cortex (our brain regions of thinking/reasoning) to our motor regions (mobilizing our response to threat).  If it ever seems as though you do things in the heat of the moment that you would normally never do, this is the reason why.  Quite literally, you're not in your right mind!

This is why it's essential to work on our trading in ways that do not trigger perceptions of threat.  If we take risk before we've properly trained ourselves or if we take more risk that we can truly absorb, then we will experience stress and anxiety as normal, natural responses to the perceived danger.  Learning trading and making all our mistakes when we're taking minimal risk--and while we're focused (see yesterday's post)--trains us to maintain our best problem-solving when we most need it.

Once we enter that fight or flight mode, the best thing we can do is pull back from the screens and return our mindsets to their proper focus.  The rule here is to only engage markets when we are able to process information optimally.  A best practice of taking time outs and using that time to calm ourselves with deep, rhythmical breathing--and then returning to markets with modest risk can be cultivated into a habit pattern.  "Above all else, do no harm" is the physician's creed.  The goal is not to trade.  It's to trade when we perceive opportunity--and when we're in a proper mindset to pounce on that opportunity!

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8/30/2026 - Many traders identify emotion as the key enemy to trading success.  Emotion, however, is just one manifestation of a larger trading challenge:  focus.  Successful traders are able to achieve a laser focus on markets--and they are able to sustain that focus throughout their trading.  Building our capacity for focus is one of the most important things we can do to achieve trading success.

When we are fully focused, we see more in markets.  We see more detail, and we see more context.  In an earlier post, I distinguished three facets of focus:  1) intensity of focus; 2) flexibility of focus; and 3) sustainability of focus.  In other words, we want to zoom in on what is important, shift our attention to view the context of what is important, and maintain this process without undue distraction.  Many, many times, emotional disruptions of trading occur when we first lose our concentration.  The emotions are the result of the problem, not the primary problem themselves.

It is better to trade only part of the trading day with full focus than attempt to trade the entire day with distractions.  Indeed, we build our focus muscles when we practice trading and review and replay market action.  As I point out in the Positive Trading Psychology book, we can monitor our heart rate and brain waves in real time to actually see how calm and focused we are.  We can also practice meditative techniques with these same monitors to directly work on achieving and sustaining focus.  Indeed, performing meditation prior to market sessions is a great way to prepare ourselves for the trading day.

Focus is our magnifying glass.  We can turn every trading session and every review into an exercise in sustained concentration.  Our great trading enemy is not emotion.  It is distraction.

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8/28/2026 - We have to lose many times before we internalize the resilience to know that we have what it takes to succeed.  If each loss is a learning lesson that we review in intensive detail and burn into our brains, then we have moved forward in our development even as we step back in our P/L.  It's necessary to bounce back many times before we truly know that nothing can keep us down.  Confidence doesn't come from positive thinking.  It comes from overcoming loss, again and again.

In his book Best Loser Wins, Tom Hougaard points out that "An elite soldier is scared to death the first time he is in a combat situation.  That is why his first combat situation will be a simulation.  And the next one.  And the next one.  And little by little, his fear is trained out of him, through the use of repetition, breathing awareness, and habituation" (p. 37). 

We start by trading in simulation mode or very small.  We lose.  We jump at the opportunity to learn from the loss:  learn how to better enter and exit, how to better identify opportunities.  We lose again.  We again jump at the opportunity.  As we start to win, we get a little bigger.  We lose.  We delve into learning from the losses.  Again and again.  Soon, as Hougaard notes, our fear is trained out of us.  It's not that we're confident that each trade will be a winner.  We're confident that our development will win even when we lose.  We know that our development will win *because* of what we will do when we lose.  Turning losses into learning is perhaps the most important trading psychology technique.  The intensity and repetition of our learning is directly responsible for its impact on our mindset.

  

How Well Do You Coach Your Own Trading Performance?

 

8/19/2026 - An important test of how well we coach ourselves is how we respond to losing periods in markets.  The book Best Loser Wins is very important in this regard.  The subtitle of that text reads:  "Why Normal Thinking Never Wins the Trading Game".  Normal thinking avoids pain and avoids loss.  It's normal to hang onto trades that go against us, not wanting to lock in a loss.  When we examine the trading of the best traders, however, we find that they are very good at losing.  When they see that their ideas aren't working, they're quick to exit and limit their losses.  When those ideas do work, they're quick to take profits on a portion of their position but also willing to let the rest of the trade run--and perhaps even add to the position.  The result is that the average size of their winning trades far exceeds the average size of the losers.  Ironically, the best losers end up becoming the greatest winners.

Where self-coaching comes in is that the best traders not only endure losses, but actively *learn* from them.  If a well-researched idea isn't playing out in price action, something else is going on.  That something else is a market driver and will trap unaware participants.  For instance, perhaps the stock market is not reacting as usual to growth news because commodities, especially oil, and yields are on the rise, suggesting an inflationary environment.  The losing trade quickly stimulates a fresh look at markets and often a new, promising trade.  The loss was a price paid for learning and can result in a much larger profit.

In short, the mindset of the successful trader is not so much positive or negative as it is resilient.  When we coach ourselves to find opportunity following losses, we exercise that resilience.

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8/18/2026 - In the last post, we looked at how relative volume provides important information for understanding market movement and planning our trades.  Because volume is so highly correlated with volatility (+.66 during 2026), tracking volume in real time can help us anticipate likely movement and thoughtfully establish targets for our trades.

Yet another facet of the market microsystem that helps us coach our own trading is how market components are moving concurrently with the overall market.  If we're trading stock index futures, for example, and we see the market break out of a range higher, we want to quickly look at the NYSE TICK and see how many stocks are ticking higher (i.e., lifting offers) on the move.  That tells us a great deal about the breadth of buying interest.  We also want to glance how various market sectors are behaving on the breakout.  Is this a broad move higher, likely reflecting a trend, or is this rotational action impacting some sectors and not others?  

Finally, we want to see how other markets are trading at the time our market is breaking from its range.  Is the move occurring in asset classes other than stocks, such as interest rates and currencies, or is this an idiosyncratic move specific to equities?  If it's a broad move across asset classes, this can be a great signal that large institutions are deploying capital across macro themes--a development which should help price movement persist.

Who is in the market helps determine how the market moves.  A good coach, like a good football quarterback, sees the entire field and calls plays based on what they see.  A great deal of trading failure occurs when we get run over by the big picture that we never see.

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8/17/2026 - The previous post suggested that every market exists within an ecosystem and that successful trading of a market requires an understanding of that ecosystem.  We can think of price action and volume as the market's "text".  The ecosystem is what surrounds and determines price and volume behavior:  the "context".  Understanding--and genuine conviction--occurs when we can place the market's text in proper context.

Let's say that we are trading the SPX Index via SPY or stock index futures.  The first piece of context is how the market is trading compared with how it has typically traded *at that time of day*.  So, for instance, is volume at today's opening bars significantly higher, lower, or similar to typical volume during those bars over the past month or so?  *Who* is in the market determines how much the market can move and how it is likely to move.  Who is in the market also tells you who you are trading against, and that tells you how the market is likely to move.

A simple exercise is to identify the best couple of trading opportunities each day over an extended period of time and then check out those opportunities as a function of the market volume traded on each occasion.  You'll see that the ideal "setups" occur differently when you're trading in markets dominated by institutions and those dominated by smaller participants.  Developing traders who don't understand context won't realize why the patterns that had been working for them now aren't working.  They'll become frustrated, and that will hurt their trading.  But the problem is not predominantly psychological.  It's a failure to understand market context.

More to come.

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8/16/2026 - So what does trading have in common with photography and how is that relevant to coaching our own trading performance?  The above photo of a bee eating and pollinating a flower was sent to me by Dr. Corinne Masur, a psychology colleague and an accomplished photographer.  It's a beautiful picture of a beautiful act:  the bee feeds from the nectar, while pollen sticks to its body.  When the bee moves to another plant for eating, the pollen falls off onto the new flower, enabling the new plant to grow and flourish.  The bees and flowers thus live in a mutually beneficial ecosystem.  Understanding the bee requires an appreciation of that ecosystem.

When Dr. Masur described what it takes to capture such a beautiful photo, she said that it requires the ability to stand in one spot for a long period of time.  That immediately made sense to me.  The perfect shot doesn't just suddenly appear.  The photographer sees a promising opportunity and waits for the right shot, framing it to capture the subject and its surroundings.

Great traders have a detailed understanding of an ideal market situation to exploit, from the big picture to the moment-to-moment activity.  They then have "the ability to stand in one spot for a long period of time", patiently waiting for phenomenal reward relative to risk.  Those are the opportunities to size up, and they don't come along all the time.  Trading without the ability to stand in one spot--and the knowledge of what to look for across time frames--*is* overtrading.

What many traders don't understand is that each market exists within an ecosystem.  It's understanding that ecosystem that that helps us trade the opportunity properly.  Simply looking at price bars and chart data misses the ecosystem.  It would be like looking at the bee and missing the flower.  The next post will explain how to coach ourselves to identify market ecosystems.

This post is written in honor of Victor Niederhoffer, who understood nature and ecosystems and their relationship to markets.

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8/14/2026 - It's often assumed that the role of trading psychology is to help us follow our plans and execute our setups.  That is not how experienced traders and portfolio managers coach themselves.

Consider a basketball team preparing for an important game against a talented rival.  A significant amount of time is spent watching game films, stopping the films at key points, and learning lessons from those occasions.  It is those lessons that are then practiced on the court, building awareness and skills that can take advantage of the rival's weaknesses.

For instance, the films might show that the opposing team is slow to rotate their zone defense when the ball is passed cross court.  This sets up open jump shots from the perimeter.  In practice, then, the team will rehearse rapid cross court passing to take advantage of the opponent's slow adaptation.  

How does this relate to markets?  The market is the opponent, and the "films" we review are how the market has recently traded.  We track volume/volatility; we track which markets have been correlated with our market; and we track which sectors of the market have been strongest and weakest.  We then identify opportunities that have appeared in these recent markets and how we can best take advantage of them.  Our practice is rehearsing how we'll trade patterns that are likely to recur in today's trade.

But what if today's market trades differently from recent markets due to news and/or impacts of other markets?  That's when we call a timeout and quickly adapt by *not* following our previous plans and by seeing--in real time--how opportunities are setting up.  We may even be able to identify markets from the past that have traded similarly and reviewed how we successfully traded them.

In other words, self-coaching sometimes means intentionally not following our plans in order to adapt to new/different market conditions.  Self-coaching is preparation and training, and sometimes that means making real time changes in what we do and how we do it.

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8/13/2026 - We are always coaching ourselves.  Some of us do it in a conscious, planned fashion and others do it randomly.  Our self-talk *is* our self-coaching.  We are always talking to ourselves about what we're doing, what we have done, and what we should do.  That internal voice is the coach within us.

That is why it's a great test to ask ourselves:  Would I want someone else to talk to me the way I speak to myself?  Would I speak to a good friend or colleague the way I speak to myself?  If the answers to these questions are no, then it's likely that our self-talk (our self-coaching) is sabotaging us.

The reality is that informed, constructive self-talk, like informed, constructive trading, is something that has to be learned, practiced, and cultivated.  We need to work on our self-coaching every bit as much as we work on our trading, because we're looking for mastery in both domains.  

Yes, we can hire trading coaches and we can sit on trading floors and listen to team leaders and managers guide us.  But if we simply rely on others as our coaches, we won't necessarily learn the skills and develop the tools for effectively coaching ourselves.  It starts with the quality of our self-talk and whether we're challenging and inspiring ourselves or draining ourselves of vital motivation.

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8/12/2026 - Why aren't we more successful in coaching ourselves to success?  As noted below, structure is vital.  If our coaching is irregular or if it's a mere add-on to our day's activity--something to get over and done--then it can't truly be internalized to change who we are and what we do.  A great question is whether we review our trading/performance with the same intensity that we follow and trade markets.  When we read about the Market Wizards, it becomes clear that they study markets and performance for long, intensive hours.  That helps them internalize what they learn.

But another reason self-coaching is not successful is that it leaves out a key dimension of learning:  emotion.  If we look at successful coaches in sports and performance fields, they don't simply go over performance in rote, routine ways with performers.  They motivate.  They push for more and more, better and better.  Think of locker room talks by basketball and football coaches.  Think of the coaching of Olympic stars.  The role of the coach is to inspire greater and greater performance.

How well do you inspire yourself in your self-coaching?  How well do you motivate yourself?  If your reviewing and planning are emotionless, routine processes, can they really push you to greater and greater achievement?

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8/11/2026 - Every trader is their own coach:  how we talk to ourselves and how we spend time previewing and reviewing markets *is* our self-coaching.  A worthwhile question to ask is:  If we coached a new trader in the way we coach ourselves, how well would they develop?  Alternatively, if we coached someone in the gym the way we coach our own trading, how well would they develop?  Many traders are far too informal in their self-coaching, so that they never truly challenge themselves and grow.

The first dimension of successful self-coaching is structure.  We don't hesitate to structure our trade ideas, spelling out entries, exits, sizing criteria, etc.  But how well do we structure our own coaching?  What kind of notes do we take before trading starts, during trading, and after?  How do we draw upon these notes to identify what we saw well and what we missed?  How do we review the trades that we took to see how well we could improve what we did?  How do we turn that review into action plans for the next day?

Look at workouts and practice sessions among sports teams or after action reviews by military squads.  There is nothing informal about it.  There is structure and there is purpose.  Everything is geared to improve performance going forward.  The coaching is motivational:  sometimes encouraging, sometimes a kick in the behind.  But there is always structure, going over performance in detail to highlight what we do well and what we could do better.    

Strengthening Your Trading By Leveraging Your Strengths

 

12/12/2025 - The subtitle of my book that will be coming out in late February is important:  Turning personal strengths into trading strengths.  We come to markets with talents, skills, and experience.  The challenge of developing as a trader is figuring out how to apply those to the various facets of trading process, from generating ideas to managing risk.  As noted below, your success as a trader will come from what energizes and excites you:  your passion will point the way to your purpose.  There is so, so much more to trading psychology than overcoming negative emotions.

Research in psychology suggests that there are four major sources of psychological well-being:  happiness (things we do that are enjoyable); purpose (things that we do that are meaningful); energy (things we do that build our vitality, strength, and endurance; and affection (things we do that connect us to others we care about).  The activities that provide our greatest success fire on all four of these cylinders.  Our challenge is to structure our trading--and the time of each day--to maximize the things that bring us joy, meaning, vitality, and closeness.

One of the strengths my research found is most closely associated with trading success is entrepreneurialism.  Great traders treat their trading as a start-up business, and they have the energy, enthusiasm, and passion that great entrepreneurs bring to their undertakings.  That is positive trading psychology--        

12/11/2025 - What we are passionate about reveals our strengths, and those reveal our values and our talents.  We don't have to push ourselves to get things done if what we're doing truly speaks to us.  Yes, there are always life's errands and to-do activities to get out of the way, but if we're looking forward to what comes after, it's never a problem to check the boxes.  Many beginning traders are passionate about making money, but that's different from being passionate about trading and understanding markets.  If those traders don't make money, they are left with nothing to support them emotionally.  They become frustrated, and that seeps into their trading.  When we identify our passions and our strengths, then we're in a position to creatively integrate those into our trading processes.  A great place to be psychologically is to be passionately involved and interested in markets even when we're not putting positions on.

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12/10/2025 - What is the most important strength for beginning and developing traders?  Certainly high up on the list is emotional self-awareness:  the ability to recognize what you're experiencing at the time you're experiencing it.  This is useful in two regards:  1) it gives us the option to step back from trading when we're frustrated or confused, so that our trading does not become reactive; and 2) it allows us to more clearly recognize our intuition when we see patterns occurring in real time.  In other words, emotional self-awareness is what enables us to avoid poor trading that results from acting on impulse, but it also makes it possible to better perceive opportunity in real time.

Emotional self-awareness is possible to practice in any area of life where emotions can get us in trouble--or where they could help us respond to challenges constructively.  A great example of this is close relationships.  By avoiding reactive responding due to frustration, hurt, or overload, we can step back and deal with misunderstandings in a helpful way.  By recognizing our partner's needs in real time and empathizing with those, we can become better at reaching out and growing our closeness.

Everything in life that engages our emotions can be practice for emotional self awareness and control in our trading.  How we live either reinforces the best within us, or it reinforces our vulnerabilities.  Trading psychology is best worked on when it draws upon life psychology.

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12/9/2025 - What have been your best trades--and best trading periods--of 2025?  From generating the trade idea to expressing it, sizing it, and managing its risk, identify *specifically* what you did well in these best trades.  Very often, it is in analyzing our best trading that we can identify the cognitive and emotional strengths that contribute to our success.  For instance, a while back I analyzed my profitability as a function of time of day (since most of my trading was intraday).  Very early in the morning right after the NYSE open, I did poorly.  Later in the morning, I did quite well.  Around noon and midday, I was mediocre.  

What led to my success was patience and listening carefully to the market and understand who was involved and how--and *then* placing my trades.  I was successful only when listening--and I was specifically listening well during busy periods, because I could track the activity of the larger market participants.  Because of years of work as a trading coach, I understood large traders and their behavior patterns--and I was successful when I drew on that awareness.  When I simply tried to trade market patterns on my own, my results were basically random.

The point here is to dig deep into your best trading and figure out what makes you tick when you're successful.  The goal is not to be like anyone else; it's to be more and more like yourself at your best.

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12/9/2025 - Tomorrow's free webinar at 4:15 PM ET will focus on assessing your strengths and applying them to your trading. Registration will close by the end of the trading day today.

What are your relationship strengths?  What do you do best as a spouse, as a friend, as a family member?  How are you able to grow your connections with people at your work and in your community?  What makes you successful in collaborating with other traders?

This blog has covered the topic of teamwork and the value of being part of a trading group/pod/community.  But how can you best help others and best receive help yourself?  By drawing upon your relationship strengths, you can teach others (and thereby reinforce your own learning) and you can learn from others (and refine/broaden your trading).  

Your strengths as a person are the foundation for your growth as a trader.  

See you tomorrow!

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12/8/2025 - As we get to the end of the year, many traders reflect on the year past and formulate goals for the year ahead.  An important concept in psychological research is that much of our growth comes, not from our top, "signature" strengths, but from expanding and developing what are called our "latent" strengths.  These are areas where we excel, but don't necessarily know we excel and so we don't consciously draw upon them during times of challenge.  We can think of these as relatively "hidden" strengths.  Perhaps they show up only occasionally in life or in a limited number of life circumstances.  They *are* strengths, however, and we can cultivate them to further our development.

My signature (top) strengths include a drive to learn and achieve.  If you were to ask those I live with, however (especially my cats!), they would say that my ability to listen and understand others are some of my best qualities.  Indeed, those have long driven my work as a psychologist.  In pursuing trading, however, I've only recently worked on ways of becoming a better listener of markets:  breaking down the market into components (sectors, subsectors) and hearing the (often unique) story each part of the market is telling.  Getting inside the market and truly listening has opened insights that I had missed despite my work ethic.

What areas of strength might be relatively hidden in your life that could take your trading to the next level in 2026?  How could you exercise those areas, so that your latent strengths get even stronger?  Very often, looking to areas of life very different from trading can alert you to what you do well that could creatively be imported into your trading processes.

In the upcoming free Wednesday afternoon webinar (December 10th; 4:15 PM ET), we'll not only evaluate your strengths, but also identify your latent strengths and discuss ways of growing them.    

Let's make the new year a year of new growth!

    

The Power of Asking New Questions

 

9/24/2025  - On my cat site, I just described a learning lesson from our most recent family addition, Nomi Lyn.  What I suggested is that the best way to raise a kitten is very similar to the Montessori approach to education:  Expose them to lots of different materials, activities, foods, etc. and discover who they are by observing what they gravitate to and how they make use of their environment.  

But, wait.  What if we trained traders that way?  Instead of expecting them to follow a preset curriculum/guru, what if we exposed them to many markets, many ways of trading, many time frames, and many role models?  What if traders spent an extended time playing with markets in order to discover where they excelled and what spoke to them?

Could it be that much of the frustration newer traders experience in markets is because they're trying to fit a mold promoted by others rather than take the time to learn where their talents and passions truly lie?  What might a Montessori education for traders look like?  Perhaps what makes cats flourish is not so different from what nurtures our own development.

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9/23/2025 - Suppose the title of this post was "The Power of Asking Now Questions".  What questions are you meant to be asking in the here-and-now:  at each phase of the trading process?  What questions are you meant to be asking at the start, middle, and end of each day?  Each week?  The purpose of now questions is to align ourselves with our life's priorities, including our own best trading practices.  We can best view opportunities--in life and in markets--if we re-view what we've done and connect with our goals and priorities going forward.  We can't act impulsively or on habit if we're consciously asking ourselves now questions.  The greatest challenge of trading psychology is not the presence of emotion, but the absence of self-awareness.  How can we reach personal goals if we are not setting those in front of ourselves regularly?

One of my best practices is to use real time brain wave biofeedback to enter a highly focused zone and, in that state, review my priorities going forward.  By training the brain for focus and using the focused state to rehearse goals, we create a situation in which our best trading becomes anchored to our best states.  This is known as state-dependent learning.  Connecting to our now questions--and our now answers--every time we calm and focus ourselves allows us to control our trading by controlling our mental and physical states.

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9/22/2025 - Back when I was teaching full time at the medical school in Syracuse, I came across an interesting study about what distinguishes the most successful scientific researchers.  One of the conclusions was that the best investigators were great "question finders".  It wasn't just that they came up with new discoveries.  They asked better questions and those led to the discoveries.  

I believe this applies to trading success as well.  For example, a trader may have flat performance for a while and conclude that they're not trading well.  A trader better at "question finding" will view the flat performance as a mixture of good trading and not-so-good trading.  They will then drill down to the ideas they're trading, the ways in which they are expressing those ideas, the sizing of their trades; their timing in trading those ideas with entries/exits; etc. to find out what they're doing really well and what they need to improve.  

Viewing flat performance of a sector ETF or a stock index as a blend of bullish and bearish components is a similar kind of reasoning.  One trader sees a flattish stock market and sees no opportunity.  Another trader looks at sector performance and the behavior of various market factors (such as small cap/large cap; growth/value) and sees that the flat overall market masks meaningful moves in the components.  Question finding for the trader is looking beneath the surface to see what is moving most--and what is moving most reliably.  A smart trader looks for movement; a really smart trader looks for the consistency of the movement (Sharpe ratio).

The best traders ask more and better questions.

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9/21/2025 - Fresh questions can open the door to new answers and opportunities.  

No trading edge ever came from consensus thinking.

What if how sectors and subsectors rotate anticipates how broad indexes will trend?  What if some of the most important information is not just price and volume, but the price of one asset relative to another?  What if absolute value begins with relative value?

We look for direction on the chart of an asset when it's the lack of direction that alerts us to relative movement within that asset.

What if the most reliable moves occur at time frames higher than the ones we watch?

Are we trading to make money, or are we watching markets to trade?

What if our best trading comes from following multiple, independent positions over longer time frames and not from piling into short-term trades of individual positions?

What if we're focused on playing the game better when there's a better game we should be playing?

What if better trading doesn't come from better trading psychology?  What if a better psychology comes from trading what we see and understand best--and what provides the greatest opportunity?

New questions can take us to new places.

I long ago found that adopting the cat no one wants and no one is looking at provides the greatest opportunity.  Markets are not so different--

How You Know You're Trading Well

 

8/15/2025 - Eight questions to assess whether you are trading well:

1)  Does your trading give you energy, challenge, and excite you or does it leave you drained and frustrated?

2)  What is one significant way in which you have grown in your trading over the course of this year?

3)  What is the one way you could most improve your trading and how are you working on that each trading session?

4)  How many people can you identify whose trading you are making better on a regular basis?

5)  How many people can you identify who are making your trading better on a regular basis?

6)  What have you learned this month from your greatest trading mistake?

7)  What have you learned this month from your greatest trading success?

8)  So far this year, what is your Sharpe ratio?  How does the average size of your winning trades compare with the average size of your losing trades?  What is your hit ratio (number of winning trades compared with number of losing trades)?  What are you doing--specifically--to improve your performance stats?  Can you truly expect to improve if you don't take the time/effort to keep score?

8/14/2025 - You know you're trading well when you can trace a clear evolution in what you do and how you do it.  Any great business evolves; it's not the same from one year to the next, one decade to the next.  They develop new products and services to replace older ones; they expand distribution; they make manufacturing more efficient; they offer new and different services to customers.  Great businesses keep score and know where they're performing well and where they are lagging.  

You're trading well when you develop new processes for generating ideas; an expanded range of ways for managing positions and risk; new markets and instruments to master.  The great trader spends as much time and energy on self-mastery as on market mastery, because success hinges on both.

8/14/2025 - You know you're trading well when you do a great job of being wrong.  The key question is, "How good are you at losing money?"  For talented directional traders, I've consistently found that win rates are not all that far from 50%.  Where those traders excel is in structuring trades to limit losses and allow for the possibility of large wins.  They don't just go long or short; they wait for flows to show them that the moves are happening *now* and then structure a trade with great reward relative to risk.  Then, if they're stopped out, they have plenty of dry powder and can step back and reassess their views.  Very often, a sound trade idea that doesn't work is telling you something about your market and can lead to an opportunity in the other direction.  Trading well means trading with an open mind and allowing losses to provide you with important information.  Trading well is trading flexibly, not with a fixed view and mindset.

Note that every trade is not only a view of direction, but also a view of volatility.  Where we take profits and let profits run captures our underlying view of how much the market is likely to move on our time frame.  Many times, traders focus on direction, not so much on vol.  You know you're trading well when you not only anticipation the direction of movement, but the extent of movement.  Trading well is trading with awareness, taking lessons away from winning trades and losing ones. 

8/13/2025 - How often are you in the "flow state" when you're trading?  In the flow state, we see markets differently and see things that we miss when we're not optimally focused.  If you're trying to find things to trade and attempting to not miss out, you're surely not in a flow state.  In flow, we are so focused on what we're seeing that opportunities come to us.  The patterns that we've reviewed and traded stand out when our minds are clear.  It is for this reason that it's a mistake to try to substitute positive thinking for negative thinking.  The best trading mindset is one in which we turn off our self talk so that ideas can come to us.  A great frontier for trading psychology is training our brains to stay in flow.  If we are scattered in our daily lives, can we expect to be focused in our trading?      

8/12/2025 - The quote from Rolf at Tradeciety captures an important dynamic.  The need to make money keeps us focused on short-term performance.  A desire for mastery keeps us focused on longer-term growth.  We know we're trading well when we are actively studying our performance as well as markets, taking away some learning--some important lessons--each day.  Here's a great psychological test:  If trading exhausts you, you know that you're a victim of the ups and downs of P/L and the need to make money.  If trading inspires you, you know that you're tapped into your growth as a trader.  Traders in professional settings are typically organized in teams, and they typically reach beyond their teams to connect with others, share views, and engage in mutual learning and development.  Great trading gives us energy.  Great trading processes immerse us in what we do well and what is meaningful to us.  We know we're trading well when trading is a platform for developing the best of who we are.

Why Do I Go On Tilt?

 

7/24/2025 - A wild thought:  What if we're in different brain states when we recognize opportunity setting up in markets vs. when we are focused on markets but don't see opportunity vs. when we're not focused on markets.  What if we could monitor our brain states in real time and identify not only when we're in the zone, but also when we're seeing opportunity?  Does intuition leave a distinct brain footprint?  That's my next project--  

7/23/2025 - On the Fitbit device that I use (Muse S-Athena), there is an exercise on the app in which the goal is to keep an owl in flight.  If blood flow is going to the brain's frontal cortex, the owl rises in elevation and flies faster.  If blood flow is moving away from the frontal cortex (our center of thought/reasoning/decision making), the owl lands and stops flying.  Before we ever experience tilt, our blood flow moves away from our thinking centers and toward our flight/fight regions.  The goal of the exercises on the device is to be able to sustain longer and longer periods of flight for the owl--and to be able to return the owl to flight after it has landed.  This measures our cognitive endurance, and it measures our capacity for recovery.  If we train the brain for endurance and recovery, we become able to prevent tilt mode before it ever hijacks our actions.

The problem with tilt is not an excess of emotion.  The problem is a lack of brain fitness:  poor cognitive endurance and poor capacity for recovery.  This is a game changer for trading psychology.

7/22/2025 - The cognitive technique below is quite promising in intercepting the frustration that leads to tilt trading.  A different, behavioral, approach involves learning to keep oneself calm and focused with visualization and deep breathing.  (I am finding brain training devices helpful for this).  Once we have mastered that skill and can get ourselves in the zone on demand (which takes practice), we can then engage in our focused relaxation while we vividly imagine frustrating trading situations that could put us on tilt.  We begin with mildly challenging situations and gradually visualize more frustrating ones.  We don't proceed to a more frustrating visualization until we can keep ourselves fully relaxed while imagining the less challenging one.

Once we can keep ourselves calm in imagination mode, we then start trading with small size/risk and employ the focused breathing in real time when challenging situations occur.  When we can trade small size/risk successfully without tilt and handle drawdowns and unexpected events without losing our concentration, we gradually step up our sizing/risk-taking.  

What this does is literally train mind and body to respond to losses and unexpected trading events in a mode that keeps us grounded in planned trading, not a reactive mode.  This takes practice, but once you have the skill, you have it for a lifetime of successful trading--and you can apply it to other challenging areas of life.  

7/21/2025 - How can we prevent tilt from happening in the first place?  In this post, I'll describe a cognitive approach; in the next, I'll outline a behavioral method.  The cognitive approach links tilt to our self-talk.  In other words, we go on tilt not just because of what is occurring in our trading, but because of what we tell ourselves about what is occurring.  Tilt is preceded by frustration and frustration shows up as negative self-talk.  The key to preventing tilt is identifying the feelings of frustration and the frustrated self-talk *as they are occurring*.  

That takes practice in thinking about our thinking and maintaining awareness of what we're feeling.  In real time, you're aware not only of the market and what it's doing, but also in what you're thinking and feeling about what it's doing.  In my own trading, I actually talk aloud as my position is moving, evaluating what is happening.  The talking aloud enables me to hear myself and stay aware of myself.  If my talking aloud becomes at all emotional, I can catch my frustration in real time before it manifests itself as tilt.  When I find myself getting tense or talking emotionally, I can quickly return to a focused mode by breathing deeply and slowly and focusing on the trade in front of me.  

As a rule, I find it very helpful to have my stop loss orders entered into the book in advance.  That way, I don't have to worry about emotionality interfering with my trading plan when a trade doesn't work out.  When our trading decisions are mapped out in advance and entered in the order book, our trading can be planned and not reactive.

  

7/20/2025 - Reacting to market action is necessary for the management of risk and reward.  Overreacting to market action is a function of the unmet needs we bring to trading.  We can overcome emotional trading by turning our best trading practices into trading routines:  repetition brings familiarity, and we don't overreact to something that is routine.  If we *need* to be right--if we *need* to make money to feel successful as a person--then we will overreact to loss.

The key to overcoming tilt is to anchor our self-assessment in longer-term improvement, not in immediate P/L.  And how do we do this?  By first trading in simulation mode, where there is no money at risk at all.  That trains us to make the right decisions in real time and turn that decision-making into habit patterns.  Only once we've internalized those habits do we begin taking small risk and rehearse making the right decisions.  When we're consistent and profitable at the small level, we bump up the risk-taking gradually, in small increments.  The idea is to build the right habits and learn to enjoy the process over the proceeds.  Small, steady improvement based on consistency is what helps us internalize great trading.  What is familiar and routine cannot shake us up.  There is no overwhelming frustration if we're focused on doing the right things.  

When we take the ego out of each trade and just focus on doing the right things, there can be no tilt. 

Training the Brain by Building Intentionality

 

4/27/2025 - Suppose you were to place yourself in a state of intensified focus/concentration as outlined below vis a vis alpha state brain training.  In this state of unusual focus and clarity, you simply absorb shorter- and longer-term charts of the overall market and the stocks that are on your radar:  those that are "in-play".  What you find is that ideas and insights come to you.  When we look at the right things in the right way, we can experience the intuition and inspiration that underpin true conviction.  We can train our brains in pattern recognition.

4/25/2025 - Every item on our daily calendar has the potential to train our brains for success.  When we intentionally push ourselves beyond our initial fatigue points, we find what philosopher William James called our "second wind" of consciousness.  We have much more in reserve than we realize we have.  This can be observed when we tackle something very meaningful and important.  Suddenly, where we might have been feeling a lack of energy, we find plenty of inspiration and drive.  If we use each daily activity to challenge our comfort zones, we find that we can exercise and develop our capacity for purpose just as we exercise and develop our bodies.    

4/23/2025 - A cornerstone of most writing/teaching/coaching on the topic of trading psychology is that emotions--and behaviors driven by emotional impulses--interfere with successful trading.  By that logic, if we can learn to control our emotions and ground ourselves in our trading plans, we are most likely to be successful.

In this post, I will explain why this is incorrect.  My forthcoming book, Positive Trading Psychology, will cover this topic in detail.

Consider:  If we possessed total free will, there would be no need for any kind of performance psychology.  We would be able to choose the right actions at the right times and optimize our performance.  Conversely, if we lacked free will altogether, there could be no work on our performance.  No animal, for instance, can purposefully work on its survival behaviors.

What makes us unique as humans is that we possess partially free will.  We have the ability to envision a future and select actions to bring us to our desired state.  We also have the ability to become distracted from our goals and live life aimlessly.  We demonstrate the capacity for intention, but we lack consistent intentionality.  In the words of Russian philosopher G. I. Gurdjieff, we live much of life "asleep".  Summarizing Gurdjieff's work, author/philosopher Colin Wilson asserts that "Western man's concept of knowledge is built on a fundamental error:  the notion that the acquisition of knowledge only requires intelligence.  It requires, in fact, a kind of action.  Consciousness needs to be put into its 'active gear'" (p. 64).

In short, we lack full intentionality because we do not consistently operate in our 'active gear'.  The challenge is not an excess of emotion, but rather a lack of training of the will.  

A common response to this issue is meditation.  If we can learn to control our bodies and our breathing, the logic goes, we will become more purposeful beings.  My work on this issue suggests that this is not necessarily the case.

For a while now, I have pursued neurofeedback training (EEG biofeedback) to learn to sustain alpha brain wave states over increasing intervals.  Using the Muse device and its app, I spend a predetermined period of time listening to the sounds of a rainforest.  When my attention wanders and I go into beta mode, the rain sounds increase.  When I focus with unusual intent and enter alpha mode, the rain slows and eventually stops.  In a sustained alpha mode, I can hear birds chirping.  The app tallies up the proportion of time spent in beta and alpha mode and also counts the bird chirps.  

Interestingly, when I engage in basic meditation work during the biofeedback session (controlling my breathing and maintaining awareness of my body), I am able to remain very still (as measured by the app).  I feel relaxed and emotionally calm.  But I do not enter the alpha state.  In other words, reducing the arousal of the body (just like reducing negative emotions) is not sufficient to maximize intentional focus.  

After a sustained period of EEG training, reduced rain, and many bird chirps, I feel unusually clear and focused.  It feels like being a detached observer of events rather than being involved in the world.  Everything seems to move more slowly.  That state is achieved, not by relaxing and being "present", but by effortfully intensifying my conscious focus to make the rain slow down and eventually cease.

Perhaps most important of all, when I'm in that detached state, my perception--of life and markets--is clearer and it's no problem whatsoever doing the right things.  Purposeful action comes naturally, not with tiring effort.

Perhaps traders fail to follow their plans for the same reason that most of us fail to consistently pursue our life's goals.  It's not that we're too emotional; it's that we operate with underdeveloped focus and intent.  An intentional life--and intentional trading--has to begin by training our brains to sustain the "active gear" of consciousness.  In a relative state of "sleep", we cannot sustain purpose.  That requires ongoing training and practice, not the usual ministrations of coaching or self-help.

Further Reading:

Beyond Meditation:  Using Biofeedback to Change Behavior Patterns

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Overcoming Emotional Trading in Real Time

 

Update:  My medical school colleagues and I wrote a chapter for a standard reference text in psychiatry that just came out.  It covers recent research and practice in short-term approaches to changing our thinking, feeling, and acting.  An important finding is that it takes emotion to change emotion.  We are most likely to internalize changes we make if we truly feel those changes.  One key implication for the topic below:  We can most efficiently and effectively change emotion in real time by evoking the *opposite* emotion, not by trying to make ourselves emotionless.  If we're frustrated and self-critical, instead of trying to empty our minds and meditate, we can evoke memories of trading experiences that left us feeling fulfilled and grateful.  More to come! - Brett  

We read a lot about trading psychology and the need to maintain perspective, trade our plans, control our emotions, accept losses and uncertainty, and manage our risk.  This education is helpful, but it is not training.  Actual training in trading psychology would have to occur in real time, because trading challenges crop up only when we are in certain states of mind and body.  This is why Jeff Holden and I have teamed up for SMB Capital's training program to help traders coach themselves in the heat of battle.  This is going to be a multi-week collaboration, in which we integrate the discussion of markets and trades with hands-on work on our mindsets.

Here is the video from our first class.  

A major idea from the session is that, before we can change our emotional state, we need to be aware of our state.  Jeff presented a "mood meter" that enables us to place labels on what we're experiencing.  As I point out in the video, the very act of identifying what we're feeling enables us to be an observer of our experience--not one who is wrapped up in their experience.  This coming Thursday midday, we'll discuss--in the context of the market trade that morning--what to do once we observe our emotions, so that we can stay constructively engaged in our trading.  I look forward to getting a video for that session as well.

Now here's an important point that we rarely encounter.  It comes from the book I'm currently writing, which integrates positive psychology and trading psychology:

Awareness of our positive emotional states is every bit as important to our trading as awareness of our frustration and negativity.

If we are aware of the emotional signs that accompany our best trades--our feelings of understanding and confidence--that awareness helps us take larger risk when the expected value of our trades is best.  We have positive triggers for our best trading just as we have triggers that set off our worst trading.  Recognizing our positive triggers in real time enables us to make the most of the opportunities that present themselves.  This is why it's important that our "mood meters" capture the best as well as the worst of our trading experience.  

More to come!

Brett  

How To Coach Yourself To Trading Success

 

Update:  During Thursday's session, Jeff reviewed with the group the chart of emotions that described four quadrants at the intersection of two axes:  positive and negative; high and low energy.  We also discussed the very center of the chart as our state of focus.  The idea is that, when we're super focused on markets, we're not immersed in either positive or negative feelings.  At that point, it's not about us.  So the question becomes:  how do we reach and sustain that center point?  The first step is self-awareness:  simply to know what we're experiencing in the present and to be an observer of our emotional state, not immersed in what we're feeling.  An initial exercise in this direction is to write down what we're feeling when we're feeling it.  By observing ourselves, we are exercising (self) focus.  Next week we will build on this-- 

This Thursday, I will join the head of recruiting for SMB Capital, Jeff Holden, for a combined mentoring/coaching class with developing traders.  What will be unique to the session is that I will be presenting and teaching coaching skills to the traders at the same time that Jeff presents and teaches best trading practices for that day's trade.  To the best of my knowledge, this will be the first time that the skills of trading psychology are taught alongside the skills of consistently profitable trading in the context of a live market session.  Once we've held the session for SMB students, I will share the specific methods we talked about in an update to this blog post.  The goal is to go beyond coaching advice and provide specific tools for TraderFeed readers to coach themselves to trading success.  

As Coach K indicates above, the key to elite performance is hungering for excellence, not success.  We can't always win, but we can always learn and learn and practice and practice excellent ways to play the game.  Back in the mid-1970s, I had the honor of being part of the freshman basketball team at Duke.  The coach ended quite a few of the evening practice sessions with an exercise where each player had to hit 10 consecutive free throws before they could go home.  You can imagine, tired and sweaty and needing to get homework done, how the players desperately wanted to get home.  That put real pressure on their free throws.  Over the course of the season, they had practiced doing the right things at the charity stripe so often under duress that they didn't wilt when it came to clutch situations at game time.  They achieved excellence by practicing under the emotional conditions of actual performance.

Now imagine that you couldn't leave your trade station after the market close until you had traded that day's market successfully in replay mode.  Again and again, you'd replay the market and push yourself to stay in the right mindset and take the right actions.  Day after day, those reps would eventually become part of you and you'd internalize sound trading psychology at the same time that you internalized sound trading.  

Stay tuned to this blog post after Thursday morning's session with Jeff.  I'll share the methods I discussed with the developing traders and I'll highlight how you can best rehearse these methods to coach yourself effectively.  This should be fun--

Brett