Some of you may have heard of trading psychologist Brett Steenbarger whose TraderFeed blog has been in the 'other blogs I read' section of this blog for a long time.
He has some interesting ideas on trading psychology in his latest Forbes post, writing:
To appreciate the difference between the traditional psychological perspective and the newer one, consider two traders keeping performance journals. The first trader keeps tabs on various problems that creep into his or her trading, including the usual suspects of fear and greed. The journal entries note how these have occurred and what the trader will try to do subsequently to avoid the pitfalls.
The second trader keeps a journal that is broken down into five areas of performance: research and information collection; creativity and the generation of trading ideas; entry execution and position management; risk management and exit execution; and self-management along the four domains listed above. Each of those areas of performance is anchored by best practices and the reverse-engineering of successes, so that there is a continual refinement of strengths.
One journal consists of finger-wagging: don’t do the wrong things. The other journal consists of an exercise of strengths: do what you do best.
Which journal is most likely to be empowering? Which is a trader most likely to stick with Which is most likely to lead to exemplary performance?
Minimizing our problems can help us cope. Maximizing our strengths can help us flourish.
My experience is that the flourishing focus is a true paradigm shift for most people. Most of us view our typical day as an opportunity to get tasks done, manage challenges that arise, and hopefully accomplish some things. Once we view life through the lens of flourishing, however, each day becomes an opportunity to enhance happiness, personal satisfaction, energy, and relationships. This is the idea of life as a gymnasium: each day presents challenges that exercise the best within us.
His previous post was also a gem, including this advice which mirrors what I have said myself many times, only not quite so succinctly perhaps, bitches.
You have a relationship with the market and any time you're controlled in a relationship, you're the bitch.
The only way to have an even relationship with the market is to control when you play, so that you don't get played.
That takes rules, that takes finding and sticking to edges - and it takes the willingness to not play when your edges aren't screamingly apparent.
What you got ain't passion for trading; it's a need to play.
If you need to play, you're going to get played. You're going to be controlled by market behaviour. You're going to be the market's bitch.
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