Skip to main content

Trading Psychology for the Experienced Trader

A problem with much of the theory and practice of trading psychology is that it is grounded on the experience (and issues) of retail traders and relative newcomers to markets.  I suppose that's inevitable, as a sizable proportion of writers and practitioners have not actively traded themselves and many have not routinely worked with trading and investment professionals.  A result of this limitation is that much of trading psychology focuses on such issues as controlling one's emotions and following a defined process.  Those are important issues to be sure.  But limiting trading psychology to those is like limiting the coaching of baseball to holding a bat properly and getting in front of ground balls before fielding them.  Great stuff for the noobs, but not exactly what the experienced, successful folks are working on.

Here are a few areas of trading psychology that I find to be of much more relevance to traders well along their developmental paths:

1)  The cognitive side of trading - How do you process information most efficiently/effectively and how can you refine your market preparation to better leverage your information processing strengths?

2)  The epistemological side of trading - How can you most effectively integrate quantitative data on markets (predictive models) with an experienced feel for markets?  How can you best blend analysis and intuition?

3)  The tactical and strategic sides of trading - How can you quickly identify when markets are changing and adapt to those changes?  How can you stay true to how you trade without becoming so inflexible that you become a dinosaur when markets evolve?

4)  The personal side of trading - How can you best manage your personal life and maximize your experience outside of trading so that you are best able to maximize your focus and energy while you are trading?

In my book, I refer to an ABCD focus:

*  Adapt to changing markets
*  Build on cognitive and personality strengths
*  Cultivate creativity
*  Develop best practices and processes from your successful experience

I find that difficult periods of trading offer the greatest opportunities to work on these areas.  Most of the time, trading is difficult because we have not sustained that ABCD focus.  Somewhere in the cognitive, epistemological, tactical/strategic, and personal sides of trading, we're not making the most of our strengths.  That becomes our path for development.  The expert sailor has learned from stormy seas:  skill development is one of the most powerful paths to psychological development.

Further Reading:  The Single Most Important Trait of Successful Traders
.

Comments

Post a Comment

Popular posts from this blog

Women and children overboard

It's the  Catch-22  of clinical trials: to protect pregnant women and children from the risks of untested drugs....we don't test drugs adequately for them. In the last few decades , we've been more concerned about the harms of research than of inadequately tested treatments for everyone, in fact. But for "vulnerable populations,"  like pregnant women and children, the default was to exclude them. And just in case any women might be, or might become, pregnant, it was often easier just to exclude us all from trials. It got so bad, that by the late 1990s, the FDA realized regulations and more for pregnant women - and women generally - had to change. The NIH (National Institutes of Health) took action too. And so few drugs had enough safety and efficacy information for children that, even in official circles, children were being called "therapeutic orphans."  Action began on that, too. There is still a long way to go. But this month there was a sign that ...
Post a Comment
Read more

Benefits Of Healthy eating Turmeric every day for the body

One teaspoon of turmeric a day to prevent inflammation, accumulation of toxins, pain, and the outbreak of cancer.  Yes, turmeric has been known since 2.5 centuries ago in India, as a plant anti-inflammatory / inflammatory, anti-bacterial, and also have a good detox properties, now proven to prevent Alzheimer's disease and cancer. Turmeric prevents inflammation:  For people who
Post a Comment
Read more

Austerity-A Fancy Word for Destitute.

The reason for this post is not for the folks who have been caught in the first wave of personal economic hard reality, but the next wave. Regardless of the optimism espoused by grinning leaders and sycophant press, we are entering the final stage of global economic collapse. It began in 2008 and was forestalled for five years with fudge putty, but the weight of global indebtedness cannot be propped any longer and the final crunch is imminent. Austerity measures herald the final throes.  Indications of coming austerity.   Austerity measures are the final last ditch effort, futile or not! Back in the day many of us old-timers went through periods of "hard-times". In retrospect I realize there is no comparison to yesteryear hard times and today's version. Back then, expectations were never very high for the working class, there were no sophisticated systems or conveniences anyway. In fact the difference between being "set" or not was about having treats or not. Si...
Post a Comment
Read more