Wednesday, October 14, 2009

The Best Dr. Brett Steenbarger Trading Psychology Posts


I've put together a list of posts I find particularly helpful when it comes to trading psychology.

Dr. Brett goes over A Few Trading Psychology Observations

I'd like to highlight a few key points I like from his post-
- Traders develop plans and trade patterns that simply don't work; they're based on randomness.
- 90% don't/can't sustain the process of keeping a substantive journal. Among the group that does journal, well over 90% of the entries are about themselves and their P/L. I almost never see journal entries devoted to figuring out markets.
-In every performance field of note--from Olympic athletics to Broadway--performers spend more time in practice than in formal performance. That is how expertise develops. The ratio of "practice" time (time spent on markets outside of trading) to trading time is a worthwhile indicator of a trader's prospective success.

-"It's a common observation that traders fail because they don't stick to their plans. My experience is different. Traders develop plans and trade patterns that simply don't work; they're based on randomness. When the patterns don't work, traders become frustrated and abandon their plans. So it looks like lack of discipline causes trading failure. But planning doesn't create success; sound planning does. Sticking to plans based on randomness is no virtue."

How do traders enhance there trading skills while the market is closed?
-Back Test your strategies (are these strategies profitable?)
-Review your charts and setups (Are you taking Impulse/emotional trades or backtested planned trades?)
-Review your past trades, look at trade frequency, share size, max drawdown, max gain
-Review the trading day with tick replay feature if your charting software provides that feature
-Trade on a trading simulator if your broker has that feature
-Review your trading journal to find trading mistakes you keep making, so you can focus on improving those problem areas
-Record the Trading day and review it later using screen capture software like Camtasia studio or !Quick Screen Capture

Denial as a Trading Motivation

Trading on Tilt: Regaining Self Control

2 comments:

John Sphinx on 8:51 PM said...

I agree with everything you wrote, but for Back Testing doesn't that take the emotional side of the market out of the game? How could you back test a market when it about emotions and not really math per say.

Anonymous said...

Emotions are translated to technical patterns that can be seen on a chart, the key is having a working strategy that recognizes these patterns and adjusting the system accordingly to the markets volatility, moreover; algo-traders adjust there code everyday to take in cosideration for the market volatility and any news that comes about. Hpt

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