Info!! Summit Trading Psychology Posts - 2015

Below are piece of employment yesteryear trading psychology posts from during 2015.  If you're looking for posts on trading methods, cheque out the Trading Techniques Page.  Other posts on trading psychology tin dismiss live on flora on the page for early on posts, too equally the pages for 2016 as well as 2017.  If y'all can't uncovering information on your topic inwards the posts, endeavor Googling "" as well as the cite of your topic.  That volition unremarkably effect inwards pulling upwardly a few of the nearly 5000 posts on the blog.  For greater depth on a given topic, y'all powerfulness cheque out the curated Forbes posts and the trading psychology books page.

While I cannot render online coaching to private traders, I welcome questions most the posts at the electronic mail address that appears on the bio page.


TOP TRADING PSYCHOLOGY POSTS FROM 2015

*  Risk Management equally a Best Practice

*  Meditation equally a Best Practice

*  Risk Intelligence as well as Trading Success

*  Training Yourself inwards Pattern Recognition

*  Trading equally Entrepreneurship

*  Trading equally Training inwards Mental Toughness

*  Incorporating Self-Control Routines During Trading Hours

*  The Three R's of Trading Success

*  Why Disciplined Traders Make Bad Decisions

*  A Simple Strategy for Developing Your Trading

*  Keys to Process Driven Trading

*  Solving Your Trading Problems yesteryear Identifying Your Trading Solutions

*  Three Ingredients inwards Trading Success

*  Why Promiscuity Doesn't Work inwards Trading

*  Why Trading is So Difficult

*  The Single Most Important Trait of Successful Traders

*  How to Stay inwards the Game yesteryear Taking Intelligent Risks

*  The Greatest Mistake Losing Traders Make

*  Three Best Practices of Trading

*  Two Excellent Predictors of Trading Success

*  Best Practices for Dealing With Drawdowns


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Info!! 3 Best Practices For Turning Trading Stress Into Performance

In the recent postal service on trading stress as well as distress, I suggested the quondam was necessary for our evolution every bit traders; the latter was a potential impediment to our evolution.  Stress is the number of challenge; distress is the breakdown that occurs when nosotros are overwhelmed past times challenges.

So how tin sack nosotros exceed away on the normal, inevitable, as well as ultimately constructive stresses of trading from becoming sources of distress?  Three best practices that I'll live on touching upon inward my upcoming webinar presentation are key:

1)  RISK MANAGEMENT - Trading losses should live on planned as well as anticipated.  By limiting run a peril per merchandise as well as limiting drawdowns across trades, you lot ensure that whatsoever unmarried catamenia of miserable functioning volition non impair your emotional or fiscal capital.  This agency that proper merchandise construction, portfolio construction, as well as reduction of risk-taking during periods of miserable functioning are every bit of import to success every bit generating the side past times side corking merchandise ideas.  One of the virtually mutual trading problems I run across amid less experienced traders is that they size positions as well as predicate their run a peril taking based upon how much coin they desire (need) to earn, non on how much they tin sack afford to lose.  They conduct maintain as well as therefore much run a peril that they ensure an eventual emotional upheaval.  

2)  PERFORMANCE FOCUS - The ever-changing nature of markets ensures that they volition examination you.  They volition examination your query as well as understanding; they volition besides examination you lot emotionally.  Turning the stress of challenge into fuel for increment is a corking way of staying positive, constructive, as well as complimentary of distress.  Look at it this way:  the marketplace is your gym as well as it's going to hand you lot a workout.  What trading muscles are you lot going to build this week?  This month?  Turning setbacks into learning lessons as well as goals for time to come trading ensures that you lot volition purpose losses as well as drawdowns to brand yourself better.  H5N1 positive functioning focus starts amongst constructive self-talk:  how you lot procedure marketplace challenges volition really much behave upon your emotional responses to those challenges.

3)  LIFE BALANCE - There volition live on times when markets volition non sustain you lot emotionally--and quite perchance non financially.  What volition acquire you lot through the lean periods?  Having activities as well as relationships that nourish you lot emotionally, physically, as well as spiritually tin sack brand all the departure inward sustaining the mindset needed for optimal functioning during hard times.  Having diversified income streams takes a corking bargain of pressure level off P/L as well as makes it much easier to conduct maintain the patience to expect for skillful trades.  We know that emotional well-being contributes to creativity, productivity, as well as positive performance.  The best way to avoid distress is to build a life buffer of well-being.

So, every bit I'm writing this, I'm non a happy camper.  My models gave useful purchase signals inward stocks slow inward March as well as sell signals inward the commencement few days of April.  They besides were premature inward giving purchase signals the terminal few days as well as were completely leaning the incorrect way yesterday.  Intellectually I know that the best of predictive models inward markets exclusively cut down uncertainty, simply when I acquire imitation signals, I become dorsum to function as well as run across what I tin sack larn from them.  It is non fun to acquire something incorrect when you've position days as well as weeks of long endeavour into crafting something.  But I know that's the exclusively way the arts and crafts volition acquire better.

(Note to self: you lot acquire dissimilar results when you lot model realized vs. implied marketplace volatilities). 

"If it ain't broke, don't create it," is the incorrect approach.  In fixing breaks, nosotros build our selves.  And that ensures nosotros do goodness from the stress of operating inward uncertain, risky environments.   

Further Reading:  The Well-Being Hypothesis   

Info!! A Surprising Best Usage Of Successful Traders

Here's an interesting observation I've made close traders who are doing good lately versus those non doing in addition to hence well:

It's non only the character of the trades that distinguishes the successful trader, but the character of the fourth dimension during marketplace hours when they are non trading.

The to the lowest degree successful traders are glued to screens throughout the 24-hour interval in addition to induce got real piffling structured, character fourth dimension away from the screens.  

The to a greater extent than successful traders induce got breaks during the 24-hour interval in addition to give-up the ghost along themselves fresh in addition to focused.

The most successful traders induce got a structured non-trading procedure during marketplace hours.  They are only every bit plan-oriented inward their non-trading fourth dimension every bit inward their trading time.  When markets are opened upwards in addition to they are non trading, they induce got processes they follow to position novel opportunities in addition to to maintain their functioning zone.  

Productively planning in addition to structuring your non-trading time:  that is an unappreciated best practice.  The nifty traders are highly productive when they are *not* trading.  H5N1 large footstep that tin movement your trading frontwards is to commencement keeping a written report carte where you lot degree the character of your fourth dimension during the trading 24-hour interval when you lot are not trading.

On Mon at noon EST, I'll last joining Jigsaw Trading for a costless webinar on three psychological techniques to ameliorate trading psychology.  In that session, I volition larn into special close specific practices I come across best traders engaging inward during non-trading hours.  Registration for the session tin last works life here; I promise to come across you lot there!

Brett
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Info!! Best Practices Inwards Trading: Using Biofeedback To Manage Trading Stress

The body's flying or create produce reply that nosotros know equally stress is oftentimes a reaction to perceived threat.  When nosotros assist close an upshot that is uncertain--and particularly when nosotros perceive a threat to that outcome--our bodies mobilize for action, alongside adrenaline pumping, muscles tensing, in addition to view charge per unit of measurement accelerating.  That is an adaptive reply for dealing alongside physical threats, such equally avoiding an oncoming car, but oftentimes gets inwards the means of careful, deliberate activity when the threats nosotros perceive are coming from the trading screen.  It is ironic that, but equally nosotros most take away to move grounded inwards the rational activities of our frontal cortices, nosotros typically activate our motor areas in addition to peril acting earlier thinking.

How nosotros react to perceived plays an of import component inwards determining whether stress brings distress.  Today's best practise comes from Daniel Hunter, who outlines his purpose of biofeedback inwards dealing alongside trading stress.  Readers volition recognize biofeedback equally a tool that I guide emphasized both on the weblog in addition to inwards books, equally it's a slap-up means for us to move aware of our stress responses in addition to bargain alongside them proactively rather than reactively.  Here's what Daniel has to say:

"I am a scalper inwards the forex markets, then anxiety, excitement, in addition to apprehension tin creep into the trading day.  I scrap this alongside a device that measures view charge per unit of measurement variability.  The device I purpose is the Emwave2.  It has an earlobe attachment that I purpose during trading.  I purpose it along alongside the calculator programme provided in addition to guide a visual, existent fourth dimension condition of my electrical flow state.  If my emotions starting fourth dimension to waver in addition to my breathing starts to change, it alerts me, oftentimes earlier I realize my state.  With breathing exercises, I tin guide my emotions dorsum nether command in addition to focus on what is genuinely happening inwards the market.  It is also a fantastic practise earlier bedtime, equally you lot autumn asleep faster in addition to your character of slumber is much improved.  It is basically an objective meditation monitor."

Daniel also mentions that considerable enquiry supports the purpose of view charge per unit of measurement variability feedback inwards controlling stress in addition to enhancing well-being.  Because the monitor gives us existent fourth dimension feedback close whether nosotros are inwards or out of our surgical operation zone, it serves equally a tool for mindfulness.  Once nosotros are aware of our stress responses, nosotros tin channel them inwards constructive ways in addition to preclude them from driving our adjacent trading decisions.  If nosotros select to trade, nosotros select to piece of job inwards an surround where at that spot is peril in addition to uncertainty.  That ensures that nosotros volition sense stress.  Our challenge is to plow stress into a stimulus for self-mastery:  to command our responses rather than permit them to command us.

Further Reading:  Three Uses of Biofeedback for Traders
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Info!! Trading Psychology Challenges - 2: Perfectionism

In the Enhancing Trader Performance book, I position a powerful obstruction to developing successful trading strategies: perfectionism.  "Perfectionism clearly plays a business office inwards preventing us from cultivating superior strategies," I wrote.  "In a real of import sense, perfectionistic traders are non seeking to brand money.  They are trying to non lose money.  Their intolerance of loss keeps them moving from method to method inwards search of a certainty that markets cannot provide." (p.157).

The phrase hither is apt: *intolerance* of loss.  The perfectionist is non seeking self-improvement.  The perfectionist is intolerant of anything that falls curt of ideal.  This sets the phase for self-blame as well as frustration.  While it powerfulness await similar a shield of high standards that protects us, inwards fact that shield burdens us, weighing downward our performance.

A review of one's trading mag oft reveals when perfectionism is a problem.  Influenza A virus subtype H5N1 trader powerfulness lead hold identified a skillful idea, placed a merchandise at a skillful level, as well as taken profits at a target, only to run into the merchandise become farther inwards his or her direction.  The mag entry volition focus on what the trader *should* lead hold done (holding the merchandise longer) rather than what the trader did well.  The "should" is non grounded inwards whatever tested rule; that same trader volition hold out as self-blaming over a merchandise that is initially profitable but reverses when he or she holds for a farther target!  Such perfectionism is hindsight bias at its worst.  

Note how such perfectionism turns a winning merchandise into a psychological loss past times exclusively focusing on shortcomings.  It is non constructive, because it does non do concrete learning lessons.  It is frustration channeled as self-blame.  As such, it robs us of the fulfillment nosotros otherwise would experience subsequently a skillful merchandise as well as leaves us feeling diminished.  Over time, such self-blame takes a cost on our liberate energy as well as outlook, contributing to the work of burnout.

How many of your mag entries as well as how much of your review fourth dimension are spent on what you lot did wrong?  To what grade do you lot acquire from your successes as well as reinforce your best practices?  If you lot are parenting a immature child, you lot would role positive reinforcement, non merely punishment, to learn the right behaviors.  As a trader, you lot are ever a immature child, ever developing, ever learning.  You desire to hold out as constructive amongst yourself as you lot would hold out for a immature lady or boy you lot love.

Perfectionism wears people down.  Perfectionism tears people down.  We desire to channel frustration toward learning as well as improvement, non toward self-blame.  We desire to straight our anger toward our work patterns, non toward ourselves.  That is a real of import distinction.

So what tin compass the axe nosotros do almost perfectionism?  Three strategies stand upwards out:

1)  Restructuring Our Reviews:  By giving ourselves realistic written report cards, grading each expanse of our trading process, nosotros tin compass the axe readily position what we're doing good as well as what we're doing that needs improvement.  We desire to become frontward amongst positive goals--building on our successes--as good as remediation goals, correcting our weaknesses.  Every review should position strengths as well as improvements as well as should atomic number 82 to goals of continuing to do what is working.  Every review should too focus on constructive steps nosotros conception to accept to improve our shortcomings.  The focus of the review is on improvement, non blame.  We focus on getting better, non beingness perfect.

2)  Cognitive Strategies - The cognitive strategies described inwards cognitive journals--we let ourselves to stand upwards exterior our perfectionistic patterns.  In short, when nosotros adopt a cognitive perspective, nosotros plow rigid, negative thinking into the enemy.  That allows us to coach ourselves inwards an empowering way, non inwards a agency that demoralizes us.

3)  Behavioral Strategies - Very often, perfectionism is triggered past times frustration.  Of course of teaching it's frustrating to accept off a merchandise only to run into it become much farther inwards our direction.  That frustration shows upwards as physiological tension, which inwards plow cues the negative thought patterns.  One of the greatest insights I came to as a trader was the recognition that my pathetic trading was only state-dependent.  When inwards the fight-or-flight mode, I was much to a greater extent than probable to miss what was happening right inwards front end of me as well as impose my ain needs onto markets.  Behavioral strategies let us to delineate dorsum from trading screens as well as alter the dry soil we're in, becoming to a greater extent than calm as well as focused--and much to a greater extent than able to recruit corporation coping skills.

Sometimes negative, perfectionistic thinking is pervasive, occurring across life domains, non merely during trading.  If that is the case, it's worth consulting amongst a psychologist as well as developing a structured conception for changing those patterns.  It's too worth ruling out depression as an underlying problem, as the depressed dry soil tin compass the axe atomic number 82 to chronically negative thought patterns.  As I emphasized inwards the postal service on diagnosing our trading problems, it's ever a alert sign when patterns disrupting our trading are too disrupting other areas of life.  That's when nosotros desire to motion beyond coaching as well as acquire concerted professional person help for overlearned patterns.

We volition never hold out perfect as traders.  That's what keeps us ever-learning, ever-growing.  Our challenge is to role our shortcomings as inspirations, fueling continued improvement.

Further Reading:  How to Separate Frustration From Your Trading

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Info!! Learning From Relative Performance: International Stock Markets

Recent posts conduct keep taken a expect at relative marketplace indicators, including those from fixed income as well as from unlike stock marketplace sectors.  In this post, nosotros expect at the relative functioning of international stock markets as well as what that mightiness hold upward telling us.

The piece of occupation past times post charts U.S.A. large cap stocks (SPY); a wide listing of non-U.S. shares from Europe, Australasia, as well as the Far East (EFA); European stocks (FEZ); as well as shares from emerging markets (EEM).  All conduct keep been laid to a value of 100 for the initiatory of all of 2012 for slow visual comparison.

When all international equity markets are rising, nosotros clearly run into indications of global economical expansion.  When functioning amid international markets is mixed, nosotros run into that economical functioning is uneven across the globe.  It's the latter that nosotros are facing presently.

Note how U.S.A. stocks (SPY) conduct keep been strongly outperforming the other international markets.  Indeed, emerging marketplace shares conduct keep made relatively piffling headway over the past times 3 years, as well as European shares conduct keep collapsed inward 2014 relative to the U.S.  Given the uneven economical recovery implied past times these markets, nosotros straight off run into the U.S.A. winding downward its quantitative easing, fifty-fifty equally monetary stimulus has been ramped upward inward Nippon as well as is existence pursued past times the European Central Bank.

A effect of this relative economical forcefulness as well as the handoff of monetary easing from the U.S.A. to the international fundamental banks is that major overseas currencies conduct keep been weakening relative to the U.S.A. dollar.  Indeed, accept a expect at the bottom chart, which shows how an portfolio consisting of U.S.A. stocks as well as brusque the currencies inward the U.S.A. dollar index has performed since 2012.  Particularly Federal Reserve annotation the recent, near-vertical ascent.  U.S.A. assets conduct keep been massively outperforming those abroad.

What does all this mean?  With weak economical weather abroad; monetary policy continuing to weaken the yen as well as euro; as well as involvement rates inward the U.S.A. even then meaningfully higher than inward Nippon as well as Europe, it is hard to run into what, inward the nearly term, volition continue investors away from U.S.A. assets.  Those macro dynamics are an of import underpinning of the significant forcefulness inward the U.S.A. stock market.  Gauging those dynamics past times tracking the relative functioning of international markets is quite helpful inward agreement global macroeconomic shifts.

Further Reading:  Three Best Practices During Trading Drawdowns          
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