Table of Contents
Title Page
Copyright Page
Epigraph
Preface
Acknowledgements
Introduction
CHAPTER 1 - Change The Process and the Practice
LESSON 1: DRAW ON EMOTION TO BECOME A CHANGE AGENT
LESSON 2: PSYCHOLOGICAL VISIBILITY AND YOUR RELATIONSHIP WITH YOUR TRADING COACH
LESSON 3: MAKE FRIENDS WITH YOUR WEAKNESS
LESSON 4: CHANGE YOUR ENVIRONMENT, CHANGE YOURSELF
LESSON 5: TRANSFORM EMOTION BY TRACE-FORMATION
LESSON 6: FIND THE RIGHT MIRRORS
LESSON 7: CHANGE OUR FOCUS
LESSON 8: CREATE SCRIPTS FOR LIFE CHANGE
LESSON 9: HOW TO BUILD YOUR SELF-CONFIDENCE
LESSON 10: FIVE BEST PRACTICES FOR EFFECTING AND SUSTAINING CHANGE
RESOURCES
CHAPTER 2 - Stress andDistress Creative Coping for Traders
LESSON 11: UNDERSTANDING STRESS
LESSON 12: ANTIDOTES FOR TOXIC TRADING ASSUMPTIONS
LESSON 13: WHAT CAUSES THE DISTRESS THAT INTERFERES WITH TRADING DECISIONS?
LESSON 14: KEEP A PSYCHOLOGICAL JOURNAL
LESSON 15: PRESSING: WHEN YOU TRY TOO HARD TO MAKE MONEY
LESSON 16: WHEN YOU’RE READY TO HANG IT UP
LESSON 17: WHAT TO DO WHEN FEAR TAKES OVER
LESSON 18: PERFORMANCE ANXIETY: THE MOST COMMON TRADING PROBLEM
LESSON 19: SQUARE PEGS AND ROUND HOLES
LESSON 20: VOLATILITY OF MARKETS AND VOLATILITY OF MOOD
RESOURCES
CHAPTER 3 - PsychologicalWell-Being Enhancing Trading Experience
LESSON 21: THE IMPORTANCE OF FEELING GOOD
LESSON 22: BUILD YOUR HAPPINESS
LESSON 23: GET INTO THE ZONE
LESSON 24: TRADE WITH ENERGY
LESSON 25: INTENTION AND GREATNESS: EXERCISE THE BRAIN THROUGH PLAY
LESSON 26: CULTIVATE THE QUIET MIND
LESSON 27: BUILD EMOTIONAL RESILIENCE
LESSON 28: INTEGRITY AND DOING THE RIGHT THING
LESSON 29: MAXIMIZE CONFIDENCE AND STAY WITH YOUR TRADES
LESSON 30: COPING—TURN STRESS INTO WELL-BEING
RESOURCES
CHAPTER 4 - Steps towardSelf-Improvement The Coaching Process
LESSON 31: SELF-MONITOR BY KEEPING A TRADING JOURNAL
LESSON 32: RECOGNIZE YOUR PATTERNS
LESSON 33: ESTABLISH COSTS AND BENEFITS TO PATTERNS
LESSON 34: SET EFFECTIVE GOALS
LESSON 35: BUILD ON YOUR BEST: MAINTAIN A SOLUTION FOCUS
LESSON 36: DISRUPT OLD PROBLEM PATTERNS
LESSON 37: BUILD YOUR CONSISTENCY BY BECOMING RULE-GOVERNED
LESSON 38: RELAPSE AND REPETITION
LESSON 39: CREATE A SAFE ENVIRONMENT FOR CHANGE
LESSON 40: USE IMAGERY TO ADVANCE THE CHANGE PROCESS
RESOURCES
CHAPTER 5 - Breaking OldPatternsPsychodynamic Frameworksfor Self-Coaching
LESSON 41: PSYCHODYNAMICS: ESCAPE THE GRAVITY OF PAST RELATIONSHIPS
LESSON 42: CRYSTALLIZE OUR REPETITIVE PATTERNS
LESSON 43: CHALLENGE OUR DEFENSES
LESSON 44: ONCE AGAIN, WITH FEELING: GET DISTANCE FROM YOUR PROBLEM PATTERNS
LESSON 45: MAKE THE MOST OUT OF YOUR COACHING RELATIONSHIP
LESSON 46: FIND POSITIVE TRADING RELATIONSHIPS
LESSON 47: TOLERATE DISCOMFORT
LESSON 48: MASTER TRANSFERENCE
LESSON 49: THE POWER OF DISCREPANCY
LESSON 50: WORKING THROUGH
RESOURCES
CHAPTER 6 - RemappingPsychodynamic Frameworksfor Self-Coachingthe Mind ...
LESSON 51: SCHEMAS OF THE MIND
LESSON 52: USE FEELING TO UNDERSTAND YOUR THINKING
LESSON 53: LEARN FROM YOUR WORST TRADES
LESSON 54: USE A JOURNAL TO RESTRUCTURE OUR THINKING
LESSON 55: DISRUPT NEGATIVE THOUGHT PATTERNS
LESSON 56: REFRAME NEGATIVE THOUGHT PATTERNS
LESSON 57: USE INTENSIVE GUIDED IMAGERY TO CHANGE THOUGHT PATTERNS
LESSON 58: CHALLENGE NEGATIVE THOUGHT PATTERNS WITH THE COGNITIVE JOURNAL
LESSON 59: CONDUCT COGNITIVE EXPERIMENTS TO CREATE CHANGE
LESSON 60: BUILD POSITIVE THINKING
RESOURCES
CHAPTER 7 - Learning NewAction Patterns Behavioral Approaches toSelf-Coaching
LESSON 61: UNDERSTAND YOUR CONTINGENCIES
LESSON 62: IDENTIFY SUBTLE CONTINGENCIES
LESSON 63: HARNESS THE POWER OF SOCIAL LEARNING
LESSON 64: SHAPE YOUR TRADING BEHAVIORS
LESSON 65: THE CONDITIONING OF MARKETS
LESSON 66: THE POWER OF INCOMPATIBILITY
LESSON 67: BUILD ON POSITIVE ASSOCIATIONS
LESSON 68: EXPOSURE: A POWERFUL AND FLEXIBLE BEHAVIORAL METHOD
LESSON 69: EXTEND EXPOSURE WORK TO BUILD SKILLS
LESSON 70: A BEHAVIORAL FRAMEWORK FOR DEALING WITH WORRY
RESOURCES
CHAPTER 8 - Coaching YourTrading Business
LESSON 71: THE IMPORTANCE OF STARTUP CAPITAL
LESSON 72: PLAN YOUR TRADING BUSINESS
LESSON 73: DIVERSIFY YOUR TRADING BUSINESS
LESSON 74: TRACK YOUR TRADING RESULTS
LESSON 75: ADVANCED SCOREKEEPING FOR YOUR TRADING BUSINESS
LESSON 76: TRACK THE CORRELATIONS OF YOUR RETURNS
LESSON 77: CALIBRATE YOUR RISK AND REWARD
LESSON 78: THE IMPORTANCE OF EXECUTION IN TRADING
LESSON 79: THINK IN THEMES—GENERATING GOOD TRADING IDEAS
LESSON 80: MANAGE THE TRADE
RESOURCES
CHAPTER 9 - Lessons fromTradingProfessionals Resources and Perspectiveson Self-Coaching
LESSON 81: LEVERAGE CORE COMPETENCIES AND CULTIVATE CREATIVITY
LESSON 82: I ALONE AM RESPONSIBLE
LESSON 83: CULTIVATE SELF-AWARENESS
LESSON 84: MENTOR YOURSELF FOR SUCCESS
LESSON 85: KEEP DETAILED RECORDS
LESSON 86: LEARN TO BE FALLIBLE
LESSON 87: THE POWER OF RESEARCH
LESSON 88: ATTITUDES AND GOALS, THE BUILDING BLOCKS OF SUCCESS
LESSON 89: A VIEW FROM THE TRADING FIRMS
LESSON 90: USE DATA TO IMPROVE TRADING PERFORMANCE
RESOURCES
CHAPTER 10 - Looking forthe Edge Finding Historical Patternsin Markets
LESSON 91: USE HISTORICAL PATTERNS IN TRADING
LESSON 92: FRAME GOOD HYPOTHESES WITH THE RIGHT DATA
LESSON 93: EXCEL BASICS
LESSON 94: VISUALIZE YOUR DATA
LESSON 95: CREATE YOUR INDEPENDENT AND DEPENDENT VARIABLES
LESSON 96: CONDUCT YOUR HISTORICAL INVESTIGATIONS
LESSON 97: CODE THE DATA
LESSON 98: EXAMINE CONTEXT
LESSON 99: FILTER DATA
LESSON 100: MAKE USE OF YOUR FINDINGS
RESOURCES
Conclusion
About the Author
Index
Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.
The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.
For a list of available titles, visit o
ur Web site at www.WileyFinance.com.
Copyright © 2009 by Brett N. Steenbarger. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
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Library of Congress Cataloging-in-Publication Data:
Steenbarger, Brett N.
The daily trading coach : 101 lessons for becoming your own trading psychologist /
Brett N. Steenbarger.
p. cm. - (Wiley trading series)
Includes index.
eISBN : 978-0-470-45667-5
1. Stocks-Psychological aspects. 2. Speculation-Psychological aspects.
3. Investments-Psychological aspects. 4. Self-help techniques. 5. Personal coaching.
I. Title. II. Title: Becoming your own trading psychologist.
HG6041.S757 2009
332.6’.4019-dc22
2008041524
.
What? A great man? I always see merely
the play-actor of his own ideal.
—Friedrich Nietzsche
Preface
The goal of The Daily Trading Coach is to teach you as muchasp ossible about coaching, so that you can mentor yourself to success in the financial markets. The key word in the title is “Daily.” This book is designed to be a resource that you can use every day to build upon strengths and overcome weaknesses.
After writing two books—The Psychology of Trading and Enhancing Trader Performance—and penning more than 1,800 posts for the TraderFeed blog (www.traderfeed.blogspot.com/), I thought I had pretty well covered the terrain of trading psychology. Now, just three years after the publication of the performance book, I’ve once again taken electronic pen to paper, completing a trading psychology trilogy by focusing on the process of coaching.
Two realities led to The Daily Trading Coach. First, a review of the traffic patterns on the TraderFeed blog revealed that a large number of readers—about a third—were accessing the site during the hour or so immediately prior to the market open. I found this interesting, as most of the posts do not offer specific trading advice. Rather, posts deal with topics of psychology and performance—ones that should be relevant at any hour of the day.
When I asked a group of trusted readers about this pattern, they responded that they were using the blog as a kind of surrogate trading coach. Reviewing the posts was their way of reminding themselves of their plans and intentions before going entering the financial battlefield. This was confirmed when I gathered statistics about the most popular (and commented upon) posts on the blog. The majority were practical posts dealing with trading psychology. Most were uplifting in content, even as they challenged the assumptions of readers. It seemed as though traders were looking for coaching and finding some measure of it in the blog.
The second reality shaping this book involves digital publication and the rapid changes sweeping the publishing world. To this point, relatively few electronic books (e-books) have been offered to traders. When those books are available, they are little more than screen versions of the print text. Despite the allure and convenience of electronic publishing, few traders I consulted actually sought out or used e-books. The most common complaint among traders was that they did not want to spend hours devouring information in front of a screen after a full day of trading. I quickly realized that participants in the financial markets don’t use the electronic medium in the same way that they engage print text. That led me to think about writing a different kind of book, one better suited to publishing’s electronic frontier, but also useable in print.
When you overlay these two observations, you can appreciate the vision that led to this text: a “trading coach in a book” that can be as easily read on the screen as on paper. The goal was to integrate blog and book content by creating practical “lessons” that help traders become their own trading coaches. There are 101 lessons in The Daily Trading Coach, averaging several pages in length. Each lesson follows a general format, identifying a trading challenge, an approach to meeting that challenge, and a specific suggestion or assignment for working on the issue. The chapters are independent of one another: you can read them in order, or you can use the table of contents or index to read, each day, the lesson that most applies to your current trading. Unlike a traditional book, the idea is not to read it through from front to back in a few sittings. Rather, you take one lesson at a time and apply it to guide your development as a trader. Like the blog, it’s an on-screen reminder of what to do when you’re at your best, but—more than the blog—it’s also a roadmap (and practical set of insights and tools) for discovering and implementing the best within you.
My ambition has been to pack into these 101 lessons more useable information and practical methods than might be found in any number of expensive seminars and coaching sessions, at far less expense. Too often, the goal of the seminar providers and coaches is to convert you into ongoing clients. The intent of this book is just the opposite: to give you the tools to become your own coach, so that you can guide your own professional and personal growth. In other words, this is a manual of psychoeducation: a how-to guide for improving yourself and your performance.
One thing I particularly like about the electronic format is that it enables a writer to link the book content to a vast array of material on the Web. I will be adding material to The Daily Trading Coach via a dedicated blog called Become Your Own Trading Coach (www.becomeyourowntradingcoach.blogspot.com), so that this book will grow over time. You will need only to click the e-book links to access free updated information and methods on the Become Your Own Trading Coach site. There is one master page on the blog for each chapter of this book containing the links relevant to that chapter’s material. At the end of each chapter, there is also a resource page that alerts readers to further links and readings. I will be adding audio and video content to the new blog over time, which should be particularly helpful for those who learn best by seeing and hearing ideas. Once publishing becomes electronic, there’s no reason that every text can’t be a multimedia learning experience.
You’ll notice from the table of content
s that each of the 10 chapters contains 10 lessons. Those chapters cover a range of topics relevant to trading psychology and trading performance, including specific lessons for utilizing psychodynamic, cognitive, and behavioral brief therapy methods to change problematic behavior patterns and instill new, positive ones. The final two chapters are especially unique: Chapter 9 consists of self-coaching perspectives from 18 successful trading professionals who share their work online. Chapter 10 fulfills a long-standing promise to TraderFeed readers, walking traders through the basics of identifying historical patterns using Excel. Each lesson is accompanied by homework activities and suggestions (“Coaching Cues”) to help with application of the ideas. Major ideas are set apart within the text for quick review and scanning. At the end of each chapter is a list of resources to guide your further inquiry into the book’s topics and ideas.
Yes, the aim of the book is to help you become your own trading coach, but a glance at the chapter and lesson titles reveals that the broader purpose is to help you coach yourself through life. The challenges and uncertainties we face in trading—the pursuit of rewards in the face of risks—are just as present in careers and relationships as in markets. Techniques that help you master yourself as a trader will serve you well in any field of endeavor. In that sense, the goal is not just to make money in the markets, it is to prosper in all of life’s undertakings. I will be gratified and honored if this book is a resource toward your own prosperity, in and out of financial markets.