Articles – PsychTrader

Cognitive Flexibility

Cognitive flexibility is being aware that in any given situation there are options and alternatives available. As an example, you don’t have to stay in a losing position, yet so many traders do just that as their conviction in a trade turns to hope. Cognitive flexibility is a critically important...Read More »

Executive Function and Trading

A while back I asked the question of whether or not you were an instinctual trader. To find out you were asked to click a link and play an online card game. The game is called the Iowa Gambling Task (IGT) and was developed to simulate real-life financial decisions...Read More »

Slow Down

Tony Schwartz, the author of Be Excellent at Anything, posited that a major problem today is that many of us can’t say no. We’re unable to define a stopping point or establish boundaries when it comes to “work.” In a sense we’ve become multitasking masters where we’re able to...Read More »

Rules Based Trading

There are numerous questions that need to be answered when it comes to trading. How much to buy or sell, where to trim profits, should I use the leverage of options or stick to stock, etc. Creating a set of trading rules can alleviate some of the cognitive load associated...Read More »

Overcoming poor trading habits

Poor trading habits are difficult to overcome, especially those that have been a part of a trader’s routine for years. Part of the reason is that habits are perfected through experience. Habits can be formed and reinforced through expectations (from one’s self or others), triggers (smells, visuals,...Read More »

Working Memory Research

I’ve been conducting research in the area of working memory and want to further that research to find out if there is a relationship between trading success and working memory. I’m seeking 10-20 participants to help me conduct this research. Here’s what’s required of the participants:

Be...Read More »

Discipline Is Key

Barclays Wealth has a new report out entitled “Risk and Rules: The Role of Control in Financial Decision Making.” This report looks at people and personalities and how they influence financial decision making. It also explores the strategies people use to manage their behavior when making investment decisions.

Something I’ve noticed...Read More »

5 Days

As a therapist, when dealing with adjustment disorders and/or anxiety issues, one of my favorite questions to ask my clients was “what will your life look like in 5 days?” The logic that spewed from that point would offer up a window into that individual sitting in the chair on...Read More »

Trade Metrics and Drift

As we approach the end of the year it is common for many traders to review their yearly performance. Most use an equity curve but those that want to improve upon what worked in 2010 take it beyond the basics. I’m talking about performing an analysis of the trade data...Read More »

Own It!

It seems so easy to focus on the things we do wrong. I can name hundreds of mistakes I’ve made in my life. I choose not to focus on what went wrong, but rather on how I can improve my standing and learn from my mistakes. I found one of...Read More »

Managing Risk

Over the years I’ve been fortunate enough to get to know thousands of market participants. Some are long-term investors others are scalping pennies per trade on thousands of shares while others manage millions of other people’s money. The interesting theme I picked up on with nearly every one of them...Read More »

Accountability

Nothing gets my blood boiling like someone that would rather blame others for their issues rather than owning them. Not the best mindset for a therapist, I know, but I was aware of my bias and addressed it by choosing a system of therapy that agreed with me—a psychology of...Read More »

Fear

Fear has a way of making us focus on unfavorable headlines and price action. Fear impacts our ability to evaluate alternatives as it clouds objectivity. Fear is why profits are taken too quickly. Fear is a four letter word that comes in many flavors.

Fear of losing: Nobody wants to lose—doesn’t...Read More »

Influences

As we approach that time of year where we adjust our clocks I take the opportunity to tie several other “to do’s” to this event. I change the batteries in the smoke alarms in my house. I change the water filter in my fridge. And, most importantly, I take inventory...Read More »

Regression

When we confuse or frustrate a particular learned behavior it causes a reversion to an earlier learned behavior. This earlier learned behavior is typically less desirable, but comfortable and familiar. This regression of sorts occurs when we are unable to accept and perform at an expected level. Regression is a...Read More »

I’m A Winner!

There is no feeling quite like that of success in trading. To take the time to perform analysis on a name, establish a trading plan and then profit from your hard work is an awesome feeling. Putting a string of winning trades together like that is priceless. However,...Read More »

Trading As A Business

There’s lots of research out there about business failure and for the most part, the same could be said for trading. Here’s a list of the 10 most frequented catalysts for business failure:

1. 78% lack a rigorously-developed business plan keyed to the realities of their market, including sufficient...Read More »

Prepare for the Fall

Psychology Of Trading Webinar

I’m presenting a psychology of trading webinar for free with the good folks at TradeKing. The webinar will be Tuesday, August 24th at 5pm ET

If you’re interested, click the logo below to be taken to the page to register. I hope you’ll find the time to attend.

Focus on the positive

Finding Flow in Your Market Participation

Flow: An optimal state of engagement in which a person perceives challenges to action as neither underutilizing nor overwhelming his or her existing skills and has clear, attainable goals and immediate feedback about progress.

Athletes often experience flow when they perform at their peak as every ounce of strength and focus...Read More »

Cognitive dissonance and trading

The old saying “the trend is your friend” is easily one of the most widely used and accepted aphorisms of the markets. Looking back at what the market has done since March of 2009 it is easy to see why the trend is indeed your friend. It’s also easy to...Read More »

Extroversion and Trading

Personality can be defined as a dynamic and organized set of characteristics possessed by a person that uniquely influences his or her cognitions, motivations, and behaviors in various situations. One such situation is trading and the basis for the personality assessment that I created called the MAP (Market Awareness...Read More »

The TESTED Method

Some have said that trading is 90% mental and 10% technical and that successful traders learn to remove emotions (or at least control them) from their trading decisions. The TESTED method is a process to help remove emotions from your trading and allow yourself to be proactive in your trading....Read More »

Watch lists

One common mistake I’ve seen over the years in working with traders, especially new ones, is an attempt to trade everything and anything. A common thread that I found was that they believed that if their “job” was that of a trader then they needed to be trading. Not true!...Read More »

It's what you do with what you have that counts

I’ve always been a market technician and have used levels of support/resistance from day one. I use charting to form my main thesis of what I see as the potential move in stocks. Funny thing about technical analysis is that there are literally hundreds of ways to interpret the data....Read More »

Safeguarding Techniques

In Adlerian psychology there are what’s known as safeguarding behaviors and they have a place in trading as well. Basically, we as humans want to protect ourselves from three threats to the self.

Physical harm – we might get sick, die, etc.
Social threat – we might not look good in the...Read More »

Re-framing

As a former therapist, one of the areas I would focus on with clients is the way in which they would perceive their situations. Using a technique called re-framing; I would help them see their “problems” from a different perspective. Often times, clients would be able to overcome roadblocks simply...Read More »

Trading Journals

The image to the left should be recognizable by most of us as the American alphabet. It is from these 26 letters that billions of people are able to communicate on a daily basis. We learn the alphabet early on with rhymes and rote memorization so that we...Read More »

Irrational Beliefs

While pursuing my doctorate in ’99 I had the opportunity to see Dr. Albert Ellis give a lecture in Pittsburgh and will always be grateful for that. He was the old curmudgeon and everything that I expected. For those that don’t know, he created rational emotive behavior therapy (REBT) and...Read More »