I was listening to Dr. Brett. Steenbarger on the Chat With Traders podcast this weekend. And I couldn’t resist the urge to share it with you here. If you haven’t listened to this yet, I highly recommend it.
Below are links to the podcast, as well as some additional relevant resources for one of the best trading psychologists around.
And as I explained in my review of Trading in the Zone, trading psychology is something I can’t get enough of. I hope you’ll feel the same way!
Finally, I’d be remiss if I didn’t remind you that I mentioned Chat with Traders in the best trading podcasts of 2015 blog post. So congrats to you home-gamers following along who’ve already caught this one.
Chat with Trading Psychologist Dr. Brett Steenbarger:
SoundCloud podcast link: How to master trading psychology, and introduce new best practises w/ Brett Steenbarger
And if you want to hear him speak a little more, check out his appearance on the Trend Following podcast with Michael Covel.
Now as promised, below are my unfiltered conscious thoughts, while listening to/reflecting on the podcast. Take it for what it’s worth!
Notes on Podcast with Trading Psychologist Dr. Brett Steenbarger:
Do more of what works… Model your success! Update your success diary/playbook and review it.
Adapt to changing markets (all businesses must)… Drawdowns may reveal changing market conditions…
Improve without curve fitting… Build different systems for different market conditions. Diversify with different methodology for different conditions.
Build on your strengths.. How does this reflect in process? (Eg are you best at slow thinking methodical science experiments… Also compliments time horizon… Deeper and more analytical experimental design… Find data and perspective other people are ignoring. If you do what everyone does you will get the results everyone does.)
Best practices > repeated > lead to best processes
Habits and routines are much more important than motivation… Implement best practices routinely to develop positive habit patterns. Motivation follows action.
Leverage your success and work around your weaknesses. Acting on your strengths is fulfilling (intrinsically rewarding)… We feel strong and fulfilled when acting on your strengths… If you’re intrinsically frustrated that means you might be working in an area you are weak at.
Goals need to be followed with a specific plan. A goal without a plan is a wish. You need daily actions to drive consistent and regular progress towards goal. P&L goals emphasize outcome over process, which can lead to performance anxiety. Focus on what you can improve on. Risk adjusted returns are a better way to focus.
Traders need to make friends with loss and failure. They can teach us and make us stronger. It’s how we become better. Your drawdown is telling you what’s not working.
Think in percent and basis points… Easier psychologically than thinking about dollar amounts and thinking about money. Putting too much pressure on yourself can be a big challenge. You need other thinngs in your life outside of market to help refresh you during draw downs.
And that’s it! Feel free to mention your favourite part of the podcast in the comments below.