Here are 5 ways I will help you improve your trading…starting now

  • August 12, 2005
  • Brett Steenbarger

What roles does a psychologist play when working for a professional trading
firm?  Here are a few of the ones I’ve filled during the past year:

  1. Counselor – Sometimes personal problems interfere with trading and
    the concentration needed to focus on the markets.  In my counseling
    role, I help traders figure out what is going on in their personal lives and
    how they can change patterns of thought and behavior that are causing
    distress (and losing trades).

     

  2. Stress Manager – When a trader has hundreds of contracts–or even
    more–on the line with a particular trade, the tension builds quickly. 
    As I like to point out, even if you’re 60% correct in your market calls, for
    every 50 trades you make, you’re almost certain to have a string of four
    consecutive losers.  That sets even the most experienced of traders on
    their heels.  Real-time techniques to handle loss and stress are
    essential to preventing expectable strings of losses from becoming
    snowballs.

     

  3. Sounding Board – “What do you think of this market?” is a
    question I commonly hear.  Traders know I conduct my own research and
    look at longer-term patterns that they might have missed in their short-term
    focus.  By running their expectations by me and letting me play
    sounding board (and sometimes devil’s advocate), traders are able to get
    outside their heads and–in Ayn Rand fashion–check their premises.

     

  4. Educator – Many times a problem will appear at first to be a
    psychological issue, only to reveal itself as a problem with trading
    technique.  As an educator, my goal is to show traders new ways of
    reading and trading the markets that can address their shortcomings.

     

  5. Coach – I recently explained in an
    article
    how I use journaling with metrics to help traders keep score and improve
    their performance.  My task as a coach is to help traders figure out,
    not only what they’re doing wrong, but what they do that works.  Many
    times, there’s a talented trader hidden inside the frustrated soul who is
    meeting with me.  Our job is to isolate that talent and make it more
    consistent.  

One of the real perks of working in a large professional firm is the ability
to have someone who fills those roles on a full-time basis.  Most
independent traders have to make do with self-help and networking with
peers.  While I am not able to take on traders as private clients and
students due to time constraints, I am willing to be a kind of consulting
psychologist for TradingMarkets.com readers.  Do you have a counseling or
stress issue you’d like to toss my way?  Would you like feedback from a
sounding board, educator, or coach?  Email me at sonderstel@aol.com
and ask the shrink.  I will select questions to address in my column and
will do my best to respond by email to the remainder.  Feel free to keep
your emails anonymous, and, for readers’ benefit, please keep them brief and
to-the-point.  Let’s have some fun with this!

Brett N. Steenbarger, Ph.D. is Associate Clinical
Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical
University in Syracuse, NY and author of
The
Psychology of Trading (Wiley, 2003).
As
Director of Trader Development for Kingstree Trading, LLC in Chicago, he has
mentored numerous professional traders and coordinated a training program for
traders. An active trader of the stock indexes, Brett utilizes
statistically-based pattern recognition for intraday trading. Brett does not
offer commercial services to traders, but maintains an archive of articles and a
trading blog at www.brettsteenbarger.com.