Steenbarger Webinar – March 2017

Common problems affecting traders

  • Medical issues – e.g. hormone imbalance, attention deficit disorder, tiredness
  • Traders bringing their past into the present – looking for self-validation in trading,
  • Situational problem – changing market conditions create confusion/challenge

These then lead to psychological issues, which in turn impact on the trader’s performance.

There needs to be a diagnosis of where the problem comes from.  This helps tremendously in addressing the issues/problems.

Approaches for addressing symptoms

Behavioral approach – e.g. objective is to become relaxed – lower level of arousal (this was in a recent blog post of his that I had made notes about) Stg1 – relaxed environment Stg2 – imagine executing a trade, in quiet market.  Breathe deeply, slowly, sitting still, staying calm.  In Stg2 consider different market conditions, different cumulative p/l conditions, trade management scenarios, different setups.  Go through this exercise dozens of times a day.  Learning a new response pattern to a previous situation.  Exposure method – very good for anxiety issues.

Cognitive Therapy – thinking about thinking.  Challenging negative thought patterns.  Eg how am I thinking about losing trades.  => Self-Awareness.  Negative mood negatively impacts trading performance.  Identifying and intercepting thought patterns.  Journal of our thinking – 4 columns.  Situation/how am I thinking about this situation/consequence/desired thought pattern.  As an example, how would you talk to a new traders in that situation – you would use a constructive attitude – you would not call them an idiot!  Repetition – becomes natural – will catch yourself in real-time.  Interruption of negative thought patterns as they occur.

Solution-focused methods.  This focuses on phases when I am doing things correctly.  What am I doing right/correctly during those phases?  Identify and then do more of that.  Is it because I am more connected to the bigger picture?  Eg where trading is put in the context of life as a whole. (use photos from family members).  Journalling everything that I am doing right.  How am I generating good ideas?  Trading in and out of a position?  How am I managing risk well?  Preparation, adequate sleep, taking a break – are these things leading me to trade better.

With all of these approaches – it’s important to do these all the time.  A lot.  These way new patterns become internalized.  Prevents ‘relapse’.  New habits are created.

Additional thoughts/notes from Q&A

Retail traders often learn about trading whilst they are actually trading – this creates further psychological issues.  Having a structured learning programs would avoid some of these issues.

Prop Traders – often to get the job at a fund, traders need to provide an established track record, meaning that they probably already resolved a lot of these issues – hence there is a survivorship bias in place for hedge fund traders.

Performance anxiety triggering over-complication of information – rather than keeping the setup simple.  What is the minimum information setup when taking winning trades.  What things are looked at on a regular basis?

Don’t see losing trades as failure – instead, see them as ‘paying for information’ – and use the information in a constructive manner.  Seeing the trades as ‘new information’ reduces stress associated with losers.

Best way to take stress out of losers – is to get other meaningful things in your life.  If something is all important – than the pressure and stress simply becomes too great.  You are setting yourself up to fail.

Look for patterns in the data – that often indicates what needs to be worked on.

This entry was posted in Psychology. Bookmark the permalink.

2 Responses to Steenbarger Webinar – March 2017

  1. Dave says:

    Very helpful recap of the Webinar. I really liked the post. “Don’t see losing trades as failure – instead, see them as paying for information”… I would say, don’t see losing trades as failure – instead, see them as your Business expense.
    http://davematias.com

    Liked by 1 person

  2. Pingback: Conversations with traders & coaches | Trick or Trade

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