Trading psychology 2 0 from best practices to best processes by brett n steenbarger

TRADING PSYCHOLOGY 2.0 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 more on this series, visit our website at www.WileyTrading.com TRADING PSYCHOLOGY 2.0 From Best Practices to Best Processes Brett N Steenbarger, PhD Copyright c 2015 by Brett 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 Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com Library of Congress Cataloging-in-Publication Data Steenbarger, Brett N Trading psychology 2.0 : from best practices to best processes / Brett N Steenbarger, Ph.D pages cm.—(Wiley trading series) Includes index ISBN 978-1-118-93681-8 (hardback)—ISBN 978-1-118-93683-2 (ePDF)— ISBN 978-1-118-93682-5 (epub) Stocks—Psychological aspects Speculation—Psychological aspects Investments—Psychological aspects I Title HG6041.S762 2015 332.6401 ′ 9—dc23 2015016663 Cover Design: Wiley Cover Images: Business growth graph c iStock.com/Violka08; Black Chess King and lying Pawns on board c iStock.com/Dominik Pabis Printed in the United States of America 10 EPIGRAPH If you don’t have time to it right, when will you have time to it over? John Wooden v CONTENTS Preface Introduction Prelude ix xiii xvii vii CHAPTER Best Process #1: Adapting to Change CHAPTER Best Process #2: Building on Strengths 95 Best Process #3: Cultivating Creativity 199 Best Process #4: Developing and Integrating Best Practices 277 CHAPTER CHAPTER Conclusion: From Best Practices to Best Processes 411 Postscript 415 References 417 About the Author 423 Index 425 REFERENCES Andreasen, N C The Creative Brain New York: Plume, 2006 Argyle, M The Psychology of Happiness, 2nd ed New York: Taylor & Francis, 2001 Barber, B M., Lee, Y-T., Liu, Y-J., and Odean, T ‘‘Just How Much Do Individual Investors Lose by Trading?’’The Review of Financial Studies 22 (2009): 609–632 Baumeister, R F., and Tierney, J Willpower London: Allen Lane, 2011 Berkman, L F., and Syme, L ‘‘Social Networks, Host Resistance, and Mortality: A Nine-Year Follow-up Study of Alameda County Residents.’’ American Journal of Epidemiology 109 (1978): 186–204 Buckingham, M., and Clifton, D.O Now, Discover Your Strengths New York: Free Press, 2001 Byeagee, Y Paradigm Shift: How to Cultivate Equanimity in the Face of Market Uncertainty, Amazon Digital Services, 2014 Catmull, E Creativity, Inc New York: Random House, 2014 Chrysikou, E G., Hamilton, R H., Coslett, H B., Datta, A., Bikson, M., and Thompson-Schill, S L ‘‘Noninvasive Transcranial Direct Current Stimulation over the Left Prefrontal Cortex Facilitates Cognitive Flexibility in Tool Use.’’ Cognitive Neuroscience (2013): 81–89 Coates, J The Hour Between Dog and Wolf London: Penguin, 2012 Colvin, G Talent Is Overrated London: Penguin, 2008 Compton, W C., and Hoffman, E Positive Psychology, 2nd ed Belmont, CA: Wadsworth, 2013 417 REFERENCES 418 Csikszentmihalyi, M Creativity New York: Harper Perennial, 2013 DeVries, M., Holland, R W., Corneille, O., Rondeel, E., and Witteman, C L M ‘‘Mood Effects on Dominated Choices: Positive Mood Induces Departures from Logical Rules.’’ Journal of Behavioural Decision Making, 2012, 25: 74–81 Dewan, M J., Steenbarger, B N., and Greenberg, R P (eds.) The Art and Science of Brief Psychotherapies, 2nd ed Washington, DC: American Psychiatric Publishing, 2012 Diener, E., and Suh, E ‘‘Measuring Quality of Life: Economic, Social, and Subjective Indicators.’’ Social Indicators Research 40 (1997): 189–216 Diener, E., Sandvik, E., and Pavot, W ‘‘Happiness Is the Frequency, Not the Intensity, of Positive versus Negative Affect.’’ Assessing Well-Being Social Indicators Research Series 39 (2009): 213–231 Duckworth, A L., Peterson, C., Matthews, M D., and Kelly, D.R ‘‘Grit: Perseverance and Passion for Long-term Goals.’’ Journal of Personality and Social Psychology 92 (2007): 1087–1101 Duhigg, C The Power of Habit New York: Random House, 2012 Dunker, K., and Lees, L.S ‘‘On Problem-solving.’’ Psychological Monographs 58 (1945): i–113 Emmons, R.A Thanks! New York: Houghton Mifflin, 2007 Ericsson, K.A The Road to Excellence Mahwah, NJ: Lawrence Erlbaum, 1996 Fordyce, M.W ‘‘A Program to Increase Happiness: Further Studies.’’ Journal of Counseling Psychology 30 (1983): 483–498 Fredrickson, B L Love 2.0 New York: Plume, 2013 Fredrickson, B L Positivity New York: Three Rivers Press, 2009 Fredrickson, B L and Branigan, C ‘‘Positive Emotions Broaden the Scope of Attention and Thought-Action Repertoires.’’ Cognition and Emotion 19 (2005): 313–332 Fredrickson, B L., Cohn, M A., Coffey, K A., Pek, J., and Finkel, S M ‘‘Open Hearts Build Lives: Positive Emotions, Induced through LovingKindness Meditation, Build Consequential Personal Resources.’’ Journal of Personality and Social Psychology 95 (2008): 1045–1062 Gompers, P A., Kovner, A., Lerner, J., and Scharfstein, D.S ‘‘Performance Persistence in Entrepreneurship.’’ Harvard Business School Working Paper 09-028, 2008 Grant, A Give and Take New York: Penguin, 2013 Hammond, D C ‘‘Hypnosis in the Treatment of Anxiety- and Stress-related Disorders.’’ Expert Reviews in Neurotherapy 10 (2010): 263–273 Heath, C., and Heath, D Decisive New York: Crown Business, 2013 Heath, C., and Heath D Switch New York: Random House, 2011 419 REFERENCES Ilmanen, A Expected Returns Chichester, UK: Wiley, 2011 Ivanov, I The Five Secrets to Highly Profitable Swing Trading, Amazon Digital Services, 2014 Jackson, J J., Wood, D., Bogg, T., Walton, K E., Harms, P D., and Roberts, B W ‘‘What Do Conscientious People Do? Development and Validation of the Behavioral Indicators of Conscientiousness (BIC).’’ Journal of Research in Personality 44 (2010): 501–511 Kahneman, D Thinking, Fast and Slow New York: Farrar, Straus, and Giroux, 2011 Kelley, T The Art of Innovation New York: Currency Kohn, M L., and Schooler, C ‘‘Job Conditions and Personality: A Longitudinal Assessment of Their Reciprocal Effects.’’ American Journal of Sociology 87 (1982): 1257–1286 Kok, B E., and Fredrickson, B.L ‘‘Upward Spirals of the Heart: Autonomic Flexibility, as Indexed by Vagal Tone, Reciprocally and Prospectively Predicts Positive Emotions and Social Connectedness.’’ Biological Psychology 85 (2010): 432–436 Kok, B E., Coffey, K A., Cohn, M A., Catalino, L I., Vacharkulksemsuk, T., Algoe, S B., Brantley, M., and Fredrickson, B.L ‘‘How Positive Emotions Build Physical Health: Perceived Positive Social Connections Account for the Upward Spiral between Positive Emotions and Vagal Tone.’’ Psychological Science 24 (2013): 1123–1132 Kotter, J Leading Change Boston, MA: Harvard Business Review Press, 2012 Kotter, J., and Cohen, D S The Heart of Change Boston, MA: Harvard Business Review Press, 2002 Kuhn, T S The Structure of Scientific Revolutions, 3rd ed Chicago: University of Chicago Press, 1996 Lahti, E What Is Sisu? http://www.emilialahti.com/#!what-is-sisu/c1b3m, 2015 Leutner, F., Ahmetoglu, G., Akhtar, R., and Chamorro-Premuzic, T ‘‘The Relationship between the Entrepreneurial Personality and the Big Five Personality Traits.’’ Personality and Individual Differences 63 (2014): 58–63 Linker, J Disciplined Dreaming San Francisco, CA: Jossey-Bass, 2011 Livingston, J Founders at Work Berkeley, CA: Apress, 2008 Lo, A.W., and Repin, D.V ‘‘The Psychophysiology of Real-Time Financial Risk Processing.’’ Journal of Cognitive Neuroscience 14 (2002): 323–339 Locke, E A., and Latham, G P ‘‘New Directions in Goal-Setting Theory.’’ Current Directions in Psychological Science 15 (2006): 265–268 REFERENCES 420 Loehr, J., and Schwartz, T The Power of Full Engagement New York: Free Press, 2003 Lopez, S J., Pedrotti, J T., and Snyder, C R Positive Psychology, 3rd ed Thousand Oaks, CA: Sage, 2015 Mauboussin, M J The Success Equation Boston, MA: Harvard Business School Publishing, 2012 Ichiro Kawachi in collaboration with the Allostatic Load Working Group, ‘‘Heart Rate Variability.’’ San Francisco: University of California, McArthur Research Network on SES and Health, 1997 McClusky, M Faster, Higher, Stronger New York: Hudson Street Press, 2014 McGonigal, K The Willpower Instinct New York: Penguin, 2012 Michalko, M Cracking Creativity Berkeley, CA: Ten Speed Press, 2001 Nettle, D Happiness Oxford: Oxford University Press, 2005 Niederhoffer, V The Education of a Speculator Hoboken, NJ: Wiley, 1997 Park, J., Konana, P., Gu, B., Kumar, A., and Raghunathan, R ‘‘Confirmation Bias, Overconfidence, and Investment Performance.’’ McCombs Research Paper Series No IROM-07-10 Peterson, C., and Seligman, M.E.P Character Strengths and Virtues Oxford: Oxford University Press, 2004 Posner, M I Cognitive Neuroscience of Attention, 2nd ed New York: Guilford, 2012 Prochaska, J O., Norcross, J C., and DiClemente, C C Changing for Good New York: William Morrow, 1994 Ratey, J J Spark New York: Little, Brown, 2013 Ratey, J J A User’s Guide to the Brain New York: Vintage Books, 2001 Root-Bernstein, R S., and Root-Bernstein, M M Sparks of Genius Boston: Mariner, 2001 Sawyer, K Group Genius New York: Basic Books, 2007 Sawyer, R K Zig Zag San Francisco: Jossey-Bass, 2013 Sawyer, R K Explaining Creativity, 2nd ed Oxford: Oxford University Press, 2012 Sawyer, R K Explaining Creativity Oxford: Oxford University Press, 2006 Schwager, J D Market Wizards Hoboken, NJ: Wiley, 2012 Scott, J., Stumpp, M., and Xu, P ‘‘Overconfidence Bias in International Stock Prices.’’ Journal of Portfolio Management (2003): 80–89 Seelig, T inGenius New York: HarperOne, 2012 Seligman, M E P Flourish New York: Free Press, 2011 Simonton, D K Creativity in Science Cambridge: Cambridge University Press, 2004 Simonton, D K Genius, Creativity, and Leadership Cambridge, MA: Harvard University Press, 1999 Steenbarger, B N ‘‘A Hard Look at Our Trading Edge.’’ TraderFeed, August 2, 2014 Steenbarger, B N The Daily Trading Coach Hoboken, NJ: Wiley, 2009 Steenbarger, B N Enhancing Trader Performance Hoboken, NJ: Wiley, 2007 Steenbarger, B N The Psychology of Trading Hoboken, NJ: Wiley, 2003 Tang, Y ‘‘Mechanism of Integrative Body-Mind Training.’’ Neuroscience Bulletin 27 (2011): 383–388 Teasdale, J., Segal, Z.V., Williams, J M., Ridgeway, V A., Soulsby, J M., and Lau, M A ‘‘Prevention of Relapse/Recurrence in Major Depression by Mindfulness-based Cognitive Therapy.’’ Journal of Counseling and Clinical Psychology 68(4) (2000): 615–623 Torrance, E P The Nature of Creativity as Manifest in Its Testing In R J Sternberg (ed.), The Nature of Creativity Oxford: Oxford University Press, 1988, 43–75 Wadlinger, H A., and Isaacowitz, D M ‘‘Positive Mood Broadens Visual Attention to Positive Stimuli.’’ Motivation and Emotion 30 (2006): 89–101 Zabelina, D L., and Robinson, M D ‘‘Child’s Play: Facilitating the Originality of Creative Output by a Priming Manipulation.’’ Psychology of Aesthetics, Creativity, and the Arts (2010): 57–65 Enhancing Trader Performance (Hoboken, NJ: John Wiley & Sons, 2006): The process of developing expertise as a trader Positive Psychology Forbes blog, http://www.forbes.com/sites/brettsteen barger/: Positive psychology and peak performance articles The Daily Trading Coach (Hoboken, NJ: John Wiley & Sons, 2009): A cookbook of self-help methods for coaching yourself as a trader The Psychology of Trading (Hoboken, NJ: John Wiley & Sons, 2002): A solutionfocused perspective on mastering performance psychology TraderFeed blog, http://www.traderfeed.blogspot.com/: Trading psychology, psychology of markets, and more And, of course, check out the resources offered by many of the contributors to the best-practices section of this book! REFERENCES ■ Further Resources from Brett Steenbarger 421 ABOUT THE AUTHOR B rett N Steenbarger, PhD, is a Clinical Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, New York He has worked since 2004 as a performance coach for proprietary trading firms, investment banks, and hedge funds The author of three previous books on trading psychology and the popular TraderFeed blog, Dr Steenbarger has written over 50 peer-reviewed journal articles, book chapters, and books on the topic of short-term approaches to behavior change He also writes a blog for Forbes that covers the field of positive psychology as it relates to peak performance 423 INDEX @MPortfolios, 387–389 A Abnormal Returns blog, 250, 366, 395 Adams, Scott, 199 adapting to change, ix–x, xiv, 1–93, 411 adding through elimination, 391–393 affection, 143, 148, 150–152, 156, 162, 166, 169, 180, 183–185, 193, 305, 333, 346 affinity groups, 188–189 see also networking Andreasen, Nancy, 240–241, 417 anxiety, 27, 38, 42, 74, 138, 143, 155, 168, 173, 175, 305, 338, 365, 368, 377 Argyle, Michael, 184, 188, 417 Awad, Sam, 374–376 B balancing job and trading, 374–376 Barber, Brad, 234, 417 basket of stocks, 309–311 Baumeister, Roy, 57, 76, 417 Beckstrom, Norbert, 358–359 Bellefiore, Mike, 385–387 Berkman, Lisa, 184 best practices, x, xv, 213, 277–283, 289, 291, 295, 309–408, 411 linking into best processes, 283–287, 290, 411 best processes, xi, xv, 213, see also best practices biofeedback, 167–171, 174–175, 339–340, 364–365 heart rate variability (HRV), 168–169, 171, 173, 340, 365 vagal tone, 173 Blair, David, 367–369 Blanshard, Brand, 309 Bokhari, Awais, 389–391 Bollinger Bands, 229, 335 breadth, 319–320 breaking negative behavior cycles, 378–379 Britton, Chris, 400–402 Brown, Josh, 367 Buckingham, Marcus, 106–107, 112–113, 132, 417 Byeajee, Yvan, 370–373, 417 425 C INDEX 426 Carstens, Henry, 22 Catmull, Ed, 274, 417 change, 54–74, 411 crisis and, 60–63 emotions and, 61–65 mirroring and, 68–70 motivation and, 67–68 in psychotherapy, 65–66 readiness for, 54–60, 79 translation and, 65–66 urgency and, 56–61, 66 chart review, 359–361 Chrysikou, Evangelia, 227, 417 coaching, 342 –344 Coates, John, 77, 417 cognitive bias, 195–196, 215 cognitive control, 384–385 cognitive journal, 339 Colvin, Geoff, 139, 417 Commodity Channel Index, 335 Compton, William, 145, 151–152, 417 confirmation bias, 30, 231 conscientiousness, 149, 165–167, 169–170, 201, 268 contemplation, 54–56, 58, 60–63, 66–67, 69–71, 74, 79–83 contentment, 97, 143 see also life satisfaction core motivations, 33–36, 87 correlation, 311–315, 319–320 of asset classes, 313–315 of stock sectors, 311–313 Covel, Michael, 367 creativity, ix–x, xiv-xv, 42, 86, 93, 96–97, 132, 134, 138, 143, 155, 193, 197, 199, 201, 207, 267, 270–271, 273, 275, 291, 297, 334, 411 and analogy, 255–261 automatic writing and speech, 254–255 becoming more creative, 235–237, 335–337 brainstorming, 266–271, 274 chart review, 359–361 combinations and, 250–257, 337 crisis of, 215–219 and discipline, 275 and entrepreneurship, 207–208, 210 and failure, 274–275 in groups, 263–266, 271–273 immersion and, 235 incubation and, 225–227, 337 insight and, 228–230 and lifestyle, 261–262 and problem finding, 230–235 process, 222–235 and productivity, 237, 247–250 reading in parallel and, 350–351 reframing problems and, 240–244 and strengths, 219–222 switching modalities and, 244–247 trading failure and, 237–240 and verification, 230–231 Csikszentmihalyi, Mihalyi, 96, 225, 233–234, 248, 418 cycles, 8–9, 49–50, 319–320, 415 D The Daily Trading Coach, x, 167, 173 Darwin, Charles, day structure, 347–350 deliberate practice, x, 129, 131, 139, 142, 165, 167, 193, 358 DeVries, Catherine, 195–196, 418 depression, 38, 71–72, 74, 143, 155, 166, 190, 305, 338 discipline, ix, xi, 5, 9, 25, 30, 36–38, 41, 43, 45, 47–49, 51, 70, 79, 92, 100, 107, 110, 114–116, 125, 149, 153, 165–166, 173, 176, 199, 211–212, 217–219, 239, 247, 253, 261–262, 267, 275, 288 - 290, 297, 300, 329, 341–342, 351, 359, 362, 364, 367, 402–403, 413 Dewan, Mantosh, 418 Diener, Ed, 96, 146, 151–152, 418 Dow TICK, 317–320 Duckworth, Angela, 14, 130, 418 Duhigg, Charles, 37–38, 42, 70, 128, 160, 418 Dunker, Karl, 6, 30, 418 E F filtering noise, 186–188 finviz.com site, 367 flexibility, 8, 33, 43, 45, 50 commitment and, 10–11, 15 trading and, 15–16, 46–47, 54 G Garl, Scott, 384–385 Gompers, Paul, 209, 418 Gottman, John, 191 Graham Capital, xi Grant, Adam, 39, 63, 418 gratitude, 189–193 grit, 14, 130 Gross, Markham, 362–364 H habits, 37–38, 42–43, 45, 71, 74, 128–129 happiness, 76, 97, 134–135, 143, 146, 148, 150–156, 160, 164, 166, 169, 180, 183–184, 188, 190, 192–193, 305, 332–333, 346, see also well-being, subjective well-being Hammond, D C., 173, 418 Heath, Chip, 30, 64–65, 68, 418 Hope-Robinson, John, 355–356 Hunter, Daniel, 364–365 I Ilmanen, Antti, 7–8, 419 Index Indicators, 229 information processing, 393–395 427 INDEX edges in trading, 91–92 Ehlers, John, Emmons, Robert, 190–193, 418 emotional commitment, 27–28 emotional diversification, 332–333 emotional experience, 79, 143–148 emotional intelligence, 50–53 emotional thermometer, 78 energy, xv, xvii, 14, 18, 21, 34–35, 39, 56–59, 61–62, 64–65, 67, 70–71, 75–76, 80, 83, 87, 112, 124–127, 130–131, 133, 143, 147–148, 150–153, 156–164, 166–167, 169, 171, 174–178, 180, 183–185, 187, 193, 237, 250, 298–299, 301, 305–306, 332–333, 346–347, 354, 370, 377, 385, 413, see also wellbeing, subjective well-being drains, 160–164 Enhancing Trader Performance, x, 323, 421 entrepreneurs, 5, 201 and startups, 209–211 roles of, 212–213 strengths of, 207–209 traders as, 199–214 Ericsson, K Anders, 122, 129, 165, 358, 418 event time, xvii, 415 Evernote, 82 excellence principle, 126–128 exercise, 153, 178–179, 222 and the brain, 194 exposure, 168 flow state, 167–168 focus, xv, 77, 105, 107, 109–111, 130, 139, 148, 158–159, 167–171, 173–180, 192, 225–227, 235, 256, 339–342, 356, 365, 376–378, 385, 397–398, 401–403, 405–406 Forbes blog, 333, 421 Fordyce, Michael, 154–155, 418 Frank, Jonathan, 361–362 Fredrickson, Barbara, 171–174, 183, 193, 418 frustration, x, 4–5, 8–9, 19, 42 and self-talk, 72 functional fixedness, 6, 30 inspiration, 346–347 internal dialogue, 70–71,75 intuition, 356 isolation, 68–70 Ilmanen, Antti, 7–8, 419 Ivanov, Ivaylo, 359–361, 419 J Jackson, Joshua, 165, 419 Joury, Gus, 376–378 K Kahneman, Daniel, 25, 30, 419 Kelley, Tom, 267–268, 419 Kingstree Trading, ix, xi, 259 Kirk, Charles, 391–393 Knight, Bob, 121, 373 Kohn, Melvin, 165, 419 Kok, Bethany, 173, 419 Kotter, John, 60–61, 63, 419 Kuhn, Thomas, 13, 419 INDEX 428 L Lahti, Emilia, 130, 419 Landry, Paul, 373–374 Lee, Bryan, 382–384 Leutner, Franziska, 201, 419 Liberman, Terry, 393–395 life satisfaction, 76, 135, 143, 148, 150–152, 156, 166, 169–170, 180, 183 –184, 188, 190–193, 196, 298, 305, 332–333, 356, see also well-being, subjective well-being Lindzon, Howard, xii, 366 Linker, Josh, 266, 269–270, 419 Livingston, Jessica, 209, 419 Lo, Andrew, 340, 419 Locke, Edwin, 75, 419 Loehr, Jim and Schwartz, Tony, 157–160, 162, 420 Lopez, Shane, 183, 188, 420 love, 180–185 and markets, 330–332 M MacArthur Research Network, 168, 420 Market Delta, 233 Market Profile, 259 Mauboussin, Michael, 23, 420 McClusky, Mark, 121–122, 124, 126, 420 McGonigal, Kelly, 76, 420 McLaughlin, Sean, 366 meditation, 76–77, 167, 174–175, 178, 355–356 loving-kindness 171–173 mentorship, 342–344 metrics, 119, 294, 327–330 personal, 329–330 trading, 327–329 Michalko, Michael, 228, 241–242, 244, 246–247, 249, 252, 420 mindfulness, 75–78, 169, 197 motivation, 82 positive and negative, 80–81 movement, 384–385 see also exercise multiplier effects, 139–141, 150 N Nahmnay, Eldad, 378–379 negativity, 76 Nettle, Daniel, 153, 420 networking, 69–70, 91, 196, 365–367 see also affinity groups professional networks and, 184 new highs and lows, 348 Niederhoffer, Victor, xii, 9, 420 NYSE TICK, 179, 182, 222, 315–317, 319–320, 348 O Open Trader, 389 opportunity, 83–87, 323–325, 381–382 organizing trading, 382–384, 387–389, 402–404 overconfidence, 29–33 S Park, JaeHong, 30, 420 peak condition, 353–355 Pellegrino, Pier Luigi, 405–408 perfectionism, 74–75, 191 performance reviews, 379–381 personality trading style and, 51–52 Peterson, Christopher, 132, 138, 420 planning, 395–397, 404–405 positive attribution bias, 31–32 positive psychology, 96–97, 106 positivity, 171–175, 196 Posner, Michael, 166, 420 preparation, 373–374 priming, 397–398 Prochaska, James, 54–55, 75, 77, 420 process, 214, 391–393, 405–408, 412 driven trading, 287–301 flow chart of, 45–47 improvement, 306–309 review of, 301–306 productivity, ix, xiv purpose, 39–43 satisfaction, see life satisfaction saving money, 408 Sawyer, R Keith, 222–223, 225–227, 232–233, 263, 265–267, 420 Schulz, Daniel Martin, 397–398 Schwager, Jack, 13, 51, 58, 150, 264, 420 Scott, James, 30, 420 Seelig, Tina, 241, 420 self-control, 130, 167, 355, 376–378, 384–385 self-hypnosis, 173–176, 178 self-management, xv self-talk, 337–339, 358 Seligman, Martin, 64, 66, 70–71, 96, 132, 138, 155–156, 420 Seneca, Lucius Annaeus, 277 Shcharinsky, Danny, 398–399 Simonton, Dean Keith, xiv, 96, 229, 235–236, 247–248, 420–421 sine wave chart exercise, 11–13 sisu, 130–131 sizing positions, 321–323 small wins, 64, 68–70, 75 SMB Capital, xi, 385, 402 solution focus, x, 17, 24, 28, 35–36, 38, 65, 90, 141, 156–157, 160, 176 Spencer, Steve, 385–387, 402–404 Spengler, David, 356–358 Steenbarger, Brett, 421, 423 stock sectors, 311–313 Stock Charts, 335 Stock Twits, xii, 53, 216, 224, 366 stop loss, 43–44 strengths, x, 97, 100–126, 128, 135, 193, 197, 275, 411, 413 character, 132–139 cognitive, 99–100, 411 education and, 102–104 engagement and, 117–122 identifying, 106–111 integration of, 135–139 non-strengths, 113–116 performance and, 101–102 Q quality improvement, 295 R Rand, Ayn, 10, 95 Ratey, John, 194, 420 reading in parallel, 350–351 regimes, 7–8 relapse, 75–79 relationships, 184–185 see also well-being, subjective well-being relaxation, 169, 340 Rijhwani, Rahul, 369–370 risk management, 321–325, 351–353 Ritholtz, Barry, 367 Root-Bernstein, Robert and Michele, 251, 256, 420 Ryan, Steve, 381–382 rule-governed trading, 362–364 429 INDEX P strengths (Continued) strengthening, 123–126 as weaknesses, 116–117 workout of, 333–335 stress management, 168 subjective well-being, 97, 142–146 cultivating, 154–160 and personality, 148–150 research, 150–154 T INDEX 430 Taner, Enis, 353–355 Tang, Yi-Yuan, 167, 421 teams, 40–41, 344–346 Teasdale, John, 76, 421 The Big Picture blog, 367 The Daily Trading Coach, x, 167, 173, 341, 421 The Kirk Report, 392 The Psychology of Trading, x, 17, 421 The Reformed Broker blog, 367 The Whole Street blog, 367 thinking, 25–28 threats to success, 87–91 opportunities and, 88 Torrance, E Paul, 236–237, 421 trading checkups, 385–387 trading edge, 22–23, 367–369 trading framework, 389–391 trading journal, 398–399 trading reviews, 358–359, 400–402 trading rituals, 370–373 TraderFeed blog, ix, 38, 74, 123, 165, 178, 182, 186, 203, 219, 221, 262, 299, 309, 351, 358, 364, 369–370, 373, 377, 379, 381, 384, 397–398, 400, 421 trend day, 348–350 Tudor Investment Corp., ix, xi Twitter, 53, 216 U uncertainty, 361–362 use it or lose it, 123–127, 170, 194, 413 V video reviews, 400–402 Viskanta, Tadas, 395–397 visualization, 356–358 Vlad, 351–353 volatility, 44–45, 53, 320–322 of asset classes, 313–315 of stock sectors, 311–313 volume, 44–45 W Wadlinger, Heather, 172, 421 well-being, ix, 148, 152–153, 166, 169, 171, 173–175, 180–181, 185, 191, 193–194, 196–197, 356 See also subjective well-being willpower, 57, 76, 166, 176, 300 Wilson, Colin, 411 Wilson, Robert Anton, 30 WindoTrader, 393 winning and losing trades, 325–327 Wooden, John, v Worch, Ryan, 379–381 Workflow, 369–370 workout, 177–179 worry, 72–73 Y Yadav, Jitender, 404–405 yoga, 177–179 Z Zabelina, Darya, 227, 421 WILEY END USER LICENSE AGREEMENT 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Cataloging-in-Publication Data Steenbarger, Brett N Trading psychology 2. 0 : from best practices to best processes / Brett N Steenbarger, Ph.D pages cm.—(Wiley trading series) Includes index ISBN 978-1-118-93681-8... metaprocesses: robust routines for changing our routines and adapting trading to ever-changing market conditions It is not enough to find an ‘‘edge’’ in financial markets; as any tech entrepreneur... confident that he felt no need to analyze his wins and losses or adapt to changing market conditions—until the profits stopped rolling in BEST PROCESS #1: ADAPTING TO CHANGE 30 Author Robert Anton