Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book «Psychology trade», 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.
Although I am not leading private practice on the training of traders are likely to be inevitable that traders will look to me for help after reading my book on «Psychology trade». From time to time I am working on projects with a group of traders to use psychology to improve their trade. In the past few years, I have collected personal data of interviews, and helped more than a hundred traders.
This is a representative model, and allows me to make findings on the psychology of traders and typical challenges they face in their trade. Below, I identify several points that I learned from the survey and interviews with traders who trade for their living.
• Most problems in the trade are variations to concerns about performance. Anxiety execution occurs when the execution of trade, which usually happens automatically, it becomes the object of excessive study. This attention to the execution of an effect of the intervention, in which execution can no longer take place naturally. With such a concern often faced in the execution of sporting events, with a public speech, passing tests, etc. Whenever fear about performance dominate over directly by the execution, the results will suffer.
• Anxiety execution occurs during periods of market success, and in times of loss. It's easy to find traders who are able to take losses, but who become frightened when they record profits prematurely, ie, to achieve their goals of profit. The effects of barriers after the string of losses is more grueling than the effects of obstacles on the pressure, which traders feel when making money.
• Traders normally try to replace negative talk with each other on the positive during the trade. This is a mistake. When traders are loaded into the market and focus on the screen, they do not participate in a conversation with them at all.
• Striving for perfection is the most usual source of performance anxiety among traders. Traders tend to focus on achievement and are often set high goals for themselves. These performance goals are making the tension, when goals were not met. Actually, it makes sense to replace the goal of performance objectives of the process. Rather than set the goal to make, for example, $ 25,000 a year, the trader must, for example, aim to follow the trading plan (inputs, the size of the position, outputs) in 90% of all cases.
• The quest for perfection leads traders to exceed trade regime. The excess of the trade regime is the most common source of losses among traders, which I took the interview. Traders exceed the trade regime, when they feel pressure to make money that dazzles the trader about what is happening in the markets at this time. Trading in the low volatility, trading outside the trading plan, trading losses, and trading unreasonably overestimated the size of the positions - these are examples of excess trading.
• Traders who deal with the concern of performance on the same level of position (eg, 5 lots) often re-experience this problem when they significantly increase the size of its positions (50 lots). We do kalibruem our emotions, based on the amount of money that we earn or lose. This makes trade pyatidestyu lots much more difficult for traders, trade than five lots, even if the market situation could be absolutely identical.
• Traders often think that they have worse psychological problems than was the case. When model performance raises concerns in trade for a considerable period of time, traders often become convinced that they are driven deep into their emotional problems and in need of intensive psychotherapy. Often, the self that he destroyed or emotionally unsuitable, a greater problem than the direct execution of concern, which is quite soluble problem.
Of course, there are other problems, not just associated with fear of performance that can confront the trader. Many of them described in my book. The uniqueness of the performance anxiety that it could crush the very successful traders are the same as it was new. This is why most of the problem concern-the desire for perfection has tended to be the most focused on achievement and successful traders. This is indeed a double-edged sword.
Somewhere between the extremes of pressure and satisfied with the performance of laziness is a happy middle, where traders can focus on self, not sabotaging your results. Trade like a well-planned process: you want to keep the initial expectation is reasonable, to enjoy this while it happens, and learn from this as soon as completed.
Next, we consider the strategies that a trader can use to overcome the pressure of time.
Consider the following psychological scenarios:
• A student must pass a final exam at the rate of anatomy in order to successfully complete their first year in medical school. Since its first few tests were on the verge between successful and unsuccessful passing this exam completely affect the final result. As the ideal time for the big test, a student, more and more worried about this test, especially when he misses some of the issues. Anxiety affects his sleep, which in turn makes it even more worried that fatigue will prevent him from successfully pass the exam. By the time he was taking the exam, he was tired and perevozbuzhden and skips a lot of questions, often reviewing the correct answers.
• The young woman did not ever feel comfortable when speaking in public, but now it will hold the most important presentation in his career. As a result of this presentation it or get the main client for the firm, or lose it in favor of a competitor. During the conversation, she pointed out that members of the audience from the client, which it seeks not seem to be especially careful. This suddenly makes her anxious, and she desperately tries to give a presentation problem. When she loses the thread of our conversation, she becomes excited, and finishes the presentation of an uncertain note.
• Trader has several winning deals in succession, and a confident feeling, increases the size of positions that benefit the good lane. The market initially was in his favor, but quickly develops when large orders are pushing it in the opposite direction. Looking at the position, he realizes that he lost all the profits from his previous winning deals. He re-enters the market, just to capture this second wave. Now he feels as if he had entered into a failure and hesitantly begins to trade, with a reduced size perspective. By the time of closing the market, he receives a negative outcome for the day and week. He feels as a dullard who has become too reliant upon their achievements.
No doubt you can find a familiar pattern in each of these situations. A man was executed in a situation where he feels pressure to succeed. The situation plays a critical role in the eyes of man, and he now focuses on performance, rather than directly at the viewer. This is a double center of concern - to focus on performance, rather than remain sequestered by the execution - is a common element underlying all the concerns of performance. Such anxiety is the single most common problem of trafficking, which I encountered in interviews with traders.
How traders can reduce their level of performance anxiety? Here are some strategies that, in my opinion, can be effective:
1. To concentrate on the process, when you think about the trade, rather than the profit and loss - Traders like to set goals for themselves - more so than not - money goal lead to unnecessary pressure. Better goals are to focus on the trading process, such as limiting the losses in two tikami if you skalpiruete market or hold the position until the slide stop, the warrant will not be activated. Good attitudes «if I sell to, the profit will come by itself». This will remove most of the pressure to perform.
2. Gradually increase the risk. Risk leads to psychological aggravate the situation and greatly increases the likelihood of pressure during the performance. Bad shot in basketball in the first minute of the game is no different from the bad throws in the final seconds of game in the tie, but there is a huge psychological difference. Traders who try quickly to radically increase the size of your account, find that the transaction, which has been able to 1 lead, can not work with 10 lots, because of the pressure leading to the request too quickly to limit losses or take the profit. The gradual increase in the size of the position far more effectively than impulsive jump, which you find yourself emotionally unprepared.
3. Get away from the screen. Talking with them during periods of performance anxiety actually affects accurate processing of market data, because part of the brain responsible for perception and action in the market model is not activated. Much better to move away from the screen and refocus on what the market gives you, rather than blindly acting on fear and further complicate the situation.
4. Use Mental rehearsal in order to make the dangerous situation your friends. This may be only the most effective technique, which I found to reduce and eliminate the fear of execution. Using the managed model that has been repeatedly confronted with dangerous situations, and mentally rehearsing, as it would be a better answer, you can eliminate much of the tension, when such situations occur in reality. The aim is to so often confronted with the fear of execution to think that copying the answer to it becomes automatic, like a familiar model.
5. Privyazhite Mental rehearsal of a particular psychological condition. This is - one of the best strategies covered in my book. Learning to place themselves in a state of extraordinary calm and concentration, and then, repeatedly repeating the strategy for dangerous situations, a trader can establish a link between psychological status and copy answer. When there is tension performance, all that a trader should do - is to call upon repetiruemoe psychological condition and repeat the behavior that has been studied in detail. For example, if you're constantly thinking repetiruete strategy in order to retain the winning transaction in the maintenance of calm, renewal of calm during the next winning transactions will facilitate the conduct related to the holding position.
6. Do mentally tested in front of traffic. Removal of high expectations at the beginning of the trading day may reduce the pressure of performance. Every time when the word «shall», is the idea of trade-is being stripped. The word «shall» includes internal requirements in order to make some money, deal with some frequency, to return the money back after the loss, do not keep money in the market, etc. As concerns the performance is often supported by excessive demands on themselves, the management and confirmation of the reasonable purposes of trade during the trading day may reduce the pressure of performance.
7. Separate trading of life. When something becomes too significant, the pressure that accompanies the performance, increasing exponentially. Traders who trade for their livelihood, are particularly vulnerable to the concerns of performance. If the trade - this is your entire world and it does not work, then you will feel as though your world is crashing. Lay «eggs» self in a few baskets, so that it could guarantee that the inevitable recession and the black bars will not destroy your confidence.
I want to stress once again: the majority of traders who believe that they have driven their psychological problems, deeply inside themselves, in fact, caught in a vicious circle of excessive demands on themselves, increasing the pressure of performance, causing anxiety, which leads to violations of the execution and renewed demand to itself, to compensate for the failure. After some time, traders are caught in a circle, are beginning to doubt as to whether they had ever succeed.
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