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The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (Wiley Trading)

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The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (Wiley Trading)

This is my first Amazon.com review, and with excellent reason -- Dr. Steenbarger's latest book is his best yet!

Wall Street is the only place on earth where an expert and a novice have a 50-50 chance of winning. This is the human fascination with speculation.

Dr. Steenbarger's book provides 101 lessons every rookie and professional trader should---thanks to this book---be familiar with. Like his previous books, The Daily Trading Coach provides little jewels to improve your viewpoint from amateur trader to professional trader.

Compared to Van Tharp's books, Dr. Steenbarger takes an entirely different approach. Where Van Tharp focues on Position Sizing and Positive Expectancy systems, Dr. Steenbarger focuses on proper self-monitoring and self-coaching tips to improve performance over the daily uncertainty of Wall Street.

Combining Van Tharp & Brett Steenbarger's lessons, below are some commonly misunderstood facts of financial speculation:

1) It's not by making large profits that money is made over time. It's by consistently keeping losses small in relation to profits.

2) Making Money and Being Right are at opposite ends of the performance spectrum, and --- very surprisingly to most --- most professional traders admit their primary job is to minimize losses, NOT focus on being right. Why? Minizing losses (well over 50% of the time losses can't be avoided) ensures their average winner will be greater in relation to the average loser.

3) No one knows FOR SURE how much profit any trade is likely to make. Fortunately, it is possible to know THE INITIAL RISK a trader is willing to lose.

4) Projection of future prices are only a BEST GUESS, never a 100% certainty.

5) Top traders only control three things all the time: Initial Risk, Exits, and EMOTIONS...

Most professional traders keep emotions in check, and most admit that an emotional trader is a Dangerous Trader. I'm happily surprised to find Dr. Steenbarger support a different view.

Dr. Steenbarger uses research to argue that emotions can become a trader's best friend by fueling the drive to sustain change and modify a trader's behavior to enhance trading performance. Learning this is worth 1000x the price of the price of the book! Why? Because humans are naturally wired to act on emotions, and the human mind is the most complex to understand because emotions drive its actions unpredictably. Over 75% of the Daily Trading Coach is focused on harnessing the psychology of emotions to propel performance

It is said that Wall Street is the most expensive place to find yourself. Although this will always be the case, The Daily Trading Coach will certainly help reduce the cost of such an expensive lesson.

My faith is stronger than your doubt,

Federico Tewes

The first time I met Dr. Steenbarger was in the smaller conference room of our proprietary trading firm in NYC. We were finalizing our training program and wanted the best teacher that we knew to review our work. He wasn't being paid, he was just a trading coach offering a helping hand. As Dr. Steenbarger offered his critique I was humbled by how much I still needed to consider. There was more work to be done.

I have traded my own account through the Asian Financial Crisis, the Tech Boom, the Internet Bubble, 9/11, and the recent near collapse of our banking system. Today I run SMB Capital, a proprietary trading desk. Yet TraderFeed and Dr. Steenbarger's writing is still essential reading for me. The Daily Trading Coach is no exception. It is simply a must read for the new, developing, and experienced trader.

As John Forman has done I should disclose that I am a proud contributor to the book. And I must admit my favorite part of this book is when Dr. Steenbarger makes fun of me for my overzealous contribution. Hey I was just trying to help.

When I first started my trading career in the late 90's you learned through osmosis. You sat next to an experienced trader and when they had time (if they had time?) they discussed their trading. The market is more complicated than when I began and this model frankly is outdated. One of the new techniques you must master is how to coach yourself, even if starting at an established firm with excellent mentoring. Start with the Daily Trading Coach.

Often new and developing traders mistakenly believe that learning from the best trader is the way to become great. If only this were true. The developing trader must find the best teacher. Dr. Steenbarger is the best trading teacher that I know.

The other day I received an email from a prospective trader asking me if everyone on our desk put up identical P&L since they all have access to the same trading plays. The experienced and developing trader are I am sure chuckling politely as they read. Not every trader possess the same trading skills and mental development. Psychology is the 800 pound gorilla in the room on every trading desk. Dr. Steenbarger is the godfather of techniques to clear our mental hurdles. There is so much more of this in the Daily Trading Coach. 101 lessons more to be exact.

Dr. Steenbarger has insider access to Hedge Fund traders, Investment Banks and proprietary trading firms that few do. His years of experience working with these groups has armed him with anecdotes and lessons that he has again passed along. Thank you Dr. Steenbarger.

This book sits in my office in Manhattan along with many other great trading books. I find myself often of late, rising from my chair, heading over to my book shelf, and rereading sections of the the Daily Trading Coach, as I consider how to best mentor one of our traders. The Daily Trading Coach is a trading gift that keeps on giving.

Mike Bellafiore
Partner, SMB Capital

After reading over 100 books on trading, I believe this one could very well be the most important. Your mind will determine if you are successful or not in trading. When you trade you are competing with millions of other traders, investors, and institutions for profits. It is similar to being an athlete, and all athletes must have coaches to continually push them to higher levels of achievement through motivation and goals. With out the right coaching, careers stagnate and even go backwards. The beauty of this book is that it teaches you to coach yourself. The author is a trader and psychologist, and he coaches professional traders. His goal with this book is to teach his readers how to coach themselves to success with the same techniques he teaches the pros to use.
Here are some of the gems of wisdom you will find in this book:
"...your losing trade is never a total loss as long as you embrace it and learn from it."
"When we're most frustrated, but also most overconfident, we're likely to make our worst decisions and violate our trading principles."
"..confidence comes from self-mastery."
"A good day is one in which we follow sound trading practices, from skilled execution to prudent risk management."
"Your focus becomes one of trading well, not one of making money."
"To best focus on any single performance, it helps to be diversified among performances."
"Positive thinking is not necessarily optimistic thinking, it is constructive thought."
"...good risk adjusted returns are better for the psyche than extreme patterns of returns. It's not how much you make, but how much you make per unit of risk taken that will keep you in or out of the performance zone."
"Focus on your best trading and you begin the process of extinguishing your worst practices."

This book has really improved my trading, by really teaching me to think correctly. It also reinforced my risk management strategies and showed me the importance of learning and growing. If you are serious about becoming a trader this book is a must have, it will show you how to build up the correct psychology to persevere in the markets long enough to win consistently. This is a must have for every trader's library.

I gave very high ratings to the author's previous two books. However, I remarked that they are for professional trading trainers and trainees preferably with intermediate knowledge on psychology. Eventually, the author had presented the "mass market" this great work which it can digest. Very useful indeed. A must for any serious trader's collection!

Below please find some of my most favorite passages for your reference:-
When you think about your thinking by adopting the perspective of a self-observer, you no longer buy into negative thought patterns. pg42
A trading career is a marathon, not a sprint; the winners pace themselves. pg78
When we pursue goals in an effortful manner, we build intentionality and free will. pg80
A different facet of well-being is serenity: a mind free of distracting thoughts and feelings. It is vital to elite performance: a mind at peace is one that can be fully focused on market patterns. pg83
Success does not consist in never making mistakes but in never making the same one a second time. - George Bernard Shaw pg99
To keep yourself solution focuse, you want to ask yourself, "What did I do well today? What about this trade did I do right?" You will find that, over time, your performance is varied. pg113
When you talk aloud your thoughts and feelings, you no longer identify with them; you listen to them as an observer. pg117
Our coping is mobilized when we imagine anticipated stressful situations, preparing us for when those situations actually occur in trading. pg127
Consider two coaching scenarios.....1# "How could you be so careless? You just ruined your week. Do you realize what will happen if you continue to do this...." 2# C'mon, you're a better trader than that! Remember last month when you put together a string of winning days?...." 1# mirrors a sense of failure....2# doesnt avoid the problem, but starts from the premise of good trading. It mirrors encouragement and a reminder of the trader's strengths. pg144
I find it helpful, during trading, to periodically remind myself, "It's not about me." pg178
Tangible rewards for your success are among the strongest positive reinforcers. pg206
You dont have to diversify by trading many markets. You can diversify by time frame, directionality and setup pattern (trending, reversal). pg247
Anyone who fights for the future lives in it today. -Ayn Rand pg261
It's okay to be emotional; it's not okay to let emotion change your management of risk. pg281

It was really hard to resist buying this book from the local bookstore AFTER I had ordered it from Amazon. What did they say about delayed gratification? My order was one of seven books, and when it arrived, I read this one first - so much for delayed gratification :)

I have to tell you - ALL of the 101 Lessons spoke to me. The 'highlights' and summaries called "Coaching Cue" are extremely useful. It aids when one just wants to go back and get the main points of the lesson. Some spoke softly, some spoke loudly.

My (loud) "Aha!" moment was the lesson (#1) on using emotions as a change agent. When we experience success in the face of strong emotions, it affirms our conviction in ourselves, it adds to our sense of confidence. Use emotional force to provide the motivation for an organizing principle - a must-have; in order to meet our goals. The force would have to come from you, the trader. This 'Star-Wars' like exhortation begins with the visualilzation of yourself in trading to achieve your goal. "Imagine it, and it will be so." - General Maximus in "The Gladiator".

Visualization reminds me of trying to perfect my gybe in board-sailing, where the coach tells us to visualize in our minds exactly what we would do to achieve that perfect gybe. Know where the wind is coming from (the trend), place the sail to catch the wind correctly (ride the trend), proper foot and hand work to flip the sail and carve the board (trade management), and exiting the gybe with good speed, and re-catching the wind efficiently (closing the trade and enjoying the good execution of a trading plan).

I've lived too long in the myth that a good trader is an unemotional trader. Only computers are. What? Use emotions in trading? Yes use it as a force for positive change, because we cannot run away from emotions. (But use emotions with control.) We are humans, not Vulcans (sorry Spock!). But hey, it is far better to read the book. I risk doing it injustice by trying to summarize it in just a few lines.

Remember that this is not a book on trading. It is a book to teach you as much as possible about coaching and mentoring yourself to success in the financial markets. In this resepect, Brett includes a wealth of good, actionable advice, with memorable case examples. This makes the advice come alive. In some chapters there are even references to other specialists. He doesn't hold back in giving due deference to others.

It is not just 101 Lessons, it is also like 101 Authors/Specialists in one book.

Steenbarger's work is like a concatenation of many works, theories, traders and philosophies; being brought to bear on the a receptive trader with some degree of insight.

I think this book will be really good for those already trading, from newbie to master trader. However, even if you haven't traded before, it can be very thought provoking. And who knows, after reading it you may want to trade! (Caveat Emptor). I believe it will also make one a better person, as it really makes you get into your own mind, be your own shrink. Honesty with oneself is therefore a prerequisite. If you are deluding yourself, it will probably have little value.

How does this book compare with others? It doesn't. There is no comparison, and I don't mean this as hype. I have read hundreds of books on trading (bought and library-borrowed), and have also browsed through Amazon.com's extensive catalogue, and I have yet to know of a similar book (as of May 2007). If I'm wrong, do let me know.

And just like the markets, this book strives to be alive by having its own blog! But Amazon.com review guidelines precludes me from putting the URL in this review. So get the book, trader!

Practical insights with pragmatic application to the continuous improvement it takes to build a better trader. The lessons, not surprisingly, are far wider and far deeper than trading - beneath the surface are chords which resonate across the spectrum of life. This is a book written by someone who truly cares about seeing people succeed in the specific and the general - you actually feel that when reading the book.

A book of many levels, of many insights and containing many, many gifts,

--h

PS. The Conclusion alone is worth the price of admission.

What distinguishes this book (I don't know his other works so I can't refer to them but a cursory sampling of them here at Amazon induced me to try this one out first) from other trading books I've read is that Steenbarger unabashedly incorporates "self-help" elements into his overtly psychological approach to becoming a professional trader. I'm aware of the stigma attached to the self-help genre as a whole, but in Steenbarger's case these elements emanate from extensive academic training in psychology (from the "About the Author" section of the book near the back: "Brett N. Steenbarger, PhD is clinical associate professor of psychiatry and behavioral sciences at State University of New York Upstate Medical University in Syracuse, NY"), so his self-help angle reflects what seems to be a genuine concern with helping people--a refreshing antidote to the many dry, analytical, impersonal tomes on trading out there (which isn't to imply that the latter don't have their place--they do--but they're useless if you haven't first mastered various inner aspects of professional trading).

I emphasize Steenbarger's self-help emphasis to distinguish it from the emphasis of another, more famous (but not necessarily better) writer, Mark Douglas, author of _The Disciplined Trader_ and _Trading in the Zone,_ both classics (and for good reason) in their field, whose insights about trader discipline, while incisive, are hardly inspiring. And for me, it's what endears me most to Steenbarger. The writer I've encountered who's come closest to equaling this profound sense of connection Steenbargers makes with his audience is Dr. Alexander Elder, although while Elder establishes his rapport through humor and familiarity, Steenbarger establishes his through perspective, compassion, and insight into how optimism and realism aren't necessarily mutually exclusive.

One thing I must say, however, is that those who haven't been trading for awhile may not benefit as much from this book as those who have--and especially those who have already lost a great deal of money. Steenbarger even implies as much in the way he titles his chapters: "Change: The Process and the Practice"; "Stress and Distress: Creative Coping for Traders." These are the FIRST TWO chapters of the entire book! Indeed, this is obviously a work intended to help the already-wounded trader get back on his/her feet and this time do it right. Steenbarger emphasizes the necessity of the professional trader eventually having to consider trading well from the standpoint of a fear-based need rather than a luxury-based desire--a revelation, again, that usually only comes to those who have already been severely wounded by trading badly. If this is you, this is your book. If it isn't, and you stick with trading, it eventually WILL be--unless it's already too late.

This book is for traders who already have a trading plan or a stratgy in discretionary trading. This book will show you methods how to stand by yourself, watch yourself, and help yourself to follow your own guidelines.
Dr. Steenbarger states that he only coaches professional and institutional traders. So all of his books (I like Enhancing Trader Performance best) come at a huge discount.
This book is divided into 10 chapters made off 101 lessons. The reader/trader may find that some lessons aren't of any concern to her, and then he finds other lessons that really address his specific need or problem. Dr Steenbarger's books even helped me in other areas of my life.

But as for trading; in my not so humble opinion, a proper trading plan is still the most important asset to the trader. By all means in trading one has to know why to do, when to do, and how to do something. It's like a traffic light: you may feel you're tired, sad, happy or excited; you still know what to do when you see green light or red light. Psychology takes care of itself after you've crossed the street. It's when your plan works and you find it's your own behavior that hinders to get the most off it, then this book might help you with overcoming your limitations.

In many sections, I felt the book could have just as easily been titled "The Daily Weight Loss Coach" or the "The Daily Relationship Coach" with a pass of the find & replace feature. Much of the content is very general in nature or just common sense. Unlike other books in my trading library, it did not change the way I trade, but I still feel it was worth the read. The book would probably be of more benefit to somebody just starting a career as a retail trader.

In Googling "Trading Coach" this morning, I came across "The Daily Trading Coach". I read the reviews and looked through the sample and Googled the author. I've been trading for about 10 years and I'm admitting that I've never been good and it so unless I want to give it up, I need to change how I trade. That's why I bought this book. I'm spending a month of vacation time from my job to get my act together since I'm going into my 60th year and want very much to be able to trade to supplement a pension in my retirement. Quite a bit of pressure. So to grapple with the fear that I have of destitution in old age, (just kidding) I'm setting up a better trading process; journaling, determining a pre-market routine, figuring out how to make trading a business, etc. It's complex so it's important to get organized and have a system down on paper to work with, a business plan. I've never sat myself down to do that.

I've worked in both the textbook industry and the educational field and just in reading the preface and intro. of this book and seeing how Mr. Steenbarger has laid the text out and is using multimedia through his website, I am impressed. I see the danger here as one of being overwhelmed with data, but the author is obviously a man of great accomplishment and organization, and a lack of organization, dedication and consistency have been my downfalls. I'm looking for help to stop speculating and make trading a business. I've learned a lot about trading in the last 10 years. Now I need to apply it in an effective manner.

I'm going to use this book as a workbook. I'll go into it looking for what applies to my trading of the day, read some about the subject, then be led through a wealth/maze of information on-line, helped to assess it's use and organize the information into my trading plan. A good way to keep myself on track... like having a coach at my side when I want some assistance to work on something specific to my trading challenges. I'm thinking I've found the teacher/coach I am ready for, and it's ME, with a little help.

Happy Trading