The Psychology of Risk: Mastering Market Uncertainty [Hardcover]

Ari Kiev (Author)

Book Description

Publication Date: March 15, 2002 | ISBN-10: 0471403873 | ISBN-13: 978-0471403876 | Edition: 1

One of the financial world's most respected experts on the psychology of risk provides a revolutionary risk management model
Over the past three decades investors have adopted all varieties of complex quantitative systems for quantifying and managing risk. Yet, sophisticated investors and money managers continue to suffer record losses in today's increasingly volatile markets. This book bridges the gap between investor psychology and quantitative risk management with a revolutionary risk management program that virtually any trader or investor can easily adapt to their goals and personalities. Using numerous fascinating real-life case studies, Dr. Kiev illustrates the various psychological and emotional traps to which even the savviest investors can fall victim. He develops a dynamic new risk management model that combines quantitative models and money management techniques. He also provides rigorous guidelines that will help readers answer such crucial questions as: How much should I trade? How much risk can I handle? and When should I get out?

Editorial Reviews

From the Inside Flap

THE PSYCHOLOGY of RISK
Mastering Market Uncertainty

In The Psychology of Risk: Mastering Market Uncertainty, renowned psychiatrist and trading coach Ari Kiev builds on his internationally acclaimed books Trading to Win and Trading in the Zone to explore the psychology behind risk and trading. By focusing on your appetite for risk-taking, your ability to manage and adapt to risk, and your pathological patterns of risk-taking, Kiev shows you how to overcome the psychological obstacles of risk that undermine your decision-making process and ability to cut losing trades and stick with winners.

With the help of numerous trading case studies, Kiev outlines a risk management program that bridges the gap between investor psychology and quantitative risk management techniques. Filled with expert advice and examples of real market situations, The Psychology of Risk allows you to take action in the face of uncertainty and unpredictability by addressing issues such as:
* Risk and the trading approaches you need to deal with it
* Psychological techniques that will help you trade independently of emotions: excitement, anger, fear, and stress
* Handling problematic behaviors such as perfectionism, decision paralysis, hoarding, and impulsiveness
* Handling failure and success
* Using the tools of coaching, teamwork, and system building to overcome obstacles

Risk taking does not mean living dangerously; it shows a willingness to act beyond the circle of what you already know. In breaking from the natural inclination to "avoid risk at all costs," you will begin to see risk in a new light-certainly not always as a negative force. The step-by-step approach presented in The Psychology of Risk will provide you with a new and stimulating perspective on risk, which will enhance your trading success and increase your profits.

From the Back Cover

Praise for The PSYCHOLOGY of RISK

"The Psychology of Risk is equally vital for everyone from the day trader to short-term online trader to long-term investor. A clear, enjoyable insight into what makes trading success."
-Alpesh B. Patel, Financial Times columnist and author of Trading Online

"Once again Dr. Kiev delivers a book that should be read cover to cover and kept as a reference. The Psychology of Risk explores the elements of risk taking as they relate to the human psyche."
-John Floyd, Director, Proprietary Trading, Deutsche Bank AG

"In 2000 and 2001, benchmark U.S. equity indices experienced the worst two-year performance since the bear market of 1973-74. Among the winners in this tumultuous market environment were those that invested with short time horizons rather than those that utilized a rigid buy-and-hold 'one decision' philosophy. Against this backdrop, Kiev, in his familiar pull-no-punches style, delivers an insightful, timely, and pragmatic thesis that focuses on the inner game of trading: psychology, discipline, and the holy grail-timing. A captivating read for those in search of a performance edge."
-Ciaran T. O'Kelly, Head of Equity Trading, Salomon Smith Barney

"Ari has proven himself to be a keen coach of world-class traders. The Psychology of Risk is a great read for those looking to better understand what it takes to put oneself at risk in the market."
-Kevin Becker, CIO, Claiborne Capital Management, LP

"Ari Kiev has done it again. One of Wall Street's preeminent trading coaches, he explores some useful principles of risk taking which will help traders to take their game to the next level."
Jay Goldman, Hedge Fund Manager, Goldman & Co., LP

See all Editorial Reviews

Product Details

• Hardcover: 256 pages
• Publisher: Wiley; 1 edition (March 15, 2002)
• Language: English
• ISBN-10: 0471403873
• ISBN-13: 978-0471403876
• Product Dimensions: 9.2 x 6.1 x 1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #809,194 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

24 of 26 people found the following review helpful:

3.0 out of 5 stars Good for Short Term Traders, but..., April 11, 2003

By 

GCB "gcb2" (Austin, TX) - See all my reviews

This review is from: The Psychology of Risk: Mastering Market Uncertainty (Hardcover)

Kiev's thesis rests upon the premise of setting profit goals and then trying to hit them. The idea is that you will be compelled to refine everthing about your trading and put away all excuses in order to reach this goal -- a sort of goal as catalyst for improvement theory. While this seems like good advice I am afraid that for longer term traders it runs headlong into the "only take what the market gives you" truism. If I set a goal of $10,000 per month, what do I do when the market goes nowhere for four weeks? You guessed it, I would try to force things. Not good. So unless you are willing to accept the thesis of setting specific profit goals you won't gain that much from this book. A much better treatment of general trading psychology can be found in Mark Douglas' "Trading in the Zone".

10 of 10 people found the following review helpful:

5.0 out of 5 stars A good read and I am a better money maker because of it., June 3, 2002

By 

Matt Grossman (New York) - See all my reviews

This review is from: The Psychology of Risk: Mastering Market Uncertainty (Hardcover)

This book isn't just applicable to traders. Fundamental, research driven investors will find the focus on risk management and risk taking equally helpful. The discussion of how an investor's emotions and tendancies can interfere with a profitable strategy is unique to Dr. Kiev's work and contradicts the old maxim of "don't let emotions affect your decisions." Emotions are part of everyday life and we have to find ways to benefit from them, not be hurt by them. I found Dr.Kiev's use of trading examples particularly helpful in helping me to identfy when my emotions are interferring with my strategy. More importantly, he provides tools and guidance that can help the reader improve their stock picking and portfolio management performance.

11 of 12 people found the following review helpful:

5.0 out of 5 stars An Important Read All Traders, May 19, 2002

By 

"stevenbg" (Oxnard, CA USA) - See all my reviews

This review is from: The Psychology of Risk: Mastering Market Uncertainty (Hardcover)

I found this book to be quite unusual. If you understand what Dr. Kiev is saying, you will find that you only have one decision to make, and that is to commit to a result. In a direct fashion, Dr. Kiev shows a committed trader how to move forward in a focused way, how to find the resources needed for success, how to evaluate progress and how to stay on track to reach a goal. Each chapter includes transcriptions of conversations with traders who are experiencing difficulties "along the way". I found that I shared many of the characteristics of these traders. The commentary that followed each vignette seems to provide a range of emotional "tools" that the trader can use whenever he/she feels besieged by the markets. One of the most important issues covered in the book is the ability to execute, to do what you know is right, and to stay in the trade without succumbing to emotion. This point alone would have saved me thousands of dollars (and a lot of emotional turmoil) in the last several years. Dr. Kiev's book is an invaluable resource to traders at every stage of their journey.