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The Psychology of Trading: Tools and Techniques for Minding the Markets Hardcover – December 23, 2002

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The Psychology of Trading: Tools and Techniques for Minding the Markets + The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist + Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology
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Product Details

  • Hardcover: 330 pages
  • Publisher: Wiley; 1 edition (December 23, 2002)
  • Language: English
  • ISBN-10: 0471267619
  • ISBN-13: 978-0471267614
  • Product Dimensions: 9.3 x 6.2 x 1.2 inches
  • Shipping Weight: 1.2 pounds (View shipping rates and policies)
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (51 customer reviews)
  • Amazon Best Sellers Rank: #314,310 in Books (See Top 100 in Books)

Editorial Reviews

From the Inside Flap

Behavior is patterned. Beginning with this premise, noted clinical psychologist and active trader Dr. Brett Steenbarger opens the therapist’s door, demonstrating how traders can identify, interrupt, and change the problem patterns that interfere with successful trading. In The Psychology of Trading, Dr. Steenbarger draws upon real-life case studies and offers hands-on techniques for emotional change to assist traders in becoming their own therapists. Themes that set The Psychology of Trading apart include:
  • "Trading from the couch" by utilizing emotions as valuable market data
  • Identifying and building solution patterns that capture hidden trading expertise
  • Techniques for assessing and trading against the emotions of market participants
  • Methods for building focus and concentration for more automatic and trustworthy trading decisions
  • Creating shifts in states of consciousness to rapidly exit anxious, impulsive, depressed, and guilty frames of mind

In an engaging manner that provides practical solutions to real trading problems, Dr. Steenbarger walks you through the most common cognitive and emotional tendencies that distort efforts at identifying and trading market patterns. He then describes specific skills derived from years of brief therapy practice to help you become an effective observer of these tendencies and gain control over them. By blending state-of-the-art research from psychology and cognitive neuroscience with detailed case studies, The Psychology of Trading provides you with the intellectual and emotional ammunition to face yourself and transform your approach to risk and reward.

From the Back Cover

"The one, only, and by far the best book synthesizing psychology and investing. In addition to providing modern, scientific knowledge about psychology, this book provides a mirror into the mind and wide breadth of knowledge of one of the leading practitioners of brief and effectual cures. Will help to cure your trading and your life."
–Victor Niederhoffer, Chief Speculator, Manchester Investments
Author, The Education of a Speculator and Practical Speculation

"How refreshing! A book that rises above the old NLP model of the 80’s and provides insights on how our relationship with the market is indeed a very personal one. Not only has Steenbarger provided some fantastic tools for the trader to transform his mindset, but he has contributed unique trading ideas as well. Brilliant!"
–Linda Raschke, President, LBRGroup, Inc.

"‘Investigate, before you invest’ was for many years the slogan of the New York Stock Exchange. I always thought a better one would be, ‘Investigate YOURSELF, before you invest.’ The Psychology of Trading should help you increase your annual investment rate of return. Mandatory reading for anyone intending to earn a livelihood through trading. "
–Yale Hirsch, The Hirsch Organization Inc., Editor, The Stock Trader’s Almanac

"This highly readable, highly educational, and highly entertaining book will teach you as much about yourself as about trading. It’s Oliver Sacks meets Mr. Market–extraordinary tales of ordinary professionals and individuals with investment disorders, and how they successfully overcame them. It is a must-read both for private investors who have been shell-shocked in the bear market and want to learn how to start again, as well as for pros who seek an extra edge from extra inner knowledge. Steenbarger’s personal voyage into the mind of the market is destined to become a classic."
–Jon Markman, Managing Editor, CNBC on MSN Money
Author, Online Investing and Swing Trading

"Dr. Steenbarger’s fascinating, highly readable blend of practical insights from his dual careers as a brilliant psychologist and trader will benefit every investor; knowing oneself is as important as knowing the market."
–Laurel Kenner, Columnist, Author, Practical Speculation

More About the Author

Brett N. Steenbarger, PhD, is Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, New York. An active trader and author of the popular TraderFeed blog, Steenbarger coaches traders in hedge funds, proprietary trading groups, and investment bank settings. He is also the author of the Wiley titles Enhancing Trader Performance and The Psychology of Trading. Steenbarger received a BS from Duke University and a PhD in clinical psychology from the University of Kansas.

Customer Reviews

To advanced or beginner traders I highly recommend reading this book to propel your trading forward.
James Ramsay
I have read Douglas and I have Ari Kiev's book which I will read one of these days, but I can't see how it can top Steenbarger's.
Matt Cook
Rarely have I read a book that both contained so much useful information and presentated it so well.
William J. Egan

Most Helpful Customer Reviews

89 of 95 people found the following review helpful By ServantofGod on December 15, 2003
Format: Hardcover
The author's M.D. counsellor-trader identity did help him making this an uncommon trading psychology book full of "highly trading relevant" counselling records from both trader and non trader patients. The catch is: if you are not interested in or equipped with an intermediate level of knowledge about psychology or counselling, I doubt very much whether you can finish reading this 300 page book till its end.

To let you have a better grasp of my "worry" mentioned above, I would like to quote something from the last or conclusion chapter, which the author regarded them as the 11 major themes explored in his book.

1. Behavior is patterned.
2. Your trading patterns reflect your emotion patterns.
3. Change begins with self observation
4. Problem patterns tend to be anchored to particular states. (When you enter a particular state thru emotional, physical, or cognitive activity, you tend to activate the behavioral patterns associated with that state.)
5. Our normal states of mind, which define most of our daily experience, lie within a restricted range of our possibilities. (Your immersion in daily routine keeps you locked in routine mind states)
6. Most trading occurs in a limited range of states, trapping traders in problem patterns. (Traders tend to place greater emphasis on the data they process than on the ways in which they process those data.)
7. People in general, and traders specifically, enact solutions as well as problem patterns.
8. Eliminating emotions is not necessarily the secret to improving trading. (Traders can utilize positive emotional experiences to identify constructive solution patterns and to create an anchoring of new, positive patterns.)
9. Success in the markets often comes from doing what doesnt come naturally.
Read more ›
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36 of 38 people found the following review helpful By Determined_Trader on December 2, 2005
Format: Hardcover Verified Purchase
I am a full-time, intensely dedicated trader. I can say that many individual paragraphs in this book contain more useful information, advice, and insight than the TOTAL of all other books I've read on trading. First: the author is SMART, VERY experienced with trading, and the perfect combination of an original thinker and a well-informed intellectual in his field. He has an obvious gift for psychology and therapy, and a real hook for trading. Although the book is literally overflowing with all sorts of gems, the center of it, and the brightest gem of all surrounds the concept of "brief therapy." Through 10 or so excellent therapy stories he shows us several ways to "get outside ourselves" and observe what we're really up to; and then how to cleverly "shift" who we are to more productive patterns. He does all this both within and beyond the particulars of trading. This book can help you achieve a clarity directly appropriate to trading in DAYS, that without it--and if you were quite perceptive!--would have seemed like a lifetime's work. I can't recommend this book highly enough; and I've never written a review and don't plan to write another--AND, I'm kicking myself because I'd really prefer that other traders DIDN'T read it!
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24 of 25 people found the following review helpful By Matt Cook on August 22, 2004
Format: Hardcover Verified Purchase
The Psychology of Trading is one of those books where you will make a lot of discoveries about yourself and about your life, if you are paying attention, that all tie into trading.

Steebarger is a psychologist specializing in "brief therapy" and also an active trader. The book has chapters that discuss an in-depth story of a patient, and draw lessons from that story about life, cognition, and trading.

It is an awesome book. I have read Douglas and I have Ari Kiev's book which I will read one of these days, but I can't see how it can top Steenbarger's.

Steenbarger says that we have many personalities, and he shows you how you can identify which personality is doing what, and trigger the "Observer" in you, a part of you that is watching and that can see the truth of what you are doing and why you are doing it. This isn't as Zen as it sounds. And Steenbarger has technique after technique in each chapter, so it isn't a bunch of generalizations and observations.

The first technique (which I have done for some months now and read that Larry Connors and Linda Raschke also do and you probably do too) is to keep a detailed trading journal with your thoughts, feelings, what is happening, why you are taking a trade, etc.

The second technique is to excercise in the morning (he does stretching and some calisthenics) and then talk out loud and explain each of your trading plans. Something about talking out loud and explaining your plans lets your brain process differently and he says you can identify what is really good, find holes and see potential traps or things you haven't thought through.

I am on the fourth chapter and I just love this book.
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25 of 29 people found the following review helpful By A Customer on February 15, 2004
Format: Hardcover
First, let me start by saying this book will not teach you how to trade (though you could probably see that from the title). I think the book is way longer than it needs to be. The author talks about many counceling events with clients in his life (most are non-trading related) and then tries to draw a parallel with them to trading. When he finally gets to his point about actual trading psychology, he has good things to say. But I think he could have said everything in one chapter. Nonetheless, I found that I was able to relate to many of the behaviors he discusses. I didn't feel like he really gave great help in trying to break the bad behavior, but at least being able to relate to it makes you think about it and pay attention when you are falling into it while trading. There are many other trading books I would probably read before this one. But if you're sick of all of the technical books that try to teach you how to trade, this book might be worth a read. It's actually one trading book that you could take on vacation with you.
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