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The Psychology of Trading: Tools and Techniques for Minding the Markets Hardcover – December 23, 2002
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From the Inside Flap
- "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
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 80s 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 Traders Almanac
"This highly readable, highly educational, and highly entertaining book will teach you as much about yourself as about trading. Its Oliver Sacks meets Mr. Marketextraordinary 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. Steenbargers 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. Steenbargers 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, CNBC.com Columnist, Author, Practical Speculation
Top Customer Reviews
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 ›
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.
A favorite mantra of traders is that one must be disciplined to have a chance at success in the markets. This is all well and good, but it's oftentimes easier said than done. Dr. Steenbarger's book takes the reader beneath the surface to explore reasons why discipline breaks down - why traders who know exactly what they are supposed to be doing, still fail to do it.
Unlike some other books, in this one the author does not just pour out a list of all the things that traders can do wrong, and the various mental issues which come in to play. He actually takes a proactive approach, one which helps the reader see that there are things which can be done to overcome one's difficulties. The reader is not left to feel like their emotions are a bad thing, but rather helped to see that they can be put to good use, not just in trading, but in life as well.
Most Recent Customer Reviews
This is a ridiculously good trading book. I should know; I’ve read well over a hundred of them. I’m very surprised it doesn’t have more than 4 stars. Read morePublished 2 months ago by Ronnie Adkins
It's a great read with great stories, and great insight. I really have enjoyed the read so far, and I think it will vastly improve my trading psychology. Read morePublished 3 months ago by Len56
This is a great read, anyone thinking about trading should definitely read this first before placing any trades.Published 4 months ago by Amazon Customer
More psychology than trading this book is good for the serious trader who is trying to shore up this part of his trading skills. Read morePublished 8 months ago by Robert Kirk
Great book on the psychology of trading, life lessons and clinical psychology. Thank you Dr. Brett. You've helped me to become a better trader, physician, friend and father!Published 9 months ago by Midnight Grave Digger
I found this book very well written and very insightful. But it may not be for everyone. There may be some experiential prerequisites necessary. Read morePublished 16 months ago by Tovel Young
It is very long, with unrelated stories, and quite boring. Made me thinking why I paid so much.Published 19 months ago by Amazon Customer
Of course this book is very useful and contains a lot of fresh and right ideas. I would recommend this book to everybody, but advice not to blindly believe everything you will read... Read morePublished on June 6, 2014 by Tim Martynov