Maintaining a Positive Trading Psychology

Below is an excerpt from an article from Psychologist Brett Steenbarger, author of The Psychology of Trading (Wiley, 2003)

“It is common to hear traders assert that mental self-control is the key to stock market and futures profits….the reverse is equally true.  Staying grounded in solid trading rules and systems is one of the most powerful ways of maintaining a positive trading psychology. When we are rule-governed, we are in a mental state that promotes efficient perception, problem solving, and action. Indeed, training ourselves to stay rule governed during trading rehearsals is an effective strategy for cultivating rule governance in real time.”

Wise words indeed, a positive trading psychology is SO key to trading success.  Essentially, for the members of this site, I am your rule based system, by following my trades you will keep a positive trading psychology, as you won’t be beating yourself up for making mistakes, or having a “woulda, coulda, shoulda, didn’t” conversation with yourself.

Part of the reason that I am so attracted to trading a system is one, in the past I have had too many of the aforementioned conversations with myself after a trade had gone really bad and second, because I do not believe that I would have the consistent metal strength to make decisions day to day if I were purely relying on instinct, intuition or even experience.

Different rule based systems may work better for different traders, depending on time frames and markets traded…some people like trading 24 hours a day!  My own rules require 15 minutes a day and are very mechanical and that’s the way I like it.

If we believe many of the “Wizard” traders interviewed by Jack Schwager, a key to trading success is surviving our own learning curve.  Identifying the system(s) and trading time frames that work for you.  As not everybody wants to be a day trader, myself included, but you gotta have rules!

May today be a profitable day…for all of us.

John