Did you know that no one knows for sure how many “basic” (irreducible) emotions there are? Many scientists have long believed in six, a new study indicates four and a growing body of work by the teams emerging from Lisa Feldman Barrett’s labs makes a very credible case for only two – approach and avoidance […]
What can a trader do (really do) to optimize their mind for trading? Is it “plan the trade, trade the plan”? Is it “control their emotions”? Is it something else?
Here’s what works.
Realize that like professional sports, trading is a performance discipline.
#1 means that the interaction of body, mind and “spirit” IS the place to […]
What phenomenon does this partial quote describe?
“…people all of whose human relationships have the same
outcome: such as the benefactor who is abandoned in anger
after a time by each of his protégés, however much they may
otherwise differ from one another, …or the man whose
friendships all end in betrayal by his friend; … or, again, the lover […]
First of all, neuroscience is teaching us that trying to separate risk decision making from feeling or emotion is at best a waste of time and at worse, a sure way to eventually trade-out (like act out) the feeling/emotion that is present. Second, there is a logical fallacy in the idea of “control your emotions” […]
Forms of fear permeate the process of trading. Every market decision bets on a fundamentally unknowable future and as such, trading implicitly includes a factor derived from the spectrum of panic to overconfidence. Moment to moment, a trader’s beliefs can ameliorate debilitating or palpable fear but as most honest traders know, price action “mis-behavior” can […]
As I prepare for The Galtere Institute’s Behavioral Finance symposium, I am doing what I always do before I speak – catching up on the latest studies on emotion and risk decision making. For example, did you know that there is actually still much disagreement in science about what emotion is and how it works? […]
Traditionally trading psychology advice regarding giving money back has focused on being disciplined and staying focused. Yet traders of all stripes complain to me that while they intend to be disciplined and to stay focused, they find themselves in trades they didn’t intend.
It’s almost like (they say) someone else was in their body making these […]
If you are not at a hedge fund or proprietary trading firm (and in some cases even if you are), you might not really know your own trading. It’s quite easy to look at an equity curve and think that it all you really need to know.
In reality however there is a lot more data […]
Research is showing how powerful our mental context is in making risk decisions. But the thing is, most traders think mental context is about what they know – their insights, their indicators and their experience. In reality, it goes much further and deeper than that.
Recent experience that seems totally unrelated to trading counts. For example, […]
Price action in the markets is “the tell” – as they used to say. (It seems that is one of those words that has come and gone). But the problem is this said ‘tell’, tells you different things – it can be interpreted many ways. It is what is known as ambiguous.
Humans have a known […]