Trading is hard. This far-flung, never-ending electronic poker game serves up a mental challenge unlike any other. Anything can happen at any time. It looks like a numbers game but it’s really a people game. The data are numbers but the information is in the relationships between, and the implications of, those numbers.
Ambiguity reigns.
Successful traders […]
“I got them all wrong” exclaimed one private equity portfolio manager. “Ha! Right!” said another Chief Investment Officer when I suggested that the pattern recognition skills embedded in succeeding with the Bloomberg Tradebook Trader Brain Exercise (TBX > GO) resembled private equity decisions.
With almost ten thousand players, this exercise/game illustrates an underlying hunger for new ways to improve […]
UPDATE June 20, 2016: I am SO glad the Cavs won! Thrilled. Elated. Vindicated. Ecstatic. Relieved. Joyous. Shocked… not necessarily in that order. Maybe someday I will get to interview LeBron about the cycle of emotions he experienced and used to create this incredible historic victory!
UPDATE June 17, 2016: This time I stayed until the […]
A few weeks ago, I attended the annual meeting of The Social and Affective Neuroscience Society (SANS) – a seemingly unlikely place to figure out how to resolve a trading mistake! Those who follow me know I am not only a closet academic but that many of the advanced trading psychology ideas I teach originate with […]
Conventional wisdom still dictates that traders “control their emotions.” Yet somewhat conversely, the cutting edge of neuroeconomics research shows that “emotion determines how we perceive our world, organize our memory and make important decisions” (Brosh, 2013).
Ever wonder why you did the exact thing you planned not to? Ever marvel at how you said you would […]
Trading psychology advice permeates the world of traders. Yet, the majority of traders still experience a challenge that goes like this: “Why did I do that?” They have a plan, they swear they will not make that mistake again and BAM! they do precisely the thing they did not want to do (and swore they […]
In a culture where it seems like hard work will be an edge, many traders mistake the type of work that will indeed create the best results. Trading is not only an intellectual exercise but a physical and emotional one as well. It follows then that an edge or at a minimum, the approximation of […]
Do you realize that almost no matter where you exit a trade, you are going to feel bad? If the trade is a winner, you wonder if you could have gotten more out of it or why you gave back part of what you had. It’s like a winner is ironically a no-win situation. On […]
Two separate studies interviewing close to 200 successful portfolio managers and traders confirm what Jason Voss and Ravhee Mehta have reported in their books The Intuitive Investor and The Emotionally Intelligent Investor. Being able to read the feelings of other market participants, a form of empathy, and being able to parse one’s one feelings for […]
In technical terms, the researchers call this projected emotion, “anticipatory affect”. In simple terms, the results of this meta-analysis of the brain’s reaction to probabilities in risk goes like this:
1. A trader or PM takes in information about the expected mean, variance or skewness of a trade.
2. The PM or trader’s brain responds with an […]