Something to Read - The Four Pillars of Trading Process by Brett Steenbarger
1) Preparing -
What you do to identify and exploit opportunity in markets, including
observation, research, idea testing, trade structuring, portfolio
construction, and trade planning.
2) Performing
- What you do to initiate and manage positions in the market, including
sizing, risk management, entry and exit execution, and adjusting to the
ongoing stream of news, data releases, and market movements.
3) Reviewing
- What you do to examine individual trades and overall trading to learn
from successes and mistakes and to reexamine ideas about markets.
4) Revamping
- What you do to translate your reviews into concrete goals and actions
that make you more prepared and aid your future performance.
As
the Buffett quote above implies, when a trader develops intrinsic
gratification from processes of discovery and mastery, it is much easier
to weather the ups and downs of short-term performance.
The
most common shortcoming I see among traders is not that they let their
emotions run away from them and lose their discipline. Rather, they
truncate the third and fourth elements above and spend almost all their
time preparing and performing. As a result, they rarely conduct the
thorough reviews that lead to ongoing learning--and they even more
rarely translate any cursory reviews into systematic efforts at
self-improvement.
Preparing
and performing require immersion in markets. Reviewing and revamping
require a step away from markets to reflect upon preparation and
performance. Joined together, the process elements yield a sense of
growth, development, and ongoing adaptation to changing markets.
When success is measured in terms of mastery, one can profit handsomely even during periods of trading loss. That is an important trading edge.
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Read more from Brett Steenbarger
Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology
Trading is a performance discipline, and like Olympic athletes, elite military troops, and performing artists, traders can structure their development to achieve competence and expertise. Through his own trading experiences and those of individuals he has mentored, Dr. Brett Steenbarger is familiar with the challenges thattraders face and the performance and psychological strategies that can meet those challenges.
In his first book, The Psychology of Trading, Dr. Steenbarger provided a framework for understanding and overcoming the mental obstacles to successful trading. Now, in Enhancing Trader Performance, he goes a step further and shows you how to transform talent into trading skill through a structured process of expertise development.
Straightforward and accessible, this comprehensive guide:
- Discusses the importance of finding an optimal fit between your trading talents and interests; the markets you trade; and the ways you trade those markets
- Explores how you can enter into a learning process that will cultivate your tradingcompetence and expertise
- Introduces the concept of learning loops, which enable you to make progressive improvements in your trading methods
- Breaks down performance into three components—mechanics, tactics, and strategy—and examines the role of each in generating trading success
- Illustrates how you can coach yourself with practical cognitive and behavioral techniques that rapidly change problem patterns and build new, positive ways of thinking and behaving
When you enhance your performance as a trader, you replace a small piece of randomness with intention. This enables you to make more informed trading decisions as you make your way through today's dynamic markets. Filled with in-depth insights, practical advice, solid research, and detailed examples, Enhancing Trader Performance offers an innovative approach to market mastery.
