Trading Psychology Principles and Best Practices
TraderFeed (Brett Steenbarger, Ph.D. (noreply@blogger.com))
Principle #1: The best trades come to you. I have consistently found that, if I begin my market day with a definite idea and a desire to trade that idea, I'm likely to lose money. If, on the other hand, I enter the day having done research but then adopting an open mind as to whether or not the market will follow its historical tendencies, I'm much more likely to place winning trades. Really good trades are not something I bring to the market. Really good trades emerge from being immersed in the market. Watching and watching, listening and listening to what the market is saying leads to moments of clarity where it suddenly becomes clear what is going on. The idea will come to me (as happened yesterday) that buyers cannot push this market higher. That leads to a nice short trade to fade what has been happening. When trade ideas come from immersion in the market, there is a quiet confidence in those ideas. Quiet clarity is a sign that an idea has come to you--that you're not simply imposing your needs, your views, your desire to trade on the market. One of the most promising practices in trading psychology is training the brain to more consistently operate in a mode of enhanced focus. The best trading comes, not from controlling emotions, but from building our capacity to stay in the zone. When we wait and wait and wait and track the market and track the market over time, we are doing the very things that help train our brains. Success comes from active patience. That's when the great trades come to us.
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