The Trader as Psychologist

The Trader as Psychologist - The Trader as Psychologist...

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The Trader as Psychologist Brett N. Steenbarger, Ph.D. www.brettsteenbarger.com This is an excerpt from The Psychology of Trading (Wiley, 2003). An important goal of this book is to help you approach trading the way a psychologist approaches his or her clients. I call this “trading from the couch,” which means learning to utilize your thoughts, feelings, impulses, and behavioral patterns as market data . Trading from the couch entails an important shift from traditional thinking. Instead of trying to overcome or eliminate your emotions, this self-aware trading calls on you to learn from your reactions. Your goal is to turn yourself into a finely calibrated instrument for detecting and acting on the patterns of both the trader and the trading. Note that cultivating such sensitivity does not mean simply going with your feelings in placing orders! As you will see in the coming pages, it often means the opposite: learning to use excess confidence and risk aversion as valuable contrary indicators. Surprisingly often—for the trader, as for the therapist—acting counter to one’s initial
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This note was uploaded on 10/21/2010 for the course BUSINESS 19450 taught by Professor Goldberg during the Fall '10 term at Saddleback.

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