LEARN FROM GENERALS OF THE
MARKETS - PART 13
“Discipline is the bridge between goals and
accomplishment.” - Jim Rohn
Dr. Brett N. Steenbarger, who
holds a PhD in Clinical Psychology, began to get involved with the markets in
the late 1970s. He’s an expert in the field of psychology and its importance in
trading. This brilliant expert has written 2 wonderful books about trading: Enhancing Trader Performance and Psychology
of Trading. He worked with
professional traders at Kingstree Trading, and also coordinated their training
programs for new traders. Lately, he’s served as a presenter in some training
programs sponsored by the Chicago Mercantile Exchange and other futures
exchanges.
Living in Naperville, IL, Dr.
Steenbarger is a happy husband and a proud father. One source says that he’s
now working as a hedge fund manager. He’s also written numerous articles about
trading and trading psychology. According to him, a trader is one who actively
speculates on market movement, drawing on research and/or discretionary
judgment to anticipate changes in prices. I can tell you that you’ll gain a lot
of helpful insight into successful trading if you can read some of those
articles on his website. You can access them at Brettsteenbarger.com. In
September 2008, TRADERS’ magazine (www.traders-mag.com)* was able to interview this
bright mind. Some of what he said was mentioned below.
Lesson
Dr. Brett definitely has much
helpful information to pass across to traders – beginners and experienced. Here
are some of what he’s to say:
- Like
any performance field, it takes years (not weeks or months) to become
successful at trading. People like to neglect this reality and learn their
lesson the hard way. Would you like to develop the necessary knowledge and
skill before you put your capital at risk? Successful trading requires
hard work (contrary to what others might say). Dr. Brett believes that
highly successful traders are no deferent than very successful physicians
and athletes. They’re highly dedicated, work long hours and constantly
upgrade their knowledge and skills.
- Don’t
forget that you’ll always be a student of the markets. Don’t ever think
you know what you’re doing. Overconfidence is what ruins most traders
(like using too big position sizes because we feel the market ‘must’ move
in our favor or we feel a negative order would eventually turn positive
even if we don’t use stop orders).
- Dr.
Brett risks a fixed small size of his portfolio on each trade. He stops
trading temporarily if he loses more than a target amount (something
that’s usually small). He raises his size if he trades well, but reduces
it if he goes out of sync with the market. He makes sure that he never
goes down more than 5%. He goes for small but consistent profits, not
jackpots. He doesn’t believe that everyone should trade like that (but the
discipline has worked for him so well).
- You
can’t win the game if you don’t stay in the game. You can only start
making money if you stop losing it. The only way to stay in the trading
game is to focus on risk management, which, according to Dr. Brett, is
perhaps the most important ingredient in all successful trading,
especially as far as permanent success is concerned.
Conclusion:
As a trader, would you like to always approach the markets with positive
thoughts? This is exactly what trading psychologists like Dr. Brett N. Steenbarger
promise you (there are many famous trading psychologists out there). Are you
interested in knowing how you could always trade with calm – no matter what the
markets do? Continue to follow the articles in this series.
This piece is concluded with
a quote from Dr. Brett N. Steenbarger:
“Greatness is more than being good at something: it’s
when a career becomes a calling and skills become expertise… Competence is
doing things conventionally well; expertise is doing things uncommonly well.”
*For current TRADERS’ issues,
please visit www.tradersonline-mag.com.
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
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For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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