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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:
1. 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.
2. 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).
3. 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).
4. 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.
