The Psychology of Trading: Tools and Techniques for Minding the Markets 1st Edition

This is a fantastic book and anyone thinking of buying it should definitely listen to some of the points in this review.First off, this book and its insights are very well thought out. You get the sense that this author is not some hot shot. He is a down to earth human and it is easy to emphasize with him in many of his stories of emotional swings in the market.The author is able to take the psychology of trading and apply it to the real world. All too often new traders think of trading as one thing and life as another. As someone who has been on this path for awhile, things begin to merge as you find that your problems in life carry over to your problems in trading, and to be a good trader for long periods of time, you must also be good at living well in general.I have read reviews complaining about the stories and their relevance. There is a inkling of truth to these statements, but they usually come from readers who are not well experienced in the markets. This book is very subtle in its own way and many of its pearls of wisdom are not "smack you in the face" statements. This book is definitely not for those who are brand new to trading because they will not have the experience that lets them understand how the stories this author tells are relevant to his trading.So what is the use of this book if you have to already know what he is talking about to read it? Well the author definitely puts things that are already deeply understood into new context. Putting this market wisdom in new ways is always a great way to solidify your mental structure and sometimes be able to apply it outside of your previous focus.All in all, I would tell any trader that they have to have this book on their shelf, but that it is a book to be read many times, chapter by chapter, not all at once. Like Market Wizards, Disciplined trader, or Rem. of a stock operator, this book requires patience and an understanding of subtlety. You will get new insights every time you leaf through it.Concerning his last chapter and sometimes throughout the book, he is definitely on the leading edge of where trading is going. Before computers became very powerful, most good traders needed implicit knowledge and experience to trade. Now that computers have taken over quite a bit of the playing field with Quant funds and technical analysis, sometimes this old "seat of the pants" trading is called undisciplined hogwash. However, the best traders will be able to use the new psychological information about instinct, combined with the technology and discipline of systems, to become proverbial Michael Jordans of Trading. Very very interesting stuff.

I have been there: knowing I have an issue with my trading but not knowing how to overcome it. Dr. Steenbarger’s case stories and guidance describing how a trader might benefit from the treatments, combined with some of his personal trading preparation, difficulties, failures and triumphs come together to present the reader thoughtful insights few lay people would ever realize on their own in their quest for trading success. I found many passages where Dr. S will describe a trading truism such as when he says “I spend most of my trading time waiting for my setups to appear.” These resonated with me, lending more weight to the trading passages and motivating me to keep my trading journal as he suggests, paying more attention to the market internals, and of course, to my own state changes while trading. (Read the book to find out!) Now I have some tools to help me get more centered, focused and profitable. I would recommend this book to any trader.

I found this book very well written and very insightful. But it may not be for everyone. There may be some experiential prerequisites necessary.For all those who have read the negative reviews, I would think the discrepancy between what the good reviews and bad reviews are saying is the level of introspection one has. If you are an extreme introvert that is in love with his own thoughts more than what is happening around him (like me),this will be a huge help. If you are an insightful and introspective extrovert, this will help you. If you are the type who never knows what they are feeling or don't understand the social pressures imposed on them or can't appreciate silence (this book is not actually about all three of these), it may be a good read for you, but you have some learning of yourself to do.If you can't see how trading brings the same psychological contexts as the rest of life, pay someone else to trade for you. What has happened to us in life shows up in our trading. What we struggle with in life shows up in our trading. We cannot compartmentalize these parts of our lives as well as we think.This book helped me parse between me and my trading (they are not one and the same.... though my self talk told me otherwise). It taught me how to change my mood and perspective by using my body. And it works. It taught me that most of my knee jerk trading issues were not deep rooted psychological issues. They are common issues. They are easy to deal with and you don't need therapy or a trading coach to overcome them.If you are profitable but not as profitable as you know you can be (1% and not 3% or more) you can learn how to challenge yourself to be better. If you are not profitable, this is not a trading system. If your trading system is valid, this will help you execute a working trading system. If your trading system is nonfunctional, that doesn't mean YOU are and this book will only help after your trading system has been back tested and verified.Also check out his TraderFeed blog