Global Trading Center
Trading Coach
To Master the Market, Master Your Trading Psychology
“It is almost impossible for the beginning trader to make a reasonable assessment of the level of expertise that is required to function in a trading environment.” Mark Douglas, The Disciplined Trader
Greetings, trader! Dr. Kenneth Reid here. Welcome to my trader coaching site. I have been actively involved in the equity and futures markets since 1996 as a trader, trading coach, financial newsletter editor and pundit. You might have read articles I’ve written for Forbes, SmartMoney and SFO Magazine, or perhaps you saw me on CNBC.
I hold a Ph.D. in clinical psychology, so I am aware that academic studies show that most traders lose money, even in a roaring bull market. This statistic is both intriguing and disturbing. It is intriguing that trading is much harder than it appears. In hindsight, after all, it looks fairly easy. The high failure rate is disturbing, however, because it means that most traders get hurt, both financially and psychologically.
So let’s cut to the chase. There are three things a trading coach should tell you upfront about trading for a living.
First, the market is like a casino. The “buzz” gets you focused on exciting possibilities, which entice you into making trades with low odds of success. The more you watch the Top Gainers list or CNBC , the worse you will do because they stimulate the Trading Trance, which distracts you while professionals shake you down.
Second, you are unlikely to be psychologically prepared to deal with the losses that arise from making low-odds trades. There will just be too many of them and they will depress you, make you angry, or cause ‘loss aversion’ so that you will become overly analytic or freeze up.
Third, more is not better. Your high speed computer and real time data feeds don’t necessarily give you an advantage. They may be creating overload. Trading legend Richard Dennis recently remarked that trading is “ten times harder than it used to be.” You need a professional-grade edge, i.e. a robust, well-tested Trading Plan. Most traders lack this essential item.
I’m sorry to be the bearer of bad news, but you probably already knew it. Markets are not at all efficient at setting prices, but they are very efficient at one thing: separating active traders from their money. By some measures the market’s efficiency is around 96%. You need to join the 4% to survive.
TRADING IN “THE ZONE”
“Trading in the Zone” is the title of one of Mark Douglas’ excellent books on the psychology of trading. What is “The Zone?” It is a state of expanded awareness and control, without fear. In order to stay in “The Zone” when trading, a person must master three things.
1. MANAGE STRESS
Moderate levels of stress are stimulating, which makes trading less of a job and more of an adventure. If you exceed your “stress threshold,” however, you will get into an overload state that triggers primal emotions and defensive/aggressive behaviors.
KEY POINT: In this stressed-out state of mind, you will become re-active rather than pro-active. Your prefrontal brain function will be degraded so your ability to follow your trading plan will be impaired. You will miss the obvious and lose impulse control. Read more.
Ironically, your fear of losing or missing out will actually work against you and cause losses. This leads to a downward performance spiral into trading hell. You will seek revenge for losses or run for cover. Moreover, professional traders take advantage of the emotional vulnerability of the average trader. Read more about toxic stress here.
2. MAINTAIN A CONFIDENT MINDSET
Aspiring traders pay far too much attention to what just happened in the market (the Recency Bias) and not enough attention to their own mental state. Successful traders actively manage their mental attitude in order to maintain confidence in the face of uncertainty; discipline in the midst of randomness. Maintaining a confident mental attitude is a skill that can be learned. Top athletes practice it. Top traders practice it. You can, too.
Even successful traders, however, are at risk of psychological wounding from a string of losses or a single large loss. Read more.
In this state, a trader will become risk averse and trade-not-to-lose. That is a recipe for breakeven trading, or worse. (Listen to a free 1 Minute Tip on rebuilding confidence.)
The good news is that there is a technology that can help clear the negative emotional residue from past losses for just $99. Click here to find out more.
3. MASTER YOUR TRADING ‘EDGE’
Your trading ‘edge’ is the method (plan) that gives you an advantage in your trading beyond the odds of chance. Professionals trade a defined plan, amateurs trade intuitively, instinctively and often impulsively.
Professional traders exploit amateurs who make trading decisions based on emotion. Read more.
If you do not carefully design and master your trading edge to be both aggressive and defensive, your trading account will serve as a source of funds for professionals. As an active trader myself, I know what is needed to maintain an advantage in our fast-moving algorithmic markets and I specialize in helping traders sharpen their technical edge.
To review my Coaching Program, click here.
HIGH RISK TRADERS
Some traders lack the discipline to follow a trading plan, even when they want to. These traders tend to be intelligent, creative and intuitive, but also inconsistent, disorganized and impulsive. They are High Risk Traders. Here is the true story of one High Risk Trader I worked with. Let’s call him Art.
Art was a former executive at a well-known software company. He was smart, creative, confident, strong-willed, ambitious, hard-working and very dedicated. Nevertheless, despite his CEO-like personality, Art took his trading account from $1 million down to $100k in the year before he called me. How did this happen? Read more.
Clinical studies support the popular belief that men have difficulty asking for directions (I’m not kidding… we do have a stubborn streak.) Art was like that. As his strategies and tactics failed to achieve the desired results, Art never sought help. He remained entirely focused on the market, not on himself or his system. To recoup losses, he traded more frequently and averaged down on losing positions. He tried harder, not smarter.
His wife was worried about his trading, but Art always felt he was ‘on the verge of greatness’, even as his equity curve continued to plunge. Ironically, his self-confidence (masking his huge need to be right) actually worked against him. You are probably not as stubborn as Art, but your own psychology is certainly a key factor in your bottomline.
RISK OF RUIN
The Risk of Ruin defines the odds of reaching a point at which you are no longer mentally, emotionally or financially able to fund (or re-fund) your account. The risk increases exponentially for those traders who:
- Enter too high for longs and too low for shorts;
- Can’t stay in a winning trade;
- Can’t take a loss in stride and keep losses small;
- Overtrade and “revenge” trade;
- Compulsively trade against the trend, and/or
- Can’t seem to learn from their mistakes.
These behaviors are warning signs that you are vulnerable. You can find out more by taking my Free Risk Profile here. The Risk Profile will help you determine whether you have some of the psychological risk factors that can lead down this path. It is free of charge.
TO MASTER THE MARKET, MASTER YOURSELF
Whatever your level of intelligence, education or success in life, learning to trade for a living is likely to be the most difficult challenge you have ever faced.
Your business skills may not help you because the trading environment is completely different than the business environment. Moreover, you are likely to encounter certain things about yourself that you were not prepared to face before.
I’m a competitive tennis player. In his autobiography, Andre Agassi wrote, “For me, tennis is a vehicle to discover myself and push myself.” For many traders, trading serves the same purpose. (It does for me.) You may be driven to master trading because it holds the secret not only to your financial future, but to your own self-mastery.
Many of my coaching clients report that as their trading improves, the quality of their life improves along with it. If you are this type of aspiring trader, passionate about succeeding, I can coach you to achieve your goals.
YOUR TRADING COACH
Whether you are an aspiring rookie, an experienced veteran who is stuck at breakeven, or a successful professional looking to sharpen your edge, let me help you reach your full trading potential. To review my Coaching Program, click here.
Email me to schedule a FREE 15-Min. CONSULTATION. Email: doc@daytradingpsychology.com
My fully customized 6-week Coaching program costs just $2997. Click here to SIGN UP NOW.
DR. REID’S INTENSIVE 90-min. TRADER COACHING SESSION
Don’t want to commit to 6-weeks? Need just a little help now?
I offer a 90-minute intensive trader coaching session for $450. The program is designed to correct just one key issue that is holding you back. Sessions can usually be scheduled within 48 hours. Click the button below to sign up:
DR. REID’S WINNING TRADER’S MINDSET MP3
If you take no other action today my friend, be sure you order my neuroprogramming MP3 ACCESSING THE WINNING TRADER’S MINDSET for just $249. The key to trading success is becoming proactive about your mental-emotional state while trading. Take the next step to mastery today.
You can read testimonials here. Click here to be notified of my next FREE Webinar.