Trading psychology - Coaching for traders

trading psychology, trading coach

"Most trading difficulties arise from the way trading naturally conditions us
to avoid those situations that actually present the greatest possibility for monetary reward."
Kenneth Reid, Ph.D

SELF-SABOTAGE? Hardly!

trading coach Traders often start out with a streak of 'beginner's luck,' but eventually the inherent risk of trading catches up with us. When this happens, we can't seem to make our knowledge and experience pay off. I had one very smart client, a software programmer, tell me that he did not have a single winning trade for two months.

Still, to think of this syndrome as "self-sabotage" is unhelpful, demoralizing and just plain wrong. Traders do not have a deep-seated desire to remain stuck or fail. That is just bad psychological theory. Something much less sinister is happening.

Toxic Stress
Simply put, trading stresses us out. Stress leads to a cluster of natural defensive reactions that bias us to avoid precisely those risky situations that actually present the greatest possibility for monetary reward, and to seek out seemingly safe situations that actually offer the least chance of gain. That is why trading to avoid risk (trading not to lose) produces diminishing returns... or worse.

Risk can be managed and mitigated, but there can be no reward in trading without risk.

When caught in the Cycle of Toxic Stress, a trader gets out of sync and just about everything one does is wrong. You know you are caught in Toxic Stress when:

You hesitate to enter when and where your plan calls for an entry;
You impuslively chase trades, causing you to buy high and sell low;
You get out of trades too early, on the first wiggle, instead of letting winners run;
You let winners turn into losers and you hold the losers too long;
Your emotions get the better of you at the worst possible times;
You try to follow a plan, but in actual trading you act impulsively or freeze;
Your trading takes on a desperate quality as you try make back losses.

This section of the website describes Seven Factors that contribute to the Toxic Stress Syndrome. The main cause of the syndrome is simple Aversive Conditioning discussed below. Additional causes include Random Rewards, Mind Traps, Scared Money, Procedural Errors, The Trading Trance and Adult ADD. If you hire me as your coach, we will determine which factors are causing you difficulty and together we will fix them. This page describes Aversive Conditioning, the primary cause of trader failure. Follow the links to read about the other causes. Kenneth Reid, Ph.D

THE CONDITIONING CYCLE
trader conditioning

Many traders report that they were able to trade well when they first started, but the more experience they gained, the worse things got. Trading is perhaps the only business in which increased knowledge and experience can work against you.

Mark Douglas points out that the initial naivete of traders makes us fearless. In that fearless state we actually trade much better than if we were afraid, even though we have less objective knowledge about the market and about what we are doing.
In the course of learning to trade, you will make errors and they will cause you pain. You may not remember the details of those painful experiences, but a part of your brain does. That part of your brain (the amygdala) stores details about everything that ever hurt you and tries to avoid those things in the future. The amygdala is a pattern recognition device. It is the size of an almond, but it can recognize 20,000 faces....or chart patterns.

Losses have much more impact on the amygdala than wins. In fact, it does not register wins at all. It only registers things that hurt. The more you trade, the more times you will lose and the amygdala never forgets a loss and who/what caused it. Never. Gradually, therefore, the amygdala adds emotional color to your trading experience in the form of fear. Gradually, you become subtly afraid of the setups you used to take even if you consciously decide that you still want to take them. Each time a setup occurs, you will either miss it entirely or think up a reason why you should not take it.

The good news is that this type of conditioning can be reversed. I specialize in helping traders reverse aversive conditioning. But first you have to know that the conditioning is there, running the show, filtering (distorting) all your perceptions of the market's opportunity flow.

BOTTOMLINE
Job #1 for traders is to correct aversive conditioning. My coaching program is focused on identifying how you may have been conditioned through your trading and reversing it. Among various other tactics, I use a downloadable, audio neuro-reprogramming technique I developed called Total Brain Conditioning^TM that you can read about on this website.

Email me to schedule a FREE 15-Min. CONSULTATION (doc2 at daytrading-doc.com) or click here to sign up now.