The Psychology of Trading Tools and Techniques for Minding the Markets
If there is a single [herne to this book, it is this: Trading is a microcosm of life.' In trading, as in life, we pursue values. In both trading and we manage the risks of those pursuits: lost opportunities and realized losses. How we seek values and managc thc associated risks will dctcrmine our personal and professional success.
Many times, our responses to the uncertainty of outcomes inrerfcrc with the achievement of our goals. In careers, romantic relationships, and trading, we find ourselves cnacting self-defearing patterns: cutting promising situations short and lingering in unprofitablc ones. It doesn't matter that we are virtuous people, hardworking and otherwise successful. It doesn't matter that we have attended all the latest seminars, read the hottest books, and purchased all the best trading tools. If our coping with risk distorts our efforts at
The term Trading is used in this book to cover all active forms of managing one's financial invcstmcnts. Anyone who attempts to time Investments, whether over hours, days, weeks, or months, is a trader.
pursuing values, we will fail 10 attain 1 he stature that can be ours—as traders and as human beings.
For the past years, I have provided counseling and therapy services to approximately 130 people a year. Almost all of these people havc been highfunctioning individuals tackling demanding career fields. I learned during these years of practice that the problem patterns of physicians, executives, students, and traders are surprisingly similar. These patterns arise when strategies for emotional risk management—efforts to minimize pain and maximize pleasure—Fail to make it possible to successfully navigate life's matrix of risks and rewards. Every problem pattern we experience is a oncesuccessful coping effort that has outlived its value. Conversely, newly created patterns that meet life's present challenges Icad to sUcccss. Wc are best positioncd to achieve our goals when we can extract ourselves from rhe mindless repetition of the past and fashion fresh life solutions.
