How to master trading psychology | Brett Steenbarger

Summary

In this insightful episode of 'Chat with Traders', host Aaron Fichtner interviews Dr. Brett Steyn, a renowned trading psychology coach and author. The conversation delves into the intricacies of trading psychology, emphasizing the importance of understanding market dynamics and personal adaptability. Dr. Steyn shares his journey from philosophy to psychology, and how his fascination with human potential led him to specialize in trading psychology. He discusses the significance of recognizing and leveraging one's strengths, the role of creativity in developing unique trading strategies, and the necessity of cultivating resilience in the face of market volatility. The episode also touches on the challenges of goal setting and the psychological barriers traders face, such as performance anxiety and the fear of loss. Dr. Steyn provides valuable advice on maintaining a balanced life, focusing on process over profit, and viewing losses as opportunities for learning and growth. His insights offer traders a holistic approach to enhancing their performance and achieving long-term success in the markets.

Takeaways

• 📈 **Adaptability is Key**: Successful traders are adaptable and evolve with the markets, which are always changing.
• 🧠 **Mindset Matters**: Identifying whether a trading issue is psychological or logical is crucial for addressing it effectively.
• 🧘 **Self-Awareness**: The first step in breaking bad habits is becoming aware of them as they occur.
• 🚫 **Avoid Emotional Trading**: Frustration and the desire for revenge trades can lead to poor decision-making.
• 📚 **Study and Learn**: Traders should study themselves and the markets to understand what works and what doesn't.
• 🏆 **Strengths Over Weaknesses**: Focus on building on strengths rather than just correcting weaknesses.
• 💡 **Cultivate Creativity**: Seeing opportunities that others miss is a mark of a successful trader.
• 🔄 **Develop Best Practices**: Turn best practices into habits through consistent repetition to influence behavior positively.
• 🎯 **Goal Setting**: Effective goal setting involves having a daily plan that leads towards the achievement of the goal.
• 💰 **Money Mindset**: Thinking in percentages and basis points rather than dollars can alleviate the pressure associated with money.
• 🤝 **Balance in Life**: Having interests and fulfillment outside of trading can provide balance and resilience during market downturns.

Q & A

What is the biggest secret of the best traders in the world according to the transcript?

The biggest secret is that they are just like everyone else, but they work hard to learn the markets, discover what works and what doesn't.

How did Dr. Brett Steyn Bergers' interest in trading psychology begin?

Dr. Bergers' interest began unconventionally through philosophy. He was inspired by the novel 'The Fountainhead' by Ayn Rand, which led him to consider psychology as a field to help people reach their potential.

What does Dr. Bergers suggest is the first step in breaking a bad habit?

The first step is to become exquisitely aware of the habit's presence. It involves building self-awareness and mindfulness to recognize the pattern as it starts.

What does Dr. Bergers mean by 'making friends with loss' in the context of trading?

He means that traders should view losses as valuable information that tells them something about the market's changes, rather than something to fear or avoid.

What is the ABCD approach to trading psychology as mentioned by Dr. Bergers?

The ABCD approach stands for Adapting to market changes, Building on strengths, Cultivating creativity, and Developing best practices.

How does Dr. Bergers suggest traders should think about their weaknesses?

He suggests that traders should focus on their strengths and try to work around their weaknesses. It's rare to turn a weakness into a strength, but one can adapt strategies to avoid areas of weakness and capitalize on strengths.

What is the importance of adaptability in trading according to the interview?

Adaptability is crucial because markets are always changing. Successful traders must evolve with the markets, which involves both adapting trading methods and dealing with the psychological challenges that come with change.

What role does goal setting play in a trader's performance according to Dr. Bergers?

Goal setting is important, but it should be accompanied by a specific, daily plan. Goals without a plan are just wishes. It's also better to focus on improvement and risk-adjusted returns rather than absolute monetary goals.

How does Dr. Bergers recommend traders deal with the pressure of trading?

He suggests having something in life more important than trading. This provides a balance and a source of renewal and inspiration during periods of drawdown, reducing the negative effects of pressure.

What does Dr. Bergers say about the common practice of focusing on monetary gains as a measure of success in trading?

He advises against setting monetary goals as they can lead to performance anxiety. Instead, he recommends focusing on improvement and risk-adjusted returns.

What is the significance of cultivating creativity in trading, as discussed by Dr. Bergers?

Cultivating creativity is essential for success as it allows traders to see opportunities that others might miss. It's about seeing the world through fresh eyes and adapting to changing markets.