I'm new to trading, but not to personal development and psychological self help books (and I've written a book as well) and Kay is spot on. Lots of inspiration, little on actionable steps and systematic habits that can be adopted to solve the psychological issues. My bet is that I'll go through the trading psychology books and come back to books like Systems Mindset and Thick Face Black Heart and realize that I got further by applying the actionable principles in those books to trading
Thanks Matt! Yes, I do feel that those types of books can be valuable on the inspiration front, particularly when written by a champion or otherwise clearly successful person, and genuinely give insight into the work it takes to achieve similar success. However, such lessons can just as well be learned from books on mechanics/technique too (or indeed videos - with the Qullamaggie streams as an obvious example), particularly when there are biographical elements too. And on average, the latter are ultimately more practical/actionable, simply by their very nature.
That said, I also felt the two commenters before you made fair points too, as I'd elaborated in my replies to them. And part of the reason they commented as they did was because I didn't make clear who this post was aimed at, nor was I clear enough about how I DO feel that 'proper' trading psychology is a real contributor to trading success, particularly at the higher levels. I'm actually part-way through writing a follow-up stack to this one, rectifying the shortcomings I just mentioned. Or rather, adding nuance to this post.
Hi Kay. First and foremost, I want to highlight the fact that I have a great deal of respect and appreciation for the work that you do for the trading community. Both new and aspiring traders alike are well-served by your writings.
I am a full-time trader in my fifties and I found myself thinking about your post for quite some. While I fully agree with much of what you shared, I feel that mindset / psychology play a much bigger role for most than you are aware. Again, I share this from a place of respectful discussion as we all formulate thoughts and opinions based on experience and who we are as individuals.
This topic is at the root of frequent discussions with both my 17-year old son who started his trading journey at the age of 15 as well as my trading partner who is in his late forties. What is the key to successful trading?
Part of the answer is certainly to be found in the objective mechanics of trading. No question. However, in my experience, the biggest gains in performance progression have come as a result of my working on mindset. Interestingly, the same has also held true throughout my life as a long-distance runner. The technical side of trading, or running, can only take us so far in the face of a limiting mindset. It is the improvements in mindset that hold the key to ever-improving execution performance.
I highly recommend listening to the interview with Richard Bargh chronicled in the book “New Market Wizards”. From both a knowledge and practical application point of view I very highly recommend Jared Tendler’s book “The Mental Game of Trading”.
Hi, thanks very much for sparking up another respectful discussion! I love good, well-thought-through comments, whether I agree with them or not.
As it happens, I agree with everything you said. And as Cotton Dog's initial comment showed me, I could have been clearer in my original stack about how I don't think that trading psychology ends at fixing laziness, working harder and really learning about the mechanics of trading. But that's my own fault - I should have been clearer about that. The limitations of writing on Substack, I suppose, where each article is much shorter than the typical writing I do as part of my day job. Lesson learned!
About my article, I wrote it in a way that was aimed at a different audience than yourself - to people at an earlier stage in their trading journey. One goal was to get those people to really think about the root cause of a lot of their problems, and how they can at least partially resolve them, even if this doesn't 100% fix them. I highly doubt that doing as my article suggests and stopping there would get you to market wizard level, but I honestly do believe that it can get a lot of struggling traders to profitability.
The clearest example that springs to my mind on how mechanics alone will not make you a top performer is by looking at top-level sporting competitions. At that kind of level, everyone has perfect technique. So yes, there clearly is something more that distinguishes the champions from the rest.
As this is something you've already thought a lot about yourself, none of this will be news to you - but I just wanted to show that I do understand where you're coming from (and that something was missing from my article). I was just trying to help people improve in a way that is really practical - as I said, I am a technical writer, so am always going to come at this sort of topic from that sort of angle. I also feel like trading psychology is something that needs addressing at a later stage in the trading journey than a lot of people do (and most of my readers are not at that stage yet). I do remain a bit sceptical of addressing it by reading books, but it could well be that I've just not read the right ones, and will look at what you suggested - thank you!
Another thing that I've (unfortunately) noticed is how, too often, I've seen people point to trading psychology as an excuse for their own performance. As a way of not taking responsibility (which in itself is, of course, a part of psychology, but those people don't seem to get that). So by taking this somewhat unorthodox approach to the topic, I was hoping to reach a few of those people.
Speaking from personal experience, even though I have become much more disciplined in recent years, I also have lazy periods, which I tell myself off for. This does get me to put my head down again, and improve my performance - my execution, in particular, which I think is the main way mindset materialises itself in. So I really do believe focusing on that does directly improve, perhaps even resolve (depending on the person), psychology problems, even if we can definitely move beyond that, too. There's only so much depth I can go into for a Substack article though!
Hope that clears things up a bit? Happy to continue this discussion though :)
Kay, I'm sorry, but I think you have a regrettably narrow view of what "trading psychology" is about. Maybe you've never had to battle the demons that many traders face. If so, kudos to you. To put it simply, for me, trading psychology starts with when you know how and when to trade/what to do, and fail to execute for internal emotional reasons. To me, what you described just sounds like knowing how to trade in the first place. For insight into the issues to which I allude, I suggest the book Mindful Trading: Mastering Your Emotions and the Inner Game by Rande Howell.
Hi, first things first: I really appreciate your thoughtful comment that respectfully outlines why you disagree. Perhaps I could've angled my take a little differently, or explained things a bit better - and that's something I will bear in mind for the future - but my core views, based on my own experiences as well as what I've gathered from other traders, are as outlined above. It's not that people don't know how to trade, but that what they know about trading largely amounts to borrowed conviction - the knowledge is often not based on their own tendencies/history or on their own extensive studies. It's certainly how I started (and many others too) and, as such, I have absolutely spent time with my 'demons', as you put it.
But this is the thing: the only way I could defeat them was by taking a hard look at my numbers, which is in similar vein to Qullamaggie studying thousands of charts. By putting in the real work required, not just reading the books and looking at (more so than really studying) perhaps a few hundred charts.
So to take what you said ("fail to execute for internal emotional reasons"), WHY do you fail to execute? Is it because you lack confidence in your setup? In which case, study that setup more so your confidence grows. You can also grow your confidence by looking at your journal, and examining what you need to do to become profitable or make more money.
Here's a concrete example from my own journey: many of the traders I learned my setups from have stop losses that can go all the way to 10%. But in my own trading, I felt like (but didn't actually know) that was unnecessary, and actually had a huge negative impact on my bottom line. I didn't have the confidence to just move that stop up, however, particularly when people were saying to not have the same stop on every trade or place it too close to the entry point. So I looked through my past trades - in particular, my past winners - and recorded how far my winners moved against me. The answer? Never more than 2%. From that moment on, I was very confident about placing tight stops, trusting that my winners would not move far against me based on my own hard data. In hindsight, that wasn't always the right thing to do, which has made me a little more flexible now about setting wider stops where the setup looks exceptionally good, but the point is that doing that sort of analysis fixed a psychological problem as well as improved my bottom line by losing less on my losers.
I'm a fan of hard numbers, so didn't need much more than this - so yes, you may be right in that I'm not battling the same demons as others. But I assure you that I had psychological demons, which I could only fix by doing some really hard studying. Whether that's enough for others - I don't know. It'll probably depend on the person. However, I honestly believe that these types of studies can go a long way towards improving their psychological issues, whatever their personality, and that they should take priority over actions like seeing a psychologist.
I know that these won't replace the type of advice given in psychology books. That was also never my intention. All I wanted was to share something practical - something easily actionable - that can truly help traders' psychology, especially when they suffer problems with confidence or conviction. I know, because it has helped others, myself included. Plus, I wanted to share it because despite its importance, I don't feel it's talked about all that much. It took me a long time to even first hear of this sort of approach, which I have since developed into something more my own. I just hope I can contribute to the community by getting this type of angle out there more, and hopefully help a few struggling traders in the process.
I don't know the book you recommended, but did look it up on Goodreads, which has just one review (4*): "Not enough tactical steps on how to implement the ideas of the book." That reflects what I've seen with these types of books. But I also want to be fair: it's just one review, and the book has a 3.79* rating overall. Regardless, there are plenty of these types of books out there, which are easily available to all who want to read them. As I said in my article: I won't badmouth any, because I know people, whom I respect, who say that these sorts of books helped them.
But those types of books are already out there and pretty well-known in the world. I'm trying to take my tech writing skills, and use them to be a little different to everyone else by focusing on the easily actionable stuff. On practical implementation. They might not outright fix psychological issues, but hopefully they can at least send people on the path towards improvement.
I hope that clarifies a few things! Happy to elaborate further if needed :)
I agree that have a sound trading methodology and process that you trust is a key attribute of successful traders. It helps to keep you focused and "on the path". Until then, you are just randomly trying out different things hoping they work.
I also would say that the idea of "know thyself" for trading, as you illustrated, is really important to for knowing your personal risk tolerance, trade sizing, trade duration, etc.
Regarding the book, if you note, I referenced it "for insight into the issues to which I allude". I did not necessarily recommend it. It is not a complete solution. The reality is, Howell, as a working psychologist, developed a course/protocol to deal with traders's psychological issues first, then wrote the book. Especially towards the end of the book, it is a thinly veiled advertisement for his course and coaching. Still, the book has value for giving insight into the issues. As a trained psychologist, the author, understandably, takes the approach that the way to "fix" the issues is with lots of introspection and therapy, not just reading a book. (This ties into the importance of journaling, which you appreciate.)
Great to have this discussion. "Trader psychology" is a broad topic subject to different perspectives from trader to trader. I hope that we had some worthwhile points of intersection.
My bad - I had misread what you said about the book. And I like how you draw attention to the author using his background to take the approach natural to him. It's pretty much what I said about my background/training leading me to take mine!
I agree this is a good discussion to have. Nor did I feel our views were that far apart, really, although there are some differences. And for sure: gives food for thought! Still with your original comment in the back of my mind, I just wrote this tweet: https://twitter.com/KayKlingson/status/1672606886087073793. Not sure if you were already familiar with the Mark Minervini example I gave? And while he didn't describe it as a psychology fix per se, I think it could be seen as such. Or maybe we're just getting into semantics here. The important point is, it worked for him, and can work for others too!
I'm new to trading, but not to personal development and psychological self help books (and I've written a book as well) and Kay is spot on. Lots of inspiration, little on actionable steps and systematic habits that can be adopted to solve the psychological issues. My bet is that I'll go through the trading psychology books and come back to books like Systems Mindset and Thick Face Black Heart and realize that I got further by applying the actionable principles in those books to trading
Thanks Matt! Yes, I do feel that those types of books can be valuable on the inspiration front, particularly when written by a champion or otherwise clearly successful person, and genuinely give insight into the work it takes to achieve similar success. However, such lessons can just as well be learned from books on mechanics/technique too (or indeed videos - with the Qullamaggie streams as an obvious example), particularly when there are biographical elements too. And on average, the latter are ultimately more practical/actionable, simply by their very nature.
That said, I also felt the two commenters before you made fair points too, as I'd elaborated in my replies to them. And part of the reason they commented as they did was because I didn't make clear who this post was aimed at, nor was I clear enough about how I DO feel that 'proper' trading psychology is a real contributor to trading success, particularly at the higher levels. I'm actually part-way through writing a follow-up stack to this one, rectifying the shortcomings I just mentioned. Or rather, adding nuance to this post.
Going back to your comment, Matt, I'm wondering if this Stockbee post may be of use to you? https://stockbee.blogspot.com/2018/11/the-number-one-secret-to-trading-success.html
Hi Kay. First and foremost, I want to highlight the fact that I have a great deal of respect and appreciation for the work that you do for the trading community. Both new and aspiring traders alike are well-served by your writings.
I am a full-time trader in my fifties and I found myself thinking about your post for quite some. While I fully agree with much of what you shared, I feel that mindset / psychology play a much bigger role for most than you are aware. Again, I share this from a place of respectful discussion as we all formulate thoughts and opinions based on experience and who we are as individuals.
This topic is at the root of frequent discussions with both my 17-year old son who started his trading journey at the age of 15 as well as my trading partner who is in his late forties. What is the key to successful trading?
Part of the answer is certainly to be found in the objective mechanics of trading. No question. However, in my experience, the biggest gains in performance progression have come as a result of my working on mindset. Interestingly, the same has also held true throughout my life as a long-distance runner. The technical side of trading, or running, can only take us so far in the face of a limiting mindset. It is the improvements in mindset that hold the key to ever-improving execution performance.
I highly recommend listening to the interview with Richard Bargh chronicled in the book “New Market Wizards”. From both a knowledge and practical application point of view I very highly recommend Jared Tendler’s book “The Mental Game of Trading”.
Hi, thanks very much for sparking up another respectful discussion! I love good, well-thought-through comments, whether I agree with them or not.
As it happens, I agree with everything you said. And as Cotton Dog's initial comment showed me, I could have been clearer in my original stack about how I don't think that trading psychology ends at fixing laziness, working harder and really learning about the mechanics of trading. But that's my own fault - I should have been clearer about that. The limitations of writing on Substack, I suppose, where each article is much shorter than the typical writing I do as part of my day job. Lesson learned!
About my article, I wrote it in a way that was aimed at a different audience than yourself - to people at an earlier stage in their trading journey. One goal was to get those people to really think about the root cause of a lot of their problems, and how they can at least partially resolve them, even if this doesn't 100% fix them. I highly doubt that doing as my article suggests and stopping there would get you to market wizard level, but I honestly do believe that it can get a lot of struggling traders to profitability.
The clearest example that springs to my mind on how mechanics alone will not make you a top performer is by looking at top-level sporting competitions. At that kind of level, everyone has perfect technique. So yes, there clearly is something more that distinguishes the champions from the rest.
As this is something you've already thought a lot about yourself, none of this will be news to you - but I just wanted to show that I do understand where you're coming from (and that something was missing from my article). I was just trying to help people improve in a way that is really practical - as I said, I am a technical writer, so am always going to come at this sort of topic from that sort of angle. I also feel like trading psychology is something that needs addressing at a later stage in the trading journey than a lot of people do (and most of my readers are not at that stage yet). I do remain a bit sceptical of addressing it by reading books, but it could well be that I've just not read the right ones, and will look at what you suggested - thank you!
Another thing that I've (unfortunately) noticed is how, too often, I've seen people point to trading psychology as an excuse for their own performance. As a way of not taking responsibility (which in itself is, of course, a part of psychology, but those people don't seem to get that). So by taking this somewhat unorthodox approach to the topic, I was hoping to reach a few of those people.
Speaking from personal experience, even though I have become much more disciplined in recent years, I also have lazy periods, which I tell myself off for. This does get me to put my head down again, and improve my performance - my execution, in particular, which I think is the main way mindset materialises itself in. So I really do believe focusing on that does directly improve, perhaps even resolve (depending on the person), psychology problems, even if we can definitely move beyond that, too. There's only so much depth I can go into for a Substack article though!
Hope that clears things up a bit? Happy to continue this discussion though :)
Kay, I'm sorry, but I think you have a regrettably narrow view of what "trading psychology" is about. Maybe you've never had to battle the demons that many traders face. If so, kudos to you. To put it simply, for me, trading psychology starts with when you know how and when to trade/what to do, and fail to execute for internal emotional reasons. To me, what you described just sounds like knowing how to trade in the first place. For insight into the issues to which I allude, I suggest the book Mindful Trading: Mastering Your Emotions and the Inner Game by Rande Howell.
Hi, first things first: I really appreciate your thoughtful comment that respectfully outlines why you disagree. Perhaps I could've angled my take a little differently, or explained things a bit better - and that's something I will bear in mind for the future - but my core views, based on my own experiences as well as what I've gathered from other traders, are as outlined above. It's not that people don't know how to trade, but that what they know about trading largely amounts to borrowed conviction - the knowledge is often not based on their own tendencies/history or on their own extensive studies. It's certainly how I started (and many others too) and, as such, I have absolutely spent time with my 'demons', as you put it.
But this is the thing: the only way I could defeat them was by taking a hard look at my numbers, which is in similar vein to Qullamaggie studying thousands of charts. By putting in the real work required, not just reading the books and looking at (more so than really studying) perhaps a few hundred charts.
So to take what you said ("fail to execute for internal emotional reasons"), WHY do you fail to execute? Is it because you lack confidence in your setup? In which case, study that setup more so your confidence grows. You can also grow your confidence by looking at your journal, and examining what you need to do to become profitable or make more money.
Here's a concrete example from my own journey: many of the traders I learned my setups from have stop losses that can go all the way to 10%. But in my own trading, I felt like (but didn't actually know) that was unnecessary, and actually had a huge negative impact on my bottom line. I didn't have the confidence to just move that stop up, however, particularly when people were saying to not have the same stop on every trade or place it too close to the entry point. So I looked through my past trades - in particular, my past winners - and recorded how far my winners moved against me. The answer? Never more than 2%. From that moment on, I was very confident about placing tight stops, trusting that my winners would not move far against me based on my own hard data. In hindsight, that wasn't always the right thing to do, which has made me a little more flexible now about setting wider stops where the setup looks exceptionally good, but the point is that doing that sort of analysis fixed a psychological problem as well as improved my bottom line by losing less on my losers.
I'm a fan of hard numbers, so didn't need much more than this - so yes, you may be right in that I'm not battling the same demons as others. But I assure you that I had psychological demons, which I could only fix by doing some really hard studying. Whether that's enough for others - I don't know. It'll probably depend on the person. However, I honestly believe that these types of studies can go a long way towards improving their psychological issues, whatever their personality, and that they should take priority over actions like seeing a psychologist.
I know that these won't replace the type of advice given in psychology books. That was also never my intention. All I wanted was to share something practical - something easily actionable - that can truly help traders' psychology, especially when they suffer problems with confidence or conviction. I know, because it has helped others, myself included. Plus, I wanted to share it because despite its importance, I don't feel it's talked about all that much. It took me a long time to even first hear of this sort of approach, which I have since developed into something more my own. I just hope I can contribute to the community by getting this type of angle out there more, and hopefully help a few struggling traders in the process.
I don't know the book you recommended, but did look it up on Goodreads, which has just one review (4*): "Not enough tactical steps on how to implement the ideas of the book." That reflects what I've seen with these types of books. But I also want to be fair: it's just one review, and the book has a 3.79* rating overall. Regardless, there are plenty of these types of books out there, which are easily available to all who want to read them. As I said in my article: I won't badmouth any, because I know people, whom I respect, who say that these sorts of books helped them.
But those types of books are already out there and pretty well-known in the world. I'm trying to take my tech writing skills, and use them to be a little different to everyone else by focusing on the easily actionable stuff. On practical implementation. They might not outright fix psychological issues, but hopefully they can at least send people on the path towards improvement.
I hope that clarifies a few things! Happy to elaborate further if needed :)
Kay,
I agree that have a sound trading methodology and process that you trust is a key attribute of successful traders. It helps to keep you focused and "on the path". Until then, you are just randomly trying out different things hoping they work.
I also would say that the idea of "know thyself" for trading, as you illustrated, is really important to for knowing your personal risk tolerance, trade sizing, trade duration, etc.
Regarding the book, if you note, I referenced it "for insight into the issues to which I allude". I did not necessarily recommend it. It is not a complete solution. The reality is, Howell, as a working psychologist, developed a course/protocol to deal with traders's psychological issues first, then wrote the book. Especially towards the end of the book, it is a thinly veiled advertisement for his course and coaching. Still, the book has value for giving insight into the issues. As a trained psychologist, the author, understandably, takes the approach that the way to "fix" the issues is with lots of introspection and therapy, not just reading a book. (This ties into the importance of journaling, which you appreciate.)
Great to have this discussion. "Trader psychology" is a broad topic subject to different perspectives from trader to trader. I hope that we had some worthwhile points of intersection.
My bad - I had misread what you said about the book. And I like how you draw attention to the author using his background to take the approach natural to him. It's pretty much what I said about my background/training leading me to take mine!
I agree this is a good discussion to have. Nor did I feel our views were that far apart, really, although there are some differences. And for sure: gives food for thought! Still with your original comment in the back of my mind, I just wrote this tweet: https://twitter.com/KayKlingson/status/1672606886087073793. Not sure if you were already familiar with the Mark Minervini example I gave? And while he didn't describe it as a psychology fix per se, I think it could be seen as such. Or maybe we're just getting into semantics here. The important point is, it worked for him, and can work for others too!