BRETT STEENBARGER'S TRADING PSYCHOLOGY RESOURCE CENTER

Below are resources to help traders become their own trading coaches, improve their trading processes, and develop a positive work-life balance.  All the TraderFeed posts also contain links to valuable resources and perspectives.  

RADICAL RENEWAL - Free blog book on trading, psychology, spirituality, and leading a fulfilling life

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The Three Minute Trading Coach Videos

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Forbes Articles:

https://www.forbes.com/sites/brettsteenbarger/
  

My coaching work applies evidence-based psychological techniques (see my background and my book on the topic) to the improvement of productivity, quality of life, teamwork, leadership, hiring best practices, and creativity/idea generation.  An important part of the "solution-focused" approach that I write about is that we can often best grow by focusing on what we do well and how we do it--and then doing more of what works for us.  The key is to know our cognitive, interpersonal, and personality strengths and leverage those in the pursuit of performance. 

FURTHER RESOURCES

*  A Creative Way to Use TraderFeed 

*  Brett Steenbarger Bio

*  Brett's Books on Trading Psychology

I wish you the best of luck in your development as a trader and in your personal evolution.  In the end, those are one and the same:  paths to becoming who we already are when we are at our best.

Brett
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How Well Do You Coach Your Own Trading Performance?

 

8/11/2026 - Every trader is their own coach:  how we talk to ourselves and how we spend time previewing and reviewing markets *is* our self-coaching.  A worthwhile question to ask is:  If we coached a new trader in the way we coach ourselves, how well would they develop?  Alternatively, if we coached someone in the gym the way we coach our own trading, how well would they develop?  Many traders are far too informal in their self-coaching, so that they never truly challenge themselves and grow.

The first dimension of successful self-coaching is structure.  We don't hesitate to structure our trade ideas, spelling out entries, exits, sizing criteria, etc.  But how well do we structure our own coaching?  What kind of notes do we take before trading starts, during trading, and after?  How do we draw upon these notes to identify what we saw well and what we missed?  How do we review the trades that we took to see how well we could improve what we did?  How do we turn that review into action plans for the next day?

Look at workouts and practice sessions among sports teams or after action reviews by military squads.  There is nothing informal about it.  There is structure and there is purpose.  Everything is geared to improve performance going forward.  The coaching is motivational:  sometimes encouraging, sometimes a kick in the behind.  But there is always structure, going over performance in detail to highlight what we do well and what we could do better.    

What Separates The Best Traders From The Rest

 

8/9/2026 - I'm seeing a widening gap between traders and money managers who make active and innovative use of AI and those that do not.  The first generation of AI applications was all about number crunching and assembling written information on a given topic from a number of places.  This turned AI into a virtual trading analyst, a kind of super search engine that not only collated data but made sense of it.  Thus, a simple query can quickly pull together economic data from around the world (growth, employment) and identify which countries and regions of the world are expanding and which are not.  Similarly, the AI engine can pull together data from individual companies--earnings, revenues, expenses--and quickly identify patterns of growth and stagnation.

The newer applications of AI are studying traders themselves and identifying patterns in profitability and drawdowns.  For instance, once the AI is fed the P/L data for a trader, it can identify profitability as a function of market movement, market volatility, time of day, position sizing, etc.  Once patterns of profitability are identified, they can be tracked in real time, alerting a trader to market conditions that have been more and less profitable in the past.

If you know that you're in an environment that has been profitable in the past, you can size up positions.  If you know that you're in an unfavorable environment, you take pull back risk taking.  Suddenly AI has gone from being an analyst to being a real time coach.  That is a game changer.

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8/8/2026 - What is your relationship to time?  Some people spend a good amount of their time moving from activity to activity without any overarching plan or purpose.  Others keep a calendar to structure their priorities and get important things accomplished.  Still others utilize time to prioritize activities that actively challenge them and grow various strengths.  These three ways of relating to time occur in our personal lives, our relationships, our work lives, and in our involvements with markets.  

When we develop ourselves, we expand our capacity for intentional action and that moves us from random ways of spending time to planned activities that expand our capacities.  The best traders I have worked with are masters of time.  They not only get things done, but also prioritize activities that push them to grow.  

When we are at the gym and comfortable lifting a given weight on the machine, it's time to move the weight higher.

The best traders are always on machines and always moving past their levels of comfort.

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8/7/2026 - Back in December, 2010, I wrote the following for the SpecList discussion group led by Victor Niederhoffer.  The key idea is that, for someone who has done their homework, frustration and the taking of losses is valuable information.  It is when markets are changing that the old, winning trades no longer work--and that is when we can adapt ahead of the crowd and create new winning trades.  I heartily recommend all of Vic's writings to developing traders:

Maslow one commented that, when all you have is a hammer, you tend to treat everything as a nail.  So it is with psychologists that involve themselves in markets.  Lacking an understanding of actual speculative strategies and tactics--not to mention portfolio construction--they reduce performance problems to the lowest, psychological denominator.  In so doing, they confuse cause and effect:  they observe frustrated traders and assume that relieving frustration is the key to making money.

The professional speculator, unlike the retail daytrader, rarely falls into performance problems because of derelict discipline or runaway emotions.  Rather, it is the very competence of the professional that leads to performance challenges.  It is when pros are most in sync with markets, identifying and profiting from themes and patterns, that they are most vulnerable to ever-changing patterns of direction, volatility, and correlation.  The confidence that permits healthy risk-taking under the best of speculative conditions inevitably gives way to confusion and frustration when skilled participants are no longer in sync with their markets.

The wise speculator utilizes this confusion and frustration as information:  they often are early signs that something meaningful has shifted in the marketplace.  The proper intervention in such circumstances is not to quell the frustration with psychological exercises.  Rather, it is to extract the information from the situation and feed that forward into strategy and tactics.  Very often, today's bad trade was a good trade in yesterday's regime:  there is information in that.

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8/6/2026 - An interesting question that came up during last evening's webinar was what to do if your trading system, which has backtested well, now shows a string of five or six losses.  Should you stop trading?  Should you continue to trust your edge?  And how can you control the emotions associated with such a drawdown?

My response is that successful traders don't have "an edge" in their trading.  They have many ways of making money in different market environments.  A simple example would be to track relative volume (whether volume at a given time of day is average, high, or low) and study, study, study how markets move in different volume regimes.  What you'll see is that there are different edges in markets with different volumes, because you're trading against different market participants.  How the market moves depends, in part, on who is in the market.

So now we can go back to the question and see the premise that needs to be checked, as Ms. Rand would say.  When we have a string of losses on trades that have been consistently profitable, it's a likely sign that the market has changed.  When we look at volume closely, we might detect that change.  When we look at what is moving with the market, we might see a change (for example, interest rates are moving higher along with commodities and the US dollar is weakening, all suggesting higher odds of inflation).  The string of losses are telling us to step back, reassess, and find a fresh edge in that new environment.

The losses are information.  They are like physical pain, a warning sign that something is amiss.  If we have an edge--and only one edge--we will be vulnerable to changing market conditions and that will take a toll on our emotions--and our bottom lines.

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8/5/2026  - Here are some challenging questions to ask yourself about your trading.  I'll be touching on these in the webinar this evening (see below):

*  What do you see in markets that other traders don't focus on?

*  What are the opportunities that you pursue in markets that provide you with unique returns (i.e., profits that others don't pursue)?

*  What is unique about how you review markets and performance that helps you learn and internalize unique lessons?

*  How well do you track changes in markets and adapt to them ?

The idea that you can trade the same chart patterns and indicator readings as everyone else and outperform them simply because you maintain a better psychology is absolute nonsense.  Read the Market Wizards books and you'll see that the great traders are uniquely successful because they're doing unique things.

A great psychology comes from pursuing trading entrepreneurially and maintaining the excitement of discovering and doing new and unique things.

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8/4/2026 - This Wednesday (August 6th) at 7 PM ET, I'll be participating in a trading psychology webinar with Peter Robbins and Agnieszka Wood.  It will be a great opportunity to delve into what drives the best traders and how they are able to sustain high levels of performance day after day, week after week, for an entire career.  Here's a link for the (free) registration.

In my portion of the program, I'll go into some detail regarding the research review I'm doing to identify the dimensions of elite trading success.  Here's a very simple example:  A developing trader saved charts on multiple time frames of the market he was interested in and reviewed these to identify how the best trades each day set up across a variety of indicators.  He not only took copious notes, but replayed each of the days and time frames to get a feel for how those setups looked in real time.

Every day.  For many months.  

He figured out that how buy and sell signals set up is different in slow and busy markets.

So now he developed ways of identifying when days were slow, medium, and busy and developed what Mike Bellafiore calls "playbooks" for the different kinds of markets.

But then he figured out that, within slow, medium, and busy days, there were differences in how markets move depending upon whether market components were moving in a single direction or moving in different directions.  So he identified signals for slow, medium, and busy days depending upon what was moving and how.

All of this took many months of immersed study and review and painstaking note taking.  He is now a highly successful money manager who leads a successful team.

Creative thinking.  Deep practice.  Immersion.  Resilience.  

This is what makes greatness in any field.

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8/3/2026 - Back in 2002, I wrote that "The only way to stand on the shoulders of giants is to hoist them on our own".  What I meant by that is that, in honoring our own heroes and heroines, we internalize some of their heroic dimensions and elevate ourselves.  When we explore the lives of great traders, we find that they not only have good teachers, but they have had role models that they deeply value and respect.  In learning from their heroes, they absorb something of the heroic themselves.  The greatness that they perceive in their mentors becomes the foundation for their own quests.

This is why effective education and training is conveyed through the medium of dedicated relationships.  The best traders have had the best role models and synthesize their influence into their unique styles of finding and exploiting opportunity.  Books, videos, and social media messages can be helpful, but cannot replace the dynamic of finding our own heroes and hoisting them on our shoulders by internalizing their greatness.

As noted in the previous post, when mentors are our heroes, our pursuit of trading goes from being a challenge to embodying a quest.  No one will work hard enough to absorb the subtleties of markets unless their motivation reaches the level of inspiration.  If you can't find greatness in your teacher, it's unlikely you'll be able to elevate yourself by standing on their shoulders--and it's unlikely that you'll be sufficiently inspired to hoist them on your own.

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8/2/2026 - I once noted that the point at which we grow old is the point at which we decide that the best of life is behind us.  It could be at age 30, 50, 70, or never.  A youthful mindset is one in which we perceive a bright future and decide to pursue it.  That could be in markets, in relationships, or in our work efforts; it could be in all of these.  When we fight for the future, as Ayn Rand pointed out, we live in it today.  The brightness of the future we work toward illuminates each of our days.  

In the Trading Psychology 3.0 book that I'm currently writing, I review the large number of books written either about or by accomplished traders.  What is clear as I research is that the great traders pursue markets not merely as a career or even as a passion, but as a quest.  When we are on a quest, we dedicate ourselves to a noble and inspiring end.  P/L by itself is not a quest.  For the greats, the true quest is for mastery and understanding.  Profitability is simply a way of keeping score.  

When we pursue our quest, our lives become ones of purpose, meaning, challenge, and fulfillment.  Our efforts give us energy:  they inspire us.  We look forward to each day--and that is the mindset of those who remain perpetually passionate, ever-youthful, knowing that the rest of their lives will be the best of their lives.  

Coaching Yourself To Trading Success

 

7/31/2026 - Many years ago I met with a very successful prop trader who wanted to ask me questions about psychology.  We discussed the psychology of success and then he asked me if I had anything I wanted to discuss regarding trading.  I said, "Sure!"  He asked, "What is the size of your largest trades compared with your average size?"  I thought for a moment and said, "Maybe 3:1".  He gave me a hard look and simply said, "Consider 20:1".  

Years later, this trader would become the head of one of the world's largest hedge funds.  I never forgot his advice.

It is advice that could be dangerous in the wrong hands.  What made this trader special was that he was intimately familiar with the markets he traded and had deeply studied the patterns they displayed and what happened when those patterns played out very successfully.  His ability to recognize in real time that the pattern was recurring enabled him to size up to a huge degree, even as he was aware of what to do if the trade should reverse on him.

His self coaching followed from his intensive study of the patterns that he traded.  He viewed so many examples that he knew when the trades were working and could quickly size up.  He also viewed so many examples that he knew when the trades stopped working and he could quickly exit.  What enabled him to size up to such a degree and not let fear and greed get the better of him was the repetition of studying the trades so many times in so many ways.

A huge percentage of his year's profitability came from the small number of trades that he sized up in this manner.  His intensive, sustained market preparation made his real time coaching automatic.

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7/30/2026 - An impressive developing trader recently wrote to me, not to ask questions and seek answers but to share what he was doing successfully in his trading.  Right away that stood out.  What he shared, however, taught me an important lesson.

He observed that the specifics of his trade planning--tracking market patterns he had observed and outlining in depth every detail of how each pattern has played out--made it possible to see more clearly what was happening in real time and respond without hesitation.

In other words, trading with confidence was a function, not merely of his self-talk, but his intensive preparation.  Because he had seen and noted every facet of every setup, doubts and self-talk did not interfere with his trading.  Indeed, the right actions came to him.

This trader was succeeding because of his self-coaching.  He wasn't just creating chartbooks of setups; he was looking within each of these patterns to see what to do when.  That has enabled him to size up his best trades and has bolstered his confidence.  

Truly, this is what success looks like in markets.  I'm hoping this trader will give me permission to give him a proper, personal shout out in my upcoming Trading Psychology 3.0 book!

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7/29/2026 - How we manage time is how we manage ourselves.  We can be highly purposeful in our structuring of time, or we can go with the flow.  Once we're intentional about our use of time, then we can ask questions about how productive we were, how we could become more productive, how we could use the time more effectively.  Each block of time becomes a project, an enterprise, and we can use each block to become more and more intentional.

The goal is to do the right things and to do them more and more effectively.  Working on each block of time and learning from our performance of each block *is* our way of working on ourselves.  It is how we manage ourselves.

It is how we train.

Every day can be a workout.  Every day can make us better.  It starts with how we manage time.

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7/28/2026 - In any performance field, coaching has very limited value unless the performer is actively involved in training.  Much of what is offered to traders is framed as "education".  So we see online courses, videos, and talks from educators, influencers, and others offering secrets to success.

But in what performance field do people expect to become successful by taking courses and watching videos?  Will that make someone a successful athlete?  Musician?  Painter?  Broadway actor/actress?

And imagine performers signing up for coaching without involving themselves in a structured training program!  Would a legitimate football or basketball coach offer their services if the players were not training each day?  

Coaching ourselves to trading success can only occur in the context of our ongoing training.  Each day we build our fitness to sustain concentration, gather and organize information, recognize market patterns, and act on them flexibly:  sizing up when indicated, stopping out when they don't play out.  How in the world are those skills going to develop by talking to a coach or by reading books or watching videos?

When we try to succeed in markets without rigorous training, we quickly become frustrated when success doesn't follow.  And then we tell ourselves that the problem is with our "psychology".  And we listen to other coaches and watch other videos.  Sigh.  

Training involves daily, directed effort to build specific competencies and grow our ability to sustain market focus.  I work with many successful portfolio managers, and I've read every Market Wizards book.  No one achieved distinctive success by watching videos and following influencers.  

No one.

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7/27/2026 - A unique aspect of the upcoming trading psychology webinar will be the opportunity to hear from different coaches on topics important to trading.  (See below for registration information).  A great exercise is to assume that all of the coaching perspectives contain useful information.  Your job is to pull it together in a way that makes sense to you so that the suggestions of the three coaches can become your own self-coaching.

In any performance field, what we find is that successful performers work with multiple mentors and coaches.  They pick up different things from different experienced professionals and then synthesize these in their own ways.  One way of accomplishing that is to review performance each day and then ask, "What would each of my mentors say about what I did?"  Out of those perspectives, you can then create goals for the next day.

When you pull together the inputs from different coaches, you develop your own perspectives on performance.  This enables you to identify your strengths (and ways of building these), as well as your shortcomings.  At times, the coaches will offer the same advice, and that's when you know there's an important theme to work on.

Imagine collaborating with other traders, each of whom is coaching themselves.  Their lessons become your lessons and yours become theirs:  everyone is both mentor and student.  This accelerates development and also broadens it, as we grow in many ways that we would otherwise never think of on our own.  

On a great team, everyone is both coach and student.

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7/26/2026 - August 5th at 7:00 PM ET will be the free trading psychology webinar where I'll join Peter Robbins, author of The Trader's Journey, and trading coach Agniezska Wood for a sharing of perspectives on how aspiring traders can get to that next level in their development.  Here is the registration information.

Most traders work on their trading, some more intensively than others.  Fewer traders work on their self-coaching.  How well are you developing yourself as a trader?  What positive changes have you made in your trading?  How did you make those changes?  How could you apply your self-coaching successes to new areas of growth and expand your performance?

Every trader is both a performer and a performance coach.  The best way you could utilize your time in the upcoming webinar is to figure out how you become better and better at guiding your own trading success.  You'll make your greatest changes when you train yourself to be your own best change agent.  You can begin by figuring out the most positive changes you've already made as a trader and identify how you helped yourself make those changes.  

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7/24/2026 - Please see the post below for information about the free trading psychology webinar a week from Wednesday.  This will be a great opportunity to ask Agniezska Wood, Peter Robbins, and me questions about how you can take your trading to that proverbial next level.

A hard working developing trader shared his journal with me recently and made a very interesting and valuable observation.  He noted that he trades much better--with better clarity--if he has no distractions at all in his preparation.  I've explained in past posts how interactive teamwork helps traders process more information in different ways, helping ideas stick in the mind.  What this trader found is that such interaction *is* a distraction for him.  By preparing in a quiet, focused environment, his ideas became clearer and his execution of those ideas improved.  Yes, he could benefit from interactive review and research with other traders after hours, but what underlies his success is deep focus.

The risk is that traders can pursue breadth of processing--looking at more things, talking with more traders--that they compromise depth of processing.  Clarity gives birth to conviction.  Great traders have a process for teamwork, but they have separate processes for deep work.

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7/23/2026 - On Wednesday, August 5th at 7 PM ET, I will join Peter Robbins and Agniezska Wood for a free trading psychology webinar.  Registration is here.  This will be a great way to get different coaching perspectives and practical takeaways that can improve your trading.  

During my portion of the program, I will share a trading framework that I employ that helps trade execution, identifying spots of unusually good reward relative to risk.  If we can find those great execution spots, it is much easier to size up promising ideas and still control risk well.  The key is spotting inflection points and (psychologically) being prepared to exit quickly if the trade does not go your way promptly and also being prepared to size the position meaningfully.  That means adopting a mind frame that is simultaneously cautious and aggressive.  

To identify those inflection points, we need to follow price and volume action at a higher frequency timeframe than the one we are trading.  This is very important.  Great trade ideas set up on one time frame; great execution occurs at a quicker time frame.  The same idea applies to exits.  What gets us out of a good trade occurs at a more rapid time frame than the one we're primarily trading.  When time frames line up, we can quickly size up our positions.  When time frames fail to line up, we can quickly exit.  We coach ourselves by mindfully blending tactics with well-researched ideas.  Think of a football team.  They depend upon calling the right plays, but their success crucially depends upon how they execute those plays.  Many trading psychology problems occur because we're not properly focused on execution.  More to come in the webinar.

  

Key Ideas From Trading Psychology 3.0

 

7/22/2026 - In his book Become Who You Are, Ryan Bush points out that each of us has a "portfolio"--a collection--of virtues and personal strengths.  He explains that "Pride is essentially the feeling of your virtue portfolio going up in value" (p. 208).  And how do we increase the value of our portfolio of strengths?  Bush recommends that we "simply create a daily activity schedule, designed to slightly increase the amount of virtue you bring out through your daily behaviors" (p. 209).  By integrating work on our strengths into our daily calendars, each day becomes a workout that expands the best of who we are--and each day becomes intrinsically rewarding.  

A good question to ask in this regard is "How will my trading today make use of the best of who I am?"  In other words, in addition to a monetary P/L, we create a psychological P/L in which pride in our work becomes the gauge of success.  Bush points out that such pride is the opposite of depression.  Rather than feel worthless, we experience the gratification of realizing our best selves.  It is very difficult to trade emotionally and on tilt if our focus is on being the person we most admire in ourselves.  

Bush quotes Michelangelo:  "Every block of stone has a statue inside it and it is the task of the sculptor to discover it.  I saw the angel in the marble and carved until I set him free" (p. 230).  Each of us is a block of stone.  Each of us is also the sculptor.  Trading, at its best, is art:  What we visualize ourselves to be and carve within ourselves is what we set free.

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7/21/2026 - A fascinating book from Mason Currey is Daily Rituals: How Great Minds Make Time, Find Inspiration, and Get to Work.  The book is a collection of work routines from a variety of talented and unusually productive artists, writers, scientists, and more.  What Currey shows is that a daily routine is "a finely calibrated mechanism for taking advantage of a range of limited resources: time (the most limited resource of all), as well as willpower, self-discipline, optimism" (p. xvi).  The key idea here is that routine can be the incubator of creativity and productivity.  Recall yesterday's post about "deep practice".  When we turn deliberate practice into an intensive routine, we supercharge our learning and that fuels creative accomplishment.  That is precisely what we see among the Market Wizards:  long hours of viewing and reviewing markets and trades and uncovering hidden patterns that can be converted into opportunity.  Creative insight does not come from out of the blue.  It is the result of regular, intensive effort.

In pursuing intensive routine, the great achievers tracked by Currey develop their capacity for intentional focus.  Their routines are their gymnasiums.  How they work is how they expand their capacity for sustaining creative effort.  Writing of the philosophy of G.I. Gurdjieff, Colin Wilson points out that "Compared with what we ought to be, we are only half awake.  Our fires are damped, our drafts are checked.  We are making use of only a small part of our possible mental and physical resources".  Creative geniuses have harnessed the power of routine and intensive deliberate practice to keep themselves awake.  Their routines are not just routine efforts.  Like the work in a gym, they are efforts that strengthen us.

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7/20/2026 - The previous post asked the question of why educational programs for traders rarely act as talent incubators.  The instructors can detail patterns to trade and sound trading routines, but rarely if at all do we see the students reaching their desired levels of success.

The problem is that best practices require best processes for their implementation.  Daniel Coyle, in his classic text The Talent Code, explains that success requires "deep practice".  Not just repeated practice, but *depth* of practice.  He gives the example of Clarissa, a clarinetist, who on first assessment does not appear to be especially gifted.  She gets to a point in the music where she makes a mistake, she goes back to the beginning, she repeats the sequence again and again in different ways until it sounds right, and then she moves on in the music until she makes another mistake.  Rinse and repeat.  Gradually, she becomes a talented musician.  

Deep practice is anything but review and repetition.  It's an active process of trial and error that doesn't stop until there is mastery.  An example I'm familiar with as a writer is that I will write a section of a chapter in relatively stream of consciousness fashion and then I will take a break and slowly read what I've written, changing sentences and sentence structures along the way.  Then I reread the section.  And make more changes.  Eventually it reads the way I want it to read.  By repeating this process for every paragraph of every page, I've learned to be a good writer.

Dr. Ellen Winner has called this process a "rage to master".  It is the bridge that links talent and innate interest in a field with elite skill development.  Traders who watch videos and take courses and then hope to trade successfully short circuit the process of deep practice.  From Coyle's perspective, there is no depth whatsoever in what they're doing.  Trading success is less about chart patterns and indicator readings and much more dependent upon what we observe among the Market Wizards:  an intense rage to master grounded in deep practice.

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7/19/2026 - At one level, the coming Trading Psychology 3.0 book will be a review of all that we know about trading greatness.  At a broader level, it will be a review of what we know about greatness in life.  Trading, like all disciplines, is a path for self-development.  In defining and refining our selves, we gain both self mastery and market mastery.

There is no lack of educational and training programming for traders, some of which attempts to detail the precise trading opportunities taken by the mentor.  What is striking about all of these is that the great, great majority of the students participating in these programs never achieve distinctive success.  They learn, but they do not master.

Why is this?  If a highly successful trader lays out in detail what they are doing to make money, why can't developing traders replicate that trader's success?  When we step back and think about it, this challenge is not unique to trading.  Any great athlete can explain in intricate detail how they train and how they perform, but very few of their trainees will be able to win Olympic medals.  

Trading Psychology 3.0 will propose a unique explanation for this phenomenon.  A book title from Ryan Bush is Become Who You Are.  It suggests that greatness comes, not from mimicking others, but from the intensive application of one's own talents, skills, and passions.  Most education shows you how to be like the teacher.  Rarely is that a path to elite success.  "If you meet the Buddha on the road, kill him" is a Zen Buddhist saying that tells us that enlightenment can only come from within:  from becoming better and better versions of who we already are.  The path to your trading greatness can be found in what you are already doing greatly.

Our challenge is to become better and better versions of ourselves.

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7/17/2026 - How can we overcome the emotions that make it difficult for developing traders to master their craft?  This will be an important topic in the Trading Psychology 3.0 book.  Somehow, because of the structure of the training process at hedge funds, we don't see portfolio managers or team members going on tilt or overtrading due to FOMO.  How can we develop the right mindset as well as the right trading?

The answer lies in the learning process.  What leads to overemotional trading are the *needs* that we bring to trading.  Specifically, if we *need* P/L (because of our financial situation or because of our self-esteem), then we're going to overtrade and overreact to make profitability happen. Great trading means knowing when to *not* trade.  The best traders, as seen in the Market Wizard books, trade quite selectively:  when *they* have the edge.  They are driven to trade well and that makes them better and better over time.

At a hedge fund, becoming a money manager is a developmental process.  First you might begin as a junior analyst, then you will expand your responsibility for researching good ideas, then you will trade a simulated "paper" book of your ideas with the mentoring of the portfolio manager to learn trading skills; then you will be allocated a small "sleeve" of capital to trade based on what you've learned.  Gradually that sleeve can expand to the point where you become a co-manager and eventually can begin your own team.  All of this occurs over years.

The developing analyst/trader judges performance based upon their learning and professional progression.  Each day's P/L is irrelevant to the bigger picture of growth.  The reason the developing money manager does not experience tilt and frustration is because they know they are meant to learn from losses.  They are focused on their learning P/L, not their dollars and cents each day.

This is why it can be very helpful to participate in a quality training program for traders.  The right mentoring keeps us focused on the big picture of our growth and away from trading ups and downs.

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7/16/2026 - What is the greatest impact on professional trading that I've seen from AI?  Initially, AI was super helpful in terms of coding ideas from traders.  Now we're seeing AI as a fast and deep research tool, capable not only of identifying promising trade ideas but also trading them.  For the first time in years, I'm seeing teams actually shrink in size as the efficiencies of AI make the hiring of analysts and junior traders unnecessary.

There is, however, a more profound transformation coming from AI that will be explored in the Trading Psychology 3.0 book.  With the ability to quickly research and identify trading opportunities and automate those, there is no reason why tomorrow's daytrader can't be a portfolio manager.  In other words, the benefits of diversification and holding different positions that will thrive in different market environments will increasingly become an essential part of daytrading.  Imagine a daytrader who simultaneously holds short-term positions in different stocks and different markets:  some might be scalps, others might be intraday position trades, others might be swing opportunities.  Now the trader's job becomes one of balancing the various positions, creating multiple ways of winning based upon rigorous research.

Many traders are looking to training and education sites for ways of playing the game better.  Soon, however, it will become a different game entirely.  Tomorrow's trader will look increasingly like today's hedge fund manager.

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7/15/2026 - The book Trading Psychology 2.0, published in 2015, was an effort to take trading psychology beyond the usual themes of controlling emotions and avoiding impulsive behavior to a look at the best practices of the successful traders I was working with at professional trading firms.  A little more than a decade later it's time for an update.  A number of excellent books have come out during that time detailing trading success.  I've also learned a great deal about the specific trading practices that contribute to success and especially the overarching processes that help traders adapt those practices to ever-shifting market environments.

At the heart of the new 3.0 book will be a good old fashioned literature review.  In the academic world, where I've worked since the 1980s, one begins a research project with a review of all the important works that have been published, the answers they provide, and the questions they leave open.  The idea is that, in true science, knowledge is cumulative:  we build our understanding step by step, contribution by contribution.  Trading Psychology 3.0 will review a large number of books written by successful traders and successful trading coaches to highlight what we know about great trading--and what still remains to be discovered.

One key idea from the 3.0 book will be the degree to which profitable trading is process driven.  It is far more than searching for patterns to trade and setting stop loss points and profit targets.  Process oriented trading incorporates a set of routines that examine markets and track the evolution of opportunity and an entirely separate set of routines to review performance and track improvements that have been made and that need to be made.  It is the consistency and intensity of these processes--many of which are performed by teams in professional settings--that shapes profitability.

A forthcoming book by Brian Mazza, called Nothing Changes if Nothing Changes, draws upon the structure of physical development to identify what we need to do to train success in all areas of life.  The idea of developing our trading as a training process is a powerful one, where the goal is not just improvement but transformation.  If how we prepare for trading each day is not a true workout can we truly expect to transform ourselves as traders?

Lessons From Ayn Rand And Objectivism

 

7/14/2026 - The solution-focused approach to change is a straightforward framework for coaching ourselves to trading success.  You start by writing down all your trading problems: everything you've identified that you're doing wrong in your trading processes.  What have been the problems with your research and idea generation?  With how you express your ideas?  With your trade execution?  With your risk management?  With your trading reviews and planning for the next day?  In other words, you're breaking trading process down into components and identifying all the things that you've done wrong and that have hindered your success.

Now, in your weekly reviews, examine when each of those problems *did not occur*.  You're looking day by day when you didn't make mistakes in each element of your trading process.  Then you examine what you *did* do on those occasions.  The key to the solution focused approach is the understanding that, when you're problems are not occurring, you may (without even realizing it!) be enacting solutions.  When you're not messing up, you're doing something right!  Once you've identified those potential solutions, they become explicit goals to work on, so that you're doing more and more of what works for you.

Each day, you find one thing you did right and then you turn that into a goal for the next day and a habit for your trading going forward.  Over time you build your own set of best practices--and they're the ones that work for you, not ones you've picked up from a would-be guru.

What if, hidden in your trading, is the best coaching of all?  That's a complete game changer.

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7/13/2026 - The greatest psychological challenges faced by traders are not emotional disruptions.  We experience emotional dis-ease when we seek the wrong things in markets.  When we jump from market to market, time frame to time frame, looking frantically for "setups", we are controlled by P/L.  We are no longer in the mode of *understanding* what is going on and digging deeper to achieve better understanding.  Rather, we're desperately searching for profits.  So when we have profits, we feel good.  When we lose money, we feel like losers.  With P/L as our god, our feelings about ourselves ride with our results.  When we step back and strive for ever better understanding and mastery of skills, P/L becomes a scorecard, but not our god.  

"Trading in the zone" requires focus and intention (see below).  If markets control us, can we ever truly find the zone?  Wealth is the result of greatness; it cannot substitute for greatness.

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7/12/2026 - What is a heroic life?  It is a life of noble purpose, a life dedicated to a positive ideal.  Heroism begins with intentionality, the capacity to pursue desired ends.  Intentionality is the exercise of free will.  Life is a gymnasium in which we can expand our abilities to live purposefully.  When we live from moment to moment, day to day without effortfully pursuing chosen ends, we gradually lose our capacity to sustain effort.  There can be no heroism in a life lived randomly.

In the earlier series of posts on Market Wizards, we learned that a common characteristic of elite traders is the amount of effort they expend in pursuit of opportunity.  They spend long hours each day throughout the week reviewing markets, reviewing their performance, and uncovering new patterns to exploit in their trading.  This deep processing of market information enables them to see what others miss.  In absorbing more markets and more patterns, they find more and different opportunity.

The great traders pursue markets heroically.  They trade with intentionality, making each day a learning experience.  Interestingly, the best traders I have worked with approach life in the same way:  purposefully.  If you look at how they organize and manage their time, you'll see a continual focus on getting important things done.  The calendar thus becomes a tool in the development of their intentionality.  In effortfully pursuing purpose each day, they train the free will that ultimately creates their heroic trading.

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7/10/2026 - Confusion is information.  When we are confused about what is going on in markets, that is likely because beneath our thoughts is some contradiction.  One line of thought and feeling lead us in a particular direction; another leads us somewhere else.  Such confusion is uncomfortable for many people.  We want to know.  We want "conviction" and the trades that come from deep inner certainty.  So what do we do with confusion?

The worst thing we can do is try to prematurely resolve the contradiction and push ourselves in one direction or the other.  That ignores one side of the confusion and often means that we're ignoring important information.  Great trades come to us.  When we try to make great trades happen, it's often because nothing is clear to us.  That is a caution light.

Ayn Rand, in her classic novel Atlas Shrugged, pointed out that "Contradictions do not exist.  Whenever you think you're facing a contradiction, check your premises.  You will find that one of them is wrong".  When we're confused in markets, we want to embrace that confusion and use it as a catalyst to check our assumptions.  Somewhere there is a premise we're operating on that needs to be challenged. 

Far from being a negative emotion, confusion is valuable information.  In checking our premises, we clarify our thinking--and that leads to good decisions in all areas of life.

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7/9/2026 - In the book Capitalism: The Unknown Ideal, Ayn Rand points out that "There is only one power that determines the course of history, just as it determines the course of every individual life: the power of man's rational faculty--the power of ideas".  The entrepreneur is one who pursues ideas in the marketplace, guided by a vision of unique opportunity.  From this perspective, we can define greatness as a life led entrepreneurially.  In other words, the great individual approaches life as a startup venture:  a pursuit of goals and ideals, not just as a succession of needs to be met.

So here is a good question for traders:  Apart from your life in markets, how are you living entrepreneurially?  What vision are you pursuing and realizing in your personal life?  Your relationships?  Your physical development?  Your personal interests?  What energizes and challenges you from hour to hour, day to day, week to week?  

Can we expect to sustain entrepreneurial purpose in our trading if we're living our lives reactively?  If we're not exercising our capacities for pursuing visions, will we be able to sustain our quest for trading success?  Entrepreneurship is a lifestyle--an approach to what we do in life.  Everything we pursue purposefully in life builds our capacity to pursue opportunity in markets.  We don't just try to lead a good life; we find the good life in becoming the leaders of each of our life's activities.

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7/8/2026 - A well-known quote from Ayn Rand is "To say 'I love you' one must first know how to say the I".  In other words, love is an expression and affirmation of who we are.  It is not meant to fill the void of an undeveloped self.  One important implication of this view is that need can never be the foundation for a successful relationship.  Love is a sharing of the positives of each person--their values, personalities, passions--not a desperate path for filling the voids when those things are missing.

We hear people talking about loving trading.  What kind of love are they referring to?  Is it the love of finding in markets the kinds of challenges and complexities that engage our greatest cognitive and personality strengths, or is it the love of trying to fill what is missing in life when one hasn't been successful in other arenas?  For love based upon fullness, losses are challenges to dig deeper, learn, and adapt.  For love based on emptiness and needs, losses are threatening.  Without P/L to fill the void, the needy person cannot tolerate the pain of digging deeper into markets.

When you enter a good romantic relationship, there is something about the other person that makes you want to dig deeper and get to know them better.  That's also what drives the person who truly loves trading--or any field of endeavor.  Those who fall in love are driven by positives; they're not running from negatives.  Markets can affirm who we are, but they can never fill what is missing.

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7/7/2026 - It was way back in 1974 that I was on college vacation in Florida, sitting on a beach reading Ayn Rand's novel The Fountainhead.  It's a book about an innovative, creative architect who has to fight mediocrity (and more) to see his visions realized.  There's a loose parallel to the work of Frank Lloyd Wright, which is why Fallingwater has always held a special place in my heart.  There was a moment on the beach when I looked across the water and was struck by an intense insight:  *This* is what psychology should be all about.  Not just treating illness and solving problems, but helping people find "the hero in your soul".  From this perspective, the goal is to live a visionary life of values, purpose, and meaning.  The best way to sustain the fire of a heroic life is to stay connected to the greatness in others.  The best relationships inspire and a true positive psychology leverages that connection.

Wealth--in all its forms--is not a vision; it is the consequence of realizing a great vision.  When we pursue trading for wealth and without a vision, is it any wonder that we stumble blindly through markets?  The important question for any trader/entrepreneur is, "What is your Fallingwater?".  What is the vision you're pursuing that will guide your innovation and your success?  If you're not doing something uniquely, you'll never achieve unique and distinctive returns.  You'll copy what the gurus tell you, you'll pursue one funded trading possibility after another, and your fire will "go out, spark by irreplaceable spark...in lonely frustration for the life you deserved".  

True passion comes from purpose and true purpose expresses a vision of what is and what is possible.  What you see uniquely and distinctively is your vision and in its pursuit lies your heroism and your key to a meaningful life.  No guru will tell you that.  They want you to follow them, not your own vision.  When you discover something new and promising in markets and you feel the excitement of possibility, you know you're on your heroic path.  

Key Insights From The Latest Market Wizards

 

7/6/2026 - The epilogue to the most recent Market Wizards book explains that "Two critical factors limit the possibility of becoming a Market Wizard:  1) Not everyone possesses an ineffable talent and the emotional composition that would make this goal possible, just as not everyone has the innate genes and skill to be a world-class athlete; 2) Achieving extraordinary performance in the markets requires tremendous dedication, passion, hard work, and forgoing other interests and endeavors--a sacrifice that most people are not willing to make" (p. 318).

It's easy to see how the shortcuts developing traders often take to achieve success--watching videos and following the social media postings of gurus--just don't work.  It is only when we draw upon our "ineffable talent" that we develop the drive to hone our skills and become the best we can be.  Then, the hard work is not a sacrifice--it's fulfilling.

I'm working with someone currently who is working on a large research project to track swing patterns in the stock market.  The goal is to automate this research so that there is a constant flow of signals across multiple patterns and stocks.  The quant signals thus act as an analyst, informing when and where there is opportunity, when to step aside, etc.  The trader follows the best historical signals by looking at the charts of past successful trades and developing criteria for entering, exiting, etc.  Market history thus becomes his mentor.

What's the "ineffable talent" in this case?  It's the love of learning.  It's the joy of discovery.  When our process draws upon what truly speaks to us, the hard work becomes absorbing play and we can achieve amazing results.  That's the lesson of market wizardry.

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7/5/2026 - Jason Berry's interview in the latest Market Wizard book contains a number of insights.  He mentions that he trains traders to "find triple-F trades: fantastic fill feeling.  These are trades where the market instantly goes in your direction" (p. 238).  He points out that he trades by following a trend "on different short-term time intervals, using 1-, 2-, and 5-minute bars.  By breaking down market activity into multiple short-term intervals, he is able to see quickly when trades are likely to go his way and when they are failing.  This allows for unusually good risk management.  If the trade doesn't work right away, it's not an A+ trade.

Berry also offers a unique perspective on trend behavior.  Markets don't trade the same at every hour of the day.  There are certain time periods for each market each day in which trends are most likely to continue.  "I trade each market during specific times every day.  I know how the markets move during those times.  I don't trade during the times of day when a market typically experiences choppy bars" (p. 238).  

Berry's trading is anything but mechanical.  He explains that "Innovation is one of my secrets to longevity in the markets.  My best trades often result from thorough research, where the findings are so compelling that they lead to trades with a high probability of success" (p. 241).  He reviews his trades each day and then again at month's end to refine his process.  

George Coyle, reflecting on Berry's interview, observes that the "gut feel" from repeated market study and experience allows Berry to quickly recognize when a market is behaving normally and when it isn't (p. 252).  Jack Schwager explains that Berry's ability to sustain "a trainee mindset" (p. 254), continually learning from changing market patterns, is essential to his success.

The idea that markets trade differently at different times of day and that certain times offer particular opportunity is, in my view, a game changer.  Success results from trading only when the odds are in your favor...not so unlike poker.

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7/3/2026 - Lukas Frohlich, interviewed in the most recent Market Wizard book, asserts that "If you don't have the willpower to fight through the pain, you shouldn't be a trader" (p. 164).  He observes that "The trading landscape is constantly changing, especially when moving between different liquidity brackets.  My job is simply to find the opportunities with the best expected value" (p. 166).  George Coyle, reflecting on Frohlich, points out that "It is unusual to find traders who can switch trading styles successfully, especially when the styles are radically different" (p. 167).  Jack Schwager, noting Frohlich's flexibility, observes "To succeed as a trader, you not only need strategies with an edge, but also the ability to use the right strategies in the right environment" (p. 169).

The clear implication is that even the best traders need to "have the willpower to fight through the pain", because there will always be pain (i.e., drawdown) when regimes change and what had been working no longer succeeds.  Psychologically, what is outstanding about Frohlich is that, not only does he not wilt under the pain of drawdown, he draws upon it to feed his creativity and trade with a radically different style.  Drawdown, for the trader who follows rules well, is a sign that the market has changed.  This requires rapid adaptation.

Great traders, like great companies, are adaptive.  They make and remake themselves to fit the new demands of the environment.  For the excellent rule follower, drawdown signals the end of one opportunity set and triggers the search for new ones.  Instead of viewing the drawdown as failure, the great trader responds to it as a call for creativity and adaptation.

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7/2/2026 - In his interview in the new Market Wizards book, Kenny Sharkness observes that "Another pattern I've noticed is that many successful traders are former gamers, and they look at the market and speculation as a game.  They're more focused on winning the game than the money that results from winning" (p. 284).  In my research regarding success at hedge funds, this theme also came up.  Interestingly, the games that were most popular with active/day traders were different from those that appealed to portfolio managers with longer holding periods.  The active group loved video games, for example.  The money managers loved slower games of strategy such as chess and poker.

There's an important insight here.  Whatever will fuel your trading success will draw upon something you already do and have a passion for.  Yes, we learn unique skills as traders, but ultimately we channel our talents and interests to create our success.  One of the greatest challenges of trading psychology is to identify what we do well, how we do it well, and how we can draw upon those strengths to fuel our development as traders.

Sharkness also offers something revealing when he was asked what he would do if he were starting out today.  He responded, "I would try to get a seat somewhere with exceptional traders so that they could instill in me a sense of what is possible.  Seeing others achieve greatness inspires people to strive for the same level of excellence" (p. 286).  It is not just talent and skill that make for great traders; it's also a vision "of what is possible".  This is one of the great shortcomings of traditional mentoring and coaching in trading:  It focuses on correcting weaknesses, but rarely offers models of elite success.  A continual emphasis on problems cannot create a visionary mind frame of success.

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7/1/2026 - Lance Breitstein, in his interview in the latest Market Wizards text, makes a very interesting point regarding edges in trading.  He points out that "Most patterns are indeed noise, but when you align enough nuances, there are very specific moments in time that provide tremendous positive expected value" (p. 46).  And how did Breitstein identify these specific moments of opportunity, particularly after 11 consecutive months of losing money?  He spent his Sundays watching recordings of the trading sessions, focusing on "the most critical points each day" (p. 47).  He watched these at advanced speeds, thereby exercising his pattern recognition ability.  When patterns then showed up in live trading his "real-time trading felt slowed down" (p. 47).

What's the key insight here?  Once again we see the value of immersion in developing real-time pattern recognition.  To trade all week and then immerse oneself on Sundays to hone one's game takes determination and a real love for markets.  But the most important insight is that success does not rely on indicator patterns, but on "nuances" within these indicators that occur at "very specific moments in time".  In other words, what Breitstein found were the patterns within patterns:  the nuances.

The nuances that offer "tremendous positive expected value" can only be identified through extensive, focused exposure to market turning points.  George Coyle, in the book, points out Breitstein's "commitment to work harder than anyone else...He adhered to his plan regardless of whether he felt amazing or awful" (p. 77).  The insight here is that it is the intensity and consistency of effort that produces unusual returns.  We cannot find and exploit subtle nuances if we are only casually engaged with markets.

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6/30/2026 - It is fascinating to see that many themes cut across the most recent set of Market Wizards.  A few of these are demonstrated by Kristjan Kullamagi in his interview:

1)  Learning by immersion - Kullamagi insists that there is nothing original in the patterns he successfully trades.  He indicates that "I got them from other people...I haven't invented anything" (p. 27-28).  But he also explains, "I looked at thousands of historical charts and verified that these patterns occurred repeatedly" (p. 27).  Seeing firsthand that these patterns are reliable gave him the confidence to trade and bounce back from losses.  

2)  Innovation - George Coyle points out that "Kullamagi's amazing results came from playing where many say you shouldn't play" (p. 29):  very high volatility situations.  Jack Schwager explains that Kullamagi spent 60-80 hours a week for a decade honing his skills (p. 30) with patterns that only make money 25-30% of the time (p. 31).  Most traders would avoid such patterns, but Kullamagi has succeeded with them because of his ability to tolerate--and control--losses.  He's not playing the game better; he found a better game that works for him.

3)  Persistence - Schwager explains that "One of the critical qualities of Market Wizards is that they refuse to give up" (p. 33).  Their resilience comes from a deep belief in the rightness of what they are pursuing:  they see something unique and distinctive in markets and are not willing to walk away from that.  Kullamagi experienced several early setbacks, but retained his confidence and his quest.  

Great traders are intellectual entrepreneurs.  They delve deeply into markets and perceive unique opportunity.  It is the depth and beauty of their vision that provides them with the drive to overcome their learning curves and achieve success in their own, distinctive ways.

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6/29/2026 - One of the most insightful interviews in the latest Market Wizards book is with Simon Russo, who first became passionately attracted to music and then to financial markets.  Like many of the greats, he blew up multiple times in his early trading development, but retained the sense that "I had learned a lot about how to make money in the markets".  He wrote a letter to his parents explaining his decision to drop out of school and pursue trading.  In that letter, he explained that "It has never been about the money for me; it is about the path of self-discovery and mastery necessary to become proficient" (p. 97).  

Comparing music and trading he told his parents, "That is what attracts me so much to these two areas; you can never master them, and you have to be self-aware to excel at them.  You can't be a sheep or sell out to become a good musician or trader; you have to put in hard work and countless hours to get where you want to be.  And guess what?  Hard work and countless hours are the best part; it's what fires me up" (p. 97).

Later he noted to his parents, "I will not go with a Plan B because I am worried I will fail.  I have learned to accept and even welcome failure because I don't think you can ever truly succeed without failing first" (p. 126).  Jack Schwager quotes Russo, "I love every part of the process, the entire journey, not just the results.  I love studying and doing the research" (p. 129-130).  

What's the key insight here?  Passion comes from mission.  When we find something that speaks to us deeply, it becomes our purpose, our mission.  Quite literally, Russo found two areas that he fell in love with, so that "hard work and countless hours" did not tire or overwhelm him; they fired him up.  A mission is an organizing principle in our lives.  It is what gives us purpose and meaning.  It is what we are meant to do.  An important challenge for those who wish to excel in markets is to find something so meaningful in your trading that it becomes your guiding principle, your mission to develop.  Then the work will give you energy; it will never exhaust you.  

This is what positive trading psychology is all about:  discipline comes from love.  When we fall in love--in any sphere--our effort fuels our passion and our passion fuels our effort.