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Monday 22 February 2016
SP500 At very interesting Psychological pivot.
I rarely comment on markets these days. However, the recent price action on Stocks (as well as many markets) are extremely interesting. Just over a week ago the psychology of the market, and various commentators, were along the lines of 'The world is about to end'. Maybe not quite that extreme, but I am sure you get the picture, it was an extreme of fear. Since then the bounce has been quite stunning, though with relatively little fanfare. The overriding chatter I sense is that this is just a bounce before further woes. However as the chart shows, there is a possibility that a much bigger rebound may be on the cards, at least with regard to the technical picture. Short-term signs are potentially a double bottom pattern over recent weeks if the market can break and hold above 1940/50. The twin hammer candles suggest that this may be quite possible, and if this does happen then this set the possibility of a move up to 2056 or even 2085. - Whilst this would not kill the formation of the overarching major topping formation, it would call into doubt for now. Equally failure to clear 1940/50, which may act as resistance for a few days, could turn the focus firmly back to lower levels.
Friday 19 February 2016
Ray Dalio 'What Monetary Policy 3 (MP3) Will Look Like'.
There are certain people in the world of finance, that when they speak, one should listen. Ray Dalio is certainly one of those people.
I find Ray Dalio's latest piece of work fascinating, particularly as it is in accordance very much with what I have been thinking lately. Central banks have thrown every bullet in their considerable arsenals to try and kick start their economies, the latest move by Japan seems to stink of desperation, and has certainty not been received well. Nonetheless, the situation in the global economy seems to be reaching the point where some drastic action is going to be needed. - I was thinking about this, and like Ray Dalio, I don't have the answer, but I was thinking of this in light of the situation when inflation was running out of control on the upside in the early 1980s. Yes I am old enough to recall that time. The fear of Hyperinflation was huge, and the Fed decided that it was time to throw the proverbial kitchen sink at the problem. The chart of the Fed Funds rate below highlights this period. From the 1976 to 1979 the fed fund rate rose from 5% to 10%, then over the next few years twice they raised rates sharply to 20%, sparking a major double-dip recession. This hugely painful medicine certainty did the trick, and inflation steadily subsided. This was the first major salvo in a near 30 year war to defeat inflation. Ironically it was the oil price rally of the late 70s that was the major catalyst in the inflation price spike. It would be fair to say right now inflation is not the enemy, in fact it maybe that inflation, or at least a dose of it has to be the cure (If not quite a friend). The big threat to the world is clearly deflation. There is a ideal spot, not too hot, not too cold, a little inflation but not much. To get there the central banks are clearly going to have to do a little playing with fire. Who knows what it is? But whatever it is, it will be a game-changer I don't think we are there yet, but I think we are getting closer..
Dalio article can be seen at the following link - https://www.linkedin.com/pulse/what-monetary-policy-3-mp3-look-like-ray-dalio - (You will need to be on linkedin to see this)
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
I find Ray Dalio's latest piece of work fascinating, particularly as it is in accordance very much with what I have been thinking lately. Central banks have thrown every bullet in their considerable arsenals to try and kick start their economies, the latest move by Japan seems to stink of desperation, and has certainty not been received well. Nonetheless, the situation in the global economy seems to be reaching the point where some drastic action is going to be needed. - I was thinking about this, and like Ray Dalio, I don't have the answer, but I was thinking of this in light of the situation when inflation was running out of control on the upside in the early 1980s. Yes I am old enough to recall that time. The fear of Hyperinflation was huge, and the Fed decided that it was time to throw the proverbial kitchen sink at the problem. The chart of the Fed Funds rate below highlights this period. From the 1976 to 1979 the fed fund rate rose from 5% to 10%, then over the next few years twice they raised rates sharply to 20%, sparking a major double-dip recession. This hugely painful medicine certainty did the trick, and inflation steadily subsided. This was the first major salvo in a near 30 year war to defeat inflation. Ironically it was the oil price rally of the late 70s that was the major catalyst in the inflation price spike. It would be fair to say right now inflation is not the enemy, in fact it maybe that inflation, or at least a dose of it has to be the cure (If not quite a friend). The big threat to the world is clearly deflation. There is a ideal spot, not too hot, not too cold, a little inflation but not much. To get there the central banks are clearly going to have to do a little playing with fire. Who knows what it is? But whatever it is, it will be a game-changer I don't think we are there yet, but I think we are getting closer..
Dalio article can be seen at the following link - https://www.linkedin.com/pulse/what-monetary-policy-3-mp3-look-like-ray-dalio - (You will need to be on linkedin to see this)
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
Sign-up for the 'Behavioural Trading' Newsletter.
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Thursday 18 February 2016
Webinar Recording - Trader Personality / RiskType - How it relates to trading performance.
On Wednesday 17th March, the Market Technicians Association (MTA) hosted a webinar I presented on Trader Personality and Risk Type. This 55 minute long webinar can be seen at the following link, or by clicking the image above:
https://www.mta.org/video/its-not-the-markets-we-conquer-its-ourselves/
For those looking to see segments of the webinar, these can be viewed at the following times on the recording.
1) Introduction and 3 quotes which underlie my philosopny to helping traders improve their trading performance. 0 to 7 minutes.
2) Some examples of success stories from my trader performance coaching. 7 to 11 minutes.
3) An explanation of the concept of risk-type and how it impacts trader/risk-type performance.11 to 14 minutes.
4) An introduction to the Risk Type Compass risk profiling tool and how we interpret it in the context of trading behaviours. 14 to 21 minutes.
5) Presentation of analysis of risk profiles of Traders and Hedge Fund Managers who have taken the Risk Type Compass assessment. 21 to 41minutes 30s.
6) Q&As. 41m 30s to 55 minutes.
I will be giving a presentation and talk on the same topic on Tuesday 1st March from 6pm to 7pm in London at an MTA hosted event.
Location
CMC Markets, 133 Houndsditch, London EC3A 7BX
Registration for this event is free
for MTA Members and Non-Members.However places are limited. You can register for this at the following
link. https://www.mta.org/event-registration/united-kingdom-chapter-meeting-featuring-steven-goldstein/
I look forward to you joining us for these events.
Warm regards
Steven Goldstein
Managing Director - Alpha R Cubed Ltd
www.alpharcubed.com
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
Sign-up for the 'Behavioural Trading' Newsletter.
* indicates required
Email Format
Sunday 14 February 2016
Risk Type – What is it and why does it matter to you?
To help explain 'Risk Type' and why it can be so empowering in helping improve your performance in financial markets. I am going to draw on a powerful analogy.
(Please note: I will be giving a free webinar on Wed 17th February, and a talk on the 1st March on this topic and associated research on a population of trader and hedge fund portfolio managers - See bottom of this article for full details. )
Consider a boat on the sea with its anchor down. The boat moves around on the surface as it gets pushed, pulled and buffeted by the tides, currents, winds, and waves. However the boat can never move too far from its position or state because it is firmly anchored. In this analogy, the anchor represents a person's risk-type, (their personality in relation to how they act when faced with high risk decisions). The boat represents a person's attitudes to risk. These attitudes can change depending on transient events and circumstances, and their experiences of these. Together 'Risk Type' and 'Risk Attitude' form 'Risk Behaviour'.
Risk Type and Bright-Side (Positive) Behaviours.
When a person's risk attitudes are in a harmonic position in relation to their risk type, there will be little or no stress on the chain between anchor and boat, and the boat itself will not come under strain. In this part of the analogy, the person is more capable of making informed and optimal decisions, and are less likely to be affected by default decisions and factors which impair decision-making, such as behavioural biases. In these situations, they are more likely to be productive and performance is more likely to be optimal.
Image 3
Risk Type and Dark-Side (Derailer) Behaviours. When risk attitudes are not conducive and not in harmony with risk type, there will be stress and tension on the chain. A person's risk attitude may be in conflict with their risk type. In this part of the analogy, they are in danger of making more sub-optimal choices and impairing sound decision-making. Thus they will be vulnerable to derailing behaviours such as emotional hijack or ego based choices, and more susceptible to unconscious behavioural biases and other default behaviours. In these situations, they may be far less productive and liable to sub-par performance.
Changing Risk Behaviour Requires Understanding Risk Type.
My recent article, which can be seen here, highlighted why it is so difficult for traders and investment professionals to change and improve their behaviours, and why so many highly successful traders are turning to performance coaches and consultants (Such as myself) to help them change, improve and stay ahead of the game. - Change is an immensely difficult thing to successfully achieve without outside help. One of the points I stressed in the article was that behaviours are mostly sub-conscious (they are impacted by risk type and remain hidden from view). Only our attitudes are visible on the surface, this is what we why to change, but without understanding the anchor, efforts to change are mostly futile.
The Risk-Type Compass
The Risk Type Compass has many applications beyond improving trader and investment manager performance, and we are applying it increasingly in helping improve team, leadership and management performance. We are also using it in our work to help bank and investment firms improve 'Conduct Risk' and 'Risk Culture', and to support other cultural initiatives and change projects. The tool is also being used by consultants and coaches in their work with boards and strategic decision-makers, as well as in the world of high performance sport.
Risk Personality, the next frontier for Behavioural Finance.
The rise of behavioural finance has done much to raise awareness of how much the psychological, emotional and relational aspects affect people's decision-making and impacts financial market behaviour. However focus on personality has remained no more than at the very fringe of Behavioural Finance. Victor Riccardi and Kent Baker's excellent book 'Investor Behaviour' is one of the exceptions, the book includes a chapter on Personality Traits, written by Lucia Fung and Robert Durand, who themselves have produced some interesting research in this area.
Webinar and Presentation on Risk Type and The Risk Type Compass.
I look forward to you joining us for these events.
Warm regards
Steven Goldstein
Managing Director - Alpha R Cubed Ltd
www.alpharcubed.com
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
(Please note: I will be giving a free webinar on Wed 17th February, and a talk on the 1st March on this topic and associated research on a population of trader and hedge fund portfolio managers - See bottom of this article for full details. )
Consider a boat on the sea with its anchor down. The boat moves around on the surface as it gets pushed, pulled and buffeted by the tides, currents, winds, and waves. However the boat can never move too far from its position or state because it is firmly anchored. In this analogy, the anchor represents a person's risk-type, (their personality in relation to how they act when faced with high risk decisions). The boat represents a person's attitudes to risk. These attitudes can change depending on transient events and circumstances, and their experiences of these. Together 'Risk Type' and 'Risk Attitude' form 'Risk Behaviour'.
Image 1
As different transient events and circumstances occur and we gain new experiences, so we re-calibrate and change our attitudes, this consequently affects our behaviours. In this analogy the boat moves around on the surface of the water, but remains anchored and can not move far.
Image 2
Risk Type and Bright-Side (Positive) Behaviours.
When a person's risk attitudes are in a harmonic position in relation to their risk type, there will be little or no stress on the chain between anchor and boat, and the boat itself will not come under strain. In this part of the analogy, the person is more capable of making informed and optimal decisions, and are less likely to be affected by default decisions and factors which impair decision-making, such as behavioural biases. In these situations, they are more likely to be productive and performance is more likely to be optimal.
Image 3
Risk Type and Dark-Side (Derailer) Behaviours. When risk attitudes are not conducive and not in harmony with risk type, there will be stress and tension on the chain. A person's risk attitude may be in conflict with their risk type. In this part of the analogy, they are in danger of making more sub-optimal choices and impairing sound decision-making. Thus they will be vulnerable to derailing behaviours such as emotional hijack or ego based choices, and more susceptible to unconscious behavioural biases and other default behaviours. In these situations, they may be far less productive and liable to sub-par performance.
Image 4
Changing Risk Behaviour Requires Understanding Risk Type.
My recent article, which can be seen here, highlighted why it is so difficult for traders and investment professionals to change and improve their behaviours, and why so many highly successful traders are turning to performance coaches and consultants (Such as myself) to help them change, improve and stay ahead of the game. - Change is an immensely difficult thing to successfully achieve without outside help. One of the points I stressed in the article was that behaviours are mostly sub-conscious (they are impacted by risk type and remain hidden from view). Only our attitudes are visible on the surface, this is what we why to change, but without understanding the anchor, efforts to change are mostly futile.
The Risk-Type Compass
The 'Risk Type Compass' developed by PCL (Psychological
Consultancy Limited) helps people understand more about their risk personality
and how this comes to impact their decision-making in high risk situations.
This simple but powerful tool identifies people as one of 8 different risk
types, each with their own particular characteristics; upside traits (we label
them Bright-side Behaviours) and downside traits (Dark-side Behaviours).
Understanding your risk type helps you make sense of the
positive and negative behaviours you display in your trading activities. As an
example, individuals identified as the ‘Wary’ type tend to be highly risk
averse. They are usually very detailed orientated and highly analytical, thus
they are more likely to achieve success taking a tactical approach to trading.
On the other-hand the ‘wary type’ may display high levels of anxiety and find
ambiguity challenging. Diametrically opposed to the ‘wary type’ is the
'Adventurous type’. They have a high degree of risk tolerance and are more
likely to achieve success adopting a strategic perspective. They are
comfortable holding risk without becoming too flustered. However, they lack a
detail orientation and can get caught out being over-confident and
under-appreciating the level of risk they take.
What matters for success is not what risk type you are, but
whether you applying yourself in the correct way for your type. The most profitable trader tested by us in our
work so far, was an extreme version of the 'wary type'. This was an individual
from a large and very successful hedge fund who was very anxious and nervous
when trading. Yet he produced profits well in excess of $100 million over each
of the past 2 years. His method, which is purely discretionary, plays very much
to his ‘wary type’ upside traits, and away from his ‘wary type’ 'downside
traits'.
The Risk Type Compass has many applications beyond improving trader and investment manager performance, and we are applying it increasingly in helping improve team, leadership and management performance. We are also using it in our work to help bank and investment firms improve 'Conduct Risk' and 'Risk Culture', and to support other cultural initiatives and change projects. The tool is also being used by consultants and coaches in their work with boards and strategic decision-makers, as well as in the world of high performance sport.
Risk Personality, the next frontier for Behavioural Finance.
The rise of behavioural finance has done much to raise awareness of how much the psychological, emotional and relational aspects affect people's decision-making and impacts financial market behaviour. However focus on personality has remained no more than at the very fringe of Behavioural Finance. Victor Riccardi and Kent Baker's excellent book 'Investor Behaviour' is one of the exceptions, the book includes a chapter on Personality Traits, written by Lucia Fung and Robert Durand, who themselves have produced some interesting research in this area.
Webinar and Presentation on Risk Type and The Risk Type Compass.
I will be presenting a live webinar and giving a talk, both hosted by the Market Technicians Association (MTA), whereby I will be talking about Risk Type, the Risk Type Compass,
and how I use it to help Traders, Investment Professionals and Financial
Market firms improve performance and risk culture. - In
the webinar I will be sharing some fascinating research we have doing
using this tool across a population of traders and portfolio managers
from leading Investment Banks and Hedge Funds. The research sheds a
light on different types of trading personalities and how certain trader
types are more suited to particular approaches, methods and behaviours.
The webinar will demonstrate how by being more conscious of risk type
and risk personality you can start to reshape your trading and
investment behaviours to improve your trading and investment
performance.
Webinar Details
The live webinar will take place on:
Wednesday 17th February.
Timings for this event are:
London GMT 5pm to 6pm
Paris/Rome/Stockholm CET 6pm to 7pm
New York EST 12pm to 1pm
Los Angeles PST 9am to 10am
Hong Kong HKT 1am to 2am
The
webinar is will be available at
the following link:
Presentation Details
The presentation and talk on the Risk Compass will take place on:
Tuesday 1st March from 6pm to 7pm
Location
CMC Markets, 133 Houndsditch, London EC3A 7BX
Registration for this event is free
for MTA Members and Non-Members.However places are limited. You can register for this at the following
link. https://www.mta.org/event-registration/united-kingdom-chapter-meeting-featuring-steven-goldstein/
I look forward to you joining us for these events.
Warm regards
Steven Goldstein
Managing Director - Alpha R Cubed Ltd
www.alpharcubed.com
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
Sign-up for the 'Behavioural Trading' Newsletter.
* indicates required
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Saturday 13 February 2016
Webinar and Presentation: “How Risk Personality Impacts Trading and Investment Performance and Behaviours”
I am delighted to announce that the Market Technicians Association (MTA) have invited me present a webinar and give a talk about my work on trader personality and behaviour.
At these events i will be introducing a powerful new Risk Profiling tool which we use in our work with traders, portfolio managers, banks and hedge funds in developing improved trader performance and superior risk cultures.
The 'Risk Type Compass', developed by PCL (Psychological Consultancy Limited)
helps people understand more about their risk personality and how this comes to impact their decision-making in high risk situations. - In the webinar I shall explore how the different classifications of risk personality manifest themself in trading and investment performance and behaviours, and how this knowledge can help people, team and businesses improve performance and enhance risk culture.
In the webinar I will be sharing fascinating research we have doing using this tool across a population of traders and portfolio managers from leading
Investment Banks and Hedge Funds. The research sheds a light on different types of trading personalities
and how certain trader types are more suited to particular approaches,
methods and behaviours. The webinar will demonstrate how by being more
conscious of risk personality you can start to reshape your trading and investment behaviours to improve your trading and
investment performance.
Webinar Details
The live webinar will take place on:
Wednesday 17th February.
Timings for this event are:
London GMT 5pm to 6pm
Paris/Rome/Stockholm CET 6pm to 7pm
New York EST 12pm to 1pm
Los Angeles PST 9am to 10am
Hong Kong HKT 1am to 2am
The
webinar is will be available at
the following link:
Presentation Details
The presentation and talk on the Risk Compass will take place on:
Tuesday 1st March from 6pm to 7pm
Location
CMC Markets, 133 Houndsditch, London EC3A 7BX
Registration for this event is free
for MTA Members and Non-Members.However places are limited. You can register for this at the following
link. https://www.mta.org/event-registration/united-kingdom-chapter-meeting-featuring-steven-goldstein/
To get a primer on Risk Type and the Risk Type Compass, please click on the article:Risk Type – What is it and why does it matter to you?
I look forward to you joining us for these events.
Warm regards
Steven Goldstein
Managing Director - Alpha R Cubed Ltd
www.alpharcubed.com
You can follow 'Behavioural Trading' on Twitter and join the flourishing 'Behavioural Trading' Linkedin group.
You can also sign up for our 'Behavioural Trading' newsletter by completing the form below, or hitting this link . Please be assured your data will not be shared with any outside parties, and you are welcome to 'unsubscribe' at any time.
The 'Behavioural Trading' blog is written and managed by leading Risk Performance consultant and coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities and performance. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
Sign-up for the 'Behavioural Trading' Newsletter.
* indicates required
Email Format
__________________________
Friday 12 February 2016
Still making the same old trading mistakes. What are you doing about it?
So after many years trading you are still in the game. Well done! Not many make it past boot camp, let alone make a living out of it. Clearly you are blessed! But, here is the rub: You know you could have done better, possibly much better. Too often you left money on the table, chased the market, failed to monetise your ideas, or any number of other common trading mistakes. Just think how much better it could have been!!!
First let me re-assure you that you are not alone, I worked as a trader at some of the world’s top investment banks for many years, there was not an error I didn’t make, yet I managed to forge a nearly 25-year career as a trader. I now work with traders as a coach, mostly with banks and hedge funds, and I can tell you that they also moan about leaving money on the table, missing the big trade, chasing the market, and holding on too long. It’s just that they learn to make mistakes a bit less than everyone else, and manage to do what’s right a little bit more often. It is fine margins in trading between success and failure.
So it is possible that you are making a few too many mistakes a little bit too often. And that this is restricting you from achieving your full potential. So what are you doing about it?
Maybe you turn to self-help books, inspiring biographies, perhaps some of the great works of trading literature. These may have lead to positive changes for a short-time. and you felt better and more energized. But in all but a few cases, these changes weren't sustained, and the mistakes kept on coming a little too frequently. The inescapable fact is that self-change is incredibly hard, and the longer one has been trading the harder it gets. Yet as we mature as traders, and face new challenges, this is when change is often most needed. So why is change, and particularly self-change and self-improvement so hard?
Behaviours are mostly sub-conscious: Most of our behaviours are patterns which we repeat almost without knowing. They are habitual, and if we don’t know we are doing it, how can we change it?
Lack of Objectivity: We do not see our behaviours as others may see them. As Daniel Kahneman puts it. ‘We are blind to our own blindness’.
Change is a process: Change is not something which just happens as a one-off. It requires trial, error, repetition and practice, many times over.
Overconfidence in our ability to change: The Dunning–Kruger effect is a cognitive bias whereby an unskilled person mistakenly assesses their ability to be much higher than it really is. In this case the skill is the ability to self-change.
Failure to understand the underlying issues: Most people decide they are going to be more disciplined, or maybe run profits longer, or perhaps increase their size. – Sounds simple, but unfortunately there are invisible levers working in the background, these affect our judgments and decisions, and bias our behaviours. Understanding these can be extremely powerful, but it is hard to do this without outside help.
Commitment: Who is making sure that you do not lapse and that you remain on the path to your objectives? Who’s your buddy? It is very unlikely you can do it yourself.
Willpower and self-control: Willpower is like a muscle, the more you use it the weaker it gets. Change requires incredible willpower and self-control, without outside support, it’s extremely hard to maintain.
Finally, there is your own attempts at self-delusion: Trading is something which tests
every bit of mental strength and character you have. It makes you doubt yourself, feel a fool, toys with your emotions, and jousts with your ego. To survive the bruisings there will be times where you may need to fool yourself just to bring yourself back to the table. Self-belief is a very precious commodity in trading, but it can over-reach itself.
Performance Coaching may be the answer.
Working with a coach can be the greatest investment a trader ever makes. In 2001 I had a coach, it was an action that was to transform my trading. The subsequent years, until I decided to hang up my gloves in 2009, were the best trading years of my life. In 2009, I decided to become a coach. It took me a couple of years to make the transition, but since then I have seen the extraordinary changes my own coaching has had in helping other people’s performance. I am not a coach who tells someone ‘what to do’ (directive), or teaches them a method (training). Rather I am a qualified ‘performance coach’, who works with people to facilitate them to achieve the things they want to achieve. Helping them make the sort of changes they cannot achieve on their own.
For many traders, the very thought of having a performance coach is something that seems
a stretch too far. There is still a sense whereby they feel they questioning their own ability, which conflicts with the need to have high self-belief. But this is to misunderstand what a coach does. This attitude is the antithesis of how coaching is viewed in most other professions and fields of endeavor. In sport, every pro-sportsmen has a coach, the higher they get and the better they are, the more coaches they have. This process is starting to happen in trading, albeit very slowly. Performance coaching for traders is actually a secret which many of the top hedge fund traders use. But it’s something they tend to keep to themselves, and why wouldn’t they! Trading is a high stakes game, and if you have an advantage you don’t want other people to know your edge.
So how are you going to change? How are you going to break the cycle?
First let me re-assure you that you are not alone, I worked as a trader at some of the world’s top investment banks for many years, there was not an error I didn’t make, yet I managed to forge a nearly 25-year career as a trader. I now work with traders as a coach, mostly with banks and hedge funds, and I can tell you that they also moan about leaving money on the table, missing the big trade, chasing the market, and holding on too long. It’s just that they learn to make mistakes a bit less than everyone else, and manage to do what’s right a little bit more often. It is fine margins in trading between success and failure.
So it is possible that you are making a few too many mistakes a little bit too often. And that this is restricting you from achieving your full potential. So what are you doing about it?
Maybe you turn to self-help books, inspiring biographies, perhaps some of the great works of trading literature. These may have lead to positive changes for a short-time. and you felt better and more energized. But in all but a few cases, these changes weren't sustained, and the mistakes kept on coming a little too frequently. The inescapable fact is that self-change is incredibly hard, and the longer one has been trading the harder it gets. Yet as we mature as traders, and face new challenges, this is when change is often most needed. So why is change, and particularly self-change and self-improvement so hard?
Behaviours are mostly sub-conscious: Most of our behaviours are patterns which we repeat almost without knowing. They are habitual, and if we don’t know we are doing it, how can we change it?
Lack of Objectivity: We do not see our behaviours as others may see them. As Daniel Kahneman puts it. ‘We are blind to our own blindness’.
Change is a process: Change is not something which just happens as a one-off. It requires trial, error, repetition and practice, many times over.
Overconfidence in our ability to change: The Dunning–Kruger effect is a cognitive bias whereby an unskilled person mistakenly assesses their ability to be much higher than it really is. In this case the skill is the ability to self-change.
Failure to understand the underlying issues: Most people decide they are going to be more disciplined, or maybe run profits longer, or perhaps increase their size. – Sounds simple, but unfortunately there are invisible levers working in the background, these affect our judgments and decisions, and bias our behaviours. Understanding these can be extremely powerful, but it is hard to do this without outside help.
Commitment: Who is making sure that you do not lapse and that you remain on the path to your objectives? Who’s your buddy? It is very unlikely you can do it yourself.
Willpower and self-control: Willpower is like a muscle, the more you use it the weaker it gets. Change requires incredible willpower and self-control, without outside support, it’s extremely hard to maintain.
Finally, there is your own attempts at self-delusion: Trading is something which tests
every bit of mental strength and character you have. It makes you doubt yourself, feel a fool, toys with your emotions, and jousts with your ego. To survive the bruisings there will be times where you may need to fool yourself just to bring yourself back to the table. Self-belief is a very precious commodity in trading, but it can over-reach itself.
Performance Coaching may be the answer.
Working with a coach can be the greatest investment a trader ever makes. In 2001 I had a coach, it was an action that was to transform my trading. The subsequent years, until I decided to hang up my gloves in 2009, were the best trading years of my life. In 2009, I decided to become a coach. It took me a couple of years to make the transition, but since then I have seen the extraordinary changes my own coaching has had in helping other people’s performance. I am not a coach who tells someone ‘what to do’ (directive), or teaches them a method (training). Rather I am a qualified ‘performance coach’, who works with people to facilitate them to achieve the things they want to achieve. Helping them make the sort of changes they cannot achieve on their own.
For many traders, the very thought of having a performance coach is something that seems
a stretch too far. There is still a sense whereby they feel they questioning their own ability, which conflicts with the need to have high self-belief. But this is to misunderstand what a coach does. This attitude is the antithesis of how coaching is viewed in most other professions and fields of endeavor. In sport, every pro-sportsmen has a coach, the higher they get and the better they are, the more coaches they have. This process is starting to happen in trading, albeit very slowly. Performance coaching for traders is actually a secret which many of the top hedge fund traders use. But it’s something they tend to keep to themselves, and why wouldn’t they! Trading is a high stakes game, and if you have an advantage you don’t want other people to know your edge.
So how are you going to change? How are you going to break the cycle?
If you would like to know more about how Performance Coaching can help improve your performance, or those of your team members, or traders/portfolio managers within your business. Please email me at steven.goldstein@alpharcubed.com. Or visit our website www.alpharcubed.com for further information.
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The 'Behavioural Trading' blog is written and managed by leading Trading Performance and Behavioural Trading Coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities within their frontline financial risk businesses. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.
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Thursday 11 February 2016
Oil - A tale of two headlines. - Heads you lose, tails lose you lose. Or so it seems!!!
From 2012
From 2016
Just Saying !!!!
Image courtesy of Salvatore Vuono at FreeDigitalPhotos.net
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