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Brett Steenbarger Web Seminar
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Brett Steenbarger Web Seminar

by The MoleJune 17, 2014

I’m currently watching a live seminar by Brett Steenbarger who is talking about improving trading performance. I’m posting some of the slides here – feel free to discuss and chime in:

Missed this one but I think we all know the basics of behavioral patterns and how stress can affect your trading.

I would add Revenge and Addiction.

Our trading plan was created in one state of mine – once we shift into actual trading mode we lose this perspective. How often do we find ourselves placing trades and afterward think – what the hell was I thinking? It’s important to realize what ‘sets you off’ – maybe frustrating factor that leads to over trading, maybe anxiety, fatigue, overload – you learn to identify the state of mind that is identified with your worst and best trading.

In exposure methods you learn to de-condition your emotion triggers. This is used in treating anxiety disorders or trauma. We start with the least challenging to the most difficult triggers. Brett controls his breathing rate during coping exercises – he imagines increasingly challenging scenarios while he slows down his body and slows down his mind. The rehearsals over time allow you to control your fight or flight response.

Brett has his students declare their emotional temperature each day. By self analysis you are allowing yourself to pre-empt emotional mistakes and instead active complementary internal states which have been previously practiced via meditation.

Just as negative patterns can be triggered – positive ones can be triggered as well. The question you should ask yourself is: ‘When am I in my zone?” When are you in an open minded place when I’m simply observing – only absorbing what’s coming from the screen. That is usually a very different state than when he’s researching or managing a large position. For Brett that’s a Zen state – it allows him to let the market come to him. The focus is not on eliminating over trading – the focus is on staying in the zone of optimal decision making.

Successful traders all share one thing in common despite different psychological characteristics – they all seek out markets that enforce their positive emotional/analytical skills. Everyone processes information differently – some prefer reading a lot of information, others prefer to observe others and bounce from one person to another. How you trade becomes an expression of who you are. This way you are avoiding emotional disruptions that affect your trading. In order to be consistent in implementing your own strength is to turn best practices into best processes. When we experience emotional well being we process information more deeply and more broadly.

We all make mistakes and if that is your whole life and if you have no other sources of emotional well being then your mood will rise and fall with your trades. Make your trading a performance activity – what am I doing that’s working for me and what am I doing that needs to be improved? That turns ordinary trading into performance training.

By training ourselves under difficult conditions we develop ourselves – and that self development reverberates into other ares of our life. That includes your career and your personal life. We all have certain cognitive and personal strengths. If you want to be successful trading the financial markets you need to improve your personal strengths. Do not try to make yourself into a different person. Instead try to identify what are your best traits and improve on them.

Now the session has been opened to discussion. If you have questions then post them in the comment section and I will ask him.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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  • Scott Phillips

    I’m liking the stuff about coping hierarchies

  • http://dartht.blogspot.com/ Gold_Gerb
  • Scott Phillips

    Interesting him talking about traders who are self confessed passionate about markets being vulnerable to overcontrol and undercontrol and emotional state being washed around with P&L. That would be me, and I notice I have periods where I kill it followed by underperformance periods.

  • https://evilspeculator.com molecool

    I think for you it’s essential to realize when you ‘get in too deep’ – the same is happening to you on the blogging front. You go crazy and load it up and then you get disgusted when you don’t receive the response you expect/seek. I’m very much like you in that respect and I am still working on this. FORTUNATELY this bog actually forces me to show up every day and gather the strength to produce something useful. Not sure why but if I would not force myself to go through this process my own systems would suffer.

  • PriceRules

    All good stuff. I oscillate between overcontrol and undercontrol as well depending on my emotional state.

  • Scott Phillips

    Yep, I had a few ideas about objective triggers for that stuff.

  • https://evilspeculator.com molecool

    Just hit yourself with a wet rag.

  • https://evilspeculator.com molecool

    Actually I think that is counter productive. If you are feel too comfortable there is nothing wrong with curbing your enthusiasm. But I think the ‘state’ of when you are successful – when you are in the zone is different from feeling ‘awesome’. You need to model the successful periods.

  • https://evilspeculator.com molecool

    I just posted this question: We are discussing this on our blog right now and the question is how you approach automated system trading. Because you are removed from making each trading decision but at the same time draw downs will affect you – how do you not feel powerless and frustrated inside?

  • https://evilspeculator.com molecool

    My own personal approach would be to remind myself of the bigger picture – if all fails watch Nick Rage’s video 😉

    https://www.youtube.com/watch?v=ew1L6SLpHgM

  • https://evilspeculator.com molecool

    Question was asked: Would trading rooms considered a distraction? He says it depends on the person – for some are, and it benefits others who like to share ideas. We are all different in our cognitive needs and styles – you have to know yourself. The more you are relying on being immersed in markets, synthesizing information the more distractions may impair you.

  • https://evilspeculator.com molecool

    You should not get your thrills from trading. A passion and interest in trading does not have to be reflected in an unbalanced life. He distinguishes between passion of markets and a passion for trading – the latter may fall prey to addictive behavior.

  • https://evilspeculator.com molecool

    @disqus_0BQ8B6N0tE:disqus Hey mate – feel free to add additional thought – I have to get to bed over here, it’s late.

  • Scott Phillips

    Personally the problem with blogging/trading as opposed to just trading is that I clearly get something emotionally from it. There is a danger that in Seykota’s terms “I get what I want from the markets” from blogging and not from trading. That is the root cause of Tim Knight’s problem, which is why I identify with it.

    For me, the jury is still out about whether participation on the blog for me, improves or decreases performance.

  • Scott Phillips

    Get your rest my friend 🙂 I’ll have 6 months of Heisenberg collated by the time you wake up

  • https://evilspeculator.com molecool

    He says systematic trading has its own set of pitfalls. For people who can produce systems that suits them it can be of great success. Some people have tremendous research strengths (that is you Scott) and some have great programming skills. The problem is that you keep looking for edges, keep testing, and find things that look like they work but wind up failing. He mentions some site and says how easy it is to perform form fitted backtests.

  • Scott Phillips

    He’s answering your question about automated trading now – “I love systematic trading and respect people who do it well. It has it’s own set of perils but for people who are research oriented it can be a tremendous avenue for trading success, its a classic example of leveraging your strengths. The problem with systematic trading is it is so easy to overfit trading systems, even when doing in sample and OOS testing it is easy to derive a false sense of confidence in backtests”.

  • https://evilspeculator.com molecool

    Saw my message? Ninja let us down again!! No importing of tick data. We need to start recording it locally – we’ll talk about that tomorrow.

  • https://evilspeculator.com molecool

    Hehe – see below 😉

  • Scott Phillips

    The most common mistake – putting capital at risk before you are genuinely ready. People want to make money, read a book, learn some patterns, and go ahead

  • Scott Phillips

    hehe

  • https://evilspeculator.com molecool

    Well, other people read 20 books – remember Nick Rage? He asked ‘what are you doing here’? Reading books is fine but you need to put something into practice and go through the process – technically and emotionally.

  • mugabe

    I think that this is probably the only way to realise that you are not ready. school of hard knocks.

  • Scott Phillips

    Yep – I’m 12 years in, 8 of them either full-time or close to it, and I am a LONG way from mastery. My honest opinion is that I am somewhere hovering around the minimum acceptable standard for long term profitability, sometimes above and sometimes below.

  • https://evilspeculator.com molecool

    Alright – I’m outta here. Hopefully I wake up to some productive discussion here.

  • Scott Phillips

    Not true at all. If I handed you a scalpel and told you to do some brain surgery you wouldn’t start it, you would KNOW you are fucked before you start.

    If I gave you a set of boxing gloves and told you to go take on Tyson in his prime – you would naturally refuse.

    You don’t need to lose money as a right of passage. In fact, speaking for myself, my early losses traumatized me in a way that took years of work to overcome.

  • mugabe

    thanks for posting this

  • https://evilspeculator.com molecool

    They say you need 10,000 hours to master a skill. Unfortunately trading is not a skill – it’s an activity that uses a range of your personal skills and at the same time challenges your inner demons. As Brett said – how you trade becomes an expression of who you are. Hey, I’m a pain in the ass – how does that reflect in my trading? 😉

  • https://evilspeculator.com molecool

    Remind you of someone?

  • Scott Phillips

    Yeah it’s totally me!

  • https://evilspeculator.com molecool

    I think limited exposure is good for you – you are a social creature. But don’t get in too deep – I think you have stricken a good balance in the last month. But don’t get too deep – you cannot save everyone – some people will fall through the cracks. And if you’re honest – we benefit from some of these people as they are taking the other side of our trades – that is the ugly truth.

  • mugabe

    I dunno. I think that beginner’s luck is far more dangerous than losing. The crucial thing is to have a small acount size at the beginning imo to avoid trauma. I think you probably need to be humbled by the market, but not in a way that is financially crippling if you can avoid it. Think of all the market wizards who started off disastrously.

  • SS_JJ

    “it is easy to derive a false sense of confidence in backtests”. Hence why I like to see the context in which a trade is placed.

  • mugabe

    I think one of the psychological problems with trading is that if when you’re a winning trader, it’s a very non linear process. It’s like what u said in a previous post … periods of inaction / account going nowhere followed by the sweet spot. But you need to tough it out to get to the sweet spot. That’s not easy

  • Scott Phillips

    Good points – it was eye opening reading the thread from 2010 that Gerb posted yesterday. Bob the Horse, Dudeplunger, Chronographics, Brishort, Raised by Wolves, Tooncez… some of those guys I thought were genuinely good. Chronographics in particular I spent hours on the phone to and I thought he was a solid solid pro. Bob the Horse was a hedge fund guy. RBW was quite brilliant in an erratic way. Dudeplunger was a technical trader far better than I, he went literally MONTHS trading crazy ivan on 360m charts without a single error or missed trade.

    All gone, and I assume blown up and out of the markets. Sobering

  • Scott Phillips

    Since I adopted some of Van Tharps methodology my confidence in my backtests has grown enormously, and I do a FRACTION of what I usually do.

    Before I started trading crazy ivan (manually, before the automated version) I sim-traded in real conditions (ie just like live trading but with rollovers every 2 minutes instead of every 6 hours) 5 years of actual trading, just under 1500 trades. Took me 3 months of my life dawn to dusk. This was very useful technical practice, and it got my mistakes down to an acceptable level (the acceptable level of mistakes with CI is zero, any mistakes are gonna fuck you right up) and it gave me the confidence to ride out a 3 month drawdown, which I now believe was the turning point in my trading career.

    Crazy Ivan is a very very thin edge, truthfully only made whole by the very good exit algo.

    Heisenberg in comparison is based on a property of markets which Mole and I have observed for years, it makes intuitive sense. I have 100 % confidence in the validity of the concept, the rest is just grunt work.

  • Scott Phillips

    You don’t NEED to lose at any performance activity to be good. Would Tiger Woods be any better if he sucked for 10 years instead of being a child prodigy? Maybe if Tyson lost a bunch of fights Rocky style?

    No – there is no way to polish that turd. Losing is losing, and when you practice losing you become a loser. Overcoming that thinking (I had to, many successful traders had to) is a sidetrack that you need not even walk down.

  • mugabe

    you’re not practising losing, you’re learning from it.

  • Scott Phillips

    Yeah with my meditation which I do in a social context I find it far more efficient with another person around. We are social animals, a slightly smarter than usual species of apes with less hair.

    With my work with Seykota’s group I’ve identified a pattern of behaviour which is related to seeking the approval of my mother, which I am trying to work through.

  • Scott Phillips

    Yes. You are learning how to be a loser.

  • mugabe

    only if you don’t reflect and take a step back.

  • Scott Phillips

    Whatever time you spend reflecting, stepping back, and fixing the loser thinking that caused you to lose could be better spent not becoming a loser in the first place.

    I don’t mean not having losing trades. I mean not thinking like a loser. Trading is no different to any other performance activity. If you wanted to become a world class concert pianist the advice anyone would give you is to practice your ass off in a focused practice environment, measuring your improvement, taking advice from teachers and improving your skills in a focused, iterative manner.

    You don’t need to stand up in front of an audience after your 3rd lesson, play “chopsticks” badly and get booed off stage. Any logical person would see that any potential benefit would be totally outweighed by the psychological trauma involved.

    Losing at trading isn’t a right of passage that you need to go through. Your nervous system evolved for running from sabre toothed tigers and hunting woolly mammoths. Losing at trading “feels like” a life threatening activity.

    You can literally get PTSD from trading

  • https://evilspeculator.com molecool

    Dude – go back to testing please.

  • Scott Phillips

    I’m testing right now 🙂 Not trading today, I want to get this done

  • http://dartht.blogspot.com/ Gold_Gerb

    yes. Social I say.

    without a connection to other traders, it looks something like this.

    http://thesestonewalls.com/wp-content/uploads/2010/08/Computer-in-Prison.png

  • phylum

    Interestingly, the OP (whether u or d), as boned again yesterday, has a message, in context with, within and without a multiple time frame view.

  • phylum

    If you have played any sport, a winning attitude is a must. No one rejoices losing. Nobody practices to lose!

  • http://www.ProfitFromPatterns.com/ Ivan K

    One of the very negative aspects of technology today versus technology in the 80’s … when I started my journey … is that software (coupled with a lack of discipline) have made pulling the trigger far too easy … just a click away.

    The faster the technology … the less time there is to harness to awesome power of the computer between our ears … and to allow the subC to perform.

  • mugabe

    ‘If you wanted to become a world class concert pianist the advice anyone
    would give you is to practice your ass off in a focused practice
    environment, measuring your improvement, taking advice from teachers and
    improving your skills in a focused, iterative manner.’

    You are right, of course. The problem, as I see it, is that this structured rehearsal does not exist *in practice* for most people for trading. They are very lucky if they have this opportunity at the beginning and are guided by someone. Usually we have to find out the hard say. It’s not the best way, but I would imagine it’s the most common way: read a book or two, start trading and lose. Then, back to the drawing board.

  • Billabong

    Back in the early 80’s I was paying around $140 per trade. You really had to think about your trades at that time … and a longer holding time frame.

  • Billabong

    You can get PTSD from anything that requires a high performance….

  • Billabong

    You can get PTSD from anything that requires a high performance….

  • Billabong

    Excellent point! The periods of boredom have to be filled with meaningful activities.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Same page there … tho the tariff on the Sydney Futures Exchange was far less … additionally I had eye contact with ‘my’ floor trader on the floor … and a few hand-signals ensured getting an order executed on the floor pronto … whilst I was up in the visitor’s gallery.

    In 1983 I switched to trading the ‘real’ futures markets in the USA.

  • Billabong

    If we look around, all endeavors reward the top 1% that make it. Intelligence by itself is not a measure of how well you will do. How well you will do, depending on the endeavor, is measured in street smarts, determination and Darwinism … and available capital in our case.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The only ‘capital’ required is knowledge and emotional capital !

  • Billabong

    Mole, Sorry I missed the webinar. I picked up Brett Steenbarger’s book, “Enhancing Trader Performance”, last year and just finished reading through it a second time. I also found a one hour Brett Steenbarger video put out by the Options Tribe. I saw part of it, went back and couldn’t find it.

    BTW, banking coin and watching World Cup games. 1.5 weeks of sheer fun in the markets … I can tell it’s time to back off and not go off on a manic high bender.

  • mugabe

    Must-see games today and tomorrow: España-Chile and Inglaterra- Uruguay.

  • http://www.ProfitFromPatterns.com/ Ivan K

    ‘practice your ass off in a focused practice environment’ … this is exactly why I take on so few students … each one goes through what I call Warm-up Laps … with my peering over their shoulder (using screen sharing software) … as they apply their own researched RBT … for as long as it takes them to feel ready to cut the cord … even then I have been known to monitor their real time performance … as they continue their own journey.

  • bdoone

    Another curveball to add to FOMC/quadwitching week, particularly for options traders: SPY going ex-div Friday…if anybody wondering why calls cheap/puts jacked.

  • Billabong

    Yes, tomorrow is do or die for both England and Uruguay. Today I’m looking for follow-through by the Netherlands and improvement by Spain.

  • https://evilspeculator.com molecool

    One Spaniard told me yesterday that Spain was still one of two best teams in the world cup. He was serious 🙂 Let’s see if the campeones can dig themselves out of their shallow grave this afternoon.

  • https://evilspeculator.com molecool

    Brain surgery – meh, how hard can it be…

  • Billabong

    😉

  • http://dartht.blogspot.com/ Gold_Gerb

    no comments in 3 hrs?…. omen.

    Miners. The bullish percentage perked yesterday.

    Weekly chart. Stop 24. Long 24.50

    lots of vacuous moves above 25 (circles).

    http://s28.postimg.org/y2x3nr1m5/June_GDX.png

    -Gerb

  • ridingwaves

    looks like squeeze opportunities in a few beaten up miners…AUMN juiced 28% today…
    Looking at PAL as it’s over the 20-50sma, close to 100sma at .36…if it jumps it, I have a bid a 1/2 cent above it…

  • http://dartht.blogspot.com/ Gold_Gerb

    I can never keep it straight. The juniors lag or lead? doesn’t matter.
    (full disclosure, I avoid individual picks.)

  • https://evilspeculator.com molecool

    I had a bad night – didn’t have the cycles for a morning briefing. Let’s see how this session unfolds – the bulls need to stop screwing around or they’ll get stomped on.

  • https://evilspeculator.com molecool

    Miners – yuk…

  • http://dartht.blogspot.com/ Gold_Gerb

    oh gawd, Cap’n got PMS and pissing on the parade.

    FOMC day, it’s all good.

  • Billabong

    Picked up some FCX and SCCO at the open.

  • ridingwaves

    could be a reason to make an entry..I think everyone thinks the same…yuk

  • mugabe

    the ultimate contrarian indicator. gotta get me a bigger truck…

    …only joking

  • Billabong

    FOMC announcement this afternoon will cause market gyrations through 3:40 pm.

  • Billabong

    Another option that combines PA and PL is SPPP. It moves slower because it’s a hard asset closed end fund that moves slow but no derivatives or percentages of moves to worry about.

  • http://dartht.blogspot.com/ Gold_Gerb
  • mugabe

    it’s in anticipation of india winning the world cup. massive celebratory buying when that happens

  • ridingwaves

    ASM or PPP are some of best miners to own, good mgmnt, mentioned a while ago at .90+ here, I think JJ got in, I still own it..earnings should rise with increase production…

  • ridingwaves

    🙂 that was good…I think miners are catching bid because of Scotus opinion on Argentina vs bond holders…..

  • mugabe

    some cabal is definitely manipulating the price upwards. My money’s on Putin and his cronies:)

  • mugabe

    by the way, I probably have the v.dubious distinction of being the only one here who has some positions in Argentina from before all the brouhaha. amazingly, not stopped out on either and both still in the green. they’re not exactly big posns though (thank God!).

  • mugabe

    btw, have you seen the spanish stock market this year? woof!

  • https://evilspeculator.com molecool

    Yeah, I’m not posting ahead of that.

  • https://evilspeculator.com molecool

    GoldGerb – oh no you won’t!

  • https://evilspeculator.com molecool

    i’m waiting out the storm tonight before making a post. We won’t get any additional clues beforehand. Scalping weather.

  • https://evilspeculator.com molecool

    I reverted your deletion below – self moderation will not be condoned at Evil Speculator!

  • http://dartht.blogspot.com/ Gold_Gerb

    I was wondering! WTH. LOL.

    strange how my one comment set off a flurry of activity.
    like an avalanche.

  • Skynard

    Closing /CL for the shit storm.

  • http://dartht.blogspot.com/ Gold_Gerb
  • Skynard

    Yep, holding /DX and AUD

  • wandering196

    I could write a book on this subject but being a mother, I/we have tried very hard to raise children that do things for themselves, and I don’t mean picking up after themselves. During high school we stressed the grades they achieved were for them not us. Their grades affected what they wanted to do not us, etc etc etc. My mom died a year and a half ago and I loved her but she had a negative, indelible affect on myself and my sisters.

  • Skynard

    Lol, yep. Awaiting that. They need a good thrashing:)

  • mugabe

    get into crash position NOW!

    http://www.youtube.com/watch?v=0FIleqKFhqs

  • http://dartht.blogspot.com/ Gold_Gerb

    I have a 4+ month swing trade that’s nickels away from profit take.
    order is in, it gets filled or not. [honeybadger thinking]

    it’s ok, because my psychology is ok beyond repair.
    😯

  • Skynard

    Short the /ES, -2

  • mugabe

    I’m having no truck with this .

  • ridingwaves

    lots of headfakes with today fed bs and opex tomm..

  • http://dartht.blogspot.com/ Gold_Gerb

    Filled.

  • bdoone

    Dont forget Q&A starts in 5 mins

  • Skynard

    Good action now, looks to be our re-test:)

  • Skynard

    Good sign for /DX longs, 80.5 held up so far.

  • jmoney3000

    Does anyone have any experience with Transcendental Meditation? Ive read that a lot a big hedge fund guys are really into it (Dailio, Tudor Jones, etc). Ive been doing hot yoga for the past 4 years and the main reason I like it so much is I feel so much calmer afterwards. I have never been introduced to the benefits of Mediation. I looked on their website and its basically $1000 to learn the technique which makes me skeptical….

  • http://dartht.blogspot.com/ Gold_Gerb

    Come to Phoenix in June, all the hot yoga you can handle. free!
    😉

    http://media-cache-ak0.pinimg.com/236x/e4/d4/b1/e4d4b11bcd685688172c08d6aa9bb7d3.jpg

  • BobbyLow

    If anybody is looking for a reminder not to screw around with currencies on Fed Day prior to the announcement here is one. I already have a rule not to enter into any trades on Fed Day (prior to the announcement). However, I had a remainder of two small open pairs that I was carrying from yesterday that were on trailing stops. At anouncement time, one pair was stopped out for a profit and one pair stopped out for a loss because of the vicious gap and I broke even on the two. BTW, the one that had the vicious gap in now back like nothing happened. I now have an addendum to my rule and that is to clear any and all open pairs prior to the annuncement regardless when the trade was entered – win, lose, or draw.

    On this screen grab look at the 2 PM 1 minute reaction on the /DX. Please note the stop runs on both long and short positions that took place in one minute. This is Fuckery at it’s best. Now, I’m not pissed because I expected wild swings and this was more of an experiment than anything else. This is amazing shit. 🙂

    http://screencast.com/t/PAX58XbG

  • Skynard

    Wow, check out the VIX

  • http://dartht.blogspot.com/ Gold_Gerb

    plunge, on the 30min

    I’m assuming zero is the final destination.

  • https://evilspeculator.com molecool

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