Tuesday, December 22, 2009

"The Daily Trading Coach" by Brett Steenbarger and reviewed by Richard Friesen

I am giving this book to all of my clients

“The Daily Trading Coach” by Brett N. Steenbarger is the best step-by-step guide for traders who want to make steady improvements to their trading game I have read.

The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (Wiley Trading)


I do have one complaint about the book however. Normally, when I read such a book I will mark everything I read th
at is of value with notes in the margin and then bookmark them with a sticky note. Then, after I finish the book, I will do a quick review of the parts that are relevant to me and create a “to do” list for action items.

This book has over 150 sticky notes and almost every page has a handwritten note in the margins that stimulated or confirmed my thinking. There is so much of value here that I will have to re-read almost the entire book to review the valuable lessons! Because this book is so practical, I am afraid I can’t summarize it and do it justice.

Seriously, Dr. Steenbarger covers every aspect of the transformational process that traders will need to deal with. Reading the book is like walking on a field of diamonds and hearing them crunch under your boots. The issues that my clients are working on are all addressed clearly along with suggested solutions.

Our mutual experience in trading and trading trainers has forged a common psychological foundation that my clients will recognize as they read this book. My process of building new satisfying behaviors (I call Mind Muscles™) sync right up with his self-coaching guide.

If you are a trader who wants to become more consistently profitable by improving your own mental abilities with self-coaching, there is no better resource. If you want to accelerate your process with professional coaching, I will send you a copy of this book for free.

Richard Friesen
RFriesen@MarketPsych.com
415.259.0652

Thursday, December 17, 2009

NOBODY EXPECTS THE SPANISH INQUISITION!!!



My home page is the Yahoo! Finance page. There are two reasons I chose it: 1) If I want to check a stock price, or market action, I can do so with just one click; 2) The pre-market headlines crack me up.

Go ahead, check them out yourself one day. You will find that they are generally rendered moot/outdated/incorrect within the first hour of trading.

Look, I'm trained as a psychologist. I look at things differently. It probably makes me a "bit of an odd duck", to borrow a phrase from my father. (It's true. Ask any of my remaining friends.)

But you don't need to be the quirky type to see why this (lead) sentence from the pre-market headline article is just silly.

"The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery of the nation's battered labor market proceeds in fits and starts."

What's wrong with this sentence? Well for starters it notes that unemployment claims rose "unexpectedly" last week. Later on in the same sentence, it notes that the labor market "proceeds in fits and starts."

First of all, all economic forecasting is incredibly complex. Why a rise of 1% rather than a decline of 1% for one lousy week's worth of data rates as a "surprise" is beyond me. It's like standing in a rain shower and saying you got hit by a particularly unexpected raindrop. (Really? Didn't see that one coming??)

But the second clause of the sentence says the market proceeds in "fits and starts". Yes, it does. Truly. It is a point that is universally acknowledged. So how can you be suprised by a slight decrease while simultaneously noting the market proceeds in a herky jerky fashion?

For crying out loud, pick a side and stick with it!

Behavioral finance research has taught us how rarely data conform to our pre-supposed parameters. We know a coin will come up heads 50% of the time. Yet somehow we find ourselves wanting results to alternate heads/tails when we flip it. We see a run of 3 or more heads in a row, our pattern-seeking brains screams, "anomaly!"

It's not an anomaly. It is the essence of randomness.

Back to the article; if you read it in its entirety, you will see just how complex the jobs data are. You will find yourself wondering if the first paragraph still makes sense by the end of it.

The skinny: When it comes to a week's worth of economic data, market movements... the weather, don't "expect" anything.

It is sillyness that calls to mind this famous bit of sillyness .

I'm going to have my coffee now.

(Entirely too much sillyness.)

-Frank Murtha