The Trader's Mind

Prompted by Burger King's flameout and decision not to trade, a lot of folks in comments have been talking about, for lack of a better term, the Trader's Mind.

This is an important topic to me, since I think it's vital to successful trading. The first two books listed on my Recommended Reading page are directly related to trading psychology, and I would say that the part of me which has improved the most as a trader in the past couple of years has been my mindset toward the markets.

Although I am well-off by some measures, I am most decidedly not a wealthy man, so losing or making a lot of cash in a given day should affect me emotionally. I confess, it does a little bit, but probably only 5% as much as it would for most people. Sure, I get a little excited when things are really going by way, and I feel somewhat irked when they don't, but by and large I have divorced my mind from the real-world meaning of those dollar figures bouncing around the screen.

The real challenge is dealing with other people. I've explained to Mrs. Bear (and Mrs. Bear-in-Law) that I'm not going to talk about my trading P&L except on an occasional, pre-determined basis. It has nothing to do with hiding anything. It has everything to do with me staying in my own private space. If I make a lot of money, I don't want to announce it and create a lot of excitement (and/or spending). And if I lose a lot of money, I don't want to be put in the position of explaining myself and why I didn't close out positions at precisely the right moment (in retrospect).

Exposing myself to the readers here is different for a few reasons. One, there is no personal relationship. Two, there aren't hard-dollar figures involved. And three, by and large the folks who are active in comments tend to be real traders themselves, and we all speak the same language. I'm not going to feel compelled to explain myself to any of you except in terms of errors I've made in charting and judgment. For that reason, interactions on this blog are constructive.

Discipline, clear-headedness, a well-defined plan, a predictable trading environment, and a Spock-like lack of emotions all add up to better trading. We can hoot and holler after the trading day is done. In the meantime, keep your game face on.