Category: Trader psychology
Reviewed: Sep 2010
This is a book about trading psychology, more specifically, how intuition relates to trading. The book is split into 3 parts: (1) a summary of teachings and strategies about intuitive trading (2) interviews with teachers of intuitive trading, with each one dealing with a particular area of psychology (like chaos or Zen) and (3) interviews with traders.
The author, Robert Koppel, has written a few other trading psychology books, all which seem less-than-mediocre. Even though this book is better than his others, it is still mediocre. It deals with topics which have been already covered in the psychology trading literature (like left brain vs. right brain thinking) and is definitely a superficial treatment of its subject matter. The interviews with the "teachers" end up giving readers the impression that the author has no original insight to offer.
There were only a couple of really interesting sections of the book, including the story about Mulmat's pork belly trade, and the theory about why doctors make bad traders. Here are some other interesting ideas and quotes:
- Arthur Schopenhauer: "Every truth passes through three stages before it is recognized. In the first it is ridiculed, in the second it is opposed, and the third it is regarded as self-evident."
- "No single trade is worth not being able to trade tomorrow."
- Successful traders understand the difference between loss and losing.
- To develop your intuition, "strategy and technique must be learned only to be forgotten."
- "Nobody trades the market. Everybody trades their own personal belief system."
- Bill Williams' 5 levels of trading.
- When you become an intuitive trader, "Your focus becomes not to make money but to find out who you are."
- Trading is "the most naked psychotherapy in the whole world."
- "Very often traders confuse patience with an inability to act."
- "Most traders have a tendency to think of preparation as intellectual or academic in nature. They like to "study" the markets, to judge the economics of a particular market. They forget, in the final analysis, that the bottom line of trading is that it is up to their mind and their emotions and their control to take action when the time is right!"
- "Traders unquestionably tend to over-intellectualize trading."
- "One trader I interviewed... truly believed that the only reason that the bell rang at 7:30 every morning at the exchange was to enrich him and his family."
- Whenever someone talks to a guru about the secrets of trading, they're hoping for a complex answer.
- "There is a whole industry of individuals who represent themselves as gurus and keep promulgating the notion to the public that there is one objective answer to successful trading."
- "Being confident in one's likelihood of success and being confident of a particular trading position are quite different."
- Traders are "independent thinkers, and they are people who know to manage their time and structure their lives. They don't require a lot of rules. They are comfortable in their own skin."
- "You have to have an affinity for trading to be successful. I don't think anybody can do anything well just because they decide to do it."
- "You cannot enter into a trade as a day trade then turn it into a position trade because there is a loss on the trade. The internal logic of the trade must stay consistent."
- The record of your trading is "the ultimate psychological report card."
- "Our beliefs are the lenses through which we see the world."
- "Many people have an incorrect perception of trading. They think you just start trading and fill your wheelbarrow up with money."
- "The psychologically rich keep getting richer and the psychologically poor get poorer."
- "Do not just try to break bad thoughts or habits - replace them."
- "You learn to ski by skiing. You learn to trade by trading."
- "Performance goals will energize you faster than outcome goals."
- George Leonard: "To take the master's journey...you also have to be willing to spend most of your time on a plateau, to keep practicing even when you seem to be getting nowhere."
- Think in probabilities. Act in certainty.
- "Trading is not about proving something - to yourself or anyone else."
- As a trader, each day you "will be put to a test of my own making".
- "I don't believe you can lose the lottery. I mean, they might not take your ticket, but psychologically speaking, you don't lose."