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My Book Reviews

Category: Trader psychology
Published: 2003
Read: 2003
Reviewed: Aug 2010

This book is a collection of articles dealing with trader psychology that were taken from the "Mind over Markets" newsletter and website. This book covers "traditional” areas of trader psychology (such as: stress, mood, having a positive mindset, confidence and self-esteem, keeping it simple, thinking in terms of probabilities, having a winning attitude, being flexible, taking action, taking responsibility, motivation, self-sabotage, recovering from a bad day) as well as topics covering behavioral finance (such as: framing effects, illusions of control, sunk costs, insufficient justification effect, mere exposure affects, fundamental attribution error, false consensus effect).

Although this book covers a plethora of topics, it's weak in a couple of areas. First, there are so many topics covered that the author doesn't cover them with any kind of depth (nor does it make any attempt to with the book having only 137 pages). The book best functions as a reference resource that lists issues to go and research somewhere else. Secondly, the author doesn't relate the concepts of psychology to trading too well. Other trading psychology books (like "The Disciplined Trader") back up their psychological theory by giving real-world examples of trades. Although this book does make some references to trading, the connections are way too generalized and vague. Some of the advice (like "don't dwell on mistakes" and "take responsibility") is so generic that it could have been taken from any given self-help guide.

There were a few interesting discussions throughout the book, such as: how pessimism may not be a bad thing, "learning goals" vs. "performance goals", the downside of taking responsibility, and conformity. Here are a few interesting quotes:

  • Are you truly confident? Or are you "creating" confidence because you know you need it?
  • You shouldn't ignore your emotions. You should learn to use them as a flag rather than to strive to eliminate them.
  • Although people think that it is "fear and greed" that drive financial markets, a more accurate label would be "fear and hope".

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