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  The central problem of psychology is what Freud called the "repetition compulsion".  We repeat patterns of thought, feeling, and/or behavior even though those repetitions interfere with our happiness and success.  We can be fully aware of our maladaptive patterns at certain times and unwittingly repeat them a short while later.  Because our intentionality--our capacity for free will--is limited, our ability to act upon our goals and ideals is also limited.  Every problem of trading psychology ultimately boils down to a restriction of our ability to act upon our best plans and intentions .  The evidence-based approaches to psychology are a collection of techniques that help us become aware of our repetitions, so that we can write new endings to old stories.  At root, good psychology expands our intentionality:  our capacity for free will. We can develop our capacity for intentional activity by sustaining intentional activity .  One routine t...

  Here is a simple scheme for making yourself better as a trader month by month: 1)  Review your trading for the month.  Keeping statistics on your trading is an excellent way of doing this.  How many winning and losing trades did you have?  What were the average sizes of your winning and losing trades?  How did your largest winning trades compare with your largest losers?  What ideas were responsible for the winning and losing trades?   2)  Identify the one thing you did best during the month and identify the one thing from the month that you most need to improve.  That means comparing your best and worst trades and/or your best and worst trading days. 3)  In the spirit of FIGS--focused, intensive, goal setting --identify the one thing you'll do each day to do more of what you did best and correct the thing you did worst.  This has to be a daily plan that you will tackle each trading session and that will involve building...

  Please note:  I will be discussing this topic in greater length during my Sunday evening podcast with Better System Trader live .  You can use the link to sign up; the session will be held on Sunday, July 11th at 8 PM ET / 7 PM Central. Since the writing of Trading Psychology 2.0 , I have emphasized the importance of studying our best trades to identify "best practices" that are unique to our success.  It is in combining these best practices that we become able to develop "best processes" that make us consistent in our performance.  It's a great example of how our trading psychology follows from our development as traders:  we become confident and consistent as we develop our talent the right ways . Friday was one of my best days in the market in a while, so I thought I would share a few of the learning lessons reinforced by the day's profitability. If you click on the chart above (screenshot from Sierra Chart ), you can see how Friday morning's trade ...

  In recent meetings with traders, I've heard a similar question:  When are stocks going to come down?  Those traders have been frustrated by the seeming steady march higher, as time and again, they have tried to sell "overbought" stocks and indexes. When I hear the same question again and again, I've found it's usually the wrong question. Here's an example of a good question, which I define as a question coming from a fresh, unexpected perspective: "Last week, we saw a majority of SPX stocks trading below their 50-day moving averages, according to the Index Indicators site .  After such a correction, what has the market done when we've returned to a situation where over 50% of stocks are trading above their 50-day moving averages?" Note why this is a good question:  It ignores what the chart looks like and instead defines correction as any period in which the majority of stocks trade below their moving average.  By that definition, a correction ...