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Note:  The following is from an essay I wrote a couple of decades ago, recently discovered in a stash of old papers. A therapy for the mentally well begins with the realization that change is impossible while we remain in our habitual states of consciousness.  Talking about our problems or working on changing behavior while remaining in our characteristic states is like trying to improve the reception on a TV by switching channels.  "What can one do in sleep?" Ouspensky asks his students.  "One can only have different dreams--bad dreams, good dreams, but in the same bed.  The dreams may be different, but the bed is the same". Such is the state of most coaching, counseling, and therapy.  It changes the content of our thoughts, but we remain in the same "bed".  True change requires that we awaken and rise from our bed.  Because when we can access different states of consciousness, we become able to process self-relevant information in qualitatively ...

  A savvy trader at SMB Capital reached out with a dilemma.  Each month he creates a new goal to work on, but to his dismay he has found that, once he moves on to a new goal, a previous problem resurfaces!  Psychologists refer to this as the problem of relapse.  Old patterns of thought, action, and feeling become ingrained habits.  They are not only learned, but overlearned.  It is relatively easy to change a habit pattern when we put full attention to doing things differently.  It is also easy to fall back into that pattern when our attention is turned elsewhere. This is a neglected topic in trading psychology.  We talk about making changes, but not so much about maintaining those changes. It is discouraging to make a change and feel that you're making progress, only to fall back into old ways and re-experience negative consequences.  But relapse is an intrinsic part of the change process .  We will always relapse until we have turned...

  We've seen stocks trade solidly higher for the past two trading sessions.  What has been notable about the move is not simply how strongly we've bounced, but the breadth of the rise.  Notably, we closed the week with over 80% of all SPX stocks trading above their 3, 5, 10, 20, and 50 day moving averages.  Think about what that means:  the great majority of shares are quite strong on multiple time levels.  This generally occurs when money managers and large institutional investors allocate more of their capital to equities as an asset class.  Such allocation is typically not a short-term, tactical decision. My breadth database goes back to 2006, encompassing almost 4000 trading sessions.  Interestingly, over that period, we've only seen 45 occasions with over 80% of stocks closing above those moving averages.  Such breadth thrust is relatively rare.  Over the next few days, there has been no distinct directional edge, but we begin to de...

  The first post in this series emphasized the importance of getting the right kind of help--mentoring vs. coaching--for your trading challenges.  The second post stressed the value of structuring your learning processes the right way, by first pursuing competence and then by cultivating expertise.  In this third and final post, I highlight a valuable approach to making changes--in life and in trading.     The solution-focused approach that I write about in Trading Psychology 2.0 and throughout this blog reflects a unique psychological perspective.  Instead of solely focusing on our problems, we should examine occasions in which our problem patterns don't occur.  Very often, it is in the exceptions to our problems that we can identify what we are doing right.  So, for example, let's say that I have a problem with trading emotionally and impulsively during periods of frustration.  Well, I don't go on tilt every time something doesn't ...