Trader Psychology

Sean Hendleman

"I wanted to take control of my own destiny instead of actually dealing with a lot of people telling me how I should manage the money or what I might want to do and I wanted to control my own destiny and I want to do it myself with my own money.

My systems [automated-black box trading] define risk in a way that I like to know that there’s a high probability of success prior to the trade being made, not from the entry of the trade but prior to the entry and the exit piece of the trade.

What that has done for me over the years is help me make money almost every single day over the past seven years of doing automated trading because if you take that probability and you replicate it over and over again and you’re at a 55% or 65% confidence interval, you will ultimately make money consistently.

The emotional piece of trading is probably 80% of the game or 90% of the game. You have to be able to understand risk and should be able to control your emotions more than even understanding a chart or understanding other things. You really have to understand how to work into trades, scale out of trades. You have to understand different parts of trading with risk and controlling your emotions in order to be successful.”

Scott Redler

"“What I try is I try and lead by example. If I’m in every day by 6:30, I’d really like a lot of the traders to be in early. They don’t have to be in at 6:30. They’re not preparing to put together a live broadcast in order to be displayed for everyone to act on but I fully need to be prepared every single day so I can approach my day with a plan, with a strategic plan and everyone’s day is different.

Mine is actually very long because of the amount of content that I have to put together. But really, the reason why it works is because I’m putting together the game plan, the content myself. When I get to the office in the morning and I look at 30 to 50 charts and then I put together their price point sheet with action areas, I’m really doing it so I could put myself in a position to think fast, act quick and be prepared at 9:30.

Even if you have the right setup and the right strategy, it’s that fine line whether you’re going to make money or lose money and that comes from the mental side on how you prepare yourself for it. This comes from experience, seeing it happen and actually having a profitable trade from it, the more times that you see it, the more times that you’ll trust it and begin to trust yourself.”

Marc Sperling

“I always say do a journal, think about what you did for the day, think about your good trades, think about your bad trades, because the only way you’re going to really ever replicate what you did well is if you think about it and you show it on paper, and you can actually see it.
I have been fortunate enough to do this a long time that I’ve seen just about every market and I’ve seen myself do a lot of stupid things and lots of things well. And I’d like to think that I keep getting better at doing the things that I do well and really pushing that and getting more comfortable with it.

After that is then understanding and saying to yourself “you know what, if I have an A+ conviction or a conviction on something, it’s not going to be 50% right, I’m going to be 80% right on that idea because there’s something I see.

I’m going to figure out how to maneuver to make sure the work I did on that idea is right on it. A common mistake I see from traders who start to see some success and hit a roadblock, they deviate, they get looser. I go the other way. You had success, the next day you’ve got to replicate it, same thing. Nothing more, nothing less, same thing. Do it again and again.”

Evan Lazarus

“You really have to understand what you do. You have to understand how to break down a trade. You have to know what a setup is and why these trades work and what the risks are and what the rewards are and the entry technique. I mean, you really, if you’re able to do that and do that well and have it roll off your tongue like it’s almost second nature, confidence will come because now you believe in your skill set and that’s I think, you know, people that trade, especially people that are looking to trade or starting down this path, it is a fantastic business but it is hard and I think most people that go through the first two years or that learning curve, they spend so much time focusing on the outcome rather than focusing on the process.

Focus on the process of what you do rather than the outcome. If you get good at understanding the process, the outcome is going to be great but people spend way too much time, especially in the early stages of their career, instead of practicing and focusing on the process, they want to trade and they want to make money and they want to trade and they want to make money, money, money, money, and that’s all that matters. And the end result is usually, you’re not going to make any money because you never spend any time building the process.”

Nadav Sapeika

“When you make money once, you get that taste, you know how to make it again, you do it consistently, now you know you know how to do it, it’s done. You come in every day. You don’t know how you’re going to do it but you know you’re going to do it. And that’s what you need to.

You need to get good at the discipline and the self-motivation to be able to then put a day after day after day to then gain new confidence to then say, “I know now,” that day number, whatever it is when you start making money, “these next days, weeks, months, I’m not sweating it ‘cause how I know how to make money. I’ll come in the next day and I’ll figure it how.”

Steve Levay

“The most important concept is to always be disciplined in trading no matter what is going on. I think that is the concept that a lot of traders don’t really…the non-successful traders don’t have the discipline to do this on a daily basis, and if you can discipline yourself to, as I have to day, with your P&L, not over trade, not emotionally trade, I think that discipline is the key to your entire career.

Discipline has so many different facets of it. It’s knowing when to stop trading, knowing when you made your goal and given back a little more than you want to. It’s knowing what stocks to look at on any given day, what patterns to look at, when not to trade when the market is not moving. There are so many different types of discipline and it all comes from your basic psychology of a trader.”

Mike Lee

“Trading confidence to me is one, always keeping your head up. If you strike out in baseball four straight times, come back the next day, you’re the 300 hitter. You are a 500 hitter. So for me, to my confidence, if I do have a losing day, look at your past numbers. That’s why you should keep journal. Say, “Wow, I made money 9 out of 10 days. I’m not going to get upset about this.” You come the next day fresh. You know what to do, and you get back on the horse.

One thing I did early in my career that I still do mentally because I have so much experience is writing three things that I did well that day, three things that I did wrong that day. And over time, and it was like six weeks into my business, I said, I look at this thing kept recurring and I kept stats, I kept one, two, three, four, five, the recurring things that I kept doing over and over again. And one thing that I did really well was when I was when I earned money; I worked hard not to give back more than half my day [which is common among new traders, because they don’t treat it like real money].

I believe that teaching has made me a better trader and how I could help young traders, mid-traders, or even guys who’ve been in the business a long time, is just tweaking. A lot of people aren’t that far away from being incredibly successful with this job. It’s a job a couple of tweaks, maybe size, maybe your downside risk, maybe understanding the market when it’s not in your favor, cutting back. All these things I adjust almost on the fly.”

Pete Renzulli

“I just mentioned this in my game plan meeting just this morning and I said, as a trader, you constantly have to be asking yourself what am I going to do no matter what; so if you’re long, what am I going to do if it goes up, what am I going to do if it goes down so that if one of those scenarios happen, you already know how you’re going execute the idea before you need to.

So the more prepared you are, the easier it is to do that. So the problem is most people aren’t prepared with those two scenarios as traders. They think about it when it gets to the point of them doing something as opposed to knowing what they’re going to do before they need to do it. And that preparation is ultimately what leads to consistency.

And in my world, that’s discipline; doing what you should, when you should. It’s not like this mystical thing that eventually, you’ll reach, that you can do it. It’s are you prepared and do what you said you were going to do?

When I finally got to the point where I said I don’t need to know everything, I just need to know what makes sense to me and then game plan every day my strategy, trading completely takes a different turn for you as an individual because now, every day, you expect to make money, it’s just a question of how the market unfolds.”

Andres Diana

“I came into the business at a time when there was no formal education. There was no formal training. I mean it was something like “sit down next to this guy and watch what he does and figure it out” and that works for a period of time, but I came in right when I started to network, and so, it became very important for me to create not only a journal but a whole self-analysis and correction system which I still instill in the traders that I teach today because it essentially created the trader that I am.

It allowed me to identify patterns that work, patterns that didn’t, whether they were my own or just in general in the market and it was absolutely permanent. If I hadn’t done that, there’s no chance I would have made it. You can have a phenomenal set-up, high expected value, everything looks good, but it doesn’t work, it doesn’t work. It’s just part of the statistic. It’s a probability game.”