Mastering Trading Stress: Strategies for Maximizing Performance

Preface xi

Acknowledgments xiii

Introduction xv

Chapter 1 The Nature of Stress: What is Stress and Why is It a Problem? 1

The Fight-or-Flight Alarm 2

Differences in Stress Responses 5

Personality Factors 7

The Stages of Stress 8

Taking It Step-by-Step 10

Chapter 2 The Emotions of Stress: What Negative Emotions are Experienced as a Result of Stress? 13

Fear and Greed 14

Guilt 21

Worry 23

Anger 24

Euphoria 27

Chapter 3 The Dangers of Trading under Stress: How Do Attempts to Handle Stress Create Problems for the Trader? 29

Trading Despite Stress 30

Avoiding the Stress 34

Creating a Social Persona 39

Competing to Win 44

Being Indecisive 51

Chapter 4 How Fear Inhibits Mastery: Can You Learn to Lessen the Central Emotion of Fear? 53

Responding to Fear 54

Disciplining for Success 55

Relinquishing the Need to Be Perfect 57

Maintaining Psychological Energy 59

Starting with a Clean Slate 62

Chapter 5 The Consequences of Negative Emotions 63

Greed and Risk Management Errors 64

The Difference between Confidence and Arrogance 70

Mistakes of Insecurity 71

Why Not to Avoid Negative Feelings 78

How Negative Emotions Lead to Impulsive Behavior 80

Chapter 6 Personalities and Stress 87

List Makers (Analytical Thinkers) 89

Intuitive Thinkers 92

Optimist/Pessimist/Realist 94

Are You Confident or Insecure? 96

Make the Most of Your Personality 97

A Winning Personality 98

Chapter 7 Ego and Obstinacy 101

A Stubborn Nature 102

Refusal to Accept Commands 105

Difficulty with Management 106

Chapter 8 Fear and Failure 111

Afraid to Win 112

Failing to Commit 115

Moving Forward 119

Chapter 9 Perfectionism and Paralysis 123

The Problem 124

Finding a Solution 124

What about You? 128

Chapter 10 Failing to Manage Risk 131

Risk Management for a Vision 132

The Psychology of Risk 136

The Importance of Self-Analysis 137

Asking the Right Questions 139

Assessing Your Attitude toward Risk 140

Looking for the Positive 142

Relaxation and Risk 143

Taking Responsibility 144

Chapter 11 Failure to Dig Deeper 147

Discerning the Importance of Data Analysis 149

Too Much or Not Enough? 151

Gathering the Information 152

Reducing Stress 155

Chapter 12 Failures in Shorting 159

Reluctance to Short Stocks 160

Stress and the Short Squeeze 162

Steps of a Good Short Seller 164

Chapter 13 Learning to Live with Stress 171

Learning to Observe 172

Creating New Life Principles 178

Reframing Negative Thoughts 179

Choosing an Objective 182

Defining New Priorities 183

Chapter 14 Exercises and Practical Applications 185

The Most Basic Stress Busters 187

What to Do When You Have a Breakdown 188

Importance of Commitment 196

Index 199