The Mental Edge in Trading provides the tools you need to ensure this never happens to you by helping you understand and use your emotions when it counts most. It’s the key to long-term trading success. Until now, no other book has provided a practical, detailed method for achieving the mental edge in trading. What you’ll find inside is based on intensive research into the minds of today’s most profitable traders.
Introduction:
Look, it’s no great secret that managing one’s emotions is huge when it comes to surviving the turbulent ups and downs of the markets. It can be a pretty wild ride, and all along the way we are each emotionally moved by, and respond to the markets’ activity, based on who we are as unique individuals. If you deny that your emotions are just as vital as your favorite trading system or market indicator, you are either in a state of denial or merely a “paper trader.”
The reality is that classical finance theory, as taught in universities, does not take into account the raw human emotions involved in decision making. Classical finance assumes that we all act as rational beings, when in fact we all know that we don’t. The decisions of investors and traders are shaped by not only sound logic, but also by emotions within a personal life context. We are unavoidably prone to such psychological biases when it comes to trading the markets. Understanding our own personalities and temperaments, and even more so how they shape our financial decision making, is a fundamentally crucial task for any investors hoping to achieve good returns. It can be quite daunting to think about how the numerous personality and emotional variables can interfere with implementing and sticking to your trading strategy. This book sets out in a very systematic way how to approach your personality and its influence on your trading, and how to master them.
There is no mistaking it: our emotions are real. After all, this is real money. Real contracts for commodities, stocks, bonds, and currencies are on the line. Learning to understand and adapt to your emotional strengths and weaknesses is just as critical as any other aspect of your trading. Even the most seasoned traders still grapple with the emotional component of trading. One major hypothesis is that the successful trader has learned, one way or another, to adapt to his or her own blend of personality traits and, over time, has learned to conquer the emotional aspects of trading because of this healthy adaptation. We should all learn from these master traders!
The best way to read this book is to first go through it cover to cover, and then refer back to each section as needed during particular market conditions or personal contemplations. Although the real “meat and potatoes” of how personality relates to traders starts in Chapter 15, it really will be helpful to read the first 14 chapters on personality and the human mental life, in order to get a good, solid foundation under your feet. Also, as you read this book, pay special attention to the mental edge tips listed at the end of each chapter, as it is into these that we have distilled the most critical concepts!
Finally, it is imperative that at some point you take the NEO PI-R, in order to measure your own personality traits and see how you stack up against the world at large and against the top traders in the world. By doing so, you will be well on the road to knowing how to adapt your own personality to prosperous trading. This test can be administered by any accredited psychologist or psychiatrist who is trained in giving, scoring, and interpreting it. Our ultimate hope is that this treasure trove of knowledge will help you better understand yourself, how you currently trade, and how you can learn to trade more effectively. We would love to hear your comments!
Contents:
- The Human Mind: A Primer
- How Does the Brain Generate the Mind?
- Anatomy of the Brain 101
- The Four Perspectives of Mental Life
- Introduction to Personality Traits
- Where Does Personality Come From?
- Personality Inventories
- Introduction to the NEO PI-R
- The Five-Factor Model in Detail
- The 30 Personality Facets
- General Interpretation of NEO-AC Scores
- Personality Styles
- Personality Disorders
- Neuroticism and Trading
- CBT for Traders
- Risk Aversion and Trading
- Conscientiousness and Trading
- Optimism and Trading
- Excitement-Seeking and Trading
- The Secret to Happiness
- The Overly Dependent Trader
- A Case Study: Larry Williams
- Personality Case Study: Dan Zanger
- Personality Case Study: KD Angle
- Personality Case Study: Linda Raschke
- Personality Case Study: Andrea Unger
- Personality Case Study: Ralph Vince
- Personality Case Study: Scott Ramsey
- Case Study: “The Perfect Trader”
- The Addictive Personality
The Mental Edge in Trading: Adapt Your Personality Traits and Control Your Emotions to Make Smarter Investments By Jason Williams pdf
