Still making the same old trading mistakes. What are you doing about it?

So after many years trading you are still in the game. Well done! Not many make it past boot camp, let alone make a living out of it. Clearly you are blessed! But, here is the rub: You know you could have done better, possibly much better. Too often you left money on the table, chased the market, failed to monetise your ideas, or any number of other common trading mistakes. Just think how much better it could have been!!!

First let me re-assure you that you are not alone, I worked as a trader at some of the world’s top investment banks for many years, there was not an error I didn’t make, yet I managed to forge a nearly 25-year career as a trader. I now work with traders as a coach, mostly with banks and hedge funds, and I can tell you that they also moan about leaving money on the table, missing the big trade, chasing the market, and holding on too long. It’s just that they learn to make mistakes a bit less than everyone else, and manage to do what’s right a little bit more often. It is fine margins in trading between success and failure.

So it is possible that you are making a few too many mistakes a little bit too often. And that this is restricting you from achieving your full potential. So what are you doing about it?

Maybe you turn to self-help books, inspiring biographies, perhaps some of the great works of trading literature. These may have lead to positive changes for a short-time. and you felt better and more energized. But in all but a few cases, these changes weren't sustained, and the mistakes kept on coming a little too frequently. The inescapable fact is that self-change is incredibly hard, and the longer one has been trading the harder it gets. Yet as we mature as traders, and face new challenges, this is when change is often most needed. So why is change, and particularly self-change and self-improvement so hard?

Behaviours are mostly sub-conscious: Most of our behaviours are patterns which we repeat almost without knowing. They are habitual, and if we don’t know we are doing it, how can we change it?

Lack of Objectivity: We do not see our behaviours as others may see them. As Daniel Kahneman puts it. ‘We are blind to our own blindness’.

Change is a process: Change is not something which just happens as a one-off. It requires trial, error, repetition and practice, many times over.

Overconfidence in our ability to change: The Dunning–Kruger effect is a cognitive bias whereby an unskilled person mistakenly assesses their ability to be much higher than it really is. In this case the skill is the ability to self-change.

Failure to understand the underlying issues: Most people decide they are going to be more disciplined, or maybe run profits longer, or perhaps increase their size. – Sounds simple, but unfortunately there are invisible levers working in the background, these affect our judgments and decisions, and bias our behaviours. Understanding these can be extremely powerful, but it is hard to do this without outside help.

Commitment: Who is making sure that you do not lapse and that you remain on the path to your objectives? Who’s your buddy? It is very unlikely you can do it yourself.

Willpower and self-control: Willpower is like a muscle, the more you use it the weaker it gets. Change requires incredible willpower and self-control, without outside support, it’s extremely hard to maintain.

Finally, there is your own attempts at self-delusion: Trading is something which tests

every bit of mental strength and character you have. It makes you doubt yourself, feel a fool, toys with your emotions, and jousts with your ego. To survive the bruisings there will be times where you may need to fool yourself just to bring yourself back to the table. Self-belief is a very precious commodity in trading, but it can over-reach itself.

Performance Coaching may be the answer.


Working with a coach can be the greatest investment a trader ever makes. In 2001 I had a coach, it was an action that was to transform my trading. The subsequent years, until I decided to hang up my gloves in 2009, were the best trading years of my life. In 2009, I decided to become a coach. It took me a couple of years to make the transition, but since then I have seen the extraordinary changes my own coaching has had in helping other people’s performance. I am not a coach who tells someone ‘what to do’ (directive), or teaches them a method (training). Rather I am a qualified ‘performance coach’, who works with people to facilitate them to achieve the things they want to achieve. Helping them make the sort of changes they cannot achieve on their own.

For many traders, the very thought of having a performance coach is something that seems
a stretch too far. There is still a sense whereby they feel they questioning their own ability, which conflicts with the need to have high self-belief. But this is to misunderstand what a coach does. This attitude is the antithesis of how coaching is viewed in most other professions and fields of endeavor. In sport, every pro-sportsmen has a coach, the higher they get and the better they are, the more coaches they have. This process is starting to happen in trading, albeit very slowly. Performance coaching for traders is actually a secret which many of the top hedge fund traders use. But it’s something they tend to keep to themselves, and why wouldn’t they! Trading is a high stakes game, and if you have an advantage you don’t want other people to know your edge.

So how are you going to change? How are you going to break the cycle? 
If you would like to know more about how Performance Coaching can help improve your performance, or those of your team members, or traders/portfolio managers within your business. Please email me at steven.goldstein@alpharcubed.com. Or visit our website www.alpharcubed.com for further information.

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The 'Behavioural Trading' blog is written and managed by leading Trading Performance and Behavioural Trading Coach Steven Goldstein. Steven is Managing Director at Alpha R Cubed, who work with banks, hedge funds and investment firms to help them improve their people's capabilities within their frontline financial risk businesses. To know more about Alpha R Cubed, visit the website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com. Follow Steven directly on Twitter.


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