January 24, 2019

Steenbarger: Two Self-Destructive Behaviors

Dr. Brett Steenbarger highlights two self-destructive behaviors that many traders tend to engage in:

(1) Trading addiction
(2) Impulsivity (aka Overtrading)

"Two self-destructive behaviors come to mind immediately the first I would call trading addiction people can be addicted to trading just like they can be addicted to gambling and for much of the same reason not everyone trades to make money some people are trading for thrills and excitement and those people do get in their own way."

"The other self-destructive behavior I would call impulsivity. When people make impulsive decisions because of frustration. They lose some money, the markets are not moving very much and they become frustrated and out of that frustration they feel a need to trade. In fact, traders call it overtrading. They make those impulsive decisions where they don't really have an edge in the trade and they end up 01:38 losing money as a result."

You can find Dr. Steenbarger's books on Amazon.com:

Trading Psychology 2.0: From Best Practices to Best Processes (2015)
The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (2009) 
The Psychology of Trading: Tools and Techniques for Minding the Markets (2002)