Archive for December, 2009

A Fresh Start In 2010

Thursday, December 31st, 2009

(Watch The Video Online: Market coach Doug Hirschhorn, PhD, discusses how traders can forget 2009 and get a fresh start in 2010.)

This week, I want you to ask yourself just one thing: “Did I reach my full potential as a trader in 2009?”

For most, the answer is probably no. If that’s the case, don’t worry, because now is the perfect time for a fresh start in 2010.

But rather than examining the past, I want you to focus on the future. In other words, forget about what you didn’t do in 2009. Instead, think about what you will do in 2010.

As you do that, here are three things to consider:

  1. Trust your instincts If a trade looks like a loser and smells like a loser, chances are, it is a loser. Cut the loss and move on.
  2. Focus on the trade and not the money If you’re in a winning trade, don’t get out of it just because you’re up money. Instead, get out because the trade stops working.
  3. Finally, know what your pitch looks like Don’t be sloppy and swing at anything.

Trading isn’t a game of luck. It’s a game of probabilities and that means you need to know when you have edge. And make sure you only trade when that edge appears.

Happy New Year! And here’s to a great 2010.

Think better, invest smarter.

13 Trader Resolutions for 2010

Friday, December 18th, 2009

(Watch the Video Online: Market coach Doug Hirschhorn, PhD, discusses 13 rules for traders to follow in 2010.)

As 2010 approaches, we have time to reflect on what we’ve done this year and what we intend to do next. Because I’m a trading coach, I have access to some of the greatest minds on Wall Street. Here’s a list of best practices I’ve gathered from them this past year.

  1. I will create game plans for all of my trades.
  2. I will trade only when I have edge.
  3. If I have 3 losing trades in a row, I will take a break, walk away and clear my head.
  4. I will never trade for revenge.
  5. Anytime I’m hoping, wishing or praying, I will exit the trade immediately.
  6. I will never give back more than half of my profit on any trade.
  7. I will keep a daily trading journal and email it to who will hold me accountable.
  8. I will think in terms of probabilities and risk/reward.
  9. I will remain objective in my trades by asking, “If I had no trade on, what would I do?”
  10. I will never put more than 20% of my capital at risk in any single position.
  11. I will not make trades just because I’m afraid to “miss out.”
  12. I will quickly recognize my emotions and compartmentalize them rather than waste time trying to get rid of them.
  13. And finally, I will trade to make money, not to be right.

I’m confident that if you commit to following these 13 rules, you’ll be more profitable in 2010.

Think better, invest smarter.

Hedge Funds Clawing Back

Tuesday, December 15th, 2009

Watch this video online.

Money keeps pouring back into hedge funds, but given the new era of regulation, many funds are cutting jobs and changing the rules of the game like never before. Greg Zuckerman, author of “The Greatest Trade Ever,” and Doug Hirschhorn, a trading coach, share their insight.

Bobbi Misick interviews Dr. Doug
Tiger Cheats for Adrenaline Rush

Sunday, December 13th, 2009

Excerpt from Essence.com

As the number of women who have allegedly had an affair with Tiger Woods grows, one starts to wonder if golf’s golden boy is more than just your run-of-the-mill celebrity cheater. While experts have begun to mumble sex addiction as the cause for Tiger’s supposed unquenchable thirst for cocktail waitresses and porn stars, Dr. Doug Hirschhorn, Ph.D, a peak performance coach with a specialization in sports psychology, says it’s not the actual sex that Woods is after, it’s the adrenaline rush he gets from getting away with it.

ESSENCE.com: Please explain your adrenaline theory.
DR. DOUG HIRSCHHORN: People in high profile situations like Tiger Woods are always pushing themselves to the next level to get a satisfaction pay-off. For the regular person who has a couple of good golf shots on the course, he feels pretty good. For Tiger, he expects to play great every time and so when he has that unique, remarkable, impossible shot that only he can make, he gets that adrenaline rush, that pumping awesome “I worked hard and I made it kind” of feeling.

If you think about these athletes, there are very few highlights in their careers that stand out, because they perform at such high levels on a regular basis.

The cheating almost fills a void inside of them. It provides the same kind of adrenaline excitement rush that they get when they have those incredibly awesome shots on the course.

ESSENCE.com: So, it’s not about the sex or what he’s not getting at home?
HIRSCHHORN: It really isn’t about him being unhappy at home and miserable that he’s married. It’s not about sex. It’s almost like he’s saying, “How cool would that be if I could get away with this and sleep with someone and have no one know about it and take it to the line.”

ESSENCE.com: What’s taking it to the line? Where does the rush come from?
HIRSCHHORN: The challenge is in getting away with it. The challenge is, can he get her into bed and then have it be his secret and trust the fact that she’s not going to tell anybody about it, because she could ruin him.

ESSENCE.com: Is it self-sabotage?
HIRSCHHORN: It’s not that he’s trying to destroy himself, but it’s that adrenaline rush of knowing that disaster could land on every corner. …You get that “I’m scared, I’m nervous, but I’m excited and I feel alive.”

ESSENCE.com: You say it’s not surprising that 13 women have been named. Why not?
HIRSCHHORN: It’s because you need to always up the ante. It’s like the first time you get drunk, it might just take a drink or two and then it takes three drinks, then four drinks. It’s that same kind of thing with the adrenaline rush. He probably didn’t start out with a cocktail waitress. With the first one, he was probably very careful, then he got a little sloppier and it’s almost like he was saying, “I want to see how close I can get to being caught without being caught.”

ESSENCE.com: What part does the media have to play in this scandal?
HIRSCHHORN: Advertisers like Tiger Woods because he’s a very wholesome and good-looking guy. Tiger Woods has that image and the media created that. Tiger’s marriage was kind of a “rags to riches” story: Tiger marries one of the other golfers’ nannies. She’s Cinderella. And it played into mainstream’s emotions. Tiger’s just a guy, a human being like everyone else. And the sad thing is that he’s probably trying to figure out who he is.

ESSENCE.com: What part does his upbringing have to play?
HIRSCHHORN: He’s been trained to thrive on excitement, energy and achievement since four years old. He was raised to be an elite, premier athlete. The problem that you have when you do that is, you kind of sidestep the person inside there. You exploit the physical skills and the talents, but you really sidestep the intellectual thought process.

ESSENCE.com: What would you say to Tiger Woods as a peak performance coach?
HIRSCHHORN: I wouldn’t criticize him. I would ask him, “Did you think it through carefully Tiger? Did you look at it objectively? Did you analyze the risk rewards associated with this?” On the golf course, he looks and he says, “OK, what are the odds of me making this shot successful?”  With this, he put aside all of his risk management tools and said, “Where’s the next adrenaline rush that I can get?”

ESSENCE.com: What about claims that Tiger Woods might be a sex addict?
HIRSCHHORN: I don’t buy it. Yes, he’s a human being and he’s young and he has testosterone, but I think it’s more about an emotional, psychological pay-off and not the act of sex. It’s about, “Can it push it to the limit without getting caught? Because it’s a game.” That’s why I think there are probably dozens of women that he cheated with.

Position Yourself for 2010

Friday, December 11th, 2009
(Watch the video online: Market coach Doug Hirschhorn, PhD, discusses how investors can position themselves for a strong 2010.)

Traders at banks and hedge funds get paid once a year, at the very end. Since most traders on Wall Street did not get paid much, if anything, last year, this years’ profits are even more valuable to them.

So what does that mean for the risk takers out there? It means the closer we get to the end of the year, the less interested traders are in putting on big risk. At this late stage of the game, the risk/reward for them is just not good enough.

What does that mean for the markets?

It means less competition from the big players and lower volume across the board. As a result, there are more quick rallies and dips along the way.

Here’s the good news: If you’re a smaller, short-term trader, there are fantastic opportunities to make some quick profits.

On the other hand, if you’re a medium or longer-term investor, you have a great chance to find excellent entry levels into positions for next year.

The take-away for this week is you should stick around and seek out opportunities in the markets, while the big players sit on the sidelines.

Think better, invest smarter.