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On January 4th, Dr. Doug appeared on Power Lunch on CNBC at 1:15pm EST.
Topic: The topic was Trader Psychology for 2010.
In case you missed it, we have it here for you
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.
The #1 reason is because they have a Fear of Re-Injury
I devoted an entire Chapter in my book “The Trading Athlete” to this exact concept.
Traders (and athletes) are so afraid of getting hurt again, that they become paralyzed in their decision making process or they wait for over confirmation on things and miss out on good investments right now. This is very similar to when athlete gets injured – even after they are physically healthy they are afraid to get back in the game (because they don’t want to go through it again. Several popular movies have shown this phenomena (see Top Gun or Days of Thunder)
Here is what you can do to get past your Fear of Re-Injury
Go Small in Your First Few Trades. This helps you rebuild confidence. This is similar to when a hitter is in a slump, the best way to get out of the slump is to just bunt the ball a few times – put the bat on the ball. Keep the process simple until you get some momentum.
Think in Terms of Probabilities. Ask yourself, “What are the odds of a once in a lifetime event happening twice in my life time?” Is it possible? Of course..anything is…but is it PROBABLE (highly likely)? Not it is not and successful investors bet on that.
Live in the Present. The past is the past, so leave it there. Avoid operating out of fear and live in the here and now of the world.
Keep Life in Perspective. People place too much value on their investments – they correlate it with their self esteem. They need to keep it in perspective, it is JUST the market and money… yes, it is important but it is NOT your life or your health.
Trade Well,
Dr Doug
1) Begin each investment with the end in mind (have a game plan)
2) Always maintain a “P.M.A.” (Positive Mental Attitude)
3) Avoid falling in love with investments and positions
4) Only invest when you have an “EDGE”
5) The market does not know your position or how much you are up or down
6) Manage Your Risk: H + W + P = E
(Hoping + Wishing + Praying = Exit the Trade)
7) Play the game “One Trade at a Time”
(The most important investment is the one you have right now - not the one you had in the past or the one you want to do in the future)
Dr Doug
