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Enhancing Trader Performance: Interview with Brett N. Steenbarger-Part 2

alvaro@sharpbrains.

alvaro@sharpbrains.com.

Best regards

Alvaro Fernandez
http://www.sharpbrains.com

Enhancing Trader Performance: Interview with Brett N. Steenbarger-Part 2
Today we continue the conversation about the applications
of neuroscience to trading and neurofinance with Brett N.
Steenbarger, Ph.D., active trader for over 30 years and
author of The Psychology of Trading: Tools and Techniques
for Minding the Markets and the new Enhancing Trader
Performance: Proven Strategies From the Cutting Edge of
Trading Psychology.

We ended Part 1 of the interview with this quote by Dr.
Steenbarger on the Role of mentors and coaches: In many
performance fields, such as music and tennis, coaches help
students break down their performance into component skills
and then systematically work on these and combine them. The
mentor is someone who can structure the learning process
for the developing performer and help them move along the
path from being a novice to being competent to being expert.

Alvaro: interesting analogy. Who would be a good "trader
coach" and where does one find one?

Brett: Ideally, you need an experienced and successful
trader who is familiar with the kind of trading that you
will be doing. The book contains an appendix with different
resources that can help you find educational and mentoring
resources. For emotional development, you can coach
yourself with practical cognitive and behavioral techniques
and build new, positive ways of thinking and behaving. The
last two chapters of the book provides readers with
self-help manuals for utilizing these techniques.

Alvaro: let's talk about some of the key components of top
performance in trading, and what skills traders can develop.

Brett: First, we must differentiate whether we are talking
about short-term or long-term traders. For short-term
traders, the priority would be the ability to process large
amounts of information and quickly see patterns that lead
to effective decision-making. They need speed, and good
working memory. For long-term traders, analytical skills
are paramount.

For both, I would add, knowing how to deal with "the
emotional factor" is very important. Many traders get very
frustrated when bets don't go the way they expected, and
become paralyzed or make non-logical decisions. Others may
lose concentration and focus when they get fatigued, and
make impulsive decisions. But I would stress that there is
more to trading success than controlling emotions. It takes
talent, skill, and a constant learning process. I would
also emphasize that, yes, we can train and get better at
many things, but it is equally important to ensure an
optimal fit between our trading talents and interests: the
markets we trade and the ways we trade them. There has to
be a fit between what we're good at and the opportunities
afforded by a particular market and trading style.

Programs: now and in the future

Alvaro: let's now talk about the tools you mentioned
earlier. What training programs are available now and which
ones can you foresee will be available in the future?

Brett: First, I find that Dr. Elkhonon Goldberg's metaphor
of a gymnasium for the brain is very appealing. We will be
seeing more and more tools for cognitive and brain fitness.
Dr. Goldberg cites considerable research that indicates we
can improve the functioning of our frontal cortex - home of
our executive functions such as our reasoning, planning,
judgment, analysis, and problem-solving -, through
structured exercises, much as we can build our muscles in
the gym.

Today, traders have very realistic simulation programs that
can help them identify market patterns and improve
decision-making. True, as Professor Gopher said in your
interview with him, what matters is the cognitive fidelity
of those simulations, and how they will help traders see
new, non-historical, patterns. But, at the very least,
existing simulation packages help traders learn very
quickly how to identify a wealth of recurring patterns in
markets.

Finally, I work with many traders on their emotional
reactions-especially new traders. Behavioral techniques can
be very helpful to develop calmer, open-mind, attitudes.
You linked my blog post that stressed the need to keep an
open mind and avoid missing unexpected "Gorillas in the
market"; we need to be aware of and manage the narrowing of
our attention that usually follows hyperfocus. For the many
people out there who become angry and frustrated after
trading losses, I recommend exercises such as deep
breathing and visual imagery, which, after a period of
practice, can be applied very quickly to our work when we
need it. These techniques can be reinforced by the use of
biofeedback programs that provide real-time visual feedback
on the trader's "internal performance", revealing whether
they are in the Zone of optimal learning and performance or
becoming stressed, anxious and impulsive.

It is important to understand the role of emotions: they
are not "bad". They are very useful signals. It is
important to become aware of them to avoid being engulfed
by them, and learn how to manage them.

Alvaro: Prof. Steenbarger, many thanks for your very
illuminating comments, both on trading and on improving
performance overall. Any parting thoughts for our readers?

Brett: let me go back to the key findings of my new book.
One, people who aspire to be top performers in any field
must build on what comes naturally to them, in order to be
truly motivated and absorbed in constant learning. Two,
they will need to structure programs to develop their
skills and work these programs diligently. Because elite
performers do what comes naturally, they become absorbed in
the development of their skills. If you have to motivate
yourself to work at something, it's probably not your
calling.

Alvaro: Brett, many thanks.

Brett: a pleasure.

----------------------------------------------------
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