By: Montana Timpson
Professional mental game coach Jared Tendler, MS, LMHC, joined Lightspeed in a live webinar, Developing a Performance System for Trading Psychology, to provide active traders with his extensive expertise regarding developing a performance system for trading psychology.
Tendler — coach to notable figures including some of the top poker players in the world, a top ranked pool player, esports athletes, financial traders and several PGA Tour players — detailed the development of a personalized trading performance strategy in just five key steps. Here’s what professional traders should know.
Five Steps to Developing a Performance System for Trading Psychology
According to Tendler, many professionals – including traders, poker players, athletes, entrepreneurs, and other high stakes positions – are caught in an endless cycle of constantly managing their problems. “When you are caught in this loop,” he said, “you don’t even realize how damaging and costly those problems are to your performance and success.”
The development of a performance system is designed to help professional traders change their understanding of those problems and implement a proven system to solve them once and for all. Tendler’s beliefs presented as follows:
Why You’re Leaving Money on the Table
When it comes to costly and recurring trading mistakes, Tendler hypothesized that chances are those mistakes are related to common errors, such as chasing price, cutting winners short, forcing mediocre trades and overtrading. Attempting to fix these errors by improving technical skills might not always be the solution. The “real” source of these mistakes is not technical, to Tendler — they actually stem from greed, fear, anger, or problems with confidence and discipline.
Tendler’s beliefs regarding trading mistakes are stark: “Mistakes happen in patterns,” he said, “and repetitive errors are tied to emotions, not skill.”
The Big 5 Mental Game Problems
Tendler’s “Big 5” mental game problems include greed and fear, as stated, as well as discipline, confidence and tilt. To Tendler, discipline, greed, fear, tilt and confidence are the most common factors interfering with trading.
Discipline is an important cog in any trader’s performance system, as it acts as the muscle of one’s trading operation. Persistence is key in establishing successful patterns, and for that, discipline is a necessity.
Greed, in contrast, is a factor traders must be wary of, because overeager traders with lack of disciplined foresight may lose money in the long run.
Fear is natural factor, but with discipline and proper practices in place, fear should never be overblown in a successful trading performance system.
Tilt, a poker term that refers to getting angry and making poor decisions, should also be kept in check to ensure that rash mistakes are avoided.
Confidence is the final mental game problem, and in trading, confidence is the emotion that reflects a trader’s perception of their own skill. It’s important to remember, however, that confidence does not equate to competence, so take care to remain grounded in realistic expectations when developing a personal performance system.
Change Your Perspective on Emotions
“Emotions aren’t evil,” said Tendler, “They are signals to use and learn from.”
As Tendler described it, the signals (emotions) are pointing at hidden performance flaws that create the emotion. When the emotional system becomes overactive, it shuts down higher brain functions so mistakes are inevitable.
Find and Solve the Hidden Problems
Behind obvious displays of emotion are often hidden performance flaws, biases and illusions. Once a trader gets to the core of the problem and takes it out at its roots, the emotions will stop appearing and impacting their trading. Examples of problems include expectations of perfection, illusions of control, expectations of uninterrupted profit, hatred of variance and black-and-white thinking.
“Treat these thoughts and emotions as signals of underlying performance flaws,” reminded Tendler. “They are not the ultimate problem.”
Create a Map of Your Problems
“Mapping the problem is the key to recognizing the escalation of emotion,” said Tendler. “If you don’t start trying to correct greed, fear, anger or confidence problems early, your ability to maintain control is significantly impaired and even impossible.”
To do so, Tendler suggests mapping out the emotional trigger, the thoughts following, the emotions associated, the behaviors ensuing, the actions prompted and the changes in decision making and market perception that ultimately caused the mistake at hand.
Tendler also suggested setting a timer or an alarm to stay cognizant of actions and market movements. Meditation and mindfulness training were recommended as common practice, as well, to help traders better understand the intensification of emotion throughout the trading process.
Whether you’re an independent or institutional trader, and regardless of whether you trade equities, forex, or cryptocurrencies, you can use this system to improve your decision-making and execution. For more about Jared Tendler, visit jaredtendler.com, and for additional professional trading resources, view our Active Trading Blog, and register now for our next live webinar.
About Jared Tendler
Jared Tendler, MS, LMHC, is a leading expert in how your mental game impacts performance. His roster of clients spans 45 countries and includes esports athletes, financial traders, some of the top poker players in the world, a top ranked pool player, and several PGA Tour players.
The author of two highly acclaimed books, The Mental Game of Poker, and The Mental Game of Poker 2, Jared is currently writing a book on The Mental Game of Trading and is the host of the popular podcast, The Mental Game. In addition to his writing and 1:1 coaching, Jared also previously served as the Head of Sport Psychology for the esport organization Team Liquid. He was a key driver of their success as they won multiple championships, including The International 2017 (DOTA2), the Intel Grand Slam (Counter-Strike) and four League of Legends Championship Series (LCS) titles.
Jared’s straightforward and practical approach to coaching has helped numerous clients solve their mental game problems and perform at their highest levels. After earning a Master’s Degree in Counseling Psychology (MS) and becoming a Licensed Mental Health Counselor (LMHC), Jared began his coaching career in 2005.
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