If trading is 80% psychological that leaves 20% to the edge your strategy has. We really don’t know if the 80% figure is accurate but you’ll hear a big number like that from many skilled traders and coaches. Regardless of the accuracy, how we behave as traders is vitally important. 

Back when racquetball was popular I was a competitive player and hired a coach to improve my performance. Here’s the dialog from our first lesson. 

Coach: “Why do you want to play racquetball?” 

Mike: “Exercise, gets me in shape, fun.” 

Coach: “You have it backward. You don’t play to get IN shape. You get IN shape to be a winning player.”

Mike: “Aha!”

I was approaching the game out of sequence. That first lesson ended with me getting a detailed exercise regime and the directive to follow it precisely before next week’s lesson. 

Sometimes what we’re looking to achieve has a hidden sequence. In trading, knowing yourself and addressing weaknesses should be early in the sequence. How much time do you spe...

Three celebrated authors on trading success, Mark Douglas, Van Tharp, and Alexander Elder, all agree that one aspect of trading is crucially important: 

"The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." - Mark Douglas

"Successful trading is not about being right; it’s about being disciplined. Discipline is the ability to follow one's trading plan, regardless of emotions or external influences." - Van K. Tharp

"Discipline is the bridge between goals and accomplishment in trading. It's the ability to stick to your plan even when fear, greed, and doubt try to derail you." - Alexander Elder

How does one become disciplined? According to trader psychologist Dr. Brett Steenbarger, “Loss of discipline is not the problem. Loss of discipline is the result of a problem, and we have to diagnose that problem to figure out how to address it.”

And once you’ve diagnosed it, Willpower author Roy Baumeister sug...

Traders can learn from so many great sources that have nothing to do with trading. Whenever I’m reading any topic unrelated to trading my thoughts often drift to how I could apply the same information to trading. 

If you think about it, trading is more psychological than mathematical. That means your ability to improve your results rests more on improving your behavior than your strategy rules. 

Here’s a great example: Charles Darwin said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

So true in life and in trading!

Reading this quote, agreeing to it, and then doing nothing to systematically apply this truth to your trading would be a shame. 

Here's a suggestion on how to apply Darwin's observation. My friend and colleague Dr. Woody Johnson, author of Secrets of the Peak Performance Trader, encouraged me years ago to start a “thought journal.” Rather than simply documenting trade results and associated data,...

Trading success is more psychological than mathematical. When I first realized this I was disappointed. I like math and wanted to find my success in formulas, indicators, and statistics. These are all valid tools for finding edge, but that edge won’t translate into positive performance until you get your head right. 

I’m intrigued by the number of biases we might have that hinder our success. Here’s a look at some less obvious biases that interrelate. 

Narrative Fallacy: This occurs when you create or believe in simplistic stories to explain market behaviors, even if the data doesn’t support those stories.

For example, you may believe  a market “story”—such as “Tech stocks always lead the market”—and ignore data that contradicts it. This can lead to biased decision-making, missed opportunities, and unnecessary losses. 

This is an easy one to catch yourself with. Anecdotal stories are obvious!

Here’s the fix: Focus on data. Prioritize quantitative analysis over storytelling. Play D...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

4. Balancing Rationality and Emotion: Emotional Awareness in Trading

"Mental health is an ongoing process of dedication to reality at all costs." – M. Scott Peck

Peck emphasizes the need to face reality with honesty. Traders must acknowledge their emotions without allowing them to dictate actions. Fear, greed, and euphoria are natural, but successful traders recognize these feelings but respond rationally.

Tips:

• Practice Mindfulness: Regularly check in with your emotional state before, during, and after trades. Are you in present time or...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

3. Delaying Gratification: The Patience to Wait for Profitable Trades

"Delaying gratification is a process of scheduling the pain and pleasure of life in such a way as to enhance the pleasure by meeting and experiencing the pain first and getting it over with." – M. Scott Peck

Many traders struggle with the urge for instant results (especially yours truly). This impatience leads to overtrading, revenge trading, and abandoning strategies prematurely. Peck’s concept of delaying gratification teaches traders to endure short-term discomfort fo...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

2. Acceptance of Responsibility: Owning Your Trades

"We cannot solve life’s problems except by solving them." – M. Scott Peck

Blaming market conditions, news, or external factors for poor trades is easy, but it stunts growth. Peck stresses the importance of accepting responsibility for our actions. In trading, this means owning both wins and losses. By doing so, traders can analyze their mistakes, learn from them, and refine their strategies.

Tips:

• Keep a Trading “Thought” Journal: Document every trade, including the reasoning, emotions,...

Yesterday’s results: No trades suggested. 

Today’s Best S&P Futures Turning Points: Short 6091.75 stop 6095.25. Buy 6094.50 stop 6091 if price retraces down from above. 

The World Index: (+100/-100) dips from +21 to -7 with sentiment mixed on low volatility. 

Catalysts: Revised Non-Farm Productivity & Unit Labor Costs @ 8:30. 

Quick Tip: Fear No More

Fear paralyzes progress in anything you do. In trading, there are 5 types of fear. Recognizing you’re susceptible to them is the first step to a solution. 

Fear of Missing Out (FOMO) – you can’t tolerate watching a winning trade from the sidelines. This breeds impulsivity. Solution: Have an abundance of trade opportunities using multiple strategies tuned to different market conditions. 

Fear of Loss – you still feel upset about losing money. Solution: Lower your risk and find a strategy you have confidence in by practicing in simulation mode. 

Fear of Being Wrong – you are embarrassed to be wrong and get mad at yourself when you ar...

Yesterday’s results: Buying 6100 stopped out. The short didn’t trigger. 

Today’s Best S&P Futures Turning Points: Buy 6065.00 stop 6061.25. Short 6062.00 stop 6065.75 if price retraces from below (filtered out during the Non-Farm Payrolls release).  

The World Index: (+100/-100) jumps from +7 to +36 with most major world markets somewhat Bullish. 

Catalysts: Employment Situation @ 8:30. Fed’s Bowman @ 9:15, Goolsbee @ 10:30, Hammack @ 12:00, Daly @ 13:00. UofM Consumer Sentiment @ 10:00. 

Quick Tip: Discipline

Three celebrated authors on trading success, Mark Douglas, Van Tharp, and Alexander Elder, all agree that one aspect of trading is crucially important: 

"The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." - Mark Douglas

"Successful trading is not about being right; it’s about being disciplined. Discipline is the ability to follow one's trading plan, regardless of emotions or external inf...