What is a Trading Psychologist? - Mind Muscles for Traders (2024)

Never in my wildest dreams did I ever think that someone would call me up and ask “Are you the trading psychologist?”

It has happened. But after two decades of trading on the floors of the Chicago Mercantile Exchange, the Chicago Board of Trade and the options floor the Pacific Stock Exchange; along with a decade of training and in practice as a therapist with an MA in Clinical Psychology, four years training at the Gestalt Institute in San Francisco and Master’s Certification in NLP and being a student of neuroscience, it keeps coming up.

Consider the definition of Trading Psychology

When I first heard this question many years ago, I had to consider the definition of trading psychology. So I have to ask myself – what the hell am I doing? How did I get here? And how do I deliver value to my clients and students in this field?

Can a non-trading psychologist support new trading behaviors? It is a challenge for a psychiatrist, psychologist or coach who has not experienced trading on a visceral level, to really understand how trading challenges every part of the normal processes in the human brain. Identity, beliefs and behaviors that are successful in the real world with our friends, family and work, can be impediments for the independent trader.

The beautiful thing about trading is that it gives us immediate feedback to our trading behaviors. The biases and repeated patterns that we all have, show up when we make repeated trading errors. These repeated errors can quickly help us the focus on the underlying processes that support them.

A trading coach needs to be different to a trading psychologist

A trading coach needs to be a very different animal than a life coach, psychologist or psychiatrist. This is because the behaviors required to be a successful trader run counter to the behaviors that are fostered in a normal, healthy life. Inside the trading pits or sitting in front of trading screens, the trading psychologist needs to work with tools that are not available to the general psychological community. The terms “will power”, “discipline,” and “try harder,” are just not helpful when we downshift from our rational brain to our survival brain in the middle of a trading loss.

In our normal lives with our families and our social settings and even in our workplace, we create much of our environment with our state of mind and behaviors. Other people in that environment will manage their behaviors and relationship with us in response to our own state of being. As a result we are able to affect those around us, or perhaps even manipulate those around us, by our behaviors.

What is successful in the real world often isn’t in trading

Doctors and lawyers are used to a responsive environment. When I was a futures broker for Merrill Lynch, I had many doctors and successful professional executives come to the marketplace and expect the force of their personality, their intelligence and their perceptiveness would make them very successful traders. But it turns out that the markets did not give a damn about who they were, no matter how strong their persona. As a result, almost all of them crashed and burned taking much of their inflated ego with them.

What is successful in the real world has its limitations in front of the trading screen. Because trading is such a psychological game, it requires significant focus on our internal state of mind, rather than focus on manipulating the environment around us.

Since we can’t manipulate the market, we are left with the stark reality of changing ourselves and our behaviors as traders.

Trading psychologists can open the door to a radical self-awareness

Thus trading psychologists have the delightful opportunity to open the door to a radical self-awareness and self-acceptance model that is the key to trading success. When a trader avoids the self-responsibility the markets give immediate feedback. The trading coach will have many opportunities to use this feedback to get at the heart of issues that may be facing that particular trader.

We can measure the results. Unlike traditional therapy where the results are often unclear, a trading coach and the client is able to see absolutely clearly the results of their work together. We change what we measure and it is critical to measure what matters. Most traders just look at the P&L. At Mind Muscles, we have developed a series of behavior metrics that support behavioral change on a foundational level that supports long term success.

A trading psychologist gently opens the door to allow traders to manage market reality

What is a trading psychologist? We stand right next to the trader and gently open the door to allow them to manage the reality that comes at them on a second by second basis. Our goal is to set it up in a way that allows them to become fully self-aware in real time, accept what they discover and then, create an internal rapport that supports new behaviors that serve them better.Our expectation is that the trader step into his or her master trader’s mindset and be comfortable in that powerful role.