Mastering Trading Stress

In Mastering Trading Stress, author Ari Kiev—a psychiatrist who specializes in stress management and works extensively with traders—offers examples, transcripts of conversations, and personality profiles of real-life traders to illustrate how stress affects their ability to perform at their best. Drawing on his vast experience, Kiev describes a variety of practical techniques that can be used to handle destructive emotions and out-of-control feelings, including his “Most Basic” stress busters, and tells what to do if a breakdown should occur.

Preface xi

Acknowledgments xiii

Introduction xv

Chapter 1 The Nature of Stress: What is Stress and Why is It a Problem? 1

The Fight-or-Flight Alarm 2

Differences in Stress Responses 5

Personality Factors 7

The Stages of Stress 8

Taking It Step-by-Step 10

Chapter 2 The Emotions of Stress: What Negative Emotions are Experienced as a Result of Stress? 13

Fear and Greed 14

Guilt 21

Worry 23

Anger 24

Euphoria 27

Chapter 3 The Dangers of Trading under Stress: How Do Attempts to Handle Stress Create Problems for the Trader? 29

Trading Despite Stress 30

Avoiding the Stress 34

Creating a Social Persona 39

Competing to Win 44

Being Indecisive 51

Chapter 4 How Fear Inhibits Mastery: Can You Learn to Lessen the Central Emotion of Fear? 53

Responding to Fear 54

Disciplining for Success 55

Relinquishing the Need to Be Perfect 57

Maintaining Psychological Energy 59

Starting with a Clean Slate 62

Chapter 5 The Consequences of Negative Emotions 63

Greed and Risk Management Errors 64

The Difference between Confidence and Arrogance 70

Mistakes of Insecurity 71

Why Not to Avoid Negative Feelings 78

How Negative Emotions Lead to Impulsive Behavior 80

Chapter 6 Personalities and Stress 87

List Makers (Analytical Thinkers) 89

Intuitive Thinkers 92

Optimist/Pessimist/Realist 94

Are You Confident or Insecure? 96

Make the Most of Your Personality 97

A Winning Personality 98

Chapter 7 Ego and Obstinacy 101

A Stubborn Nature 102

Refusal to Accept Commands 105

Difficulty with Management 106

Chapter 8 Fear and Failure 111

Afraid to Win 112

Failing to Commit 115

Moving Forward 119

Chapter 9 Perfectionism and Paralysis 123

The Problem 124

Finding a Solution 124

What about You? 128

Chapter 10 Failing to Manage Risk 131

Risk Management for a Vision 132

The Psychology of Risk 136

The Importance of Self-Analysis 137

Asking the Right Questions 139

Assessing Your Attitude toward Risk 140

Looking for the Positive 142

Relaxation and Risk 143

Taking Responsibility 144

Chapter 11 Failure to Dig Deeper 147

Discerning the Importance of Data Analysis 149

Too Much or Not Enough? 151

Gathering the Information 152

Reducing Stress 155

Chapter 12 Failures in Shorting 159

Reluctance to Short Stocks 160

Stress and the Short Squeeze 162

Steps of a Good Short Seller 164

Chapter 13 Learning to Live with Stress 171

Learning to Observe 172

Creating New Life Principles 178

Reframing Negative Thoughts 179

Choosing an Objective 182

Defining New Priorities 183

Chapter 14 Exercises and Practical Applications 185

The Most Basic Stress Busters 187

What to Do When You Have a Breakdown 188

Importance of Commitment 196

Index 199

"…a welcome addition to Kiev’s other ground breaking trading books…one that experienced and novice traders will greatly benefit from." (Futures Magazine, August 2008)

"One of the most fascinating aspects of most of Mr. Kiev's books is how attuned he is to the trading profession. His books -- and this one is no exception -- rely heavily on case studies and interviews with traders. Once could guess that the author is a trader himself based on the technical trading advise he gives his patients. ... Mr. Kiev always returns to the same fundamental theme. A trader cannot eliminate stress, but he can learn to cope with it. In fact, mastering stress is a requirement for success because the biggest mistakes are caused by stress and mismanaged emotions." (Accredited Investor magazine)

ARI KIEV is a psychiatrist who specializes in organizational psychology, stress management, and performance enhancement. He is President of the Social Psychiatry Research Institute and is recognized worldwide for his pioneering work in transcultural psychiatry, suicidology, and psychopharmacology. Kiev is the author of four trading books: Trading to Win, Trading in the Zone, The Psychology of Risk, and Hedge Fund Masters. In recent years, he has developed The Trading To Win training programs for dealing with trading stress, portfolio management, risk control, and leadership as they relate to peak performance in the trading arena.

For more information, visit www.arikiev.com

The daily grind of the trader is always full of excitement, energy, adventure—and stress. While many live for the thrill of the trade, most also feel the emotional, psychological, and physical impact of the constant changes; riding the roller coaster of the financial markets for eight hours a day, five days a week, forty-eight weeks out of the year.

But while some traders just seem naturally better equipped to deal with the emotional turmoil of trading, others seem to "fall apart" under much less dire circumstances. While eliminating stress is not realistic—or an entirely desired approach—reducing stress is. And traders can best cope with stress, says Ari Kiev, by being proactive and taking steps to reduce it. With this book, Kiev shows you how to do this—beginning with developing an appropriate understanding of stress and how it physically affects us, and leading all the way to specific exercises that can help traders manage their daily stress.

The author, a psychiatrist who specializes in stress management and performance enhancement, has worked extensively with traders over many years. In Mastering Trading Stress, he draws on his vast experience to offer examples, transcripts of conversations, and personality profiles of real-life traders that illustrate how stress robs them of their ability to perform at their best. He points out that the stressors for all of these traders were different and, accordingly, asserts that aspiring traders need to identify their own particular stress points and learn to deal with them in order to succeed.

Kiev describes a variety of practical techniques that can be used to handle destructive emotions and out-of-control feelings, including his "Most Basic" stress busters, and tells what to do if a breakdown does occur.

There is no way to take the stress out of trading. But stress does not have to make you emotionally, mentally, or physically ill, and it does not have to hinder your trading game. With this book as your guide, you can learn to reduce stress, cope with the stresses that are inevitable, and even use stress to your own benefit.