Mastering Trading Stress: Strategies for Maximizing Performance

225 Pages·2007·2.21 MB·English

by  Ari Kiev

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Mastering
Trading
Stress
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Mastering
Trading
Stress
Strategies for
Maximizing Performance
ARI KIEV
iii
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Copyright(cid:1)C 2008byAriKiev.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Kiev,Ari.
Masteringtradingstress:strategiesformaximizingperformance/AriKiev.
p.cm.—(Wileytradingseries)
Includesindex.
ISBN978-0-470-18168-3(cloth)
1.Investments—Psychologicalaspects. 2.Speculation—Psychologicalaspects.
3.Hedgefunds. I.Title.
HG4515.15.K542008
332.601(cid:2)9—dc22
2007020337
PrintedintheUnitedStatesofAmerica.
10 9 8 7 6 5 4 3 2 1
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For Phyllis, with all my love
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Contents
Preface xi
Acknowledgments xiii
Introduction xv
CHAPTER 1 The Nature of Stress: What Is Stress and
Why Is It a Problem? 1
TheFight-or-FlightAlarm 2
DifferencesinStressResponses 5
PersonalityFactors 7
TheStagesofStress 8
TakingItStep-by-Step 10
CHAPTER 2 The Emotions of Stress: What Negative
Emotions Are Experienced as a Result
of Stress? 13
FearandGreed 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
TradingDespiteStress 30
AvoidingtheStress 34
CreatingaSocialPersona 39
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viii CONTENTS
CompetingtoWin 44
BeingIndecisive 51
CHAPTER 4 How Fear Inhibits Mastery: Can You Learn
to Lessen the Central Emotion of Fear? 53
RespondingtoFear 54
DiscipliningforSuccess 55
RelinquishingtheNeedtoBePerfect 57
MaintainingPsychologicalEnergy 59
StartingwithaCleanSlate 62
CHAPTER 5 The Consequences of Negative Emotions 63
GreedandRiskManagementErrors 64
TheDifferencebetweenConfidenceandArrogance 70
MistakesofInsecurity 71
WhyNottoAvoidNegativeFeelings 78
HowNegativeEmotionsLeadtoImpulsiveBehavior 80
CHAPTER 6 Personalities and Stress 87
ListMakers(AnalyticalThinkers) 89
IntuitiveThinkers 92
Optimist/Pessimist/Realist 94
AreYouConfidentorInsecure? 96
MaketheMostofYourPersonality 97
AWinningPersonality 98
CHAPTER 7 Ego and Obstinacy 101
AStubbornNature 102
RefusaltoAcceptCommands 105
DifficultywithManagement 106
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Contents ix
CHAPTER 8 Fear and Failure 111
AfraidtoWin 112
FailingtoCommit 115
MovingForward 119
CHAPTER 9 Perfectionism and Paralysis 123
TheProblem 124
FindingaSolution 124
WhataboutYou? 128
CHAPTER10 Failing to Manage Risk 131
RiskManagementforaVision 132
ThePsychologyofRisk 136
TheImportanceofSelf-Analysis 137
AskingtheRightQuestions 139
AssessingYourAttitudetowardRisk 140
LookingforthePositive 142
RelaxationandRisk 143
TakingResponsibility 144
CHAPTER11 Failure to Dig Deeper 147
DiscerningtheImportanceofDataAnalysis 149
TooMuchorNotEnough? 151
GatheringtheInformation 152
ReducingStress 155
CHAPTER12 Failures in Shorting 159
ReluctancetoShortStocks 160
StressandtheShortSqueeze 162
StepsofaGoodShortSeller 164