The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success (Wiley Trading)

210 Pages·2009·4.43 MB·English

by  Ari Kiev

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The Mental
Strategies of
Top Traders
i
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Founded in 1807, John Wiley & Sons is the oldest independent publish-
ingcompanyintheUnitedStates.WithofficesinNorthAmerica,Europe,
AustraliaandAsia,Wileyisgloballycommittedtodevelopingandmarket-
ing print and electronic products and services for our customers’ profes-
sionalandpersonalknowledgeandunderstanding.
TheWileyTradingseriesfeaturesbooksbytraderswhohavesurvived
the market’s ever changing temperament and have prospered—some by
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trader, professional or somewhere in-between, these books will provide
theadviceandstrategiesneededtoprospertodayandwellintothefuture.
Foralistofavailabletitles,visitourwebsiteatwww.WileyFinance.com.
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The Mental
Strategies of
Top Traders
The Psychological Determinants
of Trading Success
ARI KIEV
JohnWiley&Sons,Inc.
iii
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Copyright(cid:2)C 2010byAriKiev.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
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anyformorbyanymeans,electronic,mechanical,photocopying,recording,scanning,oroth-
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LibraryofCongressCataloging-in-PublicationData:
Kiev,Ari.
Thementalstrategiesoftoptraders:thepsychologicaldeterminantsoftrading
success/AriKiev.
p. cm.—(Wileytradingseries)
Includesindex.
ISBN978-0-470-50953-1(cloth)
1.Investments—Psychologicalaspects. 2.Stocks—Psychologicalaspects.
3.Speculation—Psychologicalaspects. 4.Investments—Casestudies. I.Title.
HG4515.15.K542 2010
332.6401(cid:3)9–dc22
2009021669
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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ForPhyllis,withallmylove
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Contents
Acknowledgments xi
Introduction 1
CHAPTER 1 Intellect, Instinct, and Guts:
Understanding the Psychological
Profile 7
AHistoryofSuccess 14
TheAbilitytoTakeRisk 15
CreativityandOriginality 16
Self-Awareness,Self-Control,andResilience 17
TeachingTradersSelf-AssessmentandSelf-Control 18
TeamworkandLeadership 19
PuttingItAllTogether 21
CaseStudyonFindingtheRightCandidate 21
JobRequirements 21
PotentialCandidates 22
TheBottomLine 25
ThePerfectCandidate? 26
ChapterinReview 27
CHAPTER 2 Planning for Action: The Importance
of Goal-Directedness 29
MakingaPlan 30
CaseStudyonSettingaGoal 31
CaseStudyonHavingaVariantPerception 35
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viii CONTENTS
PersonalityFactorsandGoal-Setting 42
RecognizingGoal-DirectedIndividuals 44
CaseStudyonRecognizingGoal-Directedness 47
Fred’sStrengths:TheThreeCs 47
Fred’sWeaknesses:TheThreeIs 48
Goal-DirectednessinTurbulentTimes 50
OwnYourStuff 51
ReviewtheGameFilms 51
SwitchGears? 52
BeRealistic 52
StayTruetoYourStrengths 52
MaintainFocus 53
ChapterinReview 54
CHAPTER 3 ‘‘Fire in the Belly’’: The Ability
to Take Appropriate Risk 57
APictureofSuccessfulRiskManagement 57
TradingPhilosophy 59
HandlingDrawdowns 59
HeadversusHeart 60
ReviewingRiskStatistics 60
ExaminingPersonalityFactors 63
LearningtoUpgradeYourPerformance 71
ChapterinReview 77
CHAPTER 4 Thinking Outside the Box:
The Importance of Ingenuity 79
CaseStudyontheSatisfactionofCreativeThinking 80
TheStrategicThinker 81
CaseStudyonLearningtoBeCreative 82
IdeaConstruction 88
DevelopingaVariantPerception 88
CaseStudyonCreativeThinking 89
IdeaEvaluationChecklist 92
DefiningExpectationalAnalysis 94