This week’s episode of SteadyTrade starts with our guest Dr. Daniel Crosby weighing in on an important bear.
No, not a bearish investor … but Winnie the Pooh. The famed character once wisely advised, “Don’t underestimate the value of doing nothing…”
This week’s guest, Dr. Daniel Crosby, is a big fan of this wisdom. He offers what may seem to be counterintuitive advice for traders: If you want to become a consistent trader, you may actually need to do less.
This might seem crazy to some traders. After all, more action is better, right?
Not necessarily. In the episode, Dr. Crosby talks with SteadyTrade co-hosts Kim Ann Curtin and Stephen Johnson. Learn how investing and trading require a different mindset from a lot of other pursuits — and how to get in the right mode for success.
About Dr. Daniel Crosby
Dr. Daniel Crosby is a psychologist, behavioral finance expert, and the chief behavioral officer at Brinker Capital. His job? Delivering behavioral tools, training, and technology to top-tier financial advisors.
He has more than 10 years’ worth of experience in the financial services industry. And he’s written a number of bestselling books that can help professionals and traders achieve better outcomes.
The Psychology of Trading and Gender
In the episode, Dr. Crosby shares fascinating facts about trading and gender.
Did you know that women tend to outperform men as traders? They’re more patient, make more nuanced moves, and are less likely to take on too much or too little risk.
So to break it down … Women do less, are more patient, and less active when it comes to trading. There’s an inverse relationship between activity and performance.
Marital status also matters — married men and women tend to outperform their unmarried counterparts.
Hey … does that mean it’s time for Stephen to give up his playboy lifestyle and settle down?
Are You Trading the Wrong Way?
Most traders think that to perform at their best, they’ve gotta be pushing themselves all the time. Quite the opposite, says Dr. Crosby.
Everyone wants some magic pill, tip, or quick technique to achieve optimal performance. In reality, it’s all about self-care.
No, he isn’t saying that day traders need to take more bubble baths (although, that isn’t a terrible idea.) Rather, things like diet, rest, exercise, and meditation can put you in a much better place to be an effective trader.
Learn why taking care of yourself is fundamental to your performance as a trader…
Holding Yourself Accountable
As Dr. Crosby shares, money can induce greater emotion in people than the death of a loved one. Additionally, people can lose up to 13% of their IQ when stressed about money!
The idea of removing all emotion from money-related matters may not be realistic. However, there are things you can do to stay on an even keel.
It starts with accountability.
One option? Link up with a coach or a team of like-minded traders who can keep you in check.
Alternatively, are there things you can do to prevent making emotional decisions while trading?
Dr. Crosby shares why things like trading with a small account or making access to your money more ‘difficult’ can work to your advantage and keep your emotions in check.
He also speaks to the power of having a good system in place. Or as he puts it, “Automate, automate, automate.” It’s all about setting your own personal rules and living in a way that’s consistent with them.
Risk Management and Gut Instincts
Gut instincts and intuition are good things. But when your gut governs your risk management as a trader, things can get tricky.
Experience matters. Let’s say you’re facing a decision you make infrequently. For instance, maybe you’ve only been trading for a short time. You don’t have what Dr. Crosby calls “the reps to have informed that emotion.”
He also talks about how a delay between stimulus and response can play tricks with the mind — which could help explain why so many otherwise intelligent people find themselves bag-holding in trades.
Sticking to the Rules
Dr. Crosby, Kim, and Stephen discuss methods of continually coming back to your own set of trading rules.
This is extremely important, because as a trader, you’ve got to contend with emotions, physiology, and what you think you ‘should’ be doing.
Learn how a lack of balance can lead to overconfidence or catastrophizing … and why both can be dangerous.
Recognizing your own personal mediocrity helps you create systems that can help you transcend it. Don’t be afraid to take a long, hard look at what Dr. Crosby calls “A mirror onto your own idiocy.”
Connect With Dr. Daniel Crosby
- “Personal Benchmark: Integrating Behavioral Finance and Investment Management”
- “The Laws of Wealth: Psychology and the Secret to Investing Success”
- “The Behavioral Investor”
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Meet Our Hosts
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Kim Ann Curtin