Link: TraderFeed – Overcoming Anxiety

Apr 26, 2007: 8:39 PM CST

Dr. Steenbarger recently posted two writings/links on how to overcome performance anxiety. After offering previous comments from readers who sent in their own techniques to overcome anxiety in trading, he listed two techniques from his own research/practice, and an additional post on a Solution Focused Linkfest.

He writes that self-hypnosis (with a simple, easy to perform example) and Reprogramming through Biofeedback (more complicated) as his two favorite methods.

Also, in the Linkfest, he offers the first chapter of his book to read which contains a compelling personal story and grabs the reader’s attention through concrete examples and situations. It is absolutely enough to entice you to purchase the full book, which I also strongly recommend to traders caught in emotional perils, or those who want to understand their own psychology and how it relates to the markets.

I check Dr. Steenbarger’s sites daily, and he has never ceased to disappoint me with his wealth of information and resources and links to outside sources.


6 Responses to “Link: TraderFeed – Overcoming Anxiety”

  1. Babak Says:

    “he has never ceased to disappoint with his wealth of information”

    I think you mean to say never ceased to amaze you with his… or never disappointed you…


  2. Corey Says:

    Thanks, Babak

    True, I was being a generalist, and I corrected the statement to make it more personal. 🙂

  3. Joe Says:


    I have to tell you this remarable story I heard on a TAG tape from the late 90s. The speaker talked about a system Larry Williams sold to 92 customers. The system was supposedly profitable throughout the first year, with a maximum losing streak of three trades. After this initial year, Larry Williams contacted all 92 customers, reaching 85 of them. He asked who still used the system. The answer was a whopping zero (!!!).
    I believe that if you don’t back test your systems and if you just buy them, then you cannot convince yourself to use the system past the first losing trade – you just can’t build up the necessary confidence.

    What are your back testing experiences?

    Thanks, Joe

  4. Corey Says:


    Thank you for the comment and insight. It would fill many blog posts to discuss my back-testing experiences and thoughts (may do so in the near future), but I will try to provide a quick overview here.

    First, you’re right. If you don’t have a system you developed (or at least tested) that fits your personality, odds favor you abandoning the system in favor of emotion and (faulty) discretion. I was just reading recently comments by Jack Schwager (of Market Wizards fame) and he commented “What are the odds of you developing a trading system that is profitable in most markets most years? Low. Now think: What are the odds of you buying such a system and using it out of the box? Next to zero.”

    I recommend “Way of the Turtle” (Curtis Faith) in discussing various metrics to evaluate systems, as well as Van Tharp’s “Trade Your Way to Financial Freedom” vol. 2. There are many books on these subjects, but these helped guide my thinking and I reviewed them both recently (so they stand out fresh in my mind).

    In my own experience, I have tried various approaches – some I tested before hand, some not. Some I tested by hand, some I used TradeStation, some I used WealthLab (limited experience), and some I trusted from other traders (always conduct your own research whenever possible).

    One of my main themes in this site/blog is how to develop confidence in your trading approach and overcoming fears/uncertainties when trading in the market. This is done with historical backtesting and personal observation both when money is on the line, and when you are in simulation mode.

    Some traders shun backtesting because they believe the markets are unpredictable and that ‘past performance is not indicative of future performance.’ This is true in an absolutist sense. No two patterns are identical, etc. Also, when testing a system, one must avoid curve-fitting and over-optimization. I think “Way of the Turtle” does an excellent job in discussing some of the flaws of improper backtesting.

    As an overview of backtesting, Van Tharp notes you must be careful when testing to ensure that your ‘degrees of freedom’ (components) are as few as possible. In other words, if you trade using a moving average (or more than one), an oscillator, volume, and a trend indicator, then you are testing (at least) 4 components, and the interaction of these components will provide dramatically different results than if you tested them each singularly.

    In other words, you might find a positive expectancy with entering on a stochastic reading under 20 and exiting with a reading over 80. But when you combine this with moving averages (say: “Only buy when the price is above the 50 period moving average”) then you are combining two components and you might find this does not ‘test out’ as a system.

    To complicate things further, you might find that trading with a lookback on the stochastic of 14 periods (default) works out (has an edge) but not 9 periods. This is the same indicator but with different parameters, and you receive divergent results. What if you combine the Stochastic with the RSI (as I did in my early days of trading)?

    Also, let me complicate things further (just using one indicator as an example). What if you found out that the stochastic tests out with an edge from period inputs 7 – 18, but your test was conducted (ironically) during the bear market of 2001-2003. It has an edge, but if you ran the same test from 2003-2007, you might find the stochastic indicator to have a negative expectancy (not test out).

    See how complicated backtesting can be? It must be done, and you need to get a feel for the data and how your signals are likely to perform.

    What have I found that tests out?

    “Trend” continues to be one of the strongest sources of edge over time.
    Price consistently above a moving average in a trend tests out.
    “Volatility filters” (certain conditions/expectations used with volatility is contracting vs when volatility is expanding).
    Momentum and volume readings test out (with certain exceptions).
    Money flow (big money) and industry/sector strength/weakness tests out as valid
    Sentiment extremes (very difficult to test – mostly anecdotal)

    I won’t get into what I’ve tried that doesn’t work. It’s a lot. Some of it is concepts most people expect work, but I haven’t found that they test when examined.

    Because something works currently does not mean it will continue to do so. This is why I try to test out current ideas and new ideas at least monthly when I get time. I don’t do as much testing as I would like, but that’s something I’m working on this year.

    I’d love to hear your experiences/thoughts concerning what works from an objective standpoint. This could get a great conversation and exchange of ideas started! Thanks, Joe.

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  6. grossesse Says:

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