Exploring The Trader's Mind
by Jayanthi Gopalakrishnan
No matter how you look at it, Brett N. Steenbarger keeps busy; he is director of trader development of Kingstree Trading and clinical associate professor of psychiatry and behavioral sciences at Suny Upstate Medical University in Syracuse, NY. Not only that, he is the author of The Psychology Of Trading and numerous articles in trading publications, many of which are archived on his website at www.brettsteenbarger.com. Steenbarger's writings on brief therapy have been featured in standard reference works in psychology, including The Encyclopedia Of Psychotherapy and The Psychologists' Desk Reference; his most recent book, The Art And Science Of Brief Psychotherapies, has been adopted as a core training text in psychiatric residency programs. In addition to applying short-term change techniques to trading, Steenbarger coordinates a training program for new traders modeled after the medical education system.
STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan interviewed Brett Steenbarger via telephone on May 5, 2005.
How did you first become interested in trading?
My background is as a clinical psychologist, and for 19 years I taught at Upstate Medical University in Syracuse and directed a student counseling program. In that program, I was working with medical students and their counseling needs. During that time I became acquainted with - and proficient at - short-term [brief] therapy, working with people in quick ways to help them make changes in their lives. I taught that to people who were learning to be therapists, and to our own students in the student counseling, and it became a major focus of my academic work.
At the same time, I was interested in trading and had followed the markets since the late 1970s. My very first experience with the markets was as a graduate student at the University of Kansas in Lawrence, when I attended a seminar offered by someone named Joseph Granville. I was intrigued by the markets, and followed them, and traded them on and off -- obviously in a part-time mode, since I was a graduate student and worked full time as a psychologist.
In 1998, I developed more of a research-based interest in the markets, and started to approach the markets from more of a quantitative, research-based perspective. I started to try out some testing strategies, again on a part-time basis. That work accelerated after I met Victor Niederhoffer, who became a close friend and mentor, and eventually, last year I left my position as the director of student counseling and began trading on a full-time basis using some of these strategies.
How was that transition?
I realized that the problems I was encountering in trading were very much like the problems that my medical students encountered in their work and that I was helping people with in short-term therapy. So I started to apply some psychology ideas to the trading, and out of that came my book The Psychology Of Trading. It was a lot of fun to write, but it was also self-therapy, because I wrote it partly with my own trading in mind. It really was putting those two pieces of my life together, which had, up to that point, been quite separate.
What happened after that?
Some people at a Chicago proprietary trading firm, Kingstree, read the book and brought me in to do a talk for the traders, and that went well. And then they brought me back to actually work with some of the traders, and that also went well. Then they made me an offer to become an in-house psychologist, and apply psychology to the trading world, full time. It seemed to me to be an ideal blend of my interests, so I left the medical school after 19 years and went to work at Kingstree. As their director of trader development, I help with the hiring process, I coordinate a trading program for new traders, and I work with our current traders as a psychologist and mentor.
...Continued in the July issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the July 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.
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