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OPENING POSITION February 1999  

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What do you expect to see when you open an issue of STOCKS & COMMODITIES? First-time readers of S&C expect to see articles detailing technical methods for trading, and that's what they see. Regular readers expect to see many articles on technical methods, but they know that we also offer more than that. The subject that is probably less expected by new traders, but is one of the most important that traders, novice and veteran alike, can address, is on the psychological side of trading.

Why does the psychology of trading come into play as such an important part of success? Because once each and every trade is placed, the trader faces uncertainty as to the eventual outcome, and uncertainty with your own hard-earned money often equates stress. The best traders strive to reduce this uncertainty to some reasonable level by working with a method that has shown verifiable results. The worst traders often leap before they look, using tips or seat-of-the-pants approaches. The latter methods result in the trader developing considerable anxiety with each new trade because their own emotional defense mechanisms click in. To avoid such anxiety, the key is to find a method, verify its success so you are comfortable with it, and then implement it.

But what if you want to go farther than that? If that's the case, you'll find our interview this month with psychiatrist Ari Kiev quite interesting.

Kiev works with traders and recently wrote a book titled Trading To Win: The Psychology Of Mastering The Markets. In our interview, Kiev outlines some of the steps to becoming what he refers to as a master trader. He made one remark that I found especially intriguing, and I think you will too: He asks traders to set a goal of how much money they are going to make in a given year.

My initial reaction -- and, as it turns out, the reaction of a number of traders to whom Kiev posed the question -- was, "How can I guess? It depends on what the market does!" This isn't a viable excuse, according to Kiev, who doesn't buy this as a reason not to set a target. He makes a very interesting case, which I will let you read yourself. He makes an observation I want to comment on here: If you set a target, you will usually find a way to achieve it. I think this is very true. Setting a goal usually sets your mind in motion on how to solve the problem of "How do I get to my goal?"

By making a commitment toward an end result, you usually start thinking of and setting into motion steps toward meeting that goal. It may seem as if you're putting the cart before the horse, but I suggest you try it. More than likely, your mind will get you thinking about all kinds of resources and opportunities to bring you to your target.

Who knows? Maybe 1999 is the year that you set a goal for yourself of becoming a master trader. Try it out and see. Set the goal for yourself, write it down -- and see how you do this year.Trade well!