BigShort community members suggest their absolute favorite trading books for this library, so we can learn from one another. User @MacZaddy suggested “The Daily Trading Coach” by Brett Steenbarger.
"It really helped me to illuminate some of my mental week spots in trading and in life" -@MacZaddy
Here's the TL;DR. If you like the book, consider getting a copy to go deeper:
Become Your Own Trading Coach
Steenbarger emphasizes that great traders are self-directed learners:
Daily Self-Coaching
Set aside dedicated time each day to objectively analyze your performance, emotions, and trading decisions.
Actionable Reflection
Reflect after each session, writing down what went well, what didn’t, and why. Identify specific areas to improve next session.
Structured Practice
Systematically practice new trading skills (entry timing, risk management, emotional control), just like an athlete or musician would.
Master Trading Psychology
Trading success is largely determined by mindset:
Recognize Emotional Patterns:
Notice triggers (losses, missed trades, greed, fear) and how they affect your decisions. Interrupt negative patterns early.
Mental Discipline Techniques:
Use visualization, breathing exercises, mindfulness, or journaling to maintain emotional control under pressure.
Reframe Mistakes:
View losses as valuable feedback, not personal failure. Detach your self-worth from short-term trading outcomes.
Create a Structured Routine
Consistency comes from a disciplined routine:
Pre-Market Preparation:
Begin each day reviewing your trading plan, levels, market conditions, and mental state. Consistency reduces impulsiveness.
Checklists and Rules:
Have clearly written checklists and rules that guide every trading decision. Following rules helps avoid emotional reactions.
Post-Market Reviews:
Conduct structured post-market reviews each day, identifying specific areas for improvement to apply next session.
Develop an Effective Trading Journal
A powerful trading journal should be detailed and actionable:
Trade Documentation:
Record entries/exits, risk levels, reasoning, and outcomes for every trade. Identify patterns of success or mistakes.
Emotional Tracking:
Capture your emotional state for each trade. This identifies patterns linking emotions and trading decisions.
Daily Goals and Reviews:
Clearly document daily goals, then assess progress at day’s end. Reflect and adjust for continuous improvement.
Cultivate Emotional Resilience
Trading requires resilience and adaptability:
Handling Losses:
Accept losses as inevitable. Quickly analyze, learn, and reset your mental state to remain clear-headed.
Stress Management:
Integrate daily relaxation techniques (meditation, exercise, hobbies) to lower stress and maintain focus.
Positive Mindset:
Regularly remind yourself of past successes and strengths, reinforcing confidence during tough market conditions.
Build Strong Behavioral Habits
Steenbarger believes trading success comes from disciplined habits:
Small, Incremental Goals:
Set realistic daily or weekly targets focused on process improvements rather than just monetary gains.
Consistent Execution:
Measure success by adherence to your plan, rather than solely by outcomes. Prioritize flawless execution over immediate profits.
Celebrate Progress:
Regularly acknowledge improvements—no matter how small—to reinforce positive behavior and sustain motivation.
Continuous Learning and Adaptation
Markets evolve, and traders must as well:
Regular Skill Building:
Commit to continuous education, studying new strategies, books, courses, or market research to expand your skills.
Adapt to Market Changes:
Frequently reassess your methods in different market conditions (volatile, trending, choppy). Adapt your strategies accordingly.
Network and Learn from Peers:
Collaborate with other traders, exchange ideas, and seek feedback. Learning from others accelerates your development.
Strengthen Focus and Attention
Sharpen your mental game to maintain clarity:
Reduce Distractions:
Create a dedicated trading environment free from distractions. Limit social media, chat rooms, or unnecessary news during trading hours.
Short Breaks for Productivity:
Take short breaks during trading sessions to reset focus and prevent decision fatigue, especially after emotionally intense moments.
Mindful Awareness:
Practice mindfulness techniques to remain fully present during trades, enhancing your decision-making quality.
For traders seeking deeper insights and practical exercises, the full book provides powerful tools and detailed exercises designed to elevate trading performance and personal growth.