For many, entering the world of trading is driven by the dream of freedom—specifically, the desire for financial independence and the ability to dictate one's own time and life choices. But have you considered the true cost of this dream? Are the rewards that come with pursuing this path worth the sacrifices required?
This is a special Independence Day edition and I'm hosting a very special guest, an icon in trading psychology world – Dr. Brett Steenbarger – and together we are delving into a topic close to the hearts of many traders—freedom.
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About Dr. Brett Steenbarger
Dr. Brett Steenbarger, Ph.D., a Teaching Professor of Psychiatry and Behavioral Sciences at SUNY [sunie] Upstate Medical University in [syrakius] NY Syracuse, NY.
Dr. Steenbarger is known for his expertise in brief therapies and multicultural counseling, teaching these subjects to doctoral interns in psychology and residents in psychiatry. With a background in clinical psychology from Duke University and the University of Kansas, he has published extensively, including over 50 peer-reviewed journal articles and book chapters on brief therapies in psychiatry. In 2003, Dr. Steenbarger shifted to a part-time faculty role to focus on finance, where he coaches traders and portfolio managers using short-term psychological methods. He has collaborated with numerous financial firms, authored five books, such as “Enhancing Trader Performance”, “The Daily Trading Coach", and “The Psychology of Trading” .
Contact Dr. Brett Steenbarger:
About Agnieszka Wood
Founder and CEO of Ahead Coach, Trading Mindset Coach
Agnieszka Wood, is a passionate and accomplished day trader with over a decade of hands-on experience in the financial markets. Coming originally from Poland but having spent most of her life abroad, notably in the Netherlands and the United States, Agnieszka brings a diverse perspective to her work. Her journey is marked by conquering challenges, a deep passion for self-development, a commitment to unlocking her full potential, and a relentless pursuit of excellence.
Since 2019, Agnieszka has taken on the role of Founder and CEO of Ahead Coach, a coaching platform where she conducts her transformative work as a Trading Mindset Coach. Through Ahead Coach, she offers coaching programs for traders that draw on her extensive 20+ year background in Neuro Linguistic Programming (NLP), life coaching and her own experience in trading. Her holistic approach is designed to empower individuals not only in their trading endeavors but also in all aspects of life.
Agnieszka's influence extends beyond her coaching practice. She is a respected speaker at various trading events, where she shares her insights and knowledge with fellow traders and enthusiasts. In the trading education industry, she is known for her expertise in mindset coaching, helping traders overcome psychological barriers and build consistency.
Passionate about guiding individuals towards tangible results, Agnieszka thrives on taking on new initiatives and projects that promote personal growth. Her multifaceted expertise, unwavering dedication, and holistic approach make her a trusted coach for those seeking transformation and success.
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✉ Contact me: launchyourlife@aheadcoach.com
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For many, entering the world of trading is driven by the dream of freedom, specifically the desire for financial independence and the ability to dictate once on time and life choices. But have you considered the true cost of this dream? Are the rewards that come with pursuing this path worth the sacrifices required? You are listening to The Confidence in Trading Podcasts. I am your host Agnish Khawood, a trading mindset coach and a season day trader with over a decade of experience. If you are new to my show, don't forget to subscribe so you can come back for the next episode. In this podcast, we explore the fascinating world of psychology and the human element of trading. We take a deep dive into different perspectives to inspire you and help you navigate the emotional ups and downs of trading with self-compassion and confidence. Whether you're just starting out or you're a seasoned pro, this podcast is your trusted companion providing support on your trading journey. Get ready to boost your confidence and unlock the secrets to mastering your mindset for success. Welcome to episode number 35, The Price of Freedom in Trading. I am thrilled about today's episode because in celebration of Independence Day, I have a big surprise for all of you. We have a very special guest who, as a trader, you have likely heard about or even read some of his books. And together, we will be delving into a topic close to the hearts of many traders. Freedom. I'm delighted to welcome him to my podcast. Let me introduce Dr. Brett Steenbarger, PhD, a teaching professor of psychiatry and behavioral sciences at SUNY Abstate Medical University in Syracuse, New York. Dr. Steenbarger is known for his expertise in brief therapies and multicultural counseling, teaching these subjects to doctoral interns in psychology and residence in psychiatry. With a background in clinical psychology from Duke University and the University of Kansas, he has published extensively, including over 50 peer reviewed journal articles and book chapters on brief therapies and psychiatry. In 2003, Dr. Steenbarger shifted to a part-time faculty role to focus on finance, where he coaches traders and portfolio managers, using short-term psychological methods. He has collaborated with numerous financial firms, outdoor five books such as enhancing trader performance, the daily trading coach, and the psychology of trading. Welcome, Brett, to the show. It's such an honor to have you as my guest. Thank you so much, Finayashka. I really appreciate the invitation and look forward to our session. Wonderful. Brett, as we delve into the topic of freedom, I am so curious to hear your perspective. How would you define freedom and has your definition of freedom evolved over the years? And moreover, how has your experience in trading influenced your perception of freedom? Wow, there's a lot to those questions. So let me start at the beginning. So I approached the topic of freedom from the vantage point of freedom of will. And when we have a free will, then we are not under compulsion to do things. In other words, outside things or outside factors are not controlling us. We determine our actions. The challenge we have as human beings is that we have partly free will and partly we live by habit and routine. So sometimes we live mindfully in a very self-directed way. Sometimes we live mindlessly and outside factors control us. When we are trading, we can't afford to have outside factors controlling us. We need to be in control of our decision-making. And that's where freedom of will is so important to our financial future. Thank you for that. I almost cannot stop myself from asking you when you got into trading first. Was freedom the reason when you started trading? Well, that's really interesting. So I started trading in the late 1970s. So I'm really dating myself here. A lot of listeners, I'm sure were not born then. But in the late 1970s, I started trading. And it was really out of intellectual curiosity. It was challenging. Lots of moving parts. And I had had a fascination with the stock market, even from my grade school days. I remember doing a report in eighth grade about a career doing the stock market. So it was something that interested me. But it was more in terms of the challenge, the intricacies, the intellectual curiosity. I didn't really have thoughts about freedom, especially in terms of financial freedom. But I certainly valued having free time, having the freedom of a schedule to pursue the trading. Yes, that's a lot of years trading. So you have a wealth of experience. It's amazing. I can imagine that when you see how the market developed and people who are actually able to get into trading these days and how easy it is right now, it also kind of represents freedom. Anyone can do it, right? Yes, anyone is free to trade it. And in the late 1970s, it was quite, quite, quite different. I've joked many times that my major expertise in working with traders is not the three letters after my name, the PhD. My main expertise is that I've traded so long that I've made every single mistake that developing traders could make. So been there, done that. And the personal experience, I think, is just as important as any academic background. Absolutely. It's like knowledge without the experience. It's really not worth a lot, right? You can learn the most from actually doing. Exactly, exactly. And I think that's true. I'm jumping ahead here, maybe. But with respect to trading psychology, we learn about our trading psychology by doing the trading and by encountering the challenges, tackling the challenges, we learn about ourselves. You're actually not jumping ahead because that's where I wanted to go into right now, because of course, that's the crucial topic for today, freedom in trading. So it is often seen as the ultimate goal for traders, right? Yet the reality can be quite paradoxical, because in fact, from the moment you begin to trade, you already have immense freedom. Even though the people say, I want to have freedom, that's why I'm going to trade, as if freedom is something to achieve later on. But once you get into trading, you already can make your own decisions. You can choose when to take a trade, when to take a break, set your own schedule, you're actually free to do whatever you want. However, this freedom can lead to erratic behaviors. And for many traders, it does. And then to cope with that, traders start to create their rules and actually cut their freedom because they have to be disciplined. So that brings me to this intriguing questions, like, are most traders actually simply not prepared for the freedom that they want? Very interesting question on the Ash graph. I'm going to reframe this topic just a little bit because my experience is that traders are not free, and they don't feel free if they need, and that's with a capital, and if they need to make money, if they need the trading to be successful, their ego is tied up in their trading, they need this to be profitable, or maybe they lost their job and they need the income. And once you need something, it's very easy for it to control you. And there goes the freedom. One of the smartest things I ever did was I learned trading while I was working full-time. That gave me freedom because I could learn, I could make mistakes, I could take a day off from the market, I often say to people, if you have a full life, so I can, in my case, I've been married for over 40 years. Congratulations. I have five children, seven grandchildren, four at a career in teaching and in psychology, and trading is a part of what I do, and it's an important part. But if something goes wrong in trading, I still have a full life. I don't need to be profitable each day each week, even each month, or what have you. When we put all our eggs in one psychological basket, and sometimes people say, I have a passion for trading, that's a vulnerable place to be, and I think that's not freedom. I think the trading controls us at that point. I totally agree because I actually did the most stupid thing, which was the opposite to what you did. When I started trading, I said to myself, I'm going to take it really seriously, so I quit my well-paid job and started trading full-time. Yes, I had some savings, but the idea wasn't to live off savings for a long time. So yeah, I had the need and I had the pressure, and that definitely did not help. It became the only thing in my life, and I started noticing that it actually was killing my spirit because if I wasn't making money at the time, I was really struggling, and suddenly nothing was giving me pleasure. I had nowhere to go to get relief from the stress, so I tell you when you say, if it's the only thing, and you put all the eggs in one basket, it's just never good because you don't have that moment to step away and say, oh, there are still a lot of other things I can enjoy. It's a vulnerable place to be, and it's admirable that you are so dedicated to it, that you want to pour yourself into it, but it's a vulnerable spot to be. And the other perspective I emphasize with developing traders is that look at other performance activities, look at playing basketball, or look at acting. I teach at a medical school, look at being a surgeon, doing surgery. Who really thinks that you're going to start out, pour yourself into it for a few months, and be able to make your living from it. That is effing insane. Seriously, I want to be a pro golfer, so I golf for six months, and I'm going to join the PGA tour, or I'm going to join the NBA in basketball, or I'm going to start doing surgery after six months. I don't want to be your patient. Our expectations with trading are often unrealistic. There are no performance domains that I know of, where you can do it for a limited amount of time, and suddenly kick back, live on an island, and make your living from it. Those expectations are still so present. Despite videos, programs, YouTube, material, and everyone who has had some experience, or a lot of experience, like yourself, people still don't believe it, people like to believe in the dream. This dream of freedom is sort of clouding the judgment, and actually bringing people further away from their dream, from that freedom that they want to have. I agree with you Anishka, and I do believe there's a difference between a fantasy and a dream. I think it's great to have a dream for success, and you can have a plan to implement that dream. I might have a dream for my retirement, and I can have a plan to save and to work toward that, but to expect that you're magically going to make 20 times your money, and do that again and again and again. That's a fantasy. In the past, when I was working full-time at the hedge fund, there are some people online who had all sorts of claims about how many fancy cars they had and how much money they were making in the market. I tweeted them. I privately contacted them, and I said, "That's wonderful. You're so successful. If you can send me an objectively verified track record of all your trades and your success, I do recruitment at a large hedge fund. The minimum account size at our fund is $200 billion, which is true, and yeah, we'll get you more money than you could ever have. Just send me your track record with a variation." Somehow, I never heard from them. I think there's a difference between a dream and a fantasy. I'll say this, and maybe this is an important takeaway from our talk together. I don't think you're going to get rich from trading. I think you will succeed at trading if you're already rich. I mean rich in the life sense. If you have a full developed life, if you have a rich life in terms of relationships and activities and your health and your physical well-being, you have a rich and fulfilled life, that's the best foundation to pursue success in financial markets. If you have an impoverished life, if you have a life that's lacking in fulfillment, markets are not going to make up for that, and that will create too much pressure. That's so well said. If you are living in scarcity, it's very hard for people to free themselves from looking what is and even imagine what could be, and then let go of that fear. Because if you don't have money, you will constantly trade with thinking, "I cannot lose money," and then your focus is completely skewed. If you don't have that pressure and you have success already and don't have to make money, the point where you make decisions from is totally different. Exactly. There's a little poster in the background of your studio saying mindset is everything. That's what you're saying right now, Lanny Ashka, is that if you enter trading with a mindset of scarcity, you can't expect trading to make up for everything you're missing psychologically. That's why I say, if you have a rich life, you're most likely to succeed in trading. Exactly. That's beautiful. Trading is not going to make you happy. I don't think markets are so easy or predictable to count on them for our happiness for our fulfillment, but they can be a challenging and fulfilling activity. They are for me, and they can be an important activity for us. I think trading, in general, is very enriching as activity. It makes you grow as a person. That's what I find fascinating about trading. That's why I focus more on the process, on where can I grow. If I make mistakes, where did that go wrong? What did I do? What can I improve? It's like this constant quest of building more emotional immunity, not getting triggered by the market. It's more of the opportunity to free yourself from all those external factors and really stand on two feet in confidence. Perfect. What you're saying is spot on. You're making such an important point that if we trade the right way, if we approach trading the right way, our trading process improves us as people. We work on ourselves by working on our trading. I won't mention names, obviously. There are many people who advertise themselves as performance coaches, blah, blah, blah. They don't trade. They don't know anything about markets. They recommend little exercises or things to do or little self mantras we can have in our head. That's not it. That's not what trading psychology is all about. We improve ourselves as people by working on our trading. That's day by day, hour by hour. We are correcting mistakes and we are doing our best to implement plans. It creates a sense of control and discipline. It creates a sense of creativity when we see new opportunities and research new opportunities. We build ourselves by building our trading. I love your comparison to the athletes. If you watch how athletes are developing, how they work on their skills, it's just golf or tennis, there's so much mindwork going into it. I almost feel like professional athletes, the same as traders, it's like a special human being. It's a special thing. If you have never traded, you will never understand what you expose yourself to and what a battle it is and how that feels when you are able to stay away from that battle because you know you don't win so that you release the ego. It's just such a quick and intense growing process. Very much so. The hard part about trading, and I think this is true of sports as well, is that we always have to be growing because we're always facing new conditions. I work on my skills and build all of those, but markets keep changing. How I trade a slow market versus a very active volatile market. How I trade a trending market versus a rangebound market. These things will be different. Similarly, in sports, we have to prepare for different types of opponents and different styles of play. We always have to adapt. We always have to change, and that keeps us growing and keeps us working on ourselves. You know, when you said that it does the thought pop up, in fact, adaptation to constantly changing condition is part of freedom, right? Because when we talk about freedom, and people say, I want to be free because I want to do whatever I want at any time, that's change. That's a constant change. If you really want to do that, that means you're constantly changing, so you have to also constantly adapt. But because constant change brings a lot of insecurity and people in general don't like to feel insecure, that creates also that need for controlling the markets and fighting the markets because it's not easy for people to actually adapt. So again, there's discrepancy between, yes, I want freedom, but I also want things to be predictable and stable. Right, right. And your point is that freedom is adaptability, that when we can adapt to many different things, and we're free to do what we do best. Right. And I definitely believe that's true. So it's not like we learn trading once and for all times, we learn, and then things change, then we relearn, and things change, we relearn, it's an ongoing process. But that means we're enjoying freedom and building our freedom in an ongoing way. Right. In that sense, actually, it is always trading for a living because you just have to learn your whole life, as long as you trade. You trade for a living, not so much that you pay your living from it, but you really trade for a living because there is no end to it. Right. And I would argue that trading for a living is very different from living for trading. Totally. Yes. If markets are all you have, if trading is all you have, you're not free. It's controlling you. And so when you have that broad life, and when you're constantly adapting, life is always challenging, you're always learning, that to me is freedom. Beautiful. Do you think that discipline restricts freedom or doesn't make freedom possible? It's a good question. And I believe that it's precisely because of discipline that we are free to do many of the things that we are able to do. And so in my day-to-day life, there's a certain discipline that I follow in terms of taking care of myself, taking care of my marriage, taking care of the household. And that frees me up in terms of time to be able to pursue other things. And it frees us up myself and my wife to pursue certain things. So being organized and having that discipline frees up time, and it frees up opportunity to do other things. That's a great way to look at discipline because it is so often associated with something negative, right? With this negative connotation of discipline means pain and people don't like discipline in general. But then in trading, you've got to be disciplined. Yes, I'll give you another example of discipline. And listeners won't be able to see this, but you can see Alignashka that I'm wearing a Fitbit watch. And so every day I'm measuring the quality of my sleep. And every day I'm measuring how many steps I take, how many active minutes of exercise. That's discipline. And every single day I have targets that I aim to hit. And that's awesome. When I do that, I have more energy. I feel better. And guess what? That gives me more independence. That gives me more freedom to do what I want. If I didn't keep myself in shape, especially at my age, if I didn't keep myself in shape, I wouldn't be free to do anything because I'd be sick all the time and feeling tired and run down and achy. And so anyway, I do think that discipline goes with freedom. And an undisciplined life leads to negative consequences, which really hurts our independence. And of course, mental discipline, which has a lot to do with being disciplined in your thinking, right? What are you spending your time on, not just physically, but also in your head? What do you let in? And what do you say? I don't want to have that in my head. So being disciplined in sifting and filtering those things that are not serving you, especially when you trade, I find it's such an important factor of decision-making. Basically, where do you put your focus on? That's for me discipline as well. That makes so much sense. Maybe I could give an example for my own recent trading. And this is a good example of working on our psychology by working on our trading. So what I was finding was that I was spending too much time and energy trying to perfect my exits on a trade. So I trade the ES contract to the SMP futures. And I have some rules as far as when to enter. And those generally worked for me. The question is, how far can the position move in my favor? So for instance, recently, I was short and got into a pretty good price and it bounced around for a while and then started to come down. And I'm finding myself trying to fine-tune and perfect the exit. And I'm spending so much time and energy on the exit process that I deplete my mental energy. I run down my mental energy to look for the next trade. And so what I needed to do was estimate the volume and volatility of the market while the trade is on to let me estimate how far the market potentially could move in my favor and create a rule for exiting. And so I put my order in at the market. And so I'm letting the market take me out passively. I'm entering actively, but taking me out passively. And then, boom, it takes me out. I have my profit and I'm free. There's that word. I'm free to then see how the market behaves afterward to see if there might be a good next trade coming up. That's fantastic. And it's a great example to show actually why process is so important, right? Because we can endlessly keep thinking, "Oh, was it a good exit? How should I stay should I go?" And a lot of times people would exit and then, yeah, the price will still go in their favor. And then the process starts in their thinking, "Oh, I should have stayed." And so having that discipline also to accept, "Okay, this is the decision I made. This is my process." And I know when I follow the process, in the end, it's going to work out in my favor, right? Whether I'm not going to take every cent of the table, and that's okay. Yes, because the greater risk for me was losing my mental capital, my emotional capital. And so by having a rule for exit and putting that into the market and letting the market take me out, then I'm free in terms of the mental capital to look for the next setup, to look for the next trading opportunity. So that actually shows that what is really also very important is to, like, we have the freedom to choose where we put our focus and energy in. And while we have this freedom, we have to say, "Okay, what brings me the best return? If I'm going to spend all my time on trying to figure out the best exit, or am I going to follow my process and see if there are any other opportunities that I can take, right? Where do you put your energy into so that it will bring you in the end, the best return?" Exactly. And it's a good example of how we work on our psychology by working on our trading. It's not like I'm doing some fancy psychological exercise to make me a better trader. It's that I'm working on the trading, and that helps my psychology. That's what gives me that emotional capital. So it's like this perfect combination of both. It's not disconnected, because a lot of times it sounds almost disconnected for people like, "Yeah, I'm trading." And when you say, "You know, there is a big part of trading is psychology." "Oh, yeah, I'll do that one day." Right. Yeah. Or they'll just do the psychology and they won't work on their trading in a very hands-on way. And you can work on your mindset all you want. But if you haven't learned the ins and outs of trading, you'll just end up feeling better about losing money. Right. A big question, how to achieve freedom? Because for those dreaming of trading for a living, the allure of freedom from nine to five grind is undeniable, right? And transitioning to trading full-time isn't really just about financial independence, like many traders think. It's really embracing the new way of life and making meaningful choices. But achieving this level of freedom is not really just quitting your job, because quitting your job is easy, I can tell you. But it is an internal and psychological journey that requires courage, responsibility, and the willingness to accept the consequences of your decisions, whether they're good or bad, and not everyone is ready for it. So, Brett, in your opinion, how do you know that someone is ready to quit their job and trade for a living? Really good question. I do think that if you quit your job, have no other source of income, it really does place a lot of pressure on trading performance if you don't have meaningful savings. So, what I would say is that at the point where you have meaningful savings, where you could go through an extended period of drawdown and loss, which even great traders do, that it won't interfere with the quality of your life. That, to me, makes sense. Again, if it's a need to make money, you don't have savings, you don't have a job to rely upon, that's a very pressured position to be in, and that affects performance. To go back to the very beginning of our talk, equating freedom and independence, we have to rely on trading for everything then we are not independent. We are very dependent upon markets and our performance on markets. And again, that's a very pressured place to be. I'll mention one other thing if I can, and this is true of performance at any field. I enjoyed basketball growing up. And at my height and my body type, I was not meant to be a successful college basketball player or professional basketball player, but I love the game. And so, I realized that basketball was not going to be, that was not where my strengths were, that's not where my future was going to be. And I think that's really important. Trading is not for everyone in terms of ultimate success. And just like any performance field, it's a relatively small percentage of people who take up the activity who could end up making a living from it. And that's true again, in acting, that's true in sports. So, we want to be able to approach trading in a meaningful way, but we want to approach trading also so that we have a plan B. The way I think of it is this, there is something in life that we do greatly, that brings our strengths to life. That might be trading, that would be wonderful if it is, but it might be something else in life. And that's fine. The important thing is to be who you are, to utilize the strengths that you have, and be as successful and fulfilled as possible in the area where your greatness shines. So, for me, it was not trading. I trade, I enjoy trading, and I've done it with a reasonable degree of success. But my love, what I'm really good at and what really speaks to me, is my work as a psychologist and helping people. -That's so beautiful. -Yeah, I discovered that trading full-time was not for me. I missed being with people and helping people. So, we got to pursue our passion. We have to pursue our strengths somewhere in some area of life. There's something where we can let our greatness express itself. -Yes, the gift. -That's a good way to plant. There's a gift there that we can pursue. It might be trading, that's great to find out, but if it's not trading, that's okay. There are other things that'll give us that independence and that freedom. -That's beautiful. And the one way to find it is just by gauging how much energy does the activity give you. If you do something, for example, in your case, being a psychologist, how much energy does that give you and pleasure in being with people versus when you're trading. You can see what is really my true passion. -That's a great point. If it's not really our path, it will take energy from us. If it's our path, if it's our strengths, it's exciting, it's thrilling, it's fulfilling, it gives us energy. -And I think this is a beautiful place to end this episode. Thank you so much, Brett, for joining us and this candid and inspiring conversation today. -Well, thank you, Anishka. I appreciate being able to speak with you and with the podcast guests and look forward to getting together in the future. -Wonderful. I really enjoyed it and I really am honored that I had the opportunity to offer this wonderful insights that you gave us to my listeners. -Achieving freedom in trading, as we said, is just about financial independence. It's about making informed choices, managing risks and understanding the responsibilities that come with it. And the pursuit of freedom in trading requires a balance of ambition and caution, as well as the willingness to adapt and learn from both successes and setbacks. And remember the saying "Be careful what you wish for" rings true in this context and reminding us to approach our trading goals with thoughtful consideration and realistic expectations. While the allure of freedom in trading is undeniable, it's essential to navigate this journey with clarity and discipline. So as you continue on your trading journey, keep in mind that while the grass may seem greener on the other side of the fence, the true freedom comes from freeing yourself from influences that can control you and your trading. And this involves taking responsibility for your actions, maintaining integrity and self knowledge and having the ability to let go of things that don't serve you. And if you would like to learn more about Dr. Steenbarger and stock up on his books, so you can profit from his experience, knowledge and great advice, you can find relevant links in the description. And for those of you who are not getting any closer to your dream of freedom despite your efforts, I invite you to sign up for my free email series, The Trading mindset tips. This invaluable resource provides actionable guidance on how to break free from cycle of failure. Join hundreds of other traders who have already signed up and benefit from these tips, improving their results daily. Go to my website at aheadcoach.com or click the link in the description to sign up for free. Thank you so much for listening to The Confidence in Trading podcast. If you are enjoying my show, please leave a review on Apple podcast and tell me what you like about it. Thanks to you, more traders will be able to find me and together we will make a bigger impact. So thank you for your support. And if you are new to my show, don't forget to subscribe so you can come back for the next episode. And make sure to check out some of the free shows too. Thank you again for tuning in. This is Agnyska Wood from my head coach. Bye for now!
