The Psychology of Risk Mastering Market Uncertainty

by Kiev, Ari

• ISBN13: 9780471403876
• ISBN10: 0471403873
• Edition: 1st
• Format: Hardcover
• Copyright: 2002-04-19
• Publisher: Wiley

Summary

One of the financial world's most respected experts on the psychology of risk provides a revolutionary risk management model Over the past three decades investors have adopted all varieties of complex quantitative systems for quantifying and managing risk. Yet, sophisticated investors and money managers continue to suffer record losses in today's increasingly volatile markets. This book bridges the gap between investor psychology and quantitative risk management with a revolutionary risk management program that virtually any trader or investor can easily adapt to their goals and personalities. Using numerous fascinating real-life case studies, Dr. Kiev illustrates the various psychological and emotional traps to which even the savviest investors can fall victim. He develops a dynamic new risk management model that combines quantitative models and money management techniques. He also provides rigorous guidelines that will help readers answer such crucial questions as: How much should I trade? How much risk can I handle? and When should I get out?

Author Biography

ARI KIEV, MD, is a practicing psychiatrist who has received recognition in the financial community for his insights into the psychology of decision making under stress and for the creation of goal-directed programs to enhance trading performance. He is the author of fifteen books, including Trading to Win: The Psychology of Mastering the Markets, Trading in the Zone: Maximizing Performance with Focus and Discipline, and the bestselling masterpiece A Strategy for Daily Living. He is President of the Social Psychiatry Research Institute in New York, has appeared on CNBC and CNNfn, and has been featured on Forbes.com, cbsmarketwatch.com, in The New York Times, and The New York Post. Dr. Kiev frequently writes for Active Trader magazine and was featured in Stock Market Wizards by Jack Schwager for his significant contributions to some of Wall Street’s most successful hedge funds.

Table of Contents

Introduction	1	(13)
PART ONE THE ESSENTIALS OF RISK TAKING
Defining Risk	13	(24)
Considering a New Approach	17	(6)
Understanding the Psychology	23	(4)
Identifying the Problems	27	(10)
Understanding the Approach	37	(20)
Making the Commitment	38	(6)
Setting a Target	44	(13)
PART TWO THE PROBLEMS OF RISK
Handling Your Emotions	57	(38)
Defining the Life Principle	58	(2)
Examining the Emotions of Trading	60	(7)
Understanding the Stress Response	67	(2)
Creating a New Life Principle	69	(5)
Owning Your Responses	74	(6)
Dealing with Anger	80	(5)
Maintaining Your Concentration	85	(10)
Learning to Let Go	95	(32)
Battling Perfectionism	98	(5)
Overcoming Mental Accounting	103	(4)
Combating Paralysis	107	(2)
Learning to Become Flexible	109	(5)
Hoarding Stub Ends	114	(2)
Considering the Herd	116	(5)
Releasing the Rationalizations	121	(2)
Acting Now	123	(4)
PART THREE THE PERSONALITIES OF RISK
Profiling Passive Traders	127	(20)
Cautious Traders	127	(4)
Fearful Traders	131	(4)
Insecure Traders	135	(4)
Committing to a Result	139	(3)
Choosing What You Have	142	(1)
Discovering What Is Missing	143	(4)
Profiling the High-Risk Trader	147	(20)
The Solutions	162	(5)
Recognizing the Master Trader	167	(22)
Defining the Master Trader	168	(8)
Developing Mastery	176	(7)
Assessing Your Progress	183	(6)
PART FOUR THE PRACTICE OF RISK TAKING
Increasing Your Risk	189	(16)
Understanding the Value of Statistics	190	(5)
Using Specialized Techniques	195	(10)
Handling Failure...and Success	205	(22)
Recognizing a Breakdown	206	(1)
Managing the Emotions of Breakdown	207	(6)
Turning Breakdowns into Breakthroughs	213	(4)
Recreating the Wins	217	(7)
Remembering the Plan	224	(3)
Doing the Work	227	(24)
Discerning the Importance of Data Analysis	228	(2)
Determining What Is Relevant	230	(2)
Understanding the Business Model	232	(3)
Paying Attention to the Catalysts	235	(2)
Interpreting the Silent Data	237	(2)
Using Technical Analysis	239	(12)
Coping with Risk: Coaching, Teamwork, Systems	251	(30)
Consult a Coach	251	(11)
Take Advantage of Teamwork	262	(10)
See About a System	272	(9)
Conclusion	281	(8)
Index	289