The Pro’s Process - Matt Davio

The second in my series of posts asking Pro Traders about their psychological processes.  Delving a little into how it feels to them when trading.  The good and the bad.  How this has changed over time and what preparation they do mentally for performing as a trader.

One of the key features for me was that I wanted traders with experience who have been through the mill over the years and of course those who were kind enough to broach this subject publicly.  This I hope gives developing traders more to learn from.  

I’m very fortunate to have a great line up and this week is: 

Trader: Matt Davio

1) How long have you been trading?

I’ve been trading full time since 1991, while holding primarily buy and hold 76-91 prior to that.

2) What style of trading / investing do you practice (technically driven, fundamental, systematic, a combination etc)?

I have moved from fundamental to technical and left both pretty much both for Market Profile trading, which is neither fundie or technical. Its the truest way I know to Trade in the Now with no Ego.

3) How do you feel when a trade goes against you?

I assume the risk in every trade I take before I even place my buy/sell. Only thing I can ever control is my risk.

4) How do you feel when a trade goes for you?

Trading is a game, losing is part of the game, I feel no different with a win or a loss. Next …

5) How have these feelings changed over your trading career?  (Can you recall how you originally used to feel and elaborate on how this has changed over time?)

Sure, I used to care about being right or wrong, now all I care about is the scoreboard. Make more than I lose. Losses are entirely part of the game. Not all of us can trade like Goldman Sachs and have one trading day loss a quarter, Impossible.

6) Do you have any practices that you do away from the trading screen to help you mentally and emotionally handle trading?

I like to coach my kids, play squash, ski, golf, and yes I do like to keep score at things other than trading. I like games. Words with friends even keeps you sharp and allow you to trade less, and let the trades come to you with patience. All these games and my parenting teach me patience that transfers in life and to trading as a game.

7) Have you always done this? 

I’ve always enjoyed “game theory” i just never knew there were actual studies and degrees in Game Theory.

8) If not, how have you learnt to deal with the feelings that come up when trading?

Trading is the most self reflective game that I can imagine. You truly  have to be in the now all the time, without that being in the moment you are doomed. If you can’t learn and grow yourself, you will fail at this game. 

9) Can you describe a time in your trading life which really rammed home the point that so much of trading comes down to psychological factors?

The market doesn’t care about you and your positions and in 2001, I had some big positions that had stretched my risk parameters, that if I would have been smaller and more patient, I could have held the trade for 2-4 more weeks, the trade cost me multiple 7 figures itself, a big hit, and if I could have held a bit longer, it would have paid me mid 8 figures,  Timing and size should be directly correlated to your risk demands. There’s always the next trade, don’t swing for the fences.

10) If you could give aspiring traders one piece of advice about emotionally handling the market what would it be?

Don’t forget to breathe in and out. Holding your breath, is only half the game, Markets have natural ebbs and flows much like breathing, they go up and down, never forever in either direction. Play both ways, the game doesn’t care how you score. Just keep posting good patient trades.


I’d like to thank Matt Davio for sharing about the way he tackles the market from an emotional / mental side of things and for his willingness to allow me to post this as a free resource in the hope that traders who have been in the market for less time or are thinking of entering can perhaps pick up some A-HA’s.

If you are interested in finding more out about Matt Davio you can find him:

On twitter @MissTrade

Or on his website: 


Previously in the series:

Charles Kirk - read it…


Disclaimer: Embrace The Trend / Richard Chignell does not provide investment, financial or product advice.  I trade my own capital exclusively.  I eat my own cooking as should you.  If you are going to trade / invest it’s at your own risk and you must take responsibility for your actions.