The Pro’s Process - Mike Dever

The seventh 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: Mike Dever

1) How long have you been trading?

33 years

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

After starting out as a discretionary trader, I quickly evolved into using systematic models for trading decision support. Following a multi-year research project in the late 1980s – early 1990s, during which I systematized my trading methods, I’ve traded pursuant to a fully-systematic, multi-strategy trading model.

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

I assume you mean “when it loses money.” I never look at a trade as having gone “for me” or “against me.” That’s far too personal and anthropomorphizes each trade. As long as we’re “on model” I feel fine. It doesn’t matter whether any given trade is losing or making money.

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

The same as I do in response to the question above.

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?)

For the first ten years or so of my trading career I definitely felt an emotional pull that changed with the outcome of my trading. After making the full commitment to systematic trading I instead felt emotional satisfaction over developing sound trading strategies, and no significant emotions based on the outcome of the trading itself.

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

Enjoy my family. But nothing designed specifically to make me a better trader.

7) Have you always done this? 

No. I was far more involved with my work life throughout most of my career. I enjoyed what I did for work and that’s why I spent so much time on it, but it was behavior that some may have viewed as “workaholic.”

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

N/A

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?

Too many to list all here. But I discuss one in chapter 11 of my book (Jackass Investing: Don’t do it. Profit from it.), where I describe an S&P trade I made in October 1987. But the main point I learned is the importance of reducing the effect that psychological factors have on trading. For me, following a disciplined, systematic trading model achieves that goal.

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

Trade to make money, not to fill some other unfilled emotional hole.

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I’d like to thank Mike Dever 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 Mike Dever you can find him:

On twitter: @mikedever

At his firms website: http://www.brandywine.com/

On the books website: http://www.jackassinvesting.com/home/ 

He is also the author of the excellent Jackass Investing: Don’t do it. Profit from it. You would be wise to check it out (click here)

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Previously in the series:

Charles Kirk - read it…..here

Matt Davio - read it…..here

David Blair - read it….here

Mike Bellafiore - read it….here

Mark Holstead - read it ….here

Brian Shannon - read it…. here

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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.