We’ll start by laying the foundations of bulletproof trading in the first couple of chapters, before building on that with specific strategies and techniques to help you:
take committed action
identify your values and who you want to be as a trader
manage your risk
embrace uncertainty
plan for (and therefore beat) the worst
train your attention and awareness
focus on your trading process
control the controllables
get comfortable with being uncomfortable
unhook from difficult thoughts
work with stress-based emotions
build confidence in coping with difficult trading situations
stay calm in critical market moments
avoid beating yourself up
find the opportunity in the difficult, and turn adversity into advantage
get good at adapting to change in the markets
monitor your stress and fatigue levels
master the art of recovery to build resilience and sustain performance
develop your physiological fitness and toughness.
I have tried to make the book practical throughout, with numerous exercises both to explain the concepts and to help you develop the mental, emotional and physical skills of a bulletproof trader. These exercises, and the techniques taught within the book, are evidence-based and the same ones I use with my own trading and investing clients.
While I appreciate it is often easy to skip over exercises and activities when reading a book, I strongly recommend that you take the time to complete and practise them as best as possible to get the full benefits of Bulletproof Trader.
Part One: Becoming Bulletproof
1. Why Bulletproof?
“I want to bulletproof myself.”
It’s September 2014 and I’m sitting in the boardroom of a hedge fund in the West End of London having a one-to-one coaching meeting with a new client, the hedge fund’s founder. He’s a successful trader with an incredible track record going back many years. I’m dressed in my standard uniform of casual trousers and shirt. Across the table he sits in shorts and polo shirt, notepad and pen at the ready.
After an exchange of initial pleasantries – primarily a discussion about the weekend’s football results – I prepare to ask my first question. I am aiming to find out more about the trader, his key biographical details, trading history, trading style and strategy – and what outcomes he would like to see from the coaching programme.
“What do you want to achieve?” I ask.
“To be able to deal with my trading performance and results with greater equanimity,” he replies.
“And why now?” I ask.
“I have never really had an extended run of bad performance. But I know that statistically one is likely to happen. I have to prepare myself for that. I need to make sure I have the skills to handle such an event. I want to bulletproof myself.”
“How would you know if you were… bulletproof?” I said. I hadn’t heard that phrase used like that before. It stuck with me.
“I would have fewer negative thoughts,” he said. “I can get obsessed about decisions I have made, especially when I have lost money or am not making it. I can be a perfectionistic. When I fail, I can’t stop thinking about it, and I know that mindset is not helpful. Sometimes I am just sat there telling myself ‘what a f****** idiot’ over and over again. My emotions can be very negative. Sometimes I feel pretty depressed. Trading can make me feel sick.”
“And what would be the benefits of being bulletproof?”
“Ultimately I think it is about keeping me in the game. I love what I do, and want to be doing this for many years. I don’t want a big negative event to take me out. But I would like to be able to change some of my thinking and how I feel when things are not going well.”
We went on to define in greater depth what being ‘bulletproof’ meant for him – identifying particular situations where it would be useful and looking at what bulletproof behaviours might be. We explored some tough situations he had already faced in his trading career and overcome. It was important to discover his current level of bulletproofing. Any trader or fund manager who has traded the markets for a long period of time will have developed a certain level of resiliency to still be in his or her seat trading – even if they feel they’re currently in crisis.
Over the next 12 months I helped this top trader develop a range of strategies that increased his ability to deal with tough trading situations. We were ‘lucky’ in that during our work together there were a couple of significant market events that had a big negative impact on his results – and provided great opportunities to practise what we had been working on together.
Our work included:
learning about the importance of anticipating and planning ahead for challenges
the power of acceptance (of your situation and your experience of that situation)
how to manage the mind and the emotion-driven thoughts than can arise in times of difficulty
understanding perception – and how the way we see a situation creates our reaction or response to that situation
being able to see the opportunity within a challenge
being comfortable with the worst-case scenario.
We also undertook some simple mindfulness-based meditation practices to increase in-the-moment awareness, gain greater objectivity, lower emotional reactivity and increase equanimity.
Lastly, we spent some time using biofeedback. This involved learning techniques for increasing the strength of his nervous system, making him less reactive to doses of stress – particularly the impact of it on his decision-making.
All in all, he developed an extensive toolkit that robustly increased his level of bulletproofing. Importantly, he worked at using the tools provided – he practised the skills – and as a result attained a level of trading resilience beyond his initial expectations.
A key part of this is because he spent time and energy developing the skills to become more bulletproof. I believe this is something any trader can do.
Coaching traders
I have been fortunate enough to spend the last 15 years coaching and training thousands of traders and fund managers across the globe at
