THE PSYCHOLOGY of RISK

Mastering Market Uncertainty

In The Psychology of Risk: Mastering Market Uncertainty, renowned psychiatrist and trading coach Ari Kiev builds on his internationally acclaimed books Trading to Win and Trading in the Zone to explore the psychology behind risk and trading. By focusing on your appetite for risk-taking, your ability to manage and adapt to risk, and your pathological patterns of risk-taking, Kiev shows you how to overcome the psychological obstacles of risk that undermine your decision-making process and ability to cut losing trades and stick with winners.

With the help of numerous trading case studies, Kiev outlines a risk management program that bridges the gap between investor psychology and quantitative risk management techniques. Filled with expert advice and examples of real market situations, The Psychology of Risk allows you to take action in the face of uncertainty and unpredictability by addressing issues such as:

* Risk and the trading approaches you need to deal with it

* Psychological techniques that will help you trade independently of emotions: excitement, anger, fear, and stress

* Handling problematic behaviors such as perfectionism, decision paralysis, hoarding, and impulsiveness

* Handling failure and success

* Using the tools of coaching, teamwork, and system building to overcome obstacles

Risk taking does not mean living dangerously; it shows a willingness to act beyond the circle of what you already know. In breaking from the natural inclination to "avoid risk at all costs," you will begin to see risk in a new light-certainly not always as a negative force. The step-by-step approach presented in The Psychology of Risk will provide you with a new and stimulating perspective on risk, which will enhance your trading success and increase your profits.

'Praise for The PSYCHOLOGY of RISK

\"The Psychology of Risk is equally vital for everyone from the day trader to short-term online trader to long-term investor. A clear, enjoyable insight into what makes trading success.\"

-Alpesh B. Patel, Financial Times columnist and author of Trading Online

\"Once again Dr. Kiev delivers a book that should be read cover to cover and kept as a reference. The Psychology of Risk explores the elements of risk taking as they relate to the human psyche.\"

-John Floyd, Director, Proprietary Trading, Deutsche Bank AG

\"In 2000 and 2001, benchmark U.S. equity indices experienced the worst two-year performance since the bear market of 1973-74. Among the winners in this tumultuous market environment were those that invested with short time horizons rather than those that utilized a rigid buy-and-hold \'one decision\' philosophy. Against this backdrop, Kiev, in his familiar pull-no-punches style, delivers an insightful, timely, and pragmatic thesis that focuses on the inner game of trading: psychology, discipline, and the holy grail-timing. A captivating read for those in search of a performance edge.\"

-Ciaran T. O\'Kelly, Head of Equity Trading, Salomon Smith Barney

\"Ari has proven himself to be a keen coach of world-class traders. The Psychology of Risk is a great read for those looking to better understand what it takes to put oneself at risk in the market.\"

-Kevin Becker, CIO, Claiborne Capital Management, LP

\"Ari Kiev has done it again. One of Wall Street\'s preeminent trading coaches, he explores some useful principles of risk taking which will help traders to take their game to the next level.\"

Jay Goldman, Hedge Fund Manager, Goldman &Co., LP'

With the markets becoming more and more volatile, managing risk is more important than ever. Renowned psychiatrist Ari Kiev bridges the gap between investor psychology and quantitative risk management techniques to present a risk management program that any investor/trader can put to use. Readers will learn how to use a unique model for managing risk that combines quantitative models and money management with behavioral psychology. With a holistic approach to managing risk that offers winning strategies and proven behavioral models, this book allows readers to confidently answer those critical questions every trader must face; how much should I trade, how much can I handle, and when should I get out of a trade.

'Introduction.

PART ONE: THE ESSENTIALS OF RISK TAKING.

Chapter One: Defining Risk.

Considering a New Approach.

Understanding the Psychology.

Identifying the Problems.

Chapter Two: Understanding the Approach.

Making the Commitment.

Setting a Target.

PART TWO: THE PROBLEMS OF RISK.

Chapter Three: Handling Your Emotions.

Defining the Life Principle.

Examining the Emotions of Trading.

Understanding the Stress Response.

Creating a New Life Principle.

Owning Your Responses.

Dealing with Anger.

Maintaining Your Concentration.

Chapter Four: Learning to Let Go.

Battling Perfectionism.

Overcoming Mental Accounting.

Combating Paralysis.

Learning to Become Flexible.

Hoarding Stub Ends.

Considering the Herd.

Releasing the Rationalizations.

Acting Now.

PART THREE: THE PERSONALITIES OF RISK.

Chapter Five: Profiling Passive Traders.

Cautious Traders.

Fearful Traders.

Insecure Traders.

Committing to a Result.

Choosing What You Have.

Discovering What Is Missing.

Chapter Six: Profiling the High-Risk Trader.

The Solutions.

Chapter Seven: Recognizing the Master Trader.

Defining the Master Trader.

Developing Mastery.

Assessing Your Progress.

PART FOUR: THE PRACTICE OF RISK TAKING.

Chapter Eight: Increasing Your Risk.

Understanding the Value of Statistics.

Using Specialized Techniques.

Chapter Nine: Handling Failure . . . and Success.

Recognizing a Breakdown.

Managing the Emotions of Breakdown.

Turning Breakdowns into Breakthroughs.

Recreating the Wins.

Remembering the Plan.

Chapter Ten: Doing the Work.

Discerning the Importance of Data Analysis.

Determining What Is Relevant.

Understanding the Business Model.

Paying Attention to the Catalysts.

Interpreting the Silent Data.

Using Technical Analysis.

Chapter Eleven: Coping with Risk: Coaching, Teamwork, Systems.

Consult a Coach.

Take Advantage of Teamwork.

See About a System.

Conclusion.

Index.'