hit a pre-split-adjusted price of 110 last April, David Berry, a Minneapolis business owner and daytrader, thought it had run up too far. So he shorted the stock, meaning he borrowed shares in the hope that the price would fall, which would enable him to buy back the shares at a lower price and pocket the difference.
Instead, the opposite happened. The next day, Net.B@nk shot to 140. The day after, it hit 155; the day after that, 170. He covered his short, swallowing a loss of about $40,000, then watched the stock surge to 255.
"After that, I could not trade," he recalls. "Psychologically, I had been hurt so bad from that one trade, I could not hit the button, could not think."
Two months later, he met Robin Dayne, the trader's coach. Employing confidence-building techniques sharpened during eight years working with self-help guru
and trading expertise honed at New York's
, Dayne helped Berry erase his fear.
Berry anted up nearly $3,000 to attend one of Dayne's seminars, at which she publicly led him through one of her psychological exercises. He spent another $1,000 for related materials. The seminar and materials were worth every penny, he says.
"Psychologically, she helped me get through that time," he says. "That's her angle. Everyone else is fixed on how to manage your money or how to execute a trade."
Dayne is quickly earning a reputation as the person to call when trading turns troublesome. Her
growing business includes coaching by phone, private sessions and Internet-based classes and seminars, all of which focus on the psychology behind trading.
Trader Coaching: 1999's Version of the Shrink
The increasing recognition that the daytrading industry needs to educate users coincides with a rise in coaching services for trader's psychological needs. Some firms, such as
outside of Washington, have hired in-house trainers who also act as coaches. They not only participate in the training of new traders, but also are available to address the psychological aspects that are so important in the trading game.
"The discipline that good traders have is awesome," says Dr. Stephen Boren, Microtrade's in-house coach. A clinical psychologist by background and daytrader by current trade, he says his goal is to make traders more effective through training sessions as well as one-on-one sessions, which he offers separately -- for a fee, of course.
It was while she was working with Tony Robbins about six years ago that Dayne met the first trader she worked with. That trader's subsequent success prompted other traders to call Dayne. She hadn't a clue what daytrading was, but quickly realized that those she helped were making heaps of cash. Eventually she struck a trade with Broadway: She'd coach 10 of Broadway's highest-potential traders in exchange for trading lessons. She learned the mechanics but was still lost, she says, even though she had some winning days. So she struck another deal -- for two years, she documented every move the traders made, rewriting Broadway's training manual in the process.
That background proved invaluable. "It helps for a coach to be a trader," says Lawrence Black, a young trader profiled in
Washington Post Magazine
earlier this year. "I can't think of anything similar in terms of having to perform every day with large amounts of money on the line. It helps to know the emotions."
Those emotions can quickly become a trader's bane. "It takes ego to have the confidence that you can take money out of the market" says Tony Oz, a daytrader and author of
Stock Trading Wizard
. Conversely, he says, "when you trade for a living you have to admit you are wrong on a daily basis."
A two-time champion wrestler who now runs a computer business in addition to his trading, Berry is a classic example of someone who hates to lose. "If they have one loss on top of another," Dayne says, people "tend to stack that emotion." The word she hears most often in this case is "paralysis," she says. "That starts all of the problems."
The four biggest threats to successful trading Dayne encounters in her coaching calls are buying at the top, chasing a stock, getting out too early or not sticking to a decision to cut losses.
So what exactly does she do? Dayne's techniques are based on the theories of neuro-linguistics, which focus on the relationship among the mind, language, emotions and patterns of behavior. Her process breaks the association between an event and the brain's reaction. Although she declines to make too many details of her method public, she talked a reporter through the technique she calls "scramble." It's simple, radical and thoroughly surprising.
For example, after a loss or a series of losses, fear builds up in the brain as a sort of protective measure against pain, Dayne says. Her scramble technique "literally breaks the connection between the event and the emotion." In other words, after the client is "scrambled," what pops into her head is what was learned during the scramble rather than the original painful memory. "It's very strange, but it works 10 years of therapy in 10 minutes," she says.
Her method breaks the habit of using metaphors. When traders "start saying 'I can't do this,' they build up a place of tremendous fear, but if they learn to say 'I can do this,' it conditions them in the right direction," she says.
So far, she's put 1,500 people through her process. Says Berry: "When I got scrambled, I had to do it in front of the whole class -- it was totally humiliating. Now, when I think of it, I laugh every time -- and my trading has been much more successful."
Dayne runs her coaching business from her home in Nashua, N.H. Her disciplined routine includes doing about four hours of trading a day and limiting clients to 15 a week. She'll only take two coaching calls a day during trading hours, and charges more -- $100 per call vs. $75 off-hours -- for that time. Her cross-country seminars are immensely popular. She's got two left this year: one later this month in New York City and in early December near Palm Beach, Fla. And nearly all of next year's slots are already sold out. People come to her to get "scrambled," to change the way they approach their trading. As she says, "It's like 10 years of therapy in 10 minutes."
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