Hirschhorn: Risk-Averse Traders

(Video: Market coach Doug Hirschhorn, PhD, discusses why he believes traders are risk averse right now.)

Here are 3 reasons I believe this week’s trader temperature is risk averse:

The data is already baked in the markets Despite a bullish outlook based on recent Fed statements, the feeling is that most of upside move is already baked into the markets. That means a slow and steady climb until the year's end. While that may be good for long-term investors, it's not so good for shorter-term traders.

Pay day preoccuption Traders have families and need to lock in paychecks (they get paid at year end).

Lack of New Catalysts A lot of the uncertainty we had before isn't so uncertain anymore. As a result, the risk/reward profile is not nearly as compelling.

In short, staying patient right now is the best trade.

Think better, invest smarter.


Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, 8 Ways to Great (Putnam, 2010).

Have a question for Doug? You can reach him through his Web site, DrDoug.com

Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.