Best of Trading Psychology · Part 1

published on August 2, 2020

Markets speculation and risk this is the chat with traders podcast hosted by aaron field hi traders and welcome to episode 190 this here is another compilation episode so

Just like the best of risk management episodes from a few months back except this time i've compiled some of the best clips on trading psychology again i dug up way too much from the back catalog of

Almost 200 episodes to pack into one episode so this is only part one a part two will follow shortly besides creating a go-to trading psychology resource i hope this

Might also highlight some past episodes that you've not yet heard so before each clip you'll hear i mention the episode number in case you want to go back and listen to the full interview

Plus all episodes can be easily located in the show notes at chatwithtraderscom one nine nine now to get things started this first clip is a gem from the very early days of chat with traders it's taken from episode 8

And it's options madman anand sangvi aka lucci lucci has been on the podcast a couple times and given some of the large panel swings he experiences it's always a treat to hear him talking

Psychology what are some of your best tips to sort of keep a handle on your emotions do you have any sort of advice on the subject that you wish someone shared with you when you're starting out

Yeah yeah and that's the thing like you go through so many different emotional stages of your life you know so so you got to remember like whatever whatever environment that you have

Around you that's what's going to influence your decisions and that's what's going to influence your emotions so for example when i was 23 24 you know i just had a i just had a baby

Uh you know my thing was all about you know how do i how do i make sure i got rent and all that kind of stuff covered every single day you know so so when i went about trading it was all about okay how do i make 4

000 a month how do i make 4 000 a month how do i make you know how do i make this this kind of money a month and i wasn't looking at the big picture i was never looking at the big picture

Um simply because like what my environment decided and you know decided how i was going to live how i was going to make decisions um you know so whatever you're going through

At the time you always have to be bigger than that you know you always have to take a step outside and look at what you're going through and realize that in trading none of that

Shit matters none of it matters and it's so difficult to do this it's so difficult to do this to step away from having to make money to step away from um you know living

Living a certain lifestyle or requiring a certain lifestyle it's so difficult to step away from all this stuff and i would say the one most important thing that i wish somebody told me was that to not

Think about the money when i'm trading you know and and again you know this is not something that you learn overnight but it's something that if you have it in the back of your head when

You're starting you know you're closer to the bigger picture than i was you know so it took me years to figure that out you know and it was all

Always about to your your lifestyle like trading can consume you and does consume a lot of people to the point where they don't leave their houses you know they don't go out they don't

They don't talk to people you know they they become very secluded and lonely and loners you know simply because like they're they're slaves to their p l every single freaking day

You know and that's all it's about and that's not what it's about you know so living a healthy lifestyle and and you know enjoying time with friends whether you're down on your account or down on the year or you're up or

Whatever you know having a life is so important to being on an even keel uh you know when you're sitting there in front of the in front of the computer in front of the trading screen you know so always thinking about that big

Picture uh which again most people stop thinking about it the second they have problems trading or the second they have problems in their environment that they have to

Deal with and then subsequently those problems affect their trading decisions and that's all it is you know most of the most of the bad decisions that you make are a direct result

Of of your environment or you you projecting the problems that you're having in your environment or in your life onto the market onto a market which doesn't give a shit about it we're just

Talking pure probabilities market doesn't care if you got issues you know it doesn't give a damn but you're going to project that onto the market simply because that's what's going on in

Your life that's what you're thinking about you know you're thinking about rent you're thinking about this you're thinking about you know how shitty your life is maybe at that time or how great your life is

At that time you know you're thinking about all those things and you're projecting this onto a probability mechanism a market which doesn't give a shit you know so that's that's the biggest

Thing i could say you know keep thinking about the big picture don't don't fall into the day-to-day you know hustle and bustle of the market all the time realize that the market's not going anywhere there's going to be

Money to make tomorrow the next day the next day the day after that you know so so don't don't get too wrapped up in every tick of of of the markets you know

Still tying him with that emotions and psychology sort of thing how do you keep the confidence up to push on and pull the trigger um after a run of losing trades this one's tough this one's tough man

It's tough it's like it's like it's like taking a bad beat it's always like taking a bad beat it it it takes time everything is about time you know so let's say you get you get

You get a run of bad cars or you get a couple shitty months where you take a bunch of losses uh you know it just takes time it takes time for you to step back and realize what happened and then it takes time for

You to stop being uh depressed like humans have this this this uh innate sort of ability to to to what is it what is the word i'm thinking of self-doubt or to beat

Themselves up you know after something bad happens like humans always go through a period of time where they beat themselves up about it they're like dude i shouldn't have done

This i shouldn't have done this i shouldn't have done this right they kicked themselves in their ass too hard and it takes a while to to to work out of that process and to start feeling more confident about yourself to start

Feeling you know like you actually can do this you know what i mean i mean you know during a period of bad losers you know there's nothing in the world that feels feels as bad i mean again obviously

There's worse situations everywhere but you know it's a horrible feeling in the pit of your stomach you're just like dude can i even do this anymore and it takes time it always takes time to come back out of that scenario and

That's again why it's so important to stay on that even keel to to continue to live your life and enjoy your life and to continue to have other things around you that you're motivated by as well it can't just be about the markets

All the time you know so that will help those uh you know those periods of self-doubt and you know you're beating yourself up depression and all that kind of stuff you know that will help making those

Periods a lot smaller so you can you know automatically bounce back and jump back into the game you know for me it's like it's like two months or three months where i sort of like size down i'm like quiet uh you know and then

Finally once i get once i get a couple of winners i'm you know i'm ready to get back in there next up jared tendler from episode 86 jared is a mental game coach who works

With world champion poker players professional golfers and pool players and traders too with the aim to reduce negative and excessive emotion from decision

Making and i understand that one issue that affects traders or poker players of all levels is something you refer to as tilt would you mind sort of describing uh

What is tilt and how to recognize when you're actually as you call it on tilt sure so so tilt um there's there's kind of a couple definitions for it one was the definition that that was

There before i came into poker which was uh tilt was pretty much any reason for you to play sub-optimally right so you're making decisions that are less than what you'd you would consider to be your best

And so upon studying you know poker players and their descriptions of tilt you know for several years i really realized that you know 80 plus percent of their descriptions tended to be about them getting angry

And making bad decisions and so for me tilt is just another word for saying anger for a lot of poker players they'll say you know tilt is anything as i said less than

Playing your best but but what if you're drunk you know what if you're tired uh what if you're fearful uh you know all of those reasons are gonna be

Are gonna need unique solutions to them so uh you know anger is is really the biggest one uh in trading um i would call the equivalent uh greed and fear uh and maybe to a western

Degree uh uh you know loss of uh of discipline uh they tend to be the place that the words that traders use most often uh to describe their mental game issues when i don't think

That that they're actually experiencing greed nor fear or or a lack of discipline um that it's something more than that but within poker what i did was break down

Seven different types of of tilt or several different types of anger that would exist one was running bad tilt which meant you know players were losing for several days in a row sometimes weeks or months

And and they were you know just getting crazed as a result of it uh and and the the solution to running bad tilt um has to do with the understanding that emotion accumulates over time

Okay the brain has a mechanism by which it can in essence digest emotion right so you have a stressful day you got angry one day uh and so you know you go to bed not in the

Greatest of moods but you wake up the next morning you feel fine right nothing bothering you feel it's like like a normal day where did the emotion go right in essence

The brain has like a stomach that digests the emotion much like it would uh the actual stomach digests food uh but what happens is when there's like a really emotional day you know or then you know you might go to bed and

Your sleep might even be disrupted uh in part because your brain is digesting all that and then when you wake up the next morning you know you don't feel quite right it's almost like an emotional hangover so to

Speak and so when you start that trading day or the poker players you know goes down and starts to play poker again you know they're not starting with like a like an empty cup in a sense right

There their tilt threshold their threshold by which the anger is going to affect their decision-making has has been lowered right or their emotional level has already risen however you want to think about it

And so in essence it's going to take less tilt inducing stuff to get them pissed off to the point where they're going to make bad decisions so so dealing with that accumulated

Emotion becomes really really important and so for traders who have this particular issue one of the best ways that you can start to break apart that accumulated emotion is to do some journaling is to

Write and and the writing the purpose of it first and foremost is to get out of your head what those emotions are right you go have a couple beers at the

End of the day right you're gonna feel better right but are you gonna actually get rid of the emotion probably not right so venting to other people you know has a way of getting the emotion

Out but it's also not as productive so keeping things inside is not a great thing when you vent on paper what you what you do is you give

Yourself a record of the emotional reactions that are occurring and that becomes helpful when you go back and look at it a day or two later and you see like what the hell is going on here

Why am i getting so pissed off and that's an important question to ask regardless of the mental game issue that you're dealing with in particular we're talking about tilt why is it that i'm getting so pissed off

Here is it because i just can't deal with losing this many days in a row and and so then you're able to start to solve things but at a minimum you know you can start to deal with

Running bad by by just getting that emotion out and minimize the accumulation day by day so that you can give yourself a chance to kind of reset uh the next type of tilt i talk about is

Called hate losing tilt i should have actually called it competitive tilt in retrospect because you know like traders poker players you you're going to lose a lot right and and and for people who were

Competitive uh especially those who were athletes or were in any kind of forms of competition earlier in their life they they have more control in those other avenues they've been more

Successful and and so they have more control over winning and losing so not only do they hate losing but now they've entered a profession where losing is built into the fabric of

It and it just pisses them off there's no way around it right there's a lot of competition well what you have to do there is have to really start to understand exactly what it is that you're competing

For you know and and that's how you can start to correct it and and reframe the nature of the competition right and and so you know you can look at your goals as being something that you're competing for

Sometimes confidence or good feelings emotions you know you're competing for uh when you start to understand exactly what what the nature of the competition is you can start to round out some of

The edges that will create those problems um injustice tilt entitlement till are two ones that i've mentioned already today mistake tilt uh revenge tilt kind of

Always a fun one uh you know in in poker that would be a particular player is is just constantly beating you uh or they say something or do something that kind of just annoys you and then they

And then they beat you uh or a particular player who has just gotten the best of you you know time after time after time and they you know now just hearing their that person's

Name gets you pissed off uh you know as i mentioned right trading is is a little bit less personalized than poker is uh but revenge trading definitely exists you know in a way of trying to get the

Market back for screwing you right so maybe less about a person and more about getting the entire market back and then the last one is called desperation tilt

And this is where uh i would say there's there's a line drawn between a performance issue right versus an actual gambling problem and this isn't a very important distinction to make for some

Traders and poker players to make right a performance issue means that that what you're doing uh and actually let me describe first so desperation till basically means that when when you are so desperate to

Recapture your lost uh your losses that you'll pretty much do anything right you're gonna increase your bet size and you're going to enter trades that you have no

You're going to start placing bets in in industries or in names that you don't even know anything about right it's it becomes more pure gambling in a sense that desperation to win overrides

All logic and you do a lot of stupid shit that you're regretful of uh you know the next day or even later in that day when it's a performance issue you can handle those losses you can handle all

The dumb stuff you've done when it's a gambling issue now you're betting with life savings now you're betting with with money that you borrowed from friends now you're now your your life is

Becoming impaired and that's where you've got to really look in the mirror and say you know do i actually have skill in this game or am i just a degenerate gambler and and fortunately

Most of my my clients uh have been in the in the former category where it's a performance issue and we are able to correct it but if somebody has you know a a gambling problem

Like i mentioned i refer them to somebody locally because that's not something that i i work on now i'd like to share with you what i think is a pretty fascinating segment from michael

Samuels on episode 165 michael's an equities guy with a prop trading background who now predominantly trades news flow around mergers and acquisitions and other major

Events can you tell us a little bit about this situation uh with qualcomm and i can't remember who the other company you mentioned was um you know you said this deal is kind

Of falling apart at the moment i mean how are you how are you trading around that you know one of the mistakes that i've made is the uh i'll call it the cost of time being sunk in or time

Sunk cost the more time that i put into something the more money i invest in it the more research i do with it the harder it is for me to change my

Mind on it if that makes any sense so the short story in this again this is 19 months that i'm gonna try to sum up in two minutes the short story is qualcomm tried to buy

This company nxpi they needed nine different con they needed nine different countries to approve this deal eight of the nine countries uh agreed and one country did not

And that was china and what ended up happening was they got it got very wound up and wrapped up in all sorts of different international conflicts that are currently happening

Between the united states in china and trump and you know the prime uh you know and chairman she and i have found myself uh at points you know head spinning

Over this thing and i've gone to drastic measures to try and gain an edge in this and the only result has been that it just made me crazy and you know if you want to i can tell you about some of these drastic measures

Uh sure yeah so you know and again you have to stay within the the confines of legality right you know so the you know there was a point in this story um where the wall street journal broke a

Story that said that qualcomm executives were waiting for the 10-4 from china to fly over there and finalize the deal so in my mind at that point uh the signal that i wanted to see

Was the qualcomm plane taking off from san diego california and going to china and now there's various services that track these sort of private planes but in this case that wasn't possible and the reason that wasn't possible was

Because qualcomm themselves blocks the tail number on their plane so the next thing that the only other option you have then at this point is and again this was a story that i had made up in my head

Uh was that the only way to track this plane is to physically be out there in san diego and watch it take off and so i literally just posted a uh we have something called taskrabbit i

Don't know if you guys have that there but we've got something similar yeah okay so i posted something on taskrabbit and the taskrabbit post read something like um go to this airport and watch this

Plane take off and send me a video of it and and i got a response in about 15 seconds and this woman who was uh you know just a mother of three she would drop her kids off at school

And she would go to the airport and she sat there at the airport for me day after day after day after day and she was probably there for like a week and i had to deal with her and the deal was this i'm gonna pay you x

You know this much a day and if you get a video of this plane taking off i'll give you this bonus money this big bonus money and she calls me a week later and she says it's happening and you know

You're probably wondering well how did i know where the plane was going right that's the big question they have this plane how would i know and the thing is you don't but the way that and again

I was making a lot of this up perhaps um qualcomm has two planes uh one is for short distances and one is for long distances and uh so i was tracking the big one and the big one took off

And she sent me a video on this and of course she sent me the video of this at like 3 45 on a friday where i have 15 minutes to make up my mind of what i want to do with this situation and you know it's it that's the kind of

Stuff that can make you crazy and because you think you have this piece of information that no one has you think well what if it happens this weekend and i don't take advantage of it uh so i had better do that now and not

Only that but i was so mentally wrapped up in this thing i was so like emotionally committed to it like it was a person this trade that i that i wasn't thinking rationally

And of course i ended up putting on a large position the deal is still not happening and uh you know it's it's probably taken a few years off my life just watching this situation

Unfold right man that's a crazy story have you uh have you done things like that in the past like other situations where you've kind of done some i don't know stakeout excessive due

Diligence yeah yeah let's call it that nothing to that extreme okay you know nothing to that extreme i mean a lot of this job in my opinion is you know you could call

It getting lucky but you have to be on these conference calls you have to like be in the game like don't be lazy you know one of the one of the best trades i ever had

I was just i happened to be a bit lucky but i happened to be on this uh lumber liquidators which is sort of like a lumber supply company uh conference call and you know 2014 or 2015

And they happened to mention in the call for you know at complete random that they were going to be uh on the show called 60 minutes which is an investigative journalism show that's sunday and and it was like you

Know a grenade went off in the middle of this call and one of the analysts you know it's an earnings conference call suddenly no one cares about the earnings and and they said well what's you know what

What's the deal why are you going to be on 60 minutes he said well you know i can't really describe you know the contents of it but i will say this i i stand by

The safety of our wood you know which implies oh shit well the whole segment's going gonna be that the wood's not safe and you probably had five to six minutes before this hit you know

The bloomberg wires and all the major news wires and you know in trading that's an eternity five or six minutes is an eternity and you know it's i did great in it but

You look back and you say well man like i could have done this i could have done that but i guess what i'm trying to say is one of the things to always remember is just don't sit on your hands like get in

There like be on every call that you can get on like just just be there so when you got that information how did you actually build a trade around that did you just

Instantly go short the stock or was there something more to it in that situation and again i've replayed this in my head oh i should have done this or i should have done that i mean at that point

The stock was trading for 69 you could have shorted it all you wanted down to let's say there was unlimited you know there was unlimited amount of liquidity in this name until you know

65 and at that point i think it was still like maybe down small on the day and just so you know on monday after that segment the stock opened at 30 so wow you know there's lots of things i

Could have done you know i could have bought puts that were going to expire the following friday and you know before the ball and the puts had exploded there was lots of things i could have done

What i did was just sort the stock out right because in the moment you know when it's happening you just think what's the easiest way for me to get exposure this following clip was recorded at a

Live event which aired on episode 163 with the legend john moulton best known as rambo a nickname and reputation he earned or thrown around huge volume as a spread trader in the pits of the sydney futures

Exchange let's go back to the point you made where you spoke about how it's important to lose it sounds like you've got a few things you want to say about that so

Um let's hear it well it's just my observation the last couple years of my life that um a society in general doesn't really teach people how to lose they teach you how to win winning is

Easy everybody knows how to win you know they see lebron james win a basketball game making the last shot he knows how to win he's a winner winning is easy but is there anything in

Society that teaches you how to lose is there a course at university you take that says hey come take this course we're going to teach you how to lose in general there is what there is one thing that will teach you how to lose

And that's organized sport because an organized sport you will lose okay that's the only thing i can think of that teaches you how to lose other than that you have to figure it out for yourself

You really do and losing is in how you deal with losing is extremely important in trading because winning i'm telling you is easy that's easy it takes care of itself the key to trading is learning and figuring

Out how to take a loss and how you deal with that up here do you hang on to it and let it bother you or do you release it and let it go

All i can say is is that you need to learn from when you're trading you have to learn and you can learn from them from being correct and say i did that correct and you learn from that

And you also learn from when you lose when you lose you have to experience the loss feel it learn from it and spit it out and let it go and focus on the next trade if you hang

On to a loss too long it will pollute you it will not allow you to make the next trade and you have to focus always on the next trade the next trade is the most important trade in the world

Not the last trade or the trade before that but the trade before that just let the trades happen and focus on the now of trading do you have the belief that each trade

Is individual of itself like there might be times where you're actually going through a rough period um do you still treat everybody why are you so negative i'm not that rough period losing hair

Yeah that's the way i've always traded i don't want to use the word high frequency because you guys have algorithms that are high frequency trading algorithms and i'm more of a hands-on trader and

What i'm always doing is i'm focusing on the next trade i don't think about the trade before it and and i'm not analyzing the risk i just took with that previous trade it's just a fucking trade

I don't care you know just put it in the books let's get on to the next trade and because i'm mainly a spread trader so i'm buying here and i'm selling here i'm trading 20 different things all the time on the bid and offer blah blah blah

A lot of times i have no idea what i'm doing i'm just trying to make good trades and then and then the market closes and i go i wonder what my position is let's look at that position calculator i

Look at the position and go well okay i'll get that up on the truck i'll get that up on the charts and see if that looks good oh yeah it looks good on the charts i like that position i might keep that for a day or two

You know like what motivates me to make trades is is when i'm looking at the markets is a lot of different things it has to do with relative value uh it has to do is there a buy program in

The 10 years is there a cell program in the 10 years are these spreads reaching historical levels are we getting their expiration now these spreads historically have a

Tendency to move a certain way go into expiration so there's a lot i'm thinking about when i'm making treads but i don't dwell on what i've done i never dwell on what i've done

Ever when you're talking about learning how to lose i mean i know who's who here has been training let's say less than two years who's been training for more than ten woo

Cool young crowd that's cool so i imagine especially for newer traders that's a very strange concept to put forward yeah learning how to lose how do you actually know if you've

Learned how to lose you stop doing it you you don't lose as much and you lose less frequently and then you say to yourself ah maybe i'm getting this now

Okay um but you're gonna lose so i i don't dwell once again i'm repeating myself but i i i i'm so focused on the next trade this is real zen shit man this is like living in the now and spitting out

What's happening in the past if you're zen buddhist if it is then buddhist here you'll make a fortune trading so what you're trying to do here is you're trying to focus on the absolute

Moment of the price information that you're getting off the screen and that's what you're focused on and everything that's happened before that you can look at it later but if in an active market when you're trading you

Want to be focused on the now of the price action that you're looking at and if you're dwelling on other things that have happened in the past it's gonna it's gonna keep you from from

Doing that it's as simple as that as far as losing is concerned i mean you know like when do you really actually realize that you've lost money well it's when you get your statement the next day and you look

At the total equity at the bottom you say it's like i lost money yesterday but but i don't i don't do that i've gone months and months without looking at my statement to see if i've made or lost any money

I've gone months with that one of the things when i first started trading like a lot of you guys are new traders i had to keep track of how much money was making a daily basis i used to go from chicago

On the chicago northwestern trade up to lake forest every day it's about a 45 to an hour train ride depending whether i'm taking the express train or not and i'd sit down i'd count every trade i made

And figure out exactly how much money i made or lost on the day i did that for a few years right so it's an evolutionary thing when i first started training i really wanted to see how i was doing on

A daily basis right it was important to me then i realized after a period of time that it wasn't so important then i got to a point where i said actually if i can

Completely divorce myself from money i'm going to be a much better trader i know that's hard to do but i'm telling you now if you can if you can get away from the money aspect of trading

And just focus on the market and making good trades you'll have you'll be distracted by less things there you go i mean i just i'm at a point now and i have been for about

15 20 years where i just don't care about the money i i get a monthly statement now i'll look at a monthly chart of where my equity's been and that's it i don't look at daily

Statements that live in nothing i'm focused on on my position and the trades i want to make the trades i'm making what are some of the lessons i know this is a really cliche sort of thing to say but given

Someone like yourself who's been doing this for 40 years i think it might be an interesting subject to go into what are some of the lessons which you would like to pass on to a younger

Group of traders believe in yourself self-belief real big real real big don't quit and never lose all your money it's like a poker game you lose all your money you have to leave the room

Go away come back when you have some more money so yeah and that isn't very simplistic things to say but it's it's really true stay in the game and really believe in yourself it's

It's um it's a real balancing act between having too big of an ego and not having enough of an ego you know and you got to know yourself really well you don't know what your strengths are

And you have to know what your weaknesses are and it's a real game of inner exploration up here and i find it interesting now we're all trading from screens

The screen's over there and i'm here you want to externalize the experience of trading real easy the screen's over there and i'm here but you shouldn't be doing that you should be internalizing the

Experience of what you see on that screen into here internalizing it it's not you against the machine the machine should be part of you metaphorically

The one thing that i found and and about trading and it's the greatest gift that trading ever gave me and it has nothing to do with money it has to do

With freedom up here i knew early in my life i wasn't the type of person who was going to be told what to do i realized i was going to have to find something that i could do for myself i wasn't very good at taking orders or

Working for somebody and initially it was like okay to to do that i need to make some money on my own i'll become a trader okay down the track and i made mistakes i started you know

When i first got some money i started buying stupid things buying stupid things then i realized that owning physical possessions was just going to be a burden to someone like myself i'm no

Good i can't look after things i don't have to change the oil i can't do this i can't do that owning physical possessions is a complete burden so i stopped doing that and then a little bit further down the

Track i realized that the greatest thing the training was going to do for me was freeing up my mind free me up up here i can look at any situation in my life

And treat it honestly and fairly without having to accept anybody else's dogma being shoved down my throat and i like that i love having freedom up here it's a really beautiful feeling and i

Wouldn't trade it for the world and that's that's what money's done for me it's enhanced my um my existence on a lot of different levels and has nothing to do with

Fast cars fast women or any other nonsense i was watching the golf over the weekend and they were at the memorial tournament in ohio and jack nicklaus was there giving a little speech and i

Wrote down what he said he was because i think golf is very similar to trading so one sport that has draws a lot of parallels to trading and he said the following he was talking about hail irwin was another golfer of

Azera who was just receiving a big prize and he referred he said hail irwin is a great manager of himself and the course the analogy here is that a golf course is like the market when you tee off on the first tee what

Are you up against well you're up against how are you going to swing the club what are you thinking in your head how am i going to play today it's very internal

The course how's the wind blowing how fast are the greens how thick is the rough that's the marketplace you can't you that's what you have to deal with when a professional golfer

Tees off he has to deal not only with himself but the golf course every time you turn that machine on you have to deal with yourself and you have to deal with the market very close

Parallels anyway he said hale erwin's a great manager of himself and the course and then he just said this to anybody wanted to hear he said know who you are know your game play within yourself

I wrote it down because i said fuck this is just this is trading this is trading you know what i mean and he said believe in yourself i've already said that to you guys believe in yourself

And he another thing he said that i thought was very fascinating you know he's talking on the tv he said and he's the greatest golfer ever you know he's one he's dominated the sport during his era

And he said i never thought i was the best i never thought i was the best he said i've ever started thinking that way i was absolutely destined to screw up take a

Triple bogey lose the tournament not make the cut so i never thought about being the best to me it was always the challenge to try to be the best i thought that was interesting i thought

I'd pass it on you guys next are a few snippets from the two interviews i've done with mike balafiore c episodes 22 and 162 mike is the co-founder of smb capital a proprietary trading firm

In new york city what were some of the hurdles you had to cross like things that you really struggled with early on just edge you know i think that lots of times people mistake psychology

With a lack of edge people think oh there's something wrong with me there's something wrong with my mind um i think a lot of times just people don't

Understand their edge and they don't have edge and you know look if you make a trade and there's no edge in the trade of course you're going to get upset because you're going to probably lose

Money whereas if you're in a trade where you have edge and you make money um you're not going to necessarily struggle with a lots of the psychological issues because you're going to have made money

So i think that edge is hard and i think people don't even understand how hard it really is you know great traders can barely be right more than 50 percent of the time and

Still be legendary traders can we just go back and pick up on i think it was the first part of that formula you described you mentioned about having a growth mindset can you go into

That a little more what does a growth mindset mean what's that referring to so there's a really great book that we recommend traders read before they actually show up

At our firm and it was written by carol dweck who is a professor and she wrote this book called mindset and a really really great book and and the the book essentially

The hypothesis is that if you come into i'll apply it to trading if you come into trading and you think that your talent and your talent alone is going to

Dictate how you do as a trader that's called a fixed mindset if you come into trading and think well how i'm doing right now is how i'm doing right now

But i can be better tomorrow and if i do abc then i can be a lot better then that's a growth mindset and we found at our firm that the traders who have a growth mindset

Become very very successful traders and a great example of that is at the end of the year this year we ask our traders to come up with their yearly goals and

In 2016 one of our traders who i'm going to talk about their yearly goals in 2018 for this particular trader earned a green shirt and at our firm if you net a million dollars

In trading profits for a year you get a green shirt it's a it's a it's a big honor to be able to hit this hit this level and in 2017 this trader earned a black shirt

And a black shirt is when a trader nets two million dollars plus in trading profits for the year and so uh trader was very successful in 2016 and got even better in 2017 and

When uh he sat down to come up with his yearly goals for 2017 he said bigger picture i'm also thinking about making the incremental steps to be a 10 million dollar a year trader that's

What he wants to be and so he's not settling for being a black sure trader he is starting to think about the things that he needs to do and starting to do the work that he needs to do

To hit that next level in his development that's somebody who has a growth mindset do you find that most people in trading naturally have what you would call a growth mindset no

Absolutely not really um yeah um i i definitely think there are a lot of traders that that have a growth mindset but no i i don't think uh everyone has a growth mindset um i

I also think while it's preferable that people i have a growth mindset people that are traders that are so talented that the fact that they don't have a growth mindset also doesn't stop them

Um but it's but it's highly preferable getting to a seven figure trader how much of it is a mindset factor i know we spoke about having a great growth mindset earlier and that probably

Ties into this but do you think that some people they want to make a million dollars like they can say that but psychologically perhaps doubt their own ability or it

Seems too far beyond the realm of possibility if that's the case how do you overcome that so i've written about this in the past like i call it small wins

And so you don't want to think about going from zero to a million dollars you want to think about going from zero to being able to make fifteen hundred dollars in a month i i actually would take a step back when

You first start trading a very common step is you lose too much money and a real step in progress is to lose less it's a real step in progress and a real step in progress is

To trade flat and a real step in progress is to make fifteen hundred dollars and so um after you make fifteen hundred dollars you set the the next goal maybe i wanna

Make four thousand dollars in a month and then maybe i wanna make ten thousand dollars in a month and so you you want to be thinking about what are the things you need to do to get to that

Next realistic step uh in your development and and it's it it is a process we find on our desk that it takes until year three before uh traders are going to make substantial

P l and you want to come into this game being realistic about your learning curve you can make some money in year one and you can make good money in year two but what we're seeing at our desk guys have

All these resources they get to work with dr steenbarger they get and the best technology in the prop space both on the front end side and you know you can't use our technology unless you

Traded our firm and on the automated side and you get all the coaching and all the mentoring and plenty of capital to use at the firm and it's still and you have these

Experienced traders you can learn from and watch them trade in real time and still take some time to get to to get good at it and you get the firm backing to make sure you can support yourself

Through those through those years but but it still takes some time so i don't think about i don't think about trying to go from you know the one yard line to across the from from the 20-yard line to all the

Way across the field to the other team's goal line i think about how do i go from the 20 to 30 how do i get from the 30 to the 40 how do i get to the third and and just keep plugging away and catch

You put your head down and keep working and it's easy to get from the 20-yard line to the 30-yard line it's really almost impossible to go from the 20-yard line

To scoring a touchdown um so that's what that's what our guys that's what our guys are doing and you know that example that i used with one of our top traders who wants to be a 10 million dollar a year trader

He was a seven-figure trader uh two years ago be before that you know he went from a zero to a four thousand i remember pushing him when he was about a eight to ten

Thousand dollar a a month trader i remember pushing him and challenging him to make thirty thousand dollars in a month and uh getting him to commit to that and i remember him then

And then doing that um and then it got to the point where he netted a million dollars and then he got to the point where he netted over two million and now he's pushing himself to make even

More but he's he's taking those incremental steps and to be a 10 million dollar a year trader he knows he has to take these incremental steps and so focus on those incremental steps that you need to take to get to that next

Level coming up now a clip from episode 174 with nishant porbandarwala nish is a proprietary trader at kirshner trading group in austin texas now this clip is an awesome comeback

Story and it plays in perfectly with the psychological challenges associated with trading you know the story i was telling you that you know i should tell everyone is is the story in 2014

And it was it was a great year for me to start with i was up i was up you know i think i was up 300 000 in the first three months it was a great it was great start of the year and i was

Really happy i was having my first first child and you know my wife was like oh we need to buy a stroller i said yeah buy the best stroller and i was like when you buy this and buy the best you

Know listen it's going to be a good year looks great and then i was playing an imbalanced trade just like i normally do but i didn't i for some reason i didn't get my closing

Print on it so i was in 10 000 uh amgen amgn and i was short 10 000 amgen which i was supposed to cover at the close and i just something happened and i couldn't cover

It and i was elegant sorry yeah and i couldn't cover it and and while i was trying to get out post-market ackman came and said that he wants to

Buy the stock for 150 or 140 a share and the stock was trading that time at about 90 bucks and so even it took me less than i think in 30 seconds i was down 300 000

In in the stock yeah it was just it was crazy i was just sitting at home and trading and basically i lost everything i made for that year um and and i mean just the loss itself was was really hard psychologically

Uh i just had a child you know it was just i think it was it was 15 days after that and i just couldn't believe what happened you know i was still in the days i think when i came down i

Thought of quitting trading because i was like i don't know if i could ever come back from a loss that big uh oh you know how long would it take you know it was just like you know you

Know my whole life was like coming in front of me and you know i was just like i don't know what to do at that moment it was it was it was tough time i was pretty much in tears i called my

My old coach and he kind of told me he's like no just stick in there just don't worry about it just you know just hang in there and i was like okay fine you know what this is the reason i started trading is because i love

Trading and for the passion of trading because this is what i would do every day of my life if i had a chance if i would i would work on weekends if there was

A short of trading on weekends so i said you know what let's just go back to the love of trading and you know forget everything else and i started uh you know trying to make a small comeback i think i remember the

Next month i lost fifteen thousand dollars because i was just not there mentally then slowly i think i started making i think i think maybe like you know five thousand dollars and ten thousand

Dollars and seven thousand ten thousand kind of slowly slowly slowly started chipping in on that loss and then uh i think in about three or four months i found out my father had cancer

Uh so i had to go back to india so i went three or four times to india and i was like dude what else can you know the world throw at me now you know it's like this loss i just had a child my first child my

Father had cancer uh so he passed away in december and by that time i you know i was i was still flying in and out of you know austin tour to bombay uh so i didn't have enough time to even

Trade properly you know i was still i was still you know so much happening at that moment so i kind of you know i think at the end of the year i think this this

Loss happened you know in april and by december i think i had i had i had covered about half my loss i was down still 150 for the year didn't make a paycheck nothing and then comes 2015 so

Uh i think it was 24th or 21st or 21st of august so yeah 21st of august is 21st of august is when i i i finished my loss of hundred and fifty thousand so that's

When i covered all my losses and then 24th is when the flash crash happened all right okay so you can imagine the emotions that i was going through

At that moment in life because i had this crazy loss it took me about a year and a half to recover and i just recovered about three days before the biggest day

In my life that's crazy man there's like a yeah there's something there's something to that story like you know you were you were very close to giving up but you know 12 months

Later you had this massive win on the flash crash which is like just makes your whole career pretty much yeah i mean then you're like okay at least you know now you have enough money to

You know to survive in trading because you know i mean if you don't have money in the bank it's just so hard to trade the way you want to trade you know so always tell people like

Listen you know get a second job do whatever you want but keep some money in the bank so that you have that confidence you're psychologically you're you know strong

And you don't rely only on trading income you know because for a while it's so hard trading is such a hard thing because psychologically mentally everything you know it can screw you up

Pretty badly you know and for me it was like that was it i mean for me it was like that whole 15 16 months ordeal ended up with the high of my life you know so um you learn a lot from all that because

I'm like you know i mean i was pretty much in tears after that after that big big day in 2015 i called my wife and i'm just like you know what a circle this has been and what it's taught me

You know and you know i mean had some big days before that i remember like my my first big day i think was in i think 2007 i think 2007 it was a big day because i made like i think made a hundred thousand

Dollars in one day and i told my friends guys you're gonna party tonight uh yeah i mean listen i was like 20 24 25 i was like dude this is like dude who makes 100k in a day this is like

Epic you know and you're hiding second you're under trading forget second year never seen that kind of money in my life so i'm like listen party guys let's go out and let's drink so i got everyone to a

Restaurant uh just order champagne this you know whatever people want to order us order guys and obviously we're all drunk and this and that i think i spent like a i think twelve

Hundred dollars that night just you know buying drinks for all my friends and then you know uh my biggest loss is obviously in 2015 and 2014 when i lost 300 000 and i'm just like

You know obviously your friends are there for you but you know no one is giving it a thousand dollars back when you want it so yeah it doesn't work yeah so can you kind of

Learn in life that listen let's not celebrate the laws i mean let's not celebrate the highs and let's not you know frown about the lows you know everything will come when the time is

Correct just work hard and you know have the passion for trading which i think is the number one thing for a trader uh if you have the passion you'll do well the money will come automatically and i've always believed

In that so so when i had this big day also i didn't celebrate i just went home and i said you know to my wife i said let's have a drink and that's it i'll now play a part from episode 169

Featuring jack ma jack is a proprietary futures trader and head of mentor capital while he trades government bonds around contract expiry time he mostly trades australian bank bills

Working structures across the yield curve earlier i was talking about psychology in terms of you know believing in um sort of the uncertainty right that anything can happen

You kind of gotta believe that now because if you do believe it then you're not gonna be stubborn when it happens like okay fine that was a it was a 95 five percent trade the five percent happened

Fuck it it happened right and then you can you're at peace with it now i would say the next step is you know you should reward yourself in a way that's consistent in in how how you sort of want to

How where you want your psychology to be right for example you don't want to be just jumping for joy when you make money and going to a deep depression in the corner when you lose money

Right because if you're rewarding yourself based on the money amount of money you've made it's actually better to reward yourself based on the quality of the trade because that will make your actions and

Psychology consistent with where you're trying to be right you don't want to be the guy who just celebrates making money you want to celebrate making good trade if that means

Losing less money you need to celebrate it you know whereas if you make money on a shit trade that's that's what that's where it's really dangerous so how do you how do you differentiate between the two because that could be

That can be quite difficult um i've got a good one um it's been so long that i don't think the firm will care anymore but i never told anyone this earlier right so for example we we trade tier one

Australian domestic data right we try to jump right on that for a second so when i first started and uploading about five months in all right there was one time where we were all waiting for the unemployment

Figure the largest figure in australia right now you don't want to go into that with an outright it's crazy it's and back then it would gap 10 points each way and that's huge

Seeing that most trades you're trying to make one or two um i apparently i i jumped in right when i thought the data was out so the market gapped three prices down right and i was like oh it's out

We're going down you're already in well no i wasn't in yet right so i'm waiting for the figure to come out and then the market this is all within like seconds yeah obviously all right the market moves gapped three prices

Down i go yep it's out so i went and sold and then he paused for what seemed like an eternity it was only probably another second because it was a bit weird i was a wiser pause

And then it collapsed like there's no tomorrow right um it clashed so much i didn't even know what price i got in i had to go check because my dom was refreshing so fast i

Couldn't even see the price now i was lucky because i was right so i made 10 ticks in an instant trade right like it was probably a second what actually happened is

I uh i bet i placed a 10 grand 50 50 bet right that's a shit trade that i made money on yeah okay yeah so so so obviously there's very clear ones and i thought i should sorry because it's funny i mean they'll hear

About it now in the firm but if that went the other way i might not be here talking to you anymore yeah to be really honest man that's crazy yeah you're very lucky that when in your favor

Absolutely to this day i recognized that i got this two things in my career it could have ended my career i'm just so it takes a little luck to get to not get completely crushed but that

Being said i've also had a lot of bad luck i just don't remember those because these are the better stories yeah but that's it as well like you do also have a lot of bad luck as a trader or it

Seems like you have a lot of bad luck that when you do have some good luck it's worth um enjoying it yeah why not you know i i couldn't tell anyone that story because

I figured they might look unfavorably but i'm pretty sure it's fine now well let's hope so because uh a lot of people are soon to hear it what about in examples where it's it's not so obvious just on like sort of

Day-to-day trading yeah i i would say that the probably rule number one and i'm obviously i'm assumed the people who's going to take advice from this are relatively new to trading right

Is following not following your plan right because in the beginning i would i would hop that is gospel you know if you have a plan you know where are you entering or what needs to happen for you to enter a

Trade and then you know were you taking profit were you taking the puke um and and why and what for whatever anything this happened right all of these should should have been planned

Out before you enter a trade now if you enter the trade and you don't follow that plan that's a shit trade it doesn't matter how much money you've just made right um

Now the reason i say is because in the beginning it's more often than not that mid-trade decisions are usually not good ones right whether you're under the pump right and a typical example would be you

You'd you get into what would seem like a short-term trade and it's starting to come close to your stop you know yeah but on a bigger time frame this looks alright so this now has

Turned into long-term trade now no one changes a short-term trade into a launching trade when they're winning right they'll get to your take probably like great happy days i made money to trade work out you only do that when

It's completely going against you so that's a really good example like you don't re in the beginning you don't really want to be changing your plan now if your plan is crap and that's fine

You know then you still need to follow that through because discipline is really important as well having that discipline to follow your plan then when a trades over you're not

In the heat of the moment anymore you can objectively assess your plan maybe it was flawed but that's fine this is why here you're learning you know it's not about making money in the beginning anyway

Yeah and as we're kind of on the the topic of psychology here i did want to ask you how do you deal with uh periods where you're perhaps underperforming and not doing as well as you'd expect to be doing

Um from a p l point of view or from a from a yeah i guess we could sort of talk about both but yeah mostly from a p l point of view like let's say you're just on a bad run and

Yeah i mean i don't know um you know what your bad runs in the past have looked like but let's just say you know there's been two months go by and you've you know you're not really up yeah oh no that's

Yeah um i think i i think um and i read this in in one of these books i can't remember what it was it it says success is perishable

Mastery is not might have been like a book called the trading athlete or something um i find it really important all right because you you know we value ourselves and this could even go to day-to-day

Life right on something you pride yourself in something right you know whether it's your job your money whatever your looks could be anything right how well you dance

Now now if you if you you know if you value yourself based on something that's perishable because you think it's not but you know it can like any physical thing is perishable

Whether it's yeah it's a if it's your house it's your money it's just too much you know your girlfriend or something right then when that perishes you're gonna you're gonna be in a deep

State of distress or whatever it is right so i guess i've always looked at myself and pro prided sorry proud what's how do you say yeah yeah what's the right word there

I don't know right i'll try to pride myself in it yeah yeah is it i think that's the right way so yeah let's go with it prime myself in my abilities right and both the ability to climb out

Of holes like you know piano holes as well as that well okay i've had two you know some bad runs if i if i look at and go was it really

Am i really doing the wrong thing and that's why i asked you to clarify you know that question now if i'm doing the right things by my edge and i've assessed that there's nothing more of my trades it's just that

I've taken on you know two months of 80 20 trays and they've given me two months of 20 outcomes then that actually doesn't really affect me

As much you know i i i really annoy myself when i you know do the wrong things the wrong traits so so therefore i'm like okay i've lost some money or whatnot but i'm still the

Same trader you know therefore i can still hold sort of my head up high and go into it again and just go that was the 20 whereas if i you know if i was pride myself in

My account then maybe not so much after that too so i think that's that's how i deal with it from a psychology point of view i just i really focus on sort of what i can control which is my skill

And how i trade not the market next up a short clip from my interview with tom sosnoff which was episode 87 tom is a former trader he's also the guy who co-founded think or swim

And then sold it to td ameritrade before going on to launch the tastytrade network pretty much i'm just throwing this clip in the mix because it's an opposing view and tom's reaction when asked about

Psychology is kind of hilarious one of the things that a lot of traders are very much into and some even say that it's you know maybe 90 percent of the challenge is trading psychology

I understand you feel very differently about this can you give us some technology is 100 bullshit it's the people like to we we're enablers our society is is you know we we've created a society

Of enablers and so we make people feel feel good about their inept financial abilities their lack of know-how it's it's not because they don't have the right you know um traitor psychology

Or or they're not seeing the right trait or psychologist it's because and most people that are traitor psychologists that i've ever run across have have would have zero value in my

World this is not a you know right brain left brain type thing the reason people aren't successful is because they don't take the time and the commitment to be successful

That's all it is and i'm tired of enabling people and and making trying to make everybody feel good when the industry is conflicted by by the by the true sense this

Industry makes money by managing other people's money and by selling people money and by selling fear and the only way to get around that to change that culture is to develop the know-how yourself and

99 of the people are unwilling to develop that know-how so the idea that there is some traitor psychology out there it's complete bullshit but i mean even operating like a mechanical

Strategy or being very quantitative in your approach uh do you think that there is a certain degree of psychology even though it's not nowhere near 90 percent um do you think

That there's a small part of it that that does come down to your psychology no i think it's mechanics it's like anything else it's almost like

Breathing i think there's a i mean listen if you're talking about ego that's fine because you know everybody has egos if you're talking about you know risk taking and things i don't

Consider that part of your quote psychology i consider that all part of your mechanics now if you want to if you want to consider psychology mechanics then then sure but i don't

And and i think this is a this is a um this is a game that you know that comes down to it comes down to mechanics you said before you didn't play blackjack i don't believe blackjack is a

Game that has there's there's a psychological element to blackjack just like i don't even believe there's a psychological element to um you know to any card game even poker

Or you know or craps or anything else i mean i know people argue that there is in poker but if you've ever watched poker players most of them play by the book and and

When you're playing any other kind of game it is straight by the book so and now we're starting to see even sports has become you know a game of mechanics we used to

Say oh this this head coach or this manager is a genius because he made he pulled the right string or made the right move at this time and the reality right now is everything is becoming

Part of saber metrics and statistics and and of course it's going to go that way because 90 95 percent of time that's going to win every time so no i'm i'm poo pooing the whole

Psychology aspect to it and i'm suggesting that it's a lack of know-how it's a lack of desire and until we get people willing to take on that intellectual challenge you know we'll we'll we'll give

Ourselves a crutch and call it psychology to take us out here in concluding the best of trading psychology part one is dan shapiro and this segment comes from episode 32

Having come up as a prop trader in new york city dan now trades independently and with a focus on high beta names he's also encountered a fair share of setbacks during his career

So you can really appreciate the rawness when he speaks on psychology matters we've talked about how you lost money you know throughout that two-year period um and quite depth so

Let's talk about how you go through losing periods these days sure they're not quite as as dramatic as two years at a time but you know you still go through losing periods i mean everyone does so

How do you stay and i know good spirits how do you how do you keep your head up through losing periods and how do you break out of that yeah that's a great that's a great question aaron

As we previously discussed i i get tons of emails all the time and they're never they're never asking me well what do you think about this chart you know again what i think about a chart is irrelevant um

The question always is how do you make it through man how do you do it how do you mentally stay afloat and you know there there's a there's a great answer to that number one

And here's my advice number one guys turn off your piano turn it off um you know turn it off i i you know i completely i don't even know where my p l box is on my platform turn it off and the

Reason why uh you have to turn off your p l is number one this whole business is or or all uh emotion versus reality right the more you're emotionally

Committed to a trade the more chances than not you're going to completely mistreat it and everything you do in this trade is wrong and everything is going to happen after

The trade is over is probably going to make you angry or angrier because eventually the trade will probably work out your way okay so the first thing you do is turn off your p

L okay uh number one and here's kind of relevant advice here also you want to turn off your p l because if you're having a good day and i hear this all the time dan i have a 30 000 account okay

What should be my goal for the day and my answer to that is your goal for the day is to make it to the next day okay which has nothing to do with your p l and what happens is when you're trading

You're trading well okay if you look at your p l and you say yourself well my goal is a thousand bucks for the day okay you hit your goal within the first hour or so and then i know a lot of

Traders they'll shut off they'll shut off their day for they'll shut off their day right they'll completely shut off the day and they'll leave here's the problem the day that you can

Make their thousand two thousand three thousand five grand whatever it is whatever interval you trade whatever tier size you trade the day you can make that money really really quickly you don't realize it but

You're playing a premium hand you're playing the kings you're playing the jacks you're playing the aces you're playing the queens okay so that day is turning out to be a premium hand

And what you're doing is you're taking a pair of aces and you're putting in a bet of 50 bucks that's basically what you're doing and you're telling the guy on the other that's playing against you i'm all in

For 50 bucks and once you hit that pot you say yourself okay i'm done for the day so you're losing out on a premium hand every professional trader will tell you what we're looking for is premium we're

Looking for those pocket aces okay so the day that you can make two three four five grand for the first 30 minutes 45 minutes you're in a very very bullish scenario playing a premium hand

So the last thing you want to do is say to yourself well i'm up a grand for the day i'm done and you don't realize you that one grand could turn into three thousand could turn into six thousand because it

Turned into ten thousand because you're riding that euphoric euphoric hand you're riding those pocket aces and i don't care how you know how misguided you are everybody eventually

Plays pocket aces and the most important part is if you remove your p l box those pocket aces really turn out to something um on the way down it's even more

Important to turn off your p l i already know on my tier size let's you know let on my tier size and let's just use any any let's just use a thousand sure lots just make it easier

I already understand if i'm putting on a trade and the stock goes a dollar against me i know i know mentally i mean i know i can do the math you know put on a thousand shares dollar you know

Down a point you're down a grand okay but mentally if you see it visually if you see it that thousand turns into a hundred might as well turn into a hundred thousand because your next trade

You don't want to get down 1200 you don't want to get down 1500 so what you're going to do is you're gonna you're gonna trade the p l and not trade the setup okay so you could be looking at a five star setup a

Stock comes out of a two-month range comes out you know takes a 20-30 cent spike comes back into your you know turn comes back into your entry goes down 10-15 cents you're already

Down a grand you're mentally already distraught you sell the position the 10 15 cent loss next thing you know 35 seconds later the stock's at the highs of the day so you're mentally already destroyed

You're done you're done once you're once you're trading your p l instead of the setup you might as well you might as well you know wrap it up for the day because nothing good is ever going to

Happen when you're trading the p l and the more deeper and deeper you get into the day the more erratic mistakes you're doing the more eager you are the more you're if you're a man

The more testosterone levels are rising okay and all you're doing is committing further and further into emotionally protecting your p l and not trading

Uh trading the setup the proper way so that's my kind of my first tip everybody goes through slumps okay everybody goes through slumps i've had i had a week um two months ago okay two months ago i

Went from having one of my top three biggest weeks to prior prior you know prior week to just not getting anything going i mean i went through monday through thursday i couldn't make

A dime i wasn't really losing any money i just couldn't make a dime like everything was wrong right everything was wrong stocks were snapping back out of breaking down out of bottom channels on shorts

Stocks were getting rejected on longs there was reload sellers all my longs there were reload buyers on my shorts just nothing went right you know nothing went right and i sat

There you know i sat there a couple days i started laughing there's nothing eventually start laughing you you can't you know you can't take this business um you can't take this business to heart

Okay you can't think that this is this is you know every bad thing is pointed at you okay you'll go through these horrific times that you can't get anything going

You'll go through these horrific times like perfect example i i last year about about a year ago i don't know if you any any listeners remember there was a huge run into the clothes on clothes on these

Ag stocks these potash and intrepid potash and all these stupid things and i took um intrepid potash overnight and the whole group was like down 25 the next day the next day i mean it was i was like

What wait wait you tell me there's no specific company news and i'm down four bucks on this trade which is insane and mentally i was like well i could try to make this money back today okay let me see what the market gives me

Today okay let me see because i i've learned long enough the revenge trade does not work okay any time you have any type of raw emotion going into a trade you're going to mess it up

Okay so what i learned a long time ago is there's not one event bad event in your trading career that should be able to take you out of your game okay

Uh things happen all the time stocks get downgraded uh bad you know fda news you know i try not to trade a lot of biotech especially overnight um because they blow up all the time um

But the most important part of everything is i understand the highs and lows of this business because what i went through after after 9 11 so for me when i go on a really big hot

Streak i i'm not impressed because i expect to make money obviously uh every trade that i put on i feel like i'm gonna make money i feel there's certain days

Um i can walk on water and then there's days i can't get anything going you know what i mean in those days you just say to yourself you know what it just wasn't meant to be you don't

Need to keep on piling on positions i could feel i could figure out within the first 30 minutes if i'm gonna have value in the day uh so if i'm rolling the first couple of

Trades what's the point of me keep on piling it on right because it escalates it escalates very very quickly you could go from being down three grand to be down eight grand eight

Grand turns into 14 14 turns into 21 what's the point cut yourself off understand this you're not getting a premium hand okay uh emotionally there's nothing you can do you can't cry

Your money back to you okay um so you know but the most important part when you go through a slump okay just realize that you know sometimes the easiest thing to do

Is just take a step back okay take a step back just watch the market watch the watch the order flow sometimes order flow won't translate into what's going on on the surface

It just won't because order flow most of the time will not be organic okay and that's where social media that a lot of these people you know tout and hype these stocks for

Everybody to jump in you know all that stuff uh so you got to just take a step back and just say hey look you know it's just not my day maybe it's not my two days but you know what i know what i

Know what i need i know what i want and until i get those premium hands there's no point to do it um the problem a lot of traders have is just they can't accept defeat okay and there's a bigger you know

There's a bigger there's a big picture there okay and you go back into the theory of war right there's plenty of battles that are lost right plenty of battles battles are lost

All the time the most important thing is to win the war so i could lose a battle right i could fight with tesla and you know there's a reload seller sitting there at the top of the range

And it just the guy won't let go the guy won't let go and you know what i'll figure that apart out you know once it breaks the range i'll get out i'll take my loss but i'm not gonna lose the war on one trade

And i see it all the time that many traders are so fixated about being right instead of fixated about trading properly and that snowballs into day after day after

Day until they realize you know what this is just not for me and the saddest part about the whole trading cycle is people will most people will never

Uh trade up to their potential okay because they won't give themselves a chance to playing those premium hands and they take everything to heart and they believe

That everything they do is the result of bad things just everything bad you know some somebody just has this evil eye on you and the reality is you know what the market

Most of the times won't get you will give you what you want most of the times it won't celebrate your existence all the market wants to do is take your money and take your confidence because

Remember i could go on and this is this is a very important point i could go on a run three weeks in a row right three weeks ago have a magnificent run and this is how fragile our us traders

Are you can go two days without making money and you've completely lost your confidence think about that think about how many times trade traders have done that you could go on a three week run doing the

Same thing every day every day every day every day you lose money two days in a row you start questioning everything you did for your whole career okay and i say this all the time

You don't lose your confidence it gets transferred to another trader okay it gets transferred to another trader okay because you can't lose something that is obviously shown you promise or

Prosperity in the past you're just a product of what's happening in the moment and just sometimes we can't control what we see in the markets so

Instead of snowballing it letting it go out two three five days take a step back you know do something nice for yourself okay get a massage okay go to the beach go to the pool go to the sauna do

Something nice for yourself okay um and when you clear your head you come back just watch the order flow is it telling you the same thing that it told you two weeks ago

Is it telling you the same thing hell that it told you two days ago what's different about this tape today that was indifferent from a week ago okay and little by little when you take the step back

You finally kind of see it in a weird way you kind of see it and once you see it you can start making adjustments and remember at the end of the day everything we do is all adjustments it's one big

Adjustment you've reached the end of this episode of chat with traders but rest assured there are more episodes loaded with real market insight and zero hype on the way soon

So to stay updated with each great new release subscribe to the podcast and itunes and we'd love it if you leave a rating and review we'll catch you next time on chat with traders

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