How I Beat the Mental Game of Trading [After 5 Years of Failure]

Summary

The video script delves into the psychological challenges of trading, highlighting how our evolutionary instincts for survival conflict with the patience and discipline required for profitable trading. It discusses common pitfalls like revenge trading and loss aversion, and offers strategies to overcome these issues, such as establishing a pre-trade plan, maintaining a trading journal, and developing a risk management plan. The goal is to help traders rewire their brains to associate trading with positive outcomes rather than pain, ultimately improving their chances of success.

Takeaways

• 🧠 Trading is difficult because our brains are wired for survival, not for the patience and discipline required in trading.
• 💸 The desire to trade often stems from a subconscious link to financial survival and the pursuit of unlimited income and freedom.
• 📉 Many traders fail because they are not following a proven strategy and are instead driven by emotional responses to market movements.
• 🔄 After a loss, the instinctive reaction is to 'fix' the situation by taking another trade, which often leads to more losses.
• 🎯 To become profitable, traders must move from hoping not to lose to strategically planning to win with a high degree of confidence.
• 📝 Writing a daily contract can help enforce discipline by committing to only take trades that adhere to a defined set of rules.
• 🏋️‍♂️ Establishing a good habit after a loss, such as exercising or a different activity, can interrupt the cycle of revenge trading.
• ⏰ It's crucial to never enter a trade without having a predefined stop loss, take profit, and entry point.
• 🚫 Avoid adjusting stop losses and take profits unnecessarily as it indicates a lack of a solid trading system.
• 📉 Loss aversion can lead to a host of bad trading habits, including taking profits too early and letting losses run.
• 📊 A risk management plan is essential to limit daily losses and ensure that wins outweigh losses over time.

Q & A

Why is it difficult for many traders to adhere to their trading rules?

Many traders struggle to adhere to their trading rules because of psychological factors deeply ingrained in human nature. These include tendencies towards revenge trading, impulsive market ordering, chasing prices, and frequently changing stop limits, which often stem from an emotional rather than a rational approach to trading.

What is meant by 'revenge trading' in the context of the script?

Revenge trading refers to the behavior where a trader, after experiencing a loss, makes impulsive trades in an attempt to recoup the loss quickly, often leading to more losses due to a lack of planning and emotional decision-making.

How does the human evolutionary instinct for survival conflict with the principles of successful trading?

The human brain has evolved to prioritize survival, which can conflict with successful trading. This is because the brain associates trading losses with a threat to survival, triggering an emotional response that can lead to poor trading decisions like revenge trading or overtrading.

What is the significance of the 'rock bottom' mentality mentioned in the script?

The 'rock bottom' mentality refers to the trader's belief that they have reached their lowest point and will change their behavior. However, the script suggests that this mindset often fails to lead to lasting change without addressing the psychological aspects of trading.

Why do traders often attribute their losses to the strategy rather than their psychology?

Traders often attribute their losses to the strategy because it is easier to accept than facing the more complex psychological issues at play. It is a way to externalize blame and avoid confronting the harder truth that their own emotional responses may be the real problem.

What role does the human desire for freedom and uncapped income play in attracting people to trading?

The desire for freedom and uncapped income is a significant factor attracting people to trading because it represents a potential escape from the limitations of a 9-to-5 job and a capped salary. This links trading success to survival needs, amplifying the emotional stakes involved.

What is loss aversion and how does it affect trading decisions?

Loss aversion is a psychological bias where individuals become more sensitive to avoiding losses than acquiring equivalent gains. In trading, this can lead to risk-averse behavior, such as closing profitable trades too early or holding onto losing trades in the hope of breaking even, which can undermine profitability.

Why is it recommended to not move stop limits once set?

Moving stop limits once set can indicate a lack of a mechanical system or an emotional response to market fluctuations. It is recommended to keep stop limits static to adhere to a trading plan and avoid making impulsive decisions based on fear or hope.

How can associating clicking with losing help in trading discipline?

Associating clicking with losing can serve as a Pavlovian response to avoid impulsive trading after a loss. It helps create a mental link between hasty actions and negative outcomes, potentially reducing the frequency of unconsidered trades.

What is the importance of having a risk management plan in trading?

A risk management plan is crucial for limiting losses and ensuring that traders do not overexpose themselves to risk after a losing trade. It helps maintain discipline by setting clear rules for when to stop trading for the day after a certain loss is reached.

What are some practical tips given in the script to overcome psychological pitfalls in trading?

The script suggests signing a daily contract with oneself to adhere to trading rules, recalling every trade taken, not moving stop limits, equating clicking with losing, implementing good habits after a loss, writing a summary of the trading session, and having a risk management plan.

Outlines

00:00

💡 Overcoming Trading Psychology

The speaker discusses the difficulty traders face in adhering to their trading rules and the tendency to engage in revenge trading and poor decision-making. They emphasize that the root of these issues is psychological, stemming from our brain's evolution focused on survival. The speaker shares their journey to becoming a profitable trader and the importance of understanding the psychological aspects of trading to avoid common pitfalls like chasing prices and frequently changing strategies.

05:02

🧠 The Human Brain's Role in Trading Failures

This paragraph delves into why our brains, evolved for survival, are ill-suited for trading. The speaker explains that the instinct to solve problems when faced with a loss leads traders to make impulsive decisions, like taking another trade immediately after a loss. They compare this to the behavior of a hunter who would not recklessly shoot after missing a target but would instead reposition and plan. The speaker suggests that associating clicking with losing can help curb the urge to trade impulsively after a loss.

10:03

🏃‍♂️ The Dangers of Revenge Trading

Here, the speaker outlines the concept of loss aversion, which is the fear of losing that develops over time from poor trading habits. They describe how this fear can lead to more losses and a cycle of pain and avoidance. The speaker also discusses how this aversion can lead to worse habits, such as removing stop limits and taking profits too early, all driven by the desire to avoid pain and get back to a neutral position.

15:04

🧘 Rewiring the Brain for Better Trading

The speaker suggests that while it's hard to suppress emotions, one can rewire their brain through practices like cognitive behavioral therapy. They recommend creating associations in the mind, such as linking clicking with losing, to avoid impulsive trading. The speaker also advises traders to have a back-tested strategy and to stick to it, as most problems for new traders are not psychological but rather due to trading outside of a proven strategy.

20:05

📝 Developing Good Trading Habits

In this paragraph, the speaker provides practical tips for traders to improve their trading habits. They suggest signing a contract with oneself each morning to adhere to trading rules, not moving stop limits, and equating clicking with losing to reduce impulsive trades. They also recommend implementing good habits after a loss, such as exercising or engaging in a hobby, and writing a summary of each trading session to reinforce good practices.

25:06

💼 Risk Management for Sustainable Trading

The speaker concludes by emphasizing the importance of having a risk management plan. They suggest setting limits for the day, such as risking a certain amount to make a certain profit, and stopping trading after one loss. The speaker illustrates how this approach can lead to compounded gains and limited losses, encouraging traders to think strategically rather than emotionally about their trades.

Keywords

💡Revenge trading

Revenge trading refers to the act of making impulsive trades in an attempt to recoup losses from previous trades. In the video, it is described as a common mistake among traders who let their emotions drive their decisions after experiencing a loss. The speaker warns against this behavior, illustrating how it can lead to a cycle of poor decision-making and further losses.

💡Market ordering

Market ordering is the act of immediately buying or selling a security at the best available current market price. The video discusses how traders might resort to market ordering out of desperation or impulsiveness, rather than planning their trades, which can result in poor entries and increased risk.

💡Stop limit

A stop limit is an order placed to sell a security when it reaches a certain price, with the sale occurring at the next available price or better. The video mentions how some traders might keep moving their stop limits, which can be a sign of poor trade management and an emotional response to market fluctuations.

💡Psychological aspect

The psychological aspect of trading pertains to the emotional and cognitive factors that influence a trader's behavior. The video emphasizes that overcoming psychological hurdles is crucial for becoming a profitable trader, as our natural human instincts often conflict with the disciplined approach required for successful trading.

💡Loss aversion

Loss aversion is a psychological bias where people prefer avoiding losses to acquiring equivalent gains. The script describes how loss aversion can lead traders to make conservative decisions, focusing on not losing money rather than maximizing profits, which can hinder their trading success.

💡Risk management

Risk management in trading involves the strategies used to limit potential losses and protect profits. The video suggests having a risk management plan is essential, such as setting limits for daily losses or adhering to a specific risk-to-reward ratio, to prevent emotional decisions and maintain discipline.

💡Emotion-driven trading

Emotion-driven trading is when decisions are made based on feelings rather than logical analysis. The speaker in the video argues that this is a major pitfall for traders, as it leads to decisions like revenge trading and impulsive market orders, which can be detrimental to long-term profitability.

💡Backtested strategy

A backtested strategy is a trading strategy that has been analyzed using historical market data to evaluate its potential performance. The video encourages traders to find and stick to a backtested strategy to ensure that their trades are based on proven methods rather than on-the-fly decisions.

💡Survival instinct

The survival instinct is an innate drive to stay alive, which has been deeply ingrained in humans through evolution. The script discusses how this instinct can interfere with trading by triggering a fight-or-flight response to losses, leading traders to make hasty decisions in an attempt to 'survive' financially.

💡Evolutionary programming

Evolutionary programming refers to the way our brains have developed over millions of years to promote survival. The video explains that our evolutionary programming is at odds with the patience and discipline required for trading, as it predisposes us to make quick, emotional decisions rather than calculated, rational ones.

💡Pavlovian response

A Pavlovian response is a conditioned reflex or reaction that occurs in response to a stimulus. In the context of the video, the speaker describes how traders might develop a Pavlovian association between the sound of a stop limit being hit and the urge to make another trade, which can lead to a cycle of loss.

Highlights

The psychological aspect of trading is crucial for becoming profitable.

Humans are naturally bad traders due to our evolutionary programming for survival.

Revenge trading and market ordering instead of planning trades are common mistakes.

Chasing price and getting bad entries lead to terrible stop losses.

The belief that changing strategies will solve trading issues is a misconception.

Our brains are hardwired to associate trading with survival, causing emotional responses to losses.

The desire to solve problems quickly leads to impulsive trading decisions.

Loss aversion develops over time, causing traders to fear losses more than they seek wins.

The first trade after a loss is often the most dangerous and least informed.

To overcome psychological pitfalls, create a contract with trading rules and sign it daily.

After a loss, engage in a positive habit to break the cycle of revenge trading.

Never move stop limits once set, unless as part of a predefined strategy.

Having a risk management plan is essential for limiting losses and compounding gains.

Successful traders need to rewire their brains to associate trading with a profitable strategy, not pain.

It's important to recall every trade taken in a session to reinforce good habits.

A summary of each trading session can help traders improve by recognizing emotional patterns.

Transcripts

why is it so hard to stick to your

trading rules why do you keep blowing

account after account telling yourself

each and every time this is my rock

bottom you tell yourself this but you

keep doing it you keep Revenge trading

you keep Market ordering in as opposed

to planning your trades you keep chasing

price you keep getting bad entries which

lead to terrible stop limits you keep

moving your stop limit you keep looking

for strategy after strategy conning

yourself into thinking that the problem

is the strategy it's not the psychology

the harsh truth about this is that you

cannot become a profitable Trader

without overcoming this specific aspect

of trading which is the psychological

aspect right now the reason that we are

terrible Traders by Nature all of us

including me including your favorite

Trader right professional or online Guru

the reason that that that we are all bad

Traders is because we are human the

answer is a lot simpler than you think

it is it is based in the makeup of our

brains our brains have been evolved ing

for millions of years right and they're

evolved to do what to survive that is

why I'm talking to you in front of this

camera today is because we survived as a

species over millions and millions of

years the problem is our brains are

programmed to survive right to keep our

species Alive Now why is this bad for

trading you might think that this might

you know not affect trading at all or

you might think that trading is not has

nothing to do with the way that we've

survived for millions of years and you

couldn't be more wrong so in this video

is just going to be a raw video talking

to you about some of the lessons that

I've learned in Psychology over the

years it took me years to overcome this

to become a profitable Trader it took me

years to get to a point where I'm making

five figures let alone six figures as a

Trader right it took me years to not

lose and hopefully in this video I'm

going to shed light on and make you

understand really what parts of the

human psychology are working when you

are you know Revenge trading or or when

you shooting yourself in the foot when

you are going down a path that is

emotional and not psychological right as

I said the harsh truth is that you have

to overcome this aspect of your trading

but the good news is that you can

overcome it now why do most Traders lose

you you see this statistic all the time

right people throw out 99% some people

throw out 95% some people throw out 90%

no one really comes under 90% because it

is a high percentage of traders that

lose let me ask you this if it was just

a matter of guessing price don't you

think that you would be right 50% of the

time right if you think of it as a coin

flip where it's just is price going to

go up or is price going to go down you

only have two choices right you can

either long it or short it so you would

think that it would be somewhat around a

coin flip any any 50-50 proposition that

I give you if we do it enough times you

will get closer to

50/50 but why is it that 90% plus of

Traders lose it's because we are all

human there is nothing wrong with you

per se there is something wrong with you

as a

Traer but there's nothing wrong with you

as a human it means your brain is firing

as it should be so what is going on and

how do we undo this or better yet uh not

let it affect us as much because you're

not going to be able to undo it

perfectly right but you can undo it at

least as it relates to trading to where

you are now taking a different path

towards profitability first it's

important to understand why humans are

attracted to trading you might as as I

told you in the beginning you might

think to yourself trading has nothing to

do with survival why is why are our

brains and the way that our brains work

inextricably tied to failing at trading

well let's take a step back why are

people attracted to trading right people

are attracted to trading because most of

of human most of humans on Earth are

stuck in some sort of rat race right

they're salary is capped their freedom

is capped right they they don't have a

ton of freedom because they're likely

working a 9 to-5 their salary is Cap

because you can't just go every single

day and ask your boss for more money

well you can but you know what the

result will be right but all of these

things are capped and once someone

discovers trading or they see other

traders that are successful they see the

possibilities of what trading can bring

to them they start linking that to

survival because it is a literal ATM

machine obviously once you become

profitable and go through years of

hardship years of training years of

market experience but people can see the

outcome and now with social media they

could see it more than ever right they

see the outcome of profitable trading

they see the payouts they see the

account balances they see the lifestyle

so you automatically link that to

survival as a human being because it is

above and beyond most likely for most

people it is above and beyond what you

are doing now right like the reason that

Jeff Bezos and Elon Musk the reason that

they're not attracted to trading as in

day

trading is because they don't need it

it's not part of their survival right

they they they're not capped in a way

that 99.9% of human beings are so being

that you are a human being with

limitations in your life as it relates

to the amount of money you can make and

as it relates to the freedoms that you

have you automatically associate Trading

or success at trading with survival your

mind starts bursting with possibilities

right and and IM imagined uh outcomes

what what could my life look like if I

just succeeded at this one thing I need

to do it what could my life look like

how different could it be how different

could my family's life be right so you

can easily see now you know at least if

you didn't think so before you can at

least see the connection now between

trading and survival but as I told you

at the outset our brains have been

evolving for millions of years and

everything in trading is an is

antithetical to the way that our brains

have been programm see now that we've

linked trading to

survival you could see easily how losing

can can feel to your brain can feel like

not surviving so what happens when you

lose right what happens when you lose in

trading when you lose in an aspect of

life that your brain now links to

survival well you're a human being right

we didn't we didn't survive millions of

years by not being problem solvers so in

Our Minds when we lose we try to solve

the problem the problem with this is

that we are sitting in front of our

desks with a mouse that has one button

on it and all we could do is take

another trade right that at least that's

what you think for now all you could do

is take another trade so when your brain

when your brain uh experiences that loss

and your emotional being experiences

that loss you automatically go into

problem solving mode right because you

are now panicking since your survival is

at threat the problem with this is that

you think problem solving means taking

another trade I have to fix this or I

won't survive I have to fix this or my

chances of survival are at stake I have

to fix this or the life that I've been

imagining of uncapped money and uncapped

Freedom will not happen for me and my

family so I have to fix this so

automatically you take another trade now

imagine a hunter right imagine a hunter

is puts his sights on an animal right

we're in the wild we lived in the wild

for millions of years we've only been at

desks for you know a few hundred years

so in the wild imagine that you're going

after a kill and you miss your first

Target right you miss the the animal

that that's in front of you there are

animals grazing around in the perimeter

but you missed the first one what do you

do then do you just jump up out of your

hole that you've been hiding in and

start firing indiscriminately at all at

all the animals no you don't because

they're all run they'll all you'll be

exposed all the animals will run away

and you'll never get a kill this is what

Revenge trading is like right this is

what Revenge trading is like what would

you do if you were a hunter if you miss

the the first uh kill but you see that

there are still other animals in your

vicinity well you would reposition

yourself you if the first animal ran

away then you might you know set your

sights on another one that's in distance

you might calculate okay this one is a

little closer than the other one was so

that means that I have to adjust my aim

but I still have to maintain my calm

maintain quiet because I cannot go home

without food so when we enter a trade

taking another one immediately is not

the answer as a matter of fact I bet if

you kept statistics on the trade that

you took after the losing one I bet you

it wouldn't even crack 5% right it

wouldn't even crack 5% success meaning

that after you take a loss say your stop

limit gets hit and you immediately enter

another trade I guarantee you that the

success of those trades that you've

taken will not even crack a 5% win rate

see the most dangerous trade that you

take is the one right after a losing

trade it's the one that is the least

informed that has the least amount of

thought it is all emotion

it is the most dangerous trade that you

take so one of the things that that I've

managed to do over the years was in my

mind Mak an association between clicking

and losing meaning if I if I if my stop

limit hits the last thing I should do is

click to enter another trade right that

trade is a losing trade I automatically

equate if I hear that sound that goes

off when my stop limit hits I I

automatically it's like pavlovian right

I automatically equate the next trade

that I take immediately after as a

losing trade right now in the beginning

I will give you some some tips on on

what to do actually let's keep it till

the end I will give you some tips on

what to do how to resolve some of these

inefficiencies that have been programmed

in our brain but here's why going down

this Path of Revenge trading is so

dangerous because after weeks months

years of doing it you start to develop

something called loss aversion now what

is loss aversion verion loss aversion is

exactly what it sounds like it's when

you are scared of losing right and I bet

you because you're watching this right I

bet you are most likely an unprofitable

Trader and I'm not trying to denigrate

you I'm not uh insulting you so stop me

if I'm lying but again you're probably

an unprofitable Trader and I bet when

you enter a trade your gut feeling your

gut reaction when you enter a

trade the first thing you say to

yourself is I hope I don't lose this

trade or man I hope my my stop doesn't

get hit I think my stop Lim is going to

get hit I hate when my stop limit gets

hit and I guarantee you that you're not

saying time and time again when you

enter a trade I guarantee you're not

saying oh I know what the stats are in

the setup this is my preferred setup

this is my a it has all of the trappings

of an A+ trade according to my rules my

back tested strategy I know this setup

and if I wait until price gets to my

entry then I'll be fine right if I wait

until price gets to my entry I know

likely what's going to happen with a 65%

or 7 70% degree of confidence that the

trade is going to hit I guarantee you're

not thinking on those terms and you

cannot be a profitable Trader until you

get to that point so the problem with

Revenge trading or the problem with

entering trades rushing your your

entries chasing price Etc all this stuff

the problem with all this stuff is that

it builds over time weeks months years

of what we call loss aversion so now you

are all you are doing is entering a

trade hoping you don't lose you're no

longer entering a trade to maximize your

profits and build your account up right

you were entering a trade hoping not to

lose so now you associate trading with

pain you still see the possibilities

right and especially if you're on social

media you still see the possibilities of

what trading can bring so you keep doing

it a lot of people do quit a lot of

people don't right years they don't quit

but now you associate trade ING with

pain and this is the worst place that

you can be in and everybody successful

or not has been in this place right but

I'm hoping again to shed light on this

so that when it's happening when you are

doing these bad habits you can see it in

real time like Neo from The Matrix and

you can stop yourself right and I will

give you tips on on things you can do uh

in order to avoid these pitfalls but now

you associate trading with pain right so

you start

reinforcing even worse habits so you let

your losses run right you you you maybe

you you remove your stop limit and you

let that position bleed because you're

hoping that it turns around and now you

might be hoping that it turns around

just to cut your losses as opposed to

winning a trade right but the reason you

do this is to avoid pain you take

profits too early right the minute that

you see green you close it out because

remember you you now associate trading

with pain you no longer are are

associating trading or you might have

never Associated trading with a

profitable strategy so now the minute

that you see green you cut it and you

take green on you know you might take

$150 or $200 and then the trade ends up

running for two3

$4,000 and you're like oh my God that

was where my target profit was if I just

kept it I why didn't I keep it it's

because you're trying to avoid pain you

associate trading with pain you keep

trading after taking large losses or you

might Revenge trade the source of that

we talked about this a little bit you're

trying to problem solve your way out of

bad trading right but you at the end of

the day are trying to avoid pain you

want to get back to green right so

you're trying to avoid pain trading

without real conviction meaning chasing

price foming into a trade that someone

else might have taken that you missed

their good entry and so now you're

taking a suboptimal entry because you

now have a fear of missing out and a

fear of missing out causes pain so your

subconscious mind that has been you know

evolving for millions of years is trying

to survive and avoid pain because it

sees trading as survival and it sees

success in trading as surviving right so

this is all antithetical to trading this

is why you know you always hear oh you

have to be a robot when you trade you

have to remove your emotions when you

trade guess what that's impossible to

remove your emotions you're a human

being right unless you're a psychopath

which I don't know what the stats are on

Psychopaths and trading but you are a

human being with real emotions right and

it's it's hard to suppress your emotions

however you can rewire your brain

obviously there's been millions of

studies done on cognitive behavioral

therapy you know on rewiring the brain

in order to make certain associations

more prevalent or to suppress certain

associations so in your in your mind

right like you have to make the

association for instance as I said

before

clicking is losing right if you make

that Association and you keep

reinforcing it over and over again then

you are less likely to do it right but

you still feel bad when you take a loss

it's just what what are you doing now as

opposed to Revenge trading right letting

the emotions build up so much into a

decision you could still feel bad and

there are ways to overcome the the

emotion of losing a trade right in the

beginning actually we can jump into this

now so what are what are some things

that you can do in order to improve this

aspect of your trading and I guess I

want to start off and and just say

before we get into uh what are some

things you could do to mitigate not all

problems with trading are psychological

right this is something that that you

hear a lot of newbies say like oh my

problems are psychological yes you do

have psychological problems as it

relates to trading but how do you know

that your problems aren't technical are

you trading a back tested strategy are

you trading a strategy that you've

tested out or paper traded for months

and you know it's profitable but the

only problem is that you go outside of

of that strategy right if you are not at

the point yet where you have a a

strategy you're not confident in the

strategy that you're trading that's fine

your problems should start with finding

a back tested strategy there are tons of

people online that that you can follow

that have back tested strategies or that

have stats to back up their trading have

payouts or whatever right that's really

not that hard to find a winning trading

strategy because they all from my

experience a lot of them work right SMC

ICT works I know traders that trade just

momentum I know traders that use foot

footprint charts and volume Etc there

there aren't there isn't just one

strategy that works right if you can

find a strategy that's more than a 50%

win rate and you can stick to that

mechanically then you will likely find

profitability right it's just the

problem of being confident in in that

strategy and only taking trades in that

strategy so I just want to put that out

there that a lot of times if if you are

really really really a beginner Trader

your problem is not psychological if you

are a good technician if you know how to

read a chart if you're comfortable

entering trades if you uh are familiar

with certain strategies that work if you

see your stats work when you do trade

your strategy but the problem is that

you're trading outside of it then

your problem is likely psychological or

mostly psychological right so here are

some tips that I can give you in order

to overcome your natural pitfalls as it

relates to trading number one sign a

contract each and every morning I've

talked about this time and time again

but write a contract say I will only

take trades that adhere to my rules I

will not Market in Market order in I

will only wait for uh my my limit price

to hit I will set the trade up before

before I get in I will have a my stop

limit my TP and my entry defined before

I get in so write down all of your

ground rules and leave a space for a

signature and go to a copy store and

print 250 of them for the number of

trading days a year and sign it every

morning and leave it on your desk right

next to your keyboard trust me this will

work it it's not going to fix all your

problems but I bet you it will limit the

amount of Trades the number of Trades

that you take I guarantee you it will

cut down the number of unnecessary

trades that you take it's not going to

solve all your problems nothing will

except for reinforcing these good habits

every single day and then seeing the

results becoming confident and then you

know sticking to those results right

once you have once you see uh a a small

subset of good results it gives you the

confidence to stick to those results and

it compounds like a snowball trust me

after each and every trading session you

should be able to recall off the top of

your head every single trade that you

took right A lot of times you'll see I I

know you're guilty of this but you'll

see your

executions a after the day is over and

there's like a million trades right and

if I said hey what did you trade today

you will not be able to recall each and

every single trade but you should be

able to recall each and every single

trade so on most days if you ask me what

did I trade I can easily tell you okay I

took uh a an a long on the NASDAQ and

the morning and I shorted gold in the PM

session and that's it right this that's

how your trading day should look because

once you find confidence in your

strategy then the next step up is to

scale your trades you will not need more

trades you will just need bigger size

trades obviously once you get to a point

where you have achieved some semblance

of profitability then the path to

compounding that is to increase the size

little by little on your trades as

opposed to taking more trades don't ever

enter a trade without having a defined

stop limit TP and entry I've already

talked about this but every single one

of your trades should look like this

okay every single one if you if they

don't it's because you don't have a

system the other thing is do not move

your stop limit around now it's okay to

have a dynamic stop limit meaning if

your trade hits uh you know one and a

half r or one r one to one and you say

at this point I'm going to move my stop

limit to to break even that's fine but

just fidgeting with your stop limit and

your takeprofit constantly it just shows

that you likely don't have a mechanical

system yet right so do not do that if

you do have a system if you have a

mechanical system that you know you

should be trading do not move around

your stop limit and your uh takeprofit

just don't do it at all the next one we

talked about this before but always

equate clicking with losing meaning a

after your stop limit hits if you lose

on the trade you should always equate

clicking right after that with losing

right it clicking does not mean there's

a chance to win it automatically means a

loss if you assoc if you're able to

associate that right over and over and

over again then I guarantee you will

limit the number of times that you click

after losing a trade you should also

Implement some sort of good habit uh

some sort of of of um recurring good

habit after a loss right

you should be uh going to the gym or

going outside or doing push-ups or going

for a drive or spending time with your

family or say you know if my stop limit

hits I have to get up out of the seat

and do X whatever X is playing guitar uh

whatever you can come back to your desk

uh in in order to trade but do not look

at that same setup anymore immediately

after you take a loss right do do not

stay stuck to that setup go away come

back in 5 10 15 20 minutes and then look

at the chart and reassess from there and

if another trade fits your criteria

again you're supposed to have a set of

criteria if another trade fits your

criteria then you can enter it but the

minute that you that your stop limit

hits get the hell up off of your desk

and go do something else and make that

thing a habit every time I take a loss I

do 100 push-ups every time I take a loss

I go practice guitar for 20 minutes

every time I take a loss I go make the

kids uh breakfast or whatever right

every time I take a loss I go for one

mile run every time I take a loss I go

do four sets of bench press like

whatever it is it could be anything

right I go draw a picture or paint or

whatever it is that you like to do but

you have to associate a you know hit a

trade hitting your stop limit with you

getting off of your desk to do something

and finally write down a summary of your

trading session each and every day right

what were your emotions uh what trades

did you take did you like certain things

about what you did today it's important

to also reinforce good habits when you

find them right what did you do today

that that you didn't like that you want

to avoid tomorrow doing this really is

underrated because if today I did

something like I I Revenge traded right

I I avoided Revenge trading for seven

trading days straight but today I

Revenge traded so I can write that down

I guarantee you you much less likely to

do it the the next day right and then

maybe you can go 14 days without Revenge

trading and lastly I want you to have a

riskmanagement plan I I don't see a lot

of Traders having this right what are

your limits for the day meaning if you

tell

yourself I I can only take one loss per

day right and your risk management plan

might look something like this you say

you risk 250 to make 500 right a two to1

basic 2:1 risk to reward now if you take

a loss you're done for the day you're

down 250 that's it you're done for the

day you get up you try again tomorrow

okay if you win you make 500 bucks right

and you allow yourself to take another

trade now what if you lose that second

trade so you made 500 the first trade

you lost 250 the next trade you are now

up 250 for the day and you are done

because remember you have a one loss

trigger now imagine you take two trades

and you win you are now up ,000 doll and

imagine you lost your third one then you

would be up 750 on the day and you were

done because you took one L now imagine

this is a very at least according to the

way that I trade this is a very unlikely

scenario but imagine you take three

trades and you win all three of them I'm

not saying winning three trades is an

unlikely scenario I'm saying I rarely

take three trades but imagine you take

three trades and you win all three of

them then you are now up 1,500 on the

day and I probably would venture to say

you cannot find four A+ trades in a day

but you know either you stop or or you

know you take another trade until you

lose but you get you get the picture

that having a risk management plan where

you know you limiting yourself to one

loss a day and you every trade at least

to begin with until you get really good

but every trade to begin with is a two

to1 risk to reward you are risking 250

to make 00 like the imagine those gains

compounded uh over over a month right

imagine those gains compounded over a

month and more importantly Imagine The

Limited losses that you'll take if you

actually stuck to this strategy if every

time you lose you're only lose 250 but

if you win two trades and and lose one

you're up 750 if you win three trades

you're up, 1500 even if you win one

trade and lose one you're still up 250

like people do not think of a risk

management plan when they start trading

unfortunately but hopefully I shed some

light on why it is that you know as As

Natural beings as cavemen why we do suck

at trading but I'm I'm hoping that you

know this talk here maybe you should

listen to it every day before you start

your day I don't know but I'm hoping

that this talk here really will allow

you to step outside of your body and

like I said Neo from The Matrix see

what's going on when you take a loss

like what why is the urge so strong to

enter another trade right but hopefully

you got something out of this this is by

far the most requested topic that people

ask me to make a video on so hopefully

this shed some light even though it was

a a raw video it took me a while to to

compile my thoughts into a coherent

video so hopefully made sense for you

hopefully you got something out of it if

you want to trade with me 7 days for

free I go live at Market open every

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I'm in Italy as of the time of this

recording in Sicily uh it's it was light

outside when I started the video now

it's dark but stay safe out there

Traders peace