How I Beat the Mental Game of Trading [After 5 Years of Failure]
Summary
TLDRThe 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
💡 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.
🧠 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.
🏃♂️ 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.
🧘 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.
📝 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.
💼 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.
Mindmap
Keywords
💡Revenge trading
💡Market ordering
💡Stop limit
💡Psychological aspect
💡Loss aversion
💡Risk management
💡Emotion-driven trading
💡Backtested strategy
💡Survival instinct
💡Evolutionary programming
💡Pavlovian response
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
single day click the link in the
description would love to have you
follow me on IG and on X for daily
trading and finance content and also on
IG I post my travel content right now
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
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