The Secret Mind Tricks of a Trading Legend

Summary

The video script discusses the importance of developing the right mindset for successful trading. It emphasizes that normal thinking does not lead to profitable trading and shares personal experiences and lessons learned from the trading world. The speaker highlights the significance of understanding one's psychological weaknesses and the need to learn from failures. Drawing from examples like Rafael Nadal and Roger Federer, and referencing Rudyard Kipling's poem 'If—', the talk encourages humility in the face of both triumph and disaster. The speaker also challenges the common focus on technical analysis and advocates for deliberate practice, setting specific challenges to improve trading skills. The talk concludes with the idea that slow, consistent progress is better than no progress and motivates traders to think differently to break out of the 90% failure rate in trading.

Takeaways

• 📈 Develop a trading mindset: Focus on the mental and psychological aspects of trading, not just technical analysis.
• 🧠 Understand normal thinking's limitations: Recognize that typical thought patterns may not lead to profitable trading.
• 📉 Learn from losses: Embrace failure as a learning opportunity, similar to how Kobe Bryant approached his missed shots.
• 📚 Review past trades: Analyze old trades for valuable lessons, treating them as 'diamonds' for improvement.
• 🎯 Set specific challenges: Engage in deliberate practice by setting specific, challenging tasks to improve trading skills.
• 🧘‍♂️ Mindfulness and self-awareness: Be conscious of your behavior and thought processes to avoid self-sabotage.
• 🤔 Analyze psychological weaknesses: Spend time understanding your own psychological barriers to better trading.
• 📉 Accept uncertainty: Learn to tolerate and perhaps even celebrate the inherent uncertainty in trading.
• 🚫 Avoid complacency: Regularly remind yourself of past mistakes to prevent repeating them.
• 🏋️‍♂️ Maintain physical health: Ensure adequate sleep, exercise, and nutrition to support the energy required for deliberate practice.
• 📖 Continuous learning: Commit to a continuous process of learning and self-improvement, adapting strategies as you learn more about the market and yourself.

Q & A

What is the main theme of the talk?

The main theme of the talk is about developing the right trading mindset and how to train oneself to become a better trader, emphasizing that normal thinking doesn't lead to profitable trading.

Why did the speaker believe that normal thinking doesn't lead to profitable trading?

The speaker's belief stems from his experiences, starting 21 years ago at a brokerage where he encountered a client's flawed logic in trading based on perceived low stock prices, and from studies like the one by Rodriguez from FXCM that showed clients had a high success rate but still lost overall due to poor risk management.

What is the significance of the story about the client who owned pharmacies and his interaction with the speaker?

The story illustrates the common mistake of buying stocks based on the misconception that a falling price equates to a 'cheap' buy. This was a pivotal moment for the speaker, highlighting the need for a better understanding of market analysis beyond superficial indicators.

What is the '10,000-hour rule' as mentioned by the speaker?

The '10,000-hour rule' is a concept popularized by Malcolm Gladwell, suggesting that to achieve mastery in a field, one needs to practice for around 10,000 hours. However, the speaker emphasizes that it's not just the time spent but the deliberate and focused practice that leads to expertise.

How does the speaker suggest traders should approach their practice?

The speaker suggests that traders should engage in 'deliberate practice', setting specific challenges for themselves to solve and learning from their mistakes. This approach helps build neural networks and leads to improvement in trading skills.

What is the importance of mindset in trading according to the speaker?

The speaker emphasizes that mindset is crucial in trading, with a general consensus that it contributes to about 75 percent of successful trading. It's about being able to follow a strategy and learning from both wins and losses.

Why did the speaker consider the study by Rodriguez from FXCM significant?

The study was significant because it analyzed the behavior of 25,000 clients over 15 months and 43 million trades, revealing that despite a high success rate in identifying winning trades, clients still lost overall due to their inability to manage losses effectively.

What is the role of self-awareness in becoming a successful trader?

Self-awareness is key to understanding one's psychological weaknesses and improving trading behavior. The speaker argues that knowing oneself makes one a better trader and person, as it allows for the development of strategies to counteract natural tendencies that could lead to self-sabotage.

How does the speaker relate the poem 'If—' by Rudyard Kipling to trading?

The speaker relates the poem 'If—' to trading by highlighting the importance of treating triumph and disaster with the same level of composure. This mindset helps traders maintain consistency and focus on their process, rather than being swayed by emotions from market outcomes.

What does the speaker mean by 'review and discover' in the context of trading?

'Review and discover' refers to the practice of analyzing past trades to learn from both successes and failures. This process helps traders identify patterns and behaviors that need improvement and develop strategies to enhance their trading performance.

What is the speaker's view on the common focus on technical analysis in trading education?

The speaker believes that the common focus on technical analysis is misplaced. While it's important to understand the basics, the speaker argues that more emphasis should be on understanding psychological aspects and developing a robust mindset to handle the emotional challenges of trading.

Outlines

00:00

😀 Introduction to Trading Mindset

The speaker introduces the concept of a 'trading mindset' and discusses the importance of developing the right attitude for trading. They compare it to improving in tennis through practice and matches, and question how one improves as a trader. The talk delves into the idea that conventional thinking does not lead to profitable trading and shares the speaker's journey in understanding this, starting with an anecdote from 21 years ago at a brokerage firm.

05:01

📈 Trading Psychology and Behavior

This paragraph focuses on the behavioral aspect of trading. The speaker recounts experiences from their time at City Index, noting how clients often bet against the trend. They discuss the realization that technical analysis, while important, is not the sole key to successful trading. The speaker also criticizes the overemphasis on technical analysis in educational resources and historical approaches, such as W.D. Gann's methods, which they argue are outdated and misleading.

10:01

🤔 The Role of Mindfulness in Trading

The speaker emphasizes the importance of mindset in trading, suggesting that it accounts for 75% of successful trading. They question why, if mindset is so crucial, most people focus on technique. The speaker argues that most trading techniques have a success rate of only about 65%, yet 90% of people still lose. They advocate for a shift in focus towards understanding and addressing psychological weaknesses that lead to self-sabotage in trading.

15:03

💪 Learning from Failure

The speaker shares a personal trading experience, highlighting the importance of learning from failure. They discuss a specific trading pattern that led to a loss, and how they analyzed it to improve their trading strategy. The speaker uses the example of sportsman Kobe Bryant to illustrate the value of embracing failure as a learning opportunity. They stress the need for deliberate practice and setting specific challenges to improve trading skills.

20:04

🧠 Deliberate Practice and Improvement

The speaker expands on the concept of deliberate practice, referencing Malcolm Gladwell's 'Outliers' and the work of Anders Ericsson. They explain that to become an expert, one must engage in specific, challenging tasks that require problem-solving. The speaker shares personal examples of how they have applied this principle to their trading, such as developing strategies for trading on trend days and during specific market events like FOMC announcements.

25:05

📚 Reviewing Trades and Embracing Uncertainty

The speaker discusses the importance of reviewing past trades to learn from both successes and failures. They stress the need to ask specific questions and to be mindful of one's behavior, particularly in uncomfortable situations. The speaker also talks about the inevitability of uncertainty in trading and the importance of accepting and learning to navigate it. They share a personal anecdote about a significant loss to illustrate the importance of learning from mistakes.

30:06

🚀 From Novice to Strategic Trader

The speaker reflects on their personal growth as a trader, from being a novice who traded without a strategy to becoming a strategic trader with specific plans for different market conditions. They discuss the evolution of their trading approach, including how they now handle losses and wins, and the importance of setting specific exercises and reviewing them. The speaker encourages the audience to think differently and to take a unique path to success in trading.

35:07

📝 Conclusion and Future Support

In the concluding paragraph, the speaker expresses their commitment to supporting the audience's trading journey. They mention the idea of creating a study plan to guide the audience's learning process. The speaker looks forward to continuing the journey with the audience and wishes them a restful weekend, emphasizing their availability and desire for the audience's success.

Keywords

💡Trading Mindset

The trading mindset refers to the mental attitude and psychological approach a trader adopts to manage emotions, expectations, and behaviors in the context of trading. In the video, it is emphasized that a proper trading mindset is crucial for success, as it helps traders to follow strategies consistently and manage the emotional aspects of trading.

💡Technical Analysis

Technical analysis is the method used by traders to evaluate securities and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. The video discusses the common focus on technical analysis in trading education but argues that it should not be the sole focus, as it is only part of the foundation for successful trading.

💡Behavioral Finance

Behavioral finance is the study of how psychological biases and emotional factors influence financial decision-making. The video touches on the importance of understanding one's own behavior in trading, highlighting that normal thinking and behavior patterns often lead to unprofitable trading outcomes, thus the need for self-awareness and behavioral adjustments.

💡Risk Management

Risk management in trading involves the process of identifying, analyzing, and accepting or mitigating uncertainty in investment decisions. The video script mentions the importance of having a plan and managing risk, which is a critical component of the trading strategy that helps in avoiding significant losses.

💡Chart Analysis

Chart analysis involves studying charts that represent historical data to predict future market trends. It is a form of technical analysis and is mentioned in the context of the speaker being introduced as someone who knew about chart analysis, indicating its significance in the trading world.

💡Emotional Control

Emotional control is the ability to manage one's emotions, particularly in stressful or high-stakes situations like trading. The video emphasizes that treating triumph and disaster with equanimity is a mark of a successful trader, which requires emotional control and a consistent process over emotional reactions.

💡Practice and Deliberate Practice

Practice refers to the act of performing a task repeatedly to improve one's skill, while deliberate practice involves setting specific goals and challenges to improve in a focused and structured manner. The video discusses the concept of deliberate practice, suggesting that it is more effective than mere repetition in developing trading skills.

💡Self-Sabotage

Self-sabotage is the act of unconsciously behaving in ways that undermine one's own goals. In the context of the video, the speaker discusses the importance of understanding one's psychological weaknesses to prevent self-sabotage in trading, which can lead to unprofitable decisions.

💡Market Trends

Market trends refer to the general direction in which prices are moving in the market. The video mentions the importance of understanding and trading with the trend, which is a fundamental concept in trading that can significantly impact the success of a trading strategy.

💡Loss Aversion

Loss aversion is the tendency for people to prefer avoiding losses as opposed to acquiring equivalent gains. The video script addresses the issue of loss aversion, where traders often find it difficult to take a loss, which can hinder their ability to execute trades as per their strategy.

💡Review and Learn

Reviewing past trades and learning from them is a critical process for improving trading skills. The video emphasizes the importance of reviewing old trades to extract valuable lessons, which can help traders to refine their strategies and avoid repeating past mistakes.

Highlights

The importance of developing a trading mindset is emphasized, drawing parallels to how athletes train and improve.

The speaker's belief that normal thinking does not lead to profitable trading is introduced, with a personal anecdote from 21 years ago.

The story of a gentleman who owned pharmacies and his misguided belief in buying low-priced stocks as 'cheap' is shared.

A study by Rodriguez from FXCM is mentioned, revealing client behavior patterns and the paradox of high success rates but overall losses.

The observation that many traders bet against the trend is highlighted, showing a common psychological bias in trading.

The focus on technical analysis in trading education is critiqued, suggesting it may be misplaced.

The speaker discusses the historical context of trading techniques, referencing a course from 90 years ago by W.D. Gann.

The current advantages of trading in the modern era are outlined, including reduced spreads and increased knowledge sharing.

Despite increased information and tools, the high failure rate in trading is acknowledged, prompting a call for a different approach.

The idea that mindset is crucial for successful trading is presented, with an audience consensus placing it at 75% importance.

The paradox of most trading techniques having a success rate of only around 65% is discussed, questioning why there is a high loss rate.

The concept of 'deliberate practice' as proposed by Anders Ericsson is introduced, emphasizing the need for specific challenges.

The speaker shares a personal example of learning from a failed trade and how it influenced a future successful trade.

The importance of reviewing old trades to learn from past mistakes is stressed, likening it to finding 'diamonds'.

The idea of setting specific, challenging tasks to improve trading skills is discussed, using the analogy of mastering ballet moves.

The speaker's personal trading evolution is detailed, from trading without a plan to developing specific strategies for different indices.

The concept of 'best user wins' is introduced, emphasizing the need to confront pain and learn from losses rather than celebrating wins.

The talk concludes with encouragement to think differently, set specific exercises, and review losing trades as a path to improvement.

Transcripts

[Music]

foreign

called the ideal trading mindset

the theme of the of the talk was how do

you develop the right kind of trading

mindset how do you train yourself is

that if I want to be a better tennis

player I go out and I practice

I play a lot of matches and I improve

but how do you get better as a Trader

that's what the presentation was also

about so I got the laser pointer here

just bear in mind I can't actually see

any of your comments

[Music]

so the

the argument here is that normal

thinking doesn't lead to profitable

trading I want to tell you why I believe

that how did I come to have that belief

system

it

well it started 21 years ago I was three

days into my new job at a brokerage

called Financial spreads and I was

invited to a company their best clients

of The Brokerage and the directors out

to a day on the race course on the

racehorses race courses it's a day out

uh called the Ascot I always know it as

the ladies are wearing funny hats and

the gentlemen are drinking champagne and

smoking cigars so there I was and the

CEO of the company he had introduced me

as their newest recruit and and then

this is the funny bit at least I think

it's funny he's saying he knows Charles

as if knowing about chart analysis was

some kind of novelty back then but it

was because back then 21 years ago the

the charging the trading platforms had

no charge when I worked at City index

there were no charts

so there I was and bought this executive

coach and I was introduced as the person

who knew about chart analysis

the first person to just sit down in

front of me was a gentleman who owed a

string of pharmacies up in north of

England and he said to me uh could you

please analyze this chart here

and I looked at it oh I remember it

and it was a

company called Marconi now what's

interesting about Marconi was that it

had been a bit of a darling in the Fuji

100 index but it had fallen from Grace

from a price of about 12 pounds 1200

Pence down to at this point when I spoke

to this gentleman uh was uh trading

around 300 Pence

the story of Marconi actually it is

eventually it went bust it went to zero

now but what's interesting here was that

this gentleman had bought a little bit

when it had retracted off the highs

because he was thinking it was getting

quite cheap then he added to his

position down here and then he added to

the position down here and here and here

and here because as he said this has got

to be the cheapest company I've ever

come across now at the time I wasn't

able to formulate my opinion as I was

later but essentially it was the first

time I ever came across an individual

who was not trading or investing uh on

the Merit of what he was seeing in the

market but what he was actually

believing and he had the misguided

notion that a a stock that had fallen a

low in price was cheap but as I said at

the time I wasn't able to verbalize what

I I know to be true today

it was to be a few years before I got my

next lesson about math psychology

it was the um it was a study that I

spoke about many times by now from

Rodriguez from fxcm who together with

his uh his staff at fxcm had analyzed 25

000 of their clients Behavior over a

15-month period where they executed 43

million trades in FX now what was

interesting about it was that the the

the outcome of this

actually revealed that their clients

were very good at the identifying

winning

very good at identifying

winning uh so we say trading setups but

the problem that they had was that when

they won so they weren't decent but they

lost a whole lot more than

than they won

and so even though they had a very high

success rate on their profitable trade

overall they were net losers

so at that point I had a I had been

exposed to the behavior of the clients

of City index and have become acutely

aware how frequent it was that people

would be betting against the the trend

on any given day so for example if the

Dow was marching up the page

clients would like to sell short and if

it was falling you could be absolutely

certain that they would want to try and

buy the Dow and sort of armed with that

knowledge I began a journey of shall we

say self-discovery I also became much

more mindful of what it was

that the Brokers all over the world were

doing to their clients

so for example any given broker this is

uh from pepper Stones uh web seminar

section of their educational on on their

educational area when you look at it

it's it's all about well how to read

candle jars how to identify trading

opportunities how to figure out gaps and

slippage and and how you can day trade

Forex and whilst there's absolutely a

place for this there is a place for

shall we say uh learning about the

basics of trading it it seems now that

we

we seem to have probably put the cart

before the horse and all the focus is

now on technical analysis as if this is

going to make us better

so the

so I became much more mindful of that

even though Brokers meant well and

Educators met well all their focus was

on the wrong thing this is not new I

mean this goes back this chart here is

from uh 90 years ago and it's from a

course that a gentleman called W.D Gan

sold and back then I think it cost the

the equivalent of a of the annual salary

of a typical worker and there's so many

lines and so many dates and he he sold

his courses through the The Narrative of

of

an America that to some extent was

religious he sold his courses on the

premise that he had found a code in the

Bible and what's so puzzling is that

even now in many many years later you

still have people who who Brave on about

how great Gan is and how much money uh

they are able or could make from knowing

about fractals of eighth and 2 8 and 5 8

and the Moon is gone retrograde Mercury

and Venus is up Uranus and so forth and

it is is actually frightening that there

are still people able to sell this

[ __ ] but they are because it is

appealing to a part of our brain that

goes well if it sounds complicated it

must be it must be worthwhile uh

learning about

now when you look at how far we have

come over the last

20 years from when I started trading it

is mind-boggling how much more

advantages it is today compared to say

uh

20 25 years ago when we day traded the

Dow 25 years ago we were paying an eight

point spread in the Dow that meant that

if you bought the Dow it had to move

eight points in your favor before you

were a break even so spreads have come

down significantly knowledge sharing

like what we're doing in telegram right

now is at an all-time high it's never

been so readily available

Mark is a practically trading at your

disposal 24 hours a day you have charts

you have a chart on your mobile phones

historical back testing is is available

to us and through and through we have

never been as informed about trading as

we are today yet when all that is said

and done we're still operating with a

failure rate of around 76 to 80 percent

and as I jokingly said if that was a

dentist school that had a 76 failure

rate you would have to question the

teachers methodologies

yet and and say this was a a school

where you're contemplating sending your

your your daughter or your son one

second

okay

and and evidence of if this was a school

where you're contemplating sending your

your child your boy your girl and they

had a failure rate around in the in the

70s and 80s you wouldn't send them there

you go now it has that has to be another

way and what I am proposing is what is

the other way because if normal thinking

and normal behavior doesn't lead to

profitable trading the obvious question

begs what does

so I wrote a book as you know which

isn't a book about technical analysis

but it's all about how we as Traders go

about trading which is the wrong way

around

so there's a little audience question

time

how important is the right mindset in

trading and this was a question that

Steve Ward asked at the Symposium early

on this year and it was an interesting

question because people sort of started

to chip up well I think successful

trading is a 90 strategy and 10 mindset

and other people saying well it's

important to have the right strategy but

it's also important to be able to follow

the strategy and that comes down to

mindset so by General consensus we sort

of landed at the 75 percent that that

that's the that's how important mindset

is

so if mindset is so truly important and

we can't actually make our way to uh to

profit through the use of techniques

alone

then it does back the question well why

why is everyone focusing on technique

see most trading techniques will at best

have a 65 chance of success so a little

more than a coin flip charts of 50 50.

but if that's the case why do 90 of

people lose

ninety percent of people don't lose on a

coin flip game

so when you when you travel the the

internet and you forget yourself with

bulletin boards and newsletters and and

the likes

you will be subjected to the uh to the

how

of trading the how do I use a moving

average how do I use candlesticks how do

I trade the Dow how do I trade the the

Dax the footsie and so forth all the

focus is on techniques it could be

product knowledge it could be uh it

could be knowledge about money

management

Etc which all important things but

there's absolutely no focus on what are

you going to do when you're just about

to self-sabotage for the up team time

how do I deal with uh not taking the

trades when a fundamentally know I

should be taking them how do I

take a loss when I simply can't get

myself to do it how do I execute a a

trade that I that I I know I really

should be executing

and so

what I wanted this web seminar to be

about and the one in London is why do we

focus all our mental energy on

strategies and entries when in reality

you should spend time on analyzing your

psychological weaknesses what's your

weak gain

so the foundation of successful trading

to me is technique is

has there has to be a foundation of a

cold technique but why don't you master

that technique of course you can improve

but I think it's much more important

that you actually begin to learn about

your weaknesses which come down to your

behavior and your process

so I argue that Getting to Know Yourself

makes you a better Trader makes you a

better person but it also makes you a

better Trader and I'll give you an

example of this so here's the footstep

and uh

we are seeing a market rallying but

right down here where the laser point it

is right now we are witnessing the the

market has made a low below the highest

bar of the day

so the highest part of the day is this

bar that we're seeing here

and we have now closed below the low of

the highest bar and especially when this

is this is in the context of a double

Top This is a reliable sell signal so

I'm selling short right here in the

footsie and you know it is what it is

maybe it'll go well maybe it won't

and then what happens is that the market

then makes a

push above at which point I'm going oh

this is not looking good but then it

comes all the way back down again at

which point I'm thinking ah it's all

good it's going to go back down to the

lows again

but then what happens all the subsequent

bars actually it must just pause for a

second because I think this is important

so what you're seeing here is Rafa Nadal

and Roger Federer headed out to Center

Court for one of their epic battles

could have been the one in 2007. could

have been the one in 2008 but it's not

actually those two I wanted to look at

what I want you to look at is this

foreign

from a

an author called Rudy Kipling and the

poem is called if

if you can meet with Triumph and

disaster and treat those two imposters

just the same

then you shall be a success if you can

do that he wrote it to his son or sons

and what I took away from that is what

he was trying to tell his star

his chances you know go through life

with a degree of humility don't be too

excited when you win and don't get too

despondent when you lose because those

are just emotions and those emotions are

just

ah like a Candle in the Wind it's not

sustainable but what is sustainable is

how you go about your daily life and

your process

and so the The Imposter of success or

Triumph has the cause of disaster well

they're just emotions but they will

detract you from the real journey which

is the Journey of being able to follow a

process

so when we move on to this and we see

here that the the foot see over the

ensuing two bars are making a high above

that candle which we saw here I am

beginning to think I'm not in the wrong

I'm not in the right position and I get

stopped out

and

I can stop out here at the at above the

the highest higher of the day okay tough

luck another tree but that's not quite

how I see it the way I see it is what

can I learn from this is that a lesson

that I have missed here

should I do should I have done something

different

so when I highlight what's going over

here up here what I pay close attention

to

is this candle here

this long handle here because the market

had turned had closed below the low or

the highest bar which to me was a sell

signal then we get a push higher which

goes all the way back down here and in

in my book this Market should have

continued lower but it didn't instead it

rallied and I began to go through the

days and the weeks and the months and

the years before that going hey is this

something that happens frequently

because if it is I want to know about it

this is something that I want to learn

from now learning from failure is

something that very few people engage in

but my role model is a gentleman called

Kobe Bryant I am in awe of Kobe and rest

in peace when Kobe Bryant Kobe Bryant

died earlier uh he was the attention of

many journalists all over the world and

they were talking about how an amazing

uh

a basketball player he was for the

Lakers they were talking about all the

records that he broke how many times he

makes the the uh the MBA et cetera Etc

but it took a journalist from The

Guardian newspaper called Andy Paul and

he was talking about a different Venture

he was addressing Kobe Bryant from a

different vantage point he was

addressing it from his failure rate she

turned out that Kobe Bryant he racked up

14 481 missed shots during his career

well over more than a thousand in the

second player on the list and so the

journalist concluded that actually

Bryant's success story began with

working to conquer the fear the fear of

failure you see in this previous trade

that I just executed it was so easy to

just dismiss it as oh well nothing to

learn it was just another losing trade

but I saw it differently and I I believe

that that's a mindset thing that much of

our progress as a species and as

individuals comes from our setbacks that

we learn from our setbacks therefore our

relationship with setbacks is highly

correlated with our position in the food

chain both in society and within the

hierarchy of our work within the

hierarchy of employment maybe uh on our

social status do we treat setbacks as

just that a step back with no lesson or

do we learn what is needed to be learned

if anything did we appear a little wiser

the next time a similar situation

appears so when I look at this setup

here as as benign as it may appear to

you it actually turns out that this is

something that happened quite frequently

market closed below pry bars low and it

looked as if oh it's going to fail here

and then it masked higher I I get a

market that it's close to close and

perfectly low pry bars low it looks as

if we're headed lower and boom high

again Market makes a retracement of

three or four bars closes below probably

low and up here it looks as if Market is

headed back down again because we've got

to push higher and then we close it all

the way down and yet the market somehow

managed to find the strength so I began

to think no there's something I need to

learn here and I went through years and

years of this particular pattern just

looking for this particular pattern so

that I may be 100 prepared for it the

next time it was to happen and then I've

just used a couple of more examples of

this and then something really

interesting happened

I was trading the ftse in an evening not

long ago yeah in uh in November and I

executed two trades in the footsie at

300 pounds a point at 7 362.

now what's interesting about it was that

it looked to me as if the market was

double topped trending lower and this is

just a retracement

but then what occurred to me was as I

had executed the trade it occurred to me

hang on what is this thing that I'm

seeing right here

and it turns out that that's the exact

same pattern that I had done so much

research on and it just slipped onto the

radar and I saw it and I go wow I

shouldn't be I shouldn't be short here

at all I should be long

this is a mistake to be short here had I

not done those hundreds of hours of

research and this to this pattern that

lesson may have slipped me

but instead I took my loss lost about

four and a half thousand pounds five

thousand pounds and it was in the trade

for only three minutes or so and then I

very quickly reversed long now I know

what you're thinking saying yeah anybody

can say that so I'd like to prove it to

you here's my track record here's the

the trade here you see I'm jump trading

and this is 70 buying it 300 another 300

another 300 another 300 another 200

something about about 11 1200 pounds a

point now not all of the trades are held

all the way but eventually the market

did grind up and the best trades were

the one that I executed near the highest

of the day I didn't make back everything

that I had lost but I made 90 back of

what I lost and I came out of that

trading session thinking thank you Kobe

Bryant thank you for teaching the lesson

of setbacks because had I not been

inspired by you and had I not done the

word on this particular pattern because

I was annoyed that I'd lost

back then I would never have gotten a

lesson and I hadn't gotten the lesson

well I may have been inclined to hold on

to this trade a lot longer than I should

but I didn't I took the loss I moved on

and while this is not entirely a success

story in that sense that I made

everything back well

I made

most of it back and that to me seems

like a victory and also an enforcement

of reinforcement of the right kind of

behavior

so Solutions as I call part one is

review and discover

review your old trades because in there

lies an acre of diamonds

invaluable lessons for you to learn from

but it leaves me something different it

leads me something to the next point and

that is is it even possible to practice

Trading

what I call the liver practice and it

turns out that I have found a way and

I'd like to discuss that with you the

person you're seeing over here to the

left lady could you shut the [ __ ] up

someone else is trying to work or you're

Yip yapping away

yeah

be respectful

this person that you're seeing here is a

gentleman called Malcolm Gladwell he

wrote a book called outlier yeah [ __ ]

off he wrote a book called outlier

and

outlier uh suggested that if we do

something for ten thousand hours we are

going to be experts

it's essentially what's it's different

the difference between average

performers and and high performers is

that they have practice a whole lot

longer than the average performers and I

read that and I probably swallowed it

hook line and singer but there was

something about it that didn't resonate

with me and I based that on my own

driving I have been driving for I don't

know 30 years and then I was invited on

on my birthday to a race course where I

put myself into one of those performance

cars I think it was a Mercedes-Benz GT s

version

and I had a driver who basically said

you know do this do that so I was

driving and I realized that while I

think of myself as a pretty good driver

as I'm raising down the the motorway the

Autobahn yeah

actually that's not driving that's just

cruising straight ahead if you want to

improve you've really got to give your

mind a challenge to solve because the

challenge for for a mind is not there if

you're just doing what you always do and

it reminds me of and let me just go to

this one here

I was watching Wimbledon a while ago and

there was a commentator

who was uh hasn't comment on one of the

tennis players and he said no well you

know practice makes perfect and then Tim

Hinman who's a bit of a legend within

the the English trading is the English

tennis community he said no no no

practice does not make perfect practice

makes permanent

what does make perfect is perfect

practice which was something Vince

Lombardi was asking he's a a an American

uh football coach who gained an

incredible notoriety for his performance

than what he was able to bring out in

his players so we go back to Malcolm

Gladwell and the German to the writer

Malcolm Blackwell is actually the

architect of the research

uh and his name is Anders Erickson he's

a Swedish researcher who works at

American University and he was the

original proponent of the 10 000 hour

rule

but as he stated in an interview look I

never said

that if you practice something for ten

thousand hours you become an expert what

you need to do is you need to create

what are called what I call deliberate

practice and the way to create

deliberate practice for example in the

context of trading is that you set

yourself a specific challenge because

your brain is a it's a problem solving

uh mechanism and if you just say I'm

just going to start a charge you're not

going to learn anything because your

mind is just going to glance over but

it's always glanced over but if you say

to yourself I am going to find out all

the single times that the ftse makes

that pattern that I just showed you and

then I'm going to document I'm catalog

it and then the next time I see it I'm

going to trade it and so what Anders

Erickson basically said was that the

people that he had researched the

violence the parents the athletes they

only become experts because their

coaches had set them specific

challenging uh tasks that they had to

solve so it wasn't just a question of

doing the same serve over and over it's

instead it was about doing the same

serve trying to land it in a

particularly challenging part of the of

the court for example or that your your

fingers had to learn a very specific

deliberate sequence to play the violin

that's how you improve by actually

tasking yourself with a very very

specific sort of behavior in order to

uncover a new behavior and what in turn

that does is build neural networks Now

ladies and gentlemen now perhaps you

understand why I like to get my sleep

and why I make sure that I exercise and

I eat well because this kind of behavior

takes an inordinate amount of energy

living consciously takes an ordin amount

of energy and so what ericksonfaces said

was you know Malcolm uh Gladwell you got

it wrong it's not about of doing

something for ten thousand hours it's

about doing it deliberately

and truly truly challenging yourself now

how can we do that as code when we don't

have coaches and I remember my my ex who

was an Exquisite Ballerina she was

teaching me about the Swan Lake and

within the Swan Lake which has been

dazzled uh audiences for you know for

for decades she's talking about that

there's a there's a there's a sequence

called the the Foote it's a 32 uh spins

on your foot without putting the other

foot down and it's this constant

Balancing Act without getting dizzy and

she said look you don't go in and you

start balancing you don't start

balancing for 32 footsteps you do them

one little bit at a time and you build

up a big picture until you can begin to

uh to actually do this flat-footed and

then once you've done a flat footed then

you begin to go up on your toe for one

or two and you go back down there and

then two three and four and so forth and

that this this particular sequence in

the Swan Lake has been the bane of

ballerinas for more than a century and

those who have mastered it they didn't

just go in and go yeah I'll just keep

practicing it no they set themselves

small deliberate tasks and then salted

one piece of the parcel at the time so I

have split my trading training into

different categories

and I must admit I've also split many

other things in my life into different

kind of categories so I'll call the

first one specific Improvement and so

the specific specific Improvement is say

I I feel that I wasn't good at trading

Trend dating days so I found all the

trend days I could find that happened on

a Friday for example and I began to make

notes on well how am I going to trade

these on a Friday how do you actually

trade a strongly trending day especially

when it's a positive day which seemed to

be my achilles how do you do it how

would you actually go about doing that

navigating around your fears of being of

of being the one that is buying the high

ticket of the day

and going through these exercises day by

day by day hundreds of them I was able

to actually come up with strategies then

enable to say you know what I am going

to do this and the way I'm going to do

it is by you know fill in the blanks

because I don't want to deprive you of

your own research let's take another

example let's take fomc trading not so

long ago we had the earth form C and I

served you an 80-point winner which took

us about a minute and a half and bang

but what you don't know that there was

hundreds of hours of research gone into

that particular sequence of events on

that particular day I had taken every

fomc event that I could find over the

last 10 years and I had meticulously

gone through every single one of them

finding out how do you successfully

trade fomc and I came up with a a

trading pattern that I call the ruler

for again I'm not going to deprive you

of your own research but the rule of

four has been something that you have

been subjected to

probably without even knowing it you

just heard me say we're shorting the tax

here or we shorten the Dow here or

whatever it may be

but going through every single one of

these fomc's I found a way to

successfully navigate this particular

and oftentimes very difficult Market to

trade that was my mind being tasked with

a very specific exercise being how do

you trade fomc when you look at the

school run same story how do you trade

the tax successfully in the morning and

was not everything that I do is turned

into gold for example I I chart the uh

the S P 500 against the uh the tide in

the Hudson river which turned out to be

an absolute third

it just does go to show that I set my

mind a specific task and then I went

about to solve it

now what I also need to remind my brain

of is don't be complacent because you

know what you have a tendency to do the

wrong thing at the wrong time so I need

to show my mind my brain what can go

wrong if I don't excel in the right kind

of behavior so what you're seeing me

doing here a while ago

nine years to be exact I went along with

that the ftse at 6064. and then I bought

some more at 56 and the market went down

and I bought some more 35 and I bought

again at 30 at 25 and then in the end I

closed the whole thing and I lost 17 000

pounds do you think that's good Trading

Harold

it's awful trading and that is the point

that I need to remind my brain of

periodically

because you have to be the master of

your own kingdom but you also need to

acknowledge that your mind has at its

core function to enable you to forget

pain it has its core it wants to protect

you against pain it means that it will

protect you against remembering the

losses because hey that's painful so I

am going to do the exact opposite by

saying [ __ ] you brain I need you to

remember how badly you can act when

you're under stress so don't you ever

dare add into a losing position but

what's the opposite of of adding to a

losing position what's the very opposite

Behavior it is to add to a winning

position and that's why we're doing it

it is not just that we make more when

it's going well it is also that we are

counteracting the very things that our

brain has a tendency to do to us and I

don't want that

uh this is a stupid example so but it

goes the same I bought one of those

smart watches only cost me 20 quid

because I don't need anything else but I

need to know how quickly can I run 10

kilometers how quickly can I walk five

kilometers am I improving and why am I

just cruising so everything in my life

that I I know of I'm just trying to

improve because that's what I get a bus

out of ladies and gentlemen

mental Improvement I call it the book of

hork and you see Jack Nicholson in here

he's like from the shiny

anyway my book of horror and I'm

actually taking this from someone who

gave me these uh it's not my own not all

of them

but it's just a a this is what I have a

tendency to do and I want to be reminded

before the trading day start not to act

in the wrong way I want to act in the

right way

so solution part two for me is uh posing

specific questions and enabled me to

develop a much Sharper Edge in my

trading because I'm not embracing every

single aspect of the game not every

single aspect what's the point in

analyzing the ftse in

a

trading between 12 o'clock until three

o'clock if you're only trading in the

morning it has to be specific to your

particular circumstances

in furthermore you also have to

acknowledge

and embed in your psyche that there is

no amount of math there's no amount of

indicators there's no amount of anything

that can get you out of having to

experience uncertainty so if you want to

trade consistently without the swings in

confidence then you have to learn to

accept and tolerate and perhaps even

learn to celebrate the feeling of

uncertainty by doing the very things

that you don't like to do become mindful

of the things that you don't like to do

just like in an example imagine you're

going to a public toilet and there's

tenor urinals you're most likely going

to if it's all empty you're probably

going to find that you want to gravitate

towards peeing at the one that is at the

furthest left or the furthest right so

force yourself to pee right in the

middle yeah it probably means that

someone can stand right next to you but

it is that those little things

that will enable you to living a life

out of side of your comfort zone as it

ain't as it sounds but your behavior if

you become mindful of it will present so

many opportunities for you to learn

about what exactly makes you tick and

what exactly makes you run away

so the reason why I broke best lose of

wins was as much for myself as for

anyone else

and the chapters in best user win

reflects that that charts are only a

part of a successful Trader's Arsenal

and the curse of patents is not every

pattern is 100 successful because we

have a tendency to see what we want to

see and if we don't set on my specific

exercises from a charging point of view

will most likely not improve

we also need to learn to fight our

humanness and act on the very things we

don't like to act on and only by being

mindful of them and having a process a

review process will you actually be able

to achieve that

and maybe you need to drive yourself

into disgust before you actually change

your behavior

so back when I was a kitty or youngling

there was a movie with Emilio Estevez

called that was then and this is now by

Hinton it was a a movie adaptation of

his novel

so when I look at how I did trade I

trade a small I was scared I traded tax

without knowing what I was doing

traded a dow with no strategy

I won a little very often and then I

lost a lot once or twice I suffered from

the supermarket mentality so when the

Dow was falling I would be buying and

buying and buying

I traded without a real plan I

celebrated wins and I extrapolated how

much money I was going to make if I

continued making money like this and I

ignored the losing trades but let's look

at how I am today

I trade [ __ ] huge and that's not my

line that's a broker that called me and

he says if you insist on trading [ __ ]

huge size you can't trade at such tight

spreads so a change broker and that's

another story and I'm not scared when I

trade big I've developed index specific

strategies so I know when I can trade

the NASDAQ I know and I can trade the

tax and then when I can trade the foot

so

I trade The Tao and I'm very respectful

like a surfer headed out to a raging

ocean because I know I can give quickly

and I know it can take quickly

and I also know I lose often but my wins

are bigger and I don't have an

impressive win-loss ratio

but

when

I do smell a wheat Market

I smell blood and I will add and I'll

add

or like the NASDAQ trade that we did a

few days ago

to me that had all the Hallmarks of all

the research I've done and I was

expecting new highs for the day and we

kept pushing and pushing and pushing and

we turned a losing day into a big

winning day

so I trade with a plan specific to the

instrument and the time of the day

and when I and I win I don't look too

deeply into it but I do look

and when I am losing I'm trying to

figure out what could I have done

differently

was there something I did wrong here

so what I want to say is that slow

practice is better than no progress

remember that

stay positive and don't give up because

if you really want this all you have to

do is to think differently than to

everyone else

you are not the 90 you're the 10 why

well because I'm training you I'm

guiding you and I'm telling you what to

do and what that do is you start with

you beginning to set yourself specific

exercises you solve them you review your

losing trades you don't necessarily

celebrate big time when you win and you

care less you don't care less when you

lose so you confront the pain head on

that's how we progress

anyway

that was the last slide

I don't know if this uh will work but I

really wanted to give it the talk how it

was meant to be

that was nice

it was nice to be able to give the talk

how I wanted to even though there was

staff around me or people around me

so now

I can

I guess I can wish you a

a lovely weekend

love you lots

and remember I am here for you

and I want you to succeed

I want you to do well

so today I'm at a lady after the tour

who came up to me

and as I was talking to her it occurred

to me

that

what I should really do was to write a

study plan

you know what books to buy

what things to study

I think that would be beneficial for you

so I started scripting notes it'll take

a while of course

but uh

like everything and I hope that we have

a long journey ahead of us together

with that in mind

would you take care now

stay safe

and have a restful weekend

I'll see you Monday

thank you for being here bye-bye