The Mindset of a Trader | Hicham Benjelloun | TEDxYouth@RAS

Summary

The speaker, a finance enthusiast with 20 years of teaching experience, delves into the psychology of trading, emphasizing the importance of emotional control and discipline. They debunk myths about 'magic' strategies for success, advocating instead for a 'probability mindset' where traders view outcomes in terms of likelihood. The talk highlights the traits of successful traders, such as a poker face, routine consistency, and a clear, focused mind, over mere positivity or hope. The speaker concludes by urging individuals to define their own success and to practice clarity and focus, suggesting that learning to breathe properly can lead to a clearer mind.

Takeaways

• 🧐 The presenter emphasizes the importance of myth-busting in finance, suggesting that many widely accepted beliefs may not be true and require critical examination.
• 🎓 With 20 years of experience in teaching finance, the speaker highlights the need to understand the psychology behind trading due to its unpredictable nature and the low success rate among traders.
• 🤔 The speaker challenges the notion of finding a 'magic' strategy or indicator for success in trading, stressing the psychological aspects as more critical than any technical tool.
• 🃏 Successful traders are described as having a 'poker face,' maintaining emotional control and consistency in their demeanor regardless of market outcomes.
• 🕒 Discipline and routine are key characteristics of successful traders, who follow a strict daily schedule to maintain a high level of organization.
• 🎲 The concept of a 'probability mindset' is introduced, where traders think in terms of likelihoods of success and failure, similar to the odds in a coin flip.
• 🚫 The speaker argues against the overemphasis on positivity and hope, suggesting that these can lead to unrealistic expectations and a gap between desires and reality.
• 🧘 Clarity and focus are proposed as replacements for positivity and hope, with the idea of being present and interpreting situations without bias as crucial for success.
• 🔄 The importance of managing situations, both good and bad, is underscored, with the advice to 'cut losses quickly' in trading to avoid larger setbacks.
• 💭 The presenter discusses the potential pitfalls of positivity, including the energy it requires and the risk of leading to depression if not managed properly.
• 🌟 Success is subjective and should be personally defined, with the speaker advocating for a realistic approach to goals and expectations.

Q & A

What is the main theme of the presentation?

The main theme of the presentation is the psychology of finance, specifically focusing on myth-busting and the mindset of successful traders.

Why is the success rate of traders less than 5% according to the speaker?

The speaker suggests that the low success rate is due to psychological reasons, as many traders believe in finding a 'magic' strategy or indicator rather than understanding the psychological aspects of trading.

What is the concept of 'myth-busting' as mentioned in the script?

Myth-busting refers to the process of challenging and debunking commonly held beliefs or misconceptions, which the speaker applies to both everyday life and financial concepts.

What does the speaker mean by 'poker face' in the context of successful traders?

A 'poker face' in this context means that successful traders do not show their emotions and maintain a consistent demeanor, whether they are experiencing gains or losses.

How do successful traders maintain their discipline according to the speaker?

Successful traders maintain their discipline by having a strict routine, waking up at the same time every day, and following the same working and resting hours, as well as exercising regularly.

What is the 'probability mindset' as described by the speaker?

The 'probability mindset' is the ability to think in terms of probabilities of success and failure, rather than in a deterministic way. It involves understanding that outcomes are not certain but can be predicted over a large number of occurrences.

Why does the speaker argue that positivity and hope can be problematic?

The speaker argues that positivity and hope can be problematic because they often involve a projection into the future that may not be realistic, and they require a lot of energy to maintain, which can lead to disappointment and depression if the desired outcomes are not achieved.

What are the two concepts the speaker suggests replacing positivity and hope with?

The speaker suggests replacing positivity and hope with clarity and focus, which involve being present and interpreting situations as they are without bias.

What does the speaker mean by 'closing the gap'?

'Closing the gap' refers to managing the difference between one's aspirations and the current reality, and not letting this difference cause negative emotions or unrealistic expectations.

How does the speaker define success in the context of the presentation?

The speaker defines success as a personal and subjective concept that varies from person to person. It is up to each individual to define what success means to them, whether it be a simple pleasure like a salami sandwich or something more material like wealth.

What is the speaker's advice on how to achieve clarity of mind?

The speaker's advice for achieving clarity of mind is to learn how to breathe properly, suggesting that focusing on one's breath can help to be present and clear-minded, which is beneficial for trading and life in general.

Outlines

00:00

🧐 The Psychology of Finance and Myth-Busting

The speaker introduces the concept of integrating finance with psychology, focusing on myth-busting in the financial world. They discuss the importance of understanding the psychology behind trading and the misconception that success in finance comes from finding a 'magic' strategy. The speaker emphasizes the need to control emotions and maintain discipline, highlighting the low success rate among traders and the importance of routine and organization in successful trading.

05:00

🎭 The Poker Face of Successful Traders

This paragraph delves into the characteristics of successful traders, likening them to poker players who maintain a 'poker face' by controlling their emotions and not letting external factors affect their decisions. It also introduces the concept of a 'probability mindset,' where traders think in terms of probabilities rather than certainties, understanding that both winning and losing are part of the game. The speaker stresses the importance of consistency and discipline in a trader's routine, regardless of market outcomes.

10:01

🤔 Rethinking Positivity and Embracing Clarity

The speaker challenges the conventional wisdom of positivity and hope, suggesting that they can have a dark side and may not necessarily lead to success. Instead, they advocate for clarity and focus, explaining that successful traders have a clear mind, free from biases and preconceived notions. They discuss the pitfalls of being overly positive or hopeful, which can lead to a disconnect with reality and emotional exhaustion, and propose that a clear and focused mindset is more conducive to success in trading and life.

15:02

🚫 The Perils of Unrealistic Expectations

This section critiques the idea of setting unrealistic expectations, such as aspiring to be the next Warren Buffett or Bill Gates, by highlighting the role of luck in their success. The speaker encourages setting realistic goals and working towards them with discipline and clarity of mind. They emphasize the importance of not being swayed by the stories of a few outliers and instead focusing on personal growth and the probability of success through consistent effort.

20:04

🧘‍♂️ Achieving Clarity Through Mindfulness and Breathing

In the concluding paragraph, the speaker offers advice on achieving clarity of mind, suggesting that learning to breathe properly is a simple yet effective method. They argue that being present and focusing on the breath can lead to a clearer mind, which is beneficial for traders and anyone seeking success. The speaker summarizes the importance of having a clear mind, setting realistic expectations, and embracing the probability of success through repetition and consistency.

Keywords

💡Myth-busting

Myth-busting refers to the process of challenging and debunking widely held but false beliefs or misconceptions. In the context of the video, the speaker uses myth-busting to question common financial assumptions and to promote a deeper, more critical understanding of financial concepts. An example from the script is the speaker's life-long engagement in myth-busting, which they apply to both small and significant matters, including finance.

💡Psychology of finance

The psychology of finance explores how human behavior and emotions influence financial decisions and markets. The speaker emphasizes this concept by discussing the mental aspects that contribute to the success or failure of traders, highlighting the importance of emotional control and discipline in financial trading.

💡Poker face

A 'poker face' is a term used to describe an impassive or inscrutable expression, which conceals a person's thoughts or feelings. The speaker mentions that successful traders often have a poker face, maintaining a consistent demeanor regardless of whether they are making or losing money, which helps them control their emotions and make rational decisions.

💡Probability mindset

A probability mindset is the ability to think in terms of likelihoods and uncertainties rather than certainties. The speaker explains that successful traders adopt this mindset, understanding that outcomes are probabilistic and that long-term success is achieved by consistently making trades with a probability of success greater than 50%.

💡Discipline

Discipline refers to self-control and the ability to follow a code of conduct or a set of rules. In the video, the speaker describes how successful traders are highly disciplined, maintaining routines and habits that contribute to their trading success, such as waking up at the same time every day and performing exercises at consistent times.

💡Emotional control

Emotional control is the ability to manage and direct one's emotions constructively. The speaker points out that successful traders control their emotions, preventing them from influencing trading decisions, which is critical in an unpredictable and often emotionally charged environment like financial trading.

💡Focus

Focus is the act of concentrating one's attention on a particular object or task. The speaker replaces the concept of hope with focus, emphasizing that successful traders are present and fully engaged in the current situation without being distracted by future expectations or past experiences.

💡Clarity

Clarity, in the context of the video, refers to having a clear and unbiased mind, free from the influence of past or future considerations. The speaker suggests that clarity is essential for traders to interpret the market accurately and make sound decisions based on the present situation.

💡Realistic expectations

Realistic expectations involve setting achievable goals and acknowledging the limits of one's abilities or circumstances. The speaker warns against the unrealistic aspirations of becoming another Warren Buffett or Bill Gates, advocating instead for a grounded approach to success based on hard work and probability.

💡Positivity

Positivity is the state of being optimistic or hopeful. The speaker discusses the potential pitfalls of positivity, such as the creation of a gap between expectations and reality, which can lead to disappointment or depression. Instead, they advocate for clarity and focus as more effective approaches in the context of trading and finance.

💡Breathing

Breathing is mentioned as a fundamental technique for achieving clarity of mind. The speaker suggests that learning to breathe properly can help individuals become more present and focused, which is beneficial for traders in making clear-headed decisions.

Highlights

The presenter emphasizes the importance of myth-busting in finance, challenging commonly held beliefs that are often taken as truth due to repeated exposure.

A finance perspective is integrated into the presentation to explore the psychology behind financial success and failure.

Teaching finance for 20 years has provided insights into the low success rate of traders, prompting further research into the reasons behind this phenomenon.

The unpredictability of trading is highlighted, with the presenter questioning how one can profit in an environment that is inherently unpredictable.

The presenter introduces the concept of the 'psychology of trading' as a key factor in understanding the success of traders.

Successful traders are described as having a 'poker face,' maintaining emotional control regardless of market outcomes.

Highly disciplined routines are attributed to successful traders, who exhibit a level of organization and discipline beyond the norm.

The presenter discusses the characteristic of trading where both winning and losing are part of the game, and how successful traders maintain consistency in their approach.

The concept of a 'probability mindset' is introduced, where traders think in terms of probabilities rather than deterministic outcomes.

Traders are described as having no projections about the future, focusing instead on the present moment and interpreting situations without bias.

The presenter argues against the overemphasis on positivity and hope, suggesting that they can be misleading and potentially lead to disappointment.

Clarity and focus are proposed as alternatives to positivity and hope, with the presenter advocating for a clear mind and present-moment awareness.

The presenter discusses the potential dark side of positivity, suggesting that it can lead to a gap between expectations and reality, which may cause mental strain.

The importance of having realistic expectations is stressed, with the presenter cautioning against aiming to become 'another Warren Buffett' due to the rarity of such success.

The presenter concludes by advising on how to achieve clarity of mind, suggesting that learning to breathe properly can lead to a more focused and clear state of mind.

The presentation ends with a reminder to define personal success, clear one's mind, and live in the moment to increase the chances of achieving it.

Transcripts

now the background when I was asked to

make up this presentation it took me a

while to decide what to talk about and

since I have a finance perspective I had

somehow to bring in some finance and

more more specifically the psychology of

fineness okay so here it is one of my

biggest hobby is myth-busting Sal

Viscuso myth-busting that means taking

some concepts I've been doing that all

my life you hear things a thousand times

after a while you start believing it's

the truth right and it takes a while to

realize sometimes it's just conditioning

okay so I enjoyed doing that with small

things and big things so I will combine

myth-busting with finance and I will

give you the my statements in few

minutes okay so I teach finance I've

been doing it for 20 years it's funny

it's fun can be boring sometimes but

it's a very interesting topic I've done

some research about it and for the past

few years I'm also trading financial

instruments you know what that means

right and since I'm tea I'm researching

I'm doing trading and I'm researching

traders do you know that traders you

know people who buy and sell stocks

currencies right you understand that

they the the the success rate is less

than 5% that means if we have hundred

people here less than five will make

money

sometimes even less than that so why is

that the question you know deserves some

research now trading is very fun very

exciting very unpredictable okay you buy

yourself stock you hear some news you

think it's gonna go up but it's go down

you think it's gonna go down it goes up

you don't understand alright so how can

you make money in such and predict the

predictable environment well the the

trick is to get into the psychology of

trading the mistake of some people is

that they think there is some magic

somewhere okay there's some magical

strategies or this some magical

indicator or magical formula I will find

it

and then I will make millions of dollars

but trading is very hard right for

psychological reasons just like almost

any field psychology is very important

so let's explore that that the minds the

mind of a trader of financial trader

okay it's very interesting okay a

successful trader has a poker face just

like mine what is the poker face

poker voice no idea well first of all at

poker if you see successful traders

talking expressing their ideas you don't

know if they're happy

or said okay you don't know if they're

having a good time or a bad time they

just have the same tone same face and

they keep it for a long time to them

being in the marriage of funeral is the

same thing okay making money or losing

money or at least in appearance is the

same thing okay they they control their

emotions okay you cannot stop emotions

or things popping up in your head but

they don't let these emotions control

them okay they are highly organized

and highly disciplined okay they wake up

everyday at the same time they do

exactly the same routine they don't

think they work like like machines okay

they they have the same working hours

they have the same resting hours they do

their exercises at the same time every

day okay so they are highly disciplined

beyond the normal person and in trading

the characteristic of trading is that

you make money and you lose money

sometimes okay that's that's part of the

nature of the game and to them when you

see them a successful successful trader

is you know when they win make money or

lose money it's exactly the same thing

you will find the same they will still

go out there and do the same routine and

do the same thing do their exercise have

their dinner at the same time etc

nothing really changes so I have to have

this poker life they don't show their

face okay and that's really the nature

who let the characteristic of this

personality they have also what we call

a probability mindset and and here I'm

about to get into my statement and what

is the probability mindset a probability

mindset that means they think in terms

of probability and this is not very

natural very few people can think in

terms of probability what does it mean

really think in terms of probability

they don't think in a deterministic way

like people who you know would like to

have a fixed salary would like to have a

fixed life would like to know what they

will have for dinner tonight

etc now these guys they can have a

winning month they can have a lose in

month etc so probability means that they

get into something and they know the

probability of success and the

probability of failure just like when

you flip a coin right if flip a coin

what is the probability that you will

have head 50% right

so you don't know exactly in each flip

if you will it will be head or tail

right but you know if you do it ten

thousand times what will happen it would

be 5050 this is how they think so to

them you have to keep doing the same

thing over and over and over thousands

of times in a very boring way without

thinking to get their probability of

success which to use v2 them is more

than 50% right so it's okay if you lose

sometimes you know you will win more

than you lose but this is so heavy

on to think in mind that it's you know

95% of the people cannot do that okay

usually because they don't know how to

do it so these people they're not

projecting in the future I'm talking

about these people like they're aliens

there are supernatural in a way they

have no projections in the future right

they they don't think about tomorrow

after tomorrow well actually they think

about it but it's it's not it's not

affecting their emotions right they are

here now okay they can feel their body

did their sensations they can hear you

they can analyze what you say in an

unbiased way which is very hard because

the mind tends to be projected in other

things that are not here right this is

the natural way of doing things to them

nothing is a problem it's it's a

situation everything is a situation

whether we perceive it to be good or bad

we are in a situation we have to manage

it

okay so if the situation is what we call

bed well I will get rid of it as fast as

possible okay

that translates into them when you have

a losing trade I will not let the loss

go very far away I will get rid of it

now before the loss gets bigger okay and

that's very hard to do because we don't

accept a loss so sometimes we have a

losing possession and we keep a losing

possession and so it gets worse and

worse and worse and worse okay when a

situation is bad then you try to make

them all or good sorry what we perceive

to be good we try to keep it as long as

possible make the most of it okay so we

pronounce the good situations and we

shorten the bad situations and this is

the probability mindset this is how you

win it's this is similar to what people

say you know you do it over if you fail

you do it over you fail keep doing it

until you succeed it's kind of similar

but it's not exact it's a probability

way of thinking now the interesting part

is that and here it's a little

controversial because positivity is is

really a big thing for everybody right

well these guys they don't do what they

do in terms of Passau positivity okay

and I will go as far as there is a

confusion of what positivity is because

I don't really think positivity gets you

the good things okay it's other things

that will get you there positivity is

more of like sugar it makes you feel

good right

but if since we live in a world of

duality if you think about positive but

there is no way that you can forget

about negative things okay so it's a

tricky concept so it's not about

positivity positivity is the future it's

not now these guys are not about hope

again hope is similar to positivity okay

I'm not really you know saying these

things are bad what I'm saying is that

they have a dark side to them okay

positivity and hope can be very tricky I

know people who've been positive all

life and they really haven't done much

but when you see them they're positive

you know if you throw something bad at

them they will look at it from a

perspective and they won't interpret it

as being good so they always play in

this ping-pong game of good bad good bad

you cannot think about bad and not good

or think about good and not bad so you

always play in this ping-pong game and

it's very tiring believe me

can be very tiring for some people okay

so not positivity no hope so we replace

this concept by clarity they have a

clear mind what is a clear mind a clear

mind is a mind that is here present that

is not affected by the future the past

by the hope no it's here completely

empty and biased interpreting things as

they are not as the mind thinks they are

okay and we will replace hope by focus

so into the world of trading in finance

we change positivity and hope to clarity

and focus in other words we want to be

here and not there okay

so what's wrong with positivity I'm not

saying it's wrong I'm just talking about

the dark side of positivity okay well

you know that saying the people are

positive you know that saying when life

throws that you are limited what do you

do you make a lemonade right that's

that's famous saying for for the

positive community which is almost

everybody but the problem is is if you

have a lemon do you know how to make

lemonade if you know what I'm saying

because there is always a gap okay and

if life gives you what you think is

lemon is it really a lemon because

sometimes what you think is bad you

think something happens bad to you you

wait a little bit you realize it wasn't

so bad because it threw you into

something that opened some doors for you

okay so it's always a mind

interpretation what appears to be bad

can be good in a longer perspective and

vice-versa

okay so there is this gap well an

example would be okay I want to have

this nice house but I don't have a nice

house now there's a gap and that gap can

can widen why well because you start

wondering how on earth am I gonna get

the money to get this house right is

this legitimate right so you can get

into a vicious cycle of thinking that

widens the gap and it happens all the

time okay like what he just said before

you know it's it's it's not because you

think positive about something that it

will happen okay because there is there

is now a reality that is in front of you

that keeps throwing you away from it so

at the end it might get worse and this

is what happens to most people that's it

reality so it's not easy to manage so

closing the gap is between what you want

and what you see right now because what

you see right now can be very bad

according to your judgement okay but

it's here so it's affecting you and it's

hard to get away from it that's why most

of the rich people are from family who

have money most of the poor people are

from families who do not have money

that's the way it is because that's what

you see it affects you all the time

so the people who go from one to the

other is because they they applied you

know the very high self-discipline or

some kind of self pressure self clarity

that will call their what that got them

to there and and it's really a minority

we have to be real about it the last

thing about positivity you know or

before last thing is that you know

positive it's positivity and hope

willpower motivation these things need a

lot of energy isn't it right

you have to keep pressure in yourself to

remember to think about this all the

time right and this this you know in a

sort of funny way can be fueled by sugar

yeah I mean if you want to motivate

yourself all the time keep repeating

affirmation all the time keep doing all

this and you might have to eat a lot of

sugar because you need that energy it's

an energy that you need that will go

away so I know a lot of fat positive

people I'm sorry about that but that's

it's it's one of the risks if you use

positivity in in I would say wrong way

and it can lead to depression that's I

mean there are scientific studies about

this you know people tend to ignore the

dark side of these things but there are

some negative or some studies that

actually link positivity to to

depression why because this of this gap

that I said the gap between what you

want but you really want that what you

have and that you cannot close by not

closing it you can have some mental

issues okay all right so we want to

replace positivity and hope with clarity

and focus okay so clarity and focus that

means you are here okay not there I'm

not in tomorrow I'm not in the other

building I am here I'm watching you I'm

trying to fill you I'm trying to fill

the building without any bias judgment

okay this is what clarity is I'm empty

in my mind so I cannot just you based

off of all my programs so I can judge

you as you are okay

this is what clarity is and of course

focus goes with clarity that means I

have to find a way to focus on you to be

here right here right now okay so I

really believe that you know a lot of

people who make it you know who do good

things they talk about positivity but

somehow they have this clear mind okay

and they add positivity to it and they

have very nice mix but some people just

cannot make it with positivity okay and

they are not given the right directions

into starting working on unclear in

their mind before they can become

positive okay so when you are clear it's

not that you have no emotion that's not

really exact but it's we are human

beings

you cannot stop thinking you cannot stop

emotions but what you can work on is

stopping or limiting the impact of your

emotions on you okay and that can be

done with some work okay so no emotions

things are what they are not as I am I'm

seeing you as you are hopefully not as I

am not filters of my mind this is you

know this is how traders make money

because they are able to judge the

market based on what it is not on what

my mind is okay on what happened

yesterday one week ago etc okay that's

what clarity is I cannot judge things

well if I'm positive positive is

tomorrow no you know what I mean okay

and these guys are single minded of

course because they are very focused and

they have realistic expectations okay

realistic expectations and I think

somebody touched on that is that you

know it's things are not as simple as

you might think you know for example few

days ago or few weeks ago I was

interviewing one guy to work in finest

Academy for me and he wanted to impress

me and he the first thing he said you

have to hire me I'm the future Warren

Warren Buffett I am very positive very

you know I told him first of all Warren

Buffett is not a trader he's an investor

where he invests in financial instrument

but he's not a typical trader and I

don't like that much positivity and I

wanted to say something but it's gone

but anyways I ended up hiring him

not because of him because because it

was really funny because he knew about

finance somehow okay but but you know I

told him you know Warren Buffett is not

an investor and it's not realistic there

is only one what Warren Buffett there

will never be another Warren benefit you

know people like Warren Buffett Bill

Gates Steve Jobs or whatever these big

names this these people we call them

statistical outliers I don't know if

anybody knows what that means

Siddiq alive even I mean just listen to

Bill get he said he says that I am here

because I'm lucky there's nothing about

you know being positive or something

okay of course if you do good things

good things will happen to you

but don't expect to become Bill Gates

expect something good to happen okay so

these guys that's what I mean by realist

and realistic expectation you have to do

your best you have to work hard you have

to create expectation and objectives and

expect to good things to happen but

don't try to be you know something that

is purely a statistical error okay for

example I am statistical error because

I'm almost two meters right how many

people are two meters I'm the tallest

guy in the building right that's that's

what bill gate is you know it's like a

two meter 20 basketball player you know

you will have very few people that will

get to that point and usually it's pure

luck it's not success that is pure luck

it's the extent of the success that is

pure luck okay however let's remain

positive right if you work hard if you

do good things good things will happen

but just don't be unrealistic

okay now I will just finish by giving

you talk you notice maybe how a little

bit to become clearer first of all you

know if since we're talking about

success we enjoy success we'd like to

have success

well success first of all it's up to you

to define it you define what success is

for you if success is having a salami

sandwich that's fine it's nobody's

business to judge you right if success

for you is to have a lot of money good

for you just make sure that you don't

have that gap that you can get there

that the gap is not too strong for you

okay so you define what success is

then you clear your mind try to find or

learn some tools that will help you

clear your mind okay learn to live in

the moment right now you know I want to

be here not there I want to judge thinks

as they are not as I am that's another

way of saying walk the path of

probability the path of the probability

is repeating the same thing exactly

without thinking over and over and over

and over and over right and the

statistic will be on your side at the

end by probability you will win when you

do it hundred there is nothing it's not

a miracle it's purely mechanical when

you repeat things over and over

statistically speaking you will if you

choose a good distribution you will win

okay so it's not magical okay

it's exactly like a blind box right a

blind walks successfully by going this

way then this way then this it's never

straight bad okay that's that's the the

the probabilities way of thinking okay

well how do you pick have a clear mind

well I'm sure there are many ways but to

me I think the best way to just learn

how to breathe it's as simple as that

simple does not mean easy right simple

just means that you know the path is

very clear if you learn how to breathe

I'm not necessarily talking about

meditation

when you've learned how to focus on your

breathing you learn to become single my

if you focus on your breathing you are

here okay so this is an exercise that

you can read about it research it but

it's it's clarity or mind care clarity

is directly linked to to to how you

breathe if you breathe well if you learn

how to breathe you will have a clearer

mind and maybe you'll become a good

trader okay thank you very much

[Applause]