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The Doctor Who Rewired The Psychology Of Wall Street Traders — Transcript

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0:00People who say that trading psychology
0:01is to experience anger,
0:03frustration, FOMO, anxiety, all the
0:05emotions, it's very normal. So, what we
0:07have to do is learn how to read it as
0:09information. [music]
0:10Treat emotion as data that's worthy of
0:12analysis. The key though, and this is a
0:14big thing,
0:15>> EWI why is the psychology of true
0:18institutional traders and professional
0:20traders. He himself is a trader as well.
0:23Meet Dr. Andrew Menaker.
0:26>> Always wanting more. When I first
0:27started making money, of course I wanted
0:28to make more. I need to beat what I did
0:30last week or last month or last quarter.
0:32I need to have my best year. That has
0:34become a problem for me. It still is to
0:35this day. So, one of the things I've
0:36learned to do for myself is I
0:38>> In this episode, Andrew gives a
0:40play-by-play walk-through of [music]
0:42exact processes he utilizes on
0:45professional and institutional traders.
0:47Learn all this and more on this episode
0:51of Words of Risk.
0:52>> Getting the edge is not the hardest part
0:54in trading. There's a lot [music] of
0:55edges. There's a lot of ways to extract
0:57money from the market. It's about how to
0:59execute your edge. Anyone who's watching
1:01and listening to this, I strongly
1:03encourage if you're not successful
1:04trader yet, and by the way, I define
1:06success as being able to make enough
1:07money to support yourself for a [music]
1:08year from your trading profits. If
1:10you're not there yet, you need to be
1:11categorizing your trades as
1:14>> I want to get straight into it. I know
1:15we have a lot to go over.
1:17>> Mhm.
1:17>> But just straight off the bat,
1:19what is the key difference that you
1:20notice working with such professionals,
1:23bank traders, institutions, Wall Street
1:25traders,
1:26much larger in terms of
1:28the capital that they're working with
1:31in comparison to the independent retail
1:34traders? Is there a huge difference in
1:36the sort of advice, maybe struggles that
1:38these traders face?
1:40>> One of the biggest differences is the
1:42type of performance anxiety when you're
1:44managing other people's capital. It's
1:45not just about measuring how you're
1:47doing, but other people are watching
1:49you. So, the type of anxiety is very
1:51different when you're managing capital.
1:53And so, the work that I do with those
1:55types of traders is a bit different.
1:56Everyone struggles, every trader um has
1:59FOMO, every trader gets frustrated after
2:01a loss, every trader feels nervous about
2:03being in trades. But when you're
2:05managing capital, it's a whole 'nother
2:06layer. So, my work with those folks is
2:09very different. 30% of my clients are
2:11independent traders, about 70% are
2:13professionals, hedge fund managers, bank
2:15traders, prop traders.
2:17>> That's really interesting. And as we
2:19mentioned in terms of the fact that you
2:20trade as well,
2:22>> Yeah.
2:22>> how much of a difference do you think
2:23that plays into your work? Knowing,
2:26actually experiencing those emotions and
2:28those highs and lows that
2:30an average trader or even just any
2:32trader feels.
2:33>> Yeah, great question. Well, I think
2:36on the one hand, it gives me some
2:37credibility with clients. And it also
2:39allows me to know what they're
2:40experiencing. Um when you have skin in
2:42the game, I think it really changes
2:43things quite a bit. Um I'll say this,
2:46too. It's not always great that I'm an
2:48active trader and a performance coach,
2:50because I'm exposed to a lot of
2:52different trading styles, a lot of
2:53different types of trading, some very
2:55successful traders. And
2:57it can have the effect of wanting,
2:58causing me to question what I'm doing
3:00and I try and try and do what someone
3:02else is doing. It doesn't always work so
3:03well for me. Usually it doesn't. So, one
3:05of the downsides of being an active
3:07trader and a coach is uh knowing how to
3:10stay in my lane, if you will. And that
3:12took me some years to figure out for
3:13myself, actually. Knowing who I am and
3:15staying true to myself.
3:17>> That's so interesting, cuz I have the
3:18similar, that's where we have something
3:19in common, cuz you're speaking to all
3:21these traders all the time. Thankfully,
3:23I I personally have paused my trading
3:26when building the podcast. But even
3:29then, there's still the thought of that
3:30sounds great. That's you know, that
3:31makes sense. I should try that.
3:33>> Yeah.
3:34>> And it is a bit of a struggle to to not
3:36try and do that.
3:37>> Yeah. You know, interesting story. I'll
3:38share with you. Back in 2012, there was
3:40a
3:41I was invited to be part of a book. The
3:43the lot So, very lofty title. How the
3:45world's most successful traders make
3:47their living in the markets. They're
3:48going to interview 16 traders, one
3:50chapter on each trader. I was one of the
3:52traders. There was a lot of famous
3:54traders in that book, Peter Brandt,
3:56Linda Raschke, very famous professional
3:58traders who've been around a long time.
3:59I felt like an impostor to be part of
4:02that book.
4:03When the book came out, within 2 months,
4:05I had the worst drawdown in my trading
4:07career.
4:08And so I realized that being a
4:09recognized as a good trader is not
4:11always
4:12um a positive thing in your own trading
4:14because it can inflate your ego, which
4:15it did to me. And it caused me to have a
4:17lot of problems for a few months after
4:19that, actually. So.
4:21>> I would love to set the stage because
4:23we've had the the pleasure of having
4:25different trading performance coaches
4:27and psychologists on the podcast. And
4:29what I've noticed, and I didn't really
4:30think about it
4:32so deeply before having this experience,
4:35is that each one seems to have a
4:36different philosophy that they they come
4:39to
4:40the work with, if that makes sense. So,
4:43as we mentioned you, we talked about
4:44Randy Hal for example. He has a very
4:45specific methodology and philosophy
4:48which he bases the foundation of his
4:50work and how he interacts with them, the
4:52traders, and the feedback he's giving.
4:54Are we able to sort of establish what
4:55your philosophy and sort of standpoint
4:58is when working with individuals?
5:01>> Certainly. Love the question. Um so I
5:04approach it as we don't see the market
5:05as it is, we see it as we are.
5:08Um
5:09we see everything through a personal
5:10filter. The market, a chart, is like an
5:13a Rorschach inkblot. You show it the
5:15same chart to 10 people, you'll get 10
5:16different interpretations based upon
5:18their past, their their memories, their
5:21expectations, who they are, their degree
5:23of EQ.
5:24So my approach is teaching
5:26my traders, my clients, helping them to
5:28understand how their personal filter
5:30operates.
5:31Since you're not going to see the market
5:33clearly, it's going to come through your
5:34own personal filter, what's going on
5:36with that personal filter? And so I can
5:38go deeper into that if you'd like, but
5:39it's really it's really about that. So,
5:43you know, a lot of traders have a
5:44background, perhaps maybe in math or
5:46science or engineering or logic,
5:48something like that. So, the numbers are
5:50a big part of trading.
5:51Um the problem is that the numbers, the
5:53data, is something that's outside of
5:55you. What you see on the chart, the
5:57pattern, it's outside of you.
5:59When you're under pressure, this applies
6:01to everybody, whether you're managing a
6:04billion dollars, you're managing a
6:05thousand dollars, it doesn't matter.
6:07When you're under pressure,
6:08the external data, what you see outside
6:11of you, is going to be influenced by
6:13what I call the internal data, which is
6:15both emotional as well as physiological.
6:18Your blood pressure, your heart rate,
6:20your hormone ratios, how much caffeine
6:22you have in your system, how much sleep
6:23you've had,
6:25disease process, any kind of health
6:26issue, biology, I call it roughly, and
6:29your emotional state creates the
6:31internal data set.
6:32And the more pressure you're under,
6:34the more the internal data influences
6:37how you perceive the external data. So,
6:39you have to learn what is your internal
6:40data set saying, learning to use emotion
6:42as information, learning to read your
6:44own what I call inner market, which will
6:47help you to more clearly see what's
6:49going on on the chart and not react to
6:50your own personal needs.
6:54>> I believe there's a big misconception in
6:56sort of the retail trader
6:58realm, if you will,
7:00where they believe that emotions are bad
7:02and that we need to be emotionless in
7:04the markets. What what are your thoughts
7:06when you hear that?
7:06>> I would say good luck with that because
7:08as humans we're all emotional creatures.
7:10We have a limbic system, part of the
7:12brain, the amygdala, hippocampus, all
7:14part of the limbic system. It's the
7:16survival part of the brain. So, to
7:18experience anger, frustration, FOMO,
7:20anxiety, all the all the emotions, it's
7:24very normal. So, what we have to do
7:26is learn how to read it as information.
7:28Treat emotion as data that's worthy of
7:31analysis. The key though,
7:34and this is a big thing, is learning how
7:35to analyze it in real time.
7:37A lot of people journal, which is great.
7:39I'm a big advocate of journaling, but
7:41you don't get as much out of journaling
7:43as you could if you're actually learning
7:44to analyze your emotions as you're
7:46having the emotion, not later. Writing
7:49about it later is great.
7:50I encourage people to do that. But, you
7:53have to have ways to analyze what's
7:54going on for you right here in this
7:55moment.
7:57Is my desire to hit that buy or sell
7:58button
7:59me acting on an emotion, or is this me
8:01acting on my plan?
8:04>> Is there anything specifically that can
8:06allow traders to get more self-aware,
8:08more present to be able to facilitate
8:10that?
8:11>> Yeah, there's a lot of different things
8:12you can do. So, one of the first things
8:14you want to do is I like to start with
8:15the body, the physiology. What's going
8:18on with your body?
8:19Are you leaning forward? Are you tense?
8:21What's your breathing rate?
8:22Um are you clenching your fists? So,
8:24look for signs in the body, somatic
8:26markers are a big kind of a big tip-off
8:29in terms of your emotional state.
8:31Your inner dialogue, um there's a lot of
8:33different ways to go after that. And I I
8:35have a lot of different techniques for
8:37that, basically, which we could get we
8:39can get into.
8:40>> Okay.
8:40>> The main thing though is you have to
8:41really spend time learning your own
8:43internal patterns.
8:45As a trader, we're always looking for
8:46patterns on the screen,
8:48but guess what? There's also patterns
8:50inside of you, inside of me. We all have
8:51our own internal patterns, our thoughts
8:53and feelings,
8:55and those intersect with what we see on
8:56the screen. So, learning to keep track
8:59of your patterns and what those patterns
9:00mean for you is really important. In
9:03fact, I'll say that
9:05emotion is not not the problem, it's
9:07your reaction to the emotion. It's what
9:09do you do with emotion is the behavioral
9:11response. Everyone has FOMO. Everyone
9:13wants to get their money back after a
9:15loss, but what are you going to do with
9:17that feeling? Do you want to put the pen
9:19on the paper and write about it? You
9:20want to go take a walk? You want to
9:21breathe? Or do you want to hit the buy
9:23and sell button to get the money back?
9:25It's your choice in that moment. And
9:27learning how to create new habits for
9:29yourself.
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11:19trading education forever.
11:24>> As part of being able to be more
11:25self-aware in the present moment, do you
11:27feel like
11:29a A of people struggle with that because
11:31we aren't
11:32Well, we're in a society really that is
11:34constantly distracted and I can be
11:36guilty of this myself of
11:38rather than being
11:40you know, with my thoughts alone for a
11:42moment, I always
11:43have a YouTube video I can watch or an
11:45app that I could be on or find something
11:47to fill that time and space. Especially
11:50even reflecting on trading for example.
11:52Yes, the market's there and I should be
11:53probably focused or maybe something's
11:55I'm waiting for something to set up. But
11:57instead of maybe taking a moment to sort
12:00of check in as you say mentally of
12:01what's how am I feeling? How am I
12:03operating? Am I on process rather than
12:05I'm distracted with maybe it could even
12:07be a podcast. It could be something else
12:09to just keep the mind busy whilst I wait
12:11rather than allowing ourselves to be
12:14present and have a moment just to
12:16ourselves.
12:17>> Exactly. I think, you know, so often our
12:19day-to-day experiences we go from a
12:20dopamine spike to a dopamine dip back
12:23and forth along this loop. So, I might
12:25suggest that every half an hour take a
12:27minute and check in with yourself. Close
12:29your eyes. Do some long slow deep
12:31breathing. Where do you feel tension in
12:33your body? What is the What are the
12:34quality What's the quality of your
12:36internal thought at that point? What are
12:38you feeling? Checking in with yourself
12:40on a regular basis.
12:42A lot of people hear me say this and
12:43they'll think it's a great idea, but
12:45those who will do it will actually get
12:47great benefit from it. Those who think
12:49it's a good idea, but never do it won't
12:50get much benefit from it basically.
12:53>> Have you ever sort of had a client where
12:55you've had that sort of I don't know
12:56what how to describe the mentality
12:58probably maybe is it stubbornness? Is it
13:00a lack of discipline to follow through
13:02with the action? Have you ever had a
13:03client where
13:05you've had to do some specific work on
13:07overcoming that first before they start
13:08implementing something?
13:09>> Many clients actually. Um more than I
13:12would care to admit.
13:14Um you know, most of my clients are men
13:17and as as men we're not often taught to
13:19acknowledge our feelings let alone to
13:21express them or understand them in real
13:22time. So, in learning to do that can
13:25feel like a weakness or I'm being
13:27vulnerable or how's this going to help
13:29me make money? So yeah, I I often have
13:31to show people the connection through
13:34how they're feeling and what they're
13:36doing with the buy or sell button. And
13:37when they when they start to see that
13:39connection more, then they realize the
13:41the value
13:42of learning to assess how they're
13:44feeling. Then I have to teach them how
13:46to actually do that as well cuz I don't
13:47usually know how to do that
13:48automatically. So
13:50>> So just going back to what you said
13:51earlier in terms of those processes of
13:53trying to be more present and really be
13:56mindful of how we're reacting or how
13:59we're feeling in real time. What were
14:02some of those processes that you
14:03implement with traders for them to
14:05facilitate doing that?
14:06>> Yeah.
14:07Well, I always start with the body
14:09and have them do long slow deep
14:11breathing. Have them do a body scan.
14:13What are they feeling in their body from
14:14head to toe? Start there. And then you
14:17want to go towards what are my thoughts
14:20right now? What am I thinking? What are
14:21my hopes? What are my fears? What are my
14:23expectations?
14:25And as a bonus, if they can get that on
14:27a paper with a pen and write that out,
14:29that's even going to be more helpful
14:31because just doing this internally in
14:33your head, what you're trying to do is
14:34you're trying to engage the prefrontal
14:36cortex, the front part of the brain
14:37behind the forehead,
14:39the logical part of the brain. It's very
14:41hard to do that when you're staring at a
14:42chart and you're thinking about money.
14:44The limbic system, the emotional part of
14:46the brain, also isn't going to want to
14:47be involved. So to engage the prefrontal
14:50cortex more by putting a pen in your
14:52hand and putting your thoughts and
14:53feelings on paper, you're forcing the
14:56PFC, the prefrontal cortex, to become
14:57more involved, which is really where you
14:59want to be trading more from
15:01versus the limbic system.
15:03>> Do you find
15:05because when hearing this,
15:07I can imagine
15:08what the average trader will do. And
15:10again, guilty of this in the past, no
15:11doubt, even maybe in present day for me.
15:15But it's like additional steps,
15:17additional work that has to be done,
15:18right? It's like why why do most traders
15:20not journal? Because this is tedious
15:21extra task, but then they're the little
15:24things [snorts] that make the biggest
15:26differences, right?
15:26>> Right.
15:28>> So, do you find that
15:30because of this additional work that
15:31maybe it doesn't incentivize the
15:32dopamine here, right? As we just talked
15:34about. Is that a big reason as to why we
15:36look to avoid and even though we know it
15:39might be the right thing to do, but we
15:40kind of just don't put an emphasis on
15:42it?
15:42>> Yes, yes, and yes. So, it does not give
15:44immediate gratification to do that type
15:46of um
15:47self-awareness work. Um people not see
15:49the direct connection to making money as
15:51well. How is putting my pen on the
15:53paper, how is checking in with myself
15:54going to make me more money? So, this is
15:57part This is where the resistance to
15:58doing it comes from.
16:00But, when they start to do it and they
16:01start to see a difference in how they're
16:03reacting and how they're um no longer
16:05putting on revenge trades, how they're
16:07waiting patiently for the setup and not
16:09front running themselves, when they
16:11start to see the benefit of it, they
16:12start to do it more. But, the first part
16:15of the the work is very difficult.
16:17Getting people to actually see the value
16:19of that, let alone even trying to do it
16:21in the first place.
16:23>> Do you find that bizarre, though? Cuz
16:25in terms of in one sense they've reached
16:27out to you to do that work,
16:29but on the other on the other hand, the
16:30flip side, they still have that
16:31reluctance to actually do it?
16:33>> Yeah, and unfortunately there's a lot of
16:34traders that have been like that. People
16:36will reach out to me, they'll pay the
16:37money, we'll start working together, and
16:39two, three, four sessions in, they're
16:40still not doing what I'm suggesting they
16:42should do.
16:43And there's another reason why they
16:44don't do this type of self-awareness
16:46work is by
16:48you have to acknowledge what you're
16:49feeling. A lot of people don't want to
16:51know what they're feeling or they don't
16:52want to feel what they're feeling.
16:53They'd rather just think about the
16:54money, how can I get out of this losing
16:56situation, how can I get back to that
16:58profit goal that I'm going after. So,
17:00that's where their thoughts are, and the
17:03whole idea of checking in with my
17:05frustration and understanding why I'm
17:07angry and and scared or any of those
17:09types of emotions,
17:10um that's pretty uncomfortable, and it's
17:12human nature to want to avoid discomfort
17:14and just focus on something that could
17:16bring you comfort, could bring you
17:18gratification. You're going to force
17:20yourself to look at the chart and not
17:21look at the, you know, not look at
17:23yourself.
17:24>> [laughter]
17:25>> One thing that's very interesting
17:26though, as sort of if we go really far
17:29back,
17:30>> Yeah.
17:30>> is we're not really incentivized or
17:32taught or really aware of
17:35trying to do that process cuz I remember
17:37there was a I can't remember the name
17:39for it, but I remember there was
17:41maybe 10 years ago I came across this on
17:42YouTube. There was a
17:44a type of training that people were
17:46doing or seminar where, you know, they
17:47would get people to like scream and
17:49shout and really move their body
17:51essentially because as children
17:54we will self-regulate our emotions,
17:56right? And so any child who's 1 years
17:59old, 2 years old, even even older, if
18:00they feel sadness, they will just cry.
18:02They will they will express that
18:03sadness. They will let it out. Anger, so
18:06on. Well, as we get older, we kind of
18:09for some reason stop doing that. We want
18:11to be very as you as you mentioned be
18:13reluctant, kind of avoid being aware or
18:16trying to dissect what's going on. So,
18:18we Do you think that's a kind of not a
18:20societal problem, but that is an
18:22element, right? Like
18:25nat- nature and and naturally as a child
18:27we'd do it. We'll self-regulate.
18:28>> Yeah.
18:29>> We'll let that emotion out. We'll let it
18:30go and then move on. You'll see a child
18:32cry one second, their eyes out and the
18:34next minute they're happy as as as can
18:36be. Well,
18:37I believe as adults and I've experienced
18:38this myself, like we will feel that
18:40anger and we'll hold on to it.
18:42>> Yeah.
18:42>> Because we don't want to express it.
18:44>> Yeah.
18:44>> And literally we might even hold on to
18:45it and be stubborn for 2 days. And then
18:47when you finally in some outlet let it
18:49out, suddenly you're absolutely fine,
18:50you move on.
18:52But as traders as you say, like we'll
18:54have these drawdowns, we'll hold on to
18:56it. We won't do that work. We'll avoid
18:58it.
18:59Do you think that's an element of it
19:00that we kind of in society aren't
19:03there's no real notion of like we should
19:04be aware of our emotions or we should
19:06try and understand those emotions. It's
19:08really not something that is discussed
19:09on a
19:10on a mainstream or level that the most
19:13would ever sort of hear about.
19:14>> And not only that, Riz, but I think in
19:16the trading world, um people think it's
19:18all about logic and and the chart
19:20pattern. And And to a degree it is, but
19:22it really comes down to how you interact
19:24with the the chart pattern, how you
19:26interact with what you see on the chart.
19:28So, um you know, if you don't express
19:30the emotion, what's going to happen? It
19:33will be expressed through your trigger
19:34finger. It'll come out on the buy or
19:36sell button. So, what I tell people is
19:38you can either keep the emotion bottled
19:40up in the body, which is very dangerous
19:42health-wise. You'll have um
19:43potentially some health issues on your
19:45hands down the road. Or you're going to
19:47express it through hitting the trigger
19:50finger, hitting the buy or sell button.
19:51What I suggest is an alternative outlet
19:54for the emotional energy. Emotion, by
19:56the way, is the word motion with an E in
19:57front of it, energy in motion. So, you
19:59have to It's up to us to direct the
20:01energy somewhere. And most traders are
20:03trading somewhat subconsciously in the
20:06sense that they're subconsciously
20:08letting the emotional energy just come
20:09out into their finger, hitting that
20:11button over and over and over. I see
20:13this a lot with people who are
20:13overtrading, um especially. It's they
20:17have a really hard time directing where
20:19that FOMO, where that anxiety should go.
20:21Um
20:22not the trigger finger, not the buy or
20:23sell button.
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21:23back to the episode.
21:25Have you noticed in terms of
21:29the difference between the Wall Street
21:31institutional traders and sort of the
21:34retail independent traders,
21:37do you find that the institutional Wall
21:39Street traders
21:41will take your advice and action it
21:44faster because they have someone to
21:46answer to and because maybe they're
21:48working with you because it's been
21:50advised to,
21:52but essentially that's their job, that's
21:54their role. They need to improve, they
21:55need to be better versus the independent
21:57trader has no one to answer to, and
22:00again, we've we've already talked about
22:01that. They've done it, but then try and
22:03avoid the work. Well, this person if
22:04they avoid the work, they're done.
22:06>> Yeah, and you're onto something, Riz.
22:08Definitely true. My professional
22:10clients who are managing money, they
22:12tend to follow through with my
22:13recommendations more consistently, and I
22:16think it's because, like you said, it's
22:17their job is on the line, right? They
22:19they have to they have to improve their
22:21performance. Um whereas the independent
22:23trader wants to improve their
22:24performance, but they don't have the
22:26same the same ramifications aren't
22:27there. Um so, I think this is also
22:30probably why
22:322/3, if not more than 2/3 of my coaching
22:34clients are professional traders, cuz
22:36they talk about me, they refer someone
22:38else to me, they hear about me in the
22:39community, so they Among the independent
22:41traders, um
22:43they just they're just wanting to get
22:44better setups and better technical
22:46analysis, and maybe they'll read a
22:47trading psychology book, but they're
22:49generally not going to actually engage
22:51in psychological exercises. They might,
22:54but many of them aren't, actually.
22:57In terms of one psychological thing that
22:58stands out,
23:00I'm guessing on both sides,
23:02>> Mhm.
23:02>> It's handling the increase in numbers,
23:05the scaling of capital. So, the
23:06independent trader who may be going from
23:08$1,000 to 10 or 10 to 100, maybe even to
23:12seven figures versus the professional
23:14trader who no doubt is scaling from
23:16seven to eight, maybe to nine or beyond.
23:19>> Mhm.
23:20>> Regardless though,
23:22are there specific things that you have
23:24to do to allow people to accept the
23:26higher level of risk, the higher level
23:28of reward managing this higher amount of
23:30capital regardless of or maybe there's a
23:32key difference between even the person
23:35who's going from five to six figures
23:36versus someone who is going from seven
23:38to eight or eight to nine.
23:39>> Mhm. Mhm.
23:40>> Is there any specific things that you
23:42have to do to allow people and help
23:43people to accept this new reality and
23:45then reach this new level if you will?
23:47>> Mhm. Yeah, it's a really great question.
23:49So,
23:50at the the higher levels or people where
23:52they're managing large amounts of money,
23:54one of the big issues that comes into
23:55play for me with my clients, and I
23:58introduced this concept to them pretty
23:59early on,
24:00is the idea of uncertainty versus risk.
24:03Um most traders think of them as kind of
24:05the same thing or they they feel very
24:07similarly, but when you're scaling up,
24:09when you're going up from like, you
24:10know, uh
24:131 million to 20 million or to 100
24:14million or whatever it may be or even a
24:16a smaller trader, independent trader, um
24:20the risk is going to feel different when
24:21you have more capital at play.
24:24And so, how you respond to that risk is
24:26really, really important. And I use a
24:28concept known as smart risk versus
24:30sloppy risk. So, it's learning what is
24:33how do how can I identify smart risk?
24:35Cuz as a trader, what's what we're doing
24:36is we're taking risks constantly. Every
24:38action we take has a risk to it. So,
24:41what we want to know is am I taking
24:42smart risk or is it sloppy risk? And
24:45just because there's more money
24:46involved, it doesn't necessarily mean
24:47it's smarter or sloppier. You have to
24:49also understand am I responding to the
24:52uncertainty of the situation? Am I
24:54responding to the risk of the situation?
24:56The risk, by the way, is what's the
24:57worst-case scenario here?
24:59What's what's what's what's the
25:01catastrophe that could happen
25:02potentially, right? And you're going to
25:04feel nervous, and you're going to be
25:05scared, and it's going to be um it'll be
25:07a lot of emotion around that.
25:08Uncertainty
25:10also brings a lot of anxiety, but it's
25:12different than a risk. And so, you have
25:14to be able to decouple in your mind
25:16the types of thoughts and feelings that
25:18are
25:19combined I should say that are
25:21associated with the risk versus
25:22associated with the uncertainty. Really,
25:25it's a subtle difference, but it's
25:26People at the higher levels of trading
25:28understand it, independent traders maybe
25:30not so much.
25:31>> How can they do a better job of
25:33understanding it?
25:34>> Yeah, well, so first of all, I'll just
25:36start with this. Let's define the two.
25:37So, risk operational definition of risk
25:40is
25:42how much money am I going to lose if
25:43this doesn't work? You have to define
25:45that for yourself, obviously. So, risk
25:47is definable, and it's up to us to
25:48define what the risk is.
25:50Uncertainty, on the other hand, is we
25:52can't really define it. We try to.
25:53People back test. They have
25:55probabilities, but in the end, we don't
25:57really know every what's going to
25:58happen. Nobody knows what's going to
25:59happen. So, uncertainty is anything
26:02could happen. Risk is what's the worst
26:03thing that could happen. And so,
26:06in that moment when you decide to size
26:08up or size down or scale in or scale out
26:10or whatever you're thinking about doing,
26:12you have to ask yourself, am I
26:13responding to the risk
26:15or am I responding to the uncertainty?
26:18And there's usually going to be a
26:19difference.
26:21>> One thing that I find interesting in
26:23terms of
26:24the institutional and professional
26:26traders
26:27is uh something you mentioned earlier,
26:28that they will manage other people's
26:30capital.
26:31>> Yeah.
26:32>> Have you noticed a key difference
26:33between this the psychological aspects
26:36of that, managing cuz even a retail
26:38trader may take investor capital, for
26:40example. Mhm. Is there a key difference
26:42you notice in the psychological element
26:44when going through that process versus
26:46managing your own money?
26:48>> Yes, definitely. And I work with a lot
26:49of independent traders who succeeded and
26:51get get uh investment from from outside
26:54investors. So, and what often will
26:56happen is usually very common pattern is
26:59the first month, first three, four, five
27:01weeks they do really well, and then
27:03things start to kind of not do so well,
27:05very common pattern because they start
27:07to
27:09um
27:10they start to second-guess themselves.
27:11They start to If they've had a nice run
27:13in the first month, they might get
27:14overconfident. And they take on too much
27:17risk. So, yeah, there's some certain
27:19common trajectories that do occur when
27:21people take on more capital, whether
27:23they're independent or, you know,
27:24working at a prop firm or at a hedge
27:26fund. Yeah.
27:28>> And in terms of
27:31imposter syndrome, I got a really
27:33interesting question. It was for me. It
27:35was I don't think it was necessarily
27:36just related to trading.
27:37>> Yeah.
27:38>> But this I was at an event and someone
27:39asked a really great question in terms
27:41of have I ever felt imposter syndrome?
27:42Then afterwards, they they came up to me
27:44and just explained that they had finally
27:47started to see consistency, starting to
27:49see results. Been roughly, I think,
27:50about 6 months they had said.
27:52But they were second-guessing
27:54themselves, like is this is this just
27:56luck? Am I just getting lucky? Is this
27:58something you've noticed in traders that
28:00that this imposter syndrome can seep in?
28:03You know, especially after
28:04years of struggle and hardship. And they
28:06even they've been putting in the work,
28:07but still when it starts to click, when
28:09things start to build momentum or they
28:11start seeing results that they can
28:13second-guess themselves and almost feel
28:16like an imposter
28:17>> Mhm.
28:17>> of their success.
28:18>> Mhm. Oh, yeah. Well, first of all, I'll
28:20just say I've personally experienced the
28:22imposter syndrome myself at various
28:23times. Um so, it's very common, Riz, and
28:27there's a lot of different ways to deal
28:29with that. Um
28:31I'll just say this before I get into one
28:32of the suggestions of how to deal with
28:34that is I think one of the things
28:35underneath the the imposter syndrome,
28:37why it happens, is
28:39often is someone may not feel as though
28:40they're worthy of success. So, then that
28:43that's kind of leads to the imposter
28:45situation. Um one of the things you can
28:47do on a very practical level, this isn't
28:49very deep psychological stuff. I can get
28:51there, we can go there if you want, but
28:53on a very surface practical level is I
28:54have my clients
28:56sort their trades into one of four
28:58categories every week. And then over
28:59time, look at how many cat- how many
29:01trades they have in each category. A
29:03type one trade is you followed your plan
29:05and you made money. It worked the way
29:07you wanted it to. A type two is you
29:09followed your plan, but you got stopped
29:10out at your stop level that you had
29:12predefined for yourself.
29:14Not fun, but it's part of the game. Type
29:16three, sloppy, impulsive, revenge, FOMO,
29:20you're you're not doing something
29:21according to your plan. I call it a
29:22low-quality decision, and you lose
29:24money. A type four trade, also a
29:26low-quality decision, FOMO, revenge,
29:28something, but you make money.
29:30So, if you are making money,
29:34but it's not from type four trades, then
29:35that's your own competence. That's your
29:37ability, that's your skill. And showing
29:38somebody that this is who you are, and
29:40you're actually making this happen, and
29:42you're this is not simply purely luck.
29:44You're following the plan, and you're
29:45making money.
29:47Likewise, if someone's making money, but
29:49it's from a lot of type four trades,
29:50then we know
29:52that's just
29:54it's not sustainable. The drawdown's
29:56going to happen. In fact, one of the
29:58um,
30:00you know, one of the big turnarounds I
30:01often will see a big turnaround moment
30:04for a uh especially an independent
30:05trader will be when they start to
30:07realize that the money that they made
30:08for this month, even though they feel
30:09great, oh, I had my first green month,
30:12if we look at it, and if we see a lot of
30:13type four trades in there, impulse
30:15trades that made money,
30:17um, I tell them, look, well, it's not
30:19going to last. You need to minimize
30:21those type four trades. And when they
30:22start to realize, how did I make my
30:24money, and how did I lose my money,
30:26not simply wins and losses, but was I
30:27making it by following my plan, or was I
30:29making it by being impulsive?
30:32That recognition right there is a really
30:34big part of a the developmental uh
30:37trajectory of a trader. Knowing
30:40when that moment comes. And that's
30:41usually the turn for a lot of people.
30:43>> I really like them, and I want to dive
30:45deeper into that element.
30:47>> Yeah.
30:47>> But just before we do, you mentioned
30:49about we can dive deeper into the
30:51imposter syndrome sort of things. What
30:53does that look like in terms of you had
30:55to dive deeper into someone
30:57and identifying that and trying to fix
30:59that, what does that look like?
31:00>> Yeah. Well, I think at the deepest
31:02levels there's there's a fear of I'm not
31:04good enough. There's a shame. There's a
31:07feeling of inadequacy. A feeling of
31:09being exposed, of being found out. And
31:12and it's it's an existential crisis.
31:14It's it's very scary.
31:17And so, um
31:19what happens is people will create all
31:21kinds of defense mechanisms and coping
31:23strategies to insulate themselves from
31:25from those fears. Um and so, part of
31:28what I have to do is help identify what
31:31are those defense mechanisms? How are
31:33you you know, what are you doing around
31:35that imposter syndrome? What are you
31:36doing to keep it at bay? What do you do
31:38you want to recognize it for yourself?
31:40Because you actually do have to
31:41recognize it to work through it. If it's
31:43there, trying to pretend it's not there
31:45but even though you know it's there,
31:47it's only going to come back and create
31:49more problems down the road. So, it's
31:50really about learning to deal with it,
31:52facing it head-on. And um you know,
31:55dealing with the the
31:58the fear of not being good enough is
31:59really what it comes down to you at the
32:00deepest deepest levels, fear of
32:02inadequacy, fear of exposure, which I
32:04think every human at the deepest level,
32:06whether they articulate it or not, is
32:08worried about.
32:09>> Let's take a break for a minute there
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33:27below.
33:28Have you ever had circumstances where
33:31someone's had maybe some trauma or
33:34negative affirmation, if you will, from
33:37a loved one or a significant person in
33:39their life that then has led them to
33:40have imposter syndrome?
33:42>> Oh, certainly. Oh, yeah. And um, you
33:45know, when I work with a client, it's
33:46not just we don't just talk about their
33:47trading, we talk about their entire
33:49life.
33:50You know, people come to me, "Hey, can
33:51you help me with this, that, or the
33:53other?" Something very trading-specific,
33:54you know.
33:56"Help me to, you know, get out of my
33:57losers faster. Help me to stop
33:59overtrading. Help me to follow my plan."
34:00Well, in my work, it's always also about
34:03their life and how did they grow up?
34:04Their cultural background, the messaging
34:06they get from their parents, from their
34:08spouse, from their family, from their
34:09community,
34:10um, from their friends. And so, all of
34:12those things becomes part of the mix in
34:15terms of how you feel about yourself.
34:17Those are all Those are all data inputs.
34:19And so, it they contribute to how you
34:21feel about yourself.
34:22>> And then, going back before we pivoted
34:24away,
34:25>> Yeah.
34:26>> you mentioned about collecting those
34:28four types of trades.
34:30And I really like that because
34:32in terms of
34:33do you think a large part of that
34:35process and the success of it is that
34:38finally traders can see the raw data
34:41and see, okay, oh, actually, I am right
34:44to feel imposter syndrome because most
34:45of my money is being made from these
34:47trades that have no process versus I
34:50shouldn't feel this way because most of
34:52my money is made from trades on process.
34:54>> Right.
34:55>> So, do you think that element of
34:57visually seeing the data behind the
34:59trading behind the results or lack of
35:02results is very important in terms of
35:05being able to overcome some of these
35:07limiting beliefs potentially or hurdles?
35:09>> Very important. Um almost I won't say
35:12impossible, but it's very difficult to
35:14not um
35:16become better without knowing what
35:18you're doing in your trading. So, you
35:19know, what big part of trading is
35:21ourself worth gets tied to our P&L. And
35:23we get so focused on outcomes, did I
35:25make money today? Where's my week?
35:26Where's my month? Um the problem with
35:29that is if your self-worth is tied to
35:31your P&L, it's going to be really hard
35:33to see the market clearly.
35:35So, what we have to do is we want to
35:37decouple outcomes from process as much
35:39as we can. I mean, one leads to the
35:41other, but they're not the same. You can
35:42have a good process, but end up losing
35:44money. You can have weak process and you
35:46can make money. So, we have to decouple
35:48them. What I mean by decoupling them is
35:51you actually have to evaluate them
35:52separately, and that's what categorizing
35:54your trades in those four types will do.
35:57What had been a good process, but what
35:59was the outcome? Was it positive or
36:00negative? It might have been a weak
36:01process, but what was the outcome? Was
36:03it positive or negative? So, it's
36:05basically it's decoupling the process
36:07from the outcome, evaluating them
36:09separately, and that can help you to see
36:12really what you're doing. And by the
36:13way, this becomes like a process goal or
36:15a coaching goal, I should say. When I
36:17have a new client, you know, I'll say,
36:19let's collect some data, you know, just
36:20let's let's see how many trades you have
36:22in these four categories, and let's see
36:23if we can move the type threes and fours
36:26down by 50% in the next month. You know,
36:29and that's what we'll aim for. Rather
36:30than try to make a certain amount of
36:31money, can we see it change in how many
36:35trades are showing up in the three and
36:37four category?
36:39>> I've always had this
36:41mindset and I've always said the
36:43ultimate hack in trading
36:45is how do you take less trades and make
36:47more money? Which is the exact process
36:49you just mentioned of how do we reduce
36:51down just the trades that shouldn't be
36:52there?
36:54And as a byproduct, we haven't done
36:55anything else. We haven't taken more
36:57trades. We haven't changed anything. All
36:58we've done is try to remove as much as
37:00possible. I'm trying to be perfect, but
37:02just remove those trades that shouldn't
37:04be there anyway.
37:05That will then increase your
37:06profitability without doing anything
37:08else.
37:09And I'd love to hear that. It's
37:10reinforced it.
37:11>> Less is more. I mean, that's one of the
37:13things I I say a lot in my my coaching
37:15sessions. But yeah, so reducing the what
37:18you said, unnecessary trades or the
37:20off-plan trades.
37:22Um one of the ways to do that is to
37:24before you hit the button, before you
37:26get into the next trade,
37:27you can ask yourself, am I being
37:29accurate or am I just trying to make
37:30money?
37:31Accuracy is am I following my plan?
37:34It
37:35Following your plan may or may not make
37:37you money.
37:38But all we can do is follow our plan.
37:40The money is going to be up to the
37:41market ultimately. So, I think it's it's
37:45it's really critical that people know
37:47how they're making and losing their
37:48money by these four categories.
37:51Um anyone who's watching or listening to
37:53this, I strongly encourage if you're not
37:56a successful trader yet. And by the way,
37:57I define success as being able to make
37:59enough money to support yourself for a
38:00year from your trading profits. If
38:02you're not there yet, you need to be
38:03categorizing your trades as one of four
38:06types, looking at it every week, every
38:08day for that matter, and understanding
38:10really what you're doing.
38:13>> On the topic of data, I have really I
38:16believe I asked Randy this. And it was
38:18because there was quite a strong theme
38:19going on in the retail space. And a lot
38:22of the time when I mention retail space,
38:24it does include that a lot of that
38:27messaging comes from social media or
38:28shared on social media, whether it's X
38:30or YouTube or Instagram.
38:32>> [gasps and sighs]
38:32>> But, there was a notion that was really
38:35being spread, and I
38:37agree with it to a degree as well. And
38:39then after speaking to Randy also, I was
38:41like I saw that different perspective,
38:42so I'd love to hear yours as well. Which
38:44is
38:46people would say trading psychology is
38:48Meaning that a lot of the time
38:52people use it as a crutch or an excuse
38:55for the lack of data that they don't
38:57have, or the edge that they don't even
38:59see or know about. So that they when
39:01they take these losses or they're not
39:03consistently profitable, they can
39:06easily say my psychology is the problem.
39:07It's psychology that's the issue. Versus
39:10the fact that when you have data, as we
39:12talked about then when categorizing the
39:14trades, you start to observe the raw
39:16data and be able to actually understand
39:18what's going on in your trading. When
39:19you have the data,
39:22it's not that psychology disappears or
39:24that that's not a problem and now you
39:25can just trade effectively.
39:27But now you actually understand your
39:29trading edge, your process. You
39:31understand what the average performance
39:33looks like, the average losing
39:35performance looks like, and therefore
39:37those psychological problems you were
39:39using as an excuse
39:42won't be there anymore.
39:44And what are your thoughts on that? Do
39:45you believe that there is a lot Is that
39:47something you agree with? Is that
39:48something you disagree with?
39:49>> Yeah. Well, you know, I'll just say
39:51this. I think people who say that
39:52trading psychology is I think
39:54there's two categories of traders who
39:56say that. First category are people who
39:58have never been successful in trading.
40:00That's a lot of them. And there's also a
40:02group of traders who are very successful
40:03who might say that. And I know some of
40:05those folks, and I think they actually
40:07do use trading psychology, but they
40:08don't recognize it as such. Um they
40:11don't articulate it that way. But going
40:13back to what you were saying in terms
40:14of, you know,
40:16mixing up whether having an edge versus
40:18whether it was my psychology was at the
40:19problem. I don't take on a new
40:21independent trading client unless they
40:23have an edge. I'm not in the business of
40:25teaching someone how to trade. Um, they
40:27have to have a system that has a
40:29positive expectancy, some type of an
40:30edge before I can work with them, before
40:32I can help them.
40:33And I want them to articulate what is
40:34their edge. It doesn't have to be
40:36detailed, but I want to know, did they
40:38know what their edge is? Can they
40:39articulate it? Because without that, all
40:41the trading psychology in the world is
40:42not going to help. So.
40:44>> I love that because my reflection after
40:47speaking with Randy and then generally
40:49just thinking about it is actually
40:51it's not that psychol- uh, trading
40:53psychology is It's more so
40:54that, hey, this is an excuse being used.
40:57>> Right.
40:57>> The real psychological problems come
40:59when you have the edge and you can then
41:01actually identify why I have the edge, I
41:04can see the data, why can't I execute
41:06it? Right? Why can't I go feel the
41:08confidence enough to to back it up with
41:10with action and process? Or maybe now
41:12I'm actually making mistakes when I have
41:14an edge with positive expectancy.
41:17>> Yeah.
41:17>> Right? And as you say, that's why it's
41:19it's a great thing to hear that you
41:20wouldn't work with someone who doesn't
41:21have an edge because then you don't know
41:23what to work with.
41:24>> We're wasting our time and money. Yeah.
41:25Yeah. You know,
41:27getting the edge is not the hardest part
41:29in trading. There's a lot of ways,
41:30there's a lot of edges, there's a lot of
41:32ways to extract money from the market. I
41:34think there's
41:35you know, thousands if not maybe more
41:38ways to do it.
41:39Um,
41:40the problem is, can you execute your
41:41edge when you're under pressure?
41:43When you're feeling anxious? When you're
41:45scared? When you're in a drawdown?
41:47So, it's about how to execute your edge.
41:50Can I execute my edge? And that's really
41:52where the work comes. That's why
41:56most of my clients I think are
41:57professionals is because they they know
41:59they have an edge and their issue is,
42:01can they continue to follow it when
42:02things are getting tough? Um, and
42:05frankly, that kind of a, you know,
42:06working with someone like that is a very
42:08different than working with somebody who
42:09they they have an edge, but they're not
42:11that sure about it, and they don't
42:13really trust it, and
42:14also brings me to another interesting
42:16topic, which is, you know, trading
42:18education is is a wonderful area.
42:19There's a lot that can be learned, and
42:22some good educators out there, but
42:23ultimately, you can't trade like someone
42:25else. The edge has to become your own.
42:27You have to understand it for yourself,
42:30and maybe even modify it for yourself,
42:31cuz everyone has different risk
42:33tolerances and preferences and things
42:35like that. So, ultimately, you can only
42:37be the best version of yourself. You can
42:40never be, you know, rather than being
42:42trying to be the best the next great
42:43trader, I would suggest trying to just
42:45be the best version of yourself. In so
42:47doing, you might become the best the
42:48next great trader, but don't try and
42:50become the great trader. Just try and
42:52become the best version of you, which is
42:55how accurate am I today? How much am I
42:57sticking close to my plan today?
43:00>> I want to bring it back to you now.
43:02>> Mhm.
43:02>> In terms of trading-wise, was it a case
43:05where you had traded before or already
43:08traded when you got into performance
43:10coaching and and technical psychology,
43:12or was it actually the other way around?
43:13>> Well, the other way around. I never had
43:15a single finance or econ class in
43:17college, Riz.
43:18Um truth be told. So, when I was coming
43:21out of grad school, I got really lucky.
43:22An opportunity landed on my lap to do
43:25some threat assessment work for the Navy
43:26in the defense department, which I
43:27wasn't looking for, but it just kind of
43:29landed on my lap. I needed the money.
43:30Had student loan debt. Um got involved
43:32in a situation that was very
43:33high-profile. Got in the newspaper.
43:36Um I resolved a very dangerous situation
43:39um
43:40peacefully just talking somebody into
43:42putting their weapons down, and it got
43:43in the newspaper. Well, Asperger heard
43:45about it. They asked me to come in. I
43:47began working for them. Um this is in
43:50the late mid late '90s. And that's when
43:52the market bug hit me. I live here SF,
43:55San Francisco. Dot-com thing was
43:56happening in the '90s. And so, everyone
43:59was trading. I was like, wait a minute.
44:00I'm working with traders. Everyone
44:02around me is trading. So, I
44:04the market bug bit me at that time as
44:06well, and I got involved in trading
44:07around that time. So, I first began
44:09working with traders, and then I started
44:11doing my own trading. Um but I had never
44:13put on a single trade yet when I first
44:15worked with my very first trader, which
44:16was a bank trader at Wells Fargo.
44:18>> What was it you think about Wells Fargo
44:21identifying that
44:23situation and thinking,
44:25"We we want to work with this guy."
44:27What do you think was it the case that
44:29you were able to get through to someone
44:30in such a
44:32intense moment
44:34that then to them goes, "Okay, this guy
44:35should probably work with some of our
44:37traders." Is that the full process you
44:38think?
44:39>> You know, I It's a good question. I I've
44:40often wondered. My sense is that they
44:42recognized that
44:44dealing with crises and threats is very
44:47similar to dealing with markets. And so,
44:49I think they on some level they realized
44:51that I had some skills that I could
44:52probably bring with me into onto the
44:55their trading floor and help their
44:56traders
44:58um deal with the threats of the market
45:00going against them. And um so, I think
45:01that was a good instinct that they had
45:03cuz it's the way it worked out was
45:05That's indeed what I did with their
45:06their traders. So.
45:08>> Would you say as well of like going
45:09through your own personal trading
45:11experience allowed you to have a deeper
45:14level of insight that maybe other uh
45:16performance coaches may not have?
45:19Even though the essence of emotion and
45:21the essence of crisis and you know,
45:24dopamine uh cycles and then and these
45:26things, the science behind it all
45:28>> Yeah.
45:29>> Yes, we can all understand and learn
45:31about. But do you think there's a
45:32different element when you've actually
45:34experienced it
45:36firsthand, you know, the markets and and
45:38the highs and lows that come with that,
45:39the mistakes that we can make, the the
45:41limiting beliefs, the thoughts?
45:43Do you think that gave you an edge
45:44almost and and a deeper insight?
45:47>> [sighs]
45:47>> I think it did. I mean, it it was it was
45:49good and bad. It was I mean, it was good
45:50in that, you know, working with people
45:52who were moving around a lot of money at
45:54the push of a button,
45:55um I was invited onto the Chicago
45:57trading floors back when they had active
45:59floors. I've been to the to New York on
46:00those floors. Being in a in an
46:02environment where people were actively
46:04trading large amounts of money,
46:06um I learned a lot. Um the downside to
46:09it was that um
46:11I think I got a little bit ahead of
46:12myself. I thought I could be more like
46:13them. This kind of goes into that
46:15imposter syndrome or the recognition
46:16trap. I was surrounded by people who
46:18were moving around a lot of money and I
46:20thought maybe I could do this as well as
46:21easily as they're doing it. And it
46:23doesn't work quite that way. So it so I
46:26had a um So the beginning of my career
46:28in terms of my own trading was rocky. I
46:30mean I made money in the very beginning
46:31cuz everyone was in the dot-com boom.
46:33Everything was going to go up. But um
46:35right after that things weren't so easy.
46:37And it was really learning how to how to
46:39manage that. But yeah, I had I think I
46:41had a really good advantage in that my
46:43first especially as a coach and even as
46:45a trader
46:46um my exposure of working with um
46:49high-level professional traders right at
46:50the very beginning of my career was was
46:52definitely an advantage.
46:54>> What are your thoughts when it comes to
46:55Oh, first of all, sorry. We should
46:57establish like what is your sort of
47:00viewpoint of the markets? Are you
47:01short-term, long-term?
47:03>> Mhm. I have different views. I have
47:04different accounts. So
47:06>> Oh wow, yeah. I haven't seen that.
47:07Sorry.
47:07>> Yeah, I have diff I have a suggestion.
47:08So I have multiple accounts with
47:10multiple time frames. I have an intraday
47:12account, I have a swing account, I have
47:13a longer position
47:15uh trade account. So and I don't mix
47:17them up. So yeah, I have ideas about
47:19short-term stuff, very short-term, a
47:21little bit longer, and a little bit
47:22longer. And so I operate with different
47:24time frames in different accounts.
47:26Now yes, as an independent trader you
47:27can do that. But managing a portfolio
47:30it's a whole 'nother story. So
47:32>> I find that interesting. I think there's
47:33a lot of benefits to that. Do you feel
47:35like
47:36some may struggle
47:38to maintain
47:40the mindset shifts that come with each
47:42one, like the different characteristics
47:44almost that are necessary to be a good
47:46performing scalper versus a long-term
47:49position investment?
47:50>> Yeah, very much so. I mean the classic
47:52mistake is you have a short-term
47:54intraday trading account and
47:56trade goes against you, I'll just hold
47:57overnight cuz I think it'll come back.
47:59Right? I mean, who hasn't done that? I
48:00think everyone's done that. But, what
48:02happens is if you get away with it, then
48:04you've just reinforced horrendously bad
48:06behavior cuz at some point it will not
48:08work and you'll blow out your account.
48:11So, learning how to segregate your
48:14behavior
48:16and coordinate it with the particular
48:17account you're working with in that
48:18moment. This is my intraday account, so
48:20I'm going to think intraday.
48:22This is my swing account, I'm going to
48:23think swing. I'm going to look for
48:25different types of situations. So, yeah,
48:27I think it's
48:28for, you know, for an independent
48:29trader, I think um dividing your
48:31accounts by time frame is really
48:33helpful.
48:34>> Do you think, or have you noticed,
48:36should I say, have you noticed if
48:38there's a difference between the
48:39psychological
48:42aspects or struggles or hurdles?
48:44Do they differ depending on someone's
48:46time horizon?
48:48Are there certain attributes or things
48:49that come up for a scalper versus a
48:52swing trader?
48:54>> Um Yes. I mean, one of the biggest
48:56differences is as a scalper you're doing
48:58more round trips, more round turns, and
48:59so there's more stresses and pressures,
49:01there's more moments of frustration or
49:04moments of regret. Um and so, it's
49:06frankly it's more stressful.
49:08Um and in general, this is a broad
49:10generalization, I think that the shorter
49:13the time frame you're trading, the more
49:15difficult it is to succeed. Like, if
49:17you're somebody who's working on a
49:181-minute chart and you're doing like 15,
49:2020 round trips in a day, there's not a
49:22lot of successful traders doing that
49:24nowadays. It used to be many years ago,
49:26you'd see more of them successful.
49:28What's happened now
49:29began 2010, 2012, 2014 when algos
49:32started coming into the market, started
49:33taking over. So, now what you're doing
49:35is you're trading against bots, you're
49:36trading against computers.
49:38Um so, and they're faster than you are.
49:41So, um recognizing that scalping, trying
49:45to trade in and out really quickly, you
49:47can get away with it for short periods
49:49of time, but it's very stressful, it's a
49:51very hard.
49:53Cognitive load, emotional expenditure is
49:55extremely high and it takes its toll and
49:58I see a lot of people struggle with
49:59that. There's a very few people who can
50:01successfully scalp for like an entire
50:03year.
50:03>> Mhm.
50:04>> Um it's it's rare. It happens, but not a
50:07lot.
50:07>> Just on the flip side, I'm going to sort
50:09of more swing and and position.
50:11>> Yeah.
50:13>> Patience.
50:15I've heard
50:16of people express that, you know, they
50:18don't they lack patience and that's just
50:20who they are. They're not a patient
50:22person.
50:23What are your thoughts? Are you able to
50:24develop your patience and and be able to
50:27broaden that horizon even if you are
50:28someone who maybe struggles with holding
50:30a trade and allowing it to play out?
50:32>> Mhm.
50:33>> Is it just personality trait and that's
50:34just who you are and maybe you should
50:36look to transition to to day trading and
50:38shortening your horizon or is it is
50:39something that you can develop as a
50:42trader?
50:43>> It it you can develop it to a degree. Um
50:47and it one way to develop it would be
50:49to, you know,
50:50is this person in their life are there
50:52other areas of their life where their
50:54degree of patience is different cuz they
50:56might describe themselves as being one
50:58way, but maybe if you look at them and
50:59get to know them, there might be other
51:00areas of their life where they behave
51:02differently. So, maybe using that area
51:05as something to kind of borrow from.
51:06What's What skills and resources do they
51:08have in that part of their personality
51:10that they can apply to their trading?
51:12So, it is a workable thing. You can
51:13modulate it to some degree, but there's
51:16also a personality kind of a profile and
51:19some people are just not
51:21really meant to be scalping. Um and
51:24others are really going to do better at
51:26a longer time frame. I think of myself
51:29in my own as I do some day trading, I
51:30think of myself as an intraday swing
51:32trader. So, even if I'm taking an
51:34intraday trade, I'm not trying to scalp
51:36it cuz I'm I know I'm trading against
51:37the algos and the bots at that point.
51:39I'm looking for a bit more of a
51:40significant move. Um that's also just
51:43goes with my nature. I'm a little bit
51:44more of a patient person, so I can kind
51:46of hold that a little bit longer. Um
51:49but yeah, knowing the fit between your
51:51personality and trading style is really
51:54important. And I'll say this, too. Now,
51:55there's a lot of people who take trader
51:57tests or profile questionnaires about
51:59that. My personal belief, cuz I used to
52:01do a lot of threat assessment, I've done
52:02fitness-for-duty exams for military and
52:05law enforcement people. I don't think it
52:06psychological test is really going to
52:08tell you who you are.
52:09You're going to find that out through an
52:11interview and or through your trading.
52:13But, answering questions on that on that
52:15questionnaire, checking off a box,
52:17strongly agree, strongly disagree, true
52:19or false,
52:20that's going to be stilted. It's not
52:22going to be a true representation of
52:23actually who you are. And this has been
52:24shown a lot. People can take a
52:26personality test, but then when they're
52:27actually out in the field, the way they
52:29operate is very different.
52:30>> Mhm. Is cuz
52:33does it kind of come back to what we
52:34were talking about earlier? Like, a lot
52:35of people aren't honest with themselves,
52:37or aren't really reflective or
52:39self-aware of what their emotions
52:40actually are. So, when just reading a
52:42question that gives you options, you
52:43just go to what you kind of want to be
52:45the answer.
52:46>> That's a big part of it. It's a big part
52:48of it. Also, if you look at the
52:49questions, they're designed as like
52:51in this situation, what would you do
52:53here? Or in that you're you're asked to
52:54project into something. It's not real.
52:56It's not actually in front of you in
52:57that moment. And there's been a lot of
52:59research showing that how you react to
53:00something in the moment is very
53:02different than how you react to
53:03something as a um as a possibility.
53:07>> I was to paint a scenario of a trader
53:09who has just taken a significant loss or
53:12made a significant mistake.
53:14>> Yeah.
53:15>> What's the best thing they can do in
53:16that moment? What's the best thing they
53:18should be doing when it when they've
53:20just faced that? What's one of the best
53:22things they can do?
53:23>> Yeah, well, first of all, I'm going to
53:25say um
53:26it's different for different people, but
53:28many people will benefit from taking a
53:29step back and reevaluating, I should say
53:32evaluate, what happened? What led up to
53:34this situation? What was the sequence of
53:36events that led to this? Try to identify
53:39the pattern. It wasn't simply that one
53:41thing happened. It's usually going to be
53:42a sequence of events that occurred that
53:44led up to it. So, maybe unpack it, do
53:46what I call an autopsy,
53:48um can be very helpful.
53:50Re-centering and recollecting yourself,
53:52um for instance, if it's an intraday
53:54situation, you know, stepping away from
53:56the screen, taking breaks is so
53:58important. Um do something different
54:00with yourself, physiological.
54:02Exercise, take a walk, lift some
54:04weights, go for a run. Do something
54:06physical, could be very very helpful to
54:09reset the nervous system.
54:11>> How important is a trader's day-to-day
54:13life or things outside of trading
54:15>> Yeah.
54:16>> when it comes to their performance as a
54:17trader?
54:18>> Really important. I mean, the gut biome
54:20influences what goes on in our brain.
54:22The vagus nerve connects the gut biome
54:24to the brain stem. How you eat, what
54:26your how you're sleeping, what
54:28substances you put in your body, um
54:30degree of fitness, health, relationship
54:33status, all of that
54:34becomes part of our inner market. Those
54:36are all factors that are part of that
54:38personal filter, how you see in the
54:40market and how you're going to choose to
54:41when you're going to hit the buy or sell
54:43button. So, looking at all of those
54:45factors is really important and I take a
54:47holistic approach in my coaching. I have
54:49to. I can't only talk about their
54:51trading. They have to look at
54:53how is your sleep patterns? What's your
54:54nutrition? Are you getting enough
54:56protein in the morning? If you don't get
54:57enough protein, your glucose levels drop
54:59after two or three hours of being awake,
55:00glucose levels low, you're going to have
55:02no willpower. So, I mean, there's some
55:04simple things like that you can look at.
55:06Have protein in the morning, eat nuts
55:07during the day, hydrate, drink a lot of
55:09water, stretch, deep breathe. Um but
55:12then, quality of life. If you're not
55:14satisfied in your life outside of
55:16trading,
55:17much more likely you're going to be
55:19using that buy or sell button to get
55:20some sense of contentedness and
55:22satisfaction because your life isn't
55:24giving it to you, and that can be a
55:26problem. So,
55:27you know, helping people to find um
55:30satisfaction in their life outside of
55:32trading,
55:33ironically, really helps their trading.
55:35>> Mhm.
55:37Have you noticed or seen a theme at all
55:39when you've had even high performers
55:42who have performed very well even for a
55:43long term.
55:44>> Mhm.
55:45>> Of course they have losses. That's part
55:46of the game as we know.
55:48However,
55:50they have a really big blow up day.
55:52Maybe not blown the account but really
55:54just as we were just discussing like had
55:55a really big mistake out of character.
55:59Have you ever noticed a pattern that a
56:01lot of the times the catalyst wasn't
56:02even to do with the market?
56:04A lot of the time the catalyst came from
56:06an external cuz I've seen a theme
56:09where it could be an argument with the
56:10spouse, a breakup, bad night's sleep,
56:13illness, a death in the family but then
56:15decided to trade still.
56:17And that heightened emotion that's been
56:20external
56:21has then
56:22presented in the market and led to a
56:24domino effect.
56:26Have you ever noticed that?
56:27>> Oh, yes. Um all the time. Um I have a
56:30client who um
56:32um I can use his first name. He gives me
56:34permission to talk about him. His name
56:35is Ed. He's a very successful prop
56:38trader. He's been around for many many
56:39years. Um when his mother-in-law moved
56:42in with him and his wife and their kids,
56:43his trading went downhill for a little
56:46while. Um so yeah, so things in your
56:48personal life will affect your trading
56:50for sure.
56:51>> Yeah.
56:53The reason I bring that up is simply
56:54because I think uh again, a lot of
56:57people don't put much emphasis on the
56:59external
57:00outside of trading.
57:01>> Yeah.
57:02>> They they really think that everything
57:04is dictated by what we do in the
57:06markets, how we are in the markets
57:07versus
57:08>> Mhm.
57:08>> all of this stuff that can happen
57:10outside and can happen to us even if
57:12you've been trading for 10 years, 20
57:14years successfully at the highest of
57:16your career, anything can change
57:19due to something like that. Right? And
57:21the costs only get higher if anything as
57:23you continue to progress as a trader.
57:26Is there anything that you've noticed
57:29on the independent trader side
57:32that seems to be a really strong
57:33recurring theme that they struggle with.
57:35>> Yeah. So, and we bring everything we
57:37bring our entire lives with us when we
57:39trade. So, one of the recurring themes
57:41is people will hit a
57:42um a profit uh a certain degree of
57:45success in their account and it's they
57:47stop. They hit a ceiling and they and
57:49they lose the money. A very common
57:51pattern is they can make money for 1 2
57:53maybe 3 weeks and they give it all back
57:55in a couple days and they make the money
57:56in 2 or 3 and then they give it That's
57:58probably one of the most common retail
57:59cycles that I've seen. It's very very
58:01common. I'd say maybe 80% of the people
58:02are going through that. Um so,
58:05recognizing when you reach that when
58:06you're kind of getting to that high
58:07water mark again is what are you going
58:10to do for yourself psychologically to
58:11recognize that you're in a really
58:13delicate place and how are you going to
58:15get to the next rung on the ladder,
58:17right? That's a that's a very it's a
58:19very important aspect of my coaching
58:22work with independent traders is
58:23recognizing that cycle for them um and
58:26then having them recognize the cycle and
58:28then working with that cycle.
58:30>> If you don't mind, how do we break
58:31through that? Because you're right, that
58:33is the
58:34>> Yeah.
58:34>> very strong recurring theme.
58:36>> Yeah.
58:36>> You know, cuz regardless of whether the
58:37trader is doing it with their own money,
58:39whether I don't know if you know uh
58:41these evaluation companies which are
58:43very big in the industry, uh even on
58:45that in that scenario where the money's
58:46not real or whatever you know, mindset
58:48we want to talk about,
58:49>> Yeah.
58:50>> regardless, that's the recurring theme.
58:52>> Yeah.
58:52>> The one where they consistently can run
58:54up for 2 3 weeks, give it all back in 2
58:573 days and then that's the cycle that
58:58unfortunately I I went through that
59:00cycle for 3 years personally. Yeah.
59:02>> You lost a lot of money, emotional toll,
59:04actually guesses.
59:05>> Exactly. How do we break that? I would
59:07love for us to dive deep into how do we
59:09break that cycle? Well, how do we try to
59:11>> Yeah.
59:11>> overcome that cycle?
59:13>> a number of things that you have to do
59:14and I'll stay I'll start with what we
59:16talked about earlier is tracking your
59:17trades. So, if you're at 3 weeks you've
59:19made some money, it's a good 3-week
59:20period. How did you make the money? Was
59:22it through type four trades or type one
59:24trades? That's the first step. The next
59:26step is to
59:27um understand what is your risk profile.
59:30Um what kind of risks are you taking?
59:32Are they smart risks? Are they sloppy
59:33risks? Um and ultimately, you want to
59:37know how much is your self worth
59:39riding along with your P&L. If you're
59:42feeling really good because you're at a
59:44high watermark, yeah, it's okay to feel
59:46good and I don't want to, you know,
59:47burst anyone's bubble and make them feel
59:49bad, but you have to check yourself
59:51because feeling good simply because you
59:53made money, that's actually not
59:55confidence. That's simply just feeling
59:57good cuz you made money. Confidence is
59:59actually resilience, regardless of
1:00:01what's happening, wherever you are on
1:00:02your P&L ladder. So, being able to help
1:00:05them develop resilience as opposed to
1:00:08self-esteem. And And the two get mixed
1:00:11up for people all the time.
1:00:13>> Do you find that a lot of people when
1:00:14they have that two to three week run,
1:00:17they get a sense of overconfidence?
1:00:19>> Mhm.
1:00:20>> Or I've seen people actually,
1:00:21alternatively, start to make changes at
1:00:23that stage for some reason. Even though
1:00:25they've just done something that worked.
1:00:26It doesn't even have to be two to three
1:00:27weeks, it could be a month, two months,
1:00:30for example.
1:00:31But they start to see results and then
1:00:32suddenly they change something.
1:00:34Do you know is there any reason that
1:00:35that happens, do you think?
1:00:37>> I mean, they change something because
1:00:39>> As in, yeah, that's exactly why. Like,
1:00:41why do they They have a month, two
1:00:43months of success and then they change
1:00:44something? Maybe it's the risk, maybe
1:00:46it's uh their strategy even or something
1:00:48something different, even though
1:00:50something's just worked. Like, what do
1:00:51you think it is that causes that
1:00:53catalyst, causes that change?
1:00:55>> Well, the common one is that that they
1:00:57don't feel like they deserve the
1:00:58success. So, unconsciously, they find a
1:01:00way to kind of keep themselves back to
1:01:02where another part of them feels like,
1:01:03"Oh, maybe I just deserve to be working
1:01:05at a lower level or succeeding at a less
1:01:07level or not succeeding at all,
1:01:09perhaps." So, they'll find a way to to
1:01:11kind of cut themselves off, basically.
1:01:14>> One thing that comes to mind and it's
1:01:15actually very interesting cuz it's a
1:01:16it's an interesting
1:01:18I think
1:01:21relationship or
1:01:23reoccurring theme if you will that both
1:01:26sides share
1:01:27in terms of the professional environment
1:01:29and the retail environment. Now, there
1:01:31are those retail traders who
1:01:33don't engage with social media or any
1:01:34sort of groups and they're just by
1:01:36themselves.
1:01:37But there are loads and I'm sure you see
1:01:39a lot of it nowadays that are
1:01:41posting their progress and their trades
1:01:44and you know, what they're doing, their
1:01:45performance, etc.
1:01:47on social media
1:01:48or in these uh communities.
1:01:50>> Mhm.
1:01:51>> While of course in the professional
1:01:52environment, whether it's a uh
1:01:54proprietary trading firm or a hedge fund
1:01:56or a bank,
1:01:58those traders can see the P&L. Like
1:01:59other traders can see the P&L, the team,
1:02:01there's the manager, etc. So the P&L's
1:02:04are quite open and people can see that
1:02:06performance-wise.
1:02:09Is there an element that you've noticed
1:02:10that there's a pressure that comes with
1:02:14the audience, you know, the the
1:02:16knowing that people can see my P&L, my
1:02:18performance. If I perform good, great, I
1:02:20feel great. I feel like, you know, I'm
1:02:23performing great in front of everyone.
1:02:24But then the opposite is true as well
1:02:27because it's interesting how in this
1:02:28environment, it's very much because
1:02:30you're in that professional environment
1:02:32and therefore there's a lot more
1:02:33openness on that side of things. While
1:02:35in this environment, people are putting
1:02:37themselves out there even to a point
1:02:39where someone who's
1:02:41you know, trying to become profitable is
1:02:43still showcasing their trades online on
1:02:45social media for example and therefore
1:02:47they're self-inflicting
1:02:49this pressure, added pressure, this
1:02:51added weight, this different angle that
1:02:52didn't exist before.
1:02:54Is there any element of
1:02:57working with people and having to help
1:02:58them overcome this added weight or added
1:03:00pressure of being
1:03:03on a stage if you will with your P&L.
1:03:05>> On a stage, that's exactly what I say
1:03:07when I talk to people. I really really
1:03:09like that line. So it's an added
1:03:11pressure. You're absolutely right and I
1:03:12think it's not great for everybody. For
1:03:14some people, they it it works well for
1:03:17them but for many for many it does not.
1:03:19So you have to look at what is the
1:03:20motivation. Why are they posting the
1:03:22results? First of all, are they posting
1:03:23the results consistently? All their
1:03:25results, not just when they're doing
1:03:26well and not an occasional loss, but all
1:03:28of their results.
1:03:29So that's that's another issue, but the
1:03:32whole idea of public accountability and
1:03:34public recognition,
1:03:35um I think it's a double-edged sword. On
1:03:37the one hand, it can provide
1:03:38accountability. Um it can perhaps give
1:03:42somebody an avenue to be um
1:03:44to be willing to expose themselves, um
1:03:47to deal with that potential shame, which
1:03:49could be ultimately make them stronger,
1:03:51but could also be a pressure.
1:03:53Because they're seeing what other people
1:03:54are doing and they're open to criticism.
1:03:56And so, you know, I think net net in the
1:03:58end, my personal opinion and um is that
1:04:02I think for most people it's generally
1:04:03not a good idea
1:04:05um for the most part. But you know, I'm
1:04:08not saying you shouldn't do it, but I
1:04:09don't think it's helpful in the way that
1:04:10people think it's going to be helpful.
1:04:12>> Especially, would you say in particular
1:04:14those who are still not found their
1:04:16consistency profitability?
1:04:17>> Definitely, cuz it's like why are you
1:04:19doing this? Is it just for
1:04:20accountability or are you trying to show
1:04:22off? Or I mean, what's the real
1:04:24underlying motivation? And we have
1:04:26layers of motivation. So really
1:04:27understanding what's the true deepest
1:04:29level of motivation. Why are you really
1:04:31doing this?
1:04:32And is it truly in your best interest in
1:04:34terms of what you're trying to achieve
1:04:36for yourself? Or are you just trying to
1:04:37feel good and get some notoriety for
1:04:39yourself? Very big difference.
1:04:42>> Trading is very unique in the aspect
1:04:44that
1:04:45in society we are told we work 40 hours
1:04:48a week, we get paid, right? We do this
1:04:50job, we get paid X amount. That's a done
1:04:53deal.
1:04:54While in trading, we can work X amount,
1:04:57turn up, do everything right,
1:04:59but lose money. How do we overcome that
1:05:02element, right? That struggle that
1:05:04something that shouldn't happen
1:05:05essentially. Our brain says that that
1:05:06doesn't make sense. We've done
1:05:07everything correctly. I've turned up.
1:05:09I've done my work for the month, but I
1:05:10haven't had my paycheck.
1:05:12>> That's a great question. It reminds me
1:05:13of a client I had some years ago. It was
1:05:15a retail trader who was a
1:05:17he was in construction business and he
1:05:19said, you know, I can work on a job site
1:05:21and then come back the next day and I
1:05:22saw I see what I did the the previous
1:05:24day and it's still standing, but in
1:05:25trading
1:05:26it could all be gone. And it's like,
1:05:27this is so frustrating. So, you're
1:05:28you're absolutely right. Um
1:05:31so,
1:05:32trading is the most unique game there
1:05:34is. It's potentially infinite in terms
1:05:36of the success you can achieve, but the
1:05:38downside is also pretty daunting, as
1:05:41well. So, it's up to each person to be
1:05:43their own agent. You're the agent.
1:05:44You're in charge,
1:05:46right? So, you have to take that
1:05:47responsibility. And I think that when
1:05:50people
1:05:51get pulled into trading or they get
1:05:53interested in trading, they only think
1:05:54about the upside. And maybe they think
1:05:56about the potential downside, but what
1:05:58they don't think about is the the
1:06:00psychological pressures of what it's
1:06:02going to be like day-to-day.
1:06:04And um
1:06:05I work with a lot of traders who
1:06:08especially on the independent side, um
1:06:10who it's they will tell you in their own
1:06:12way that this was a surprise to them.
1:06:14They didn't expect it to be this
1:06:15challenging. Pretty much they all
1:06:17they'll all say that at some point. Um
1:06:20so, yeah, realizing that trading is the
1:06:21most unique game there is. I mean, for
1:06:23instance, people use like sports
1:06:25psychology to apply to trading
1:06:27psychology. And by the way, this is a
1:06:29thing I wanted to mention. There's a few
1:06:30differences. Like in sports, when you're
1:06:32playing a when you're competing in a
1:06:34sporting match, whether it's
1:06:36you know, basketball or football or
1:06:38baseball or volleyball or even ping pong
1:06:39or any things, like there's a finite
1:06:41time. You know when it's going to end.
1:06:43It's four quarters. It's 21 points. It's
1:06:45the clock, 60 minutes, whatever it is.
1:06:47But in trading, it's up to the agent.
1:06:49It's up to you, the player, to determine
1:06:51what's the end point going to be. When
1:06:52am I going to get out with the loss?
1:06:53When am I going to get out with the
1:06:54gain? What's What is my end point?
1:06:57The other big thing in trading is that
1:06:59um you can't see your competitors. In
1:07:01sports, you can know who your
1:07:02competitors are and you can see them.
1:07:03You can see what they're doing. So, in
1:07:05trading, it's very much, even if you're
1:07:07on a trading floor and you're trading in
1:07:08a pod with other people, it's still a
1:07:09very individual
1:07:11very personal individual game. And
1:07:14understanding that, a lot of people
1:07:15don't are not prepared for that.
1:07:17>> Again, doing that comparison between
1:07:20the professional environment
1:07:23and the independent retail trader, the
1:07:25professional environment
1:07:27gets that access to potentially a
1:07:29performance coach, gets that risk
1:07:32manager who's there to facilitate that,
1:07:34even has potentially people who are
1:07:36doing fundamental analysis being
1:07:38provided to them, even technical
1:07:40analysis to them. They have the pod
1:07:42environment to reflect ideas from and
1:07:44get direct feedback and almost instant
1:07:47feedback, even if they perform badly or
1:07:48well
1:07:49in that environment.
1:07:52And in it
1:07:53some essence,
1:07:55a level of responsibility is taken away
1:07:57in terms of maybe their only focus is to
1:07:59make sure they execute
1:08:01and do so well.
1:08:03Versus the independent side, all of that
1:08:05responsibility falls onto that one
1:08:07person's shoulders to do all of this
1:08:09analysis and
1:08:11you know, be independent and be
1:08:12responsible, as you mentioned, in terms
1:08:14of knowing, you know, being uh
1:08:17making sure you do everything correctly
1:08:18and
1:08:19being your own agent.
1:08:21Is there a an element of that that the
1:08:23independent needs to be aware that there
1:08:24is a much higher amounts of work and
1:08:27focus
1:08:28necessary and to be responsible
1:08:31than necessarily the other players that
1:08:33may be playing in the game?
1:08:34>> Yeah, I mean, you you just said the word
1:08:36to be responsible. So,
1:08:38look at the word responsibility. It's
1:08:40it's response and ability put together.
1:08:43What's your ability to respond? How you
1:08:44going to respond at any given situation?
1:08:46The market running away without you and
1:08:48you want to jump on, but it's not part
1:08:49of your plan, or the market going
1:08:50against you and what do you do? Last
1:08:52time it came back, but this time it may
1:08:54not
1:08:55Being responsible is a really important
1:08:58part of growing up as a trader and
1:09:00becoming an independent trader. And
1:09:02that's the hard of being an independent
1:09:03trader. There's also certain advantages
1:09:05that independent traders have over the
1:09:06professionals, by the way. They can
1:09:08operate in different time frames. They
1:09:10can trade different products. They can
1:09:11use different strategies. And when
1:09:12you're working at a hedge fund, usually
1:09:14there's a mandate. You have to work
1:09:15within certain parameters.
1:09:17Um and that can be limiting. So, as an
1:09:19independent trader, you call the shots,
1:09:21which there's an incredible amount of
1:09:22edge, actually, with that. Also, a lot
1:09:24of responsibility. It's a two-sided It's
1:09:27a double-sided sword. So, knowing that
1:09:30there's increased responsibility, but
1:09:31potential increase in edge as an
1:09:33independent. I've seen a lot of traders
1:09:35who've left the hedge fund world or a
1:09:36bank desk trading their own capital and
1:09:38do really well.
1:09:40>> Is it because they may have identified
1:09:41their own edge that they weren't able to
1:09:43express?
1:09:43>> want the constraints of having to manage
1:09:44capital.
1:09:45So.
1:09:46>> Another element, I think, as well, that
1:09:48you just kind of touched on it made me
1:09:49think is
1:09:51just as there's those restraints in this
1:09:52environment on the professional side, as
1:09:54we talked about with these evaluation
1:09:55companies, you're then yes, they're
1:09:58choosing to go into this endeavor,
1:10:00but then there's part of that is very
1:10:03sometimes strict, sometimes but at the
1:10:05end of day there are rules that they
1:10:06have to follow.
1:10:07>> Mhm.
1:10:08>> So, what does that do to a trader, you
1:10:09think, when
1:10:11you have certain parameters that you are
1:10:13forced to trade within?
1:10:15Whether that's fixed drawdowns that can
1:10:18be quite tight at times.
1:10:20Uh consistency rules in terms of your
1:10:22P&L.
1:10:24What does that do to a trader's
1:10:25psychology? And then how do they
1:10:27overcome that those restrictions that
1:10:29are in place that you can't do anything
1:10:31about and you need to play within those
1:10:33those realms and those barriers?
1:10:35>> Yeah.
1:10:36>> What should traders be doing to overcome
1:10:37that?
1:10:38>> Yeah. Well, let me just speak to I mean,
1:10:39I think a lot of people go through this
1:10:41when they're trying to be evaluated to
1:10:42get for funding, right? You have to
1:10:44trade within certain parameters. There's
1:10:45this daily stop loss and
1:10:47that kind of a thing. I think you know,
1:10:49while I think
1:10:51there's a lot of great things with these
1:10:52funded trader programs to get capital
1:10:53for people, the downside is that it can
1:10:55force people to trade in a that's not
1:10:57really the way they should be trading.
1:10:59It it often forces over trading. It
1:11:01often makes people too active. Um and
1:11:04they become very outcome focused.
1:11:06They're focused on the dollar amount and
1:11:08that can be a big problem when you're
1:11:11in that type of environment. So, the
1:11:13more you can pull away from the outcomes
1:11:15and be focusing on the process, the
1:11:16better off you're going to be. The
1:11:17problem is that if you're
1:11:19dealing with a lot of different
1:11:20parameters, the dollar is going to be
1:11:21right in front of you and it's kind of
1:11:22hard to to ignore it. So, yeah.
1:11:26>> And you know, as we come towards more
1:11:28the end of the podcast, there's plenty
1:11:30more that we can dive into. I know we
1:11:32didn't touch too much on your own
1:11:33personal trading, um which I hope to do
1:11:36now and with a few questions, maybe. Um
1:11:39but one thing I wanted to ask you, it
1:11:41just randomly came to me and it might be
1:11:42a bit of a random question and it might
1:11:43throw you off, so feel free to to we'll
1:11:45move on or we can cut it out. I don't
1:11:47mind. But I was wondering like is there
1:11:50a question that you wish I asked you?
1:11:53Or, you know, would ask? Is there
1:11:54anything that comes to mind that hey, I
1:11:55wish someone would ask me this?
1:11:58And yet they haven't yet. Maybe
1:11:59something I've missed or overlooked.
1:12:01>> Mhm.
1:12:03Mhm.
1:12:05How does somebody know when they're
1:12:06actually successful?
1:12:09And it's I'll just say it's not because
1:12:10it's a certain dollar amount.
1:12:12Cuz what happens, Riz, is that somebody
1:12:14might say if I make a certain amount of
1:12:16money, it's the FU number. If I achieve
1:12:18this number, I'll have it made in the
1:12:19shade. What happens is when you get to
1:12:21that number, you feel good for a short
1:12:23period of time, but then you need about
1:12:242x that and it keeps going up. So, what
1:12:27kind of criteria, how are you defining
1:12:29your success? I think it's really
1:12:30important. It can't simply just be about
1:12:32the money.
1:12:33>> It's interesting. What do you think it
1:12:35then has to come down to then if it's
1:12:36not the money?
1:12:38Cuz that was actually a question I was
1:12:39meant to ask in terms of Well, we'll
1:12:40come to that. But what if it's not the
1:12:42money, what should it be?
1:12:43>> Feeling good about yourself.
1:12:45Feeling that you did the right thing.
1:12:46Feeling that you're becoming the best
1:12:47version of yourself.
1:12:49>> It's interesting you say that. I uh had
1:12:51a a pleasure of doing a podcast with a
1:12:54a hedge fund trader out of uh Dallas.
1:12:57Sorry, Austin. And
1:12:59that was his thing. He said, "My goal
1:13:01isn't money. My goal is to always be the
1:13:03person who's progressing."
1:13:05>> Sounds like they might be my client.
1:13:06>> It could be. You never know.
1:13:07>> I have a hedge fund trader in Texas.
1:13:09>> Is he good?
1:13:09>> Actually a couple of them.
1:13:10>> Um we'll we'll talk after. But um
1:13:13But yeah, going back to that other
1:13:14question then, do you think it's wrong
1:13:17for traders to be focused on the money?
1:13:19Do you think that someone could be
1:13:21successful at trading while focusing on
1:13:22the P&L and the money side of things?
1:13:25>> I mean, of course we come to trading
1:13:26because we want money. So, P&L is always
1:13:28going to be there. But so, it's to what
1:13:30degree are you focusing on it? How much
1:13:31are you focusing on it? What other
1:13:33things are you focusing on? So, that's
1:13:35it's not a black-and-white thing. But to
1:13:37say to ignore the money is not
1:13:38realistic. But it's how much are you
1:13:41obsessing about the money.
1:13:43Um I know for myself a strange thing
1:13:44will happen in my own trading. If I'm in
1:13:46a in a in a trade and I start to
1:13:48calculate exactly how much it's going to
1:13:49be worth if it if it if it works, then
1:13:51often times the trade doesn't work
1:13:53because it forces me What happens is I'm
1:13:55not seeing things I should be seeing on
1:13:56the chart. You get caught in
1:13:57confirmation bias. I'm only seeing
1:13:59things that I want to see and I'm
1:14:00ignoring things that I should be paying
1:14:01attention to that I
1:14:03that may not be good for my trade. So,
1:14:05when you get attached to that number,
1:14:07all kinds of interesting things happen
1:14:08in our mind that are generally not good
1:14:10for us.
1:14:12>> [laughter]
1:14:12>> One thing that's been interesting
1:14:13actually over recent podcasts is uh the
1:14:16notion of actually one of the hardest
1:14:17things to do in trading is knowing when
1:14:19to exit a trade.
1:14:20>> Mhm.
1:14:20>> Like um have you experienced that
1:14:22personally?
1:14:23>> That's the classic dilemma. And it's
1:14:25whether you're on the upside or the
1:14:26downside and win or a loss. So,
1:14:28what happens is we're always trying to
1:14:30avoid regret. If you're in a trade and I
1:14:31get out here and I leave money on the
1:14:33table, I'm going to feel like I regret
1:14:34that. If I don't get out and I give it
1:14:36all back, I'm going to regret that. So,
1:14:38in any given situation, there's always
1:14:40going to be some form of regret one or
1:14:42the other. I talk about this with my
1:14:43clients. There's two types of regret,
1:14:45one from action, one from inaction.
1:14:47Which type of regret are you more
1:14:48willing to tolerate? And there's certain
1:14:50exercises I take my clients through to
1:14:52develop the awareness around choosing
1:14:55which regret you're more willing to
1:14:56tolerate. Cuz ultimately, you're going
1:14:58to have to choose a regret for yourself,
1:15:00either leaving some money on the table
1:15:01or seeing some gains evaporate.
1:15:03>> [snorts]
1:15:03>> Could we go into one of those processes
1:15:05maybe to to try and identify?
1:15:07>> Sure. Sure. So, let's say you're in a
1:15:09trade that's that's working and maybe
1:15:11you've been scaling some out. You're not
1:15:12sure if you should scale out more till
1:15:14you reach your ultimate target. What
1:15:15should you do?
1:15:17Um the dilemma becomes if I give it if I
1:15:20let it ride and I see my gains
1:15:21evaporate, I'm going to feel like, you
1:15:23know, I'm going to feel horrible tonight
1:15:24when I think it look back on that.
1:15:26If I um take it off and it runs without
1:15:30me, I'm going to feel horrible about
1:15:31that. So, what you want to do is think
1:15:32about how will I feel looking back on
1:15:34this a week later. Looking back on it.
1:15:36Project yourself into the future.
1:15:39How will I feel
1:15:40looking back a week later
1:15:42about what I did? Cuz often what we're
1:15:45doing in trading is we're trying to
1:15:46minimize the experience of regret.
1:15:48Regret minimization is a very big topic
1:15:50in behavioral economics. It's all
1:15:51There's been textbooks written about it.
1:15:53So, we're always trying to minimize our
1:15:54regret in terms of making a decision.
1:15:57Funny thing is, Riz, in trading, there's
1:15:59always going to be regrets. Even if
1:16:01you're making millions of dollars,
1:16:02you're still going to have regrets cuz
1:16:03you didn't do it perfectly. There's no
1:16:04such thing as the perfect trader. So, it
1:16:06comes down to choosing
1:16:09how to choose which regret you're more
1:16:10willing to experience in that given
1:16:12situation and making a conscious choice
1:16:15around what type of regret, which is a
1:16:16very powerful
1:16:18type of psychological approach. Many
1:16:19people are not really ready for that
1:16:21yet, but that's kind of a It's a
1:16:22higher-level way of working with people.
1:16:24But ultimately, with most of my
1:16:25professionals, we we talk a lot about
1:16:27which are they going to regret more,
1:16:28leaving some money on the table or
1:16:30seeing some gains evaporate.
1:16:32>> [snorts]
1:16:33>> It's always interesting, isn't it?
1:16:34Because we
1:16:35let's say, you know, take a a
1:16:37cryptocurrency, for example, when it's
1:16:39uh
1:16:39it's uh let's say it's there's a there's
1:16:4110, the price level 10, but it's at
1:16:43eight. Our mind is and it's already done
1:16:45two, 300% we've already made
1:16:47more than a return that is
1:16:49probable, possible on an average basis.
1:16:52But, we always go,
1:16:53"Ah, 10. Yeah, we'll we'll take it at
1:16:5510." There's always a bigger number that
1:16:57we can
1:16:58hold to and then in the end, for the
1:17:00majority of people, including myself,
1:17:02that eight becomes two or one.
1:17:04>> Yeah.
1:17:04>> And then you as you say, you regret not
1:17:07making that decision.
1:17:08>> And if you've been making money
1:17:09recently, really early in the day or in
1:17:10the previous trade, your dopamine's
1:17:11high. There's a lot a lot of influencing
1:17:13factors that are going to
1:17:15act as an influence in terms of what you
1:17:17decide to do. Do I want to hold for the
1:17:1910 or the 20 or
1:17:20what's going to happen? So, there's it's
1:17:22not just about the trade. It's about
1:17:24your life. It's about what happened
1:17:25earlier in the day.
1:17:26It's about what your wife said to you
1:17:27this morning. It's it's it's everything
1:17:29all at once, basically.
1:17:31>> In terms of your what assets do you
1:17:33trade? What do you What do you try and
1:17:35interact with?
1:17:36>> Yeah, so my intraday trading is
1:17:38index futures. Um
1:17:40I like NQ, Nasdaq futures.
1:17:43Um stocks, I'll do swing trade with
1:17:45stocks.
1:17:46Um
1:17:47position trading with crypto. Um I do
1:17:49position trading with with stocks and
1:17:51crypto as well, but um
1:17:53crypto is pretty much just position. I
1:17:54don't like to actively trade it. It's
1:17:55just too woolly for me. It's too crazy.
1:17:57The moves are too too big and I don't
1:17:58like it. But, I do, you know, I look at
1:18:01it long term.
1:18:02>> [snorts]
1:18:02>> In terms of the intraday NQ, cuz
1:18:05there'll be a lot of the audience who
1:18:06will be doing that as well. Is there
1:18:07anything
1:18:09specifically that you observe and sort
1:18:11of uh
1:18:12have created an edge around?
1:18:14>> Yeah.
1:18:15Well, you have to recognize the NQ is a
1:18:16wild beast. It's it's like a bucking
1:18:18bronco and if you're having a hard time
1:18:20with the NQ, I would say move to the ES,
1:18:22first of all. NQ attracts a lot of
1:18:24people cuz they like the moves. Oh, look
1:18:26at all these moves and they think about
1:18:27opportunity.
1:18:29If you're not making money, the first
1:18:31thing you should be thinking is not so
1:18:32much about opportunity. You should be
1:18:33thinking about how can I manage my risk?
1:18:36So, learn how to manage your risk on a
1:18:38less crazy instrument,
1:18:40less crazy than the NQ. And then, if you
1:18:42can do that, and then move back to the
1:18:43NQ is what I would say.
1:18:44>> Definitely. Have you noticed at all any
1:18:47psychological differences or things that
1:18:50seem to be different between people
1:18:52trading different assets, or is it
1:18:53pretty universal the trading mind across
1:18:56all assets?
1:18:57>> I mean, there's some differences. I
1:18:58mean, the
1:18:59um
1:19:00I mean, it's not so much the
1:19:02there's some differences. I mean, the
1:19:03the
1:19:05futures traders, intraday, you know,
1:19:07very usually very intense people, very
1:19:10focused. Not always, but often times
1:19:12that's the kind of people that it that
1:19:13attracts. Um longer-term traders, more
1:19:16thoughtful, more analytical.
1:19:18There's certainly variances, for sure.
1:19:21>> What about in terms of options? Cuz you
1:19:22know, with options, there's all these
1:19:23different layers to it in terms of the
1:19:25Greeks and
1:19:27the way that especially in in hedge
1:19:28funds, for example, and and professional
1:19:30trading, it's very prevalent that they
1:19:32will be in futures while using an option
1:19:35to do, you know, to counter risk or
1:19:36minimize risk.
1:19:38Do you find that by having a more
1:19:40complex layering to trades, it presents
1:19:43a different level of
1:19:45maybe not a different level of
1:19:46psychological issues, but it's a
1:19:47different level of analysis and
1:19:50data input and being able to, you know,
1:19:52understand all of this data all at once.
1:19:54>> Yeah. Well, on the upside, I mean, with
1:19:56options, you can define your risk, or at
1:19:58least you're supposed to define your
1:19:59risk. But on the downside, there's
1:20:00there's many more variables, and it does
1:20:02take more analysis and the incredible
1:20:04leverage that's there with options. I I
1:20:06think what I see often happening
1:20:09is people start off doing well with
1:20:11options, and then they have a hard time.
1:20:14And I'll just say, you know, it's a it's
1:20:15a product that's being pushed out there
1:20:17by a lot of brokers, a lot of places.
1:20:19They want you to trade options. It takes
1:20:20less capital. You can get in the game
1:20:22faster, so it's being heavily promoted,
1:20:24but
1:20:25I would say it's probably not the best
1:20:26place to start if you're a trader.
1:20:28Options is definitely more advanced.
1:20:30>> Mhm. I can imagine. It still blows me
1:20:32away. Like I still Yeah. See if you can
1:20:34just See if you can trade stocks first.
1:20:36And then if you can do that, then move
1:20:37to futures. And then maybe eventually
1:20:39options.
1:20:40>> What was uh one of the hardest things
1:20:42you had to overcome in your trading
1:20:44personally?
1:20:44>> Mhm.
1:20:45>> Outside of the things we discussed in
1:20:46terms of the comparables.
1:20:48>> Okay.
1:20:48>> Like what was one of the biggest things
1:20:50you had to to overcome?
1:20:51>> Always wanting more. When I first first
1:20:53started making money,
1:20:55um of course I wanted to make more. And
1:20:57I need to beat what I did last week or
1:20:59last month or last quarter. I need to
1:21:00have my best year. This is going to be
1:21:01my best year. Will I beat
1:21:03that? It's become a problem for me. It
1:21:05still is to this to to this day. So I'm
1:21:07always um on my toes around when things
1:21:10are going well for me. So one of the
1:21:11things I've learned to do for myself is
1:21:13I wire money out of my account on a
1:21:15regular basis. When my account gets over
1:21:17a certain level, I wire the money to my
1:21:18bank. Um and then my wife and I decide
1:21:21what we're going to do with the money.
1:21:23So that helps a lot making the money
1:21:24real. Seeing it in my brokerage account,
1:21:26it's not real until it's in my bank
1:21:28account.
1:21:28>> Mhm.
1:21:28>> When it becomes real, it changes my my
1:21:31mindset in terms I'm going to go back to
1:21:32the market the next day. I'm starting
1:21:34back at zero. I'm not at zero, but I
1:21:36brought my account back down to a level
1:21:38>> Yeah.
1:21:38>> and I work it back up. And so it's like
1:21:39a reset for myself. And it's to me it
1:21:41works really well.
1:21:43>> What's the mindset in terms of being a
1:21:45trader and a successful trader at that?
1:21:48And still doing the coaching. Cuz right,
1:21:51you could I imagine live off your
1:21:52trading if you decided to.
1:21:53>> Yeah.
1:21:53>> That definitely. Um
1:21:55I like to do both because they they're
1:21:57very complimentary. My My you know, when
1:22:01you have skin in the game as a trader,
1:22:03my clients really appreciate it. Um and
1:22:06um as a trader, I have to swallow my own
1:22:08medicine. There are times when I have to
1:22:10actively ask myself before I hit that
1:22:13button, Riz, am I acting on my plan or
1:22:16am I acting on trying to feel better in
1:22:19the moment?
1:22:19>> Mhm.
1:22:20>> Right? Something I teach my clients. And
1:22:21I have to remind myself of that. So I So
1:22:23the two they goes really well together
1:22:25for me. I can't imagine doing one
1:22:27without the other actually at this point
1:22:29in my life.
1:22:30>> Definitely. Would you say there's an
1:22:31element as well where
1:22:32it's beneficial to not need the money
1:22:35from trading?
1:22:35>> Oh, for sure. Having multiple revenue
1:22:38streams is another reason why coaching
1:22:39is great, right? But I do make most of
1:22:41my money from it trading for sure.
1:22:43But I like the coaching that keeps me
1:22:45keeps me kind of on my toes cuz I often
1:22:47get clients who have similar issues as
1:22:49mine.
1:22:50>> Yeah.
1:22:51>> And so it reminds me of what I've been
1:22:52through.
1:22:53>> Yeah.
1:22:53>> That's really helpful.
1:22:55>> Would you say there's an element as well
1:22:56that because
1:22:58it's quite interesting with trading
1:23:01it requires so much effort as we've
1:23:03talked about this entire podcast, right?
1:23:05All these different intricacies and
1:23:07characteristics we need to be and the
1:23:08accountability and self-awareness.
1:23:12And there's a lot of upside as well as
1:23:14downside that's potentially there.
1:23:16But outside of that it doesn't do
1:23:18anything else, you know, in terms of for
1:23:20others and you know, we're essentially a
1:23:22lot of the time just doing this either
1:23:23as a job uh or just in a in a in our
1:23:27room by ourselves or potentially in a in
1:23:29a Discord or some form of community. But
1:23:30outside of that there's
1:23:32>> Yeah.
1:23:33>> It's just us versus if we're doing the
1:23:35coaching work or me doing the podcast
1:23:37or, you know, someone else either having
1:23:40a job or some sort of other thing that
1:23:41allows you to
1:23:43go beyond just making money and then
1:23:45performing as a trader. Is that an
1:23:47element you think Do you think human
1:23:48beings
1:23:49need to have something else that is
1:23:52beyond just trading?
1:23:53>> I think so to have meaning to create
1:23:55meaning for yourself I think is what
1:23:56you're saying. So yeah, the coaching
1:23:58really helps me with that. I do some
1:23:59volunteer work as well. So yeah,
1:24:01coaching is a big part of bringing
1:24:03meaning to my life. And I think without
1:24:04meaning it's really hard to succeed as a
1:24:06trader.
1:24:08Yeah.
1:24:08>> And one thing I want to finish on that
1:24:09just came to me now and I think it's
1:24:11important because
1:24:14I do worry sometimes in terms of trading
1:24:17and and its nature and the way we can
1:24:19make a lot of money quickly and also
1:24:21lose money quickly and I think if we had
1:24:23don't
1:24:24implement pretty much everything that
1:24:26we've discussed today,
1:24:28all the characteristics, the processes,
1:24:30and uh you know, being centered around
1:24:32what we are trying to achieve as a in
1:24:34trading,
1:24:36we could easily just replace it all and
1:24:38say and become gamblers, right? And be
1:24:40addicted to gambling essentially and
1:24:42that dopamine hit. And a lot of people
1:24:44unfortunately will
1:24:46potentially make do a lot of harm to
1:24:48themselves financially
1:24:50>> Mhm.
1:24:50>> because of it. Have you noticed
1:24:53or ever been in the situation where,
1:24:55especially on the independent side I
1:24:56imagine versus the hedge fund side,
1:24:59but the independent side,
1:25:01where after working with someone or even
1:25:03not even working with them yet, but
1:25:04hearing about where their situation that
1:25:06you have to say
1:25:08is I don't think trading is necessarily
1:25:10for you. You seem like you're
1:25:12>> Mhm.
1:25:12>> gambling and you have a real addiction
1:25:14to it and you need to stop.
1:25:16>> Yes, it's a hard conversation to have
1:25:18and I have had that with a few times
1:25:19with traders. I had a
1:25:21client a few years ago who was um who by
1:25:24the way he was uh he was into poker
1:25:25playing, so I thought he might have had
1:25:26a good sen- good head on his hands uh
1:25:29in terms of how to deal with risk, but
1:25:31um
1:25:32he was crazy with the risk. He would
1:25:34just let his trades go too far against
1:25:35him. Occasionally they'd come back and
1:25:37he'd say, "But see, it came back." And
1:25:39so he would want to do it again and we
1:25:41went over it and over it and over it and
1:25:42he he wanted to continue the coaching
1:25:44and I said, "Look, I think you're
1:25:45wasting your money with the coaching. I
1:25:47think you're wasting your money putting
1:25:48it into the market. I don't think
1:25:50trading is for you until you start to do
1:25:52some of the things I'm suggesting, which
1:25:54is simply like can you categorize your
1:25:56trades?" He refused to do that cuz he
1:25:57didn't really want to see how he was
1:25:58making and losing his money.
1:26:00"Can you journal, not just live not just
1:26:03post event journaling at the end of the
1:26:04day or at the after the trade, but can
1:26:06you write while you're in the midst of
1:26:08the trade what you're feeling and why
1:26:09you're feeling it and why you're about
1:26:10to hit the button? Can you do that?"
1:26:12"Oh, I don't want It's going to distract
1:26:14me. I've got to stare at this chart. I'm
1:26:15not I can't miss what's on the chart.
1:26:17Well,
1:26:18I suggested to him, maybe this is not
1:26:20for you.
1:26:21Um
1:26:22And I've had a few of those
1:26:23conversations over the years. It's a
1:26:24difficult conversation to have with
1:26:26people. Yeah.
1:26:28>> Do you find
1:26:30that a lot of the time those people
1:26:34can be in the need for money in terms of
1:26:36like maybe you're actually going into
1:26:38debt to fund the trading. So, let's take
1:26:40an example. We've been independent
1:26:41trading now
1:26:43because of these evaluation firms. But
1:26:45even before the evaluation firms, so I
1:26:47don't want to give an excuse because
1:26:48people could, you know, deposit into
1:26:50brokers, you know, independently as
1:26:52well, even if it's small sums.
1:26:54But essentially they
1:26:56don't have savings.
1:26:58Um or have very little.
1:27:00>> Using their credit cards.
1:27:01>> And then, yeah, using credit cards,
1:27:02going into debt
1:27:04with the idea that trading will allow
1:27:06them to
1:27:07get out of that.
1:27:08>> Yeah.
1:27:09>> Right? And is the answer to financial
1:27:11freedom as promoted through a lot of
1:27:13social media or messaging?
1:27:16Do you find that if you're in that
1:27:17situation that trading if you you're in
1:27:19debt or you don't have much savings,
1:27:21trading probably isn't the thing you
1:27:23should actively do yet, learn,
1:27:25educate,
1:27:27right? But in the in the meantime
1:27:29building savings. Like what do you think
1:27:30of that scenario?
1:27:31>> Well, it won't make me very popular to
1:27:32say this, but it it's
1:27:34it's true. It's like, yeah, if you're
1:27:35someone like that, if you're in a lot of
1:27:36debt, financial crisis, trading is not
1:27:39the place you need to be. Not simply
1:27:40because of the additional financial
1:27:42risk, but psychologically you're not in
1:27:43the right headspace. You're not in the
1:27:45right state of mind to be trading.
1:27:47So, yeah, to to answer your question,
1:27:49it's it's um you have to be really
1:27:51careful about that.
1:27:52>> What's the likelihood of someone who's
1:27:53in that scenario being able to, you
1:27:56know, be calm, be on process, not have
1:27:58those psychological issues?
1:27:59>> probability.
1:28:00Very low probability. I mean, of course
1:28:02you hear these stories about people who
1:28:04I always wonder, how true are these
1:28:05stories, right? You just have to wonder.
1:28:08Can you see your brokerage statement?
1:28:09Let's at least a year year not just like
1:28:10a 3-week, you know, Excel spreadsheet
1:28:13that they post on Twitter. So
1:28:15>> That's true. Yeah.
1:28:17But that goes to that point of
1:28:19The reason I mentioned that is cuz there
1:28:20were a lot of people in that scenario, I
1:28:21think. And it goes back to your point,
1:28:23sorry, that's why it was. The point of
1:28:25those four categorizations.
1:28:28Just because this made money one time
1:28:31but you weren't on process. It's that
1:28:32same principle like, okay
1:28:34one person may have been in 20k $20,000
1:28:39debt and was able to overcome it.
1:28:42But the likelihood of was that through a
1:28:43process or was that a case where they
1:28:44got And don't I'm not going to take
1:28:46anything away from them. They might have
1:28:47taken the right execution on the right
1:28:49trade at the right time and then was
1:28:51able to use that opportunity a moment
1:28:53that they were got a bit of luck and a
1:28:55bit of process in there
1:28:57to then
1:28:58give them the foundation. But
1:29:00how can we or, you know, how responsible
1:29:03is it to compare ourselves to that one
1:29:05person who did it versus the millions,
1:29:08literal millions, who didn't?
1:29:10>> That's an important question, Razz, and
1:29:11I think everyone should be asking
1:29:12themselves that same question. How
1:29:14responsible is it for me to be doing
1:29:15that if you're in that situation? Yeah,
1:29:17that's That's the question we should all
1:29:19be asking ourselves, right?
1:29:21>> It's an interesting place to finish off.
1:29:24But I think it's a reality like the
1:29:25whole point of this podcast is to be
1:29:27able to for people to look in inwards to
1:29:29be able to really learn processes and
1:29:31learn about the intricacies outside of
1:29:32just the markets. I love the the
1:29:35self-analysis talk, the internal market
1:29:37read as you mentioned. And I think there
1:29:40was so much to take away from this. I'm
1:29:41sure there's so much more we could go
1:29:43into as well.
1:29:44And hopefully we'll be able to do this
1:29:45again in the future.
1:29:47And by everyone at home, drop a comment
1:29:48with your biggest takeaway from this
1:29:51episode. I know there was so much. You
1:29:52drop a comment as well what you would
1:29:54like to see if you were able to do a
1:29:55part two, what you would like to see in
1:29:57that. But links for Michael will be in
1:29:59the description below. So make sure you
1:30:00go check that out as well.
1:30:02Other episodes are on screen. Hit like,
1:30:04hit subscribe. And until next time
1:30:07take care.

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