Build a Winning Trading Psychology Mindset

[Music] yes how do you build a winning trading psychology mindset let's start with what is your goal in trading may sound weird but it's not you know most people their goal quite understandably is that they want to make money they want to win and they certainly don't want to lose and most likely that's proven successful in other areas of their life and so they bring that success formula in about winning and they get to it and all of a sudden they discover something is really wrong somebody didn't say something to you because you're unprepared for suddenly i can do it i can do it in simulation when the money is not real but suddenly when that money gets real all sorts of stuff starts happening i can no longer actually trade my plan and plan my trade it's just boom it's totally different so you're looking at that goal and saying yeah i want to win i want to be financially successful yeah i want to make money every day i get up thinking i want to make money well this is the great divide what you're going to have to decide in order to evolve into the trading mind that can produce success you're going to have to decide whether or not winning is about making money or if winning is about performing well spoiler alert making money focused as that's the definition of winning is not going to work performing well will and then to be able to build that successful winning trading psychology mindset you're also going to have to learn how to lose exceptionally well and this brings us to the paradox between winning and performing well winning and performing what do you really want to do a lot of people come into trading with substantial success winning ways from businesses for corporations and they think golly you know this thing has worked so well in lots of areas of my life i'm just going to duplicate the system of success i've had in one domain and i'm going to bring it guess where i'm going to bring it to trading and i'm going to produce success there yeah that's just what i'm going to do they do that and understandably you can understand why they bring it it's produced success in the past why not now the question though and this is the flaw in the winning traditional winning way is that can you control winning in trading not in your other business or corporation but can you control winning and trading no you can't and yet your entire brain is organized to be able to win versus being patient and waiting it's a paradox friends what i want to do is i want to give you an example of two apex predators each adapted for a different environment there's nothing wrong with the success that you've experienced in other domains the problem is it's built for that environment not for the trading environment and the example i give is the difference between the african lion and the american cougar one hunts on the savannahs of africa and large packs that they constantly have to be breeding and building more population because the way they stalk and attack they end up having lots of injuries they have lots of losses major ones too you get kicked by a buffalo and most likely you're going to lose your jaw you get gourd by impala and it punctures a lung so they're constantly having to replenish their capital more bodies for hunting that that success story works well in those circumstances where they have the ability to breed very large amounts of puppies coming up to become to replace all the losses okay now you took that same lion incredibly successful and take him into the american forests and guess what he starves yet there's another apex predator the american cougar and what he does is he has a completely different strategy he's not stalking he's not chasing what he's doing is he's ambushing he's an ambush predator ambush predators have to have a lot of patience and what the cougar does he climbs a tree goes out on a limb looking right down to where the deer is going to pass it's a setup and then he waits patiently waits patiently and you might look at the cougar waiting patiently for the deer to set up in the trap and think he's just lazy he's just sleeping no he's not he's calmly waiting for his dinner for reward when the deer comes into that trap into that setup it drops down from oh 20 feet got a head of steam and hits the deer in the head and the neck and snaps it the deer drops down dead there is no struggle there's very little losses and if the deer does get up and leave and runs away the cougar is not going to chase what it's going to do is it's going to cut its loss it's going to climb back up at the tree go out on the limb and wait for the next deer to show up in the setup sounds a lot like trading doesn't it well it is and what you also see is alpha's coming in with an idea of success and realizing that in the environment of trading it just doesn't work yet you take a look at what the cougar does and understand it's alpha it's apex predator man if you ever been around when you know what i mean and what you see though is they hunt differently they're patient they're focused they're ready and then they ambush that's the whole point and this is where you're gonna have to learn to be a different kind of hunter than the one that you came equipped with this my friends is where you begin to have to realize that you are going to have to evolve the trading brain the one that you brought with you okay it was also built for the african savannahs it was looking out and finding all sorts of reasons to be fearful because they we were a hunted type of animal and all those lions tigers and bears are gone now but yet we're there we bring that and we we were hunter gatherers our huntings went out and stalked and we stalked big prey okay yet we take that mind and we take it to trading and there's a couple glaring problems one is that brain is built to win it is built to control particularly control outcome it is built to be right because to be wrong was to be dead okay and it was built to find causal relationships in things in the in the environment that's much like you using technical analysis to find out where the exact bottom is going to be that's the causal relationship all those things allowed us to become an incredibly successful species then we took that brain designed for that environment we took it out of that environment and we put it into a completely new different one one that it's not adapted for trading where you have no control over outcome maybe a probability and also that desire to make things happen becomes a liability you know that can do attitude becomes a liability you have to have patience and are you going to win no are you going to do a lot of losing yeah and you're going to have to become a superb loser you're going to have to see losing is just part of the game and you're going to have to learn to do it incredibly well so ultimately you've got a problem you've got a caveman brain that you brought from antiquity but you need a probability based mind that is alien to the caveman you're going to have to build that and what's really interesting is the whole notion of winning and losing really has to change that's at the core of the problem winning you know it makes you feel good a truly good trader when he wins he actually goes and makes sure that he doesn't exaggerate the overconfidence he stays calm he stays clicked and he knows that he does not control outcome what he did is he landed on the right side of probability relative to him okay he didn't make things happen he had probability on his side but he didn't know okay which way it was going to fall that's also why he has to be a good loser if it doesn't happen his way if his guess is wrong he needs to keep that that loss small rather than adding to it or blowing it up or revenge trading or going crazy so that's that winning thing and what what happens is that when you do lose and you follow your rules you learn to shape that behavior you learn to congratulate yourself you have gratitude that you followed your rules okay and it didn't work out that's the probability this is training deep training and you have to get inside and find that part of you that has a deep desire to win and you have to calm it down you have to retrain that you have to cool it cool it down so ultimately this is about becoming a good winner landing on the right side of probability whereas losing becau really becomes landing on the wrong side of probability from your perspective it could have been the other way but the thing is is it didn't hit that probability and you just simply take the loss because if you don't take the loss at where it no longer fills your plan that's the edge that you have in the market you're gambling so you're going wow being a good winner takes all the fun out of trading in some ways well it does it makes it pretty boring sometimes being a good loser is an engagement you realize you have to instead of going oh man i hate losing it's going uh i did a really good job so ultimately what do you control [Music] you control the mind that you bring to the performance of trading that's what you control not the outcome not making things happen not being right not being wrong or predicting what happens is you bring a mind that can perform really well it can stay calm and cool collected disciplined as you're engaging uncertainty what you've done is you've lowered the threshold between fear and uncertainty the caveman brain can't separate uncertainty from fear and there you see the problem why so many traders lose what your job is to do is to manage that performance and stay in the moment of performance as you trade that's the key friends come and learn find out more go to our website read the articles watch more videos kind of look in to see what the programming is get the book get the free ebook all of that come and learn friends you

Channel: Rande Howell

Views: 9,045

Rating: 4.9879336 out of 5

Keywords: trading psychology, trader psychology, emotional control, profitable trading, confidence, losing it, giving back, FOMO, fear of losing, revenge trading, fear of entry, emotional regulation, psychology of trading, composure, mindset, self control, sabotage, discipline, over trading, impulsive

Id: LW6Ly82dyKs

Length: 12min 43sec (763 seconds)

Published: Wed Mar 31 2021