Mark Douglas 4/7 Probabilities

[Music] okay before I ask you guys if you have any questions about some of the stuff we did yesterday on this one elaborate on something John just said it was really important he said when you understand probabilities there probably isn't a person in this room who doesn't understand probabilities it's being able to function for a probability probabilistic perspective there can be a huge reality gap between let's say understanding of what of what it means but what probabilities mean like you know I'm saying hey our pattern gives us an edge you know over a series of trains to the older series of ten trains seven gonna be winners they're going to be losers the problem is we don't know which ones are gonna win and which ones are gonna lose so I'm gonna actually extract the profit potential in that edge it requires that I'd be able to take every single trade in the series or the sequence without making errors make sense right but understanding that and believing it at the core of your personality so that you can actually do it are two completely different things we can say we we can we can think of ourselves as a probabilistic thinker so yeah oh yeah I get it I understand it but if you can't execute all 10 trades flawlessly that I could guarantee you you're not you can't function at a probabilistic perspective because when you can you will be able to lose without thinking you're a loser you'll be able to be wrong without thinking there's anything wrong with you because that's an essence where we're going this is what makes trading so hard we live in a society that's completely obsessed with winning is everything avoid losses at all costs winning is everything avoid losses at all cost these are very powerful belief systems you think they're just gonna go away and not assert themselves on what you do and how you behave just because you have this understanding and probabilities just because you might read a book or go to a conference say hey you know what this is a probabilistic environment that we're dealing in and you know you got to think in odds oh you know that makes sense I can see that try doing it because what you do is gonna be a function of what you believe and if you can't do it it means that there's there are conflicting beliefs that say that you know what no this is not like I think my analysis should tell me what's going on and even though at a conscious level you're thinking no that's not what this is all about it doesn't mean that those that that that energy isn't asserting itself on how you behave otherwise you wouldn't be afraid you were at the scene of last night yeah how is it that if that if we lose it taps us into you know we have a losing experience it can tap us into all the accumulated negative energy like I put yesterday of what it means to lose in our life it has a losing has a potential to tap us into all this emotional negative emotional energy I don't want to feel that way most people with let's say a normal psychological makeup also don't want to feel that way we will avoid this at all costs I don't like the feeling of what it means to be wrong all the negative energy brings up all the times where be rated as kids someone ridiculing us teachers coaches whatever so if my experience is if my training experiences has the potential that tapped me in to these two belief systems of these memories the memories of what it means to lose and what it means to be wrong well you know what I've got big problems because you know what if I don't if I can't lose and I can't be wrong without it without it resonating you know negative emotional energy there's there's only got one other way that I can think of so help me avoid tapping and all this and this through analysis so one sense we're gonna say while the trader which means I'm a risk taker but the reality is we're using risk we're using analysis to do everything to avoid capping in the losing of the memories of losing and the memories of what it means to be wrong and it doesn't work what we're trying to tell you is this doesn't work because there isn't any analysis analytical regimen or system that you can come up with that will guarantee that the next trade is going to work what technical analysis does is that what is it defines patterns in other words know when you know when we got the order flow we got we got buyers coming to the end of the exchange we got flow cells coming into the exchange when there's an imbalance between the buys and the cells and there's no lies the price has to pick up when there's an imbalance between the cells and relationship to the buys the price has to tick down as these price up and down is there's a price ticks up and down up and down up and down up and down it creates what we call collective behavior patterns I say collective because everyone who submits in order to the exchange contributes to the pattern and what we found is that not only of can these patterns be identified quantified but they repeat themselves with statistical reliability over and over and over again in every timeframe guys with me on this word of the problem what are you oh well yeah no no the the problem the problem is the patterns repeat themselves over and over again with statistical reliability the outcomes that the patterns are predicting a random I want you to get this this is big okay the out the patterns repeat themselves with statistical reliability but the outcome that the pattern is predicting is random in relationship to the previous the previous outcomes there was a completely random distribution between wins and losses over a series of edges or you know these are the criteria that define the edges exactly that's right that's how casinos make money they're gambling on each individual they know that's a gamble each individual outcome is unpredictable and unknowable but the but over a series of events the law of the law of probabilities will work its magic and they don't need to worry about the outcome to each individual event so now you tell me what no nobody nobody likes feeling nobody likes tapping into the pain no one likes tapping into the pain and yep walk into the casino and watch people sit in front of a slot machine for hours and pump money into that machine knowing they're gonna lose not only knowing they're gonna lose experience losing and why is it they're not experiencing emotional pain they are losing why aren't they experiencing emotional pain well it's one of the time somebody raise your hand whatever go ahead yeah that's like the new you say they're expecting the next but they don't know if the next one's gonna be winner the next one may be a winner and and and the whole idea that had being fun is because they're gonna be surprised if it is but the point is they are expecting wins and losses as a matter of fact if you watch somebody playing slots or you experience playing slots you or know you know that you're going to lose more times than you win and as long as you accept the risk meaning and how do you know you accept the risk your behavior will tell you accept the risk because you don't have any problems putting the money in the machine see if you couldn't accept the risk then you would find it difficult to actually put the money in the machine gambling forces us to accept the risk in advance because if we don't we can't play you can't sit out on the blackjack table and just decide to play and without putting your money out there first they won't let you but the illusion that analysis creates with training is that I can actually get into a trade and believe that I'm not taking any risk and if the market happens is go in my favour immediately without giving any heat it like gives me it reinforces the idea that yes I don't I can do this risk I can do this without with I don't have to experience that if I just find the right method that method doesn't exist get it in your brain it doesn't exist if I had a method that produced 99% winning trains I guarantee you if you're risk adverse and you haven't accepted the risk you will not make the system money you'll always be worried about that one time that's why you know like like you take a trader who you know has you know nine out of ten winning trades several maybe sell for five to six of seven in a row and you know you're talking to the traders at conferences and chat rooms and they'll tape on all these playing trade that they had they didn't tell you that the tenth trade they lost all their winnings on the first nine and more they didn't tell you that yeah I know that am I not a fan yeah and do they have to lose all their winnings from the previous nine trades then put a stop in no they defined the risk in advance no and why didn't they define the risk in advance why did they not put a stock in the market because they thought they had a guarantee you win it's that simple you think that people can sit there and play slots for hours if there was the emotional risk if there was the emotional risk that traders have about if they're wrong or they lose we're gonna tap into that pain yeah we don't enjoy that it has to be enjoyable the emotional risk of playing slots for most people just doesn't exist they're enjoying themselves because they know the outcomes are random they know they cannot it is senseless it is it would be an effort in absolute futility to think that they're going to predict what what the pattern with the pattern oh those wheels are going to come up with on the next spin they might know anything about might not know anything about the architecture of the of the computer chip that generates the random outcome but the point is it is a ran theory random outcome and when we learn that it's purely a random outcome the whole idea of predicting or even being right or wrong is irrelevant it doesn't apply does not apply and so it takes it takes it out it takes what we're doing the activity out of a right or wrong context so I can sit there and push the button and a lovely nothing to be right along about I'm not predicting outcome now that's a little bit more tricky in training because we're using an analytical process to actually make a prediction but what we have to do is we have to apply the principles of the law of probabilities on that prediction and say you know what this is a prediction correct okay I think I mean this is yes I am making a prediction you know I don't have any illusions about the fact that you this an analytical process and come to a conclusion I'm making a prediction but you know what it's still just a guess in that way we're not responsible but what the market does after we put on a train how can we be when you understand order flow when you understand there is no way that I can predict the intent that other traders have after I get into a trade there are other traders all around the world waiting to enter orders for whatever reason pops into their brain whatever agenda they have whether it's commercial whether its contractual whether it's hedging or whether it's pure speculation they have their reasons for sending a buy or a sell order and to the exchange and you know and and how big that order is there isn't anything that we're doing on the technical reven fund of perspective where the mathematics of our system can predict what those guys are gonna do or women okay there's just no way and that's inside have to know who's who's about to who's about to send an order to the exchange what kind of orders are gonna be is gonna be a buy or sell how big is it gonna be and then I and then and then with that I could say okay well you know we've got all these buyers come in got all these cells coming in and so in this moment right here we should get an uptick but then again you know let's say there's a huge let's say in the moment there's a huge abundance of buyers coming into the into the exchange that overwhelms the number of sell or inventory to take the other side of those trades and the market start to shoot up but then some other some other traders somewhere the world sees the opportunity to what he thinks is sell high and since and just slam that rally with a huge order now you would think well who could cook a trade that big well headers can trade that big because they're not taking a risk they're eliminating the risk they're already long or stored we're already what I call naturally long and short based on their business so yeah I think they can put that bigger than order in the market and actually defend the price you heard words like defending a price this is what it means you tell me how mathematical equation is going to predict that somebody please but that's exactly the way you trade isn't it isn't it that exactly the perspective in which you take you think this mathematical equation is gonna gonna gonna accurately tell you every single time with the intent of all these other traders I around the little it's just a problem go to the game everybody that's it and analysis makes thinks it's makes us think it's something else because of the erroneous and you know connections that we make and erroneous assumptions that we make that's like yeah okay Vienna state again I give my analysis I made a prediction the prediction was absolutely correct at Leslie so the reasons why I made the prediction must be the same reason why the market went my favor and that way I you know I knew those that I knew was gonna heat up and I knew what was gonna happen making us think that the risk cannot exist if you're trading to avoid being wrong if you're using analysis to avoid being wrong in any capacity or even just the tiniest bit if you're using analysis to avoid being long and avoid losing it doesn't work the only way you're going to make this work is to adjust the way you think it is to change your perspective that what you're doing doesn't have anything to do with you're gonna need your career predictions have to be correct but your reasons for making the predictions do not in most cases for the typical screen-based trader most of the trades they put on there's virtually very little correlation between the reason why the market went in their favor and the reason why they put on the trade very little correlation and what I made my correlation how would I find that out I would have to be able to inventory if I if I went long based on a moving average and my moving average cost and and I put a buy order in the market and you know and then three four minutes later the market started rallying and I'm thinking that okay that's you know well I have the right reason for making this might my technical reasons must be you know be correct maybe because it made the correct prediction I would actually have to go out and determine all the traders who put buy orders in the market that actually caused my trade to become a winner because I couldn't make my own trade become a winner I can't trade at a level where for an example if you know and there are a lot of traders who can a lot of traders who have strategies to do exactly do exactly this okay then they see when they see how many bids and offers there are at certain price levels and and certain significant reference points that they know they might be able like I said yesterday you know like Stampede people out in opposition or even into a position that helps them out okay all they have to do if the price is at 10 all they have to do to bid it up to 11 it's just and just simply take out all the offers if there's X number of offers at 11 all they got to do is hit that's it the price automatically goes to 11 then all I have to do to get it to 12 is hit all the offers again that's it they are actually creating their own price movement they know why the markets moving they know why it's moving because they're doing it and they are making their own trades winners because everyone who took the other side of their trade at 11:00 when it gets bit up to 12 is a loser everyone who took the other side of that trade at 12 when they visit up the 13 is a loser now this could be a dangerous strategy you have to have a lot of a lot of capital but what the balls because because as has their position size grows for them to get out of that trade what do they have to do to get out of that trade they got to reverse everything in other words that to become sellers which means that if they have a huge a huge position that they built a huge long position they've built up they have a there has to be buy inventory with them to get out of that position in other words they become sellers and if there isn't enough buy inventory get out of position they can actually force the price right back right back down again that's what they well yeah hey yeah it's like a right you know there's there's a very famous doer on TV I'm not gonna mention his name but about 6 or 7 years ago he was doing an interview on the street as a matter of fact and um and kind of bragging he actually before he'd become really before he became really really famous and he talked about a strategy and this is this is a list of the icon that was probably still done I don't I couldn't I don't watch Marcus enough to really say but you know it's like if you watch to see what kind of orders are flowing the size of the orders that are falling into the exchange towards the clothes so let's say we've been we've been in a an uptrending market and it's like and it's like retail traders who need the most confirmation they're the most risk averse and they need the most confirmation of something's going to work ok so to get into a trade so so ad so this is a particular stock for example so they see a lot of 50 share 100 share 200 share orders flowing into the exchange on the clothes what do they know they know a lot of retail people are buying into the whole idea right so what they're gonna do is you know they're gonna see we're gonna we're gonna see what what kind of bids and offers are lining up before the close but before the open the next morning and he would say hey you know what movie is depending on the shot stock he might have to allocate you know any from thirty to fifty million dollars to take out to take out all of the all the bids so let's say the market is slated to open right here he might allocate 50 million or whatever it took to to take out all the bids to drive the price down in the open at the open and almost not all but many of the people that bought on the close the previous day's this was the close of previous day they're gonna think oh my god what did I do they're gonna start selling okay their sell orders are now going to help create this downward movement because there's an imbalance between the number of the buys the number of cells and as soon as they start coming into the market with their sell orders he reverses his position and starts taking the other side of those sell orders as a buyer so he was able to get in on this trending market for an example at a lower price so you just force the market lower he gets in and a much lower price and then the market just reverses back up again and keeps on going this is a valid strategy that people been using for years I mean so surprised anybody other so it's like yeah it's like you got to be able to do this you got to be able to do it you got to be able to you know get yourself into an emotional state of mind like a person who's playing a slot machine it's like how do I lose that feeling like a loser real simple you're not losing your you this business requires expenses yeah yeah you're laughing but it's true you think that's the way you think the casinos the board of directors and the man in the casinos when you know they're looking hand by hand there's a balance oh we just lost five thousand what am I gonna do here what am I gonna do these are expenses the losing will the amount of money that we pay for the tray the edges that don't work is simply the cost of doing business to make ourselves available for the trades that do how many people this room have ever owned a business when you when you here to buy supplies we need to buy pencils or office supplies did you feel like a loser writing that check didn't really did it tap you into this pain I'm such a loser wouldn't even occur do you think that way but yet you think that way now why why do you think that way now come on why do you think that way now what yeah but no why do you think that when why did why it why does the potential exists for you to experience a losing trade and tap you into the pain of what it means to be what what it means to lose why yeah because you think you know what's gonna happen you think you know what was gonna happen and that it shouldn't be happening because I knew I have it because I have an expectation I have an expectation that is not in line with the reality of the environment that walk waiting in yeah yeah we're just you're not thinking of as an expense I've got X number at my edge like I said my edge I've tested my edge I have a certain expectation about what the outcome would be in other words over a series of trades but I don't know what the outcome is going to be on each individual trade and it goes as far as this it's like if I said I'll give you an edge that has a 70% win-loss ratio 70% winners 30% losers would that imply to you that on each individual trade there's a 70% chance of winning absolutely not no 100% no there is no way to calculate think about this thing Golota just said five minutes ago there's no way to calculate the odds of any given individual trade working because we don't know what the intent of other traders are if I don't know what the intent of other traders are whom the world can I calculate the odds of any given individual trade I can't it's impossible I can be ready to put on a trade where it's destined what I mean by destined its destined to lose the instant I get billed and why because I don't know that some big hedge fund managers we're gonna unload a whole you know a whole half is inventory a particular commodity of your stock and the opposite direction of my order so what I know that that his order is coming down the pike one minute after I get filled Johan what I know that and if I can't know that that how do I calculate the odds of success of that trade I can't that means the risk always exists I can't even calculate the odds of success of any given individual trade and when I do it would let's say an edit in the discretionary mode it would be based on my experience but in essence I still know I'm guessing I guess a yeah I think this trade has a good is a good good likelihood of working out based on the pattern and at the same time you know if the pattern you know whatever pattern I'm looking at whatever's going on in the market in relationship and let's say news or anything else like that you know I still don't know what that one individual trader might be doing or intending to do keep in mind that the patterns the collective behavior patterns that give us our predictions consist consistently Rican sistent Li show up over and over and over again and they are reliable but it only takes one trader somewhere in the world just one trader somewhere in the world to negate the positive outcome of that pattern we have an expectation based on the pattern it only takes one trader just one unloading a huge order within minutes or whatever after we get into our trade that's all tell me how you're gonna predict that tell me how you're gonna calculate the odds of that trade working it is not a 50-50 I'm gonna stop you right now there's no path there's no way you can say it's 5050 there's it there's no one you just don't you there's no way you can say it's 5050 oh I just said I just said that that that a trade could be destined to lose there's a hundred percent there's a burpsaur a hundred percent you know certainty that you will lose but even before you put the train on so how's that 5050 [Music] yeah you have to make a decision but keep it now keep in mind these decisions that you have to expand you have to expand your perspective you're making you you you want to make this decision on trade by trade basis what I'm saying is that we're going to expand our definition of success from a trade by trade basis this is trade one three two three four five six seven nine ten eleven twelve thirteen fourteen fifteen sixteen seventeen eighteen nineteen twenty two what I call a sample size of trades in other words I am NOT concerned with the outcome of any particular individual trade within the twenty trade sample size what I do is trade in twenty to twenty five trade sample sizes and what I mean by that is that is that I'm saying to myself I'm based on testing the particular variables that define my edge I have found that I've got you know let's say a 60/40 win-loss ratio and when I'm talking about you know in how you profit in relationship to you know put into what you're expensive but just like this is keeping it 60/40 win-loss ratio and so I say to myself what I'm gonna do is I'm gonna take the next twenty traits and find out what my results are now I like trading in twenty to twenty five trade sample sizes because what you want is you want your sample size to be large enough to adequately test your edge you want it to be small enough so that if your edge starts deteriorating over time because we're dealing with a fluid environment edges can get better and edges can get worse and you want to be able to you want to be able to stock your sample size so that if your edge is actually deteriorating you can change the variables before you lose too much money but you got to be you got to take this expanded view that I'm not trading trade by trade anymore it's over a series of trades and so if I like my outcome at the end of twenty trades and I look at that what my outcome is what my profits and losses are if I like what I experience I take another twenty trades I do not under any circumstances change the variables within the sample size because that would be trading randomly Ivey adding random variables that will skew the results but if I like the results then I'll take another twenty trades if I don't like the results since I know exactly what I did and why I did it in every single trade I can go back and look at my variables and say you know what if I tweak this you know if I just take a little bit more risk and each one of these trades I actually would have been in more winning trades and experience more profit or if I or I could even see that I might not have to take as much risk or if I if I just move my confident my profit objectives a little bit further away or a little bit closer in other words your trading now trading instead of trading randomly their trading systematically because you're going to learn what works and what doesn't as long as you're adding random variables into your into your equation you never learn what works and what doesn't you will over a period of time it might take you five years or ten years or whatever but you get you can cut that learning curve back you know real quick just just stop trading randomly so that's why we that's why we changed and trained and limited sample size that's exactly why you're like I think so yeah I think usually between 20 to 25 trades if it isn't working I'll change the variables same thing absolutely yeah so when you expand your your definition of success from trade by trade to a series of trades then the signal outcome you become detached from the outcome of each individual trade it doesn't matter what I'm concerned about is my end result at the end of the sample size because the most important part of this once you once you have your variables that define your edge the most important part after that is being able to being able to execute can i execute flawlessly in other words can I get into these trades exactly when my edge says to get in or I gonna get in late because I think you know I don't really think this is what's gonna work now that you know and then it starts to work and next thing I'm chasing the market oh I got to get into soon because you know the last time you know it's like you know the market didn't really come down and hit my price and I missed out on a trade so I'm gonna get in beforehand and it turns out not to work it's like all these all these ways that we can we can make errors deteriorate my results because I know there is one person in this room who hasn't seen the possibilities of being able to execute an edge over a series of trades and not have more money and if the only reason why you're doing is because you're not executing your head properly because look what happens when we're trading with fear see this can only be done in a carefully state of mind I can't care about the results it can't matter if it doesn't matter then I can get it exactly what I need to get in I can get out when exactly need to get out based on the tested variables that define that edge and then I can experience the true potential profit potential that that edge has built into it I can then experience the true profit potential that has that edge has built into it the same way a casino does casinos execute flawlessly do they not I'm not saying details don't make mistakes once in a while but for the most part casinos execute flawlessly as traders we can't execute flawlessly because why we think we know what's going to happen and if we think we know it's because we think we can know then we think we know and you think we know because we think we can know once you start getting it firmly implanted in your mind it isn't even necessary to know for you to be consistently successful in this business you'll start letting the idea go but wealth talk both definitely in training his own discipline trainer and and and reinforced and taught in different ways and not the new book yet but you can see it's like a lot of people this room they were training in his own am I saying anything you can't read no and yet it's still like it's not even still like resonating like oh you know here's getting to real this is just getting this is just getting a little too real yet you've already read it right yeah yeah the whole idea trying to figure out why you're wrong with mathematical equations or even fundamental analysis is such an effort in futility it's it's when you really understand order flow it it falls in the category of being absurd because until we can find out who placed the orders and why they did it we'll never know when I say some people don't know or some people can't find out I'm saying as typical screen-based traders it is completely out of the realm of our right this is something you hear what you just said have you not read that over and over again heard that over and over again no not just not just in my books but just to eat in other places right and and yet it now is sinking in right okay see everyone is a certain psychological distance away from from not only one being aware of these concepts to understanding these concepts free embracing these concepts and then actually assimilating these concepts at a core level of their identity so to become a part of their personality and it usually happens in stages it doesn't have to know that all of the probably you know had experiences where we made you know seismic shifts in our perspective instantaneously it can happen instantaneously it really can when people have like an epiphany you know it's like it's just like they're they're a different person from one moment to the next changing is not a function of time by the we usually think that it is because we if we want to change we're gonna gonna usually employ some sort of technique and technique implies you know doing something over a period of time or a process it's not a function of time at all it's a functional desire simply a function of actually focus clarity and desire now what you're really genuinely clear about how you want to change and that clarity is sincere and resolute and depending on the degree of desire the change can happen instantaneously unfortunately as traders we get the idea you know once we get the idea implanted in our brain that analysis can take away the risk though these beliefs become so entrenched they and so powerful that it takes having to lose fortunes several times over and really painful experiences they'll finally come to the conclusion of the awareness that you know this isn't working that's the common thread that you hear everyone they've spoken through that threshold tell you about well I'm here to say is that it doesn't have to be that way you can make these changes in your perspective and a conscious level you can take control of this process and you don't need pain they have to go through it or they even prop you to do it for that point then that matter [Music] No they can't do anything with respect to the rest and afters no no yeah yeah analysis yes managing the risk is different than accepting the risk I'm talking about accepting the risk from a psychological perspective but yeah we use analysis to manage you know position size and how far we're gonna let the market go against our position that tell us that the trade isn't working or is it we're spending any more money to find out with respect to the you know the profit objective yes what I'm saying is accepting the risk at a cold level where it essentially doesn't like confusing guys if I say it that way then it doesn't matter well you can get in and out of a trade without it resonating the slightest bit of emotional discomfort no matter what the outcome that's accepting the risk you can get in and out of the train regardless of the outcome without resonating the slightest bit of emotional discomfort do you understand the distinction the difference people sit at a slot machine for hours and they win and they lose without it resonating the slightest bit of emotional discomfort they're having fun they're losing and having fun and it's only because of their perspective because they don't define what they're doing is losing they're spending money to have fun and for the possibility that you know they're going to get surprised and and get money this isn't any difference it really isn't the older flow has the same impact on price movement as a random chip generator in a slot machine if anybody disagrees with that tell me how and prove otherwise you get yeah hey well that when I answered somebody's question yesterday about why people did do the exercise I answered that question within that context and I was actually actually sorry that I did well yeah yes you're right because what it what ends up happening is that once we realize we can we can take conscious control of what we believe and how we experience our lives in trading what's going to stop us from doing it in other parts of our life it's not a matter of what's gonna stop us it's like then we don't a lot of our excuses start to build something all the way and that's that's that could be pretty scary the way I should have answered the question yesterday was that I didn't explain it well enough and trading in the zone the reason why people didn't do the exercise I really didn't and I didn't know that I didn't explain it well enough until I started in that same you know that that same material for this third book and it's like and then I started you know I started really breaking it down in breaking down my assumptions about what other people understood and how they were going to relate to this material and then it's like it all hit me like well no wonder why they're not doing it I explained it well enough I don't we are getting this idea of no motivation but you're gonna have to the word to use it see here's the problem I'm sorry that here to interrupt you but the problem is that the words you use are important okay and it's like they imply certain concepts and principles that you're operating on them so when you use the word motivation it's like it's like it implies to me that there's somehow or another what I'm saying is is impacting your motivation to do one thing or another and it has nothing to do anyway vomits abashed why are you training in effect yeah no no see you say to make money but that isn't the case of everybody why you know it's like you can see the famil the problem Oh for me to answer that question is that is that what look okay probably to ask that questions that we'd have to go into we have known a lot more deaths it just isn't that simple you just you know just isn't that simple to me to say it does based just within the context of what you asked me and I don't want to really say anything that's you know okay so let me talk later okay what do you mean how does it the backtest yeah and what you know but you backed us a set of variables until you until you're satisfied with results you keep testing until you're satisfied with the set of variables that can produce that produce an outcome over a series of trades that is acceptable to you it's that simple it's whatever whatever you're satisfied with it's that simple just whatever you're satisfied with and then once you are then you can then I'm gonna get into more detail yeah we're not I'm just just really building up to this okay I'm actually answer that question for later so I'm not gonna get into like now who else go ahead we got one over here not necessarily not no she's not necessarily as long as that difference doesn't doesn't doesn't prevent you from doing what you need to do when you need to do it in other words if there if there are competing agendas that that prevent you from executing properly or distorting the information or distorting the way you see the information yeah and then it's a problem but you know like I think I mentioned even yesterday it's like I've worked with over the years you know there are several traders like that came to me for the coaching and you know they they grew up in a Christian fundamentalist background that's you know very powerful beliefs about you know rendering services for rendering services for you know being paid in you know in the render services for which of what you're getting paid for and you know gambling does in finessin area and even though they you know they would try to convince themselves that they're not gambling the reality is they are and in a certain level you know they know that they are and they're not and they're acting in a way not in accordance with their religious beliefs and even though they do everything they can to like you know shove those shove you know the expression of those beliefs into the recesses of their mind where it doesn't have any effect on the way they see the market and the results guess what doesn't work they have to be reconciled so that what you're talking about as long as you don't think there's anything wrong with it that's all the counts if you're not feeling any guilt if you're not feeling any regret then that's all that matters that's all that matters there's a lot of people who do it for other reasons than making money then what they would say they would say they do it to make money but that's not the reason real reason why they're doing it they're doing it to be like to do it to be hero they're doing it to be the big man on campus need to impress the relatives to impress their friends you know the whole idea of making money is a byproduct that's not the real reason why they're doing it okay then that's then then that's that's right I'm not saying that it isn't and that anyone can find that it isn't but the problem is that people have a lot of different beliefs even about making money and about what money means in their lives it's like you have a person that says now I'm doing this to make money and yet I can't tell you how many traders I work with that have that have a threshold of how much money they'll allow them how much how far they'll allow them they'll count balance to grow and they get to this threshold and you know they have a huge drawdown they build it back up same almost of the dollar amount boom got one out they can't get through it this scenario has nothing to do with what's going on in the market it has nothing to do with their edge now if they're trading mechanically did seeing the thing is I'm not implying that you even have to know what these issues are I don't want to I want to scare you guys you don't have to know what these issues are and if you don't want to get involved with them that's alright you can still be very successful as traders just don't trade in a discretionary mode because see when you've trained in mechanical mode you know exactly what defines your edge you know exactly what you're supposed to do and mine you're supposed to do it there's no question about it when you trade in the mechanical loan the market has to conform to your specific specifications of your edge or you don't have a trade you don't have anything to do so there's even nothing to think about all the thinking was done when you did your analysis in your back testing you decided what your edge was gonna be and the variables you're gonna use to define that edge so all the thinking was done in advance the market either conforms to your edge or it does not if it does not you have nothing to do and nothing to think about therefore if you have all these other side issues coming into play you don't have to know what they are you just have to know you know what I'm finding it difficult to execute my system why can't I do it now it's like you're doing this goals to get in right now in this moment and you're in and you're feeling resistance or you're feeling resistance you know what are your stuff in the market or you're feeling compelled to pull your stop energies coming from somewhere you don't have to know where it is but at least if you know that you're not doing what's appropriate you can at least shut down and stop trading or the desire strong enough step through it and do exactly what you're supposed to do and every time you do I'm going to go into this a little bit every time you do you start building and now you start adding energy to your new beliefs about what it means to be a successful trader and you just automatically start extracting energy out of the conflicting beliefs and you don't even know or that energy is coming from you don't have to you just have to stay out of the discretionary mode because you're gonna need results I'm not saying they don't know what I'm saying they have to be aware and aware the potential impact that has on your village Xu properly yeah yeah taking a break yeah you know what that's a good idea let's take a break

Channel: Eddie L

Views: 76,469

Rating: 4.9384236 out of 5

Keywords: Mark Douglas, trading, psychology, probabilities, seminar, course, mentor, training

Id: lvuAgB5F2Ys

Length: 49min 51sec (2991 seconds)

Published: Sat Apr 14 2018