Tim Grittani 2018 Trader and Investor Summit Speech

thank you all for being here I say this every year but I love meeting everybody in person it is so great to get out from behind the screen names and just see faces and this event really energizes me every year today I want to talk to everyone about two things that get questions about quite a bit tracking setups which I think is a big edge for me and also trading psychology tips because I think the mental side of trading is one of the biggest challenges before I get into that there is one thing I need to talk to everyone about and that is a person that I call Nigerian timber Thani and I called him that because someone sent me a screenshot of a facebook messenger conversation where they were talking to an account named timber Thani and it had my photo and the location was Nigeria and this has been a big problem in the trading community lately where there is a scammer or scammers who are making fake accounts of myself Tim Sykes duck's other big traders and they are reaching out to people trying to scam them out of money saying you could either wire me money and I'll trade your account for you and I promise you X returns or I'll mentor you and for mentoring you just send me this money and a lot of the times the key tip-off word here is they say send it to my Bitcoin wallet which none of us will ever say so I just want to tell everybody be really careful who you're talking to I don't do any private social media messaging at all I mean this happens on Facebook Instagram Twitter I don't do any of that I can't speak for ducks or Sykes or the other big traders but I can't tell you that none of us will ever say send us a private wire transfer for any reason if you are interested in our services our products any of that go to our main websites but don't ever send Bitcoin or a wire transfer to someone's personal account I just really want to make sure that nobody else gets scammed by that so now that that is out of the way I will get into tracking setups first and tracking setups let me just start from square one what do I think about when I want to track a new setup the first thing I need is I need very clear tyria what does the stock have to do to qualify under you know a specific setup and I have names for my setups overextended gap down multi a breakout parabolic short you know all of those things have their own sets of very specific criteria and I decided it would be a good exercise to start tracking something that I've heard about pretty much my entire trading career that I'd never really put numbers to before the idea that if a stock has a big strong first green day it's likely to gap up the second day I've never really looked in depth into that and I was curious what are the odds that you get that gap up what are the odds that you'll be profitable so let's talk about the criteria that I put out for that and these are just my criteria these aren't right or wrong criteria they're just what I settled on so I only wanted to do it for listed stocks there's differences between listed and OTC stocks and I just decided that listed stocks for what I wanted to track for this example it had to be day one of the move that's what I'm tracking I don't really want to look at day two day three day four because the further into the run it is that probably changes the odds of whether it gaps or not so for now just day one I want it to be very volatile so I said just fifty percent just kind of randomly picked that number I want it to be up fifty percent or more on the day and I want higher than normal volume that one you know I don't I don't have a strict criteria not like ten times or twenty times normal nothing like that it's just kind of I look at a daily chart and I make a judgment call same thing for closing near the high of the day I don't I don't have a firm number for what near high of the day means you know if I was forced to say something I would say I want the daily candle to have closed in the upper two-thirds of the day's range and then also under $15 because that's just the price range I'm more comfortable with so this chart here on the right is a pretty good example of what a good day one might look like and the question was simple what if I started buying these right at the close and sold right at the open the next day you know whether it gapped up or down I mean right at the close I'm out right at the open what would the results look like and this is a picture of the tracker just very basic information this is kind of bare-bones for me I've gone far more in depth on other setups but it's the date the ticker the day of the day one where did it open what was this high what was it slow what was its close how much was it up on the day and then the next day open high/low close and then just I run some formulas over on the right there to get some ideas of either odds of the gap up or just you know average returns in certain situations now in this specific case here are the results I thought I might racked 44 samples when I made this slide it's actually up to 47 now and the geologists say the current odds because I remember this I've got 47 samples 19 wins 28 losses so that's about a 40 or a 41 percent success rate now that's interesting it's less than a coin flip chance so let me just ask everybody really quick let me see a show of hands here how many of you would take this trade 40% chance of working how many how many of you would stay far away how many of you need more information there we go that's awesome you guys you guys did well yeah more information I think is the correct answer because it's the other side of the trade risk reward so here are some more results so like I said it wins 40 or 41 percent of the time now here's where the risk reward comes into play let's take those 18 or 19 winners as I mentioned if you hate taking the trade and gotten out for a win in the cases where it did gap up your average return on those trades is plus 29% if it had been one where it didn't work you know one of those 60% that didn't work and you're selling for a loss the next morning right of the open your average loss is minus 13% that's about a two point two to one risk reward so risk reward is on your side even though it's less than a coin flip chance so you take all of those trades you add them together all of the wins all the losses across 47 samples the overall average return on every single one of those trades it says 4.2 percent here but given the extra few I track this week it's actually more like 5% now so average returned over 47 trades 5% gain that is actually over 200% potential return now this assumes that you trade the exact same dollar amount on every single of those trades so you can't you can't play one huge and the other small because that's gonna kind of skew which way your gains go depending on you know whether you were large on the losers or not but this really is a setup that you might be surprised to hear even though it has these overall favorable numbers I stay away from I haven't really traded this yet and you might be wondering why and this goes into trading psychology a little bit for me it's hard for me to be in a setup where I only win 40 percent of the time even if I know that long-term I'm gonna come out ahead I've kind of conditioned myself to really value consistency and have more wins than losses for me that helps me trade with high confidence and it's just who I am you know everyone's different you know I'm not saying stay away from this setup it could be something that you can keep a scope on the big picture and you can handle psychologically I just don't think I can and I think it's a mental trap for me so I've avoided it so far just one other thing I want to say about these results is that of course this is you know past data past data doesn't always predict future results the larger my sample size gets the more confidence I'll have in it just to put this in perspective I've been tracking these since about mid-may so since mid-may I've had 47 examples that fit all of my criteria so just to go a little more in-depth on what I track and how I track I you know I really have trouble telling people this but there is no right or wrong way it all depends on the question that you want to answer and the data that will help you answer that question you know in this very basic example here I was saying that I was only looking at just open high/low close for each of the two days and that was about it now it's still possible for me to refine this further this is just step one in my journey usually when I go into a spreadsheet there are a lot of tweaks I could make now I could change my hold on percent gain I could I could look and see if the ones that are up 75 percent on the day or a hundred percent on the day if those tend to perform better I could track additional information I could take the float of every single one of those stocks and see if there's any correlation between the lower the float the more likely it gaps up so you can always add more information I've always liked to just cast a wide net at first though I cast the wide net I go from there and then I start to try to narrow it down and find ways to cut out some of those losers and make it more consistent one obstacle that a lot of people have is they say I don't really understand Excel I don't know how to do the formulas and my answer to that is taken online Excel class because you can do that for very cheap I recently discovered you to me or to me I'm still not totally clear on how to say it but that's a website that has courses that span thousands of topics and they're pretty good courses you can see how well they're reviewed and even if they're listed at a hundred or 150 bucks like no joke they have a different sale every single week like I can't remember the last time I've bought a course for more than twelve dollars so it's a very affordable very easy way to educate yourself on something that could really help give you an edge in the market going forward spreadsheet tracking has been huge to my success an example I love to give of this is back when I was first getting started trading and one of the setups that I gravitated towards was multi-day breakouts and multi-day breakouts I had been watching all the video lessons the DVDs and had the phrase drilled into my mind resistance becomes support so for example if I'm watching a stock break past one dollar on a multi-day chart it's a breakout I expect that dollar level to hold perfectly I think hey resistance becomes support so I start trying to trade breakouts with this mentality and a lot of times what I noticed happening was the stock would dip back under that dollar mark I'd stop out at ninety eight cents ninety seven cents I'd say oh this is failing support didn't hold perfectly and then an hour later the stock said a dollar twenty and I say man I got faked out how did this happen like this this was just a really tricky breakout so I started tracking them I took the extra time on my own and I put them all into a spreadsheet and I started to see the pattern emerge on on paper which really helps me that it was not at all uncommon for supports not perfectly hold in many of these cases you would see the stock shakeout just below the breakout level and then continue on as if nothing had happened and yeah there were a few breakouts that just didn't work but I was able to see that too and prepare myself to set better risk levels and I was off and running that was a big part of what helped to jumpstart my growth I got to see the difference between perception and reality how I thought things should be versus how they really were and that helped me start playing my breakouts with smarter risk sure I didn't win on every breakout but I became far more consistent with the setup and it was a huge driving force in my growth so I'm gonna move on to trading psychology now because a number that has just always astounded me is that 90 to 95% of traders lose and that baffles me because trading should be a coin flip thing right like if you're looking at it just statistically you enter a trade you either win or you lose and you do it over and over like that should come out to about 50% long run so how is it that 90 to 95% blow up what pauses that I don't think it's that the patterns are too hard I really don't sure at first you're still learning it takes time to recognize it but that gets easier over time and yet you know we still have this huge blow up right the markets may be a bit rigged there definitely is a lot of manipulation I'm not gonna get too in-depth onto that but you know despite that manipulation I actually think that helps my odds I think that that helps make the moves a little more predictable you know you just you kind of get a feel for how the manipulation works and you try to play along with it and also it's not all BS and paper traders I mean there there are successful day traders out there so it's not just a bunch of people faking it so why is it that so many fail I am convinced it is the mental side and the psychological side and no matter where you are in your journey that never goes away you you are always going to struggle with the psychological side of trading yes the patterns become easier yes trading overall can become a bit easier take a little bit less work outside of market hours but you will never stop having the internal battles and keeping yourself in check is the most important thing you can do so what I'm going to talk to you about the rest of this speech is I'm going to go through a lot of psychological mistakes that I've had to deal with throughout my career ways that I've dealt with them and I'm just going to start off with a few that are kind of geared towards beginners that I especially remember when I was starting out so the first one is the follow the leader approach I signed up to penny stock and silver when I first started and I wanted to learn I wasn't just looking for quick bucks but on the side I definitely wanted to follow whatever Tim was doing I went as far when I was still studying and hadn't written yet I went as far as to track all of Tim's long trades in an excel see what percent he had made or lost on those long trades and try to project it to my thousand dollar account and be like okay if I just gone all in every single pick of Tim's here's the gains I could have expected it and so I can make some quick money and I can learn at the same time that'll be great you know I think that hey you know Tim Tim is the pro here I'm the newbie he knows what's up I should just follow him and the reality of that situation was I could never match prices the penny stocks move too fast I'm not the only genius with that idea and you usually have a bit of an effect of a lot of people trying to just blindly chase and that pushes the alert up way too fast also you know if you're in the trade waiting for that sell alert and you have no idea what to do on your own you feel totally lost there were a number of times where I'd be in the trade super scared just waiting is Tim gonna sell is Chim gonna sell and even when Tim did sell you know it takes time for him to type out that sell alert and talk about his reasoning behind the trade and again there can be a lot of price movement in that time between when Tim sells and when the alert hits so I never can matched prices and this was just a way that you could slowly bleed away your account I really think that's the main impact of trying to follow the leader at the other side of it too is that you don't learn to think for yourself the idea of trade alerts is to learn the thinking behind the trade what pattern are they seeing that's the question you want to answer and how can I learn that pattern myself but blindly following just doesn't work so solutions for this getting the discipline and the recognition of this situation so that you never follow the alerts you just try to learn from them instead another big problem for me as a beginner fear of losing I get I get questions about this one a lot in webinars people who you know they feel like they can see the pattern decently and they're just afraid to pull the trigger and believe me I was there too I would get so psyched out entering a trade we're talking like I would be shaking my heart would be racing like I was I was like oh my god am I having a cardiac event like it was it was scary it was really scary when I was first starting out and I mean that that is the one side of a potential impact of being afraid to lose that you just are gonna miss a lot of trades because it's just a really scary idea the other potential impact is that you can get yourself to take the trade but if it's not going your way you just won't cut that loss because you don't want to lose you want to wait for that stock to come back in your favour you know it's gonna be okay eventually you tell yourself you know you just try to rationalize some way that you could get bailed out of this trade so what causes this fear I think it's a couple of different things one is that you just have a really small account and you can't afford to lose I think you know this also ties into maybe how much money you have saved up other than what's in your account and I really like to tell people that you've got to wait until you have enough money in your accounts that you don't have to be afraid for this reason I always believed you should trade small when you're first starting but if you are trading small and you're still scared because you just can't afford to take the loss you're gonna be fighting an uphill battle the whole way and gonna have a really hard time making rational decisions so I think that the best of course the action is take that time to study to learn patterns you know still make the time useful but wait to actually put your hard-earned money on the line until you are rid of a major psychological hurdle and you have a little bit more to fall back on the other thing that I think causes it which is a little bit of rationale and I think I fell more into this camp was just kind of being prideful being being afraid of being wrong I knew that I was good at cutting losses early in my career I knew that I really wouldn't take any major catastrophic loss so that wasn't where my fear was coming from and just for whatever reason and that's just who I was I was just afraid of being wrong like I had a lot of self-worth and pride tied up in making a winning trade I would feel like a failure if I didn't and I wish that I had like a quick fix for that but really it just took time you got to recognize that it's kind of irrational every trader is going to lose it I don't have a slide for it this year but the past couple speeches I've done I would have had my prophet lis chart up there and my win percentage and in the last three or four years every year my win percentage drops a little bit I think it went from seventy percent to 69 percent to 68 percent so I mean I'm probably trading at about at 60 to 65 percent success rate over the past few years and I'm still very profitable but cutting losses is a must it is it is a huge part of trading because that way you don't put yourself in a blow up situation so I mean just try not to be afraid of being wrong you you have to accept that you will lose sometimes and if you're trading small size there's nothing to be scared of just give it some time keep kind of forcing yourself to take these trades with your small size and that issue it does eventually resolve itself it got easier for me with time and that was the main factor well nice beginner thing is getting rich quick a lot of people come in and they want to be millionaires tomorrow and this is a marathon not a sprint you know what causes this is kind of the overconfidence from how easy that video lessons can make sure reading look and also what can quickly decimate your account is if you take this overconfidence and it translates over into trying to trade really big I really I really cringed when I have the new students talking about the large accounts they're trading and I'm thinking to myself you're only a month into this like don't don't trade money that will be really hard to recover in terms of real-world money it was such a big deal for me that my first blow-up was only 1,500 dollars because I worked a summer job at State Farm I made four thousand dollars that summer so in terms of real-world money that fifteen hundred was no problem to try again now if I had been trading 10,000 or 20,000 I'll be a totally different story I don't think I'd be up here today so no matter how confident you feel no matter how much you think you know early on you're gonna face things in the market that you haven't seen before we we have these plays every year that I like to call the Black Swan events where you might see a pattern that works ninety nine out of a hundred times but then the one time out of a hundred it doesn't work it just decimates people you usually short sell there so usually it's the short sellers who get in trouble on those but yeah like I mean the first time you face a Black Swan event you don't want that to be ending your account and you don't want it to be a huge account especially if it does so early on you have to assume you know less than you think you do and you have to trade small those I think are the two big fixes to just put everything in perspective and again just remember it is a marathon not a sprint so now some other more general things that I think I would say I've struggled with my entire career and this is a big one FOMO which stands for fear of missing out so some impacts that you might face if you are trading with FOMO you're trying to trade everything you're trying to trade outside of your niche setups you're not that comfortable with you just want a piece of the action you're forcing stuff you don't understand you're gonna get terrible entries as a result you're gonna get really bad results as a result because if you're trading things that aren't your niche you're gonna get really really random results what causes that I think a big part of it is social media and the chatroom culture it is very difficult to be exposed every single day and maybe maybe you have one or two setups that you are very comfortable with very good at and those setups just aren't there on any given market day so you're having a slow day you're in the chat room or you're on Twitter and then you see someone posting about a big game they made or on some random big runner some people are saying hey how long this runner this is great it's going straight up and you start to get that itch you're like man I'm sitting here having most boring day in the world and I'm watching other people Bank and that's so hard to tune out you kind of start feeling like I should be doing something too and before you know it you're in that random trade you chased an entry I have certainly been there just takes time but you've got to learn to ignore that noise it was difficult for me my big turnaround after my blow-up was that I cut out a lot of setups I was focusing on my niche I was trying to only buy new promotions only buy multi-day break outs and I would go through those days I would go two or three days in a row without making a trade because my setup just wasn't there and I'm telling you it's not easy to block that out seeing other people in the chat room making money and feeling like you're missing an opportunity but the most important thing in trading is focusing on yourself that's not what you're trying to do you're not trying to nail that setup you're trying to focus on the two that you're good at the two that you're consistent at that's your goal so there's absolutely nothing wrong with missing something there are so many different sectors in the market there's so many different types of stocks you can trade there's just there's no way you can do it all every single successful trader I know does things differently so don't try to be somebody else don't try to bank on the ticker just because somebody else is banking on that ticker you need to focus on where you're good and you need to stick to it self comparison this goes along with what I just talked about a little bit early in my career when I was starting to be consistent I was starting to get good I would have a nice day you know for me at the time a nice day I was to $300 and I feel good about myself I would go on to Twitter at the end of the day and I would see a couple of top traders posting that they made 3000 or 5000 and sometimes it will be on the same tickers is made and it's really hard not to look at that and feel like you should have done more or feel inadequate and I mean again it goes back to you have to just focus on yourself where you are in your journey I don't want to focus on how I profited compared to Ducks who always trades you know ten times the size I do I want to focus on how I profited compared to the last time I tried to play that setup over the last few times I tried to play that setup you're looking for self growth you're not looking for how you compare to others everybody's journey is different you're not going to have the same learning curve as somebody else you're not gonna be profitable at the same rate as somebody else and I know that we want a benchmark we want something to compare ourselves to to tell us how we're doing but that's not realistic in trading everybody is so different and everybody really trades with their own personality so all you can do is just try to take a step forward every week I wouldn't even say every day because different days have different opportunities it's hard to look at it on that small of a scale I've always thought in terms of weeks and not even so much that I want every week to be more profitable than the week before but just that I want to come out of a week and look at that week as a whole and feel like I made fewer mistakes than last week or you know the setups that I had this week to take advantage of no matter how many or how few I want to feel like I traded them well so it is it is self reflection you need to go for and again like be be happy for the other traders who post the big gains sure but don't hold yourself to that standard you know just take one step forward every week in your own journey and get there before you know it boredom trading I go through this one a lot too you know it's you'll notice I'm saying like I haven't solved a lot of these I can tell you what I'll help but I'm still far from perfect and boredom trading I mean potential impact is pretty obvious but you forced dumb trades you do something just because you're looking for a little bit of action what causes it it's slow market conditions or you know just chasing productivity is what I like to say you know you it's hard to sit at a computer all day you feel like you should be making money you feel like you should be doing something and if you're not it's hard to feel like you're being productive you feel like it's a wasted day but don't honor that don't underestimate the value of that screen time the days early in my career I would go two or three in a row without making a trade I was still in front of it I still I still made myself watch some of these tickers and how they acted and how they performed at certain points in the pattern and that's valuable it's valuable just to sit there and watch so no you're not wasting a day you're not wasting time sometimes the best thing you can do is not make a trade and I think it gets a little bit harder even when you get later into your trading career and you get a little bit more of an ego because you get used to making a certain amount of money and when those slow weeks come around you say whoa what happened I'm not that profitable this week and then you really want to make something happen that's that's the mental trap I fall into lately at least and it always turns into instead of taking my a plus setups or my B setups I really take a C or D set up something I don't trade that often that I'm not that comfortable with and I just sort of grab it and say okay I hope this works out and I would say overall on those trades I definitely am in the red so potential solutions for that self reflection you've just got to look inwards and ask yourself why am i taking this trade and really get to the root of it you've got to be very disciplined and again it's not easy but it takes a long time and a lot of work but you can start to recognize it you also have to have realistic expectations you can't expect to make the same amount of money every day every week every month the market is going to have its ups and downs we have times where the market is absolutely insane and I have more plays than I can handle we have times where I want to just go back to bed I mean I have I have really struggled the last couple of months because of overtraining specifically I think the weed Sox have been going kind of crazy but in all the other sectors in small-cap land there haven't been too many parabolic runners and that has led to me taking a lot of boredom trades and the weed stocks and shooing myself up since the start I felt like I haven't traded well and this is to blame one thing I could have done that I wish I had done is just left the computer even if it is that early point in your career and you do want that screen time if you're having trouble with the discipline I'm not pushing buttons just walk away you know do something fun for a couple hours I mean mid day law we all have heard about the midday lull there's nothing wrong with going out and just getting lunch so give yourself a chance to separate from it these are the little things I think can help swinging for the fences wanting the big homerun trade this could lead to horrible horrible losses or it could lead to a situation where you enter a good trade you got a nice winner and you just get greedy you want more you want it to be a huge win and next thing you know that win is a loss and that is a psychological gut punch also just inconsistency if you're trying to hit a home run every trade you're probably gonna hit a home run here and there but you're gonna lose on the vast majority of the rest of your trades so the mental causes of this chasing the big bin and that usually happens to me and during the times of boredom trading actually where there's not much going on in the market I'm having a slow week and I just want a big win to pull myself out of that slow week also I think early in your career it could be the potential to grow your account fast and again can't rush it marathon not a sprint I did not get to where I am by having a few big winners here and there I got here through consistency lots of singles the singles add up I I remember specifically playing the new promotions and the new promotions that helped grow my account I would say about 75 80 percent of them would run for multiple days and they would go to three four hundred percent something ridiculous and wild like that I was always out in ten minutes I would buy right upon announcement I would sail into the predictable spike and that was it for me and those added up fast and sometimes I would feel bad that yeah I sold this stock at 20 cents and it went to a dollar two weeks later but then there would be the other plays the ones where they announced the new promotion it goes up about twenty thirty percent in the first ten minutes and then by the end of the day it's down 80 percent and they totally just sold into it and crushed it I avoided all of those there were some there was some major promotion traps I saw during my first year at trading and I never got burned by a single one because I valued consistency over the home run I wanted to just be consistent gain confidence make a profit that's what mattered I didn't need to hit a grand slam every day I just needed to be consistently profitable because that was my goal I wanted to be self-sufficient I wanted to be able to be out of my own I just wanted to make a decent living from trading I wasn't trying to hit a home run every day and be a millionaire as fast as possible that honestly was never a goal of mine from the start revenge trading I go from I go through this one from time to time also this especially happened to me after my lake loss two hundred ninety thousand dollars where you just take a gut punch of a loss everyone's gonna go through that I mean there's no avoiding it in your career you're gonna take some losses that really hurt and it throws you for a loop mentally and you just want to make that back you feel so bad and so for Lake what happened to me was I started trading the other setups after Lake had played out that I was seeing and I was trading them with about five times my normal size I was really going after it cuz I was like I'm just gonna I'm just gonna smash this trade and undo this damage as quickly as I possibly can and I think the first trade I made after my two hundred ninety thousand dollar loss was that really big sighs I think I made about sixty thousand dollars and then I made another one like that and I lost about 70 or 75 and I mean lake was my worst loss at two hundred ninety thousand I think that's 70 or 75 thousand dollar loss was it was definitely a top five ten loss at that point in my career and it happened within a few days and it was just because I was pushing I was not trading like myself and I don't I don't necessarily think that every time immediately after a big loss you would fall into revenge for me it's more after the play is over so I have no problem now at this point in my career of taking some big losses on the way up of a parabolic short if you know as long as I'm cutting them you just be playing lower highs than normal but if the tank day comes and goes and I miss that main play that I'm waiting for that's when I would slip into the revenge trading that's when I would say wow the plays over I totally screwed it up I got to get this back so there's a certain amount of time I can keep my head in the game but if I blow it at the end of the play then I totally fall into this so the solution I mean again you should be really self aware of what you're doing yeah you notice I'm repeating that a lot but it's just so important you really have to be in tune with your inner self and figuring out what's going on in your own head but a lot of times that doesn't help me with this one this this is one of the most gut-punch things for me as a trader so I have to take time off I have to walk away and usually it's a week two weeks something like that and it always helps every single time I just get that time to calm down and relax and have some time away from the market and I come back and I'm no longer in revenge mode you know if you play poker you would compare it to going on tilt you just need some time away and then once you get back you're back to your rational state of mind and you just get back to doing what worked for you before you've had time to reflect on the mistake you've had time to figure out how to fix it and just get back to business as usual and try not to repeat that mistake again addiction this is one that I definitely struggle with trading is very very addictive and the impacts of addicted trading definitely over trading because you just want that adrenaline rush and also you just miss out on life this has been something I've been reflecting on a lot lately because I spend Monday to Friday in front of my screen from about 8:00 to 5:00 every day and then I'm checking my phone after hours I feel like I can't tear myself away from it and especially at this point in my career I don't like that I want to be able to separate a little bit more I want to be able to take a more passive approach to the markets maybe find a few more longer-term setups and what causes it for me again is I love the adrenaline rush and you want to be productive you want to feel like you're in front of the screen doing all you can to be successful at trading and also FOMO that that's a big problem for me too with this is you know if it's a slow day its midday and I've you know it might be time to walk away I'm afraid what if there's a play while I'm down to the pool or while I'm away at lunch I'm so scared of missing something and some solutions to this are you just have to force yourself away if you notice yourself over trading every single day recognize that pattern within yourself force yourself to step away from the screen also if you have friends family or a significant other who can drag you away that is even better my wife Donna watches me trade a lot she's around every day and she's developed a sixth sense for this kind of stuff I can't tell you how many mornings Donna has said to me I don't think you should trade today and I say you don't know you're talking about and then I'll lose money it happens almost every single time so I really do need to learn to listen to her but I mean when we were down in Puerto Rico together those midday lols where we would go down to the pool together just get some time away from the screen so helpful just so helpful so if you're not gaining anything from that screen time we're watching the pattern just pull yourself away for a little bit you know it's okay you don't have to be productive 24/7 you just don't want to be in a position where you are forcing because you will chew yourself up distracted trader this is one that I experienced for the first time last year and the potential impact of distracted trading is big losses and what causes distracted trading is negative life events things outside of the market beyond your control for some people it could be the death of a loved one it could be you know someone is sick could be some kind of natural disaster and that that's what it was for me it was around this time last year when Hurricane Maria hit Puerto Rico and I I knew that the condo that we lived in was going to probably be in very bad shape after that it was like a total communications blackout out of Puerto Rico for the couple of months a couple of weeks following that and I just kind of threw myself into the market I really just wanted to distract myself from that negative thing going on and have something to feel good about and September had gotten off to a decent start of a month and I just for whatever reason decided you know this is the months that I think I'll size up I'll trade bigger and I want to try to have my best month ever because I'm already off to a good start I haven't had my best month in a really long time like this is a good time for let's do it so I started pushing my size and again I'm just trying to distract myself from all these negative feelings about the stuff going out on outside of the market and I took a string of losses I took I took about $100,000 loss on him and he III remember talking about that one at the conference last year up here when it was down at like $4 and I took I took a much larger sort than normal on it I think I shorted it at about seven and I'm on up cutting it at ten lost about 100k and I had a lot of other trades like that too I think I think MN KD was another one where it had a day where it gapped up big or something and I threw a ton of size at it short and it stopped me out and I lost 30 or 40 K there and I did this on about three or four different tickers where I just decimated myself and I September was one of my worst months in a long long time in fact I gave back all of my beginning of the month gains and then some and it was just because I was searching for something to feel good about and I was really in no state of mind to trade I've heard about this with other traders too I know it's not just me I've heard of people who you know find out that they've got a sick kid or something like that and just get absolutely destroyed in the ensuing month or two so if you can't come to the market with a clear state of mind if you're looking for the market to fix how you feel about something you shouldn't be there at all it's okay to step away during those times again I know you want to feel productive I know you feel like you should be in front of it this is supposed to be your job but if you're just gonna do more damage than good don't be their main issue stubbornness took me a long long time to work through this one potential impacts big losses and a trading career and what causes it not wanting to admit defeat or your current loss just feels big what I mean by this is sometimes we sort of accidentally find ourselves in a situation where maybe we sized into something a little too big and it hits the point of our stop loss and we know that hey it's time to get out of this like the chart is not right but you look at that number of how much you'll be down if you close that trade and that just does not sound good to you and it's which just kind of flips in your mind where you say you know what I'm just gonna wait for the market to hopefully fix this maybe maybe I'll get a you know for me it happens a lot when I'm short so I say maybe I'll get a pullback I can cover in two and lessen the damage but yeah it's just that switch flip moment where you know maybe $5,000 loss feels bad and you're like well 10,000 is gonna feel just as bad so why not just give us a chance to work out also I hear the excuse a lot I got stuck there's only one time you maybe would get stuck and that's if you're in something overnight and they release surprise news there's not a lot you can do in that situation that might happen from time to time but getting stuck is not my stop-loss is coming on I've chosen not to cover and now I'm down a lot and I just don't want to you always have the choice to push that button you always have the choice to get out like I said I went through this for a long time I took my 290 thousand dollar loss on Lake because of stubbornness and because of fighting it and trying to fix it and that loss sucked and I said to myself okay well I just took that loss I've learned my lesson that'll never happen again and six months later I lost 180,000 Anki bmd and I said okay well I'm a little surprised this happened again but I've got it this time won't happen again and three months later I lost one hundred five thousand on TANF and every time it was the same mistakes I would get stubborn and then I would fight and here's how I dug myself out of that mental hole this was not a one-day fix even three six figure losses couldn't fix this for me so how did I fix it I held myself accountable I made a spreadsheet after reading a trading psychology book book a hundred and one earth what is it trading in the zone yeah I'm blanking on it that's it daily trading coach 101 lessons to being your own trading psychologist that's the book I read Brett Steen Barger very very good read and it gave me the idea for this spreadsheet to track my losses not every single time I lost but every single time I made a mistake and I forced myself to sighs way down to sizes that were smaller than anything I had traded in a couple of years and that was not easy it was hard to see some prime setups and playing with what felt like puny size but I knew I had to fix my discipline so every month I would go through the month I would tally my mistakes and at the end of the month if I felt like I did a good job I could increase my size a little bit the next month if I felt like I did a bad job my size had to stay the same or go back down this was about a 10 or 11 months process for me and if any of you have seen this on my youtube channel he would just search timber Thani to find my channel I chronicled these months at the end of every month I would do a recap of my month mistakes I had made how I felt like I performed how I felt like I could do better and like I said this was not a one-day fix this was months of work but eventually I got my size back to where it it used to be even larger and I had completely killed the stubbornness bug in my system I broke the bad habit now yes I still take large losses sometimes and that's really more due to mistake if I trade something too large TL ry gave me fits over the last two weeks I probably took about six or seven $30,000 losses on that stock it chewed me up good but the key on that one was as bad as those losses felt every single time my stop hit I was out I never went on the ride and that thing went to $300 I was trying to short it as early as eighty can you imagine if I had about an eight or nine hundred thousand dollar position on that it $80 and I rode that two three hundred that would have been I mean a mind-blowing record loss so thank God I don't get stubborn anymore and if you struggle with that I really recommend doing something to hold yourself accountable maybe it's tracking in a spreadsheet like I did I don't know but be ready for a long journey and really really having to work towards it because this is the main thing that takes out traders it could be a beginner trader could be a veteran trader I've seen all levels of trade or get hit by this and again it just takes that one play out of a hundred the really rare one the thing you've never seen before where you didn't cut a loss and it destroyed you don't ever put yourself in that position so some concluding thoughts on the psychology the emotional side of trading it never goes away some of these issues they will get easier with time but don't expect to wake up one day and say oh I've solved trading this is the easiest thing in the world because that's not going to happen that's not a realistic expectation it's a daily battle you have to look inwards you have to hold yourself accountable you have to reflect on why you're doing what you do at the end of every day just take five minutes it doesn't have to be right after the market closed it could be that night before bed think about your trades think about the actions you took see if you can think about mistakes you made during the day and again not every loss is a mistake a mistake is not cutting a loss a mistake is playing too big but sometimes setups just don't work so don't kick yourself because you took a loss kick yourself because you made a mistake and try to fix it if you hold yourself accountable if you track the stuff in a spreadsheet if you strive for better every month I think you can slowly start to overcome these issues or at least greatly improve them one by one thank you guys [Applause] [Music]

Channel: Tim Grittani

Views: 146,439

Rating: 4.9292531 out of 5

Keywords: tim grittani, trading, daytrading, trading psychology, investing, speech, make money, daytrader, stocks, stock market

Id: iCgzP0xRgrY

Length: 45min 42sec (2742 seconds)

Published: Tue Jan 22 2019