 Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the trade hacker mindset. Welcome back everyone. I am joined by a special guest today by the name of Mr. Rich Friesen. I'll give a little intro of Rich and then I'll let you fill in the gaps and really provide a little bit more detail. Rich is the founder of MindMusclesforTraders.com. He has a book out called A Private Conversation with Money. By the way, full disclosure, I have not read it yet but I did order the book. So I will be catching up on that shortly. Rich has a degree in philosophy, a master's in clinical psychology and a master's certification in neuro-linguistic programming, NLP. So with that Rich, I'll turn it over to you and tell the folks a little bit more about yourself. Well, I started trading almost by accident. One of my best friends in college went to work in Chicago on the floors of the exchanges and soon was building his own trading firm. And so he said, Rich, come on out. And I said, I'm a philosophy major. I don't know about this standing on the floor and yelling and screaming. So I decided to learn a bit and I went to work for Merrill Lynch as a futures broker. And that taught me a lot. And one of the things that taught me is that almost all of my clients lost money over the long term. And as a guy who really likes to add value to the world, it was really a challenge to, you know, it's dialing for dollars. And to pick up that phone and say, hey, you want to get, make a lot of money fast, I couldn't do that. So as a result, I threw in the towel and said, Joe, I'm coming to Chicago. And he put me on in the, I mean, this was no training almost. He put me in the middle of the S&P 500 pit. And this was, you got to understand, this was when there was 500 people now. You know, it's all changed. And what year, what timeframe was this for reference? That would have been 1970, let's see, I was there, that means 74, 1974. Okay. And so philosophy major, therapist Rich Fries was in the floor of the exchange, yelling and screaming. And I was off the mark bidding and selling because they were giving me their hedge orders in the futures. So they took me out of there and they put me in the option pit. The S&P had options on the futures that just opened up. And then after a week or so, my trainee there said, Rich, you are the worst trainee I have ever seen. That's a confidence builder. Oh, that was, you know, on the floors, there's no sense in beating around the bush or being nicer, trying to build people self-esteem or all that bullshit. You know, it was just, you're terrible. And he was right. I was terrible, but I managed to survive that. And I opened an options desk on the Pacific Exchange for Chicago research and trading. And that started my career and especially given my background as a therapist, I was interested in my own mindset. And I have a story about when that made a big shift but I thought maybe you might have some questions or comments so far. Yeah, no, go ahead and jump into that. Obviously the name of this podcast is the trade hacker mindset all about the mindset around trading. And because I believe, you know, when I first got started, you know, it was all, I thought it was all about the strategy or the indicator or, you know, some type of, you know, process or system and quickly learned that it was the mental side that was holding me back. And so, yeah, please continue and cause that's what this is all about. Well, I so appreciate that that is part of your awareness because in my experience, it amplifies what you just said. So let me give you my story. And that was April of, this is a long time ago, it tells you how old I am. April of 1995, I woke up in the middle of the night and I heard this voice said, Rich, you're only worth 200,000 a year. I mean, that voice was as real as your voice is now. And so I looked around the room, you know, a little panicky. Wife was sleeping beside me. She wasn't disturbed. And I realized it was a voice in my head. It was something from really deep that came up. So I dressed, shower, shower dressed and I drove across the Golden Gate Bridge to the San Francisco and went to the options floor which was still locked at the time I got in so early. And while I was waiting for the doors to open, it gave me a lot of thought about what was that voice. And when the doors are open, there was an empty pit, of course, because nobody else was there that early. I stood at the back like I normally do and I'm very careful. I have my option values. I just take a little bite out of this order or bite out of that. And to understand a little background is that first year I went on my own. I made a, yeah, working for this large firm and making hundreds of thousands of dollars monthly. On my own, the first year I made 125,000, the next year 150, 175, and then 200, 200 and 200. And that's when that voice woke me up. And so I stood at the back of the pit and I thought about that voice. And in a moment, I realized I was done with it. And I went and stood in the best spot in the pit. Now, you young people don't know anything about this, but it's a jungle and who owns the best spot is the most aggressive, the most well-capitalized, the person who's the biggest bully, the person who can really set their boundaries and really make everybody fall in line. So I stood in the best spot in the pit and then the market maker started coming in a little bit before 6.30. And the guy who always stood there kind of looked at me, watched the clock, the bell went off, he tapped me on the shoulder, said, you know, okay, my spot. And I didn't move. The whole pit just stepped back. We got into a pushing match and the exchange official warned us very quickly that it was a $10,000 fine for both of us if we continued. So I pretended I had concrete boots. I stood my ground and when the bell went off, I just, I would blow everybody's mind. I'll put my microphone away from my mouth. I was buy the hundred, sell your 50, buy 20, sell your 50. And the pit thought Rich Friesen had gone berserk. But what happened was I realized I was done with that voice, that internal limitation. And it turned out I didn't feel worthy of more cause I remembered what the original trainer told me. I was the worst. I wasn't as smart. I wasn't as aggressive. I couldn't remember things as much concepts I could get, but you know, specific values were difficult. So I created a, what the firm, the floor kit people tease me, it was optionalmatic. It was a piece of cardboard sliced just right. So I could determine where my values were at any given point. Well, it turns out after a couple of years, everybody was using it cause it was so convenient. But I was able then to go on to make 650,000 that year and make more every year. And that was enough to capitalize me to build my own trading firm. And so Rich, the, going back to that voice and the fact that, you know, you kind of yourself worth was around that $200,000 number was, was in your conscious mind was part of that because you were scared of the risk it would take to get to that next level or was it something, something different? Well, that's a good question and a hard question. Yes. I think there was a risk. I think there was a timidity. I've always been a guy who in conflict I withdrew. That was a training for my parents and I could go into that. A lot of conflict at home, I had a younger brother who conflict, he came out fighting. I went and hid under the bed. So my process was to be safe was to withdraw and to fight on the floor was a very different process. And the risk wasn't that much cause I had a low risk process that was expandable because all I had to do was increase my volume and it worked. I see, I see. And so, so let's take it forward now to the electronic world of trading. So tell the, tell the audience a little bit about what do you, what do you trade now and kind of what's your, a little bit about your methodology and kind of what you're doing today? Well, I don't trade actively today because I have enough money to retire. I have no need to sit in front of the computer. I've did that for almost three decades. So what I do now is very different is I look for belief systems. For example, when I watch the news, I don't believe any of the content. And I think anybody that believes what's coming, the content is nuts. But what I look for is, what emotional state does this engage people with? So what I'm really interested is in the emotional state. For example, in March when the pandemic was the worst and the market was collapsing, I called one of the best traders I know and I says, what do you think's going to happen? This was a really dark time. And he says, we're not going to see the market bounce until we have a wave of bankruptcies and a major economic dislocation. So I checked with a bunch of other people. The beliefs were all the same. And I went and started. I was maybe in 30, 40% cash in my retirement account. And I brought up that to about 70% in investment. And boy, that worked out. So what I'm doing now is just looking for those moments. Could I go into the market and tell you where it's going today? No, I have no idea. I have all I could give you some percentage, 60, 40 or something. But there are moments in my career where everything just was crystal clear. And that's because I sense belief systems were about to shift. So this really fits me as a therapist and a study of how the brain works and neuropsychology because now all of a sudden I'm in my wheelhouse. I'm not trying to keep track of a dozen option values on the floor. I see. So in working with traders that you work with, some of the common things that I hear from our community, from people who are either new traders or maybe they've been trading a while but they haven't gotten to that place of consistency with their profits or their P&L curve. Some of the common things are that there's some people trade out of fear and some people trade out of greed or a combination of both. Those are the two major driving emotions that traders have. How can a trader, one of the common things I hear is how can I deal with getting over losing trades mentally? Emotional. Yeah, all the surveys I've done. The top three issues are the reaction to losing trades and then some people get aggressive. They try to make it back. They go into depression or they do some impulse trades or they overtrade and all the reactions to that. So the question then it becomes how do we create a new state of mind that can handle that and handle those losses? So this discussion now could go in a whole bunch of different areas so maybe we can come back to some others. But one of the things I do is I have a product called Mind Metrics. And in Mind Metrics, we start with our awareness, our sensations, emotions, thoughts, and we score them from minus five which would be depression for our emotions and a plus five would be like we're on cocaine or caffeine or just really jittery and excited. With a zero meaning we're just really present. We do that for our physiology. We do that for emotions and the quality of our thoughts. So we have this in the chart and you click button and it turns to each square green, yellow, or red so that we know if red were in the danger zone, for example. Then what we do is we mark the trades by our strategy. In other words, and we call them either lousy or lucrative. A lucrative trade isn't necessarily profitable but it's a trade that where you did your research, you slept well, you took care of yourself, you arrived in the right mental state, you followed your strategy, one of the strategies, you executed it, you stayed in the trade for the strategy and you exited according to your strategy. That's a lucrative trade. It doesn't matter whether it made money or lost money. So then we measure the lucrative trades versus everything else. And this is after they've closed the trade out or this is when they are entering the trade? Well, there's two ways to do this and one, we measure it afterwards and so the trader will say, was that? No, I was really just hoping or my setup wasn't quite there yet. So that would be a lousy trade. And when we look at the trades divided by lucrative, which means we follow the system, like my most profitable traders, 40% to 50% of their trades are profitable. In fact, 40% tends to, my best traders probably have a 40% win rate. That means they can handle a lot of losses. So if you have, you look at your lucrative trades, let's say 50% profitable, 50% unprofitable and then you look at everything else, the trades that didn't follow the system or you had too much to drink the night before or you weren't in the proper mindset. Most trader, I'd say 90% of them when we do this application realize that if they eliminated or if they just made lucrative trades, they would be profitably, consistently overnight. And for some of them it's like a friggin' brick on the forehead. And to that point, you know, you're grading it after the fact, which I liked as well. But the point I made about, you know, dealing with losing trades, that's one thing. But on the flip side of that, I think a lot of traders, one of their biggest issues is actually staying in the trade, right? Where they're cutting, you know, they, oh my gosh, I got this profit. I better just take it. You know, you hear, I just did a podcast episode on this not too long ago where, you know, you've heard the saying, well, you can't go broke taking a profit, right? People will say that. And it makes my body tense up and cringe because the reality is that some of your biggest gains are the ones that you are able to deal with staying in until you reach that, you know, intended profit target or whatever it is that you manage the trade. Talk a little bit about that as far as the mindset around being able to stay in trades as opposed to taking those profits too early. Right. So what we can do is that would be a lousy trade where you take your profit before your strategy calls for it. So it's lousy. You can even divide it up. Lousy trades that I got in, okay? And I took profits pretty soon. You can just measure it. But a short story. I had a clerk that was really bright and people worked their way up in my firm by first starting to clerk. And then once they got the system and understood it, we did afternoon trainings. Then we'd give them a badge and I would capitalize their trading. And then there was a profit split. So we had a trader that it was just one of those days. I mean, I think about it. It's Sarah's own, you know, talk about a rush. The firms were selling premium and the retail was buying premium and just next, you know, close strikes. So, you know, buying 26 volatility, selling 33 volatility, huge spread, minting money. So about mid-morning when the new trader came to me and he says, I'm up 10 grand. I'm going to take off for the day. I said, I am going to take $10,000 out of your account right now. You're starting at zero. So why did I do that? Because he was cutting off the upside and taking his profits too soon. The market sometimes will just give you money when the emotions are right. But the market is a harsh mistress and there will be days, maybe weeks, and I've experienced months when there just wasn't much opportunity. So if you cut the upside and you keep the downside, you're almost guaranteed to be a loser. And when you're working with clients, I mean, do you have them set up very specific risk versus reward metrics for the trades or is it, I mean, I know everybody's got a different style, different methodology, but how do you think about that? You know, some traders will say, well, I only get in something if I'm going to have a reward versus my risk of three to one or four to one or ten to one or whatever it is. How do you think about that when you're working with traders? Well, I don't determine that at all. What I do is work with a mindset and then have them test. Okay, we have a strategy that is two to one. I've had traders that go one to one. That's a lot of work, by the way. You know, some traders go ten to one and they have a lot more bosses, but boy, when they hit, it's big. So my job's not to determine that. I can help them depending on their personality. For example, if a trader is just actively trading and he needs to be there, then I'll say, what would happen if you weren't trading one to one and trading so actively? Oh, I might miss out on something. And their voice goes up like this and they're anxious. So the real issue is not their trading strategy, but their need for constant feedback from the market and their need to be active, and that is almost a compulsion. So then we work on the compulsion and when they start to become aware of the impact of that compulsion and we look for what is driving it, then they make a shift and their risk-to-reward shifts with it. But I don't start with a symptom. I start with what is driving that. I'm glad you brought that up because that's something that I wholeheartedly believe in is that part of the reason that some traders struggle is they see somebody else having success with a particular strategy that might include a specific risk versus reward. And they try to do the same thing and so you've got two people trading the exact same strategy, one is uber successful and one struggles. And so we talk about finding the type of trading, finding the duration, finding the symbols, finding the markets that fit your personality as opposed to trying to copy somebody else's because that never works in the long run. Well, so I divide it into three different parts. The first part is the market has an overwhelming amount of information. There's an overwhelming number of strategies. The strategies sometimes aren't clear. They require pattern recognition. They require some intuition when to execute them. So the new trader command is overwhelmed. If he says, okay, here's the strategy I'm going to copy, there's some value in that is because it narrows all that information and gets you in a rhythm, especially if it gets you in a rhythm of execution. And I can talk about the rhythm of execution. We can come back to that. But then there's the next stage and the next stage is what you brought up, which is so important is who am I? Is that my guide that likes to stare at the screen? Or do I want to put on an option spread and take a peek at it once a week? Or am I a guy that's looking for more longer term? Who am I? And the third part is then when you develop a confidence in your ability through time that's proven that you can handle whatever the market brings you comes up with that you're not attached to the strategy. In fact, I have a graphic. It's called the circle of confidence. And when we start, we're just naively confident. Oh, I can go in and make money. Then we start to lose. And then we say, and when I have a winning trade, well, look at me, I just made money. And then we have a losing trade. We go back and then we say, well, I need a consistent strategy. We get a consistent strategy. We don't follow it. Then we have a strategy. We follow it. Then we start making money. And then the market mood, what I call the market mood shifts. You know, there's strategies can't last forever. If you had a strategy that lasts forever, that was profitable and easy. Everybody would do it. And soon, you know, it would destroy itself. But then ultimately, we move to confidence in ourselves. We've gone through this cycle. We've seen all the markets and we can say, you know, I can see what type of market it is. I'm flexible. I'm confident in myself. I can step out of the market when I need to. I'm aware of my mindset. And that's the stage that I work with my traders to develop faster than they could on their own. How do you, and I know again, you're not really focused as much on the strategy but more just on the philosophy and the mental side with the folks you work with. But how do you draw the line between changing strategies based on the market environment and falling into following the shiny object syndrome? Yes. Oh, man, that is an excellent question because what happens is the trader will have a strategy and maybe not even execute it well, not keep track of which trades were on the strategy and which weren't. They're just in a bundle and he's not making money. And then he watches a podcast or, you know, a webinar on this wonderful strategy and he pays more money and jumps to it and jumps to that. Well, that means we're skipping that circle of confidence where we're slowly building our intuition and our skills level. We're saying it's the strategy out here that makes the difference. Now, what I have my traders do is look at a strategy that fits the context. Like beginning traders all have them print out if they can. Several months of the market they're trading. And then I'll have them take like five or six different color pens. And let's say we have a very tight low volatility flat market. Okay, circle that and give it a name. You might call it Titan flat, whatever. Then we have the market. It just collapses. You know, one of those days it just or weeks or whatever, depending on your time frame just collapses and we circle that maybe call it waterfall. So by the time they've got six different market conditions then I say if you have a moving average strategy and you circled one of the markets with just moving up, moving up with almost no pullbacks, will that moving average crossover strategy work? And they go, of course it'll work. Yeah, duh. Or if we have a tight market support and resistance well then you know a support resistance strategy will work. So I have them take their strategy and then look at the different market moods where it works well, heaven, I call it heaven, and where it works poorly, I call it strategy hell. And what we're doing now is rather than just saying some of my traders when they come to me they think the market's like an ATM. Well, my goal is to make $1,000 a day. Huh? The market is not there as an ATM. It doesn't deliver the same market, the same ability, the same thing. So once they see the different what I call the market moods, they've named them, then we have them go and say what's the volume like or their gaps, what's the momentum, what other indicators do you have that so that you can start to take measurements on each of these different market moods. Now then you have a strategy. Let's say you have one strategy. You don't apply it everywhere. You apply it to a specific context. Now this is harder than, harder, easier said than done, of course. It's easy in hindsight, right? Exactly. But what it does is it sets your mind to say the market isn't always the same and sometimes it works for me and sometimes it doesn't. The most money that I've made have been in the transitions from one type of market to another and the most money I've lost in my life is from transition of one market to another. When I can smell it ahead of time, OMG. When I don't, it's like getting hit with a baseball bat. Right, right. I kind of struggle with communicating that to our members because over the years we've built up a library of, we have 16 different full step-by-step strategy courses and sometimes newer traders will come in and A, they'll either be overwhelmed to the point where they'll just do nothing. But we really try to get them on a path to, just learn one strategy and then see if that's a good fit for you and if not, move on. Or after you feel like you've kind of mastered that, then you can kind of start branching out and learning some other things. But like I said, it's kind of a fine line between the shiny object syndrome and having all the arrows in your quiver that equip you to hit the targets in different market environments. So I like the approach that you mentioned as far as getting the mindset, looking at different market cycles, looking at different periods and naming them because I think that's true. I think you're right on with that. I think you're getting them in the mindset of understanding, because a lot of new traders, they think, once I find the right strategy, I'll just do that over and over again. Make it over. Well, what you're bringing up when you're working with your own clients is to give them a strategy or have them pick a strategy and execute it. The power of this is learning to execute. The strategy says that execute, execute. And it almost is immaterial whether you make money or not because what you need to train your brain is to execute. So what I do with my traders and I just had a guy that just went crazy with this and just so wonderful to see him, that he was confused about his risk manager, his researcher, and his executor. And so when he was in the middle of the trade, the risk manager would say, man, you should take profits here, get out before it goes around. Strategy guys say, you got into early, you didn't really follow the strategy, and the execution person would hand on the mouse, the hand off the mouse didn't know what to do. So we have three physical hats. He bought them, different colored hats. And when we're doing the research and strategy development, and you can find this in two hats, then we physically put on the hat, say this is my goal. Then when we're doing our risk manager, we say, okay, what is my size? Because you know risk and size are really important. How much I'm going to risk on every trade? What is my risk to reward ratio? Okay, I'm fully on with that. And then the executor just executes. When I worked for the arbitrage firm, I'll tell you a story. I was fairly new to the floor in San Francisco working for this large arbitrage firm. And there was a stock comm disco. They had accounting problems, maybe fraud, and the stock could drop 30, 40% or something. And the implied volatility, oh, it's so good, your audience is option savvy. The implied volatility was like 75, 80, 85, 90. So I got a call. In context, that's about five, six times the S&P 500. Yes. So I got a call from my manager, Gus, and he said, Rich, we want to sell some premium stock comm disco because that's huge. So I went in and I carefully looked at the charts. I looked at some options, like the puts, we're selling at 95, the amount of money, and some of the at the money is right at 80. So I started, I sold maybe 20 lots. And I went back and I said, Gus, okay, we've sold 20 watts. He went, no, no, no, we want to really sell some. So I went back and looked at the sheets carefully. I decided where the highest premiums were, and I sold about 100. Okay, I sold 100. The phone went quiet. He says, hang on. And in the background, I heard him talk to the founder, Joe, of the firm. And Joe came on the phone and he said, Rich, do you want me to give this order to a broker? Wow. Oh my God. So I went back to the pit, arms out, palms out, sold, sold, sold. I sold several thousand option contracts. I knocked the implied volatility from 85, 90, all the way down to 70, 65. And I went back and said, okay, we've sold. I don't remember the thousand, 2,000 options. And Gus says, oh, I think that's good enough. Three weeks later, there was almost a half a million dollars in the account because of that. Wow. So what I was, the point of this is that when you're trading by yourself, you don't have the risk manager as a separate role. You don't have all the research behind you as a separate role. And as a result, as an executioner, you have all these voices at the same time. Oh my God. No wonder it's hard to follow a strategy. So long story short, or maybe that was long story long, put on different hats, physical hats, know what role you're playing. And then just do that role, step into the next role, know what role you're playing. And then when the strategy says buy, your hand goes to the mouse and you just buy. I love that. I love that. Physically changing your environment, physically putting on a different hat. It's such a funny thing, but it can just change your mind, completely change your mind into doing the right thing. Well, the more I spend time as a therapist, the more I work with physical presence, physiology, physical things. Because our body tells us the truth. Our mind lies to us. Our emotions lie to us. But if I see somebody saying a word and their mouth twitches a bit, every time they say this word, else they say this word again, mouth twitch. What is that twitch saying? And then these voices come and these voices tell the truth. My stomach hurts. Let me talk to your stomach. And I know that for most of the people out there, this is going to sound crazy. Nobody's going to talk as though they're stomach. But I say it in such a way and the invitation is so positive that almost everybody can drop down and give a voice to a part that needs to be told, that needs to be heard. So I work with a physical presence. I do physical things and work with a physical body because I believe that's where the truth is. And I'm so glad you noticed that and pointed it out. Yeah, that's very interesting. You know, I've actually been just kind of diving into that aspect here over the last few months. And it's just amazing. And I've been using some different techniques, which we don't need to get into here, but yeah, it is. It's really amazing how the mind can react to those things when you physically do it as opposed to just thinking about, okay, I've got these different voices. I can sort them out. No, you really can't. You really have to physically step outside yourself or physically change something. And it's crazy how that can have such an effect. So why do most self-help books fail? And in my current way of thinking is that you read them, but you don't make physical changes just like you pointed out. So in my book, we have a series of 10 exercises and a free online course that explains the exercises comes with a book. So in the book, there's a link and you go there and you register and you get all the exercises. So rather than just reading words and saying, yeah, yeah, yeah, and skipping over them, you stop and there's an exercise and you physically do the exercise. For example, one is called the three-chair exercise. And this has been an eye-opener. If you look at the reviews on my book on Amazon, you'll see this popping up over and over again. And in the three-chair exercise, I have them sitting at chairs themselves and we take physical representation of money. Now, I can't do this as much now that we're on Zoom and with the COVID, but some people would put gold, some people would put money, some people would put a brokerage statement, but whatever really represents money. And in the third chair, we reserve it for their highest self, for their spiritual wisdom side. And we have started with a conversation of you as you are with money and you would be impressed with what comes up. Money, you, for example, you just avoid me. I try to get closer to you. I try to grab you and you just keep moving away. And every time I do get a piece of you, you grab it out of my hands and there will be emotion and they'll say it. Or sometimes it's a love fest. Oh, money. God. I just love you so much. I want more of you. And then we have them sit and share with money. How does that feel, money, when he talked to you or she talked to you? Well, I just want to move back. So grabby. I feel like a girl that's being, you know, just grabbed all the time. I just want to move further away. Or, jeez, she's really inviting. And I didn't realize how inviting she was. So we go back and forth in this conversation and we sit in the chair of our highest self, our wisdom, our spiritual self and say, what did you notice about the conversation? And the wisdom comes up with stuff that I don't even think about. You know, I notice his process is every time money gets close to him, he figures out a way to sabotage it and push it away. And I notice that money is getting tired of getting close to him. And I see this dance between them and I can see why he's struggling. So the three-chair exercise is a very physical way of bringing out these voices. And for traders, this is really important because all we deal with is money. And sometimes, and this is another topic, is that it's hard to see the value and meaning we're bringing to the world by trading. And my traders are good people and some of them sabotage themselves because they don't see the value they're bringing to other people and they don't feel they're worthy and they're not contributing. When do you think most individuals, of course this is different for everybody, when do you think the majority of individuals kind of form their relationship with money? You know, I've heard things, I've read things about our subconscious mind is almost fully developed before the age of eight. What do you, in your mind or kind of your philosophy, when do people form that relationship with money that carries them through their lives? Well, needless to say, it's very individual, but we start with a family. Did our parents fight about money? Was money a thing that just slipped through their fingers? Was money something they hoarded and hard to get? Was money the root of all evil? And so we already start forming those impressions when we were very young. Then we, depending on the training, for example, one of the things my wife did, all of our kids repeatedly say how much they appreciated, she started a bank account for them and gave them the incredible interest rate, I forget what it was, like 5% a month or something. So they could see their savings growing. So there was a very young impression starting when they were four or five. So we have the family. Then we have our community groups. If you are part of the progressives, there is this whole negative evaluation around money, wealth, social justice. Now, I'm not knocking some of these good intentions, but they certainly don't bring a clear path to money and meaning. And then if we look at the culture we're living in, so we have our family, we have our peer group, and then we have the culture, which right now is really confused about money and wealth and meaning. So we bring that all in. So starting from a young age, all the way to right now, we have these conflicting feelings and messages and voices in our head. For example, most of the, maybe even all of the clients that come to me have a good heart and that's maybe because I don't attract or screw others or just make money because they know that that's not my intention or that's not where I live and breathe. So they have a good heart, but they're conflicted. So that's why I developed the concept of certificates of appreciation. And certificates of appreciation mean that when you give me money for something I give you, the service or product I give you is worth more than money. And vice versa, when I get a service or product from you, it's worth more than the money that I give you. So what we shift is from making money to delivering value. And that's why I call them certificates of appreciation. Now for traders, this is especially difficult. What value am I bringing to the world? I'm just taking money from somebody else. Some of my really good hearted traders they believe there was a voice that says when you make money somebody more deserving is maybe losing it. So for traders we reframe the problem. I have a three-stage reframe. Would that be of interest for your audience? I believe so, yeah. Okay, so first there is the obvious one. Price, discovery and liquidity. Without market makers, without traders the bid offer spreads would be expanded. There wouldn't be price discovery. And for some people that's enough. Okay, I'm creating value through price discovery and creating liquidity. The next step up is that I am moving the market towards value. So for example if I look at something saying this is price below value I'm going to buy some. Even if it's a small amount I move the market towards its value even a short-term or long-term depending on my time frame. And the market says to me, Rich you moved me towards value. That's a service and I'm going to pay you for it. If on there Rich says, hey this is really overvalued, I'm going to sell it. But value is a lot higher. Mark will say, Rich I'm sorry you gave me and the market some bad information. You tried to move the market away from value. So I'm going to take some money from your account. Sorry buddy. Maybe not even sorry. You deserve to lose money. You gave it bad information. So as market makers or as traders we can start to think that our job is to move the money market towards value and that's what we get paid for. The third and final stage is I got to watch my language here. We're not on the floor, right? Screw all that. The markets have been here for ages. I'm part of what has survived eons and as a result I don't even have to justify it. So you can justify it on the liquidity and that offer spreads and you can price discovery or you can do it on I am a job moving market towards value and I get paid or you can say this is part of the human system that has worked for eons and I am part of it and I don't need to justify a thing. That's really interesting because that self-sabotage thing or self-worth or not deserving it is such a big thing and I found that when I started going down the road of the mental side of my trading why was I doing these things? Why was I self-sabotaging and having these blow ups where I would lose money early in my career and that makes a lot of sense being able to if I can create an awareness or I can create something in my mind that says why I am deserving of it? That's a big deal. I think so and especially for good hearted people I mean there's some people on the floors morality, ethics it's just can I make money but if you're a good hearted person and a trader I think any one of those three stages depending on the one you want to stop at and that works for you are really valuable so that you know you're providing a service and I believe that if we make money or let me rephrase that if we take in money without providing value that that's toxic to our souls Yeah, I can definitely see that I can definitely see that Let's jump over to a little bit of a different topic I want to give our audience some kind of tactical actionable things that they can use to really take their trading to the next level and obviously this is just a conversation so the mindset takes a lot of work it's not something that you can just hear a podcast Can I stop you for a moment? Sure The mindset takes a lot of work so what you're doing is you're setting up a struggle so I would like to rephrase that and invite you to rephrase that and the invitation is as we step into mindsets that work better for us it feels so good so try saying something like this this is what I would do with the client try rephrasing that So I'd like to have our audience get something that's actionable and help our mind grow into something more enjoyable than trading I love it you notice the difference between those two 100% Okay, excellent so that's just a teeny example of how I coach That's interesting, very interesting So you mentioned the I can't remember exactly what you called it you mentioned the metrics Mind the metrics, yeah What other things can you share with the audience that you would tell them how do you mentally prepare for the trading day do you have your clients have kind of a very strict routine some type of way to mentally prepare before that opening bell goes off or whatever they're doing in the market Yes, what you're bringing up is so important that one we have the physiology preparation sleep hydration, food, exercise so that we physically have the stamina and what my traders do is they do the set score sensations, emotions and thoughts and what they do is what is my physical sensations and I'll do that right now my shoulders are tight, I'm leaning forward I'm very eager to please or to answer your questions my throat's a little bit tight right now I'm exaggerating the sensations that I have so what I do is you notice the sensations and you exaggerate them and you say, oh is this what I want hmm, no take a deep breath, lean back okay, my voice is dropping I'm fully present with you so I've made a shift in my physical sensations next is the emotions, what am I feeling I'm feeling really kind of high talking to you this is exciting conversations you're asking hard but excellent questions yeah, I'm feeling really good emotionally right now and the next one is the quality of my thoughts and my thought is I'm fully here with you and no matter what you bring up we're going to find something of value in how we discuss it so I just made a major shift in my own set scores you know after so much talking okay what would I prefer so they take the set scores and the score minus 5 to plus 5 and we have a whole videos and stuff on that how you score it and then depending on your frequency after every trade before you start a trade you do a quick set score so then we have you click on the colored things and they turn different colors and then we actually have an algorithm that turns them into a number and most traders say if my numbers 2 or greater I will not trade so we have a physical physical measurement of how their state was when they were trading and it's not 100% clear like any trading strategy but the overwhelming thing is when there's red set scores when we're not in the right mindset the P and L reflects that to the negative interesting so in addition to the grading your strategy you're grading your emotions real time and what happens with after you get used to this I can do a set score in about one second physical okay where do I want to be okay I'm here so you get used to not only being aware of it and the second part is acceptance in other words you can say oh darn it my stomach is tight again oh I'm having those terrible negative thoughts stop thinking those terrible negative thoughts you idiot I've said that a few times to myself so it's awareness and then it's acceptance okay he was leaning forward his voice was a little tight oh that's fascinating what do I want so then we can make a decision from that and what we get is the word I use is agency we're no longer just our physical reactions our emotional reactions the being slave to negative thoughts with this awareness eventually that awareness can fly above us in our prefrontal cortex and develop agency I notice this physical sensation I notice this emotion I notice this thought well now what do I want to do that is very different than just reacting from those states and so we're not talking about just a routine before you start trading we're talking about an awareness that can just take a matter of seconds all the time yes I mean even not just when you're trading that's stuff that can help you no matter what you're doing right like for example the conversation with my wife she says something to her brows forward and her voice says up a little bit okay typical rich old rich Titan she said that's not true I gotta defend myself oh oh so now it's waiting Marty I know your voice is a little tight and your eyebrows froze is there something I'm missing well I'm today with the grandkids or whatever it was this and that the other thing okay let me listen to you so if I understand correctly this that the other thing yeah and now all of a sudden we're in rapport with each other whereas without taking that those physical sensations those emotions and thoughts I would have just reacted to something that had nothing to do with me does she ever say rich stop using your psychology tricks on me I know what you're doing oh oh goody oh yes I have learned that if I step over the line that that is not very helpful for our relationship oh goody that's excellent well that that's great stuff I want to be very conscious of your time rich we sure we sure liked having you here if if our listeners want to reach out to you and want to learn more about mind muscles for traders what's the best way to get in contact to you or to check out your stuff yeah mind muscles for traders dot com is the trading website my email is rich at mind muscles dot com and the book is a private conversation with money that's available in most book distributors and I'm do wealth workshops where people can join and we do much what we had this conversation today we put people on the hot seat we work with different issues so there's a number of things we can do so if you want to improve your mindset I know that that's one area that you really focus on with your clients and if there's anything I can do to support you or your clients I'm really happy to do that well I sure appreciate that I really enjoyed having you on the show today and I hope we can do it again sometime in the future let's do it I this is really fun and engaging and the questions you asked really stimulated a lot of great thinking so thank you yeah and I think our community our listeners it's just a great community we have hundreds of traders interacting on a daily basis not only about the mindset stuff but sharing trade ideas and just a lot of different stuff around trading so I know that they're going to find value in this so for that absolutely okay you take care and be well thanks rich