 Hey folks, Tim here from Abafai. I'm going to take a couple of sessions to go through trading psychology and How we should think about trading and how trading psychology and indeed our own psychology really becomes the overriding factor when it comes to being consistent as a trader and I'm talking about early stage consistency all the way through to You know high performance consistency. So really trading psychology. I've seen it can affect does affect trainees all the way through to seasoned senior traders You know, it's a huge topic. So we're going to do a couple of sessions on this. This is session one This is really, you know labeled starting out losing out and why? Okay, so, you know, we've all had that experience from when we started trading So let me get into this. My name is Tim Dogen. I've been working with Amplify really from around 2017 till now I'm a senior trader and mentor to the trainees but more so the sort of more senior traders That are working with the firm I used to work with Genesis Capital in Australia as a trader then before that Geneva trading Who have offices in Chicago and Dublin? And you can find me on Twitter Tim Doug So what I wanted to start this all off with right is a fantastic quote from Phil Helmuth who This guy is one 15 world series of poker bracelets He's an amazing poker player and I came across This quote actually I think I heard him say this in an interview and then I actually went and read his book called Poker Brack But it just rang true with me so much when it when it came to understanding trading and my experience of trading and and what I see with a lot of the traders that I work very closely with from I'm starting out traders and to very senior and experienced traders and the quote is you know look It's gonna dealt a good set of cards skill is knowing how and when How and when to bet all right that is really really important, you know getting the tools Handed to you getting you know capital Getting to sit in the seat and getting just exposed to markets. That's all the easy stuff You know, but it the but doing it skillfully But you know doing something with all those tools Well, you have to know how and when to apply them, right? So we're gonna go through some a lot of this really Okay, so in an introduction to trading psychology, okay, we all know about the Brett steam bargers and you know What was the other book trading in the zone and you know really good books fantastic stuff You know seen Barger an amazing amazing guy. I've read a lot of this stuff But really I want to look at a few broad topics here. Okay, what you know, we like we need to look at what we don't know Well, why we are scared? Okay, and then really how come the more we know the more we seem to lose money. Okay, and You know, this is a direct question from a starting out trader that I was doing a little bit of work with earlier this year, you know They turned around to me and said It seems like the more I've I know now and I'm educated the more I just can't really make a decision And this is really difficult Whereas when I first started trading It was just like, you know, they were just looking at the ladder and They were like, this is really easy, you know, so it's like a computer game I kind of really thought a lot about that, right? So, you know, why is psychology so important? Well Really when it comes down to it After you learn how to place orders how to use the trading software connect to the market What support and resistance how to find support and resistance? You know economic data events You then have this information that you've learned and you're now let loose to do something with it. Okay, so What what the disconnect is is that people? Sort of, you know, our minds are very busy spaces and then when we're confronted with the markets information News breaking breaking news data coming out everything We find it so hard to consolidate everything in our mind and to sort of in a way out of reflex Categorize what we should be doing and what we shouldn't be doing, you know And instead there's this raw impulsive part of the stuff just kind of wants to click the button, right? You know long short long short short long short long whatever, you know So really Making money in the markets is is pretty easy, right? It's pretty easy but you know, we've all we've all had those early trades where you get in goes on side like instantly and You get out for you know, some whatever tick amount of profit and you think well, it's easy And it can be easy. All right, it can be easy, but being Consistent about that and compounding that, you know trade on trade day on day Week on week month on month. It's really really hard really hard So, you know, there's a there's a great book called thinking in bats from Annie Duke Amazing woman professional poker player won the world series poker once I think her brother had won it before her And she has this book thinking of bats and she she kind of talks about the resulting process That because you make a decision to do a and you you get a result of X Well, if you get a negative result Does this mean that the decision in itself was a bad decision in the first place? And so she learned to disconnect her good decisions Or well decisions in themselves from the results in themselves because a good decision and Can be completely blown out of the water by the randomness of Poker for example and and that does not really change when it comes to a lot of different things and Annie talks a lot about a Super Bowl final a couple of years ago where there was you know, there was a pretty Bad decision made by the coach in the final seconds of the game It could have won won the game for the team. Anyway, go on you to have a look at it She's she's well worth having to listen to So let's move on from here in our journey to you know, be a better trader to Know what we need to know and then work on that We need to kind of be aware of a couple of things and you know, the jihari window Kind of highlights this a little bit, you know, you have sector one is it's it's You know something and everyone else knows something it's sort of public knowledge, right and then in sector two It's like well everyone else knows something, but you don't know that thing All right, and this is the called the blind spot or the blind self, you know, these are things that and You know, for example, you walk out of the house in the morning and your hair is like sticking straight up off your head And well everyone else can see that but you can't see that right So you got a blind spot that your head's hair is sticking right up very plain example Then you have to hidden self in that, you know, you know something but nobody else knows something Okay, and that's sort of like your private Mind if you like and then it comes to section four is the unconscious self, you know You don't know it and nobody else knows it Okay, but as we go forward in this in the in this series of trading psychology sessions We're going to be looking at what we what we discover in sections two and sections four Okay, because really to me You can fill in section two here by learning education, okay being aware of Things, you know being aware of a technical aspect of your trading software or being aware of Micro macro or micro economic events and impacts and data on the markets Okay, but when it comes to section four, this is where we we you know, it's a complete Vacuum of knowledge and so we have to kind of go into discovery mode here and push ourselves to find out things Okay, and to ask questions of ourselves, you know, am I doing this because I'm scared am I? stopping out of trades too quickly and Because I'm looking at my P and L all the time, you know And you have to ask your question yourself these questions and you can use software like trader view or You know edge wonk and to kind of you you know use the maths to help you figure these things out, right? But let's let's move on from here, right? Okay, so We have to kind of drop a lot baggage that we have okay because You know When we come to trading, okay, we have you know, we're we're probably At a minimum 16 or 18 years old and a minimum. Maybe we're in our mid 20s mid 30s mid 40s 50s 60s who knows okay, but the point is the baggage is is that we have this faulty way of thinking We kind of think about you know, okay, this is a job so therefore I clock in I clock out and I make the money, okay? That's not really what it is. We have to think differently You know about ourselves and What we want to do and How long that might take and what we need to know in order to feel comfortable doing this job of being a trader You know, there's a there's a huge amount that we don't know I mean and When we are aware of that as a as an early stage trader that causes a huge amount of fear Okay, and that fear Inhibits us from being able to be comfortable with the fact that we're putting money at work We're putting risk on we're taking trades because really underneath that they're subconscious. We're sitting there thinking Okay, I actually don't really know what I'm doing. They're definitely You know hundreds of more people in this market right now who know tons more than I do Okay, so as we want to get better as a trader and as we educate ourselves as a trader We need to start to let go of that concept Okay, you know if you if you've educated yourself a lot about the markets and You have taken time to keep yourself in the markets and learn how markets move why they move where they move to You know, you have to start letting go of that and that uncertain part of you that is fearful Because you know, I talked about this with my mentees only last week. Yeah, I said, you know at this point You you don't you should not be sitting in your in your in your trading seat feeling at a deficit of competent knowledge to do your job you I said you know What to do your job now is to just do that just to do what you know Okay, so you need to start to let go of that fear as you educate yourself about markets How they move where they move? You know all the different markets there are and all the different edges there are to trade these markets And then another thing is really to just be fluid as well so we need to start to be open to that learning, right and You know what happens is when people start to you know trade You know, maybe they've opened up a count on their own It's the blood sweat and tears phase as I call it where you you're you're just messing around Not putting too much capital at risk, but you are sort of sort of trying to teach yourself something, right? And then when your eyes are open to actually there's a lot to learn out there There's a lot of books. There's a lot of gurus if you like You know, then you start to say well, I actually want to I want it all right now on my head And then I can start to figure this all out, right? And that can be kind of a dangerous thing. Okay? So yeah, the search is on so what what happens typically now is that there's an indicator frenzy I was speaking with a brand new trader So someone who had just started trading about a month ago Two weeks ago I was talking to them and they'd they've been trading for about a month at that point and You know, they wanted to just have a quick chat in the trading room So we jumped on a quick video call and I said, oh, can you share your screen? Because they were interested in how I would do simple support and resistance analysis on any market And then they shared their screen with me and I could just see about ten different moving averages The four-hour bar chart and different moving averages. There were pivot points for every single day going back for like 80 days and It's just like, okay. What how do you trade? What's how do you find signals? What is your edge? They said well, I just I just kind of monitor the market So the point is is that you go on this indicator frenzy, right? You you go look you're like wow stochastics Mac D's moving average 20 20-day moving average under day moving average you know death crosses all this sort of stuff right and The positive thing is, you know, this will start you get it start you reading a lot of books Okay, and there are a lot of fantastic books out there On trading. I mean one good trade is fantastic. I might buy the Fiora in the guys in SMB capital or go guys and There's Japanese candlestick charting techniques is a fantastic book. I Highly recommend that that is that is definitely one of the books that I would read and You know, probably try and read once a year You know reminisce this of a stock operator and not a technical book But an interesting sort of anecdotal story about it one of the one of the greatest traders of the of the 20th century You know, you can get in contact with me if you want, you know to have a recommendation for a couple of books Let's let's not get sidetracked there You then start looking on YouTube. There's multiple gurus as guys, you know creaming it making, you know 200 grand a day and you know that they just it just seems to be so easy and then you want to learn how they trade and You know, and you're getting scatterbombed with information from multiple sources, you know and what you don't realize is that you actually are ignorant to edge and ignorant to You know, not in a bad way, you know ignorant is a hard word, but and you're you're sort of sitting there Just exposing your brain and learning lots and lots and lots right and this is good, you know, you're you're you're getting Some form of information in there, but it's not focused Okay, and the attention is not directional. Okay um But you are thirsty for edge you're thirsty really it for the holy grail you think wow There's I got the I got this charting package. There's 2000 different indicators in here You know just download think or swim I think that does have about 2000 indicators in it and you think wow, okay in here There's got to be some combination of indicators or maybe just one Whereby, you know, I can I can find the holy grail and just like kill markets All day every day five days a week Well, hey, what the news is there is no holy grail. There isn't Sorry guys and girls, but there there isn't one. I don't know what to tell you. There is no holy grail there is just clean and size thinking and I can't mind And and you know Nothing beats educating yourself about how the markets work. How they move and why they move And then we're going to really come to the to what I would call the holy grail At the end of this video, okay So stay tuned Okay So here we'll go through the journey All right of of of learning and starting to trade, right? So it's I call this the valley of loss Okay, so, you know, here's where you put on trades, right? You take you take loads of trades Maybe you start off as a as a, you know, a close card poker player where you you know, you you you'd like picking trades quite well, okay and You seem to pick them quite well. Okay, and then you get exposed to some other information or ways of trading in the markets and You know Either which way your confidence level Against your trades Is actually paper thin Okay, if you were in a trade and I was to come along and say I'm I'm actually on the other side of that. I think this market's going down Whereas you're like, oh along this market and I know it's 10 ticks on side And I'll go, okay And then I could just walk away I I'd say 90 80 to 90 percent of the time you're going to close out that trade or at least half of the position And that's because You might feel that like, you know, someone beside you or someone talking on a youtube video knows more than you do, right? well We need to trust in ourselves and we need to build ourselves up in that trust as I was saying earlier in this session And we frantically are using these indicators. I mean when I started trading and found edge. I was trading a macD histogram edge and Don't think I was using any stochastics for the momentum on it, but um, I probably wasn't but it was just macD histograms And looking for a two bar degradation Um, I can talk to you further about that if you want, but it's a very very simple edge and it's very inconsistent um So but the point is we're frantically looking and then we start to over trade and then we start to You know trade into a rundown into a deficit, you know And we're thinking wow, why isn't this working my first couple of trades that I took Are were fantastic and I like double my account Right or triple my account, but you know, what's what's going wrong now? Oh, that's fine. I'll just keep trading It's it's bent to come back and bent to make money I got this And the fact of the matter is you've got you've got no risk management and no edge, right? And and what happens is You probably move a stop or take up too big a loss your stop is just too far away from your entry And what happens is you get a huge emotional reaction to that, right? You take a loss of x amount of dollars On one of these trades and then you enter into this valley of loss in your mind And and you know, you're so down on yourself, right? So let's move on here Because what happens is you beat yourself up you talk negatively about yourself, you know And and what happens is you need to be aware of this if you if if you have taken big losses And we'll never use this sort of session to reflect on this, right? And it colors your entire world view Okay, when you take these big losses because you immediately Are bewildered? and you Lose all faith in yourself. You feel incredibly stupid. You feel almost Brightened to tell anyone or your significant other for example, and I don't recommend that you hide these things In fact, you should celebrate these things because when you do that You will only at that point start to grow So with the traders that I mentor um You know, I say to them was like listen, we're going to be on sim You've been trading cash for a whole while now, but you're going to be on sim for four weeks while we go through this process and Essentially, I don't want them to be subjected to more of these big emotional Uh experiences when they should actually be learning something from from what I'm teaching them about the markets technical stuff and setups and whatnot And we want to avoid that but I say to them never please Lie to me or hide a bad trade from me if whether on the sim or when we're on cash I cannot help you if You take a loss and you hide it from me or if you have a string of really shit bad trades I don't want you to hide it from me because we then can't get better. You can't get better and I can't help you Okay, so we need to put these warts and all out in the in the cold light of day and that's when we can start to fix it Okay, and for you at home This is what you should do as well as soon as you air these things you can start to grow from that point as a trader Um And what happens is is when you take these losses, you're no longer objective about the markets risk and reward You know you might be getting into You know one-to-one risk reward trades and what and then you might be actually losing like 1.5 or 2 on your risk units and then you're just banking things too early. Well, actually that's a that's a fast way to the poor house So what's the solution? Well, we've got to think differently And to think differently we've got to we've got to look at ourselves and how we are programmed To think right we got the ego we got the instinctual like this is just how I refer to them Okay, so I have a background of competitive skiing uh, you know Slalom brand slalom super G Okay When I was younger, okay, so for me the Low-state I I'm very familiar with Low-state thinking what it feels like what it smells like It doesn't smell bad of them, but what it feels like And and what my mind is doing, you know all the visceral senses of that Okay, and this is really interesting for me to see then and other high performance people and There are so many commonalities all the time So we have the ego on one side, right? And this is the part of you that wants to get things right You know closed mindset. You only play games that you know you can win or you you're pretty sure you're going to win Um, you're not really open to growth because that's a risky part, right? You know, you're you just like to keep things safe, right? I mean nothing's got to go wrong if you keep things safe and within your circle of influence, right? And still burn always needs to be right Um, and this is the part of you that thinks On I'm losing money as a trader But well if I if I work harder, I know I'm doing eight hours a day on the desk if I do 12 hours a day on the desk, maybe I'll stop losing money That is that is just an even faster way to the poor house, okay And you don't understand that's part of your ego making those sort of calls and that sort of talk in your in your brain, right? And and your ultimately the ego is always scared of being wrong Okay, and this is kind of what people talk about when they talk about traders, you know having to be right and not willing to let go of the trade and You know moving their stops averaging into losers things like that But as we look at these as we look at these that the psychology over these sessions we're going to be doing We're going to be leaning more into the instinctual part, right? You know when I when I was looking at the jihari principle those that sector two and four Really, this is where we need to engage the instinctual. Okay of what what we don't know, but we we can find out And then what we absolutely don't know and we're not aware of Okay, so this is where the the inner search becomes Real if you like so this is the part of you that takes reflex actions You know, I I always use the the analogy of throwing a ball, right? You know if I If I'm in a room with you and you're on the other side of the room Looking down at a piece of paper or something and I say hey when you turn around and I instantly throw a ball Not very fast over at you. You were instinctively Going to lift your arm. I'll put your hand up and try and catch that ball There's no thinking. There's no instructions There's there's no You know practice you just instinctively Go to catch the ball That is the instinctual part of your brain And I think a lot of traders when they get into like a Over-trading scenario will get into this further in the next session actually And they get stuck thinking that every time they see the market move They have to have an instinctual reaction to sort of catch a ball in a way This is the part of you that you know guarantees your Your physiological survival fight or flight catch the ball, you know, every it's where you say to yourself This just feels right No, it's the hunter-gatherer Nesting part of your brain. Okay So really We're going to be doing a lot more so as we go into the next session on flow state But really we're you know, what we are going to be looking at is uda loop thinking right and this You know, this will be interesting and we had a really great session in amplify We did a master class in this About um, two months ago. Actually, it was really well attended great feedback And so we're going to bring a bit of that into the next session Um a book to read uh is the inner game of tennis. It's a really small book And I guarantee you're going to be able to read it. Um within a week. Absolutely Okay, it's a biochop called timothy galloway or tim galloway You get on a new or get on an amazon very cheap go down to your local library You could probably read it in one sitting if you're a fast reader Um, but this is really, you know, the book actually will will deluci put me onto this book. Thanks will I'm really great book. So, you know, really small pick it up and it will help in the references that I have um coming forward about self one, which is the ego And self two, which is the instinctual for me, right? um, so We need to evolve our thinking about losing And make it not so horrible a thing. Okay um, you know people who don't trade or don't take risk in a professional sense and You know think traditionally about loss um, you know, and for a good reason they do um, but traders and risk takers think about loss in a totally different way in a more moderate of a fact way Unloss and discomfort. Okay. And essentially we have to evolve our thinking about being wrong Um thinking differently we naturally have to avoid um We naturally sorry we naturally do avoid Um discomfort and loss. Okay, but we need to sort of tame that Uh, right and naturally attempting to work harder What we think that if we punch in the hours that would yield more money Actually, the longer you sit in front of the of the of the trading Um software and the ladder the more you are exposed to the casino and you may as well be just sitting in a casino. Okay Um, you know, if I'm not in a trade, I'm not working. Think about that. That is wrong If I'm not in a trade, I'm not working. That is not true That is simply not true Okay, and this is going to be relevant now when we come to my holy grail at the end of this video At the nine to five mindset doesn't belong here. Now you can you can trade Uh, you know, whatever hours you want. Okay nine to five fine But the mindset of I go in it into work at nine and I make money per hour Until five o'clock and then I go home. Okay. Well with the world upended now over covid People are working from home and all but I think everyone knows what I mean when I talk about this traditional mindset. Okay You got to think like it's okay To think differently just allow yourself to say that It's okay to think differently You know, essentially become limitless In in what can happen Okay And really this is it for me. Okay Will power is not the solution And you can't will yourself the trade better. It does not work like that It does not work like that. You've got to accept uncertainty and and just shrug it off In the next session, we're really going to be looking at knowing your job Knowing the job of a trader. I like I don't think too many people address that We're going to look at calming the self one and two Talk a lot about that We're gonna, you know need to wait. We essentially need to think like this. We need to wait Until we see a good moment to put our tools to work our tools In this sense as a trader we're our capital Our software and our screens and our connection. Okay um We need to continue absolutely with the right education. I've I've meant to our traders who've been trading for Five years six years Traders from two weeks to all the way through, you know, so um You need to educate yourself About how, you know, especially on the fundamentals. I have never in my life met or talked to anybody who learned how to trade In a month or two months and they were successful and consistent never You know, we need to know why and how markets move And then we can see how we can interact with that And make money Okay So we're coming back, you know to round off here on where we started You know luck is about Getting dealt a good set of cards skill is knowing how And when Place the bet Okay Now coming to my You know holy grail if you like it's this It's this this is the holy grail right there Okay trading is waiting Waiting is trading That is really what it comes down to You need to be patient People think You know, oh, I've opened my ladder right the market seems to be kind of moving up. Okay boom. I'm on the market And then boom they got stopped out 10 26 stops, whatever And they think what? Okay, and so then they try to use smaller stops or wait a little bit Um, and then they get into the market and then it messes around on them And then you know, they think okay, and then as the day goes forward From a morning session, then they start to see. Oh my god. Here's an amazing trade But I've reached my daily loss and so I have to leave it alone and they watch as that trade works out incredibly And then it comes to the middle of or just before the end of the day and I think Only died of waited For the afternoon session I would have not taken those losses and I would have made all that money on the perfect looking trade that I saw I mean hands up How many of you Lose money in the morning and make it back or make it back to flat or make profit in the afternoon then on those losses So I'm gonna leave it there and I really look forward to the next session. I hope Some of this has has wrong true for people. It's connected to people. That would be fantastic I'd love to get your comments on the video below reach out to me On youtube or in the trading room in amplify and I'd be really happy to engage with you and now have a chat And uh, yeah, please click subscribe if you like what you've been hearing and seeing and Yeah, have a great Month in these crazy markets coming up for the general election So Or not the general the presidential election. All right I'll leave you there. Thanks very much. Bye