 Welcome back to the Trade Hacker Mindset. In this episode, I want to talk to you about disrupting bad trading patterns. 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. All right, so let's jump into this topic of disrupting your bad trading patterns or your bad trading behaviors. Now, I want to preface this topic by saying this assumes that you are actually already keeping a trading journal. Because as we've talked about in past episodes, for you to understand and realize and be aware of and detect bad patterns in your trading, you have to be journaling those trades. And assuming you are doing so, what you're going to find is that you typically don't have a ton of different problems. Rather, you have one or two problems that really kind of manifest themselves in a bunch of different ways. For example, you might have an issue of missing out on good trades or the fear of missing out on good trades or going into a trade and having a specific exit level, but then kind of ignoring that stop-loss level. Or you might have a tendency to trade size that's too big for your account. Or a big one that I see all the time is taking winning trades off too early. So on the surface, all these different problems may seem different and they require a different plan of action and a different process. But the reality is it may be just one or two things that is causing all of these different issues. And if you get to the root of those one or two things, it could really help solve a variety of the problems that you see yourself having in your trading. I've seen this many times, not only in my own trading, but for the hundreds or thousands of traders that I've interacted with over the years, that if you can identify that core issue, that core bad trading pattern, then many of the other trading difficulties will just kind of fall into place over a short period of time. And that's why it's so important that when you're tracking your trades, when you are documenting your trades in a trading journal, it's not just the date you entered, it's not just the entry price, it's not the exit price. It's not whether you had a positive or a negative P&L, but it's the actual feelings and thoughts that were going through your mind or that you were actually feeling while you were in the trade that that's a very, very critical thing to document. So if you can really become self-aware, if you can really start to feel yourself as you're going through a trade, and by that I mean, does your chest get tight if the trade starts going against you? Do your muscles tighten up? Do you start calling yourself names as things are happening? Do you talk to the actual stock that you're trading and call the stock names? Hey, I've been, no judgment. I've been there, I've done all of those things. But the reality is those things can actually be problematic in our psyche around the mindset of trading and how we should be thinking and trading in more of a peaceful type of environment. Because what happens is often this core issue, this core pattern will actually involve a feeling that recurs for you over and over that actually disrupts positive, good decision-making in your trading. So if you're in trades and you have periods of anxiety or frustration or lack of self-worth or self-defeat, how this feeling impacts your trading can vary from day to day. And this can in turn cause multiple mistakes in your trading, which makes you think that you have a dozen different problems. But the reality is if you fix that one core issue, that one core feeling, it could actually let the other things fall into place in a short period of time. You know, here's an example of something that I've actually been doing personally in my day trading. And that is, there are certain situations where you'll enter a trade, the trade will move against you and it's actually a good time to add to that particular position. But what I found is that when I would add to a position, it would actually cause me to start managing the trade after that incorrectly. And so what I've begun doing is I get into the trade and if it moves against me from the way that my rules are structured and I need to get out, I just get out of the trade. Now, what I can do is I can re-enter the trade, okay? Now, because think about this and if you haven't really been self-aware of how you feel when this happens, I want you to try it because here's what happens to me. Is if I'm in a losing trade and I just get out, if I close out the trade, it takes all of this weight off my shoulders. It clears my mind. And so now that I'm, I mean, almost instantaneously, now that I'm not in the trade, I can look at the chart and I can automatically see things much more clearly. And if I clearly see a situation where I should be entering that trade, even though I just got, I just closed out a losing trade going in the same direction, I have such clarity now that re-entering that trade can sometimes be the best situation. Sometimes I look at it and I say, gosh, I should have even probably closed that out a little sooner. But whatever the situation is, closing that trade and getting clarity and taking a fresh look, maybe even stepping away from your computer, taking a deep breath, doing some type of physical activity, and then coming back and looking at it, it's a whole new world and can create clarity around a trade that you may not even realize how advantageous that can be. I'll tell you this, it has done wonders for my performance and my trading and my methodology, and I think it would probably work for most of you as well. Because here's another piece to that, and here's what it does, is we've heard of situations where you're in a rut, you keep doing the same thing over and over, and what you need is some type of pattern interrupt. And so by closing out the trade, you're interrupting what you're doing, by stepping away from your computer, you're interrupting what you're doing, by doing some type of physical activity, you're interrupting what you're doing, by focusing on your breathing, you're interrupting what you're doing, and all these things together just create peace in your mind, it creates space in your mind so that when you come back and look at the chart, you have a whole new perspective, and it's crazy how beneficial this can be. So I really implore you all to try it, even if it's not a major situation, like an exaggerated situation like I'm talking about, I'm just talking about if you're in a trade and you just are not quite sure, you just aren't quite sure if you should stay in the trade, close it out, you can always re-enter. I mean, commissions are so negligible today, the day trading platform that I use, there's zero commission, so what am I losing? I'm not even losing out on commission if I close the trade and re-enter it. All I'm doing is I'm taking that situation that I'm in, I'm ending it, and I'm restarting. It's such a powerful mental strategy to use that I hope you try it. Brett Steenbarger is a trading psychologist and one of his books is called The Psychology of Trading. If you haven't read that, it's a good book that you should pick up. But one of the points that he makes in that book is that the key to disrupting problem patterns is to alter the state you're in when those problems first appear. So what that says to me is that you've got to become aware of these patterns, aware through your journaling of your trades, aware through conscious, repetitive thinking about what am I feeling right now? How am I feeling? Am I feeling anxious? Am I feeling tight? Are my muscles tightening up? Am I calling myself names? Am I calling the market names? Am I calling the stock and trading names? All these things are things that you need to be consciously, actively, repetitively asking yourself to a point where I'm asking myself these things every couple of minutes, especially when I'm day trading, when I'm in it, when I'm focused, I am constantly asking myself, how am I feeling right now? How would I feel if I close this trade out? How, you know, am I anxious about this trade? Even, you know, I've talked about, you know, a lot of times it's if a trade is going against you, but it's the same thing if a trade is going in your favor. Are you starting to feel too euphoric? Are you starting to feel like, you know, anything you touch turns to gold? You know, you've had those days of trading as well when, you know, everything, you think that everything you touch turns to gold, like you have the magic touch in trading and you can't lose, and that can be destructive as well because then it creates a situation where you start to oversize your positions. Trade too many contracts. You know, trade, just trade too big a size overall or over trade, you start taking trades that are not actually good setups because you just think that every trade's gonna be a winner. And what happens is, I mean, for me, some of my worst trading occurs when I focus on my P&L. You know, I've talked about this over and over and over again and I wanna reiterate it is that now I actually hide my P&L. So when I'm looking at my platform, all I'm looking at is the charts. I can see my entry price. I even recently removed the P&L percentage because then I would, you know, find myself in my head calculating, okay, so if I use $10,000 to enter this trade, I'm up 10%, so that's a thousand bucks. So subconsciously I caught myself calculating what I'm up or down in the trade because I had the percentage on there. So now the only thing I have on there is the trade price and that's just for reference. So when I'm trying to scale out or get out of the trade but having any type of financial goal, any type of P&L related goal or P&L related focus can be detrimental because what it would do for me and everybody's a little bit different is it can work a couple of different ways. One, if I think, okay, I'm up X amount of dollars on this trade, sometimes it'll cause me, depending on my mood, sometimes it'll cause me to take a trade off too early or sometimes if I have a loss, I won't want to close that trade and book that loss because I think I'm just gonna stay in it even though I know I should get out, I'm gonna stay in the trade because then it will come back and I won't have to book that loss. So it can work both ways and so any type of focus on the P&L can be destructive to your trading. The key is to refocus. It's to put your attention on the process. It's to put your attention on the charts and your methodology of what is the chart telling you? Is it based on your methodology? Is it telling you to stay in the trade? Is it telling you to get out? The P&L is irrelevant, okay? The P&L is going to be what it is. You know, based on the position size that you entered the trade, that it's within your wheelhouse of the risk that you're willing to take on the trade or at least it should be. If you're trading too big, that's another story but as long as you put on a position size that's in your wheelhouse of the risk that you're willing to accept on the trade, then who cares about the P&L until you're out of the trade? It should not be a relevant thing. And so getting back to what I kind of took a roundabout way of getting to this topic but getting back to what I mentioned before about the psychology of trading and the key to disrupting your problem patterns is to alter the state that you're in when you physically change your environment, you experience the world and you process information differently. You know, we talked about this. I had Rich Friesen on the podcast recently and he talked about, he's a trading psychologist and he talked about working with his clients from a perspective of actually physically changing their environment. And he went to an extreme of even having, he had one client who had three different hats, actual physical hats that they put on their head. One was the researcher. So when he was researching trades or analyzing charts or looking for trades, he had one hat on, okay? When he took that hat off, he put another hat on and then he was the risk manager. So that, you know, that's now, okay, how much do I want to risk? What's my position size? He put that hat on. And then he would take that hat off and put on another one and now he was the executioner. He was the guy who actually placed the trades, pushed the buttons. And by physically doing that, he could compartmentalize those different, you know, methodologies within his trading to make sure that he was always doing things correctly. And so it's so powerful to change that state. And another way you can do that is actually to talk out loud during a particular trading situation. You know, one thing that I think is pretty helpful for me is that I run the live trading room every, you know, each morning from the start of the market from 8.30 AM for the first 90 minutes until about 10 AM. And so I am talking to our community. I am giving my thoughts out loud. And this actually helps me process information. And I'm getting, you know, instant feedback via our chat. And it kind of helps me process things. Now, this is something that even if I'm not streaming live, this is something that I do anyway. This is something that I actually talk through trades as I'm viewing them and saying, okay, this is happening. This is what I feel. This is what I think. And it actually speaking it out loud will do one of two things. It'll help you process it to make better trading decisions. And it'll also help process. If you're saying things that are not true, almost that you're saying things that you don't believe to be true, you're gonna catch yourself doing that and you're gonna help yourself process those things to revert back to making better decisions. Because depending on what duration you're trading, you know, if you're day trading, you don't, and if things are moving quickly and you don't always have time to journal and write down every detail, when you talk things, talk through things out loud, that's going to serve as a bit of an audio trading journal to your mind to help you process that information more efficiently. Now, if you're swing trading, you're putting on positions that you're in for a matter of days or weeks, then you have plenty of time to document those things and that's where a written journal really can be helpful. Now, I do both. Sometimes I'm documenting things during my day trades as I'm doing them, but for the most part, I'm doing that after I get done. And then swing tradings, I'm doing it at entry, I'm doing it when I exit, I'm doing it if I have feelings during throughout the trade. So with that, it just kind of depends on your style, your methodology and the duration that you're trading. You know, we're talking about interrupting, you know, just thought patterns, but part of the journaling as well is in another form of interrupting patterns is, you know, what if one of your patterns is that you sometimes let losers go too long and they turn into substantially larger losses than you were really anticipating or that you, you know, in your mind, you have a certain level of risk for a trade, but you have a bundle of trades as you look over your trading journal that were more significant than you anticipated. What if you could eliminate some of those? What if you could eliminate 25% of those big losers? What impact would that have on your overall profitability at the end of the month, at the end of the year? So while we don't wanna focus on our P&L while we're in a trade, if we're looking at our trading journal after the fact and going through and looking for patterns and seeing what could have been done to make my profitability so much better when you see these little chunks of large losses and how can you mitigate or minimize or eliminate some of those mistakes, well, then you're interrupting a pattern that you're seeing so that now when you're in a trade and it starts to go against you, you're gonna be quicker to cut those losses as opposed to letting them grow because you know, you focused at the end of each day on seeing, okay, one of the ways I have to eliminate losses and become more consistently profitable is if I can eliminate these big losses. So if you get into a trading situation and it starts to go against you, maybe you won't let it go, get to a point where it's a bigger loss and maybe before you would have. So that's another way of just pattern interrupting some of these bad trading behaviors. So to wrap things up, you know, I've just kinda thrown a lot of different things out here but I think the focus really just needs to be try to find just one negative pattern that has accounted for the majority of your losing trades and try to identify that common trigger for that pattern. Then just take one, just select one method for trying to interrupt that pattern when you notice one of those triggers occurring. So I hope this was helpful if you wanna be part of a vibrant community, go to community.navigationtrading.com. We have hundreds of traders interacting on a daily basis, helping each other, try to become the best possible traders we can. Community.navigationtrading.com. I look forward to seeing you on the inside and we'll see you in the next episode.