 Welcome back to the Trade Hacker Mindset. In this episode, I want to talk to you about paying yourself from your trading profits. 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 about paying yourself from your trading profits, by the way, if you hear any background noise, cars driving by, birds chirping, I'm out on a little morning stroll, it's about 5.30 a.m. on a beautiful morning, so you get to come along with me. So this topic of paying yourself from your trading profits, this is something that I don't think I've talked a lot about to the navigation trading community. And so I think it's something that will help a lot of you. And it really came from my experience in trading over the last 20 plus years, where in the past, I always was trading to accumulate wealth. I was always just trying to compound my profits for use at a later date in the future, okay? So if you can relate to that, you might be looking at your trading account as a way to fund retirement, you know, in five, 10, 15, 20 years. You might be looking at your trading account as a way to build up and finance some future goal. Maybe you wanna buy a boat, maybe you wanna buy a vacation home, maybe you wanna buy a bigger home. You know, whatever that is, you know, it might be accumulating and trying to compound those trading profits and try to build up the biggest pile of money possible for that future goal, right? And so if that's the case, you're gonna struggle with the concept of taking money out of your trading account. And I really wanna say I did. So in the past, I would never take money out of my trading account. In fact, the only thing I would ever do is add additional funds to my trading account. But here's what happens and here's what I realized over trading for the last 20 plus years. If you don't pay yourself from your trading profits, if you don't extract money out of your trading account over time, it can become virtual money, okay? And what we know about virtual money is it doesn't resonate with us the same way real money does that we have in our bank account that we can spend. And what I mean by that is, you know, I would have periods of time where I would build up significant amount of profit and then I would give it all back or I would build up a significant amount of profits and then I'd take significant losses because I would start to increase my size because again, in my mind, I was wanting to compound those profits. So as my account grew, I needed to push that position size up and continue to accelerate those profits. And over time, as you're trading every single day, this account, this money that you're trading almost becomes abstract, right? It almost becomes just, it's just virtual money. It's just sitting in an account. It's almost just not real because you're not using it to spend on anything. So and think about this. I mean, this concept is real. I mean, think about this, two different examples. Do you think you spend more money when you're writing a check or using cash or using a credit card? Okay, there's a reason that Visa and MasterCard and American Express are such financially wealthy companies. It's because they know that if you're just taking that plastic out and swiping it, you have a lot less of an emotional connection to spending money and you're more apt to spend more money by using a credit card than you would if you had to pull cash out of your wallet or if you had to physically write a check. Okay, so there's a mental aspect that the credit card companies are capitalizing on from human psychology that allows them to make money because you're spending more and sometimes you're spending more than you have. A lot of people are spending more than they actually have. They don't pay off their credit cards at the end of the month. They actually accumulate debt, which interest is then paid to the credit card companies. Whereas if you are physically writing a check or if you're physically taking dollar bills out of your wallet, you're going to think a little bit differently and probably be, well, not probably, it's the studies have shown, it's statistically legitimate that you will spend less if you're using cash or writing checks. Example number two, if you've ever been to Las Vegas, if you've ever been to a casino when you go up to a table, let's say you're playing blackjack, are you putting stacks of dollar bills or $10 bills or $100 bills on the table to play with? No, you have to go to the cashier and you have to get chips, right? Well, why does the casino make you play with fake money with fake chips instead of just using your dollar bills or using your quarters or whatever level you're gambling with? Why do you have to use these casino chips to play instead of just using real money? Well, it's because the casino knows that you are going to gamble more, you are going to place bigger bets because when you're looking at those chips in front of you, it's not real money. These are just little plastic chips. I can bet as much as I want, no big deal, right? Now, of course, ultimately we understand from a logical perspective that we took our real money and we exchanged them for these chips and the value of these chips equals real money, but it's the little slight psychology that they're using to create this sense of virtual money, this sense of fake money that in our mind makes us have a tendency to bet more, right? So the same thing happens with trading. When you are trading, and let's say you're day trading, for example, and your focus is just on those red and green bars on your chart, okay? Tell me this, is that going to, from your psychological perspective, you are, you're seeing your P&L on your screen or if you're like me, you hide your P&L while you're trading and I just focus on the charts, but the ups and downs of those red and green bars, you know that sometimes you can get lost in the fact that it's almost like a game, right? It's not real life, I'm just placing little bets based on how these little red and green bars are moving. And of course we know it's real money, but there are certainly times when it doesn't necessarily feel like real money, it can feel like a video game. And so one way to keep in the forefront of your mind that what you're doing, that what you're trading is absolutely real money, then one of the ways that I've found can keep that top of mind, that can really keep that money real is by making withdrawals, paying yourself from your trading profits on a consistent basis. So let me give you an example of what I do. So for my day trading account, because we're streaming live every morning for the first 90 minutes of the market open, so I'm interacting with our community, I'm calling out trades, I'm watching the chat, I'm doing a lot of things that you as a trader wouldn't normally have to do. And so when I'm doing that, I'm trading relatively small size most of the time. So what I've been doing with my day trading account is I keep my account above $30,000 because I don't wanna have to mess with the pattern day trade rules and all that stuff, so which has to be over 25,000. So I keep at least 30,000 in it, but every time my account gets over 45,000, I withdraw all that money to get it back down to 30,000. And then, and here's an important thing, and then I use that money or some of that money, you don't have to spend it all, you don't have to go blow it just to blow it, but I do use some of that money on something very specific. So my wife and I have things we wanna do to our home, we have places we wanna go, we have different financial goals, right? And so for example, one thing that we just did is we just built a brand new big round stone patio with a big sit wall and a fire pit and all this stuff. It was about $15,000 and that came directly from my trading profits. And so here's the other thing that you should do is have a partner in these financial goals. So for example, if my wife says, hey, we should do this, we should build a new deck, we should do this or that or that, we should go here. One of the things I say is, well, okay, if I can take that money out of my trading profits, once I build it up past that threshold that I just mentioned, then we'll use that money to do that. Well, what have I done now? Well, now not only do I have a financial goal, but I also have a partner that keeps me accountable because guess what? If she wants that thing, if she wants to spend money on that thing, she's gonna be asking me, how's your trading going? Are you sticking to your rules? Are you following the process? Are you, you know, where are you at? Getting to that threshold so we can take that money out and do that thing that we wanna do. So it not only creates the consciousness of taking that money and actually seeing it in your bank account and using it for something that you want in life, but now you've also created an accountability partner. And I said this before, some of you are going to struggle with taking money out of your account because you don't wanna spend it on something in the short term. You just wanna increase and compound your profits, but I promise you, your account will increase and accumulate and compound faster if you have some systematic withdrawal process in place. It sounds counterintuitive. I know, especially if you're a new trader, you're thinking, well, that just doesn't make any sense, then the math doesn't work. If, you know, if I just compound and I keep increasing my position size, when my profits grow, then I'll just keep growing the account. But what you're not taking into account is the trading psychology. You're not taking into account the trade hacker mindset that is one of the biggest components of your trading success. And so that's an example of what I do on my day trading stuff. And then on my bigger account, my income trading, I look at that every quarter and I take out a percentage of my profits. And in this case, I'm only taking out 10% of my profits, but again, it's the psychology of actually taking out some of your profits so that it becomes real money. So if I make $50,000 in a quarter on my trading account, I'll take out $5,000. And if you've never done that, if you've never taken money out of your trading account, it's going to be kind of a, at least it was for me, it's probably gonna be kind of an aha revelation for you. So much that goes on with trading is in our subconscious that we don't even really think about on a conscious level that it's going to do things for you from just an overall trading psychology that it may be something that really propels your trading to a new level because now it's not just a game. It is real money and you don't get caught up in the virtual aspect of it as much. You know, here's another idea. If you really are struggling with the idea of taking money out of your account to spend, which I get, I'm a pretty frugal guy. I don't have a lot of, you know, I don't have a lot of fancy cars and you know, a lot of stuff that I want to spend money on. I mean, we go on vacations and we do fun stuff and we kind of do everything we want to do. But I'm definitely not the type of person that just spends money to spend money. And so when I was struggling with taking money out of my trading account, that was part of it for me. And so one other idea is maybe you don't take the money out to spend, but maybe you take the money out and reposition those dollars into a different investment. If you have a sizable account and you're, you know, every quarter you're taking out, you know, $50,000 or $100,000. Maybe you're buying rental properties with that money. Maybe you're repositioning that money into mutual funds. Maybe you are, you know, taking that money out and buying Bitcoin. You know, I don't know whatever it is that you think is another good investment that maybe is not your active trading account. I mean, I don't have 100% of my assets in my active trading account. I have real estate. I have other businesses. I have other long-term passive investments that are just accumulating that are not requiring my attention of, you know, active trading in my options trading account. So there are times when I'm pulling money out of my active trading account to help myself with the psychology of making sure that I know that's real money, but I'm not going and blowing it on something. I'm repositioning that into some of my other investment assets. So I don't care how you do it, but I would highly suggest that you create some type of systematic way of withdrawing funds from your account on a systematic basis. You know, maybe it's once a week, maybe it's once a month, maybe it's once a quarter. I don't care if you're taking a percentage of your profits. I don't care if you're making $50,000, but you're taking $100 out. That's not the point. The point is to systematically take money out to prove to yourself that it's real money and do something with that money that has an emotional attachment to you, whether that's spending it on something, whether that is repositioning it into another investment you've been wanting to explore, or whatever it is, I promise you it's going to have a positive impact on your trading. So I hope that was helpful. By the way, before I let you go, don't forget we are presenting a whole new strategy class on October 12th, 2021. So if this episode will come out on Monday, October 11th. So make sure you mark your calendars. October 12th, it's a Tuesday at 4 p.m. central. We are doing our newest strategy class. It's all about trend trading. And so I'm super excited about that. If you haven't registered, make sure you do. If you're listening to this as a recording at a later date, it'll be part of our pro membership. You can always check that out at navigationtrading.com. And don't forget to join our community of like-minded traders. Just go to community.navigationtrading.com. I look forward to seeing you on the inside, and we'll see you in the next episode.