 Welcome back to the trade hacker mindset in this episode We're gonna take a quick break from the topics from the Mark Douglas book trading in the zone we had a live stream on Thursday, April 1st and just kind of off the cuff got into a conversation about working through drawdowns Mindset and why navigation trading exists. I thought it was important to share this with everyone So we're gonna queue up the intro and when we come back, you're gonna hear the audio from that live stream 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 I don't know if you guys all saw my kind of recap video yesterday when I was talking about Amazon You know, it's two days in a row. I let what should have been just manageable losses two days ago in Tesla and then yesterday and Amazon just turn into big losses and so I'm really kind of Refocusing on getting out of you know, hey I just you know, sometimes when you when you just get on a roll and you start making money You kind of get that, you know, we talked about in the podcast We taught and mark Douglas talks about in his book you get in that state of euphoria Where you kind of think that everything you touch turns to gold and so you kind of stop following your your rules, you know in Amazon You know touched on how You know yesterday, we're gonna we're in a mighty 90 trade and I was going against this. Well, we got two bars pullback I should have been out there. I would have had about a $300 loss on the trade overall instead I just let it go and ended up turning into an $1,800 loss You know, so things like that, you know, you guys may have seen Chad's video, too He's he's he's on a hiatus. He's taking a break and you know, he had he had like a $2,200 loss in Amazon So when you get into a funk like he was in he shouldn't be trading Amazon to begin with it's just too big of a product But just FYI and I'm kind of refocusing on making sure that I'm cutting losses quicker and Following the rules on getting out So Krish, yeah, I mean I think I Mean I'm kind of hard on myself when I do stuff like that a because I Hate losing so, you know, that's my ego talking But B and I think I mean really what's more important to me is, you know I'm trying to teach you all how to trade and if I'm not following the rules That's gonna give you all kind of a green light to potentially go against the rules as well And so I'm really I get really frustrated with myself For that day. So yesterday, you know, this you know, just a lot of Self-awareness a lot of thinking through things Thinking why did I make those decisions? And that's why I kind of came back to the point I just made about I've been on a pretty good streak Started kind of getting a little loose with my rules and you know that kind of thing And so as you know, I was just kind of hard on myself But then at the end of the day if you continue to have those that negativity those negative thoughts About your trading about your about yourself. It's going to negatively affect your trading So at that point, you know, once I kind of got through that mental process Then it's over then it's just let's go. Let's move on. Let's play by the rules and let's Forget about it. And so that's that's kind of how I for me. That's how I have to do it You know, I kind of find I get my I find myself getting into that situation mentally Probably once a month, which is which is still too much, but that's how I work through it There's really a balance between kind of punishing yourself, but not judging yourself too harshly I believe and everybody's obviously different. I mean, like I said, that's the way that I deal with it That's the way that I think I handle it best and it Keeps me doing what I'm supposed to do the in the best possible way if that makes sense Yeah, exactly doc B And you know, you start you start fiddling with the you know, you start getting loose on on the rules Then it's like well and and here's the biggest thing is you get loose on the rules You let and this has happened and so I know this was part of the process is I think it was Well, it was over the last couple weeks where I would I let a trade go too long Yeah, I let a loser go against me too much and it came back and ended up being a winner Well, that that's the worst thing that can happen. You broke your rules and the trade worked out now You're now you now you're done, you know, that that sends you into a Spiral of okay, I can break the rules and still make money and then then you're screwed, you know Then you start putting on bigger size and then the whole euphoria everything I touched turns to gold situation And then you're then you put on some big size and it slaps you I mean the good news is I'm very good about keeping my position size and check so You know an $1,800 loss in a big picture of things is not it not a big deal But still hurts when you when it happens. Yeah, and I think I'm gonna have a talk with Chad today You know, I don't know if you guys listen to this video, but just and this is not anything bad I'm not trying to say anything negative about Chad But I you know, I noticed just in some of the videos from his tone from some of the things he says, you know from yesterday He said, you know, I'm following the strategy. It's going against me. It's not the mindset mindset. It's not the problem You know, I've I've read Mark Douglas book again. So it's not the mindset. Well, it's it's 100% his mindset I mean it really is I'm gonna go ahead and get out of my last Airbnb here Filled at $5 and 16 cents closed out my last Airbnb So yeah, I mean, I I think there's a lot more to it and we had a conversation a couple weeks ago and when he was having a little bit of a Losing streak and I said, you know, here's what I do when I find myself in your situation is one Scale down your position size to almost nothing, right? I like to trade multiple contracts So just trade lower price symbols Well, you know, maybe do two contracts at the most or even even one and then I talked about, you know Re-evaluating the mindset, you know going through the podcast going through the Mark Douglas stuff and really trying to focus on those two things First, you know a that anything can happen at any time in the market, right? So we know over time our strategies produce a consistent profitable result But there are gonna be times when it they're gonna be drawdowns every single strategy has a drawdown and so He's like, yeah, okay, you know he agreed and and then the next day he's trading Tesla and Amazon. Well, those are big contracts You just you can't wait when you're Until you build that confidence back up until you build the right mindset back up You can't be you can't be playing with those They're just you know, they'll rip your face off. I mean listen I've in my early days of trading, you know how many times I quit a lot Okay, I Quit a lot. I quit. I think the most the longest I ever quit four was six months But I quit a lot and that was just a totally different ballgame. I was trading futures with five or ten thousand dollar account I was an idiot when I was younger, but so it you know, it's it's part of the process I mean, I you know, I've said this before in different videos or things I wasn't consistently profitable for my first ten years trading ten years I got you know, I'd have years where I'd make money I'd have definitely, you know weeks months where I'd make, you know, really good money But I'd have periods where I'd give it all back to you know So I was just it was a roller coaster ride and a lot of it had to do with my position size Versus the account I was trading which is just ridiculous, but it wasn't it really wasn't until I Really internalized a lot of the the methodology in Mark Douglas's books that I turned that corner and Started becoming consistently profitable year after year and that's why I'm so passionate about that And that's why I'm that's the whole basis of why we're doing that podcast is because I think it's so critical You know, you get traders who jump from strategy to strategy or methodology to methodology or trading futures and then options and stocks and you know everything else and They continue to or they you know try different strategy or they find this different indicator Or they find some other tool that they think is the answer and none of those are ever the answer The answer is always between your ears the answer is always your mental capacity in your decision-making process when you're trading and So that's you know the whole the whole basis of what? Help me turn the corner in consistent profitability. And so that's why I'm really impassioned about sharing that with you guys Well, I got no trades on my friends Booked 1,000 318 on the day. So that's good Got back everything from yesterday Still down a little bit on the week, but I'll take it So well, you know when chatter in this video yesterday when he is saying come to the book You know the mindset book again, so it's not the mindset Well, and I'll have this conversation with him But I think it's maybe he's mistaking what what we're talking about mindset, you know, we're not talking about just hey I got to be positive, you know, that's positive attitudes a big deal But part of the mindset is How and why you're making the decisions on your trades that you are right? I mean we try to set these rules so that they're you know, there's some very specific criteria But as you guys know as you're placing these trades There's a little bit of subjectivity in there that can make a huge difference And so part of the mindset is what's going on in your mind when you're making the trading decisions that you're making Right, I'm on a losing streak Well, but Amazon it looks so good that setup looks so good I'm just gonna I'm just gonna get in this time because it It's got to be a winner. It looks it looks so good. Well The market can do anything at any time, right? One of the things that Mark Douglas talks about in his book is Just because a similar pattern represents itself on a chart Doesn't mean anything because it's not the exact same participants that were in the market the last time that that pattern showed up, right? So things can happen and so on a trade individual trade a trade basis Anything can happen But that has nothing to do with the fact that you can still be consistently profitable over time because if you have a strategy That's consistently profitable like we do Then we know and that's that's also why it's so important to track when I open up and I Update my spreadsheet today, you know, I'll see that. Hey since the end of august last year We're up almost $60,000 on these day trades year to date. We're up like $20,000. So the fact that I don't I haven't calculated yet. I'm not sure what we're down on the week. Maybe I don't know a thousand two thousand bucks Whatever it is That's irrelevant. You know those the fact that I had two days where I didn't follow the rules And I lost Money, you know, that has nothing to do with the long-term consistency And in getting back into the flow of what I should be doing and that is following the rules Having the proper mindset Not taking such a too much of a recency bias, you know, I could have come in today After two days losing in a row And then and when I was taking trades, it's been, you know, so scared to scared to enter right deer in the headlights I don't know this one kind of looks like one we did yesterday and You know that that I took a loss on that one. So I'm not going to enter this one Well, you can't you can't do that every single trade Has a probabilistic outcome. So every single there's no guarantee in any one individual trade If you're just playing the probabilities, you've got to think in probabilities when you're trading and I'm I'm saying this to you all from an aspect of I'm saying it to myself too, right? I'm not perfect at that either I still have that recency bias Where I will you know, the last few trades or the last few days will have an effect on my decision-making process And the degree that you can get through that Is the degree that you will become more consistently profitable. So my my profits are pretty consistent, but I That's that's just it's still not good enough for me I you know, I think I think we can take this thing to a whole new level of consistency Part of that has to do with just your decision-making process your mindset And so that's what you know going back to what I said before that's kind of what frustrates me about when I do something stupid Like I did in tesla or amazon the last couple days is You know, I need to be I need to be that example for you all because if you see me do it then you think oh He did he kind of broke his own rule. So, you know, so I can do that And I don't want to set that tone. I think follow the rules Have the proper mindset You're gonna have drawdowns, but here's here's the problem is if you Don't have consistent rules that you follow or if you're loose with your rules if you break your rules When you get into a drawdown, you don't know how to fix it if you have Consistent rules that you follow Every single day. I'm gonna follow these rules. No matter what I'm gonna play the probabilities I know my strategy is gonna be consistent over time if you do that over time And you go through a drawdown You know how to fix it either you broke a rule or you just know that it's part of a drawdown And it's gonna and you're gonna come out of it. So that's a big piece of it If you if you start breaking the rules, you don't know how to fix it And then you really mind f yourself, right? So I hope this is uh, I hope this conversation is a little bit helpful to At least one person if it is I think I've done my job here because that's You know, I don't know I don't really talk about this because I don't think it's relevant But when we first started navigation trading the whole basis of it was a I was making You know really nice profits and I wanted to share that with people, you know I I'd see people, you know meeting with their advisors and you know talking about their 60 40 mutual fund portfolio and You know these mediocre returns that they're getting they're paying fees and not even beating the the indices and and i'm just like Oh man, I made 200% last year You know the kind of kind of thing and and so I was like I got to teach people how to do this So that's number one And then number two sometimes when a member is wanting to join or has been a member and they quit or something like that They'll I don't know I can't think of an example, but they'll they'll make a comment and i'm just like I I just did my taxes and the revenue that I generate from navigation trading from from memberships Is 5% Of my total revenue 5% so I'm not saying this. I hope this doesn't come off as condescending or you know, I'm not trying to try to be a dick or anything like that But I don't do this for the revenue that the the membership that you guys pay I don't I don't do this for the revenue because it's a very minor Point of my overall revenue from other, you know businesses that I own from real estate from my trading profits and everything else I literally wake up in the morning because I love Hearing the stories that you guys tell me I love when I get an email good example because you guys know him so Tim weiss right who's who's doing the red stuff? He was originally a member is how we is how we originally met He took one of our strategies kind of our weekly double calendar He modified it what he calls revised and enhanced it into the double diagonal that he trades now the red strategy and and he he was able to Generate 250% return last year in the face of the worst pandemic that we've ever faced Move him and his wife to hawaii by a house In hawaii I mean that kind of stuff just that fires me up and that's and that's a that's a really cool story But I also get the stories of you know a guy who Started trading and he all he does is is he like trades iron ducks and in one other strategy and he was he was in a position of couldn't pay his medical bills And through the profits that he generated from the strategies that we taught him He was able to pay his medical bills. So things like that. I mean, that's that's why We get up in the morning and and do this and tim weiss talked about this to you in his presentation that we did is Trading's lonely, right? Like when I first started trading. I was so excited. I loved it It's just you know when when you're a trader like we are it's just it's in your DNA It's part of who you are And it just it's we just love it, right? And so when I started trying to share this with friends and family Everybody was just like, okay, cool. And I was just like, don't you get it? Don't you see how awesome this is we can you know generate returns better than hedge funds better than all these man money managers and you know, I'm just fired up about it and Nobody got it right go back to the whole deer in the headlights thing I had Dear in the headlights for my friends and family on I couldn't understand why they weren't as fired up as me You know, so I needed To to create this community. So it was more fun to trade You know, like I mean my people You all are my people and so that you know that that's another reason that we that we did this But people who don't trade they don't get it, right? I mean, I'm sure you all have tried to do the same thing. You've tried to explain selling premium and implied volatility and Options and oh, it's a it's a derivative of the actual stock and you know Try to explain it to people and they're just like, I don't I don't know I don't get it no interest You know that kind of thing If you don't have a group of people if you don't have people around you That are like-minded that are kind of focused on the same thing. It's very it's very difficult to be successful and so you know selfishly navigation trading has Helped Hey from an account an accountability standpoint I mean, that's why I do these live streams with the day trading is from an accountability standpoint Because if I was doing it on my own, I'm even more susceptible to breaking the rules, right? And then, you know, obviously the the alerts and everything else So having that community of people was was a big passion of mine to kind of create like-minded traders that we could interact with and Discuss with share ideas with and we've come up with trading strategies just from communication through the through the community and seeing what somebody else is doing and be like, oh, wow You know, that that's cool. I never even thought about that Let's combine this with this and then when you know, it creates a real It really starts to generate some some cool stuff by the way speaking of ideas and new strategies. I've been working on one that kind of is a It's kind of a combination of a skewed iron condor with a with a double diagonal that kind of helps Hedge the downside risk as well as hedge against the volatility crush that I'm going to be I'm still testing but It's uh, so far is testing out very well. So I Can't wait to share that with you all Doc B. I once had a mentor yell at me in a nice way for sulking in a semi-big loss But he made a point that really stuck Stop thinking of losses as bad and profits as good. I like that Start thinking of losses and profits as part of the game part of the job part of the breathing Yeah, trading is a numbers game If you can that that was that was one of the other kind of mental shifts that I made is When I was when I was first doing I was I was so focused on making money You know generating an income generating a certain amount per month and that kind of thing And when I when I let that go and I just started treating trading like a game like a numbers game That that was a big shift as well All right, so that's the end of the audio from the live stream that we did during our day trading session on Thursday, April 1st I hope that was helpful in helping you understand some of the mindset tactics That we use to help you work through a drawdown and you got some helpful information out of that If you want to be part of the navigation trading community, we call it the trade hacker community It's free to join. Just go to community dot navigation trading dot com It's full of traders interacting every day talking about not only the mindset aspect But sharing trade ideas with the sole goal of helping each other Become better traders. Just go to community dot navigation trading dot com We'll see you on the inside and we'll see you in the next episode