 Welcome back to the Trade Hacker Mindset. In this episode, we're going to be continuing with our series, discussing topics from the book, Trading in the Zone by Mark Douglas. In today's episode, we're going to be talking about shaping your mental environment. 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, let's jump into our discussion of shaping your mental environment. So we're going to be talking about trying to create kind of a new version of yourself and the tools that you need to get there are three things. One, willingness. Okay. You've got to be willing to change. You've got to be willing to learn your desire to learn. Number two and number three, your passion. If you don't have the passion to learn, if you don't have the passion for trading, if you don't have the passion to become a successful trader, then it won't work. In fact, if you don't have any one of these three tools, you most likely will not be successful. I've literally seen hundreds, maybe thousands of people who are coming into try to become successful traders and all they're doing is trying to make quick money. They're trying to make a quick buck and it just never works. I mean, we think about people who want to trade because trading is financial. It's all about making money, right? But if you come in with the mindset of just trying to make money or just trying to make money quickly, it never works out. You've got to have the willingness, desire, the passion. You've got to, you've got to love trading to actually become successful. Just like anything else in life, the people who have the most successful careers are the people who do what they love. If you go to work and you hate your job every day, there's a pretty good chance that you're probably not very successful at it as well. In the book, Trading in the Zone, Mark Douglas talks about a medium. So like he talks about an artist creating a sculpture can choose to work with a number of mediums. It could be clay, it could be marble, it could be metal. But for you, your medium is your attitude and your beliefs. So I would imagine the goal for most of you when it comes to trading is consistency, right? I mean, it can't be just making money. It's got to, you got to narrow it down a little bit more. And I think the ultimate goal for the majority, if not all traders is to get that consistent, get those consistent profits. You know, we talked in our last episode about how the best, most successful traders think differently than everybody else. They've learned to trade without fear, but at the same time, without becoming reckless and committing trading errors based out of fear. So the bottom line, and one thing we're going to keep harping on is that the ability to virtually eliminate fear and recklessness from your trading, because these two fundamental characteristics is what is going to allow you to achieve consistent results. Because once this fear is gone, once you, once you have this mindset, not only are you going to be able to trade without fear, but all the things that we do in our subconscious or sometimes conscious mind of, you know, justifying, rationalizing, you know, distorting information, hesitating, jumping in too early, hoping, praying, you know, all those things will go away. But as I mentioned, there's two parts of this. So eliminating fear is half the equation. The other is you can't be reckless. You have to develop restraint. The best traders have learned that you've got to have this internal discipline or mental mechanism to counteract the negative effects of euphoria. You know, if you get on a string of winning trades, sometimes you get into this state of euphoria where you think you just can't lose no matter what you touch, no matter what trade you take, it just turns to gold. So winning can be a little bit dangerous if you haven't learned how to monitor and control your self-awareness. So if we're looking at this from a perspective of how to become consistent and why so few traders get to that point of consistency, it's because most traders don't address their mindset. They're more focused on the indicator they're using, the technical analysis, the strategy, the algorithm, and they don't understand the consistent profits. It actually comes from your mind, not the markets. It's not about learning more about the markets. It's not about spending more hours on analysis of the market. It's more about the self-awareness and understanding your subconscious and how that can distort market information. Jumping into early, waiting too late, chasing trades, hoping, praying, all that kind of stuff. Your attitude produces better results than analysis or technique. I want to emphasize that. I'm going to say it again. Your attitude actually produces better trading results than market analysis or technique. Now, of course, we have to have a fundamental basis of knowledge of the markets. And of course you have to have a good strategy, but having the right attitude, having the right mindset, everything else is a piece of cake. What's interesting is that most traders are actually closer to the way that you should be thinking as a trader when they first start trading than they are after they've been trading for a while. And it's really because they come into the markets a little bit naive. They have kind of an unrealistic concept of what the risk actually is. And so when they jump in without fear, you know, I've seen many times where a new trader will come in and they'll get on a string of winners. And this even builds more confidence and more euphoria and more lack of fear. And this starts to create that carefree state of mind that you actually want as a trader. The title of Mark Douglas' book, Trading in the Zone, he refers a lot to the zone similar to what athletes will experience. You know, I remember watching a documentary on Michael Jordan and he talked about how when he gets in this flow state, when he gets in this zone, he almost imagines the basket as this big barrel that's about 10 times the size of the actual rim. So when he's shooting the ball up, you know, it's like he can't miss because it looks, it feels like the hoop, the basket is much bigger than it actually is. And when you get in that zone, whether it's in trading or whether it's in sports, the one thing in common with that, no matter what you're doing is that you're completely fearless. You are 1000% focused on producing a positive outcome that the fear part doesn't even enter your mind. You know, if you were, I've had coaches, you know, I played football and baseball when I was in grade school, high school all the way through school. And, you know, you had those certain coaches that just they would get in your face and for a lot of people, it would create fear. So now you've got the kids going out and trying to hit the baseball or, you know, make a tackle or do whatever. And all they have in the back of their mind is this fear of, oh, my God, what if, if I mess this up, the coach is just going to chew my ass. And by having that mindset, it just makes them get in a situation where they actually start making more mistakes. And in trading, it works the same way. Are you making trades out of fear that you're going to lose? You know, are you making trades? And in the back of your mind, you have a fear you're just trying not to lose money or are you actually in a zone of knowing that when you place this trade, yeah, you're accepting the risk, but your, but your outcome is going to be positive. So the one thing to understand is you can't force yourself into this zone. You can't will yourself into this zone. But what you can do is set yourself up, set up your environment, set up your mental conditions so that it's the most conducive environment so that you can start experiencing that zone like feeling. And the number one way to do that is to continue to develop a positive winning attitude. And a positive winning attitude is about expecting positive results. You know, I would say the majority of people actually get bogged down in this negative self criticism. You know, they have regret, self pity, kind of a victim mentality. So it's actually a minority of people that actually ever develop this positive winning attitude, which is part of the reason why there's there's such a low number of consistently successful traders. And part of this positive winning attitude is kind of having a having a short memory, right? Like think about, I was talking about cornerbacks in the NFL. If you're playing a defensive back, if you're playing corner and you get burnt for a touchdown by a wide receiver, you've got to have a short memory. You've got to be able to forget about that and get back out there and have a winning attitude. You've got to get by those mistakes. You've got to keep going. You know, I still, I still experience this every day when I'm, when I'm trading, especially when I'm day trading, where we're getting in and out of the markets fairly quickly in a matter of, you know, minutes, where if I start off the day and my first couple of trades are losing trades, I start to get that doubt to creep in. I start to get that fear creeping in that, oh, now I got to be careful because I don't want to turn this, these losses into, into more losses. So I start getting fearful and maybe not taking trades because I just, I just took one like that and it turned out to be a loser. So I don't want to jump in another one that looks just like it. You know, that kind of mental mind frame, you've got to be self aware, you know, it's natural for you to think like that. I know it's natural for me to think like that. But I also have built up a self awareness to understand that when I do start feeling that I've got to be self aware and get past it. Cause the opposite is true as well. When I first start trading for the day, if I, if I knock out two, three winners in a row, now I have this confidence. I'm not encumbered by fears. I'm not worried about the next trade. I'm feeling very confident in every trade that I see almost looks like it's going to be a winning trade. And that's where you also have to be self aware and understand euphoria, right? You can't get into that state of euphoria and start making trades that are, that are not high quality setups, but it all starts with that winning attitude, having that feeling of confidence and fearlessness. Winning is mostly a function of attitude in trading. It doesn't take a lot of skills. It doesn't take a lot of skills, you know, to buy and sell that security, whether you're trading options or stocks or futures or whatever it is, it doesn't take a lot of skills to actually execute those trades. So let's go back to our discussion that we were talking about of the brand new trader, you know, somebody comes in and is fearless and just ready to ready to take on the world and executing trades out of fear. But what happens when that new trader starts to lose, right? Let's say they go on a winning streak right out of the gate. They're building all this carefree and this confidence in trading, but then they start losing. What happens? Now, part of it is determined upon what he interprets the experience to be and what his expectations are coming in. I mean, if he comes in with the expectations that, hey, I understand there's no way to avoid a loss. I'm completely accepting risk. Then the chances of him affecting him adversely aren't very high, but that's not normal either. The most likely scenario is he's come in and he has not accepted the risk. And why would he? All he's been doing is winning to start. And so when the losses do start to come, now the market's not doing what he wants. Now he's going to start feeling pain. He's going to start feeling this mental and emotional pain. So in the book, Mark Douglas says, expectations are our mental representations of how some future moment in the environment is going to look, sound, feel, smell or taste. So depending on how much energy is behind this expectation, you know, it can hurt a lot if that expectation isn't fulfilled. And of course, most traders come in without the slightest clue that your mental frame of mind, your mindset has anything to do with the success of your trading. So as a new trader, after you get into these losing trades, you know, now you're in this state of emotional pain and your trading is going to take on a whole new light, right? It's going to take on a whole new life. Remember that carefree state of mind, that fearless state of mind? Well, that's not going to be there anymore. Once you start hitting a losing streak, we've all heard the song. You've lost that loving feeling. Well, sometimes it feels like the market can take away that winning feeling. And what happens is newer traders, especially they start to blame the market, right? It's the market's fault for those losing trades. It wasn't my fault. It was the market's fault. It's kind of like when you're a kid, you know, a small child, you're playing with a toy and then a parent or somebody comes and takes that toy away from you. A lot of times kids will start crying, right? They're having so much fun. And now all of a sudden they're experiencing pain because it was taken away from them. And we can start to feel betrayed, right? Everything was going so great. And then the market came and took it away. The pain came from an outside factor. It didn't come from us. It didn't come internally. It came from that outside factor, right? And if it comes at a time that's completely unexpected or unanticipated, then we are unprepared. And that's what causes this emotional stress. And how we how we react to this emotional pain. A lot of it has to do with how we were raised. You know, some of us had parents who were very well-meaning and teachers and friends and coaches that were very well-meaning. But some of us grew up in environments where you had situations where you have people in in power over you or leverage over you who actually intentionally or maybe subconsciously kind of inflict pain on you, whether it's emotional or physical, because they perceive you as having less power. So if you grew up in an environment like that, those things are ingrained in your mental mind state and are actually going to affect your trading, whether that's a positive or a negative environment that you grew up in. So the bottom line is even even as adults and we get into our trading mode, we don't realize how natural it is to associate the shift from joy to pain when it comes to trading and associate that with how you associated joy to pain as a child. Now, I know a lot of you are probably thinking, no, this not me. I not me. I am a responsible adult, but I promise you only the very best traders have reached a point mentally where they can actually completely accept responsibility for the outcome of a particular trade. And I see this in our community all the time where people are finding someone to blame. They're they're blaming, you know, something in the markets, they're blaming, you know, for us taking the trade and them following us, you know, they want to find somebody to blame. They're not taking full responsibility. And a lot of times it's done subconsciously because and they don't realize that it's actually coming from an association that they had as a child of something that happened of changing from joy to pain. You know, unfortunately, our society has gotten into this situation where we think we are responsible for encouraging our youth with eighth place trophies and, you know, participation ribbons and, you know, winning and losing is demonized. But when it comes to trading, when it comes to the market, the market has absolutely no responsibility to give us anything or do anything that would benefit us. And if if you grow up in this state of mind that you're entitled, that you're entitled just for showing up, well, the market's going to slap you around pretty good. It's the ultimate game of winning and losing. It's just about taking responsibility. You know, you've got to acknowledge and accept what's going to happen from this outcome. You are completely responsible for your success or your failure. If you do anything less than taking complete responsibility, a couple of things are going to creep in. One, you might establish kind of an adversarial relationship with the market. And remember, we want to be in flow with the market. If you're at, if you have an adversarial relationship with the market, you're working against the market. We want to be with the market in the constant flow of the opportunities. And the second thing that happens if you don't take full responsibility is you're going to kind of mislead yourself into believing that your trading problems, that your losses, that your lack of success can be improved by doing more market analysis, more research, more indicators. And none of that leads to better success trading. It's about taking complete and absolute responsibility. So when you actually think about blaming the market, it's pretty ridiculous, right? I mean, the market, from the market's perspective, every single moment, every single movement in the market is completely neutral, right? The market doesn't know what you want. The market doesn't care what you want. The market is always neutral. So you've got to get into the flow of the market. Now, the market does have a flow. It often might seem erratic, but the market does have patterns that repeats itself over and over and over again. So again, you can't be at odds with the flow of the market. Otherwise you're against that flow and it's going to affect your trading negatively. So if you want to be getting into that flow, you've got to be free of that fear, anger, regret, hope, prayer, despair, disappointment, all those, all those negative, fear-based things. And you really won't have a reason to experiencing all these negative emotions if you're taking absolute responsibility. You know, going back to that example of a brand new trader who started out with this carefree state of mind and then started losing, you know, those losses can create an emotional pain that's pretty shocking, right? If you're on a winning streak and then all of a sudden you start losing for the first time, it can be a little bit shocking, but sometimes not shocking enough because in their mind, it wasn't their fault anyway. You know, the market did that to you. So instead of quitting, you have, you have this feeling that you just need to, you just need to learn more. If you knew certain things about the market, you wouldn't have experienced that pain. So how will you get into a flow? Remember, we've got to get in the right mindset. I mean, some traders meditate, you know, some people work out. I work out every morning, you know, some people, let's drink coffee. Some people smoke weed, you know, whatever your thing is, you've got to find something to get you in that positive state of mind. So staying on the example of the new trader, you know, it's more about focusing on the mental mindset, not about trying to conquer the market with more market knowledge because we've all been there. You know, when we start, we start getting into those losses, you know, now, you know, I got to go get smarter. I got to put in some more effort. I got to put in some more work because in every other aspect of life, careers, sports, things like that, that's what it does take to become better. But that mindset works against you when it comes to trading. So Mark Douglas, his book talks about when a trader does that, when they start searching for more market knowledge, it creates a sick situation that he calls the irreconcilable dilemma. It's where you go on this knowledge quest, you start learning about support and resistance and chart patterns and Fibonacci and RSI and stochastics and MACDs and oscillators. The problem is now when you have this newfound knowledge, now you go back to your charts and you've got 18 different indicators on your charts. Now you have a problem executing your trades. Now you're second guessing yourself, you're hesitating, you don't put on trades at all, where you have a clear signal that before before this losing streak happened, you had it would have been a clear signal and you would have just jumped in. And then you start to get frustrated because you thought, man, if I learned more, so it should be easier. And it just it starts to just not make sense in your mind. You know, gathering knowledge, getting smarter in every other area of our life makes sense. But in trading, it can actually work against you. And I can speak to this from from personal experience. I was inconsistent at best for my first 10 years trading, 10 years. Now, I'm kind of a slow learner, but 10 years, I was not consistent in trading, but I kept doing it. I kept jumping from strategy to strategy from guru to guru from newsletter to newsletter, from indicator to indicator. And it wasn't until I started focusing on mindset, which is why I'm so passionate about this, which is the whole reason we started this podcast is because it was the mindset. It was the self-awareness that finally got me over that hump to start booking consistent profits year in, year out. You know, I think we all when we first start out go go from this state of mind of being carefree and fearless to this point to this mindset of preventing pain by avoiding losses. But what's the problem with that? We can't avoid loss. So you can't prevent the pain by avoiding losses because that can't be done. Taking losses is part of trading. You know, the market does have patterns that repeat themselves over and over and over again, but not every time. There are no guaranteed trades. There are no strategies that are one hundred percent winners all of the time. So there's no possible way to avoid losing or being wrong. But you typically don't see this. You typically don't sense this because, one, you're trying to get that winning feeling back. And number two, now you're super enthusiastic about all the market knowledge that you've started to acquire. What you don't realize is that when you go from this carefree state of mind to a prevent and avoid mode of thinking, you actually shifted from a positive to a negative attitude. You're now focused on not just winning, but rather how you can avoid pain by preventing the market from hurting you again. This goes back to as we related it to sports. If you're playing not to make a mistake versus playing to win, you've already lost. So this attitude, this mindset of pain avoidance is going to start to create an experience that you're trying to avoid, which is which are these negative thoughts, these fear based thoughts, this mindset that produces an adversarial kind of budding head situation with the market when you really want to be in the flow. And the problem is people get in this vicious cycle of doing something and they gather this market knowledge, they go back and maybe they get on another winning streak with this new found knowledge. But then they start losing again. And so they don't take full responsibility. They blame it on the strategy. They blame it on the indicator. They blame it on the person that they're following. And so they jump to the next thing and the cycle starts over and it goes over and over and over again until they address the real problem, which is your mindset. Thanks for listening. I hope this was helpful. If you're interested in joining our trade hacker community, just go to community dot navigation trading dot com. We've got hundreds of traders in there interacting on a daily basis, not only about mindset, but sharing trade ideas. You get to meet and interact other like minded traders all with the same goal of helping each other become better traders. I'm personally in the community every day, so I look forward to meeting you there. Cheers.