The Man Who Cracked Trading Psychology - Jared Tendler

the author of one of the best-selling books on trading psychology with more than 20 years of coaching experience. The idea is not to eliminate the emotion, but is the faulty perspectives that kind of run in the background that create excessive emotion. There is that ideal amount. You do not want to show up to the markets flat. You're going to suck when you're over emotional. You're going to equally suck. So, there is this kind of balancing act that we're trying to find almost like a formula, a mixture. Jared Tendler has spent 20 years inside the minds of elite sport performers and top traders, mastering the psychological aspects necessary to win in high stress environments. When emotions rise too high, they shut down the part of the brain responsible for controlling emotion. So you are on like this train to revenge trading that you cannot get off. Now what you do about it is very different. And there actually is research if you want to kind of go through this a little bit. It could be quite interesting. Um, if you're taking that revenge trade in that moment, what you're thinking feels justified. Not only justified, but correct in a way that feels as if you know something. However, what you're feeling there is more fear, not genuine intuition. We need to firmly distinguish what are the markers, the characteristics, the profile of that masquerading emotional intuition. Because if you can create that distinguishing characteristics, then you know when to kind of play against yourself. Social media is a wonderful opportunity to learn, but it's also heavily clouded by everyone's a millionaire trader. Everyone's winning every day. Everyone's got this great lifestyle. And there's all of these pulling things that could be worsening an internal state. What is your view in general of social media and trading? It's a good question. Uh trading psychology, it's a it's a topic that is for a lot of people overused, kind of scapegoating a situation. For others, it's something that is like I don't need that. that's hippie, wishy-washy. I need to focus on technicals. Uh I think today we'll find that middle ground and and where trading psychology really lies. What I want to begin with is this idea that emotions within trading. A lot of people try and remove their emotions and kind of become a robot and then realize that's fickle because we're human. But um what I found in general is emotions have been amplified by the markets in my case and usually a symptom of something deeper. So when when the word emotions are thrown out, trading emotions, greed, fear, etc., what does that mean to you? Uh, one element of human nature, I mean, I think when traders try to eliminate emotion, they're forgetting that passion and motivation are critical emotions for their success. So, you know, you want to be robotic. Well, then where's the drive going to come from? Where's the love and the passion and the interest and the curiosity? Those things are essential to becoming not just a skilled trader, but a great trader. And so you remove those then you know you're not going to be very skilled. So I think the idea is not to eliminate the emotions but as you're kind of alluding to understand the flaws biases wishes illusions hopes the faulty perspectives that kind of run in the background that create excessive emotions, right? Because there is there is that ideal amount. You do not want to show up to the markets flat, right? you're bored, disinterested, tired, you're going to suck. You know, when you're over emotional, right, the greed and the FOMO and the revenge trading, the lack of confidence, the overconfidence, the euphoria, all of those emotions get in, you know, amplified, you're going to equally suck. So, there is this kind of balancing act that we're trying to find almost like a formula, a mixture of emotions of energy that you're trying to find and everybody individually has it. There are, you know, nice heruristics that you can use. You know, I think generally it's going to be people are, you know, at their best when they're kind of calm, but some are actually at their best when they're hyperengaged and hyperfocused. Some more of the sort of energized, engaged. So, you kind of have to find the right balance for yourself. Um, but to me, I think where traders mostly think of emotion is is the problematic ones, the ones that impair their ability to execute their strategy or the system. And that is not a singular type thing. you're just going to kind of, you know, very bluntly just delete emotion because there is a lot of value that it provides. Do a lot of our emotions have just evolution. They're just from evolution. Our anim animalistic brain. What I'm maybe referring to here is if I think back to our ancestors, if they heard a noise in the bushes, they like, okay, I could either go towards it and I could find a meal and that's one unit of benefit, but at the same time, it could be a predator and I could die. uh and therefore is guess a survival inst a tension between survival instinct and opportunity and I think the market can also be analogous to this where you have blowing an account survival instinct to stay away from that versus marginal gain of a single trade a lot of these emotions that I see are are fight and flight we even you know we speak about how much of this trading emotions that we feel are just derivatives of our primitive brain I mean it has to be all of Right. I think you know we are not that young. I mean sorry we are we are young evolutionarily speaking. I mean in terms of modern society's uh slice of where we are. I mean it has to be a majority of it. And so I would only kind of caution traders out there to say well we we're not going to blame the fact that these are things that we can't necessarily control. we're going to better understand the causality of what creates excessive emotions because you might have that orienting reflex to say, "Oh, maybe there's danger out there. Well, you know, f that." Like, I'm going to go after it and be the aggressor. Okay? But not everybody's like that. That's not a law of human nature. That is a part of our nature that we have to better understand. Right? There are certain laws of human nature. For example, and this is a critical one. When emotions rise too high, they shut down the part of the brain responsible for controlling emotion. Yes. Okay. Yes. Critical idea, right? You do not have an unlimited ability to control your emotions, right? The emotional control function is actually part of higher brain function. It's part of the same system that is involved in thinking and planning and making decisions. So when your emotions rise too high, you can get in this zone where you still retain awareness. You know what you're doing is wrong, yet the emotions have created paralysis because that emotional control center has actually weakened to the point where you now can't do anything about it. So you are on like this train to revenge trading that you cannot get off. That is a that is part of a law of human nature. Now what you do about it is very different and we do have the ability to impact that. What I was um kind of alluding to here is that our survival instincts, our anal animal an animal an animal an animal an animal an animal an animal an animal an animal an animal an animalistic brains the markets are still with similar objectives where we're trying to resource gather gain money. Uh we're trying to use these resources to maybe better our lives to maybe procreate. So a lot of our anim animalistic desires maybe come through in the markets and therefore the anim animalistic emotions come out that I just alluded to. But trying to manually override that, is that something worthwhile? Or should we listen to our emotions, allow them to be there, and kind of use that as a compass because they're telling us something that maybe we don't consciously realize, or is it always worth having playbooks of emotions, having protocols in place, systems to react to ex emotion, uh, and kind of logic the situation? So I think there's a difference between the emotions that you feel around intuition and your ability to u uniquely respond and react in a very growthoriented learning um adaptive way and that oftenimes comes across as emotion. So you'll experience fear in the markets because actually you're sensing something that's going to you know significantly drop or go against your positions. So, you're going to close things rapidly or you're going to take advantage of what you see is maybe fear in the market. Um, and I would distinguish that from the uh faulty responses that we have that may be connected to our anim animalistic wiring. But if you can't understand how to control, command, correct that wiring, then you're at a significant disadvantage. And so then like what are you to do? I think prior to trading psychology coming on, you know, online so to speak, you know, in the the trading world, it was natural selection, right? And I and I worked in institutional space, right? As well as the retail space. Institutions naturally weed out the weak. And so the people that I was working with were incredibly highc caliber people, not just high-caliber traders, but they still dealt with the same issues, but they dealt with them differently than, you know, the everyday trader who I might, you know, come to me for coaching. They're dealing with the same stuff, but they're doing it in isolation. and they don't necessarily have the systems in place from a a training standpoint, from a work ethic standpoint, from uh a res a resourcefulness standpoint to be able to kind of work through those on their own. My point is that u that that internal wiring has to uh be corrected for you not to be naturally selected out. I see. So we are born with instincts. We we have certain desires and things that pull us. But then also there is this uh nature versus nurture and that can come into our relationship to money, our relationship to wins or losses, success. Um I think even ties to how we maybe even perceive love where uh let's say you have a childhood where your parents are rewarding you or or giving you love based on you passed your exams, you did your homework, you you found some sort of success and therefore in your younger youthful mind, you confuse love as conditional and then that that can manifest later in life. Um, you can also I've also read a study where if you're born in a bullish market versus you're born in a recession, you have different views or investment appetites. Um, meaning there's a lot of things that can manifest in your younger life that can express in terms of problems within your trading. Have you found any link there in terms of trauma or childhood traits that are now expressed or amplified within the markets? Yes and no. So yes, there are lots of people for whom that is the kind of like most pressing things that they're dealing with. So trading becomes an opportunity to explore realms of themselves that they wouldn't normally otherwise. You know, as you said earlier, right, the the the intensity of the markets amplify our relationship with it and thus our the emotions and the thoughts that we have may not come out anywhere else. You know, you might have a very stable, healthy marriage where money is not really an issue and yet somehow, you know, when you're trading your own capital now, it's kind of tied into your goals or the future that you want to provide for your family or your retirement. Now, all of a sudden, something comes out from your childhood. That absolutely happens. But it does not happen for everyone. And I say that because many people um the the issues that come out are more fundamental perhaps to their nature. Sorry. Per Yeah, perhaps their nature where they are just wired to hate losing. Some people are that way and it's a natural temperament or is that an environmental factor? I I think it's both. I think there are, you know, there and yeah, you'll see it in in in different walks of life as well in poker and in golf. You'll have some people who are just naturally fiery, super intense. So any little imperfection is going to be kind of magnified in their mind. Where you have another person who's just kind of just temperament wise just kind of very happy golucky. They kind of roll with the punches, the bad breaks, the injustices, the those things, they don't deal with them. Now they'll deal with something else. Maybe for them it's more of a motivational thing. They have they have difficulty uh responding under extreme pressure. Whereas the fiery one like you know more pressure the better, you know. So there's absolutely temperament issues here to to consider here. And I think what what's I think endlessly fascinating about trading is the number of different ways that traders can, you know, exercise their own fingerprint in the market, right? You can find many different ways to be successful, but ultimately you're going to be most successful when at any given point in time, your system, your style is aligned with your temperament, aligned with your personality. And that's not something I do a lot of because I don't have enough experience on the trading system side of things to help traders to do that. But I do recognize when traders are both out of sync with their own system and then it's becomes hard to kind of get in line with the market if you don't have that. I want to take a moment from the episode to remind you of Alpha Capital, a long-term sponsor of the show, a leading prop firm in the entire industry. And in the last year, they did over $50 million in payouts. That's why they are a top ranked prop firm that's been around for years and is not going anywhere. And with the multiple step plans they have and the multiple packages that they have, there is going to be something catered specifically to your needs at the most competitive pricing. And because we have a long-term relationship with them, we are able to bring you a massive discount of 20% off all evaluations. So click the link in the description or use the code toot to get 20% off all your funded accounts. Working with the best prof in the industry, Alpha Capital. If you notice any personality traits or as we said temperaments that most traders have, the reason I say this is because nobody usually grows up thinking I want to be a trader. It's not a goal people have in childhood. It's something that is kind of an entrepreneurial path or a bit more of a risky path or a less trodden path. So by default you are a little bit of a non-conformist to not take the traditional path. Uh and already maybe that brings out people that are maybe more orientated towards solo sports versus team sports, maybe more competitive people, maybe people with higher stress tolerances or more towards risk. Then there is the male female argument here where the industry is heavily skewed towards male traders, not necessarily female, when there's equal opportunity and XY Z. Do you do you see any commonalities in traders that they should be aware of before they look to even address them? So I think there are again lots of ways to get it done and you'll see traders from all different walks of life, male, females, team sports, individual sports, semi-risisk averse. I mean again even within the institutional space I will work with very riskaverse people and that's one of the things that has made them incredibly successful um because they hate taking on too much risk but they are incredibly um savvy and aggressive when you know this trade is actually not that risky like you know and they'll put what others might view an unattend an incredible amount of risk but for them they don't perceive it that way because it's the situation much like a poker player you know very experienced poker player They don't believe that they're bluffing when they're objectively others are viewing it that way. They know that it's the right decision. And so to them there's there's no pressure whatsoever. To circle back though, I think there's a lot of ways to get it done. The only character traits that I have found to be really causally connected with success have been those who are truly willing to do the work and persevere when things get hard because it will get hard. And if it's too easy early, that actually is probably what's going to make it hard in the future, right? Because now you're going to be dealing with maybe some false feedback that made you think you were a little bit better than you are, maybe lead to some complacency. There's hard, you're you're going to run into difficulty at some point. The question is, what are you going to do when that happens, right? When you get punched in the face, are you going to dust yourself off and get back up or are you going to maybe kind of pretend that doesn't exist and kind of cower a little bit? And there's no wrong answer to what happens except that if you allow it to really knock you out, knock you down. Well, then, you know, I think it's going to be really difficult to be successful long term. So, the great traders are those that, you know, have a passion for it, have a love for it, are willing to work hard, willing to kind of work through the the difficulty that to me is more correlated than, you know, some of the more individual personality traits. Do you think to be a successful trader, you need also high IQ? Uh, do more intelligent people, more academic people tend to find more success or are they the ones overthinking it and therefore finding less success? I think it goes both ways for sure. Um, I think you you you can't be too dumb, we'll say. Um, but you can be I I've worked with some people who, you know, I'm not going to name names obviously, but you know, our conversations were, you know, uh, very very cut and dry. you know, they were not deep thinkers, but they found a way to find an edge and it was easy for them to just keep pressing that button. Love the plan. Yeah. And then, you know, the adaptations, you know, market changes, they maybe a little bit slower than others but you know, again, you find something that works, just keep pressing that button. But uh the hyper intellectuals I I think can be the most successful as long as they again going back to that that topic of intuition. Being able to have the self-perception is a is a vital skill that sometimes hyper intellectuals don't always have. And it doesn't mean that they're not aware of it. They don't have the structure and the process to be able to make sense of it. So one of the things I do with a lot of you know very successful traders also very skilled and intelligent ones is firmly distinguishing the characteristics between real intuition from emotions masquerading as intuition. Because if you're taking a trade out of FOMO or taking that revenge trade in that moment what you're thinking feels justified. And in some respects it gives you a sense that what you're thinking is not only justified but correct in a way that feels as if you know something. And in part because if there's a trade where you know you just have this maybe you're like 60% to way to your target you know and you struggle with holding trades to uh your your profit target. In that moment you believe you see some indications that it's going to fail. You need to grab hold of the money in front of you. If it uh reverses and stops you out, you didn't take the money. You get pissed at yourself because you believe that you knew that it was going to reverse and fail. However, what you're feeling there is more fear. It's not genuine intuition. We need to firmly distinguish what are the markers, the characteristics, the profile of that masquerading emotional intuition from the real intuition and what that looks like. Because if you can create that distinguishing characteristics, then you know when to kind of play against yourself. It's like, oh, no, no, okay. I'm having this because, you know, in that example, um, I know that it's my own bias coming into the market because my chest is tightened. My breathing has been shallowed. My hand on the mouse is more of a death grip. If that was real intuition, I actually would have more of kind of that aha like, oh, that's interesting. Breathing is normal, hands cut, relaxed. Ah, okay. If that if those markers are present and you believe the trade's going to fail and you've been trading for more than 24 months, I say that very specifically because you need to have a bedrock of knowledge for intuition to be real, then yeah, you know what? Let's start to create a different account where we're going to test out my intuitive abilities. I know this kind of a diet tribe from your question about intelligence, but I think that's a key differentiator for what intelligent traders need to be doing in order to make the most of their intelligence. One of the worst feelings as a trader is investing hundreds of dollars in a prop firm, earning your way to a payout just to get scammed by the prop firm. And I'm sure most of you are tired bouncing from website to website, not knowing who to trust, what are credible sources of information, and what are just marketing campaigns by these prop firms to trick you into spending your money with them. 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Just to uh pull this a little bit further because I like the topic of intuition because intuition is a day three trader can also feel like I have intuition and and therefore what is defining intuition as opposed to uh something that is emotionally driven or a false narrative and is there a defining line between intuition and let's say subconscious competence? Uh, let's give the analogy of when I drive home, I know the route like the back of my hand. I don't have to actively think, but that's instinct. Instinct. Yes. Because I'm not necessarily thinking to change the gear or how I need to angle the steering. I just end up home and then I'm like, oh, I got here. Should someone strive to be like that in the market? No. Okay. So, instinct, you're not learning anything new. Okay. You are repeating what you already know. both root, both competencies, and it could be an echo chamber, I guess, of false beliefs. Well, I mean, so to me, if you're if you're only going to do that, then figure out a way to make it an algo because at that point, there's nothing new. Yeah. And and you know, again, very experienced traders will kind of sometimes go through the process to become more conscious of their unconscious competence, of their instinct as a way of helping them to grow beyond it. Mhm. But in uh intuition is actually on the exact opposite end end of the spectrum. So both things are are heavily unconscious. Unconscious competence is instinct because there's nothing new. It's all hardwired. Okay. The unconscious intuition is so new you can't quite grasp it yet. Now it does interact with your come to the surface yet. Hasn't come to the surface yet. So now you do need to have that instinct to kind of drive your mind deeper into the market than most are capable and even you are capable. But in those moments what you're doing is you are like a sponge absorbing unconscious data. So interesting and there actually is research if you want to kind of go through this a little bit. It could be quite interesting. Um there's research that shows that this pattern rec pattern recognition exists. And so if I had uh you know attached you to a bunch of electrodes as if this was a lie detector test, okay? And I put a screen in front of you and I say, "All right, here are four virtual decks of cards. They uh represent dollar values, not like playing cards, okay? Now, I'm going to give you a bankroll of $2,000. Pick cards, you know, and you let's see how let's see how well you do." So you start picking cards, picking cards, making money, losing money. What happens is uh after about 40 cards, we start to see a pattern because the decks are stacked. It's research. So, two of the decks are bad decks. They are net negative over 10 cards. You're going to lose money if you pick exclusively from those decks. Okay? But they're higher dollar values. So, you're going to lose 80 bucks. You're going to make back 40. The other two decks are the good decks. Net positive over 10 cards, but they're of lower dollar value. So, you make 10, you lose eight. Again, you're picking cards with this lie detection test, lie detector, uh, you know, instrumentation on you. After 40 cards, as you are reaching for a bad deck, your stress response is greater than when you reach for a good deck. If I ask you, all right, what have you developed a strategy? You're like, what are you talking about strategy? It's all random. Mhm. Except pattern recognition is proven that subconsciously you have identified a pattern that you do not recognize consciously. You keep picking cards. After about 70 cards, gap has widened. Stress response is bigger. Now I ask you, have you developed a strategy yet? Like, oh man, I'm on to it. Ah, it's like there's something here. It's like a tip of the tongue. Like I Okay, get to 100. Light bulb goes off. Fascinating. Okay. Now after 100 you think okay well you think the the um selection would go to zero for the bad decks but we go through a see it to believe it phase. So does not go to zero till 120 cards. So body recognizes a pattern 40 cards emotions recognize the pattern at 70 mind at 100. Okay this is you know contained research but I think the the pattern holds within traders. So again, when you reach that sort of emotional feel, that's where the masquerading emotions really can become confusing. It's like, oh, I have this sense of what's right. Well, it's okay. But that sense is different than when you're reacting more instinctively, as you said earlier, like from a deeper emotional place that's hardwired these biases and wishes and flaws that we have about what we want out of the market. very different from this very spongeworthy uh sensation of what's going on in the market that you can't even quite intellectually comprehend yet. I've never thought of it like this but I'm getting a lot of clarity and ideas. So if right now I'm segmenting three ideas where one is your nature which is your instinct what you're born with and and it's your animalistic expression. Then you have subconscious competence which is like you have information you practice it long enough like driving where you don't have to now consciously think and you put it towards subconscious so it becomes second nature and then intuition is actually the opposite where it's deep and then comes to the surface. So if somebody is in pursuit of intuition and not subconscious competence because now I've actually realized they're opposites. How can someone really breed intuition as opposed to uh do it too early and then follow false beliefs? So I would not put them in opposition of each other. I would put them in alignment with each other because you still need the subconscious competence. You need that unconscious competence in order to drive you deeper into the market. And as that space grows, you see things that others can't. You know this I mean Malcolm Gladwell in in the book Blink described this like thin slicing really well, right? an art expert who can instantly tell this is fake, right? Well, they have 15, 20 years of experience of seeing things. You take somebody that has one year, like they don't see it. Same with traders. You take somebody with 15, 20, 30 years of experience, they they see instantly. Now, they can't tell you everything they're doing because that subconscious unconscious processing is oftentimes uh unknown to them. Uh there's a a term called expert induced amnesia, right? You don't even you don't you don't even know how you make money in the markets anymore. Now, you might try to explain it and this is why some very experienced traders are awful coaches, right? They'll they'll give you pieces of it. They might even give you 80% but the 20% is where all the gold is. It's expressed nicely in the book of Robert Green Mastery where he's speaking about mentors and and having a master coach and he said sometimes you can't get enough from a coach because he might explain things that he thinks he does but that's not the source itself. The analogy was giving a tennis coach where he might explain exactly how he's hitting the ball but subconsciously he knows or subconsciously he doesn't know. He's just rotating his arm to get a bit of a top spin on it but he can't explain it. And that's doing the reps. What I'm hearing from you here is sample size. the the more I do something, the art expert, the more he sees situations, the better his judgment becomes. Do you think the answer is exclusively sample size? Because then someone may just go, "Oh, let me just go on a 20our marathon of back testing and see 3 years worth of data. Now I've got the exposure, the sample size, the card counting thing that you mentioned. I've done the work. Is that enough?" It's not because you can achieve an earlier stage of learning. It's called conscious competence. So conscious competence means I'm actually quite good at this, but I need the conscious part of my brain to be activated in order to utilize it. And this is why a lot of traders get into trouble because when your emotions become overactive, you lose access to that stuff. That's why you're like you're if you do something that you know is wrong, it means that you have a conscious ability to do it correctly. But when your emotions are too heightened, they block you from being able to access that knowledge. But the deeper instinctive unconscious competence that that can never go away. It's part of you. It is truly kind of hardwired. So as you are, you know, going through that 30-hour marathon back test, you're like, you're consuming a lot of content, okay? You have access to it. Provided that the mental condition, emotional condition, physical condition is ripe, right? You're in a great place. You have access to it. The second that that starts to bleed, tired, fatigued, burned out, bit emotional, whatever, right? Your access to that knowledge shrinks. So no, you can't just like have a crash course. This isn't the matrix, right? Where you can just like download it. So there is some degree of of like kind of hard training that's required. But then there is a function. I don't want to just say say it's time but the absorption the transition to those kind of deeper layers of our our not even our psyche just our brain like it lives in a different part of the brain right the the technical term is called procedural memory procedural memory exists below the level of the emotional system and so you know I I don't have like firm hardened rules and how long it takes to get there because sometimes you can correct some flaws that might be blocking you and get there faster if it's like pure training. Um I'll give you a sporting example. Um in 2003, Tiger Woods went through an extensive swing change. Okay. Oh, now we're not I mean like changing a lot of different aspects of weight. Now, this is the best golfer in the world who works harder than anybody. Took him two full years to be able to take the new swing into major championship pressure and not have to think about it. he could just do it instinctively. So yeah, I don't know that there's a great parallel to trading, but it does say that look in you're not going to achieve it in three months. I think what I want to take from here also is that the golf analogy of Tiger Woods, he's already achieved and now he's taken steps backwards to go forwards. And this can be analogous for a trader of I've got an edge, it's working now, but the market may transition or I may transition. And you know, it's always keeping up with an edge and ability to keep up with the markets. But also, what I'm seeing here is that um when you're back testing, it's without emotion. And he may have spent God knows how many hours practicing that swing um in his home course, but then it was mastered in game environment with the pressure. So would you therefore say back testing is not pointless but limited benefits because you are totally void of emotion because you're just pressing buttons on a replay mode and you're not actually putting skin in the game 100%. Yeah, there's there's a different it's not trading. Back testing is not trading. Trading is trading and there's no replacement for it. It's the same as sim trading. It's the same as frankly even sometimes within prop firms, right? the the the emotion that you are dealing with, the stress, the extraneous thoughts that you're having, like it's just a different environment because your internal environment is different. Everybody says, "All right, well, it's the same thing." Like, but you're different. Yeah. And that's why it's not the same thing. Before we get into the prop firm can of worms, cuz that's a deep dive I really want to take. This um this conversation portion stems from the academic idea. The reason I brought it up is because my childhood and and just even even my later teens and early adulthood, I spent six years at university. So academic was my frame. And the reason I bring it up is because the schooling system, no matter where you've taken it to, you're very reinforced by I study and then I pass an exam. If I study and fail an exam, it means I needed to study more. So therefore, the feedback loop is loss or failed exam equals learn more or do more. And that can really now put you into the markets of I'm losing therefore I need to learn more. I need to learn more. And that's where people end up strategy hopping or just you know trying to absorb as much information as possible when maybe more information is not the solution. Maybe it's correcting your emotionality. So I want to hear this kind of your expression of this idea of in life you take a loss your solution is to try and solve it or change things. Whereas in the markets you're also taught I take a loss maybe it's part of the plan. It's a valid loss. I need to factor this in and not react to it. How do you toy with this line? I like I like sports. So, to me, sporting analogies are are clean. Uh I think traders think of I lose this trade, it means that I lost a basketball game. I did something wrong. I wasn't prepared enough. Like, it's even just this the scale like to me one trade for most traders style. Now, this is obviously different for like longer term structural or swing traders, but you know, day traders or semi- day traders, like one trade is kind of equal to like one moment in a basketball game. Yeah. Right. It's like a pass. It's like, ah, I thought you were going to cut there. You cut there. Like, ah, all right, we'll do better next time. And then they just move on. Mhm. Traders think it was like, no, no, we lost the game. Like, oh, yes. We got to like really look and examine like, how are we not prepared enough? How did we get this whole the whole thing wrong? Hold on a second. It's one moment in time. It's really good. It's not one trade is not one game. And that if you change that your perspective to that, I think things can be better. Number two, you we do not understand probabilities in trading is very very different from most people's worldviews. Yeah. Right. That's why a lot of successful traders have come from poker or have come from professional sports betting because there's a built-in understanding of the the fabric of variance and the variability with which results come out. And it is truly insane. There's no other way to think about it. It's like you are getting feedback from a crazy person, right? If you're using short-term results as a marker for your performance and it's not. So, how do you, you know, overcome that? Well, yes. Okay. Part of it is truly accepting and understanding the nature of variance. Some of it is understanding your reaction to it and being able to kind of see through it in more of a I call it like a little bit of a ninja kind of way, right? You you you're not seeing the noise that's coming at you. You are seeing yourself interacting with those moments and rigidly holding to what you know is to be true and making the feedback loop be one of that is more more internal in the short term until we get enough data and we're not going to be ignorant to results. Right? Results do matter. They just don't matter as much on an intraday or even sometimes weekly time frame. I love it. I actually never thought of it like that myself. I want to get into this idea of framework where your internal state and your behavior don't have to be the same, but often your internal state can influence your behavior. Where I'm going with this is, would you agree with the statement? It's better to have a bad internal state, but then do the correct behavior anyway, follow the plan, or is it better to focus all your time on having the best internal state, but that still leads you down the wrong path of you don't have an edge, you didn't build a system. So you might have a very zen, very journaling, very meditative state, morning routines, but you haven't even done the edge yet. Meaning to say your behavior overrides your emotions. So I don't place value jud judgments on what people want. So if somebody wants to be successful in trading, then the first example is the only way. I I we don't care what your internal state is. Your performance is the ultimate measure. If you're the person that wants to, you know, have all the joy and the the the positive, you know, vibes and whatever and that's what you want out of trading with no success attached to it, then effectively like trading becomes entertainment for you, you know, kind of like a a visitor at a casino, uh, a bad poker player who goes to just enjoy the environment. That's what you want, then have at it, right? Your internal state is what matters. The external results do not. So again, I think if you but if you're choosing, as I think most people who are watching this podcast are choosing to enter this endeavor because they want to be successful and make money, then your ultimate performance is what matters most. And I think it's quite dangerous to say that trading is 100% psychology. Frankly, even like 80 to 90% is quite dangerous. Wow. I'm glad you said that because it's it's a running theme for the last two years on the show. I usually throw the question technicals or edge versus psychology. A lot of traders skew and say, "No, trading is 90% psychology because I can give two people the same edge. They have different outcomes." So, the differentiator was their psychology. Looks like you don't agree with this. I don't because that person's ability to utilize that edge is still based on their own interpretation of it, right? There are other factors that are in place. So, yes, we could say objectively speaking that the edge is laid out, but as we said earlier, maybe that the person that gave it to him didn't give him the full thing. Okay? So I don't know. Here's the thing. Emotions matter. System matter. Which matters most? You can't make money without the system. So the system matters most. Now how difficult is it for you to navigate the emotional landscape to be able to actualize that that system as well as you can. Sure that's obviously a trading a trading psychology based thing. But what matters most? It's the system. The system has to be understood at a deep enough level to be able to actualize it and utilize it. And yes, there is some psychological interference that can impair that. But to me, I think we're trying to marry the two, you know, and and I and I do believe and this is why I say it's dangerous. I think it I do believe that when you um give the message to a lot of traders that it's all about psychology, then they struggle with it and it feels overwhelming. So then they just kind of default to what they're naturally good at which is focusing more on the technicals. What I found is people also then just use psychology as a scapegoat where they may not have done the edge. They might not have sample size of data but they're like I took a last date must be my psychology cuz everyone says it is. But then the rebuttal to what you're also saying here is the often thing I hear is well if it wasn't about psychology then why not just code the edge make an algo and then the alga doesn't have emotions remove the human elements Bob's your uncle kind of thing. Y is there anything to get gain from your emotions? So once you have mastered it when your emotions aren't acting as anchors anymore can the subjectivity intuition the emotionality add to an edge that an algo could never. 100%. Yeah. And that's what the great traders have. That's why they many of them have not been able to create the algo because they don't understand from that expert induced amnesia. Number one. Number two. Yes. if they're if they're able to absorb market-based data at a faster rate than their opponent their other traders are out there, well then there's edge to that too. So, you know, yeah, the the marrying of both, I think, is where um the the most successful traders have been able to kind of live. It's, you know, we're not trying to uh eliminate emotions. We're trying to actually use them to better understand the internal governance, the biases, the flaws that are that we are bringing into the market and the way that we're seeing market-based information that may impair abil our ability to utilize a system that's been handed to us or our ability to take that system and personalize it and understand it deeply enough so that we can then utilize it to our best of our ability. Right? Those internal biases when they are cleaned out allow us to absorb more of reality. Mhm. Right. The the less that we are bringing in the more that we are able to absorb. Let's get in towards trading and gambling because you also have a book about the gambling side or the you know the casino poker. So it is a fine line and there's a lot of areas I can take it. What I want to start off with, let's put a definition of what is the difference between a gambler and a trader. I want to preface it by saying a trader will say, "I'm not gambling because I have a strategy." I'd argue so does so does a guy in the casino who has a plan. They'll say, "I I'm not a gambler because I have data on my side." I'm pretty sure card counters can argue that they have data on their side, too. Um, where is this line? Because they'll have similar emotions. the biases that you just mentioned of recency bias, confirmational bias, the survivorship bias, there's so many biases that can come in and therefore is there even a difference or or is it just a heavy enough overlap where we can accept that trading is gambling? No. Um so to me gambling is betting on a negative edge. Okay. For whatever reason, right? It could be because you have a positive e edge, but then your emotions hijack you. And so then you're basically taking trades or in the casino doing things that you know objectively are wrong or in the moment don't know it, but still can't stop yourself from doing it. So at that at those moments, you are taking trades that are anti antithetical to your system and they are negative edge in your world. That to me is gambling. If you are betting on a positive edge, I mean then then you're the house, right? Then you are not gambling anymore. You're the one providing the avenue for others to gamble. Would you would you say anything in the casino has a positive edge for the gambler? No. If you count Well, if you count cards in blackjack, you can you can turn cheating a bit, but yes. Yeah. Yeah. I mean, yeah. The the casino would call it cheating because that's how they make money. But yes, where the go say this is my edge. Yes. Predefined edge. Yeah. I mean, poke I mean obviously poker like but again as a poker player you have to be good enough to beat the rake. So if your edge is small but you're not beating the rake, well then you're betting on a negative edge because they're both factors at play. So therefore the responsibility of a trader is to skew an edge in their favor before they even consider putting money in the market. Otherwise, they'll end up betting on a negative edge and therefore be a gambler. Well, I mean technically I think you could say like the early incubation phase could still be kind of R&D investment in de the development of it because again we think we both agree that you can't just like develop the edge in isolation. You know, you still have to have some marketbased data. So, if we go kind of beyond like the sixth and n 9month incubation phase, then yes, at a certain point, right, if you're putting money in the markets and you don't really have no no idea what you're doing, you're kind of hoping to get lucky and make money quickly, then yes, you're a gambler and you might get lucky because people do win the lottery. People do win jackpots in the casino, but if you stay there long enough, you know, the house is going to win. The moment in the casino, any moment in the casino, it's a random outcome. Now, the casino has carved out favorable scenarios like the roulette wheel that have the green ones for them. Uh, and the novice gambler just sees 50/50. But regardless, each moment is unpredictable and each moment is random. And the market would be also I would I would argue that each moment in the market is unique coming from a place of it might look like a similar pattern. It might be coming to a similar supply zone and giving that head and shoulder, but it's different participants. It's different geopolitical factors. It's also different objectives. One one person might be selling the same amount as another, but he's trying to scalp. He's trying to invest. So therefore, different objectives with the same entry and therefore same intention. There's a lot of parallels of just randomness between the markets and the the casino. So therefore, is it possible to get predictable outcomes from random moments? Yes, it just takes a lot of work to be able to do that. Now you can, you know, learn from those that have are more seasoned to kind of narrow in on again styles and strategies that, you know, help you to actualize some kind of an edge. U but generally speaking, it's going to then take you two, three, five years to then be able to firmly kind of work that edge out. I think, you know, many traders are hoping that it's not going to take that long. Um, it certainly can take less than that, but I think those that are able to be successful in, you know, the nine months to 24 months, you know, they're they're rare. And I work with a lot of people who've been in this game for 3 to seven years and they're struggling to break through. And it's just not that much time. I don't think there's a single person who, you know, got into a car accident or was injured on the job who had won a lawyer who had just gotten out of law school, you know, and, you know, had been practicing for two years. Like, no, you want somebody who is seasoned, who has been around, who's seen, you know, many of the different tricks and trades. They have an edge in the legal market. Well, I mean, they've been practicing for a little while, right? Or they've been practicing under somebody for a while. So, you know, for a trader to be like really skilled, like some like a trader that you would want to go give money to in three years, I mean, they've got to have incredible mentors. They've got to have incredible work ethic. They've got to have a lot of things going for them that's going to put them in a position to be able to be that successful that quickly. It's rare. Majority of traders that are successful, you know, have been at it for a while. So, yes, it is absolutely possible. I think, you know, the numbers play out though. you know somewhere in trading similar to poker you know it's anywhere between five and 10% of the people who are very very serious about it I mean I know sometimes the numbers like you know you hear like one or two% of traders or poker players who are successful but I think that's the the the overall landscape right it's also when the barriers to entry is so low anybody can get in it's a skewed exactly so I think we we kind of cut out the people who are just not really that serious people that aren't going to watch this listen to this podcast um then then I think the numbers are greater but it's still it's not like 50% of traders are successful. I mean it it it just is. And then you know, okay, that five or 10 percent that become successful, how long are they able to be successful for? That's a different set of characteristics and qualities that are able to take somebody that that next level. 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You'll get the best discount using the link in the description or code toot for titans of tomorrow in pursuit of longevity and a career and compounding this intuition and exposure of to data. I'm also just comparing this to let's say the casino. The house always wins and they have a carved out edge the data that a trader needs to do. Is there other things that we as a trader can think what is the casino doing and how can I embody those traits or those characteristics to help me in my own trading? I think it's difficult because the casino's job for the most part is to get butts in the seat. They got to they're they're a marketing engine to get people into the casino because that's Yeah. Oh well, different uh you know uh motivations or intent but uh similar outcomes. Um so yeah but like as a individual trader you know yes okay so there are casinos who you know they'll renovate the carpets and they'll bring in some new games but again that's all in the service of getting people to want to come to their casino. Um, to me, I think the longevity of traders go back to the earlier conversation about motivation and passion. You know, if you the ones that I've seen stick around the longest are the ones that genuinely love to trade. They love maybe not everything about it, but they love a lot of things about the markets and the curiosity and sometimes it's the people and the interactions. And if you don't have that, I'm not saying you cannot be successful long term. I am going to say that it's harder because the ups and downs that you go through are met with a bit more curiosity. I'm not saying it's always fun. There's certainly hard moments, but you're willing to kind of keep doing it because of that love and that passion. When you lose that or you kind of become a little bit too burned out, um it can be hard to sustain. And I've had clients who were successful for 20 years. They come to me where they're burned out. They're like, I don't know if I should quit or move on. And we find another way for them to trade today. Mhm. And sometimes that means all right, you know what? Look at the market for 2 hours in the morning. If you don't see anything, go play golf. Go do something else, right? Or there are chunks of the of the year where they're not trading and they're giving themselves that freedom so that when they come back to it, there is that vitality. So I do think that that by and large traders think that they're there to press buttons. If I'm not trading, well then I'm not doing my job. Mhm. But as you know, even if you're not in a position, you have taken a position. It's a decision. Yep. Yeah. It's a decision. So, so I think by that nature, if you're trading, you're always trading. Period. That's like that's that's the game. So then maybe that takes away a little a little bit of the burden to be always there presently clicking buttons and not taking as much responsibility over your mental, emotional, physical condition because you asked earlier like what are ways to access intuition more? Well, that's number one. If your physical energy, if your mental energy, if your emotional energy is too low, you cannot be at your best. You cannot access intuition. That's off the table. Now you're in like a bgame state just trying to kind of grind through and that will burn. You will burn out, especially if you know you're in like highly volatile or highly challenging market conditions. It's also an idea of you leave room for creativity serendipity mastery in general because you're going to follow your curiosity if you have this open mind or curious mind, elastic mind. Everything you've just mentioned, I think a lot of traders right before they gave up also had. They had the motivation, they had the intrinsic desire, they had the curiosity, they had the good habits, they were following the plan and yet eventually they gave up. How important therefore is hope? I hate hope. I mean, hope is fine for things that are beyond your control. Okay. So, I'm cool to have hope that the world is going to be a better place for my daughter than it was for me. Okay. Okay. Um but when it comes to performance, um hope is dangerous in my opinion because hope leaves elements that ought to be in your control. Now, they may not be currently. For example, you're struggling with FOMO or revenge trading. Okay, you can say currently I don't control that but I hope that I can one day. No, how am I going to like what are the steps I'm going to take? You can't just passively hope that this thing is eventually going to come around. You got to be actively trying to figure it out. Otherwise, to me, that's basically gambling with your emotions. So, to me, I I see hope within the per the purview of performance as being a bit of a gamble, and that's not what we're after. We're trying to gain control of factors, elements, processes, thought process, emotions, right? The things that we can control. Um, and if we don't do that, then I think it's uh, you know, quite dangerous. When I think about training psychology and maybe many others too, the way I've understood it and therefore move towards improving it is embodying stoicism. And I want to hear if that's maybe the right approach. Stoicism I've understood as I want to see my emotions, address them, but not react to them. So maybe a form of suppression and maybe a form of distraction. And maybe that's not the best answer because what I mean by here is let's say I'm in a trade and I lost and then I lost another one and now I'm feeling I'm going on tilt. I'm feeling a bit of anger, greed, frustration and therefore I have all this turmoil inside myself and therefore now I can sit in front of the screen and try and collect and calm myself and express my meditative state and now that I'm stoic now I'm clear to to take action or I can just close my laptop and walk away. So despite my state, the behavior counted in the end. Is stoicism and and and that kind of neutrality towards emotion the correct expression of psych trading psychology? I would say it's neither correct nor incorrect. I would say that it's basically using crutches to aid a sprained ankle or for some people a broken leg which in the short term is necessary. Okay. So yeah, we can patch you up and keep you functional. meaning you're treating the symptom, not the cause, but you're treating the symptom. Yeah. So, I think ultimately we want to better understand, okay, what what is it that you are reacting to with those losses? Okay. One loss, not a big deal, but multiple losses, is that uh challenging your expectations of yourself, of your market, of the market, of your system? Is it, you know, that you're a perfectionist? Uh do you generally just like hate losing because you're competitive and you see other people who are making money and you're not? Is it a uh that you hate the feeling? Right. And it it could be a reversion to the feeling. And you know, for some people that may not have been competitive in their earlier lives, it's like this is the first time that they're getting to really scratch that itch. It's like, well, I don't like how this feels. Like I want to rectify it immediately. The point is there are many reasons we need to assess and diagnose in my opinion very surgically, very very precisely. What is the flaw, the bias, the wish, the illusion, the hope in the background that's getting exposed? Because the emotion of that frustration is not the problem. That emotion is a symptom of those underlying issues I've tried to express here. And when they kind of pour out, we can use what you're experiencing to help us deduce and figure out what's behind it. And then once you figure out what's behind it, let's just say it's an expectation of, you know, an expectation of making money every day, which intellectually, you know, is wrong. But there is this sort of subconscious piece that's there and maybe it's because you know you're very skilled and very confident and you've had a long track record and you know you know like theoretically it's out there that I could make money every day and I'm kind of hoping and wishing that I could. So it just like pours out in this moment. Well, we can correct that. And when you when you do correct it, not just in a singular moment, but you train it, right? You move from that conscious competency to that true instinctive way of, okay, I truly at a very DNA almost level believe in my body. I cannot make money every day, but I can exercise my edge to the best of my ability every day. And if I'm doing that, then I'm winning. And we'll see where the chips fall that day. And when you have that true sort of transformative shift, that to me is the correction. And I do believe that we can use stoicism in the short term to help us get there. Okay. Okay. Because stoicism, I believe, is again another tool. It's like meditation in a similar way, helping to train our mind to become tougher and stronger and to use our mind more as a weapon. I think too often people, not just traders, are letting our emotions run too hot. We're not taking action early enough. We don't know how to use our mind properly. Not to necessarily just control our emotions, but to actually correct them. To truly correct our emotions is a thing that people don't normally talk about. But yet, if we understand what's producing that that charge like a okay, in that moment, you've got to train yourself to think differently about your expectations. And I do that again and again and again. Eventually, it starts to sink in. And now I'm using my mind effectively. I'm using that stoicism not just to kind of numb, create that neutrality, to create that calm, but to actually do that plus inject and build a correction. Now I get to get the both benefits short-term control. I get to continue to be functional and I'm working towards the long-term resolution. That's power because then once it truly is resolved, now you've freed up a part of yourself, right? You don't have mental bandwidth because we have there are limitations to mental bandwidth, right? And if you're using a segment of that to control our thoughts and our emotions, well then how much is then being lost on our ability to perceive what's happening in the markets, right? We want to have full focus, but that full focus is a function of how much we're playing defense against ourselves. It's super interesting in pursuit of understanding the cause, not the symptom. What are certain things that could be worsening it? What I'm alluding to maybe here is social media because social media is a wonderful opportunity to learn for me to host wonderful people like yourself, but it's also heavily clouded by everyone's a millionaire trader. Everyone's winning every day. Everyone's got this great lifestyle and everyone's getting profit certificates, external validation, the leaderboards we see. There's all of these pulling things that could be worsening an internal states. What is your view in general of social media and trading? It's a good question. Uh there's a reason I've actually really pulled back quite heavily from Twitter because I actually felt like I was contributing to the problem. Um yeah, I just my stuff is not like these like little bite-sized tweets that are just kind of fun get some engagement like but what's really actually functionally changing? U so yeah, I I I do think that we look at food and social media. There are engineers out there that have figured out how to hack our physical and psychological and emotional systems. And if you are, you know, kind of mindlessly consuming the ultrarocessed foods or the ultrarocessed content, then what are you actually gaining? And I think you're actually right. Your internal constitution starts to erode and degrade from the inside. And so, yeah, you are absolutely going to be way more emotionally volatile. Not to mention how much energy are you burning throughout the day, you know, consuming content to have intuition. You need clarity of mind. You need the space and the room to breathe, right? if if it's if it's all coming coming one way, you know, and so for example, I would argue, let's just assume that as a trader, you're working on generally 15minute candles, 15-minute time frames, which is pretty, you know, high frequency for a lot of traders, but you know, it gives you the ability to take breaks every 15 minutes. You could take one minute every 15 just, you know, stand up, take a few deep breaths, look outside, whatever, something. We don't do it right. It's just the market's rapture us. So the con and then and then when you take a break, well then you pop up your phone, check Twitter, see what's going on in your chat groups. So again, strategically you can have some I'm not saying it's all bad, but it has to be curated. So nutritionally, right, you're consuming things in a way that are not going to make you overweight, obese, and sort of the sort of emotional or mental allegory to being, you know, not healthy. It is super cool that you said engineered because you're totally right. There's a documentary on Netflix. I forgot the name right now. I think it was social dilemma or something. Social dilemma. Yeah. And it was basically saying how the social media algorithm is like a casino where when you when you refresh you don't know what you're going to get and it's kind of like the roulette wheel and you might get a nice hit of dopamine. So you do it again and you scroll cuz you you want to see what's next and the result of that is addiction to the platform. impulsively I would just pick up my phone and I don't even know why I'm doing it and I just I'm gravitated towards that Instagram app or something. But also shorter attention spans. Y in general we are craving dopamine when we are doing this and dopamine as I've understood is a hormone for motivation where when neurotransmitter for motivation where when you achieve something meaningful you animalistically when you hunted you got your prey now you can eat dopamine in in maybe in real life is you got a promotion dopamine upon achievement now you can get that same hit from a scroll. How can we engineer and or let's say combat this engineer and hijack dopamine to benefit us as a trader? It's a good question. I would also say it's it's essential for focus. So, you know, people that have true ADHD, which generally is overdiagnosed, but we're not going to go there today. But, you know, true HD, they have they have deficits in dopamine and so you need it to be able to engage, you know, high levels of focus. Um, so how do we create more of that dopamine in the right way? Positively. Yes. I think part of it is actually being able to understand that it is a resource. So if it's a resource, then we're going to run out of it and it needs to be replenished. So where is it getting replenished? It's not. That's the problem. We're kind of constantly on or constantly seeking. And so we are burning energy, burning, you know, those neurotransmitters needlessly. And the point is that like as you get kind of more afraid in a sense then the need becomes greater and that uh amplifies the deficit sort of spending you know you have a tolerance towards it. You need bigger hits. You need bigger hits and and yeah the the uh your system doesn't have a chance to actually replenish itself. So like learning how to be bored. Yeah. Right. I mean go sit outside in a park and not look at your phone. Can you do that for three minutes, five minutes, 20 minutes? I mean, and it's listen, it's okay for that to be hard, right? It's but it's not okay to not try to get better at it. So, I'm not an evangelist and say, "All right, like, yo, you got to do 20 minutes today." It's like, well, I can only, you know, do five push-ups. Like, okay, well, then do five and then next week do six. Like, start where start where you are, but have the aspiration to be better. So, can we cut down on some of the time that you're using it by five 10 percent? Can we increase some of the more beneficial breaks? Right? Can you take a break once an hour, five minutes, two minutes, you know, and and what are you doing during that break? Where yes, that it's it's defining the opportunities in small spaces. When it comes to training psychology, I've had my own internal journey with it. And something that I learned myself was I could either seek to improve my psychology through various means or I could curate my strategy and technicals to maybe help me out like you were saying of like if you're trading M15 you can take a break every 15 if you're trading the 4 hour less less decisions making so less decision fatigue. Uh certain things that I noticed myself was I didn't like losing and losses are something we have to accept. So, it's really difficult to think in terms of probabilities as a human, I think, because I may know I have a 50% win rate and I can accept it all I want, but if I take four losses in a row, I might question it even though those four losses may be factored in and I might now get four wins. But I did I just didn't get the clean distribution of win loss win loss win loss. I got lost loss loss win such as the markets. Uh but because I didn't like losses and I was initially struggling to think in terms of probability, I thought okay well if I aggressively break even I'm okay with hitting break even and missing out on a trade but I don't like losing. So then I engineered a process of I break even as quick as I can. Whereas another trader might be like no no I hate FOMO. So they leave their stop loss and they don't move to break even because they're okay with a loss and therefore it's a temperament situation. Another one for me was I didn't like hanging around in draw down or like around my entry points. I wanted fast feedback loop. So then I realized swing training wasn't for me. I don't want to wait two weeks to find out if I'm right or wrong. So then I regress towards intraday or intraession training. Do you think maneuvering your technicals or your strategy to complement your psychology is a worthwhile approach? I think it depends on where you are, you know, kind of in that. um if you're really struggling to break through and your temperament, you know, is not giving you a lot of flexibility cuz I have traders who, you know, they're they they hate to take losses, but then when they're in winners, they are cutting their winners short also. It's like, well, I mean, now now what are we really doing here? So, I I I think there's a limit to how much you can kind of engineer yes, you know, around that. But I do think that there is legitimacy to the ability to understand where you are at time and place and if you are profitable or close to it and you in the short term you need to um uh work around whatever you're struggling with. Like if you let's say for example you know you are a successful trader you know but then the last year you've really struggled like market conditions have changed maybe you got sick like for a variety of reasons you just been kind of in a slump. It's like, all right, you know what? It's okay for you to cut your winner short for a little while. Like, all right, you know, I we know that you're leaving meat on the table here, but that's okay to just start to build some momentum again because, you know, when you're stuck in that rut, it's it is hard to kind of have the conviction that you need to be able to take the right trades, size them appropriately. So, yeah, there have been a couple that were really home run trades that were just sized way too small, but then you make money and you still lose confidence like, oh man, that that's just a cycle that can really really problematic. So, it is okay to kind of chop some of the wins off and just chop some of the profitability off to gain some of that confidence. I think sometimes people can be too, you know, kind of rigid like, no, the system is the system. You have to trade the system as it's like, well, again, you're the human trading this thing. It's okay to navigate the short terms to help you kind of work your way out of either a winning streak or a losing streak. Frankly, on the other side, traders who sometimes really struggle when they're when they're winning and that's when they start sizing up too big. That's when they again sort of have that false intuition. and they think everything they're going to touch is going to turn to moral. You know, they're maybe not like wildly overconfident, but it's clear that there's a there's a a a gap that's emerging where uh they're not trading their system as well and they're again kind of getting sucked into these maybe other uh traders trades and just getting a little bit loose that that it's like that's the time when you go on vacation. That's the time when you take a week off and you're like, "Well, wait a second. Why why would I stop this this gravy train from running?" It's like, well, it's because you're in danger now of having that 20% draw down. And then that becomes the kick in the butt to get back to proper trading. It's like you get yourself to have two things. One, you get to truly enjoy that week off because you're doing really well and your mind's going to get yourself reoriented and reclear without having to take the 20% hit to find out that that's what you needed. So then after the 20% hit, now you can't take the break, right? 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So, go ahead and use the link in the description or code toot for the best prices in the industry, plus the best discounts in the industry to make this a home run offer if you are a futures trader. If I'm to reword what you've just said in an attempt through probabilities, we can look at it from a case of you're shooting a basketball into a net and let's say I got the last three in. Does it increase my odds of the next one going in? Or is that a confirmational bias that I got the last three in, so the next one must go in? Or in a roulette wheel, the last four were red, so the next one should be more likely red. Or is each individual moment unique? Because if you are in a in a hot streak in the markets, you can either say, well, how often do you have a 10 winning streak? What is the probability of that? Probably very unlikely. So therefore, your next trade to become the 11th winning trade has a less probability to be winning. Another person might be saying, "No, your odds are still the 50/50 you always had. Doesn't matter what happened prior." How do you navigate that tugof-war of ideas? Yeah. So, it's it's a good question because they they have disproven the hot hand fallacy. Okay. And it's because different from roulette from basketball, if I as the basketball player or as the trader know that I am in the zone, know that I'm in a great space, then we're going to keep pressing that button. We're going to keep shooting. And I do believe that the probability is higher that that fourth basket is will go in than it is normally because of my state. Yes. And as a trader, if you are truly accessing intuition and you are going to say in sync with the market because sometimes that can be um challenging to to define properly, but if you're really feeling it, I do think the probability of that next trade is higher because that that the intuition suggests that you're going beyond your normal system. Doesn't mean that it's going to play out in your favor, but I do think it raises the uh the oper the the uh probability that it will. Now it might go from maybe your 55% win rate. Now it's now 57%. Okay. It's marginal. It's by I mean it's not like 55 to 80. Yes. But you know depending on the style. I mean I've had swing traders who I mean they will five to 7x for some even 10x their position size when they believe their intuition is high because they're not taking day-to-day trades. These are structural things. they know something is off with the market and they are going to go go hard because generally there's proof from a backtesting intuition standpoint. They have it that they know that their their odds are in their favor. So they're going to they're going to press hard. Does that go in the opposite direction to in a in a losing state where there's that famous Ray Dalia quote where if you lose 50% you got to gain 100% to get back to where you were. Um, so traders are often like, I need to reduce my risk because I I haven't got mental clarity and therefore I need to build back my confidence slowly and and work my way out of the the losing period. But at the same time, you may say, well, if I reduce my risk per trade now, now those winning trades that could have recovered me are now going to take a lot longer. So I'm in the red a lot longer and I'm sitting with these emotions for a lot longer. What is an appropriate approach to a losing period or a draw down period to climb yourself back out whilst maintaining good psychological states? Yeah, I think if you're somebody whose confidence is not as tied to those short-term results like you can just keep pressing, you can just keep trading the system as it is. Um, if you have the psychological strength andor the desire to have it get stronger because oftentimes it's in those periods where we do get stronger. And so from that perspective, sure. But if you truly have had your confidence take a hit where there's more doubt, there's more questions in your mind, um, hesitation, you're just kind of waking up and, you know, doing your pre-market prep, but things are just foggy and not really clear and maybe you are kind of starting to start to look at what others are doing to kind of then yes, I think it is like size down and and kind of build back your confidence knowing that you can lose at a smaller size and have it not affect you as much. So that there you're kind of again kind of bandating the situation which is appropriate, but it's not the corrections that that's not a long-term solution. That is just a tactic when you have not yet, you know, kind of been able to work through your confidence issues yet. What is the factors people should consider when it comes to risk? Because I've had a lot of debates on the show where certain traders will be like standardized risk no matter what to kind of nip the emotionality in the bud. uh cuz you're kind of you know following numbers that you're used to and I think maybe a problem with profit traders they quickly jump to larger numbers that they haven't acclimatized to but then other traders have been like well if you want to scale you have to size up on your A+ setups or if you do have increased conviction or confidence on a certain setup why would you risk the same as your B+ setup? What is your view on risk to maximize for return? So my bias tends to be the marriage of like system with intuition and system with you know an understanding of your psychology so you can have a bit more of the art form. Okay, that's my bias. And so for that reason I do think that your sizing and risk should be commensurate with where you think the trade lives within your within your your scope. So yes, A+ setups should have greater size than B setups. And you know, there may be times where you're not taking B setups at all because if you've been struggling and you know that your confidence could take a hit if you start losing on these B setups and uh then yeah, like the protection is okay in the short term. Uh but from a risk standpoint, yeah, I do think they're they're they're you going to maximize your profitability being able to like leverage that uh take advantage of that a bit more than um having just a very very kind of narrow lens. But there are some traders who need that kind of system as you said to kind of manage their emotions and then it's up to them as to whether or not they want to work through that emotionality to then be able to give themselves more options because I do think that it limits options and I don't know like you said people kind of get into trading because they want to be free and they're you know not have to listen to rules. It's like well who wants to get shoved into a box of their own making? Yes. you know, and sometimes we have the traders have to do that because they don't know how to deal with the emotions that kind of um they're facing in a variety of different situations. So, through your book, uh I feel like you have an interesting take on the word confidence. So, if you can elaborate, what does confidence mean to you? Yeah, I think to me confidence is just first of all, it's an emotion, right? I think a lot of people think of it being something that's more solid and permanent. But confidence is the emotion that reflects your perspective or your perception of your skills, your knowledge, your experience, even your strategy, the market, right? It's it's all perception. U because you have people who are very new traders, incredible confidence, sometimes objectively higher confidence than seasoned traders that have been doing this for 30 years. So from a skill standpoint, who has more skills? They're not even close. And yet that person has more confidence than they do. Well, that doesn't make sense. It's because they are so underkilled, they don't even know where they're lacking skill. Okay. Okay. And so that produces overconfidence. It's what makes very weak poker players want to play against the best players in the world. I don't know how bad I am, so I'm overconfident because I'm unaware of all that is. So I'm now willing to gamble in that regard. Um, so yeah, confidence is perception. And and if we're going to like um use your confidence to help access higher levels of proficiency in trading, we want it to be as accurate as possible in reflecting your knowledge and your wisdom and your skills, right? And so how do you do that? Well, sometimes it's being more honest with yourself. Sometimes it's, you know, the journaling and the back testing. And sometimes it's actually just being able to um understand some of the flaws that produce that overconfidence. Again, that illusion of control can be a big one. Right here in in certain market periods, you are doing really well and it makes you feel like you're more control of your results than you actually are. So that produces overconfidence. Then when the market inevitably turns, well, now I'm not in control of the results as I was before. So now I'm going to start to lose confidence. We have to correct that illusion of control to start to balance out our perspective. And so that we can have our confidence be more accurate and more stable. But confidence is never more important than your system, right? Never more. I I don't care how good you feel about your yourself as a trader if your system is not profitable. What are we talking about here? How important is immersion therapy? What I mean by this is when I first took well, when I first blew an account, it was the most dramatic feeling of my life. Now I can take losses and not really feel it as much because I I've taken many losses so I get used to it. Um do you think exposure to the stimulus, exposure to the emotion is maybe one of the best ways to overcome it? It can be um provided you have the right perspective. Okay. So u and you feel like if you've got a winning strategy system's strong and you know that like I look the this position size like scares me but I know that it's right. So it's like, yeah, well, yeah, you just you've got to acclimate acclimate to that new level, right? You're at, you know, Everest base camp 2. We need three weeks to kind of acclimate to the environment. Well, it's important for traders to understand that there are times where they are in a consolidation phase, right? They are in a phase where they're acclimating to the increased stress, the increased frustration. You know, like I said, some traders struggle handling losses because they hate the feeling. But if the feeling is immaterial, if it's just short term, if it's going to fade in 15 minutes or an hour, well then why would you add to it by trying to escape that feeling and create more losses, right? Acclimate yourself to it. And then yes, over time, maybe the feeling never changes, but internally you know that it's not going to kill you. It's not going to hurt you. It's just temporary. And so then you become more acclimated. For me with with golf, I I I wanted to play professional golf. One of the things that derailed me was that I didn't really understand how to truly acclimate to the pressure. I thought that the adrenaline coursing through my body when I had a three-foot putt to try to qualify for the US Open was bad. It's not bad. It's how I should be feeling. I earned the right to feel that way. Great Billy Jean quote, right? Pressure is a privilege. But it took me to really kind of work through a lot of other things for me to truly embrace that idea and know that the pressure was immaterial. And several years later, I have another 4-foot putt in a very, very big moment. My hands are visibly shaking. I step back and remind myself, doesn't matter. It is immaterial. If I focus on the pressure, the pressure becomes consequential. If I focus on what I need to do to make the putt, the f the pressure is inconsequential. and that was the truth. So yeah, sometimes there we are we we do have to expose ourselves to build the strength and the heartiness to be able to deal with all the things that trading throws at you because there's a lot of it. And yeah, I do think that, you know, a lot of traders sometimes feel like um like what's the point, right? Sometimes they get stuck in this, oh well, you know, it's just trading. I'm not like curing cancer or you know, or uh if I'm not making money, it's not worthwhile. I don't want to fail because if I fail, well then I've got nothing to show for all my time and effort. Here's the thing. Working on your psychology derisks all of that. Because if trading can make you a better person, which it it can, and it can train you to do the things that I've just described. Well, then no matter what, you fail at trading, but you become a better person. You become more knowledgeable about yourself. Well, then then it wasn't a total failure. Yeah. Okay. So, it wasn't the career you hoped for. It's not going to bring you out of a, you know, kind of current life circumstance, but it will get you to the point where you are stronger. Well, then maybe the next thing is going to be more successful because of trading. How impactful is or detrimental is trading from a place of need where if you have finan you need to pay your rent from trading, you need to pay your bills, you or you just have a strong desire to be rich quick. How problematic can that be? And and how can someone resolve it? Because the life situation is just I'm working two jobs, I've got kids, I need to better my situation. How can I alleviate the anchors that my environment is giving me? Yeah, there's some people who thrive in those environments, right? It's like the back against the wall is like what makes them be at their best and then there are other people who crumble under it. And I I would argue that it's probably more common that it's the latter. And in part because they're holding themselves to a standard that is not commensurate with their situation. Like if you're waking up at 5:30 in the morning, uh let's say you're trading East Coast hours, you're in the East Coast, you wake up at 5 5:30 in the morning, you know, uh you're spending an hour, you know, getting yourself prepped for trading, then you're like getting kids ready, going off to get to work, you know, you show up at your desk, you do, you know, hour and a half of work, uh, you know, as an accountant or whatever, and then you're going to start trading the open, you know, or close to it. I mean, you're doing that day after day and trying to do two jobs and then coming home. It's like, where's the time and the energy? So being unrealistic about the circumstances and trying to kind of hold yourself up to the standard that you know a you know non three job working trader is able to do where they can have full focus. They've got all the time in the world in the morning to get themselves ready. They don't have kids, family responsibility, etc. They've just got it's not the same. So I think when you when you are are more realistic about your circumstances, I don't think that means that you're accepting that you're tired and that's being okay. You're saying no, this is just my reality. So what does that mean? Much in the way you said earlier, like how am I going to adapt to the fact that I hate to lose and so I'm going to change the time frames with which I'm going to trade. I'm not going to swing trade. You make adjustments based on your circumstances. I think sometimes traders who are in those situations who are in legitimate financial needs, looking to trading as a way out of that, they hold themselves to standards that are not realistic for their situation. I've had actually some some traders who have actually done quite better by swing trading because it does take less time and they can use a day trading system on a swing trading time frame and all of a sudden now their lives kind of open up a little bit like they can do their trading in 15 minutes in the morning it's like oh that's different. So yeah, I think when you hold yourself, I've said it already, but the the big topic that I want to end on prop firms now, a hot topic, a big debate that I've had on the show with many where someone like it's an incredible tool. People that didn't have access to capital that would never be able to access the markets have now gone on to make thousands, tens of even millions of dollars. People have made on the flip side, it's like, well, it's kind of like a casino. They're designed to trip you up. They're designed to keep you addicted to it. And a most people are just losing money at a faster rate than they would have in their own accounts. Other considerations would also be the emotionalities that are brought out from it from the certificates, the leaderboards, etc. Um, what is your view on just utilizing profits as a tool? Because people then take that too far and say, well, I can also make it a riskreward between my buyins, the evaluations, and the reward of the payout. So, it's then just a game of gambling it and you're not following good systems that can ruminate into bad habits later on because you're very used to this reset button that you can cheaply do as opposed to in a real trader. You got to climb yourself out of that loss. How do you view that in general, especially with people that you've worked with? Yeah, I think I think the prop firm uh strategy kind of going that route, it has to be looked at as the end goal is to be able to be on your own trading independently with your own account. And if you if you look at it from that venue then or from that angle, you're going to develop the skills that you were just describing. You're going to go through the things that are required to see the long game and understand what's what has to get kind of built in that process and not getting too swept up in the short term. You know, not even just trying to get rich quickly, not even trying to make money quickly, just the short-term game that they're trying to make you navigate. I do think that there are advantages to the game from a discipline standpoint. It's like, oh, okay, well, this isn't how I would be trading on my own, but well, are you able to trade on your own entirely and follow your system to a tea and know when the right time is to say, well, I don't yet. So, like there's from a discipline stand, I do think there are advantages to using that the incubation period of prop firms to help you to do that because many traders now have had, you know, much easier access, right? So, I can't pay 10 grand and go step on the first of a of a PGA tour event. Yes, but you can pay 10 grand and enter the most competitive marketplace in the world. It's like, okay, well, the as you said, barriers to entry are almost zero now other than just the capital. So, what's going to take somebody from being a day one trader to being a 15-year successful golfer who has earned the right to play on the PGA tour? Like, their abil like again, there's there is natural selection, a but b there's a hardiness, there's a skill set that's been developed through those sometimes decades to be able to get to that point. You cannot expect that on day one to have those. And I do believe that the proper industry gives people an avenue to develop that, but it takes the right perspective of the individual trader to have that on day one. The props are not necessarily going to give them to you, right? And so like anything else, I'm all for individual responsibility here. And that's what I think we're trying to impart here is like as the trader, you have to have a bitter bigger broader vision and to use the prop firms for what they are. And final question just to wrap up. I imagine most viewers are prop firm traders simply because of the access to capital and the tool that it is. What is something that they should be aware of or something that is potentially holding them back specifically in that environment of the prop firms? I I think you you hit it on it's the the easy reset button. Um there are times where that's the easy route to either just buy a new account um or within the just to throw in whatever is left and see what happens. You cannot at any moment gamble and and those easy resets are gambling. Especially if you're then doing it multiple times within a day. That should be a non-starter for you, right? and dig your way out. Like, okay, yeah, it's not fun to have 20% of your account left. And it's easy to just press that reset button. Uh, but that's a gamble. If you do it the right way, you know, and it takes you longer, then you're actually learning something of distinct value that's going to carry you forward because a lot of traders don't think about what comes next. You get funded, you get payouts, you now get to start to get more more payouts and and maybe you're going to go there. There are steps that are required to be at that level. Sorry, there are skills that are required to be at that level that are not required now. You have to be thinking about those requirements today because it's not just about getting funded. It's about actually having those payouts and looking beyond. And if you're just trying to kind of make it and like get there, it's far too shortsighted, right? You have to become thinking about it from the standpoint of becoming a skilled, profitable trader, not from somebody who's just looking to make money quickly. Because if that's the case, I I mean, then you're in the gambling category and you might as well just buy lottery tickets. Jared, wonderful episode. Thank you very much for giving us the opportunity to host you. Absolutely. Great to see you. Excellent. Excellent.