00:00What is the number one psychological problem that you've seen with all the traders that you've come into contact with over the decades? Oh, the number one, by any stretch of the imagination, is, Randy Howell is a world-renowned author and trading psychologist

00:13His secrets in psychology has helped unprofitable traders become millionaires

00:18The successful trader wins by being an expert at losing, and I believe that trading is the perfect self-mastery

00:24If you do not master the self, you are not going to be a successful trader

00:30There are a lot of traders out there who say trading psychology is, what are Your thoughts when you hear that? First thing I ask, are you profitable? There's a wonderful thing about trading, is that most of us spend a lifetime avoiding our psychological demons

00:43In trading, they're going to stalk you

00:45When you're looking at charts, you're actually looking at emotions

00:48The vast majority are not profitable

00:51The trading gods really don't care the success rate of a trader to become consistently profitable, 2 to 3%

00:54And we're moving that 2 to 3% to 30

00:58We have a brain that is about 6 to 8 million years old

01:02It's all about survival in the moment, and we bring that brain to trading

01:08Believe that we can control outcome

01:14We believe that we can make things happen, and then you get into trading and you find out that this is a game of probability, not certainty

01:26Loads of people in the trading space say that we need to treat trading like a business

01:38Would you say that's a the wrong thing to do? The truth is is that, um, trading, [Music] the number one podcast in the trading space, the fastest growing, and that's thanks to every single one of you

01:44Hey guys, before we get into this episode, I just want to say this is an incredible moment for me directly and for all of you, no doubt as well

01:51Randy How

01:57is an absolute legend in this space

02:03When I first started trading almost 10 years ago, I used to see his clips and his lectures all over social media and YouTube, generating millions of views and impacting millions of traders across the world

02:09So the fact that I got to sit down with Randy myself, to speak to him and to extract so much value of exactly how the trading mind works and how to operate as a trader the right way and to be profitable, it was incredible for me, and a huge thank you to Randy

02:22I'm so, so happy to be able to bring to you an episode on words of wisdom on how to master your trading psychology with

02:26The one and only Randy How

02:30Welcome everyone to the Words of Wisdom podcast

02:34We are back once again as still the number one podcast in the trading space and the fastest growing, thanks to all of you and our incredible guests

02:40And we're on the big US tour still, and we're on our second destination in Carolina, and we've come here for one person only, and that is a world famous trading psychology and performance coach

02:52He has authored many books, and you've probably seen his face many times, that I know I did in my, the one and only Randy How

02:55I'm embarrassed

02:58Thank you

03:01Thank you very much

03:04Yeah, I really

03:07Appreciate it

03:10I thank you for, you know, sitting down with us, because I know we had you going back and forth for a while, and I'm sure you get so many requests, no doubt

03:13Um, it was great to speak about, you know, some of the trips you've done and the speaking engagements, yes, you've done as well

03:20Well, you were really interesting

03:24You know, it's like, you, you, who is this guy? This is interesting

03:27You, you really got my curiosity up

03:32Really appreciate

03:37I'm glad we did

03:41I'm glad we did

03:46But I wanted to kick things off, like, straight away, in terms of, like, what is the number one psychological problem that you've seen? With all the traders that you've come into contact with over the decades? Oh, number one by any stretch of the imagination is that the brain that they brought into trading is unfit to actually manage the conditions of trading

03:50We have a brain that is about six to eight million years old, and it was built for the African savannas, and it's, it's all about survival in the moment, okay? And it's acting on instinct, and what we do is we take that brain that is still operational

04:1195% of our decisions that we make on a daily basis never go through cognition

04:18They are emotionally based from this very old brain, and we bring That brain to trading, and we have built a mind

04:23We have, in this mind, we believe that we can control outcome

04:29We believe that we can make things happen

04:35And then you get into trading and you find out that this is a game of probability, not certainty

04:41And they come in, and they come face to face with it, they get emotionally hijacked because that brain does not understand the difference between risk and threat to life

04:47Caveman had no money to play with

04:56What he had was survival, and he was, um, he shared the world with saber-tooth tigers, same caves

05:02And ultimately, a threat to self is a threat to capital to the

05:08primitive brain

05:13And you get in there, and what happens is people want to not lose, because to them, that not losing is, guess what, getting deranged by a saber-tooth tiger

05:19At the same time, you also want to win, and you will get cranked up

05:25Like, for instance, if you and eight guys find a woolly mammoth, and you decide to attack it because it's going to feed the, it's going to feed the village forever and all this kind of stuff, you're going to have to get really cranked up

05:31That's a dangerous animal

05:38People died

05:42So, in the same way that when you see overtrading, it's the same principle going on

05:46It's Seeing the reward, big news, and it gets cranked up, and it blinds itself to the risk that's involved

05:50Mhm

05:56So out of it is the first order is that we're bringing a brain that, thank God, evolutionary, it allowed us to survive, but now we're asking it to do something that evolution didn't build

06:02And if you're going to go beyond that and get to where you're actually consistently profitable in your trading, you're going to have to train instinct that has been around for six to eight million years to accept a very different reality with the uncertainty that you deal with in trading all the time

06:10That's where it

06:19Starts

06:28I love that, and there's so much to unpack there, and it's so fascinating always to hear how the markets bring that fight or flight response, even though there's no physical action really involved other than that's as far as it goes

06:36Yeah, but no physical action in terms of, as you say, that actual risk of life, right? But there's risk involved, and that risk sort of bridges between the two

06:51But have you ever come across, when you're working with people trying to help them sort of navigate and change that mindset and be able to handle that risk better, would you say that you've Worked with people with it, not able to remove themselves from that brain, that evolution? Yeah

07:10All the time, that's if you take a look at the success rate in trading, you know, 95% are going to go down and another two or 3% are going to be marginal and make some money, but there's only two or 3% of people who actually generate wealth out of this

07:22And those are the people who have been able to reorganize their mind for whatever reason, not necessarily with the traitor psychologist, but somehow they've been able to remold the mind

07:28And there are other people who are scared

07:34I can't tell you how many times it's

07:41It's very common for me to have a guy, he's, I'm working with him and he's made some really breakthroughs

07:47He's actually putting really good trading mind together to act not on winning and losing, but on performance, and it starts showing and that he's extracting more capital out of the markets than he's giving back in

07:54He's really happy, elated, and he tells his friends and say, and then he'll say, "You got to go, you got to go see this guy." "Oh no." "Uh-huh." "I'm not going to go see any shrink

08:06What happens if he finds something wrong with me?" And I'm going, "Of course there's something wrong with you

08:11You're, you're taking a..." Brain incapable of doing what you're asking it to do, and you're trying to force it, and then it bucks at you and kicks you, kicks you hard

08:17So yeah, it happens all the time

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09:52Now, let's get back to the episode

09:58What would you say those trades, have you seen any sort of common traits? With those people, where they've struggled to make those changes? Um, they really believe in winning, and they have to win to prove themselves

10:02It's like, particularly like with alphas, uh, their winning is not just about money

10:07Money is representational of power, of mattering, of status

10:11And that hooks back into our caveman stuff, is that if you were an alpha and you went out and took that willy mammoth down with friends, what happens? You've got tremendous status

10:17You had first dibs to the food

10:23You had, you had leadership qualities, and you also had first dibs on the breeding stock, so your genes were

10:29Going into the future at a higher rate than anything else, that's hardwired

10:37And so people come in wanting to win, wanting to prove themselves, and if they make money, they have power, they have status, they have all this, and they forget that the rules of success in trading are enormously different than the rules of success in the world out there

10:51It's kind of like, it's kind of like Newtonian physics, large particle physics, and quantum mechanics, they're different rules

11:02And if you try to apply, if you try to force Newtonian physics principles onto microscopic type of particles, it blows up

11:10In your face

11:14And it's the same thing that, uh, alphas do because alphas blow up money, man

11:17They really do

11:21Is it kind of because of the need to be an alpha, and the traits of that personality aren't suited towards what the markets are needed? I've actually had, um, a guy that I worked with a number of years ago, was a very successful serial entrepreneur

11:33When he graduated from college, he sold a bar business for half a million dollars

11:40Now, I don't know about you, but when I got out of college, I didn't have an extra half a million dollars floating around

11:46But then over time he had always been able To be able to size up companies, understand what was not functioning, and then to build them and to sell them 10, 20 times more than he paid for them

11:58And then he, uh, was talking to his brother, who was a trader, and he found out that trading was a capital intensive business

12:11And he said, "Oh, well," and he had just sold a position for cash that gave him multi-million dollars worth of cash

12:16So, he had said, "Oh, I've got it

12:20I know how to, I know how to build businesses

12:25I can do that easy, and now I've got the capital for a capital intensive thing." So, he went out, four years later, he's not making any money

12:30Wow

12:34He's, uh, And then he comes to me and we start working, and he became consistently profitable

12:39One day we're talking and he says, "Randy, I want to thank you

12:42This is the best money I've ever invested in my life

12:46I know that I'm not going to be a trader

12:51I'm not willing to give up control

12:56I'm really good at control." And I've realized that I have to give up control and I have to accept that my power comes from my ability to perform

13:02I can't do that

13:08And I was like, kind of weirded out because my job at that time, I thought, was to help people organize themselves into a more powerful mind for trading

13:14And I'm talking to a trader, Very good trader, and I was telling him about this and he says, "You know something, Randy, it's just a cry and shame to take a perfectly good entrepreneurial mind and try to force it to become a trading mind

13:25It's just so whacked up." So yeah, there, there are traits and there are ways that when you look at it, you go something, you know, it's just not really, the amount of effort may not be enough, and the truth is, is it going to fulfill you? Do you feel like there are people that really aren't capable of change, just as you mentioned there, that those are those alpha, do you think, because a lot of people when it Comes to trading, that one of the big appeals of it is that anyone can do it, and from anywhere, and you don't necessarily need a lot of money, and so on and so forth

14:01But what's the reality of that look like? Is it a case where there really are a lot of people out there probably who aren't capable of trading, and even if that means that they do it for a long time, they're just not capable of the change that's needed, as you said, relinquishing that control, the power that trading is necessary, uh, for consistent trading

14:14Well, I'll tell you something

14:27In my individual work, uh, we follow a program where I'm, I'm Actually teaching a process, okay? From understanding emotion very differently than you probably do now, to learning how to regulate emotion, to being able to produce an observer where you recognize you and your thinking aren't the same

14:40To discovering the destructive part of the human potential, and then also building empowered elements of yourself that have been with us since the beginning, and you learn how to reconstruct the mind you bring, and it's very powerful

14:53And, um, I have about a 30% success rate with my individual clients

15:00Now, I used to think, God, but I don't want to tell anybody that much

15:06Less, have this all over the dang universe

15:12And then I realized a guy was talking to me, says, "Randy, if a major league baseball player hits 300 for a lifetime, he's going to be in the Hall of Fame." That's great

15:19And I realized that, you know something, the success rate of a trader is to become consistently profitable at two to three percent, and we're moving that 2 to 3% to 30

15:29And at the same time, you still, you still have groups of people for whatever reason

15:34I have, uh, in my file this morning, I looked in there

15:41I said, you know, these, these files have been in here for like a couple years and I've never seen them

15:47I've actually had people pay money upfront and never show up for a first meeting

15:53Really? What's that all about? Okay, talking about fear of like being exposed, and at the same time, is there's a lot of people who just are not willing to change

16:01They, they think this is the way it should be, and I'm going to be bullheaded about it, and I'm going to force my will upon the markets, upon life and stuff like that

16:12And, uh, the trading gods just kind of laugh at that stuff about us, us, uh, being able to control the will of the markets

16:20And so there's a lot, there's, there's lots, most, I wish there were an evaluation tool that would

16:25Allow, uh, traders to really find out before they start sinking a lot of capital, a lot of, uh, their interest into it, whether or not they actually have, um, what it takes to begin to shape that

16:31Mhm

16:37I really, that would be an interesting thing

16:48It definitely would be

16:59I'm, I'm actually talking to, uh, a guy who used to be in one of, used to work with me and is now running a good-sized organization where he's saying, "Randy, I would like you to start teaching at in my group, and what I would really like to do is offer this instrument that, that helps us to decide whether or not we're going to actually work with these." People, whether or not they actually, we can at least get in more narrow about whether or not they have a chance

17:09Yeah, of doing this because it's, it's a hard business to

17:15Well, that's just it

17:21It's not really a business

17:27There is a business aspect to it, but it's a, it's, it's a mindset problem of where you're actually having to remold a mind that to and get it to do things that it truly was diametrically opposed to by evolution that has been hardwired into an instinct

17:30Yes

17:33So very, it's very hard in terms of business

17:36One thing you mentioned there, it's like, it's like a business because I've heard loads of

17:39People, especially because there's a couple of things we can touch on, but we'll start with the business element, which is loads of people in the trading space say that you need to treat trading like a business

17:45Would you say that's a the wrong thing to do? Good luck

17:50Um, obviously trading is transactional in that you're, you're extracting capital, you're putting back in capital, and at the end of the day, you're finding out, uh, what your return on investment is

17:56Okay

18:01So, and you're going to have to pay taxes on that

18:06So yeah, there is an aspect of it being business

18:20But to think that I'm going to take the mind

18:34That I use for business, winning and not losing, being competitive, and if you think you're going to produce the mind that's going to be able to execute and recognize that you're going to be losing a lot, okay? And you're going to have to, you're going to have to become an accomplished loser, okay? I mean accomplished in order for you to be able to wait for the moments when things work out well and that guy hits target and then you put a leader on it and just goes into orbit and you make a lot of money and get a thrill

18:48The rest of the time what you're doing is you're, you're protecting your nickels and dimes and

18:54You're, you're, you're making your losses as small as possible, and that, that's not a business model that very many people know about, that, you know, it's true

19:07You know it's true

19:19One thing that we did mention in terms of people not being capable of trying to change and they get kind of stuck of like, "I don't want, I don't believe that, I want to stick with this way." Do you feel there is an element of, especially nowadays, but even throughout your career, no doubt there was still mentorships and guidance, but rather than social media and being so readily available, it was probably more so in seminars and things

19:33like of this nature

19:47But regardless, do you think a lot of people build a lot of limiting beliefs that they get really stuck to, and sort of really put into their foundational, uh, beliefs, even so that it becomes so difficult for them to break them, because of the, maybe even, a pedestal that they've put this particular trader on, uh, that they're learning from, or someone they look up to, or someone they want to mirror, and that's the message they're providing them? So then, when let's say someone like yourself is telling them, no, you need to think in this way, or put these practices in place, and they're saying, no, no, no

20:01Well, I've learned from so and so, or this person does it this way

20:06Is that, do you think that's something that definitely happens? Oh, all the time, and it really, it really boils down to, um, that all of us are born into a world, and I don't know if you've noticed, but we've been born into an incredibly broken world, okay? And it just so happens your brain's function is to adapt you to survive in that world, whether or not you're a wildebeest or whether or not you're a human being

20:34And unfortunately, what happens is it adapts you and your brain

20:42Most other animals, uh, bring at birth, they have, they have ancient Systems already set up

20:48A giraffe can run in three hours

20:54A chimpanzee can walk and hang out

21:00Human infants, I don't know if you've noticed, but they are born remarkably undeveloped, and their brain is developing live-wired in the moment to the environment around

21:07And what happens? It's going to pick up the rules, the beliefs in that family system, in that culture, in that community, and they're going to become so solidified that you would never see that you're looking through those beliefs, and we all bring those beliefs, and it's not rocket science

21:13That's the whole thing, is it's about

21:19mattering

21:25If I make a bunch of money, I'm going to matter

21:29If I make money, I'm going to have prestige

21:33If I make money, I have, I'm going to have a worth

21:37And a lot of people find out that they have a sense of self-worth that deeply limits their ability to make money

21:44They have low, they have a monetary worth that gets just snagged

21:49I had one guy who grew up in a blue-collar family in Detroit

21:54His father worked in the automobile factories, and he just railed at these executives who have made too much money

21:57Nobody's worth a million dollars

22:01Well, I met this guy

22:05He's working with a high six-figure account, and Every time he goes over into seven figures, a million dollars, he loses back down into the high 600s

22:10When I met him, he had been doing that for 10 years, and you're seeing that he didn't know that he had a self-limiting belief that had been absorbed at the dinner table of a perfectly fine family, okay? And the other one is that you have this sense of worth, you have this sense of, uh, competency

22:28I'm not good enough

22:31That's, I can't tell you, that happens all the time

22:33I'm not good enough

22:36I'll never make it, blah, blah, blah, blah, blah, blah

22:38And a sense of belonging and a sense of being lovable, and I want to really

22:42Get on

22:45I have a friend, um, an enormously successful trader

22:49I, I know for a fact, uh, he's made between two and $300 million in the last several years

22:52Incredible

22:56He's, yeah, he's, he's, he's of this generation

22:59And, um, he never used a trader psychologist

23:03He never did anything like that

23:07And I said, "Mitch, how did you do this?" Because when guys do that, I, you know, I want to know how they did

23:10And he says, "Randy, I'll tell you exactly what happened." He says, "You know, um, I carelessly blew three-quarters of a million dollars in a day back when, for me, three-quarters of a million dollars was a lot of money, and it, it was." It was rocking financially, what was going to happen in the home, and he hadn't told his wife yet

23:28And he finally came to the moment, he says, "I have to do that, I have to tell my wife." And he comes and he tells his wife, and he thought for sure that the wife was going to be very angry and leave him and all the catastrophic thinking you would imagine

23:39And what happened when told what she did is she went over, held him, and they cried together

23:49They cried for 15, 20 minutes, and what Mitch came out of that, came out of that as is recognizing, come win or lose, he still loved

24:00And he said it was there that I no longer, I just Thought of this as, you know, I'm, I'm taking different sides

24:05I'm doing my best job performing, but whether or not I win or lose, I'm okay

24:11That is what freed him from being an adequate trader to being this, this, this phenomenon

24:17Mhm

24:22So yeah, those are the basic self-limiting beliefs that if you're human, they're there, and they are the beliefs that you're going to have to heal with compassion, not with tough guy, but with compassion

24:40And out of that, what happens? You start growing new beliefs about your ability to manage uncertainty, but if you're trying to prove your worth, if you're trying To prove you're mattering, trading is a really terrible, terrible place to force your will against something that you can't really comprehend

25:00Do you feel when you are working with someone who has limiting beliefs, what's the sort of process you go through? Is one of the first processes making them aware of that limiting belief, helping them to observe it for themselves, and accept that limiting belief? Yeah, but I, I, I take it a step further than that

25:12I again, I teach a process and people have no idea what an emotion really is

25:17They have no idea

25:22They don't grasp that all thinking is emotional state

25:26dependent

25:29It is your emotions generating your ability to produce explanations about what's going on out here

25:33And so the first thing I'm doing is I'm educating people that you don't have emotions, they have you

25:44And that until you wise up and put down all the barky sounds of being a tough guy, the emotion is still going to overwhelm you

25:48It is more powerful than you ever imagined

25:52Your body is part of that emotion

25:56The way you breathe, the way you hold tension is part of that emotion

25:59It's the arousal element, and once it hits a particular threshold, it's taking out the mind, it's taking out the

26:04cognitive mind

26:10So I'm teaching, first of all, I'm getting people to understand that they really need to change their opinion about emotions

26:13It's not like you can live without emotions

26:17The only time that you don't have emotions is when you're dead

26:20However, you can develop freedom of emotion so that you actually become the spearhead of being able to develop an emotional cocktail that thinking arises out of, that allows you to perform really well in trading

26:35That's the, that's the, the second part is that you have to regulate the emotion

26:41And the first part of the training with me, you're Learning how to breathe diaphragmatically as you trade, you're also having a mirror or a video camera on you to see all the tenseness and see that you're not breathing, which means you're accelerating the emotions sent to take over mind, hijack mine

27:00And then I teach, when you do that, I also teach mindfulness of where you recognize that you and your thoughts are not the same, that again, you don't have thoughts, they're having you

27:07They're creating your stuff, and most likely it's history coming right through you and continuous creation

27:13Like for instance, I come from a family that lost generational

27:21Wealth, the the generation before me

27:24Wow

27:28And it was always the McMillan's getting the money back from the O'Connors, who stole it from them

27:31It was just, oh, it was crazy

27:35And I found myself, um, always trying to get the money back

27:38And even into adulthood, I found myself in one business

27:42I would do something, would happen, I would want to get the money back

27:46That's what I knew and understood

27:49If I was going to have power, I had to get the money back

27:53Then it occurred to me that, you know something, money is actually a transaction

27:57It's really more about, um, it's the grease that makes things happen

28:05It's not a good

28:13Way to measure your inherent worth as a human being, and in the time that I finally learned to change that belief to where now, um, capital is really more about an exchange of values, exchange of what people see my worth, my work is worth

28:21And since that has occurred, uh, it, it's, we have done, we've done really well financially

28:30Before I was always trying to get the money back, completely different mindsets

28:38It's those kind of beliefs that once you begin to develop the empowered elements of your potential that you can actually bring to bear, and you can turn toward the self-earning belief, and you can actually

28:46Identify it much more easily because now you're realizing, oh my god, I as a human being have been given this gift of being captain of my own destiny

28:52I can build the way the mind engages the challenges of living, and the way that I'm currently dealing with it is not working well

28:58That's why people come and work with me

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30:24Now, Let's get back to this episode

30:33What would you say in terms of, let's say someone was entering trading? They're a few months in, they've just found their interest as someone to put on their radar, like to help them make that, you know, to help them as much as possible in the beginning of their journey

30:41What would you say to them? First of all, find a good teacher, a good method teacher, and learn that method to the point where on paper you can, you can make money

30:47And then, uh, what happens is then you're going to need to learn

30:54And it may be that you just go from paper to real cash and everything's hunky dory

30:58I, I

31:03Don't deal with people like that

31:07At the point where they start actually risking real capital, they turn on the ancient brain, and that is the time where you need to be learning how to, what psychology of trading is, and how you go and intervene in emotions and build emotions

31:24So what I, what I basically say is that once you come to the moment where you turn over, get really small, go to micros, do whatever you can so that you're not blowing yourself up, and start seeing that the moment you add money to the equation, everything changes, and then that's when trader psychology becomes really interesting

31:33They

31:41Will never believe you if, uh, if you say you're going to need this

31:47Oh no, I'm just going to get this system, man

31:53My teacher knows how, we're gonna just be minting money, blah, blah, blah, blah, blah

31:59No

32:06Get there and all of a sudden have feel the potential of loss or the potential of making a bunch of money, and what happens is that the emotions just blow you out, and you're back in ancient caveman time, and your thinking brain has just been relegated to the caboose of a of a train

32:12Is there any, uh, exercises that you give to traders, you know, that they, that they can do on their own to try and identify things? The simple

32:16ones are breathing

32:20What I, what I, in almost all my work, particularly when I'm presenting, do my little presentation, my dog and pony show

32:24What I'm asking people to do is not to believe me

32:28Get a mirror

32:31Get a camera

32:35Point it at yourself while you're trading and notice how much tension is in your face, in your shoulders, in your fists

32:38And notice that you're not breathing

32:46And once they grasp that those are parts of an emotion, and what they've just done is they've just kicked it up to fight or flight

32:51When you feel all that, that's fight or flight, ready to act, and at fight or flight, thinking is just hijacked

32:58So the first thing I do is I have them do that simple exercise, and it begins to wake them up

33:05And I've also, I get a lot of, uh, people who will write me, and in fact, one Doris read while we were coming over here, where this guy is just taking these really simple exercises that I'm not necessarily intending to help people grow themselves into a better trader

33:24I want them to come through me, and what they're doing is they're finding greater levels of success

33:32That's just from breathing

33:40And the other element is that, uh, everybody can start practicing mindfulness and recognizing a great truth is that no just Because you hear voices in your head doesn't mean you're crazy, but you are crazy to ignore the voices in your head

33:50There are some, there are some destructive elements in there

33:59There are some highly empowering parts of the self, but in mindfulness, you begin to be able to start sorting out, uh, all this cacophony going on in your mind and actually recognizing that it can be ordered

34:08And what's going to happen? The observer, the CEO of your company, needs to wake up from its deep sleep and recognize that the committee of the mind, uh, is in a mutiny and that you have to decide that I'm going to learn to put this

34:22Mind together so that it is empowered, and I'm leading not from my fears, not from my greeds, but I'm leading from discipline

34:28I'm leading from impartiality

34:34I'm leading from patience, and that you can read my book, you can read, you can watch the videos, you can, that stuff's constantly out there, and Dolores and I get feedback about how people's lives have changed just from that

34:40I love that

34:47I love that

34:54In terms of emotions when it comes to greed, is there like somewhere that that stems from, or like why traders seem to be a very common theme when it comes to greed in particular? Well, first of all, There in the background of this, we're, we're labeling greed as bad

35:02It's not

35:09If you didn't have greed, you wouldn't find the motivation to go do things and make things happen

35:17The deal is, is, um, is that, is that greed in conjunction with a number of other emotional programs that allow the greed to give you the motivation to seek better, and particularly what you're doing is you're saying, I, there is a, in my work, I actually use, uh, a heart rate monitor and an app that aligns the heart rate within, within certain parameters that are indicative of a good trading mind and a deteriorating trading mind and a get

35:50The hell out of this trade trading mind, okay? And you know, ultimately, uh, greed, uh, is just something that needs to be managed like any other emotion

36:01You know, it's like, uh, you can be compassionate all you want, but if you just give away everything, you end up poor at the end, so compassion has to be managed

36:06The courage, you know, we want to have courage to act, but we don't want to do really dumb, stupid stuff

36:21So to me, greed is that, yeah, sure, it gets in the way because we have this idea that if, if we had money, that would solve all the problems in the world

36:27I used to work with really wealthy people when I was a therapist

36:34And what I found is that the wealth was so great that they could insulate themselves from having to change, they could just send attorneys, and ultimately, but if you're actually in an honest to God feedback relationship with your environment, you're looking at greed going, it has some really, it has some good qualities to it

36:56The thing is, is we need to start defining how those qualities are going to activate, because if you really have a belief of scarcity, you want to make money and you're greedy to get it, and that greed starts dominating the committee of the mind rather than having a balanced part

37:03of that mind

37:09And so ultimately, it's not, it's not that greed is bad, it's just you don't know how to use emotions intelligently

37:15Your EQ, your emotional intelligence, is low

37:24But as you develop that EQ, you begin to see that

37:27I mean, even shame, understand, shame has a bad rap

37:31If you want to change, you're going to have to employ shame

37:35Shame is an emotion that says the way you're currently organized is not working for the good of the whole

37:41You need to reorganize yourself

37:48And what it does is it starts the party, disorganizes you, and the brain flips out, and it wants everything in the world not to feel that

37:55Again, so it shuts it off

38:01But if you really find the courage, um, a number of years ago, um, I led my wife into a business debacle that cost me a couple million dollars

38:07Wow, okay

38:13And I felt nothing but shame at that time

38:20I was this guy who thought, "I am, I am so cool, I am so great," and we were living this high life, and then a recession happened

38:26The business started failing, and we were financially underwater, and I was deeply ashamed

38:32I was a failure, you know, I wasn't the man that I purported to be

38:39And I, I said, "Dloris, you can leave

38:45I know you're going to be leaving." And she has a temper, but boy, she She really got angry, and what she got angry about was that she, that I thought that her love for me had anything to do with the abundant success that, that, that I was claiming

38:52And out of that though, in the dissolution of that organization itself, what we discovered is that the one thing that I really wanted to be and wanted to do with my life is, I wanted to help people grow as I had been able to grow and get out of the, um, confinement of the self-limiting beliefs that I was born into and had executed

39:16So the greed ended up reorganizing me into much more higher functioning

39:24So if you have failure in trading, That failure, it's just, it's not saying there's something wrong with you

39:29It's saying the way you're currently organized and your competency needs to be looked at and changed to be able to match up with the requirements of trading

39:41So like even shame, guilt, all that, they are, they are, they are there because they were integral parts of our survival as a species

39:52So even, even fear, the same, same element, is that there are benefits to it

39:58Failure, failure, fear, oh, I tell you, failure, you know, the brain does not learn from success

40:03Success hits the dopamine button and it, it, it more hardwires the pattern

40:07Yeah, and it'll get you in a lot of trouble

40:12Failure is forcing the brain

40:16That's the way the brain learns

40:20If you look at failure and all of a sudden you're going, "Okay, it's not about me, it's about my competencies," and you learn to reorganize yourself to do better

40:24Uh, Ray Kroc, McDonald's, uh, he was famous for having the words, uh, "I failed my way to success." Yes

40:34Okay

40:44And it's the same thing, is that, uh, if you're, if you're afraid of failure, oh my god, don't step out the front door, much less start trading, because in trading you have this thing of where, let's say you take a loss

40:49I teach my folk to do this, is one is

40:55Is this a method mistake? And let's say that, no, you executed your, you know, your method was fine and all that, that doesn't need to be looked at, reformed

41:01Is this a psychological mistake? Let's say that, no, you actually performed quite well and you did exactly what your rule said and you still lost

41:08So what happens? You realize that loss is just simply probability

41:15You're not going to learn from it because it really wasn't a failure

41:19I actually consider that to be success in trading

41:23But if there's a psychological mistake there, it's exposing it so that it can be worked with

41:27If there's a method mistake, There, the same thing is, it's exposing it, so you can decide whether or not that method, that rule, actually is delivering the goods, or whether or not you're growing past that methodology, those sets of rules

41:39So no, all the emotions are built for you to be able to survive as a group, and, uh, they get kind of, they can get skewed, but they don't have to be

41:50What processes would you give to traders as they're actively trading? Is there things that once they've entered a trade, or executed on a trade, or the trade has given its result, as you mentioned, like you've asked, for example, did that fit your plan, etc.? Uh, but are Are there processes that you're, when you're working with someone, that you're tracking, you're keeping on top of, you're asking them to do, and getting feedback from them? It depends on how well trained they are

42:20And my, and again, my process is that first of all, they're going to be, uh, I use these forms that basically take all sorts of information about physiologically what's happening to you, because I know that the physiological aspect of yourself cannot be separated from your emotions, from your cognition, or your spirituality for that matter

42:38And you're looking at this all in place and you're saying, Okay, if I'm watching that and I'm, and I'm seeing my breathing and stuff like that, I can regulate that, and I can maintain the kind of mind that I need to trade with

42:50I also teach that you should be setting alerts every 10 to 15 minutes so that the alerts, just sitting there saying you need to check in to, uh, is your mind still in the right place? And you should be able, if you're working with me, you should be getting to a point of where you know what it, you know what the, the empowered mind looks like, feels like when it's present, okay? And so you're, you're having, you're setting up an alert, and I also have people

43:22Uh, take breaks about every hour, and the truth is, is that, um, trading is a massive drain on your cognitive system

43:28The amount of glucose, that's the fuel

43:36Uh, when you're looking, when you're looking at trading, it's like a 1965 muscle car GTO stomping it, and you're sitting there stomping it, and you're seeing the gas gauge go

43:48That's pretty much what the high activity, the cognitive activity that you're doing in trading, that's what it's doing

43:55I don't care who you are, is that after about an hour, hour and 15 minutes of that kind of load, uh, you're going to start running out of glucose, and all of a sudden Your mind's going to get dull, it's not going to be sharp, and you're going to start making mistakes

44:09So, there's a, there's a process of taking care of yourself

44:14But when it really comes down to it, what I'm teaching a person to do is to find what I call the ruler living within them

44:26And that ruler exemplifies discipline, the ability to maintain order under pressure

44:31And what happens with most people, they discover that their ruler goes AWOL

44:41You know, they get all cranked up about the orphan wanting money

44:51Yeah, yeah, yeah

45:02Or the inner critic saying, "You might as well give up, it's never going to..." Work, it's never going to work." And what you're looking at is saying, "Is ruler present?" Because you know, ultimately, if you do not have discipline, everything else is for naught, but emotional discipline is a requirement, and if you develop, like for instance, with me, it is, uh, it is a Roman Centurion, and I have a fascination of Roman Centurions since high school

45:12I took a lot of Latin, and in the second, third year, you're reading texts, and I read a book by Julius Caesar called, "I came, I saw, I conquered," and what it was, was a life, the life of Centurions

45:22I fell in love, and that, that Centurion symbolically just stayed with me

45:30For ages, to the point where this almost became a conversation where I finally asked this part of myself, um, what is it you need from me? And in this hallucination I'm talking about, that centurion looked at me and says, "I need the sword back, the one you dropped on the ground and never picked up again." I did that with a stick that I used as a sword to play king, and, uh, I threw it down one time because I, I grew up in a profoundly crazy home, and I gave up, and I threw it down, and I didn't pick it up for about 30 years

45:51And that part of me, as weird as it may sound, that part of me was sitting there waiting for me to get to a

46:13Moment that he could wake up and come become part of me again, and I claim that all of us have those kind of heroic qualities living within us, and a lot of them get pushed down for us to learn how to survive in an environment

46:34And if you're going to become a, uh, a much better achieving human being and a better trader, you're going to have to find, you're going to have to find those qualities

46:40Again, they're there

46:46They're part of the genome

46:52They're part of, uh, group survival of our caveman things, and you're going to have to learn to build that into a very different committee of the mind that can engage life's

46:57Challenges, life changes radically when that happens

47:03I went through a heart transplant where I was, I was on death row for a couple years

47:08Wow

47:14And I had to maintain this, uh, this empowered part of myself, um, because it, it, it was bleak

47:18And yet, at the same time, I now look at it as probably the best thing that ever happened to me

47:21Really? Oh, it just opened my eyes

47:25And now I'm at a point where I realize I'm 73, and sooner or later, you know, I really should retire, or kind of maybe soon through it

47:37But what I want is, I want a systematic programming that people can see years after I'm gone and work with and learn how

47:42To find that power within themselves and to grow it, and to take their God-given gifts and manifest them, it doesn't sound like trading, but it can start with trading

47:49No, definitely

47:56No, but I can see where it intertwines, though

48:03And in terms of, in terms of that, like making a systematic approach, is there any element of your work where you're looking at, uh, personality traits of individuals? I tend to look, um, I don't look at personality traits

48:10I look at, um, I used Carl Jung's archetypal system, and where there are 12 different archetypes, and they are, they are personality traits, like the ruler is

48:24Discipline, the uh, the warrior is courage, the caregiver is self-soothing, self-compassion

48:30I've heard of these, yes, so they, they, there, and but the thing is, what I, Carl Jung, when he studied, what he discovered is these traits were in all human beings, no matter what culture you came from, they were common from our, uh, from our, our African experience

48:48And the deal is, is that I'm more interested in naming him from that perspective because I'm looking for their purest form to pull forward

49:02You know, I don't need a guy who already is, um, having a very big, strong problem with his greed, uh, manifesting a powerful ruler that

49:10Becomes a tyrant

49:17I'm, I'm looking for, I'm looking for a person to be able to pull a ruler out of themselves that has the highest good, um, that I believe that a human being can strive for

49:25And so, and my favorite saying is by Thomas Jefferson, the guy who envisioned the United States

49:32He said, "The price of freedom is eternal vigilance." And what I hold is that we can build a mind, but that's not enough

49:38We have to maintain it to be able to engage the challenges of our life and to do something with them that no other animal has ever been able to do, ever

49:47Yeah

49:56We are, this is like, we are literally conscious creation

50:04And by the way, I count creation as the big bang and the organization that came to where life and the way it evolved into where one animal ended up starting having consciousness

50:13I consider that to be a miracle that is unexplainable

50:20And if you have an empowered committee that you have developed, it's much easier to actually take responsibility for that kind of mind and to develop it

50:27Are you going to fall off the wagon every once in a while? Oh yeah, of course, we, our job is to strive and to build that

50:34And I believe that trading is the perfect self-mastery is that if you do not master the self, you are not going

50:41To be a successful trader, that's a big line

50:48That's a big line, but it's so true because trading is almost, as you do with some of your exercises, it's putting that mirror in front of you

50:55If you want to succeed, you have to be able to look very clearly and detailed manner, and almost objectively at that mirror, and not be, as you said earlier, like, not feel shame, even though shame has its positives

51:07Not feel shame for what you see

51:10Yeah, not, not feel toxic shame

51:14Toxic shame, you become a character flaw that nothing can be done about at that moment

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53:20Now, let's get back to the episode

53:25In terms of, uh, a trade, like someone you may have worked with in the past, for example, taking a heavy loss, you know, a significant loss, more than the usual sort of loss, and it really is, you know, playing on their mind, maybe even impacting future performance

53:31Absolutely

53:36You know, what do you do in those circumstances? Well, the first thing is that when you take the loss, you're going to have emotional

53:41Chemistry in the body that you do not want, and the very first thing is you exercise

53:45You want to burn that chemistry

53:49And then, you know, from my standpoint in teaching people what to do, what you're doing is you're going back and reorganizing yourself around something that I call inherent worth

54:02I, I believe inherent, there is a section of us that is inherently worthy of being loved, of being respected and stuff like that

54:08And for me, we keep pushing that inherent worth away and we keep looking for performances to cover that, making money

54:16And you know, ultimately this isn't about making money

54:24Look, In two generations, um, a very wealthy man is going to die and nobody's going to remember him

54:32He may have a foundation name, but the thing is, what do you give? Like this guy Mitch, you know, he's building a foundation for God's sake

54:39He's teaching people and funding them, okay? Uh, within his system of trading, and he's not doing anybody

54:47He's taking people who are financially really challenged, which is, uh, I probably wouldn't do that myself

54:59That's a whole another, you know, working with money conversations that people have about what the meaning of money is

55:05He's doing that

55:11Um, he's altered the way he perceives money, the way he believes in money, and he wants to help produce a better potential life for others

55:18That's to me, um, um, I'm hoping that that's the way that people, they will not remember my name, but they will remember somehow that they became much more equipped to deal with the challenges of living

55:28Definitely

55:39How important is that, do you think, the beliefs around money, because the amount of people, obviously, everyone, I say obviously, but loads of people get into trading more so focused on the money element

55:45Oh yeah, right

55:52But unfortunately, a lot of people come

55:58To trading with very little money to begin with, and in my opinion, that's a very bad recipe because a lot of the messaging they're getting is that trading brings easy money

56:04Yeah, it's easy to get rich from trading, and therefore, they bring this very little money, sometimes with no money already, and they might be going into debt to try and trade, which is a whole different conversation

56:14I've actually had that happen where the guy was telling his wife that, yeah, we, I'm doing great, everything's fine, and then the first thing she knew that there was trouble on the horizon when they got the Foreclosure messages, I can imagine

56:27And yeah, he, they lost their house

56:32Wow

56:36So yeah, it's, it's easy

56:41Well, so what, how much of that is important to a trader in terms of, like, those beliefs around money and being able to change those perceptions around money? Huge, is that understand if you go back to the notion of cavemen

56:46These are guys living 100,000 years ago

56:51The concept of money just was irrelevant

56:57If you dumped a truckload of money in front of them, they might use it as, uh, tinder to, to light, but they would have no concept of it

57:02Yet at the same time, the brain is going to produce explanation

57:09It's going to produce symbolic representation, that's just what brains do

57:15And the connection between, uh, money as a source of, uh, safety, as a source of power, as a source of status, uh, became embedded into, um, your whole sense of power, your whole sense of trading

57:23If I have money, then this

57:30And, uh, it's interesting

57:38You go into a trading community and the guy asks you to sit and just watch people talk and stuff like that

57:43And, uh, what I know is that only two or 3% are profitable, and yet when you listen to this crowd of people talk, you would think every one of them are just tuning it

57:49What happens is they

57:55They're in, they're living in self-deception, and as long as they're living in self-deception about their money beliefs, then they're stuck with the performance level that they're in

58:01Is that in trading, it's not about winning and losing, it's about performing

58:08Is that your job is to perform and execute your plan every time, regardless of what happens, and if you do that, you extract more capital out of the market than you put in

58:24What happens is so easy though, when you see something and that thing, that thing's coming near your stop and all said, "Oh no, I can just give it some more room," blah, blah, blah

58:29Blah, you're gambling at that moment

58:34The moment that you decide to give it more room, you're gambling

58:38A friend of mine, uh, David Deetay, is um, enormously successful trader

58:43Uh, and when I first met him, he was an intuitive trader

58:48He had been, he was a market maker, he was just all that stuff, and he runs his own, runs his own group now

58:55And in his group, uh, you have to be at an elevated level to take his intuitive trades because he's not going to let people who are just getting into the business do that

59:01And one day he said, this is, this an intuitive trade we're getting in and only a certain group of people could

59:07Do it

59:13They got in, and what happened is that once David's in, he has certain markers that are going to tell him whether or not he's going to stay in that trade or not

59:19It didn't hit those markers, and he got out at a small loss

59:24Next day, his buddies come up and say, "Oh man, did you make all that money, too?" And it was the biggest thing this month, blah blah blah blah blah blah blah blah blah

59:30And then they started saying, "Why didn't you do it?" And he said, "Because it was an intuitive trade, and it didn't, it didn't meet my criterion once I got in." For him, it was nothing

59:35That's just the way you did

59:39Everybody else

59:43Though gets seduced by the idea of money, of power, of the prestige, and you know, look at me

59:48So that's, you know, money, uh, is all involved in that, and everyone is going to have to change those, those beliefs, and particularly scarcity thinking, you know

01:00:00Um, scarcity thinking is thinking that what you have will be taken from you, and it just so happens that if you happen to have a mortgage, you're already primed for it

01:00:15Yeah, it's true

01:00:21Okay, very true

01:00:26Yeah

01:00:32So, you're looking at it that way, and you're realizing that I also have to work through the scarcity that there's never enough, or it will be taken from me, and Those beliefs are going to impact your trading phenomenally, much less if I make a bunch of money, people are going to like me and stuff like that

01:00:39That that just gets all the other stuff

01:00:47What about in terms of striving for perfection? Do you find that a lot of people come into trading and they're trying to be perfect, trying to be, they assume that there is something they may learn or something that they can gather that will allow them to never lose and never really have any significant losses and only really win

01:00:54Oh, that's the perfectionist

01:00:58That's a, that's actually a personality type I talk about

01:01:02And The perfectionist believes that if you do everything right, you won't be wrong

01:01:06And if I want my engineer, the civil engineer who built the bridge I'm driving over, I want him to be a perfectionist

01:01:10Of course, I want the accountant I work with to be a perfectionist

01:01:14I want the airline pilot that's, that's taken me through the sky to be a perfectionist

01:01:18However, if you take those traits and put them into trading, you're going to lose

01:01:23And so, the thing is, is that perfectionism truly has to die

01:01:31Perfectionism is really about anxiety that you're going to be wrong and you're trying to make sure that you prove

01:01:36You're right, and the truth is, is that it's not about being right or wrong, it's about whether or not you learn and whether or not you perform your plan

01:01:42And, um, the perfectionist believes if I just do a little more

01:01:47Mhm

01:01:53And then they miss the trade because they're just trying to accumulate, accumulate more data to be able to make a better, better read on the market

01:01:56Yeah

01:01:59Entry time and stuff like that

01:02:03So perfectionism, that's, that's just, um, sorry about that, that just, that just doesn't work, definitely

01:02:13And you mentioned discipline earlier, and obviously the ruler

01:02:22In terms of discipline, is there Certain things that you will advise traders to do in order for them to be more disciplined? Get rest, don't do stupid stuff like, uh, drink way too much, uh, sugary drinks, and don't, don't all that stuff, but ultimately it's really more about training

01:02:32And I, I use a technique that is fairly simple

01:02:41It's, um, it's symbolic representation, where I'm looking for you to find something in the world that has symbolic representation to you of discipline, of maintaining order under pressure, the Roman centurion

01:02:46Uh, other people may find Winston Churchill, other people may find a lion, other people might find an owl

01:02:51It doesn't really matter

01:02:57It could be a person or not, um, but what you're looking at is going, you could even use like Gandhi

01:03:03He was highly disciplined, you know, he, and he beat, he beat the British, you know

01:03:09Um, but what you're doing is you're finding the essence of that in something that resonates with you, and out of that, you learn to feel that in the body

01:03:22When you, when you move that, when you take that movement from seeing an object as a symbol to where you can activate the emotional program and feel it, that feeling is the emotional chemistry in the body, altering the way you perceive reality and in acting

01:03:37It's called method acting, and I teach it

01:03:43I teach it, uh, and that's, that's how initially I start people going, you know, you need to find, and by the way guys, the hardest they generally have is the caregiver self-compassion

01:03:50They want, they believe that beating themselves up is going to help them become a better trader

01:03:56And I'll ask them, uh, well, when has that worked? And they say, never

01:04:04And at the same time, if you were to, uh, like the easiest one to quickly get to is like Mother Teresa, you know, uh, I understood that she wasn't really, I understand she was pretty mean, but, uh, the thing is, at other times other people will

01:04:12Find something that was compassionate toward them

01:04:21In my own case, it was a dog

01:04:29The dog that I grew up with is the only thing at that time that really had deep compassion for me and would do anything for me, right? And I actually look at his, the dog's name was Bullet

01:04:37I actually think about, you know, it's really funny, the who I am today, the reason there was a space there for healing and growth was because of a dog

01:04:51I'm sure it is for a lot of people though, you know, and they just might not realize it

01:04:59Yeah

01:05:06But what would you say in terms of, let's say if you were to give an exercise or like what would be the easiest? thing that traders can do who are struggling with their psychology? What would be the easiest thing you could say to them? It goes to breathing, breathing in the presence of challenge and diaphragmatic

01:05:14And what you would do if you really wanted to take another level, have a, have a heart monitor sitting there measuring and find out your, your, um, your heart rate at rest

01:05:21Mhm

01:05:27And then as you're breathing, as you're trading, you're looking over there and what initially, when you first start doing this exercise, you're going to see it bouncing around a lot

01:05:30I mean, it'll be cracking a hundred

01:05:33It'll be

01:05:36And you know, just really crazy, undisciplined, untrained type of stuff

01:05:39But over time, particularly as you look at that, look at the monitor and watching your heart rate and recognize that that heart rate and your breathing rate approximate one another

01:05:45Mhm

01:05:51And as you come to the diaphragmatic breathing, you will actually see the, uh, the heart rate go down

01:05:57Um, when I used to, when I was a therapist, it was very typical to work with a panic disorder

01:06:03And there's nothing worse than having a panic disorder when you're on a freeway around Charlotte, North Carolina

01:06:09It's at end with at crunch time, but what What happened is we would teach them by breathing, and breathing alone, to be able to calm down, to calm down, to get to the side of the road, and to recognize that if you do not fight the panic attack, if you breathe with it diaphragmatically, that the panic attack will be gone in 20 minutes

01:06:17Wow

01:06:25Instead of going to the hospital thinking you're having a heart attack

01:06:29Yeah

01:06:34Okay

01:06:38Yeah

01:06:42But that is how powerful uh that simple skill is, and it's 4,500 years old

01:06:46Hindu gurus were teaching it, yogas were teaching it, and probably the next thing is that uh breath and mindfulness have been worked together, that's the Buddha's work, would you say uh, mindfulness, if you were to break that down, is it just being more aware of, you know, your thoughts, what's triggering them, why they're happening, sort of taking a step back? Is that what you, what good way of saying it, it's stepping back out of thought

01:07:12Um, the way I define mindfulness is noticing what you notice instead of, uh, you know, what's very common when a person starts explaining to me, you know, all their problems, they don't know why in the world it's happening, it's just happening, they're blown away, they're not noticing what they're noticing, they're noticing in, in, in

01:07:31retrospect, but they're not noticing as things build up, and if you can catch it before it builds up physically, you can calm it back down, but mindfulness, uh, particularly, um, there is a, um, exercise I use, and it's, it's called second order metacognition, where you are not just an observer noticing what you notice, but you're an observer observing the observer, and so you're looking at yourself trading, and what you're saying is, what makes this guy tick, and it's nothing personal at this time

01:08:05Nobody's, it's just like I'm observing that I'm observing the fear of losing is gripping, and you're going, why is the fear There, and usually, well, we come preloaded with it from an evolutionary standpoint, but we also learn fear in our families and our communities and our societies

01:08:12Okay

01:08:18I mean, where I live, there's a bunch of AK-47s going off all the time

01:08:25Really? Yeah

01:08:32And to be honest with you, it puts me on alert

01:08:38I'm the only one in the, what I call, the hood that doesn't own a gun

01:08:45And I'm, you know, if I, you only need the kind of gun that you need, and I don't need a gun

01:08:52I, I have, I have faith in the process

01:09:00I love that

01:09:08I love that

01:09:17And one thing that is interesting, actually, that I'd love to get your opinion on is That there are a lot of traders out there who say, and pardon my language, they say psychology is—trading psychology is—what they mean by that, though, when they say that, is that, you know, all you need really is the proper edge, you know, trading edge, and once you have that, all those problems that, you know, those problems when it comes to mindset, dissipate

01:09:25What, what are your thoughts when you hear that? The first thing I ask, are you profitable? Yeah, that's a good, that's a very good question to ask

01:09:36Uh, and what you, and people who have become profitable, most of them have fought the interior war, and they know

01:09:43That, you know, uh, whether or not they do it themselves, whether or not they, uh, would, um, work with me or somebody else, that's another issue

01:09:56Mhm

01:10:10Uh, but the thing is, is that, uh, uh, most of the people saying that they're not profitable, mhm, the vast majority are not profitable, but they have an idea of what the tough, yeah, tough trader is, and you just, you just out-tough it, and the trading gods really don't care, and that, uh, when you're looking at charts, you're actually looking at emotions

01:10:24I had a guy that I worked with, he was, he, we're working on his intuition, and he was really great trader, traded with an

01:10:29Eight-figure account, and um, he, he, he, and I are on Zoom

01:10:35We're, we're looking, and he pulls up a chart, and he says, "Randy, what do you think I see right here?" And I'm talking to this guy who has been trading for 45, 50 years, and all this kind of stuff

01:10:41And I said, "Christopher, I have no idea

01:10:46You tell me what you see." And he says, "Okay, I'll tell you what I see right here

01:10:51I see blood

01:10:55I see a bunch of retail traders hanging around here right at this line, and I'm going to give them a little shake, and I'm going to scare them to death

01:11:00They're going to run, and I'm going to suck their blood." And he proceeded to do that

01:11:05And what it really boiled down to, you can say, well, he had all this big money that he could actually shake a market, blah, blah, blah, blah

01:11:15No, it was the observer

01:11:24He was observing the charts, recognizing that there is a lot of scared money, and all he did is see the point that he could trigger that fear, and they, they ran, and he, he had a feast

01:11:34Would you say that the charts are essentially a representation of, a good trader will be observing the motion within the charts? Yeah, right, because before electronic trading, I've had the pleasure of interviewing many pit traders

01:11:42Yeah, and love the snarly guys

01:11:51Yeah, definitely

01:11:59I bet you, I bet you do, because they really emphasized how a lot of the edge, you know, a lot of their performance was really derived off the emotion in the, in the pit, noticing where people were showing the, probably exactly what you've talked about with it

01:12:04You know, stop or the breathing

01:12:09They're watching, they're, they're looking at the broker, they're looking at the power players and they're seeing what's going on between them

01:12:12That's what they're betting on

01:12:15Exactly, exactly

01:12:18I, I don't think personally, after speaking with them, much has changed other than the environment, obviously

01:12:21Being in the pits

01:12:24Well, what they say is, "I dang well know it's behind those screens, but I just can't see it." That's it

01:12:34That's right

01:12:44That's right

01:12:53And that's what I was getting at, just going back to that, that, um, that phrase that people say in terms of trading psychology is, the reason why I would agree with them, and I want you to just bear with me, is that based on this conversation, really, is that trading psychology, I think, to a lot of people's minds, is the trading, right, in terms of like trading mindset, like, "Oh, you know, this trade maybe didn't work out, or I needed more size," or all trading related when Really, it's psychology, it's, it's, uh, it's the emotions as we're talking about, it's observing those emotions, so it's not really to do with trading at all

01:13:01Does that make sense? Yeah

01:13:08Actually, I would go one step further: psychology comes out of emotion

01:13:14And so you're looking again at an emotional base

01:13:20And if you happen to be a human being, you're primed for being anxious, or you're primed for being aggression

01:13:26Uh, Jane Goodall was once asked, um, what's her favorite animal? And they all assumed chimpanzees because she spent what, 40 years studying them

01:13:32And she said, "Well, it's not chimpanzees." "They're way too much like humans." He says, "My favorite animal is a dog." But the thing is, is that when people complain about the psychology, uh, we like to think that thinking is just the last thing that happens

01:13:55It is, in neurobiology, it's considered to be a neural behavior, okay, and it's electrical behavior at that

01:14:00And so I can understand how people would complain about that, at the same time, is that, uh, ultimately, at the very bottom of it, we are not psychological creatures, we are emotional creatures who rationalize, and how that animal that is us rationalizes produc— This is what I would call the Emotional intelligence of the psychology, and that's what I'm working with

01:14:31But I can understand where, I can understand, uh, where people would question psychology, and what I do is, it's just, it's not worth my breath talking to them

01:14:33Of course

01:14:36No, of course

01:14:39I just give them another two or three years

01:14:42Let them, let them come around

01:14:44That's all right

01:14:47But I think, um, I think it's both though, isn't it? It's, uh, I think a lot of people who say that a lot of the time don't have any edge anyway either

01:14:50So really, because I'm guessing it would probably be hard to work with someone on their psychology when they don't

01:14:57Have any, you know, trading edge

01:15:06You know, it's really interesting

01:15:16It's very common is that as a person develops, uh, this committee of the mind and really starts learning how to run this plant called the human body, is they recognize their methodology is just missing big, huge chunks, and they have to go back and refine their methodology based on a new psychology arising that is more efficient in trading

01:15:25Definitely

01:15:31It's very common

01:15:36Is there ever any times when you identify who, who you're working with that, hey, you know, you're, you seem more suited towards longer-term trading, but you keep trying to fight? With the markets on, like scalping and short-term trading, do you ever find that? Well, all human beings would be better off if they did swing trading

01:15:42It it, yeah

01:15:48I mean, understand in swing trading, there are only a few moments where the stress levels go up and you really have to work, whereas day trading, you know, if you're if you're producing three to four trades a day, is the level of intensity, uh, and stuff like that that's going on is pretty remarkable

01:16:05And to keep that mental edge, it it's not easy, it's not easy

01:16:13And, uh, I see a lot of people who start in day trading, they end up in swing trading

01:16:20It's because they, they can have, uh, three or four days to two weeks worth of time to, to not get cranked up

01:16:33Understand, your, um, our ancestors spent 90% of their time in what we call rest, digest

01:16:36Everybody's just chilled out

01:16:39Everybody's real cool and hanging around the campsite

01:16:42Only 10% of the time was their stress

01:16:45Mhm

01:16:49In today's world, where we are now, about 90% of the time we're stressed and 10% of the time we rest

01:16:52And when you're trading, it's exponentially higher

01:16:56Yeah

01:16:59So, uh, if you're going to be a day trader, you're going to have to really take care of yourself

01:17:02You're going to have to take those hour breaks and

01:17:05Take 15, 20 minutes, just absolutely do anything but think

01:17:08Walk the dog, go for a walk, do whatever, but don't think

01:17:10Allow the refueling to go through

01:17:13So there's just, um, you know, my bread and butter is day trading

01:17:20You know, I'm, I'm, I wouldn't, um, we wouldn't be here if it weren't for day traders and their needs

01:17:31And so, you know, what happens is that most of my time is generated about the brain on stressful events, now

01:17:39Mhm

01:17:46It's not, um, the swing traders that come along, uh, they're, they're pretty far and few between, you know, I don't, I don't see them very much and, and there's not as much intensity

01:17:54There's

01:18:02Certain moments that, you know, certain things are going to have to be done

01:18:10You're going to have to get your psychology together

01:18:17It's not uncommon when I'm working with a trader, uh, we will be taking micro moments, a quarter of a second in, uh, a trade management situation, and we're actually extracting that, elongating it, and we're trying to make changes about beliefs triggering into emotional action that occur within a quarter of a second

01:18:25In terms of preparation, as you talk, is that something you're working on as well, prep, like the preparation before coming to the markets? Oh yeah, absolutely

01:18:31You're fooled to, in my opinion, you're a fool to walk into the markets without a mind that is ready for the task in front of it

01:18:42And, uh, I know that if you're an alpha, that mind is good for about maybe five minutes

01:18:48And I know that if, uh, if you're more of a typical trader, that mind is good for 15, 20 minutes, then you need to be checking into it

01:18:55You need to be reasserting it because it's going to start drifting off

01:18:59Uh, it, it's that's just the name of the game

01:19:04So you have to be very vigilant with the mind you bring to the game

01:19:08In terms of the probability aspect, how are you having to kind of help people and guide people? Into thinking in terms of probabilities all the time? I mean, we have, our evolution has us believing the deception that we're going to uh, control outcome

01:19:25And in caveman times, that would be called control environment

01:19:30And what happens is, it was never true, but caveman had to believe it, or you and I are not sitting here today

01:19:35Yeah

01:19:39And in trading, what happens is that the, the, um, you know, that programming is still there

01:19:42It was very successful

01:19:45It's not going to go away

01:19:48And you're going to have to be able to get on top of it to be able to produce the mind consistently that can trade

01:19:55And the one thing I also

01:20:02What I want to say is probably the biggest, um, the biggest thing I see is a trader will finally master his fears to a degree that allows him to be profitable, and he thinks, "I've got it." Yep

01:20:07Hey, it's great

01:20:11And what he doesn't see is the second demon getting onto the road: success

01:20:15Mhm

01:20:19Is that when you start winning, you start going, "Look at me

01:20:23Yay!" Dopamine, cocaine starts pulsing through

01:20:27And, uh, what happens is, I don't know anybody that would take a line of cocaine, snort it, and then trade

01:20:31Really? That would be crazy because you're, you're in exhilaration

01:20:36You, everything's wonderful

01:20:39You're Euphoric

01:20:41Everything's going good

01:20:44Everything, everything's going to turn out fine, and it really screws up a perfectly good trading mind

01:20:47And you know, ultimately that's what happens when you, um, when you start winning

01:20:52You get euphoric because you start thinking, "I got it

01:20:57I finally have it." You never have it

01:21:02What you have is you learn a system that is able to hack the ancient brain that we have from our caveman times and soothe it for periods of an hour or so

01:21:14And then you need to take care again because if you've taken losses, you've triggered, you've triggered your emotional brain to either fear getting In or want to get that money back, and you have a lot of um, observation you have to do

01:21:32You have a lot of discipline that has to be managed, and you have a lot of soothing that you have to do to be able to keep good thinking, and you have to always be in a position where you're courageous to face your fears

01:21:39Yeah, trading, trading in a nutshell

01:21:43And Randy, I could sit here all day

01:21:46Really, I really enjoyed this conversation

01:21:48It's been a lot of fun

01:21:50It has been, really

01:21:53And uh, everyone at home, you know, drop a comment with your biggest takeaway from this episode

01:21:55You know, like, subscribe, but more importantly, the Links for Randy will be in the description, so make sure you check those out as well

01:22:01Other episodes are on screen, and until next time, everyone, take care.