How do successful traders make better decisions?

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Hi there, welcome to Better System Trader, the show where we talk about all things systematic and algorithmic trading. And boy, do we have an episode to uh share with you today. We're going to be talking about trading decisions and how do successful traders make better trading decisions. And our guest today is Matt Zimberg from Optimus Futures. Welcome Matt. Great to have you here. Thank you for having me. Great to be here. Thank you.

Now I'm really excited about the chat today because we had a uh an off air discussion last week about, you know, what we're gonna talk about today and you've raised a lot of good points. So I'm very excited to be sharing this with our audience. But first, to give, I guess, the discussion a little bit of context, do you want to uh just share a little bit about yourself and your background so that we can see how this is driving our discussion today?

Sure. Um again, thank you for having me. It's a privilege to be here. Um really appreciate it. Um before we start, because I'm a licensed broker, I wanna start with the disclaimer that everything that I'm gonna tell you is my opinion. Uh it's based on my experience. There could be other people with other opinions and based on their experience when I think you should be exposed to a number of opinions out there that you decide what is good for you and what to adopt.

Uh, because I'm in the futures trading business, I just wanted to tell you that uh There's a substantial risk of loss in futures trading and past performance is not indicative of future results. And when it comes to futures, you should trade only risk capital. Um I started in the business Probably about uh twenty five years ago I was in my mid twenties and I became licensed. at the time and I was a branch manager, a risk manager, a salesperson.

I worked in many capacities in this industry and somewhere around 2004 I decided to venture out and build Optimus and I've been independent ever since. Most of our customers are self-directed trading customers. We also do some algorithmic trading through the venues that we discussed, uh but for the most part we serve as self directed uh traders and the experience that have gained

over the years was because I'm always engaged with people in the industry and I'm engaged with customers. So I get a lot of feedback. I get feedback from people who are not that successful, get feedback from people who are very successful. I try to make it an experience, observe the information and share it with others. So there we are today, kind of a a brief history. So we're going to dig into some of that, uh I guess the insights and the knowledge you get from

um, you know, those two groups that you mentioned, the the speaking to the not so successful traders and also the successful ones. And I know you've got some really uh interesting insights to share with us. So Uh as I mentioned at the start, we're going to be talking about uh decision making and how successful traders make better decisions.

Um, so I just want to start off with a really, I guess a kind of a basic question, then maybe there's an obvious answer, but I think maybe as well there's kind of different levels to it. So um how important is decision making to uh trading in the trading process? It's extremely important. Um you before you get

To learn about trading. And I mean the technical That you want to adopt, whether being a trader, investor, swing, you know, swing trader, you really have to understand the process of decision making in this business. And That has to do with m more what are you going to engage on a daily basis? What kind of decisions are you going to make? How will they impact you? How are you supposed to respond to certain situations?

So you really have to start thinking of trading as a decision making mechanism. as opposed to I wanna be a trader and I wanna make money.'Cause everybody wants to be a trader and and everybody wants to make money. But you really have to engage in what decisions do I have to make on the day to day and what is within my strength. So basically you have to decide what are your strengths in the decision making mechanism. And I know it sounds a little bit

vague, but you can go very deep into it. You can be um for example, you can have a strength of being a great visual profession. So you can spot patterns on charts. Now you have to decide, well, how will I make my decision based on that? Or you can say I'm really good in math, so I'm really better in putting all the information into an Excel spreadsheet. An and evaluate what

what trades I'm going to take then. So it's really important to understand your strength, the decisions you're going to make, and basically what are the implications of the decisions, specifically in trading. You have technical decisions that you have to make and you have psychological decisions that you have to And and that will determine basically and the amount of not the amount, but the quality of the decisions you will make will determine your success.

Okay, well before we jump into I guess digging into more about the decision making process, um, you know, when you when you look at some of these uh unsuccessful traders, what type of mistakes do you see these traders make around the decision making process? Um, you know, I I wanna be I don't wanna discourage anyone and and I just wanted to say that trading

is a challenging endeavor. Nobody's born a good trader. So I would say some people struggle, you know, some people I I'm not saying it's for in everyone out there. That's definitely not what I'm But when I'm saying unsuccessful is that you know, there's some sort of an evolution you go through. Nobody's born a good trader. Nobody approaches those things and from day one he's just rocking. There's always some sort of a challenge.

And if you're rocking on day one, you might not be that good on month three or year three. Um, so there's always challenges in trading. I don't want to discourage anyone and I would say you ha you have to understand. So let's call that, you know, a group that just approached trading and they're just beginning their journey. So back to your question. Um can you ask me that question again?

So what what what mistakes do you see unsuccessful traders making in their decision uh process or decision making process? Okay. So one of the m mistakes that they do, um I would say first of all they don't understand truly the game of trading, meaning that the full scope of trading, the scope of the decision making that they'll have to to do. That's first mistake. Second mistake I would say that they're coming when they they come a little bit unprepared.

So when you're not coming prepared, what happens is you let your emotions take over. In anything in life, by the way, in any field. If you approach any problem solving endeavor, and definitely trading is one And you don't understand the full scope of what you're going to deal with, there's going to be a lot of emotion.

That are going to filter into your decision making. And emotional decision making is based on intuition. And intuition is of what we experience sometimes it's very counterintuitive to what you really should be doing. So you should be doing one thing, you end up doing a different thing. So that's one of the mistakes being unprepared.

Okay, so people say, Okay, I know I need to be prepared. Yes, you do, because if you don't, again, emotions will start sipping into your decision making. And if there's a lot of emotional decision making in what you do, it's not going to end well. Also, you know, in the trading game You have to kind of respect your opponent. Meaning that who are you trading against? Right? And people are there are people out there who are extremely intelligent.

So you're getting into a chess game with very intelligent And they want to get the same thing that you want. I mean, they have the same goal, right? The e you know, I I don't like to talk about the money and trading because Everybody that's the end result of doing something good. That's a byproduct. of good decision making whether in business or in trading. But I would say that you know you want to be prepared and not underestimate the players.

um in the field. And again, they're very again, like I said, they're very intelligent. Some of them are very smart. You know, now a lot of people think that, you know, the institutions You know, always have the best traders. That's not always the case. There are people out there who could be At-home traders, and they're very intelligent, and they make very good decisions, and you're trading against them.

So what you wanna do is really respect your opponents and not treat this um unprofessionally. Let's just keep it at that. I I'm I'm gonna make sure um I think you asked me that question. So oh, okay. So I spoke about those two things, not planning and you know, but I also wanted to mention another thing here.

is that you know, a lot of people fall in love with trading. Like sometimes I would come across situations a person would say, you know, I reviewed over the last week what is day trading and I know this is what I want to do. And like, well, again, I don't want to discourage anyone. You know, as a brokerage, we obviously rely on people trading, but at the same time, I wanted to say it's very hard within a week or even within a month.

to understand the full scope of what you're getting into. So I I would say that don't fall in love with trading, right? What I'm saying is don't be Emotionally attached to it, treated as a cold business of decision making that will have a lot of ups and downs. And I w I would say if you approach it that way, you know, then you know you're gonna be up to certain challenges. And so hopefully you'll be less um you won't go emotionally through ups and downs. That's at least what I hope in in giving.

Yep. Yep.

So you made two uh very interesting statements here and I see in the chat um Huz or Hutz um you know put this one in. What is the full scope of trading? And you also um use the term um, you know, people don't understand the game of trading. Uh you I think you kind of were touching a little bit on that at towards the end of the last question, but can we explain what is the full scope of trading or what do you mean by the game of trading?

So the game of trading has a lot of components, right? It has Strategic decisions that you will make. which is basically what method are you going to employ? What are the advantages and the disadvantages of this method? Let me give you an exam. Let's say you decide to day trade, right? Okay, so now you decide to day trade. You can have one definition of day trading. You can say, Okay, I only trade during the day and there's an overnight trade.

But that's only 10% of the business, right? 90% is having the tools to make decisions. in a fast environment. Now you're only day trading, right? So imagine somebody was a long-term investor for five years. He doesn't care if the stock goes up, down, you know, goes sideways. And by the way, in the future is I don't believe in long-term trading. So I'm using other asset classes.

Um,'cause it's leverage. You know, when you deal with leverage on futures, it's it's it's a totally different psychological game. But let's assume that somebody does not have the time, right? So he's he sticks some money in some stocks and you know, it is what it is. As opposed to let's say somebody who day trade stocks or future is on leverage. Now he has to make decisions in a very fast environment. You gotta be able to evaluate really fast.

something, right? I don't know what you're trying to evaluate. Now let's use an example. You're trying to evaluate an overbought market or oversold market or a momentum market. You want to be part of the trend or you wanna maybe trade counter trend, whatever you decide.

Now you have to say, okay, what decisions do I have to make during that and what is attached to it? So for example, so that's the technical part, right? That you think about that. And then you say, okay, what happens when it doesn't go my way? That's the risk management side. Right now you start thinking about okay, what if it doesn't go my way? What do I do? When doesn't it go my way?

When do I know that I'm right? And when do I do know that I'm that I'm wrong? So let's assume you get into a trade, you know, I'm in the futures business, so I'm gonna use that as an example. Let's say you're up a hundred dollars, right? Okay. You're up money. But you're not out of the trade yet. Now to now you have you have to evaluate, even though you're making money, have I made the right decisions? Is the market doing what I expected it to do? Or just give me$100 by fluke?

You know, and there's an accident here and the order market just stops. is or should I should I continue, right? When you think about all the scenarios that you're going to encounter, then you have better, you know, I again you have in in my opinion, I should say, you do you develop a better picture of your decision making.

There's the other side of saying, okay, it's risk management, right? Okay, so now you say, okay, well, you know, when things don't go my way, when do I know it's not going my way? Just because you're losing money doesn't mean that the trade is necessarily bad. But staying in a trade, for example, for half an hour, when you use five minute indicators, then You know, is that a smart decision? I mean, you'll be the judge. I don't think so again, my opinion.

So you have to think about the strategy that you're going to employ. You have to think about the risk management. Now the day ended, right? So you have a choice now. You have a choice of do you evaluate your trading? Um how do you evaluate your trading? Then you have to think about, you know,'cause a lot of people think, well, the day's over, it's over, right? But it's not. Because maybe you need to prepare for next day trade.

Right. So now you have to say, okay, what decision am I going to make tomorrow if I encounter, you know, same markets or a different markets or things of that nature. And this is what you do daily. And it's boring. It's boring. Like people get into trading because they think it's super exciting. It's a boring profession. And not only that it's a boring profession, it's a lonely profession.

'Cause it's only you, you and you. I mean it's you have your nature, you have your risk tolerance, you have everything. I I know that everybody's always interested in knowing what everybody else is doing. Are they buying something or are they selling What the mark you know, but in reality they should be looking at the market and themselves, right? So you have the evaluation process. And then you choose periods to say, okay, um, when do I fix

You know, like if you done things well, fantastic. If it didn't go your way, how do I fix it? So again, you know, when you approach it from n now, if if you think about everything that I'm saying here, it's not necessarily you know it could be applied in many fields, right? Could be applied in many areas, maybe not the overbought over so but it could apply for somebody who's doing something else that you have to evaluate things, right?

So again, that that way you'll start understand you know the process. In that process, the best thing that happened. is that you get to know yourself. You do not know yourself until you start trading. You know we all come where baggage, you know, emotional baggage into trading, you know? you could come from certain, you know, religious backgrounds where they taught you the mud that money is bad. Or you could come from an entrepreneurial family or you can come from a

uh a family that struggled, right? So everybody brings their own DNA into this game. And you have to decide, okay, where do I belong in this game? And this is why I'm saying you have to understand the full scope of trading. Understand the decisions that you're going to make, and that's the way it should be done, again, in my opinion, because You le it leads to cold and calculated decisions. I hope I answered the gentleman's

Yeah. Yeah. So y you were talking a little bit there about the um I guess the motivation or the driver for trading and some people do it because it's exciting or they they have some expectation about you know uh monetary income and things like that. Do you think that those um motivational drivers or factors are different between unsuccessful and successful traders or do they change over time or How do you think that works uh with with um you know being a factor in trading?

Well again, you know, everything that leads to success i is a path, right? So people can start one way. And it can lead you know, they can start With one decision making But then they're intelligent enough to realize, you know what, this is just not working. Maybe I'm emotional. I'm not approaching it right. I take trade I I trade way too many uh methods. Uh try to capitalize on every move in the market. Um people know when they're emotional.

You know, I give enough credit to people and they know when they make decisions based on, you know, psychology. I would say that successful traders Their main goal is first of all risk man. If we truly believe that nobody can predict the market, the only thing you can do at that point is really have the best risk management plan to say what happens When things don't go my way. You know, how do I control that? So I think

you know, good trading and good decision making is part of risk management. So I think people in the transition from being amateurs to professionals, I think the aspect of risk management will start playing a much bigger role. Um also you start believing in your conviction. At first When you start out, you're susceptible to a lot of beliefs out there. You know, people throw at you different ideas. This is good. This is good. And people would ask. Not such intelligence.

I and and you know again, you know, it's easy after twenty five years to to be you know, to say you should do this or you should do that. It comes with experience, but you know, uh again my goal is not to put down people who ask such questions. But really tell them that it really doesn't matter. Like they would say things like, What is the best day trading indicator? Or what is the best moving average for a day trader? You know? And

There's no such thing, really. It's it's the tools that you create and work for you and the risk management that you apply. And again, it should be a very individual thing. So I would say, you know, successful traders have a very strong conviction about what they do. So this might start out being influenced by books and courses and all kinds of gurus.

And at some point they say, you know what? They're just excuse me for my friends, you're full of shit. And you know what? They're all saying the same thing. I want to. you know, here are the things that have worked for me and I'm going to stick with them, right?

And they went through the process of some good traders even have gone through the process of being good and then they wanted to make it better, right? So they started adding things on what on top of what they traded. And they realized, you know what, more is not there.

So again, you know, in the transition you st of being a better, let's call it a being a better decision maker, you start sticking with your um The third thing I would say that good traders, which is really important, they filter information.

They know how to filter useful, resourceful, and practical information. So if some you know there's a lot of Education out there online, whether free or paid or videos or whatever the case is. Right. So as we said, you know, in the beginning you're in

You know, an experienced guy can come and say, no, this is just baloney. This is not true. Not watching this, not looking. So you start filtering filtering the information that you're getting from people. Like I'm at the stage, right, of of business. Personal life and everything else. I don't care about everybody's opinion. There's certain people that will add a certain perspective to my life or my trading or my thoughts

about my business that are practical and I value and I didn't consider it before. And again, that's also part of decision making, right? If you're letting a lot of information out there influence you. You know, at the end of the day, it's very hard to make decisions. Like imagine making decisions with 50 variables or with three variables. So if you remove 47 which are irrelevant and you stick with the ones that are relevant, I think you'll become a better decision maker in trading.

So how do you actually how do you actually determine which ones are relevant or not? Pain. Pain. There's no other way but pain. You know, you see at the end what works and what doesn't. You know, you have to go through the exercise and you s it's painful. Right. So Is going through painful experiences. Nobody likes it, of course. But you know, your losses make you think twice about all the actions that you take.

You know, like you start thinking, okay, you know what? I'm starting. I mean, you have to be observant, like people have to be observant and conscious of their decisions. If you're observant and conscious of your decision, you're starting to say, you know what, this is not working. This is not working. This is not working. And then you have stuff that does.

And then you know, you say, Well, you know, I've listened to this source of information and it helps me and this source of information doesn't help me. And so you start understanding who is practical. You know, um, who's giving you more practical advice? So sometimes it's through pain.

And I think, you know, the more experience you gain in futures, you start moving from the theoretical into the practical. Because there's a lot of theoretical that starts out when you start as a trader and Somebody with one percent more than you sounds like a genius when you don't know anything in that field.

And any field out there, if any if somebody knows just one percent more than you, they sound like freaking geniuses. And you know, and and and you as a beginner You're im you know, it it's it's it's easy to impress you, right? But it's very hard to impress somebody who's been doing this for a very long time.

So I'll give you an example. So when people start out, there's all those cliches, you know, trade with a trend, let your profits run, you know, uh, you know, cut your losses short, which is really great. It's good, it's good advice. But you know it's so hard to implement because they're not defined.

Like for somebody who didn't deal with trading, cut your losses short, well, you know, immediately as you start, if the trade doesn't go your way, should you cut it out immediately? Or you should lose three hundred or should you lose three thousand? So at that point you're like, Okay, this is a good definition. You know, but there's a lot more depth to that. So anyway, I hope it answers the question.

Yeah, yeah. So you you you mentioned a little bit earlier um in that process of Uh at the end of the trading day it's not over because you can go back and review your decisions. And then you also made a statement uh before that about Um uh just because a trade is losing doesn't mean it was a bad decision. So how do you balance the two? Like when you're doing a review of your trades uh for that day and maybe they're all losers.

How do you know that you made bad decisions there and that wasn't just well it is what it is sometimes in trading that happened? Go on, sorry. No no, all good. Um so first of all journal things. You know, take a jour, you know, there's trading journals out there. You know, we're we're trying to build one. You know, we have a platform called Optimus Flow.

I'm trying to there's a trading journal attached to it. I think I'm one of the only brokers out there. I'm sure there's others, but I don't see many other brokers providing a journal. And so You know, if your broker doesn't provide you with a journal, get a journal. And and um and and it specifically answers your question of what do you do at the end of the day. You have to put your trades in the journal throughout the day.

Or after the market closes, if you have if you can do that manually, if you're a day trader and you click a lot, you better work with something that just streams into your your trading journal, right? Because it's hard to upload. But but you know what happens? Here's what happens. What happens is you're starting to be a better decision maker because you become observant of your decision.

Let me give you an example. Let's say you had a bad week. Okay. You traded Monday, Tuesday, Wednesday, Thursday, Friday, and every single one of those days you lost. And now Friday comes around and you say, Okay, I've made a lot of mistakes

And it stays in your head, you know, and you think about it, but not documenting those mistakes, you're doing a disservice to yourself. Because within all those mistakes that happened, there could be some Golden opportunities, I call them, you know, of of of reading your mind.

Maybe there are certain hours that were better for you. Maybe there were certain markets that were better for you. Maybe you traded three markets, but in one of them you won and you lost everything in something else. Maybe there were hours. There's something that a journal detects. about your trading that you can actually look into it and have like a a map and say, wow, you know, here's my personality, here's all this decisions. It's very hard to know yourself from thinking about yourself.

It's all done through actions. So you wanna document it, you wanna go back and you start thinking about, you know. I've made a lot of good decisions in my life and I l made a lot of bad decisions in my life. And I'm talking about both in investing and trading and I'm talking about personal life and business. But you know when I make good decisions. I write a lot of what I did right, what patterns I use, how I thought, what I did. On the other hand, when my decisions are not that great.

I write down you know the things that I've done in the wrong way. But I always write more. when I do things well, because I want to train my brains to do things well in my decision making. And I don't want to write novels. You know, when I make bad decisions. Because then you're trading your mind to really make bad decisions because you're writing about and your mind will start getting attracted to that. So I know in trading journals, one of the things you should do is also have a note section.

In the note section You should. When you make good decisions and write, why did you make this decision? And write a lot about it. And when you made a bad decision, You know, right? Okay, this was not a good decision. Going back to your second question, which is really important and it's a good question, you said just because it's a losing trade, it does not mean that you done something Wrong and you you are correct. And this is where it's really challenging to distinguish sometimes.

This is where experience comes in and it says, Yes, everything lined up. Look a lot of amateurs, for example, would ask, I don't understand. I did what the moving average did. I looked at the RSI. I looked at this, I looked at that, three time frames. And I executed trades and didn't go my way. Well, the minute you execute it, there could have been a fund, you know, some

fund trader that decided to get out of a trade with a lot of stocks and it affected, for example, the stock and it affected the futures market, right? The index. Maybe it was just part of the S P or part of the Nasdaq. I mean It just affected so there are things that are happening while you're trading that might affect your decision making.

This doesn't mean but but you were disciplined, and this is where experience comes in. We say, look, you know, I if I exercise this method over and over and over again, it led to positive expectancy, and once in a while, it doesn't. What happens a lot of the times with beginners is that they don't know where to distinguish between the two. That they they think that every single losing trade was just a complete catastrophic mistake.

And oh an only time. And again, you know, a trading journal would do that because you can say, you know what, I did that trade thirty times and it every time it lost the trade. Okay, maybe maybe now there's something you should think. But you know if you did it, you know, thirty times and let's say there was a fifty-fifty, then you say, okay, maybe I should improve my risk management, not the method. Right. So maybe I can improve my decision making about that product. So

I I really like the point you made there, Matt, about um I I think it's human nature at times to really focus on what we're doing wrong and on the negative aspects of or results of our actions. But I like how you said by focusing more on the good decisions that you make, you're actually training your brain to continue doing that that good decision. And, you know, you can you can have a quick review of the mistakes that you made or the

the poor decisions and address those but really don't dwell on them too long because you're going to I guess kind of attract your mind to that. So I think that's a brilliant um

A brilliant statement and it applies I think to to all aspects of life, right? It's not just a a trading thing. You know, we make decisions every day about all different kinds of things. And um I I remember actually our our discussion off our last week, you made a point about um, you know, the importance of of learning

from things or people outside of the markets can actually have an impact on your results in the markets. Can you explain a little bit more about um, you know, what you mean by that? Okay, so your question is, you know How You learn from the mistakes of others? Is that is that the question?

Yeah, so I guess the question is what can you learn from people or things outside of the markets? How do you go through that process that can I guess improve your overall decision making?'Cause you shared with me that you study Uh you know, entrepreneurs and business people and all those. Oh, I see what you mean. impact on on the markets as well. So can you um yeah share a bit about your thoughts there?

Okay, so so yeah. What you wanna do It's part of a kind of a mental exercise is to think about, you know, um people who take decisions in risky environments. You know, I I think your question has two things. So I'll I'll try to answer the first one and the second. So you learn f so you wanna look at people that are totally outside of trade. Right. Let me give you an example. Let's say you you look at a rock climber. So he goes out there and he climbs a rock.

And every single move that he makes has to be absolutely perfect. You know, or near perfect. There's no ropes, he's got only his hands and his legs and he's It is climbing a f something that's very flat. Like, think about the risk taking of somebody like that. How calculated he is on every single detail, right? When I look at those things, it just absolutely fascinates. I don't have enough courage to do anything like that of those kind of decision making, not with this body. But

You know, maybe in the year from after twenty twenty three I'll get on a, you know. Um Yeah. Better practice. Maybe I'll try it. But but going back to it, right? I mean, like think about like the precision they have to do and the risk taken. So every single move they make is so calculated. And so you have to think about things of that nature to learn to be calculated. Or you can look at people like venture capitalist capitalists or

uh company or companies that provide seed capital. Think about their risk environment. They're sitting there And somebody comes to them with something like this, right? Like a phone. Imagine somebody came to them with a phone twenty five years ago and is gonna say, Oh, I'm gonna have all those apps and people will talk to one another and even people will be able to send money to one another.

And somebody like would say is is is is nuts. Like he's nuts, right? Yeah. So now he's asking you for ten million dollars. Give me ten million dollars, I'll build you this thing with apps and everything um, you know. And so venture capitalist always face An unknown environment. Meaning that you know they don't know every single field out there. Nevertheless, they developed so sort some sort of a method. To evaluate.

So they evaluate the people, their commitment, skin in the game. So so this is what I'm saying when you start being successful, you start developing developing a certain method, right? And a certain belief system. Or if you look at military people, you know, here's another example.

You know, I I I I'm I become very emotional when I talk about US soldiers because, you know, I mean, there's so much risk that they take out there in the world and I read about them, but you know when I read about their tactical implementation, they gotta have such discipline because again, their enemy is intelligent, they have to make very smart decisions.

There's almost no room for error because if they'll be spotted or they'll do something wrong, not only did they put their own life at risk, they put the team's life at risk. So I've learned you know from people outside of trading about how do they make their decision in that in those environments, which helps me in business and investing and everything else that I do. So it's important to learn because I I find that, you know, people when they get fascinated with trading.

They'll just have a library full of books just about trading. Nothing else but trading, YouTube trading, Twitter trading, following fifty thousand gurus out there just about trading. But you know, you don't know if they're successful. That's the problem. They might and and you know The thing that's really hard, and I'm going to get to your second question in a minute, the hard thing about decision making is unlearning.

If you have years of bad habit You know, people will do what they feel comfortable. Not what they should do, but they feel comfortable mentally. So if they have years of bad decision making unlearning the process, it's a very challenging environment, right? Going back to the second part of your question to understand how people make mistakes in general, I mean, you know, typically the mistakes that you're making, everybody's making.

Everybody thinks, you know, that their mistakes are so unique to them. But what you have to understand as a trader is that you're fighting, you know, a m I was about to say a million, but in reality it's a billion years of evolution. A billion years. You're fighting you you you're getting into a game where you're supposed to control your emotions. And people say, you know, so here's another thing. They say you gotta be disciplined and trained. And it's again it's a very vague state.

Of course you have to be disciplined, but in what way and how do you overcome years of instincts, you know, fight or flight or Things of that nature that in trading are amplified. All our emotions are amplified in trading because we don't want to lose money. And so you you you learn so the mistakes that you're doing as an individual, everybody's doing. And there's enough people out there, for example, on forums like Reddit that I'm I'm not a big fan.

But you know, people spill their emotions over there like other people are clinical psychologists. Oh, you know, I lost five hundred dollars today, I'm desperate, I don't know what to do. And then they're asking for advice and then they have a thread of a thousand people just like them, you know, giving advice. So the blind is leading the blind. It's a complete, you know, a flight over the cuckoo's nest, right?

It's a madhouse, and so I would say, you know what, there are books about I think um bread stin stin stin. yeah he he understands the concept of psychology Read his books, right? He he he he's a psychologist. Again, get your information from the right people. Once you start doing that, you'll realize that the mistakes that you're doing are not just your mistakes, that everybody's mistake and everybody's up uh doing it. And once you start realizing

that it again again it takes time. You say, Okay, I think I have to start fixing, you know, being emotional about my trading. You know, not one of the biggest thing is not to Knowing when to I I know it's a vague statement which I don't like, but you have to recognise at the end of the day, um, they they call it, you know, cut your losses short, but when to quit.

You know, when to quit, you know, and it goes both sides. It there's a certain you know, you can lose a lot and you gotta quit and not because your mental game is not at its best, or you make a lot. And that also where your mental game is not at its best, because you're overwhelmed.

You know, you're overwhelmed. And maybe when you're overwhelmed, you also it leads to greed and I want to make more. And when you feel it, you stop. And again, only experience shows that. So over time, realize your mistake.

are everybody's mistakes, what you experience, many exper many experience. But the people who move forward become conscious, they become educated. Again, the things that I said, you know, they have um They start listening to practical people and hopefully they improve their performance.

Hm. Yeah, y actually you you mentioned a um at a very early in our discussion today about understanding the mistakes of others and being able to capitalize on those mistakes. What does that exactly mean in the context of the markets? Like how can you capitalize on other traders' mistakes? That's a good question. It is it it it is tough. Because I think it's really hard to read the market. But just understand, you know Let's say

Okay. Let's talk about markets that are falling. Okay. What happens when markets that are falling? Right? They're just they're falling and falling and then they stop and then they fall and then they stop. You know somebody with experience. will not try to buy into falling markets all the time. Because he knows that amateurs who are buying into those markets. They'll be thrown out really fast.

And they'll have to sell more and more and more. So somebody's intelligent on a day like this, I shouldn't say intelligent, I should say experienced, right? Because you know intelligence has nothing sometimes has nothing to do with this game.

You know, it's more of a discipline thing in my opinion, but intelligent helps. But you know, somebody observant, let's say, they don't try to you know they don't exit the markets too fast because they realize that a lot of people will try to buy and they'll be flipped and sold out. You know, either they'll get out or the stops will hit, which will lead to more losses and so forth. So when you start understanding how people think um in the markets, which is basically how we thought as amateurs

They take advantage of those situations. Or let's look into a market that's going up, right? There's gonna be a lot of amateurs, in my opinion, that will try to short that. And will try to say this is the top. This is the top. It's you know, I can't indicate is sure one thing, but I know in my heart it cannot go higher. Explodes higher. And this is where M, you know, this is where professionals can say, you know what, it stopped. You know, for an amateur it says maybe top.

And a professional would say, you know what, I see people here accumulating positions on short And they'll be thrown out and then they'll the market will go even higher because they will have to buy their positions back. So over time you realize, you know, how people behave and you somehow integrate it. It doesn't mean that you'll be able to take advantage of it daily or by minutes.

But you could potentially take advantage of it when very large moves occur. Because on those days, those are the days that really kill Big up days and big down days. Because they either try to short a market that's just going up and try to call the tops. And So an experienced person understands how the auction market works. And he thinks about that, right? So think about it. Let's say m me me and you, you know

we're going to an auction to buy an old Mustang, right? So to start the bid at fi right? Everybody likes an old American Mustang. You know, so let's say they're starting the bid at fifty thousand. And n nobody bids. And then somebody raises their hand and they say 55, 60, 65. And here's a person who wasn't willing to buy it at 50. Now he's offering 70. Right.

And the market when it goes up that fast, there is that psychology that, you know, people buy into this. So you don't want to stand, I mean, you wouldn't be in an auction when the car gets to sixty-five. Let's say hypothetically speaking, you were able to short it, right? You wouldn't call the auctioneer and say, I'm shorting it, right? Because you know it's gonna go up. The markets have Kind of this you know, a very similar attribute to the other.

You know, it behaves in a certain mechanical way. And once you know how the amateurs, you know, will behave or the people without the discipline, this is where you can come in. And I'm not saying you necessarily you know, I have to be careful with capitalizing on their mistakes. But instead you're saying, you know what, I'm not gonna make those amateur mistakes. And starting to eliminate your mistakes, that's already part of better decision.

Hm. Yeah. But I think you can see that type of behaviour in the market. Of Uh, you know, fear and euphoria and you know madness extend for a lot longer than you expect, right? And you know, these types of conditions can go on for years, I guess. And I think you need experience and time in the market to recognize that that's what happens. What what about if you're kind of a a newbie or a beginner in the markets? Um, how can you protect yourself from things like that?

I I don't necessarily know if you need to protect yourself from that. Maybe you need to just trade what you see. You know, overextended market. You know what? Before I talk about the markets, let's talk about, you know, something else just a little bit different. Sure. Okay, it's just just for entertainment. You know, back in the day between the 12 1200 or 1500 1600, there was those people called alchemists, right? Yeah, so they convinced. Everyone that they can turn copper into gold.

And they took advantage of, you know, kings and You know, aristocracy and anybody who had money and they said, you know what, we can do it. So they pretended to be those chemists and do it. And that lasted 300 years, right? Wow. That last like imagine you had an index of an alchemist. You know, if you tried to short an alchemist index, the hypothetical, yeah, I mean you would lose for 300 years. so you know

You know, when there's euphoria in the market, you you have to trade what you see. You see long markets, it's long markets. You trade short markets because you don't know. You know, that's l y you don't know how long something lasts in terms of a good market or overextended market, because it can be years. And I've seen traders, unfortunately. that said, you know, like if you try to, you know, like for example now trade against the Fed.

You know, if you're saying you know, he's not gonna raise any more interest rates and he kept on raising and raising and raising. So if you traded instruments that are related to that, right? It's very hard. So so I don't know necessarily know how to protect yourself. All I can say is that you have to trade what you see. You see down market

They're depressed markets and they go lower and lower, you have to trade them that way. You see higher markets, you have to do that way. Now Two thirds of the time the markets are not trending. Even in an up market, an upbeat market that keeps on going higher, or down market that goes lower, there'll be a lot of days that are, you know, in between that are not trading, right? You have to learn as a day trader to deal with those markets and not try to, you know

you can have an upday in a down market, you can have a down day in an up market. So I don't have a pill to protect yourself about with something like that. I just have to say you trade what you see. Yep. So then does that then imply that like a contrarian of ro approach to trading or investing is dangerous? Um You know, I'm not a big fan of contrarian trading. I don't think it's a quantifiable theory. Um, I know there's so a lot of people could disagree with me on that, but you know, so

You know, a contrarian sometimes can use it as a partial strategy. You know, like you're along the market for five years, it gave you way above average return, so you decide to exit early, right? Decide whatever asset you were trading, you decided to exit early. So knowing fully well that this market can keep on going high. Or if you're in a down market, right? If you're if you're in a down market and you short at some

You know, and you were not long. Let's say you were short. And the market just keeps on collapsing and collapsing and collapsing. And again it gave you some sort of above average return, you know. But To have contrarian trading as a philosophy of trading long term, I really don't think it's implementable.

You know, I don't think it's something that that's quantify. Now it's a fascinating thing, right? Because it's a fascinating thing in the in the trading world because it's so easy to say, look, the crowds are wrong, do the output. Yeah, but the crowds are wrong for a very long period of time or a short period of time. So timing that period You know, it just it's extremely, extremely tough. I mean, I think the Japanese market has been down for thirty years.

Yeah. You know, I think recently, I mean there was a period that it was down for straight. You know, now here's the interesting part. In between, there were insane rallies. In between there were just huge rallies in the Japanese stock market. So where would you be a contrarian on it, right? So for me, I'm sorry, I'm not a big fan of

Sorry. That's okay. No problems. Now, um, I just want to ask you about um You you made a statement before about you have to know when to quit. And it got me thinking about how do you know when not to start? Uh I don't know about you, but I've got some friends

who uh you know, they're nice people but they're very slow in their decision making and I imagine they they may or may not be good traders, I'm not sure. What do you think is If you're a a poor decision maker or a slow one or you can't handle risk or things like that, do you think those factors should should maybe stop you from being a trader or inhibit you from being a good trader?

Well, as I mentioned, e everything is an evolution, right? Everything you can start one way and you can evolve to do things in a different way. But I would tell you this, I've never met a good trader who was a poor decision maker. You just have to find A method that fits your decision making strength. If you're not a fast decision maker,

It's very hard to be a day trader. Maybe it's better for you to be an investor. You know, and just you have to recognize, like, if you're overly calculated, like my father is an engineer. Is an overly cautious and calculated person. It's a very successful person. He's a good person. I didn't inherit his DNA, for example. You know, I'm a much faster decision maker because I'm comfortable with that. Some people need to sit and think, you know, clearly about their decision making.

You know, and usually the you know, like engineers need to think about that, you know, or programmers. And then there are people who work in environments that they just fast decision making. You know, some of them Could come from other areas. I don't know exactly what, but it's somewhere where they can they relied on their intuition much faster than something calculated. So really, you know, y you have to like I said, you know, trading will amplify your weaknesses. it always does but

you can bring your strength into it, understanding the weaknesses that you have, and adjust accordingly, if you can. But one thing I would say, for sure trading is not for everyone. That is a hundred percent That I know because and and you know what? And so what? Look, I mean, you know, there's some people that are built for it and there's a thousand other avenues of success. So nobody should and and and and here's another thing, you know.

There are people, let's say you dec you you love day trading. Let's say you love it. And everything tells you that you're not, you know, you're not a FES decision maker. Well, guess what? You can day trade one day a week. Or you can do one transaction a day, or you can do ten transactions a day instead of a hundred transactions a day. You can adjust what you do according to to your nature.

You know, and then at the end of the day, see if you're comfortable in that environment, evolving in that environment. And if you are, great. And if not. Then you know, listen, you call it quits and you say this is not for me. And it's fine. You know, it's not like there's a thousand ways to be successful in life. Trading is just one of them.

You know, so so and I feel comfortable saying it because you know You know, I I want to help people who wanna succeed in this game, but I also don't want to dangle, you know, the the this sad reality of people today following TikTokers in in in in Lamborghinis that they rent for a day when they live in their mother's basement, right? So their video is

just from productions and selling things, you know, they couldn't trade their way out of a paper bag, right? So I don't want I don't want somebody to who got into it to be, you know, it uh to affect them. Yep. Yep.

Um, so I just wanted to uh we'll start wrapping up here in a couple of minutes, but I wanted to ask you, so you've s you've shared a lot of um or you've shared some approaches to how to improve our decision making, but are there any books or uh other resources that you can point people to that uh maybe if they wanted to you know improve their decision making they could use those as a reference point.

Um I wrote here um let me see. I think that was um you know there's there's a bunch of look, I I'm I'm going to answer that way. There's a lot of books out there. about successful people and how they approach things. You can learn from every single one of You can learn from people who are venture capitalists. They have podcasts. You know, look listen to venture capitalist podcasts. It's not only about

or just intelligent and smart people how they go about making their decisions. Sometimes you can borrow things from them into the trading world. I definitely, you know, did it in my business. Um a great I read recently three good books which are uh it's called The Great Mental Model. So it really, really are it brings disciplines from other areas such as physics and biology and everything else.

kind of into the way of thinking. So you have the great m mental models. That's the recent one that I've um done. I have here a huge library of books. I read all the time. Um and and and and again you know, read about successful people, people who built companies, people who took risks. I mean, even if you read about a rock climber, you know, he could give you some insights there. Could be this one sentence.

Seriously, he could have this just one sentence that will be an epiphany and you would say, wow, I never thought about it this way. Maybe I need to apply it, right? So trading is really an it's it's an art and a science. You know, you you know the beautiful thing about trading, which I've always loved, you know, although I still say it's not for everyone, that it just combines so many challenges. You know, it combines tactical, strategical, psychological, emotional challenges, and nobody.

Nobody can get up in the morning and say the next morning and say, I know the markets. You only know them up until the last time you trade. Those are your conclusions, and tomorrow is a brand new day. And it's just a challenge. You know, one thing I wanted to add that I didn't think I addressed in the decision making, which I think I should, because it's important. So Everything that makes money, you solve a problem. In everything in life where you make money, you solve a certain problem.

In trading, you have to solve a problem. Maybe you solve a problem of over-evaluated markets or markets that are depressed. or anything else, you know, nothing I mean, you can have you can solve the, you know, momentum issues or but there's a problem that you solve. And once you recognize that there's a problem that you solve, then you know Then you can start saying, okay, what tools do I have and start making decisions about it. And one thing I wanted to say is that in anything in life which

You know, and especially in trading, making money is a byproduct. Just remember that. It's a byproduct of all your decision making. And never forget that, right?'Cause they think the primary goal in the market is to make money. Your primary goal is to make good decisions. You know, we could have another episode, you know, about risk management. Maybe we'll one day we'll do it. Um But you know, applying risk management techniques to to the that is the result. You know, money is the result of the

And when you don't make good decisions and you don't have good risk management and you apply tons of emotions, you know, and I use the word tons of emotions because I don't think you can completely eliminate emotions. It's impossible. You have chemicals, you have emotions. Right. Some people say, Yeah, I don't wanna be emotional. No, you'll be emotional. You you you will learn

to apply things regardless of your emotions because you think that it's working. That's what happens over time. Your emotions don't go away. You just do this, I don't care. Not adding money to a losing position like I did, you know, 10 years ago when I started, because I thought, oh, if I add money, it will, you know, it will be easier for me to break even. You don't have those thoughts anymore. So that's what it is. Um What was the question again?

I don't know, but that was an excellent way to wrap up the show. So inspiring. I think you put a uh what's the saying? You put a bow on it. So um I think you oh the the question was about books actually, now that I remember. Oh books, that's right, yes we have books. So the last questions you have to ask me is uh, you know, anything else next that comes up. Okay, so I'm gonna ask myself is there anything else? Yeah, because we're near the end.

I'm gonna ask myself the question, Andrew you can take a break, I'll continue. Thank you. So um first of all, uh okay, so so so here's the thing. Be patient, don't be obsessed with trading. Um I wrote here, Well I believe in goal driven people, you need to learn everything, you know, that it takes time, right? Um it takes time to evolve to be a good decision maker. So Be slow, be methodical, learn as you go, don't overtrade, right? That's what it is. So

Um, trading is not about I wrote here, it's not about posting your success on social media on Reddit or Twitter or Instagram. Um as I mentioned before, you know, you all you have to be accountable to yourself and and make it all about yourself. You know, it's a lonely tr I always say

Trading is a lonely world and it should be lonely because it's just you um against things. So let me see if there's anything else before we wrap up that I took a lot of notes. Um You know, that's something that's you know, uh that would be crucial to your guys'cause I don't wanna leave them um With anything with any misinformation. Um let me see here. Um We discussed this. Um

I think you did a great job today, Matt. You shared so much uh insightful knowledge with us, so I'm sure everyone is well i i i hope that it helps yeah look i mean There's um I'll tell you this. So, you know, I I also wanna give people a break. So here's what I would say. We we have um a community forum. It's called community dot optimistfutures dot com. If you go there and you register and you ask me a question

I will answer it. Um it could be i anything you want. There's no such thing as, you know, bad questions. Everybody has to start somewhere. Um you know, the more years I'm in this business, the more sympathetic I am towards beginners. When I started this there was this much information. And today there's this much information.

And to filter through all of this. This is the difficult part. So when I started, you know, Google just maybe started somehow, right? But I would go to a bookstore, get a book. Usually, somebody who wrote a book, not always, not nowadays, it's more for promotions, but back in the day, somebody who wrote was there were really good books.

So I used to sit there and I used to read it and today people are just overwhelmed. And and the one thing that that it's become sad and it's all of us, myself included, is that we filter information, we scan information, we don't go into depth, you know, we just scan kind of things and, you know, Um so so again go to community dot optimist futures dot com, post your question.

Um, if you're looking for a future broker, I'd love to earn your business. So it's optimistfutures.com. We have our own trading platform. And again, I want to end with a risk disclaimer that there's a substantial risk of loss in futures trading. Best performance is not indicative of future results. And on a personal note, I wanted to Thank you, Andrew, for having me here and everybody who attended. I wish you the best of luck.

Yep. Excellent way to uh end the show. And I can see there's a couple of questions in the chat here about risk management and other things. So uh we're over time now, so maybe uh if they go to um the community dot optimus futures dot com and they can ask you directly there. So thanks a lot for your time today, Matt. It's been uh great chatting to you and you've shared so much great insight with us. So I'm sure everybody is uh thankful for that and um

I wish you all the best. Have a nice um holiday break. Same, same here. I wish you guys uh all the best as well. Thank you for having me and until next time. And good luck with your rock climbing next year. Ah, thank you. Thank you. Alright, cheers. Okay, bye bye. Next step is to head over to better system.com. Marketing is hard.

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