217: Jared Tendler – Practical Solutions to Strengthen Your Mental Game

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He's also the author of several books, The Mental Game of Poker, Editions one and Two, which I know have been enjoyed by many traders. But this year, Jared has released a new book, specifically with traders in mind. It is titled The Mental Game of Trading. In my chat with Jared today, you'll pick up practical ideas and actionable tips for systemizing mental game and correcting flaws, recognizing when you're playing an A, B, or C game and how to act accordingly.

Managing common emotions that traders are vulnerable to, such as greed, fear, hesitation, perfectionism, tilt. And that's just a sample. There's plenty more packed in over the next hour. Last of all, if you would like to get your hands on a copy of Jared's newest book, the link chatwithraders.com slash Jared will take you directly to the mental game of trading on Amazon. Hope you enjoy the episode team. I present to you once again Jared Tendler.

Now we don't normally well I don't anyway, don't normally think about system with regard to psychology related matters. Obviously it's pretty natural to you, but to I think to a lot of us it maybe not so much. Are you able to d just describe, perhaps from a high level here, how mental game can actually be systemized?

accustom to their own strategies that they've used to manage a lot of their mental game issues. You know, whether that be just exiting trades early, taking time off, walking away from the screen when they've got active trades. You know, there's lots of things that traders do to kind of manage their emotions, but they're not actively working to

heal or correct, you know, those emotions permanently. And that's not to say we're trying to make you robotic and numb to emotion. We're trying to resolve the volatility that makes your emotions excessive in key moments. and forces you to violate your trading strategy, your system and make mistakes and, you know, lose money, et cetera. So the the system is kind of geared towards that outcome. Now how to get there.

You know, the first fundamental step is to map your pattern. Map the pattern of of fear or anger, confidence issues, discipline issues, greed. And and if you create a very clean map and that map includes the thoughts uh the emotions, um uh the specific uh uh actions or or physical sensations.

the changes in your decision making, the changes in your perception of the market, or the changes in your perception of your positions, that you experience at at some of these key moments and and in some in some respects in escalating fashion, right? So you do it, you know, at a low level of emotion as it increases And the reason that is so important. is because you cannot stop a problem that you can't see. And if you don't have the vision in real time to recognize that your emotions are rising.

you can't stop them. And and it becomes a a a lot like, you know, the hindsight of seeing, you know, a trade and and either out of fear or for whatever reason, just missing it. Right. Once the opportunity is gone, the opportunity is gone. You cannot get that back. And the same is true from a mental and emotional standpoint.

Correction and improvement happens in these key moments. So everything you're doing to prepare yourself ahead of time is for those moments. And mapping your, your, your emotional patterns, your thought patterns, your behavioral patterns that exist around this stuff is very, very similar to gaining the kind of data that you have as a trader and being able to see when those opportunities in the market occur.

So so that that first step of mapping your pattern is the most important thing. And a lot of traders who are listening to this will say they have a decent idea of what their what that pattern looks like. And I I would agree with them. But I also would suggest that if you actually went through the process that I'm suggesting to to study it, to review it, to add notes to it, and essentially kind of iterate on it for a few weeks.

you will find a lot more data. And, you know, the book is really kind of designed to help traders to, you know, identify pieces of of information mentally and emotionally that they wouldn't necessarily connect.

To themselves or that they don't know are relevant. Um so that that's really key. Then once you've identified the pattern, now you've got to develop a strategy. to get to the root of the the that pattern, uh the root of that that problem. Um and this is a fundamental shift in in and a lot of perspectives, which is that the emotions that you experience, the thought patterns that you experience, they are symptoms, right? They're signals of an underlying problem.

uh you know uh what i what i call these performance flaws and i in the book i talk about i think around 30 of them examples like confirmation bias, uh high expectations, uh a weak process. Uh, being too competitive, uh, always wanting to be right, believing you're unlucky, you know, hating variants. I mean, these are just a handful of them. Those are the real problems.

Right. When you have those deeper flaws, illusions or biases, whatever you want to call them, they produce the emotional volatility that you see on the surface. They produce those thought patterns where you get pessimistic or, you know, overly aggressive. You know, that that's, you know, the the the the the real problem that we're trying to attack here. And and

You know, you've got to identify what those flaws are so that you know in real time what you're trying to correct. So, you know, you take somebody who's struggling with FOMO. And and you know, a a common one with that is like this underlying belief that there's never gonna be another opportunity. And on the surface you say, well, that's absurd. You know that there's gonna be more opportunities. However, a lot of traders still harbor this belief and it shows up under emotional stress.

That they believe that they have to take this opportunity because there's not going to be another one. And so you go through in those moments, you are trying to correct that flaw in the moments where you sense. that fear or that uh, you know, uh hyper focus on a position that you wouldn't normally follow or, you know, one that you may have missed for whatever reason, that's what you're trying to correct. And and then, you know, the system is designed to try to over time

steadily reduce the intensity of that emotion as you are correcting that flaw. And if you take it to its natural conclusion where that that flaw has been firmly upgraded, now you firmly understand that there will be more opportunities, right? At a at a deeper level. That is has become automatic. Then the emotion uh of FOMO disappears. And so yeah, I think that's kind of the high level for.

um, mapping your pattern or mapping your emotion, what are some like actual practical steps for how you'd actually go about tracking or or mapping your emotions?

Uh, the reason is effectively for why you you made that decision. You know, a a lot of traders get stuck there because they quote, like know better. And and because they it in their minds know better, then they're just either pissed off, they lose confidence, they become fearful about that mistake, and it kind of snowballs on itself. So we're gonna kind of flip it on its head and say, rather than just getting pissed off or having your emotions just you know, run wild about that mistake.

Or about the fact that you just cost yourself money or missed out an opportunity, turn on its head and ask yourself, why? Why did that happen? What were the signs or signals that indicated that that mistake was actually, you know, becoming of higher probability to occur? And and when you do that, you start to like map and identify those signals. Again, the thoughts, the the the specific emotions that you're feeling.

uh the behavioral signs, like sometimes, you know, you you might notice uh your hands clenching the mouse faster. You might notice, you know, your eyes kind of hyper focused on on one chart, whereas, you know, when you're in a more, you know, kind of calm and and an optimal state, you're able to kind of you know, easily kind of move your eyes across your your your monitors, your setup.

Um, you might notice kind of heat in your head. You might tap your foot, right? There's there's all these sort of signals that exist both mentally, emotionally, physically. And then, you know, some of the things that you think about with particular positions, right? I mean, you might

uh become a bit more biased towards uh like seeking out confirmation on Twitter or in a trading group, right? You see a position, you have an idea, but then you're kind of distrustful of it. So now all of a sudden you start looking for confirmation from other people, right? That's part of the pattern. And those are the things you want to start writing down. So on a daily basis in real time, you know, I think this is one of the good things about trading compared to poker.

Unless you're a scalper and you're trade, you know, making hundreds of trades a day, right? You can take a couple minutes, even 30 seconds, to just very quickly note down. you know, kind of each one of those uh those parameters of like what you're seeing at those times. And then and then at the end of the trading day, you look back at your notes and start it start to begin to aggregate what you're finding, sense the patterns that exist.

You know, and I walk, you know, uh people through this process a lot more clearly, um, you know, in in the book. But there's also worksheets on my on my website which uh, you know, people can go and download for free. Um, and and you know, it begins to help you organize that information. And and one of the key things you're eventually gonna wanna do is.

not just get get like kind of a a a good profile of of what's occurring in real time, but actually kind of beginning to scale it on a scale of let's say one to ten. So, you know, if we're talking about anger. You know, what what is what does anger look like at level one, right? With that very minor frustration, you know, what are some of the signals that you might you know identify there? Maybe um, you know, there's the impulse to want to re-enter a trade.

uh that you know you shouldn't get into and you're able to avoid it. But even just having that impulse is something that wouldn't occur when you were in your right mind. So that would be kind of level one. Whereas if we get to level five, where now it's actually becoming problematic. Now you are actually getting into that trade. And if it gets stopped out again, you're going to get in again.

You know, and so then, you know, all the way to your level 10, um, you know, where perhaps you're just not even thinking at all. Right. And now you're just kind of blindly making uh trading decisions, trying to make up for, you know, whatever's been lost and and and make the the day uh green. Um, so if you're able to kind of scale it, then it becomes a lot easier to identify where your inflection point is, where that, you know, that kind of tipping point is where you better.

Grab control of your emotions before it crosses that point. Cause if you don't, your ability to uh correct or control your emotions after it. significantly decrease and you have to take aggressive measures. So again, there's a lot of power that comes from being able to know in real time, sense and see in real time, you know, that your emotions are rising to that level.

Um now it doesn't mean you're guaranteed to, but yeah, ten tends to be you remove the negative, you you're in better shape. Um, however, there are a couple of instances, for example, with with confidence and discipline, where I do think it is it is good to kind of map what is optimal. Because then it gives you a a an actual greater sense of when you've kind of deviated from that and and you know, the recovery is a bit easier.

Uh I mean, I think w when when you start to really kind of analyze your thoughts uh or the the the things that your emotions are sort of expressing, it it becomes easier to identify what those flaws are. And so You know, when I look at at, you know, the difference between the the trading book and the poker book, I think one of the big differences is because it's in the language that traders use.

You know, a lot of the descriptions that you'll find in FOMO, in the hatred of losing, of the hatred of mistakes. dealing with overconfidence and confidence issues, um, you know, i it's becomes a lot easier for you to kind of identify, oh yeah, like I'm actually thinking in these ways, right? Um and and that becomes the access point to figuring out what the underlying flaws are. Um so that really becomes your second step is

to try to understand what those s signals are sort of indicating. Um, you know if it's if it's i it listen it's it's difficult, right? I I think my greatest competency as a coach is being able to sort of take

uh th those uh thoughts that uh traders might be uh kind of thinking in particular moments, you know, and being able to kind of deduce uh what's going on below the surface. So Um, you know, for example, you know, you take somebody who has a hatred of mistakes, you know, they're gonna have a lot of self criticism that's gonna come to mind.

And now we have to look at, okay, well, what why is that self-criticism there? Now, it could be there because they actually have very high expectations of themselves and and they've learned over time that self-criticism has been a tool to get them to work harder.

Okay. Now the anger associated with that is not is not all bad. I mean, we're not going to suggest that. However, you know, the anger associated with self-criticism sometimes can bleed into additional mistakes. You get so pissed off that you missed an opportunity that then now

uh you know, you take a trade trying to make up for that mistake, which okay, well why would you try to make up for something that's seemingly illogical that you could make up for because you know it's already gone. Right. So it's it expresses an underlying flaw that you believe it's possible to make up for.

you know, a previous mistake. Um and so that flaw then needs to be corrected. So when your foot starts tapping and you realize it's tapping because you're itchy looking for another trade. So you can take one to make up for that mistake. you are trying to correct the belief that you can actually make up for it, right? Rather than accepting it and moving on. And so, you know, if you've kind of gone through the process to have identified that flaw.

then in real time you're you're doing some kind of disruptive disruption. And this is this is a bit of an evolution from the the poker book too. In the poker book, I described it as a need to just take a deep breath. Um and and the deep breath was about disruption. That's really what it is. So Whether it's a deep breath, whether it's standing up for a minute, whether it's just uh closing your eyes, uh uh doing some kind of physical action, you are trying to do just to disrupt the pattern.

First law of thermodynamics, right? A law uh an object in motion stays in motion until acted upon by an outside force. Your emotional patterns, your your mental patterns that are associated with this problem. They have a momentum all to themselves. You have to identify it and disrupt it. And so once you do that disruption, then you can start to inject logic, which is the correction to that that flaw. Right. So in the example I just gave. It's you telling yourself firmly.

I cannot make I cannot make up for uh this this trade. It's gone, right? Accept it and move on. You know, and that that would be an example of logic, but but the key is that you are actually training that logic, right? You got to be thinking about it before the session. Uh, you got to be thinking about it afterwards, you got to train it like a uh anything else that you'd want to learn and internalize so that in those moments when your emotions are running hot.

that actually can have an impact. I think very often traders kind of know how they ought to be thinking, but they haven't spent the time to actually train it like they would a muscle or a particular form of technique if it was, you know, like a golfer's golf swim. Right. How you think needs to be trained in these key moments because that's ultimately what's going to stop the emotions from running you over.

I'm just gonna read uh one line from the book, um which I thought was quite interesting. Uh you say emotional control is not a solution, resolution is. Um, so I'd love to ask you about this, just if you could explain this this concept of resolution, because it's obviously

Something that many traders think about is obviously trying to control their emotions or you hear others talking about controlling your emotions, et cetera. But you're saying something slightly different here. So um would you like to speak on that?

You know, though that that kind of logic uh gets overrun, right? Emotions are more powerful than the mind. The part of the mind or part of the brain that's responsible for emotional control is called the prefrontal cortex. And and but when the emotional system is running too high, it actually has the power to shut down that area of the brain. So so think about this, right? The part of the brain responsible for emotional control can be compromised and shut down by your emotions.

So you're dealing with a with a fundamental kind of architecture or wiring of how the brain is just designed. That makes it like in some respects impossible to control emotions in these key moments. So to me, and what I've kind of deduced over the years is like we just have to play a different game. Right. So that that's one reason. The other reason is that. Just in general.

When you are devoting mental resources, right? Prefrontal cortex resources to controlling your emotions, you have less of it to focus on the market. Right. There's a percentage. You only have so much mental energy. You only have so much space in your mind to actually think and make decisions. And if a portion of that, you know, kind of brain matter is utilized to control your emotions.

You know, proportionally, you just cannot be at your best. Your perception will not be as strong. You will not have the sensation that you need to make some of those high-level trades or even perhaps some of your your standard trades. So so for those two reasons, emotional control is a flawed model for like what we should be aspiring toward.

And so resolution is not a foreign concept. It's just one that we don't typically associate with problems that exist kind of internally. Right. So if you take um, let's say an argument with a friend of yours. Um, and if you are good friends, you know, there's a decent relationship there. Um, you have some kind of disagreement, you know, it could be it could even just be be about about football, right? You know, something stupid and not even that significant, but you know.

In in one way, shape, or form, one of you got a little butthurt and you know, it caused a problem that kind of stuck with you. And so the next time you hang out, it's like Yeah no, it's not quite the same, right? Now, most guys are not gonna take the time to actually resolve that or talk about it, you know. But if you were and just be like, hey man, you know, it didn't mean to, you know, I probably crossed the line, didn't mean it, I'm sorry, right? The second you do that.

you know, any of that tension just immediately dissolves, right? The problem is resolved. Now, maybe where this exists more so is, you know, uh I'm married, you're married, you know, spouses, right? If there's a there's an issue between our uh our spouses, like, you know, if it's unresolved, you know, it can be felt in the room. Once you talk th once you talk through it, usually it means admitting I was wrong. Then you know things go back to normal. And again, the problem is resolved.

So we're not talking about a foreign concept here. We're talking about identifying the flaws that exist internally in our approach to performance, right? A lot of the things I've listed. are performance based flaws that exist in every performance environment, right? Golf, poker, esports, trading.

And and they're not evidence of, you know, things that have to do with our childhood, right? We don't have to get personal here. Yes, there are instances where I work with clients and their issues are more personal. And by and large, if you're a new trader,

You know, the issues that you experience in the market tend to be more personally uh, you know, tend to be more affected by personal issues that kind of bleed into trading because you don't have a strategy that's strong enough to be able to kind of block that out.

Um, but so we're talking about these performance flaws. So you just gotta identify what those performance flaws are and go through the process of correcting them. And when you do, right, it's not like a singular instance. It's not like you just resolve a problem, you know, instantaneously. To me, it's more like chopping down a tree with an axe. You know, at the beginning of this, you know, the axe might be blunt. You might be pretty weak.

And the tree might be pretty large. But whatever, you know, those factors we're talking about here, over time, as you swing the axe, right? And that means devising that injecting logic state. Right. And you start wielding it in these key moments where your emotions are rising, you will start to see an impact. You will start to chip away at that sucker. And as you start to chip away at it, the emotional intensity is going to subside.

The severity of those thoughts, the severity of those physical symptoms will start to subside. They're not going to go to zero right away, right? It's like turning down the volume. you know, uh and it happens sometimes slowly. Sometimes you'll get pockets where, you know, it'll move around it it'll it'll kind of jump, but then the market might change or, you know, you might have some outsized win wins or losses and

You know, it's not like a a smooth road here. There's ups and downs, much like there are in the market. But you just keep chipping away at it and keeping your eyes on the prize, man, eventually that tree is gonna fall. You will resolve it and you will never experience emotional volatility for that reason again. Okay. Yes. you will continue to feel signs of uh of anger or fear or or loss of confidence.

But the ideal in my mind is that those emotions are are illustrative of what is happening as you are interacting with the market, right? As your strategy is interacting with the market. Right. So signs of fear. might actually be prudent as you maybe are a little bit overleveraged or, you know, uh taking risk that is a bit a bit, you know, kind of outside of what your purview is or, or, you know, or some frustration might be that you actually don't understand something as well as you want to.

Or some loss of confidence might be that You know, yeah, maybe you're out of sync with the market or overconfidence might be, yeah, things are actually working really well and you're feeling, you know, really good about where you're at. You know, you've expanded your capacity quite quite significantly. We want your emotions to be a pure reflection.

of your interaction or your strategy's interaction with the market. What we don't want are these flaws or biases to be entering into the market and causing misperceptions and mis-execution. That's what we're trying to resolve.

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in terms of your perception, uh, in terms of your thought process and how you're actually making decisions. And and actually kind of going through and and looking at what that looks like, you know, from your A game, B game, C game. This is another example of a way that you can kind of map you know, your game or map your patterns. So the mapping your patterns, um, you know, I I described tend to be focused on a particular problem. Like so we're gonna we're gonna map anger or we're gonna map fear.

You know, the A to C game can be kind of an aggregate of all of that. You know, so in your C game, you're you're going to see the fear and anger if if you have, let's say, both of those problems. But again, it's important to kind of recognize what your B and C game looks like or your A your A and B game look like.

Because on a day-to-day basis, you can be measuring your own performance. And I think this is really important as a trader, but you know, much like it was in poker where I I kind of developed this. Because in the short term, you're just getting false feedback in terms of the accuracy of your execution. You know, you're making lots of good trades, but you're not getting paid off.

And so it's really important that you are able to recognize how well you are performing, you know, in those instances as as much as is on the on the flip side when you're actually getting paid off and maybe don't deserve to. So, so it you know, in terms of being able to establish, you know, good control of your execution, you know, kind of through those periods where where the feedback is not always not always accurate, um, it's it's just helpful to know at the end of the day how you perform.

So if you've established kind of a clear delineation between your A game, B game, C game, at the end of the day you can go back and look and say, okay, yeah, for the most part I was in my my A and B game. I know that I am a profitable trader over, you know, over the long term.

You know, if you weren't getting paid off, yes, of course the market may have changed and maybe a little bit out of sync, but you know, the odds are, you know, that it was just a bit of bad variance and, you know, stay the course. On the flip side, You made a bunch of money, but it was clear that you were, you know, kind of a bit bored and just kind of

tossing money in left and right or, you know, a bit uh too aggressive and um, you know, kind of getting lucky and some timing, um, that that you shouldn't be as happy about that. You know, so again, it's kind of trying to balance out your the emotional volatility you experience day to day. by being able to just measure your day-to-day results in some non-monetary ways, not some non-PL ways.

When we're talking about discipline issues, which is often, you know, a a a a a C game type error, right? So whether we're talking about some impatience or, you know, uh jumping into trades'cause you're bored, you know, there's not necessarily emotion at play there. I think

As a side note, there's a lot of traders that think their discipline issues are discipline issues, but in fact they're actually emotional issues that are forcing their hand to make those, you know, kind of impulsive decisions or uh decisions out of boredom, et cetera. But

Let's assume that it is kind of pure uh a a pure discipline problem, then we're not really talking about negative emotion. We're actually in some respects talking about the absence of that that ideal emotion. So again, your first line of defense is always the recognition that things have slipped into that level.

And for some traders, it's important to kind of do that kind of just self check at the start of the day because sometimes they're actually not in the right state of mind from the beginning. So, you know, C game is kind of where they're starting. Uh sometimes that's just because, you know, they're consistently unprepared. And that's just kind of their norm. They need the market stimulation to kind of warm up in a sense.

Um, and that's fine, but just be prepared that you know, early on you're unlikely to be making good trades. So you either are gonna need to better risk manage that, maybe. size smaller or you know maybe you sort of stay out. Uh one counter to that though is, you know, you could actually just trade a simulated market and kind of use it as a modified warm-up for 15, 20 minutes just to get your brain warmed up.

Um, but again, how do you avoid C game? You gotta know what's causing it, right? C game and all of these um uh underlying flaws that I mentioned are effectively kind of like gravity, right? They're going to pull you down. And and if you're able to kind of firmly map what those are, then the escape velocity that you can have to kind of escape them.

uh is is through your recognition of them and the the the having devised a strategy to counteract them, which, you know, that ejecting logic uh I mentioned before is the kind of main tool for that.

And then it becomes no different than, you know, a a an you know, an American footballer uh trying to pick up a fumble uh and run with it and make a play versus just falling on it. Uh, you know, athletes in in every sport. Uh can kind of fall victim to elements where they just You know, try to do too much. And to me, that's all that greed is uh as it relates to trading. You know, we're gonna put aside

you know, any of the societal connotations or, you know, discussions, those are I think beyond this certainly beyond the realm of this book. But I think from a from a trading standpoint, they they don't really need to be discussed. Um you know, we're we're talking about execution, we're talking about performance. So so greed is just

you know, th that line where you cross where you're making decisions that are suboptimal in the long run. And and what I found, you know, there's there are 17 traders who are featured in the book. Their stories are kind of woven throughout the book. You know what I found is that by and large, when somebody comes to me saying that they have a problem with greed,

What they're really saying is actually they have a problem with anger, a problem with fear, and a problem with confidence. The flaws that are associated with those things are the reason that their ambition becomes excessive and that they violate their their strategy or their rules.

you know, price was going to continue to tick up. And, you know, in hindsight it became pretty clear that that was a mistake. Um and that ha that pattern has occurred more than once. I think if if that happens once, No, we're not gonna just like kind of blindly assume that greed is or overconfidence is is a constant problem unless

there are indications that overconfidence or greed is showing up in different ways, uh, you know, then maybe it becomes kind of an aggregate. But if if if like moving your your profit target is something that you've only done once and, you know, we're not gonna we're not gonna kind of overplay it as a problem, right? I think

you know, really the book and what what I'm kind of targeting are these repetitive mistakes, right? The things that we know for sure are mistakes. If you're unsure of that, yeah, there's always going to be this gray area where there's not firm certainty. Of course, you're always trying to make more money and you're trying to find ways to do that.

And so sometimes, you know, even like the the the NFL lineman, the football player I was talking about, or the the athletes, like sometimes you do try to make a play and it and it it pays off. Right. I mean it's not like these things are like, you know, completely uh you know dead money, so to speak. Like it's just wrong every single time. If you're an experienced trader, it's very unlikely that you're going to make mistakes like that.

you know for the most part we're just looking to kind of optimize things and you know in the short term it's hard to know exactly where that where that line is i would say just start with the obvious because it's obviously the the easiest way to start

So I think you said in there that uh fear is sometimes uh like an underlying issue that can bleed into greed. What about if we talk about hesitation? This is something I think a lot of traders uh have issues with and I it it may come into the category of fear. How do you hesitate less?

then you actually can be causing hesitation in a sense that you're like wanting to make sure that you're not gonna make a mistake. Because if you do, then you're you're gonna beat the crap out of yourself. Um, this is something that I call beaten dog syndrome. uh where, you know, uh you can imagine a beaten dog is gonna start to cower from, you know, the second that its owner, you know, walks into the room. And so the second that you get on the verge of making a trading decision,

Right. All of a sudden that that self critical part of you is just waiting, you know, fist ready to go to to start pounding on you, uh, if you if you uh execute poorly or if the decision was w was wrong, which which might even be that the trade

you know, fails again, it's still a good decision, but sometimes that self-criticism knows no bounds. Um so so that that can be a a reason the self-criticism can be um it could be just from the pain of losing. Um you know losing for very competitive people is painful.

So yeah, every trade has the possibility of loss. So some of that hesitation can be a little bit of the the wincing of pain as you, you know, have somebody just, let's say you had a bruise on your shoulder, somebody sticks their finger right into it. It's gonna be painful.

Uh and so yeah, at the moment of of execution, right, you start to hesitate because you're wincing a little bit and trying to avoid some of that pain. Your goals, your livelihood is on the line, right? And so the the desire to get it right, make sure that you're um uh you know, a hundred percent correct that that this is uh a trade that fits your criteria, you know, sometimes that second guessing can kind of kick in. Um so yeah, I think there's a lot of reasons for why that hesitation exists.

And you got to kind of go through the diagnostics to figure out exactly what it is. Otherwise, you know, the hesitation again is like a symptom, right? Like you wouldn't just sort of expect yourself to stop limping, you know, when you had a strained ankle just because uh, you know, you recognized that you were hesitating.

your emotional stability is on the line. So, you know, hatred of losing might turn into other problems too. And then, you know, additional mistakes, et cetera, are on the line. Right. So so that stability. Um it could be about your, your, your kind of social status.

Um, it it might be about just your own general confidence and competence and how you feel as a trader. So, you know, kind of when you sit down to trade, when you're actually, you know, entering a trade, all of those things are on the line. That's what makes The live market, never comparable to the sim. And I know we're talking about it something separate here, but just as an aside, right?

that all of those things are consequential and and and are not usually expressed in in a simulated environment. But as far as like, you know, addressing it's like, okay, so what are you now going to do? So first you gotta just become more aware of what's on the line, right? You actually gotta sit down and think about for yourself.

What are these other parameters that really matter to you? Right. Self-esteem or or uh social status may not be consequential to you. It is for some traders, not for others, right? Maybe it's not necessarily about your long-term goals. Maybe it's more about, you know, the day-to-day finances and your ability to pay the bills. Uh maybe it's about, you know, kind of proving people wrong, right? The ones that doubted your decision to become a trader.

uh and that's on the line. So obviously if you lose a trade, then uh, you know, you fear them being right. Uh you you get angry that they might be right. Um, you know, all of those things can be on the line. So I think, you know, first step is just becoming more aware of of what those things are. Second step is to just look and see if there are any particular flaws in here that maybe there's like a wish in here that you could kind of prove yourself faster than you actually could.

Um, you know, maybe there's sort of uh there are some excessive uh style goals that you have you might have. You're you know, certainly worked with a lot of traders who You know, their their goals were reasonable until they weren't. You know, once they made 10K a month, all of a sudden now they want to make a hundred K. Uh, and so then that that excessiveness in terms of what they're uh expecting themselves on a day-to-day basis.

uh, you know, puts too much pressure. And so then, you know, every loss is felt with with with greater impact. So you have to kind of look at at some of the flaws that are embedded in in those things that you've identified matter to you. Um and and then, you know, devise the the injecting logic statements to to correct those flaws. But but by and large, if you are more aware of what's on the line.

It just becomes a bit easier for you to know kind of what you have firm control of and what, you know, kind of each individual trade can prove or not prove, right? Like you can't control your long-term goals or you can't attain your long-term goals in one trade. Sometimes, you know, you want to feel like you're kind of moving towards that.

You know, so for example, you might uh create a checklist where it becomes, you know, a lot more about execution uh, you know, over the next 20 trades. Uh, and so for 20 trades in a row, you're just not going to focus on PL. And and you do that uh and that becomes a way for you to sort of sidestep that that need to feel like you're moving towards your goals based on PL versus a need that you're moving towards your goals uh based on execution and process.

So again, once you kind of identify that, it becomes a bit easier to uh figure out how to uh handle the emotional swings a bit easier too.

Those sort of things uh can be sort of pretty frustrating to traders um when you haven't like perfectly time to trade and that sort of thing. How do you become more accepting of less than perfect outcomes?

uh or or you're you're just not actually working hard enough and and and developing yourself as a trader. Right. Perfection is a moving target and one that you cannot hit consistently. That is a fundamental react a fundamental reality. So, you know, kind of embracing the imperfectness of trading and the imperfections that exist within you.

You know, I think sometimes get easier when you have a good understanding of your skill set, a good understanding of your assets and and your competencies as a trader. A lot of traders They're always kind of like have their sights set on on on what's next, on on the next uh you know, bit of money that they're gonna make, on the next, you know, goal that they're trying to to attain. And they are not often looking backwards enough.

to understand what they've accomplished, to understand the skill set that they've attained, uh, and actually just to kind of feel good about it. Um it's it's not something that that you know you ever want to just fake. But there's there's a thing called expert induced amnesia. Um and if if any of you have had, you know, kind of difficulty explaining to junior traders kind of what you do and it feels like so basic you can barely even explain it, that's expert induced amnesia.

And and on a day-to-day basis, you know, traders who tend to have perfectionism uh or or are having difficulty, you know, not having those perfect trades, they've they oftentimes have kind of forgotten um how good they are, which which sounds a bit strange. Uh, because in the moment where they're not perfect, that's what ends up kind of pinging in their head.

They fucked up. They didn't do what they were they that they knew what they were supposed to do or they didn't know or they didn't do what they thought was possible. But they've kind of lost sight of uh, you know, all of the good decisions that they've made over the years. The fact that it's okay To be imperfect because

They're they're you're they're gonna just gonna continue to extract edge from the market. And that doesn't mean extracting the maximum edge from every trade every single time. That's not how they have made money, and that's not how they will continue to make money. So

Giving up five or 10%, even 30% in this one trade. Yeah, not fun, right? But take the punch, right? You've gone through it enough. Right. Sometimes you just have to have a stronger jaw to take the punch and and you know, feel the pain. But understand, right, that you still have all of these accomplishments, these assets that will continue to provide leverage for you as you wield your edge and extract more from the market in future trades.

It made me wonder why that's the case. So why is that the case? Like often we get a lot more down about losing trades compared to how good we feel about, you know, positive outcomes and winning trades.

So, you know, the why it happens, I think, is is sort of several fold. Um for one, uh, we pay more attention to losing, right? And and it it it sort of stands out in our minds more because it's what we don't want to occur. So by its nature, we tend to focus on it more, which means that over time That pain lingers with us. And I'm sure, you know, many of those listening now can think back to some of those painful trades. And and here's the key thing. If you remember if you think back to a trade.

that that was painful at the time. And it still hurts today. Then that pain is showing up every single time that you now uh lose on another trade. So it's not just the present-day pain of a loss, it's the accumulation of all those losses uh in the past that kind of Mm create that imbalance. Um and then, you know, kind of invariably uh we're we're we're less focused on the good trades that we've made, you know, and the big ones that we take in in some respects because that's expected.

You know, and if we think about expectation as sort of setting the line in a sense, right? Uh you know, how much are you gonna emotionally get paid off? You know, if you've hit that target, well, it should be zero, right? You've you've done what you were supposed to do. Right. It's really only when you exceed that expectation that you.

uh that that you feel some some positivity to it. So, you know, by and large, like making some money is the expectation. So then you're just not gonna feel very good for, you know, that happening because

That's what's gonna happen very often. You're not gonna have those those big outside winners. I mean, unless you're taking only a few trades a year, uh that that's just gonna not be the norm, right? But you know, typically it's the, you know, five, ten, twenty percent of your trades is where you're making eighty percent of your money.

So yeah, in those trades, you're probably going to feel pretty good. But most of the part, most of the time you're going to be making, you know, a small amount of profit and that's expected. So you're just not going to feel good about it.

pretty much word for word'cause he kinda nailed it. And just sort of get your your feedback or your ideas on this. So The first one of those two points was Often when a trader is preparing for the trading day, they know what textbook trading is, i.e. from playbooking, uh from writing out a detailed plan pre open, from gaming their best ideas and how the stock might move during the session.

However, when the market opens, quite often they find it difficult to follow this plan and end up straying far from their original ideas. things go wrong, emotions set in, or they get tempted by other stocks they didn't even plan to trade, etcetera. What advice would you give to someone who faces this problem?

uh and not really kind of actively, you know, separating yourself enough to know where the opportunities lie. Um, you know, and so that kind of recognition going through the mapping pattern that I talked about earlier, like that, that is essential. You know, but it also probably means that you're being a bit too idealistic at the start of the day, thinking that that that plan is going to be executed. If it you know, if it only happens once in a while where you get, you know, kind of so consumed.

that you can't kind of execute it. Well that's that's that's a different problem. But if it's a constant, uh then there's a bit more kind of delusion in terms of how good you are actually are as a trader.

Uh, in Australia at least, uh, we've seen quite a dramatic change in market dynamics from a highly volatile, highly liquid market in the last twelve months to much more choppy conditions in recent months. On a micro scale, this means many of the playbook setups uh employed previously simply no longer work or are certainly less effective.

As much as you learn to conserve mental capital and you seek to adapt, it still weighs heavily on psyche and especially confidence to go from record high profits to consistent small losses or wins almost overnight. What suggestions do you have to deal with the

a a strategy for those types of markets, then, you know, you are kind of waiting for, you know, the conditions to turn, you know, kind of back in your favor. And you don't always know where they are or when that's gonna when that's gonna happen. So I'm not saying, you know, take, you know, a bunch of time off.

But it's okay to have, you know, kind of feast or famine, you know, period periods. You know, in in in the case of an athlete, it would be like, okay, you know, as a golfer, I'm kind of gearing up for majors and then I'm gonna take, you know, a few weeks off here or there. I think as a trader sometimes it feels like, well, the market's open. I should be there. Um now I'm not saying don't show up every day.

But, you know, if you get a sense of where the market is in the first couple of hours, you know, it's okay to to just not trade the rest of the day and conserve that capital. If you're there, you know, just there because you are a trader and and that's what you're supposed to do. uh then then I I think you're kind of forcing yourself in a spot that's clearly suboptimal long term. Now, if you're there.

to trade and you want to figure out how to be profitable in markets like that, then that's a different story. And and you can kind of look at it more from a researcher standpoint, from an experimental standpoint where you're going to try things out and

you know, obviously change sizing in that regard and you know just play around with it. Feel feel less like you have to make money and more like you're trying to figure out how to become profitable in a market like that. Uh I I think either one of those two kind of constructs may be helpful.

Uh which will redirect you straight to Mental Game of Trading on Amazon. Uh that book is available right now. It's not still pre order, right?

You know, there's a bunch of free stuff on my website, including some blogs. So uh by all means, good it's a good place to kind of get to know more about my material if you're not quite ready to dive into the book yet.