252: Yvan Byeajee - From Emotional Turbulence to Trading with Composure

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But even if we understood why we get in our own way in trading, would we even do what it takes to get out of our own way? Or do we continue to hang on to what doesn't work out of mindlessness, habits, Comfort and ignore the need to do the uncomfortable and real work that requires patience and practice.

Perhaps we ignore doing the deep work because instant results are more appealing, or if we do do the deep work, we would have to face our demons. Today Ian and I present to you a very special guest. His name is Ivan Bayaji. Growing up poor with learning difficulties, Yvonne's early trading failures drove him to understand his own emotional turbulence and instability in the mind through deep inner work.

With a heightened sense of mindfulness, he embraced uncertainty and became systematic in his trading that contributed to his edge. Yvonne discovered trading in the nineties and has been trading for a living since two thousand and six. He struggled and failed his way to achieving consistency and market success over time.

He's the man responsible for the creation of Trading Composure, where he generously shares with traders all over the world his knowledge, experiences, and wisdom of the inner game of trading. Ladies and gentlemen, coming to you all the way from Montreal, Canada, we present Yvonne Bayage.

Since I didn't do well at school because of a learning difficulty, I didn't amount to much professionally speaking, so I took odd jobs here and there. Um I'll also spoke with a stutter. I still do by the way, but now with a lot of self work, I'm able to manage it much better. But um yeah, that, you know, that's my background pre-trading. What got me interested in in trading was basically as a teenager, you know, one day I was hanging out in my high school's library during recess.

We're talking about the year uh nineteen ninety eight, ninety seven. Sorry if I'm a little bit fuzzy about the year. It's been a long time. That's when I discovered the book, How I Made Two Million Dollars in the Stock Market by Nicholas Darvis. And I took the book, brought it home, studied it little by little each night while listening to Guns N' Roses on my walk, man, good old days. And look, slowly I became fascinated by the man, by by Darvis and and what he had achieved in the market.

I I didn't fully understand what financial markets were back then, but uh I was just so inspired and fascinated by how one could earn a living taking calculated risks like that. And so so so that's my initial experience in the market. I was probably 16, 17 years old.

you know the kind of sports that i did for instance i was uh you know i was into running back then and you you know you know i like uh just a very active person i've always had this inclination towards risk towards taking risks And and that's what got me so fascinated by this endeavor from an early age, you know, and growing up, you know, I go don't come from money to begin with.

Growing up, you know, in this lack of financial stability, uh, was just mesmerized by this idea of taking calculated risk. And then seeing whether it works or not.

But those were very formative years for me, I would say. And and in hindsight, if I if you know, if I could go back, I wouldn't change anything because those experiences made me the person that I am today.

And so you know, thanks to the consistent work I've been able to do on myself, I was able to to uh vanquish most of my demons or befriend them. I mean, seen through a more positive angle. Because I did that whole transformational process without a coach, without a support structure, it took me years, Ian, you know, years of trial and error to get from where I was to where I wanted to be in the market.

blind crowdfollower or blind contrarian. You you have to learn to think for yourself and by yourself. And uh for those people that are able to get to this point, I mean, this is this is where the money is.

With uh with traders, I focus on three main pillars. First, as as you mentioned, it's the embrace of uncertainty. Second, it's self-awareness and emotional management. And and third, it's accountability in my experience, in my own personal experience, but also from having worked with so many traders around the world. without a thorough understanding and and a thorough appreciation of uncertainty.

uh um w without proper emotional management, without proper accountability, you're just not gonna approach trading with the right mindset and and you won't be managing your risk in in How it's in a sensible and meaningful way. And and without those, without the right mindset and commitment to risk control.

There's just no way you'll survive long enough in the market to experience success. You you'll you'll continually fall off the bandwagon. And to come back to your original question about uncertainty.

Real real story here, by the way. My partner calls me Dr. Uncertainty. My my friends call me the uncertainty guy. Uh just funny nicknames that they've they've given me because when discussing just about anything from politics to religion to philosophy, I'm always issuing caveats and reasoning and probabilities and expressing humility towards incomplete knowledge.

And I mean, that's, you know, that's what being in the market for so long does to you. That's that's what it's done to me at least. It's giving me this framework to think about things more, more, uh, more sensibly.

And and only then can you get clear, right? I mean crystal clear about your risk management protocols and and and just your overall mindset, your your overall mental approach to trading. So so so Ian, be before I jump to your question, let's just dumb down this concept of uncertainty so that everybody can understand.

First, let me ask you and your audience and your audience just a rhetorical question. Is there certainty in the market? Like when when you place a trade, do you know for sure whether you'll be a profitable trade or not? And the answer is you don't know, right? You you can't know. And and so this begs another follow-up question. Why don't you know whether the next trade or the next series of trades will be profitable or not?

Well, the very simple tell it like I'm a five kind of answer is that markets are composed of people, right? And different people. are always getting in and out different people with different time frames, different methods, different beliefs. About what is high and what is low, different outlooks on the underlying, right? Different reasons to buy or sell, different agendas.

And and you can't get into each and everyone's head and see what's motivating their buyer-sell decisions, what what they're gonna do next. So that that's a very simple answer to why there's uncertainty in the market because Because we're dealing with people. All right. And and people are always trying to imitate each other. They're always trying to outsmart one another. They're always trying they're always changing their minds based on facts, but also based on whims and fantasies and emotions.

I mean it it's very messy. Human affairs are a very messy thing, hence the omnipresent uncertainty that's in the market. And so When you place a trade, you just don't know what's going to happen next. And that means that there's a lot of noise in the short term, even though your trading system or strategy wins statistically speaking. I mean, over a big enough sample.

In the short term, anything can happen. Anything. You could win more than you lose. You could lose more than you win. And that's something that's very hard for people to accept. Because they're coming into the market with this mindset of having to make money over the next trade. And as we've seen, as I've just discussed, as I just explained, the market doesn't work like that. Trading doesn't work like that.

wanting to ignore the bad news or ignore the reasons to sell and then over inflating the reasons why uh the stock is gonna go up more so than they would intellectually reason that prior to making the trade.

and and gives gives you a probabilistic, you know, guesstimate about about you know you know the possibility of w whether the trend will continue or will turn around. That's what technical analysis does. Technical analysis doesn't tell you what the market will do next. Most people, most traders will approach trading with this mindset that TEA is telling them or the system is telling them that they're going to have a winning trade on the next trade.

And as I just mentioned, there's uncertainty. But almost all trading errors have roots in the intolerance of that uncertainty. It's it's it's because people are not seeing or refuse to see that that that there's uncertainty. They might understand it intellectually in a sort of loosey goosey way, but they're not they they don't understand it, you know. you know, viscerally within their core that there's uncertainty and that there are risks.

Almost all trading errors, almost all emotional struggles have roots in that intolerance of uncertainty. When traders remove their stop loss, expecting that the market will reverse. and go back in their d desired direction. That's intolerance of uncertainty right there. They they're expecting something from the market that it cannot provide. They're expecting that it caters to their needs.

When traders hesitate to pull the trigger on their trades, that's intolerance of uncertainty. When traders close a winning trade too early, only to see the market ramp up higher and higher and higher, that was fueled by their intolerance of uncertainty. FOMO, that too is a discomfort. It's it's an intolerance of uncertainty. So so they jump the gun on their trading process because they they fear missing out on what could be an amazing opportunity.

Once again, Ian, most trading errors like that, most headaches that traders experience in trading in the market. come from them expecting something from the market, something it cannot provide, which is certainty. And that's what drives, once again, 99% of trading errors that traders make, that that intolerance of uncertainty.

And look, it's it's not really uncertainty that's a problem. I hope I'm making this clear. It's really that intolerance of uncertainty that we have within us, right? It's it's all this sort of overintellectualization that you know that we do that causes us to worry too much and that causes us to to make emotions based rating this decisions in the market. That's what's a problem. But that's fixable also. There's a few ways to fix that.

First one is to learn to embrace that uncertainty, right? To to learn to understand why there's uncertainty, how it manifests itself. what it says about you, what it says about your strategy, and it's being crystal clear about those those different things. Then you can then learn to to sort of relax in the midst of that uncertainty.

And so on a trade-by-trade basis. If if you're following a system that has a long-term positive expected value, if each bet that you make, Is a bet that is sound statistically speaking. Then no matter what happens on a trade-by-trade basis, over the long term, you're virtually guaranteed to win more money than you lose. But the thing is that.

People approach trade trading with this mindset of having to make money on the next trade. And and that's a wrong mentality to have in an environment that has so much uncertainty.

Because you know, it's it's you're approaching the market with the wrong expectations. And and that's what causes those those traders to lose at the end of the day. And look, I myself have been through this. I I've struggled a lot with That's why, you know, in my mission as a trading psychology coach and consultant, I really try to sort of help traders embrace.

the fact that there's uncertainty and and and that risk is always present. And I always try to to help them internalize the idea that survival is absolutely key. It's the the first thing traders should learn to focus on and get good at it's risk management. It's focusing on survival. Because if you have that in place, that ability to survive, to take small losses and to move on to the next opportunity and the next

And the next one and the next one. Then, you know, it's just a matter of time before the market first starts to favor your your specific trading strategy, right? Because the market won't favor your trading strategy all the time. Sometimes you'll reap losses, a series of losses, sometimes you'll reap profits, series of profits. But if you can stay in the game like that, uh by by betting small, by keeping you know your risks small on a per trade basis.

you you're you're you're more likely to suc to succeed and to take advantage of whatever opportunity the market is constantly handing us. But you know, that's one. And and the second point is that If you stay in the game, if you can survive long term, what's happening is that you're building you're slowly building competence as a s as as as a trader. Because Look, you you learn to swim by swimming more, not by swimming less.

All right. You need to have skin in the game. You need to be able to to refine your skills. And the only way to to do that is by staying engaged with the market, by trading small and and and and and focusing on on developing mastery. So that's the message I I try to impress upon traders. It's to not be too impatient to make money in this field. Focus on building a set of money making skills first and then the money will naturally follow after that.

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And it asks of you that you s you you start to focus on the long-term picture and and sort of letting the numbers work in your favor and sticking with a consistent method is a statistically viable method. A method that has a positive expected value, positive expectancy. You you just keep placing those bets, those those positive expecting bets over and over and over and over again without getting destabilized mentally, emotionally by any one single outcome.

And and so people are willing to sometimes to take bigger, big risks with poor odds just to have a shot at earning a lot of money in a short period of time. So look. Hum human psychology is a complex thing. I I I I don't pretend to to sort sort of uh understand it thoroughly. I like I just know what has been proven to work time and again in the market. And it's this, it's embracing uncertainty. It's working on on developing emotional stability, emotional maturity, however you wanna call this.

And third, it's focusing on the long-term picture and approaching trading from a statistical probability lens. And if you have that in place, once again, you're virtually guaranteed to make more money than you lose in the long run. Personally, I you know I'm not a I'm not big on discretionary trading, and I know a lot of your audience. you know, sp specialize in in this. And personally, I, you know, I know too much about human fallibility, about the kind of biases that we have as human beings.

I'm I'm just not a big believer in discretionary trading. I think that winning consistent discretionary traders are few and far between. And and you you have a better chance at succeeding at trading with a systematic approach. And and and so it's it's sad that most people will not focus on that because for some reason people like to to use their mind. They like to

fancy the idea that they're using their intellect to be able to to make money, you know, out of the market. But uh that's also the reason why why most traders fail, because they There's a side of them that refuse to follow systematic rules because it's too boring, it's too monotone. Fair enough, but this is what makes money money in the long run. You you have to sort of graduate from this gambler's approach.

and and start focusing on more of a systematic approach because that's what that's how casinos make make their money. You know, they're applying a is a methodology that puts the odds in their favor. And this is why they win money in the long run, even though Some gamblers will hit a jackpot here and there, but over the long run, uh should should the gambler keep playing, the house is virtually guaranteed to make more money than than they lose. That's what wins in the market as well.

very consistent. I'm very consistent with my rules and very consistent with my performance as well. Usually I'm going to be up anywhere between 10, 20 to 30% on a per year basis. And and you you could say, okay, oh, well that's not not that impressive. But when you add the element of consistency to it, you can see how impressive that is. I'm not interested in in being up, you know, you know, a hundred, two hundred percent one year and down as much.

you know, the next year. I it as a trader, I've come to a point in my my own trading in my career, especially now since I trade a a fund for a small group group of investors. What matters to me is survival. It's allowing myself to be in those situations where I'm just taking trades that have a positive expected value and I'm doing that time and again, over and again.

y and in in the market and I'm letting the numbers work for for me. And more traders, my my whole point is that more traders would be successful in the market if they were able to adopt a similar kind of process-based, numbers-based approach in instead of desperately trying to use their intuitions or their discretion to make this or that decision.

And it's still new. We haven't developed the sort of mental heuristics to help us to for for us to be good at it naturally. I mean, to be good at it yet. That's why we need rules. We need a certain element of emotional stability and and just emotional maturity so that we're not blindly following our impulses or or our just uh short-sightedness.

Uh and and and and so that's why it's important to develop that emotional stability. And personally, I'm big on mindfulness, uh some some people in your audience might might know. And you you you'll often hear plat you know, platitudes around mindfulness, like you know, it's living in the present moment. But this isn't this doesn't fully describe what mindfulness is, in my opinion. Mindfulness is something deeper than that. It's disability to cultivate

this certain composure, certain uh emotional stability in the midst of life's ups and downs. And and so that's why I think that mindfulness and trading is is such a It's so much made in heaven. You know, it's it's just a perfect combination. And, you know, that's what I teach traders as well. I teach them to develop a strong meditation practice given my my background as as a Buddhist monk.

uh had the chance to study you know meditation in um extensively on retreats and and it's silent retreats and all of that. And so I like to think that I've developed a certain understanding of the practice. You know, that's what I focus in in my work with traders as well. It's to develop that strong meditation practice that helps them develop this um. This emotional stability, this this emotional maturity in how they deal with the markets of ups and downs.

Because most people lack that that self-awareness and that capacity to introspect and to look at themselves and to look within themselves. You know, I would say most people are living like that. They're living like puppets. But once you you develop that capacity to look at yourself, that ability to look at yourself, your flaws, your strengths.

you know what's good within you, what's bad within you, your difficult emotions, your your your your your difficult thoughts, you know, without trying to uh to sort of uh escape from them, move away from that, but uh actually facing them frontly. Um I mean your whole life has changed because when when you do that you gain certain insights into the nature of these what we call phenomena, you know, thoughts, feelings, emotions, those are those are phenomena that are arising in the present moment.

And and when you look at them, when you observe those phenomena for what they are, you realize that they're impermanent, you know, they're selfless, and that you don't have to follow each and every one of them. You can pick and choose which one.

To follow and when you get to this point, I mean your your whole life has changed, you know. The the way you approach your life is changed, the way you approach trading is also changed because there's more maturity in how you deal with your internal states now.

And you're being aware of it with exquisite detail and you're doing it, you're observing it all with complete acceptance. uh without an ounce, without generating an ounce of craving for what's pleasant and aversion for what's unpleasant, for what's uncomfortable. And and when you can observe yourself and your inner lives and your thoughts, no matter how difficult they are or they seem to be, you're in your feelings. From this place of freedom.

then then you you can see how how how much of a game changer that that can be for you know in trading. Because money is on the line and because we're so attached to the value of money, to what money means. It's it's so difficult to maintain a rational frame of mind and to not sink into those that default loss aversion bias that we all have.

Um, as as you can imagine, people that are able to cultivate that mindful awareness have they they have an edge, they have a psychological edge that a lot of market participants don't have because they're able to To experience their emotions from that place of freedom. And instead of acting them out blindly, they're able to.

Create some state some some space there between reaction and emotion and and choose to to stick with that trading plan and and their trading process and all of that. And so it can be it can absolutely be a game changer provided you cultivate a a consistent practice, provided you give the practice the time and attention and and and the commitment to the practice. That's what I meant to say.

Because this is what helps you stick with your trading strategy or system. And uh yeah, it helps you process emotion from a more rational frame of mind. And you know, once again, it's a quality that you can develop and cultivate on on on a daily basis by adopting a practice like meditation. And you don't have to do it for extended hours every day.

Yeah, you can do it for just 20 to 30 minutes per day, you know, in the morning, preferably before the market opens. You you just take some time to be with yourself, to sit with yourself and you observe your breath and your thoughts and your emotions. You observe whatever is arising for you in the moment and you try not to react blindly.

to to what is pleasant or what is unpleasant. This is how you'd reinforce, develop, cultivate that that quality called equanimity. And it's a very powerful quality in the mind. Yeah, you can also sp especially in the market.

Uh, but you know, eventually, you know, people that have this innate ability to be emotionally stable and emotionally calm in the midst of pressure, in the midst of uncertainty, they they have an edge that a lot of people don't have, uh certainty.

What you'll find in the market is that what you want right now is often at odds with the way you know, you know, the market is devised to make money available for you. Really, you have to find a way to drop. this uh sort of get rich quick mentality and and really foc focus on on uh trading as a long term thing because you know success is a plan. It it really is and and suc success is a long haul game.

Most trade traders would do better if they were to embrace this. Like I mean, seriously, thoroughly, not just

understanding it, you know, intellectually in a kind of loosey-goosey way, but really uh feel it viscerally, you know, in their guts. That trade your success is gonna take time. And paradoxically, when it when you're able to do this, That's what when success comes to you much faster than than if you were to just uh you know follow these your short-term impulses to get rich quickly in the market.

So this is where your self-knowledge comes in, the ability to look at yourself and your emotions. And this is why I'm so big on that, you know, uh self-awareness, just emotional awareness.

a big, big part of what constitutes a winning, uh, winning approach to the market. Look, most institutional traders will outperform retail traders time and again. And the reason they do is because they have a a risk manager or or an accountability officer that's behind their back, that's looking over their shoulders and that's making sure that they're sticking with their risk allotments and that's sticking with with the process and the trading rules and all of that.

And and we retail traders, on the other hand, we we don't have that luxury. You know, right from the get-go, we're we're our own bosses. Which is great, right? We're working for ourselves, by ourselves. This is amazing. But at the beginning, when when a trader hasn't yet developed self-mastery or hasn't hasn't yet developed the proper trading skills. Uh it's a big, big disadvantage. This is why, as much as possible, retail traders have to find a way to keep themselves accountable.

and and they they just plays place trades based on whims and fantasies. But that's not how you win in this field in the long run. So so that countability is is central to the project of of good trading.

uh oftentimes don't have a support group and we think a lot inside our heads and and um I mean ultimately we are responsible for our own actions and we are accountable to ourselves. But I feel like a lot of times um it's not enough. You know, at work you have and a normal job, you would probably have someone to um, you know, report out to and provide your progress and things like that. But as a trader, you don't.

winning trades. I don't care about losing trades. What I'm look really looking for is that consistency of behavior. It's it's that consistency of of following one's trading process and and and and rules because I know that should you do that, should you stay behaviorally consistent like that?

Consistent results it's is what you will get because consistency begets consistency. In an uncertain environment like the market, consistency begets consistency. And and so that's why I'm so I'm so um strict with that because and and and so you know, I try my best not to put any sort of pressure on my students to to perform because once again, I'm not interested in the uh in in how much money they're making and and losing. It's really that the that consistency of behavior.

If traders had had a way to get that level of accountability, I'm confident that the the failure rate in this field wouldn't be as high as it is. You know, that first that understanding of of uncertainty, second that emotional management, and and third that accountability. This this is this is a killer combination there.

But so they put the the mindset and trading psychology practice like maybe later until they get in trouble or I'm just wondering why why is it such a challenge to get this right from the beginning?

is leading them to believe that okay, this system, this pattern is is gonna help them get consistent results in the market if they were to trade it consistently. But thing is that it doesn't work like that. You know, once again, there's uncertainty. Right. And this is so poorly understood. Um, a lot of traders, they don't see that uncertainty or or they refuse to deal with it, to, to address it frontally.

And so once again, they put an excessive focus on analysis and then they feel exhausted because everything they try to do to manage their worries and fears of the unknown, well, it doesn't help. It's the wrong approach. Be because under you know, what's what's on underlying that approach, it's the the the idea that they're trying to eliminate uncertainty. And uh what they're really doing is upping their expectations and confirming and re-in-reaffirming their their own biases and fears.

And Tessa, look, we'll never be able to fully eliminate uncertainty in the market. We'll never be able to fully eliminate uncertainty in the market, no matter how hard we try. You know, it it's it's like by by trying to avoid uncertainty in the short term, what we're really doing once again is upping our expectations and bringing a certain amount of emotional struggle, of of psychological struggle into our trading process that's quite frankly unnecessary, let alone unpro un profitable.

The the only way of dealing with it. is to see how much of a psychological game trading really is and and and to see that there's uncertainty and and to make peace with that uncertainty. This is the only way of improving your trading. uh and and just just just your performance overall. It's to to make peace with the fact that there's uncertainty and to to focus more on the you know, mindset management aspect of it all. And um

uh when when when I miss an opportunity, I still get frustrated by that. But it's not an afflictive experience anymore. Right. And and because uh you know there's this thorough understanding that You know, okay, you know, each trade outcome is quote unquote random. Yeah, you know, there's emotions involved, but you know, I try as best as possible to befriend my emotions, even the difficult ones, and and that's

This this is what wins in the long run. It's is is changing your whole mental approach. to the trading game. Now most people are just just focusing too much on making money on in you know in the short term on this trade, on that trade. And and it's really first what must come first. Is uh just managing your risk because you understand that there's a real downside potential. And when you get good at that,

at this, at managing your risk on each and every trade, then you can get better at uh at uh managing your profits a little bit more. But um Yeah, it's it's all about viewing this as a long term game instead of it just this sort of get rich quick scheme.

You know, every losing trade personally, I you know, I I would I I would think that it this says something about who I am as a person. Okay, I reaped a loss, so I'm a failure. And and and so It's only through repeated practice, repeated engagement with the market that I was able to sort of de-energize those beliefs a little bit. But they're still hate there, you know, in the background lurking. You know, when I don't pay attention, sometimes they sneak up on me, those insecurities.

So once again, I'm I'm a work in progress. This is a never ending journey. It's not a journey with a destination. And and so this is um uh why it's also important to learn to love that journey, no matter where you are, you know, on that journey. Learn to love it for what it is and and learn to to see it as a learning experience. And when you do that, you'll you'll make giant leaps of progress in your development as a trader. At least it was the case for me and it still is.

And this is a all too important aspect that so many traders will will ignore because they think they've already had it figured out. But the reality is that most traders lose money in the market. I mean, that's a statistical fact. and and they don't lose in the market because the market is rigged. No, there are cycles, there are trends in the market, and you can take advantage of those cycles and those trends.

And you don't necessarily have to pick bottoms or tops to make money, just just uh piece of the action is fine, you know, if you can do this consistently through proper risk reward. Uh, you can make consistent money in the market. But the only problem is that most of the time traders get in their own way and they're not able to make consistent money like that, even though it's possible.

It's just uh the theoretically it's pretty easy. It's it's pretty simple, I would say. Not easy. It's pretty simple. If you were just to follow a a structure. it like it's a trading system that has a positive expected value over the long run you should make more money than than you know than you lose but most traders aren't able to make money because they you know they make this unnecessarily complicated on themselves. You know, they they they approach trade trading

with um too much attachment to the outcome, the approach trading, they're while focusing too much on the money, what's being lost, what's what's being won. I mean, I mean they're they're they're they're not viewing it as this. long-term statistical probability game. If you can learn to uh learn more about this, I'm I'm sure you you guys have a lot of

Have had a lot of great guests that expound more on that and just focus on learning. Don't focus on making money right from the get-go and just focus on building skills. And when you have those skills, when you have that self-mastery. As they say, the the world is your oyster.

And uh that said, should you require some more hands-on help, just check out my pro my my coaching program. And and that's all. Thank you so much for for having me on once again, you guys.