266: Mark Bennell - Mind Your Business: Be Like An Employee

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and why it has kept him in the game for this long. Mark's mainly a discretionary swing trader and scalper of the Australian equities and forex markets. He's presented for the Australian Technical Analysts Association, and appeared in the Traders Edge magazine in Australia and has a lot to share with us today. I don't think you want to miss this, guys. By the way, I'm filling in for our host Ian Cox today.

Ian's trying to squeeze in some more mountain biking as the summer weather is running away from Seattle. So I said, Hey, I got this. Ladies and gentlemen, I'm so pleased to present Mark Bunnell, all the way from Australia. Hi Mark. Welcome to Chat with Traders.

Um, I've now been trading the markets full time for 15 years. So yes, then traded, traded for three years part-time while I was a general manager. Um, did did quite well there. with some early Elliot wave knowledge, Alliot wave theory. And that completely resonated with me. So I thought I had uh found a bit of the Holy Grail. And um so I applied that. In my third year part time, I returned about sixty percent on my trading account. So

naturally I was thinking, you know, why isn't everybody doing this? Uh, of which I was to find out very soon. Um, so that kind of set me up for Um a not a fall, I wouldn't say, but that gave me a false sense of what trading was about because I don't know whether listeners are aware, but here in Australia we very big we're very resource dominant and we had a very big uh bull market in resources. So

You could have taken a handful of darts and thrown them at a handful of stocks and made money. So look, I like to think there was a bit of technical skill in there as well. But really um, you know, it was a uh a product of the, yeah, the good market conditions, the bull market as well. So, so that was my early sort of foray into trading part time. My father got me into part uh into part-time trading.

as another source of of income and a source of wealth. And so look, from that time on, I thoroughly enjoyed it. Um, bought a couple of decent programs and started my sort of trading career from there. But unfortunately, well not unfortunately I suppose, but. My wife at the time and I left our jobs, this is 15 years ago, to for a change of career. Uh, and I thought I would. Try trading full time.

And right at that moment in time, or round about that moment in time, was when the GFC hit. So that was when I realized what I didn't know about trading. So I took a decent hit. Um, it completely caught me off guard, blindsided me. Um, you know, prior to that I was able to take losses and things and uh, you know, follow my my plan. But, you know, when we had such a big periods like that I was just I just didn't know what to do. I didn't know how to stay out.

So that was my early experience trading full time.

In one sense though, it's probably good to have gone through it then than when I had serious and big money in the in the in the uh in the markets. It's good to have gone through that sort of situation early on and be able to work through it. So I see that as a plus. I see that as a positive. So anyway, so I went about

educating myself, I did uh quite a bit of formal education. I have the CFTE qualification as certified financial technician. I did the Diploma of Technical Analysis here in Australia, as well as the uh diploma of share trading and investment, um, as well as a a lot of other self-directed study and other short courses. Um some good, some not so good, but

I've tried to take away from all of that what I could. So I really gave it a good shot. Plan B, I didn't even want to think about going back, you know, going back sort of into the corporate sort of world. I didn't want to think about that. But I I committed myself to trading. Oh gosh, you know, 12, 13 hours a day to study and learn for three or four years, spent that.

uh did the did the um formal education. That was about two and a half years. Uh got a lot out of that, gave me a huge, terrific foundational uh knowledge base that I can fall back on. But then came the time, of course, to uh start working on your psychology. So um

you know, for that sort of role and and for the my role to come, which I didn't uh didn't see at the time. But I guess coming from that sort of mathematical engineering sort of background. We are wired a certain way. We're very detailed. We're very uh analytical. You know, we love charts and statistics, that sort of thing. We love to um

We love to add more moving parts sometimes to our detriment, of course. But that's one thing that we have to be sort of careful of. But certainly from the process. side of y side of it, yes, that's that's where it's really come in come in handy. So yeah.

So that was my thinking at the time. Uh, I don't know enough. Of course, when you have that thinking, it's easy to be in search of the holy grail and to continue in that mode for quite a while. And I've got to catch myself The odd time.

It's just a completely different mindset. What was it about the corporate world that just you knew it just was not for you that drove you to trade instead?

Does it help to give you edge? Absolutely. It does. But there is kind of a limit where the more you know someone's can be actually detrimental, but um, because you can easily get into that sort of analysis paralysis. situation, but certainly bigger picture. Yes, absolutely. But once you know, as as I think it's Bruce Lee says, once you know, you've got to you've got to apply. You've still got to start to apply what you learn. Otherwise it is just a whole heap of knowledge.

It's no different to let's let's let's give an analogy. It's no different to the um the medical student. that knows how to perform the operation in theory, but he's never done it. So uh I think that's a great analogy. So you have to then start practicing and that's when the real lessons come. And uh and that is also that's obviously also uh learning about yourself and staying to know yourself and work with yourself. That's the key to it.

Um, something that I didn't need to monitor. I could just look at once a day. Um, perhaps just just keep my eye on it during the day. But yeah, very much a swing, swing style, very much based on Elliott Way, very much based on um you know, pullbacks or bases out of um way four and into sort of way five.

Would you be willing to share a little bit about that?

very driven. So when you're not getting success, of course it leads to n not necessarily feelings of failure, but feelings that you're not getting there as fast as you would like. So I think so what I did, I didn't I'm not necessarily a person that gets depressed, but I think it's more it gets you down a little bit, but it's what you then what I then did with that. So I learned from that and tried to sort of come out of that. Um

So that's always in the back of your mind. And of course, in the back of my mind was that, you know, trading with scared money. That was another thing as well that that can affect you. And did did affect me as well, even to the point where I thought, look, I need to just Go and find a part-time job. And I did try and find, you know, part-time, you know, part-time engineer assistant or any any sort of job just to take that pressure off. But

It's hard to find those sort of roles. Um so no, I just I I pushed through, I took a little bit of time out, but I think sort of pressing into with me pressing into work helped me get through it, helps me to uh alleviate those sort of feelings of uh being down, uh keeping healthy, uh, plenty of time in the gym.

get those frustrations out. And as I said before, you'll always have those those blips in your uh in your life. It's what you do with that. And it's what I did with that. So I use those opportunities to sort of Regroup, refresh, and come out of it a little, you know, come out of it better for it. And in the back of my mind, always though was. And thankfully, with some of the educ early education I did and some of the people that I sort of listened to, I knew that I was in that.

uh I knew how long it was going to take. I was aware of it. You just don't know first off when you start. It's the old saying, we don't know what we what we don't know. Uh but I knew that it was something that I wanted to push through and I knew that it was something that I wanted to achieve and

There's an old saying where if you want something bad enough, our brain just figures ways to get around those obstacles and makes it happen. But a lot of journaling helped me through and the to know that when you look back on when I look back on my journals to see where I'd come from certainly helped me to realise that, okay, I have come a fair way, I've got a huge knowledge base here, and it's just now a matter of applying it as best I can.

and also finding out what sort of styles suited me. So yeah, look, I hope that's I hope that's sort of answered in a bit of a roundabout way.

Myself to be able to think like a trader and think in terms of a series of trades was one, that certainly helped me to not take those small hits, those small, when I say small losses, those individual losses, those moments. to keep them in perspective of the bigger picture where it's just one trade, it's just one, but that now starting to work on, really work on myself, really journal, really work on myself, not trust those first thoughts.

Think about what I was thinking about as one removed, I guess, somebody thinking about what I'm thinking about. That was kind of probably the turning point where now I was able to start to work on myself. And that came early on once I started to apply my knowledge. At the end of the day, you realise what it is. You realise it's yourself making, you know, this wrong decisions, poor decisions, um, you know, impulsive decisions and

You either now work on yourself or you find something else. So this is when the real work begins.

for a lot of people going into trading since the barriers of entry is quite low for trading, uh, versus someone who has, say, an entrepreneurial mindset and then going into like um, you know, like a a typical business. And therefore I think it plays into the statistics, the alarming statistics that twenty percent of small businesses fail within the first year. versus 70% of traders fail or give up within the first tier, according to some sources. So what are your thoughts on that?

And look, I was the same. You don't realize what is involved in trading. And unfortunately, you hit the nail on the head. The cost of entry is very low. So we go into this profession.

ill prepared um for what's what's ahead. We're in the markets against, you know, bigger funds, bigger central banks, you know, bigger, bigger uh bigger traders with with you know huge accounts that can move the money and we think we're gonna go in there and start to nail it with If you'd have three months experience, a couple of weekend courses and a ten grand account, it's just not going to happen.

So if you told traders what's actually involved, those that wanted to begin, I can guarantee, as I said, 90%, 80, 90% would not follow through. And that's the trouble. We just don't know what's involved in getting getting skilled. And the analogy that I give, of course, is the the engineer or the doctor. You're going to do the medical student, you're going to do Three to four years, whether it's over a part-time period of six or seven, whatever it is, you're going to do your time.

Another way I say it too is um you're going to pay your tuition to the market one way or another. Either do it smart, educate yourself, do it properly, you know, hire a mentor, do it, do it, do it in sequence, or try your luck. Go in there, um, try your luck and do it ad hoc. And unfortunately that part of how I did it because I didn't have mentors. So there's the option. So I think if you present if we presented that to most newer traders, I think yes, that would cut a lot out. Absolutely.

What does this actually mean? I don't think we've ever really um took the time to really break this down. Uh what what do we mean or what do they mean when they say they treat trading as a business? Do you have to have a business degree to do this? Or how when do you start doing this? When you when you first start getting into trading? Um What does it mean? So I hope that uh maybe you can help um break down what does it mean when we need to treat trading as a business?

Look, one of the keys and and those that are successful are treating trading as a business in some way, shape or form or form. Does it mean you have to have business skills? Does it mean you have to have an MBA? No, it's not. And that's You can get into trading um with no qualifications at all. You can get into, you know, do you need to be exceptionally sc skilled, um, gifted?

to be successful at trading. No, it doesn't come down to that. Learning strategies and and other techniques, technical analysis is the easier side of it. It's working with ourselves. So

in some way, shape, or form, you must be treating trading as a business. So let's consider those that treat trading as a hobby or those that treat trading as a as a true business. What does what does a hobby generally do? A hobby, yes, it brings us pleasure, but it also costs us money. So when people are treating trading as a hobby, they're really not.

treating as a as a something serious. It's more something that they enjoy, something that they like to do. Win or lose. Maybe it's it's fulfilling that uh desire to be using their time towards something that they think could be something down the track. But by not starting with the right mindset,

in terms of treating it as a bus as a serious business can actually be be quite detrimental because it never allows you to sort of work on the things you need to. So let's like it and let's have a think about other other business endeavors. uh in other business endeavours and let's let's liken it we'll sort of come back to comparison with trading.

But any in any other business endeavor, if you were to put in 50, 100, 500,000, would we be using and would we be making the undisciplined, impulsive decisions that we make in trading? I doubt. if you invested the time that you invest in tr in trading into other businesses. we would take it more seriously. So when you can

see those two uh those parallels, I think you'll find if you invested in some other part time business, I can guarantee you would take it a lot more seriously. So why is it then with it with trading that we are so undisciplined? It's because You know, we're not taking it seriously. We're not treating it as a serious business. Let's say, and also too, you have to remember if we have a business that we've put 100,000 in, we want to get

a$500,000 bank loan to buy additional stock or whatever. Um, and we approach the bank for a loan, we need to have a business plan. We need to have something to go to the bank for them to lend us money. Otherwise they won't. So same thing with trading. If you wanted to trade with, you know, with a margin account, um, you should have to come up with a business plan. So when we liken it to other businesses, we can see that.

A lot of people don't take trading seriously. Now, let's consider that let's consider trading. Um, and I consider that trading is a serious business. You know, we've got a serious financial commitment. We're we're perhaps trading with the family's life savings. So we have a serious financial commitment. If we're putting in an hour a day and a couple of hours on the weekend towards our reviews and journaling, that's a serious time commitment.

We we're emotionally involved with our trading. So we have an emotional commitment as well. We're thinking out our trading. We're working on ourselves all the time. And often there's going to be sacrifice, will be required. to commit to your your trading. So trading is a serious business.

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We give them a job specification so they know what to do. And a lot of times the individual's told don't, don't, don't think, just follow the specification. So you can see we're given a set of instructions. And often the employee will be reprimanded for deviating from that specification, and there could be possible termination for noncompliance.

So that's in terms of a traditional business. Now, when we think of our trading business, well, who are the employees? We are that employee. Now, who are who are we who are we accountable to? I think it should be. If we said before, we if we're trading with a family's money, if we're trading with a family's life savings or part of, well, we're accountable to that family, aren't we? So when we sit down and do our performance reviews.

maybe we should meet once a month, you know, with the family, and we need to give a review of our performance for the month to our family to justify why we should keep our job. Or should we maybe be getting a a written warning or a verbal warning? Can you see how we're trying to this is all working towards trying to change our mindset to

Yeah, to being a bit more responsible for the finances. So if we were to think in terms of that, we're the employee of the trading business. And look it maybe in a family name. We are that employee. So We need to be able to think like that employee. We need to be accountable to somebody, accountable to the family if you've got a or a significant other and you're trading with with with money. I think when we can see it that way.

that can help to sort of reframe and re-change, re, to sort of change our thinking.

Maybe something like that. Or if you want a partner in future, um, are they going to take someone on that's been uh dabbling in trading for 15 years and really not getting anywhere as a part-time job just to keep their head above water, you know, are we accountable to that future partner? Whatever works, I guess. When we can start to treat trading like and we start to begin thinking like a business, what it does, it it reframes our mindset.

to begin to think about our decision making more from a business perspective. Okay. To give you an example, every decision we make. Now I know if you're a scalper, we're making quick decisions, of course. Um, but it could be a session, you know, decision over a session. But I try and think Is this decision I'm about to make, is this in the best interest of the trading business? So that helps me to remain a little bit more objective.

What that does, it builds in that accountability to, you know, who am I accountable to? And Uh also uh importantly Am I being a good steward of finan my finances and my time? We have to think of time as well. Time is a commodity as well. So, you know, when you can start a begin to think like a business, it starts to mold and change your thinking to one of I'm part of this business, I'm part of this trading business.

When you when we can treat trading as a serious business, what it does, and the whole idea is to shift our mindset into one of a growth mindset. So what I try to do um What I try to do is create and part of that is then to create rules of engagement where, as we said before, about the employee and their job specification. I try to create rules of engagement which are pre-thought out if-then statements for every situation. So if this occurs, then I do this.

And how do we do that? We do that through our trading plans. We do that through our daily routines. We do that through daily journals. We do that through our psych trading psychology plan. And we also do that through our honest performance review process. How do we do that? It's through our journals. Journals are an incredibly important part of what we need to do as a trader. And any business would do, they would have reviews, of course, wouldn't they? Maybe not journal.

Um but somebody would be taking you know meeting minutes. So taking minutes of those those meetings. So it's it's working towards treating treating our trading as a serious business. And of course, you know, one of those should be to start to document your trading business plan, we can which we can uh discuss when you're when you're ready.

And what it does, it creates the framework, the rules and guidelines from a business perspective. that the trader needs to operate within. So from a business perspective, not those individual trading rules that we we work with, but it creates the the framework that the business can operate under. So what effectively this does is when you create a trading business plan, as I call it, as against trading plan, and the two shouldn't be combined.

What it does it documents our thoughts for the trading business. And in the process of documenting our thoughts for the trading business, it forces us to seriously think out what it is exactly we want from the trading business. So and and this of course should be your trading business plan should be a fluid document. It should evolve as the trading document, sorry, as the trading business evolves.

And a lot of people get sort of started and they don't know where to they can't finish it. That that's fine. You need to make a start. You can fill it out as you go as you go forward and As long as you make that initial start, you don't need to have been in business. You need to start putting down, start documenting what it is that you want from the business.

how it needs to operate. And it doesn't need to be a, you know, a war and peace novel. It can be two to three pages long. I mean, my business plan, my business plan is six pages. That's it. It doesn't need to be, you know, overarching. And and if it is too long, you'll never use it. You'll never you'll never do it.

Once you put it together, of course, two, you need to revise it every six to 12 months to see whether it's still relevant. Number one, still see whether you're working within those parameters. So the trading business plan is an important plan. And then of course that guides, of course, the your trading plan. So your trading plan comes under the trading business plan as a supplemental document, I guess we could call it.

Then you may have your specific checklists, let's say for example, and then you may have a training psycho, or I suggest you should have a, you know, a plan for your psychology as well.

What what are the things that I include in in journal? How do I deal with when I get emotional responses? What do I do? What's my plan? When I come up with a situation, when I come up with a response. How do I work through that? So there's got to be a plan because when we're working as traders, when we start to, once we know our setup. once we're believe that we're skilled enough to jump into trading and and just as a uh

Just as a sidebar here, I often get asked, do you need a high level of technical analysis trading to be to be successful? The answer is no. You just need to be able to read a chart properly. Now that will take time, but you don't need that level and that degree that I went to. Did it, does it help me? Yes, absolutely. My bigger picture work. Does it give me increased edge? Yes.

But is it absolutely necessary? No, it's not. So then the real work comes and where the rubber hits the road is working on yourself. And I liken it to peeling layers off an onion. You peel one layer off and it exposes another five layers, of course. So you've got to have a plan to work through those layers, work through those issues, because otherwise Once traders start to begin to trade.

generally they'll come up with easily five, eight, ten things that's wrong. So how do you work with that? That's where your trading psychology plan comes into comes into play, where you can work through it one or two at a time and get through it. using a process that works. Sorry. So I hope that that answers that one for you, Jason.

Number one, we need to have a vision or a mission statement for the trading business. So what's the desired long-term now in regards to this, what's the desired long-term outcome for the business? What do we expect to achieve from the business? What do we want on a personal level? So this comes under our vision or our mission statement. So let me give you some examples. It could be a

Part-time supplemental income. This could be our vision. It could be a satisfying and rewarding full-time role and full-time income. Or it could be providing finances for other pursuits or philanthropic reasons. So have a reason, have a why. So so that would come under our vision or a mission statement. Now, um, goals and objectives. So what are our goals in regards to utilizing our talents and our strengths?

What are our re goals in regards to skills? Do you want to be a, you know, a very skilled short term trader? Do you want to be a very uh you know skilled technical analyst? Is that part of what it is? Now just remember too, being a, you know, a qualified technical analyst and a and trader is two different things. You need to put both hats on.

at at at various stages or take one off and put the trader hat on. So it may be that you want to be very skilled at at chart reading. You're able to do that and somebody else may trade on your behalf. You only find that down the track, but that may be one of your skills. You need to state that. What are our goals in regards to processes? Do I want to be the process management king?

Um, that should be a goal. What are our goals in regards to risk management? What are our goals in regards to investment of time? What are our goals in regards to our psychology? So that's goals and objectives. Another way of framing that, I suppose, is let's consider it from a different angle. What would succeeding at trading mean to you? So what would it mean on a personal level? What would it mean on a financial level? What would it mean on a psychological level?

So if you can answer those questions, that will help because what we're trying to do here is project forward where we want to be, because there's an old saying when we can um when we can create that uh that ideal situation, that ideal moment in time of what we what we want to have achieved then what we focus on, we generally move towards. And as I said before, our brain then naturally, because we're problem solving, people work ways to get around those obstacles and get what we want.

So a lot of times with trading, it is only a matter of um, you know, putting in the time and the effort. If we want it hard enough, we'll figure out a way to make it happen. A lot of traders, and I know this is digressing a bit, a lot of traders. simply don't make it because they can't last the learning curve or their finances run out. So I think one of the keys is to be realistic in in terms of as long as it takes, realize where you're at on your journey. Okay.

Uh, I know it's a three to four year degree. I'm in year two. Okay. So realistic in terms of where you're at. Otherwise we all want it now. And of course it's not gonna trade it trading success will happen when it's good and ready. So another thing we should be doing as part of our trading business plan is We need to assess the trading business from where it's at in terms of resources, our finances, our capital expenditure.

Uh, you know, what are we, what's our time allowance now? What are our finances uh what are we allowing for finances now? What's our level of education? What's our level in the future? Where do we want to be? in terms of capital expenditure, what are we what have we invested now? You know, if we're if we're working off a 10-year-old laptop computer and we're working, you know, on the uh somewhere noisy, you know, well it

We're really, we're not serious about, you know, our capital expenditure, are you? Are we? So, you know, what are our goals if we don't have the finances? consider where we want to be. We want to have our own little quiet office. We want to have a decent setup with maybe, you know, two screens, something like that. So, you know, state where we want to, what we want to achieve. You know, assess our level of mentoring.

Assess our current levels of skills. Be honest with where you're at. Um, be honest with where you want to be. And then Then that sort of leads into, of course, the uh the SWOT analysis.

Now be realistic of of you know what what is in what's up against our business, but also what opportunities are there to our business. So When we look at each of these on its own, when we perform our SWOT analysis, we're really doing the SWOT analysis number one on our, let's say on our business from a finance and resource. um capital expenditure point of view, but really we're doing a self-assessment SWOT, aren't we?

So what we're doing is we're identifying number one the strengths of the business, as we said before, against our, you know, what computers we use, what um uh, what programs, what skills, but more so when we conduct the SWOT analysis, it should be on our personality or our character.

and what can be used to the fullest extent. So what are our what are our character strengths? Now we just mentioned before, and I mentioned about myself, you know, very detailed, very analytical, very thorough. So my strength. will then come from planning out a trade. So when I can swing trade, I'm very good at at planning the trade out. I'm very good at putting the analysis down.

And I've learned not to over analyse and get into that paralysis stage. But I'm very good at analyzing, picking up, you know, th those opportunities because I'm using my own you know, my own natural skills, natural strength. So It's important to do that from a potential traders perspective. Another let's give another example where the individual may be very good visually, may be able to make decisions very quickly. Bye bye. Used to action. Um maybe a good video video gamer.

So what's gonna be his strength? It's probably gonna be that quick decision making. So he's pro he or she is probably going to be more suited. to then shorter term trading, aren't they? Because sitting down doing five, ten minutes of analysis on a particular m market is going to bore them. So It's uh it's uh you know where I'm Gary here. So that individual would be better scalping. Now that is a different takes a lot more time.

And to give you to give you a a bit of an average, it takes about eighteen months to three years for a swing trader to be consistent. scalper, it's more like about three to five years. So as long as you're aware of that, if somebody is very good at gaming, then yes, they may be more suited to that shorter term type of trading.

Not going to get into how you discover that. That's that's I've done workshops somewhere for that, which we can talk about later. Um, but that's part of identifying your strength. uh how we you know what really comes down to trying but but knowing for starters this is how i'm wired that can very much help and that comes from your SWOT analysis so so we've done the strings

So then we need to do the weaknesses. So let's identify the weaknesses of the business. So what are the business weaknesses? Maybe not enough time, maybe not enough finances, maybe our setup is not quite as good as we'd like. And so they're the weaknesses of the business. Maybe our internet connection is not ideal. So they're the weaknesses of the business, but then we need to look at the weaknesses of our personality. So if you're impatient.

Trading is going to just absolutely amplify that. Okay. So think of just remember this that whatever our weaknesses are in terms of our personality, trading is going to absolutely amplify those to the point where. They're gonna basically stalk us at every turn.

So you need to be mindful of that. What are the weaknesses? Yeah, I'm impatient. I can't hold a trade. Be aware of it. Be, you know, have thought this out so that when it occurs, then you'll know, okay, this is part of my personality weakness. then identify the opportunities to the trading business. Um, if you're an FX trader and you're in London or

Uh the US time slot, that's a great opportunity. That's a great time. Um or if you're here like I am in Australia, we've probably got one of the not not an ideal time slot. However, London Open, US Open occurs maybe five p.m., six p.m., seven p.m. onwards. So if you're an FX trader, that could be ideal because you can put that hour or so in after you know you get home. Um so that could be I that could be ideal. So that could be a good opportunity.

And so that's the O. So we've done S, we've done W, we've done O. So the last thing is identify threats to the success of the business. What are your perceived threats to the success of the trading business? One of those could be running out of time, running out of finances. It could be lack of time, as we said, but it could also be black swan events, it could be other threats that could threaten the success of the business. You know, start to identify these and start start to document these.

is really hard to do. So I can imagine how hard it is for many, many traders. And so what do you think would be maybe some ways to overcome that kind of feeling um that it's overwhelming or so daunting. I mean, what are some actionable steps that a trader can take to feel like it's doable and they can take one step at a time?

you know, what is most urgent? What you know, what is medium urgency and what what can generally sort of wait. Break it down so that these are the things I need to get through, work through one at a time. Otherwise You're correct. It can be overwhelming and it can be daunting when you think about it as a whole.

What I find is when you've got a project or when you've got anything, break it down into workable steps. Work on one thing at a time. Do that thing properly. Do that particular task item properly. Until you've mastered it because with trading.

There's certain things that you haven't mastered along the way. It can often be those things that actually trip you up from being successful. So a lot of times you need to come back to that and say, all right, I haven't dealt with my journaling enough. That's what's tripping me up. I've got everything else. Right, but my journaling is bad or my statistics are bad. Learn to master each step as you go through. And It it can be um daunting, but make a start. Um remember that trading execution.

Placing the trade is just one part of the trading business. There's a whole heap of other things that we need to be doing to make it successful. And I don't want to make it sound um, like this is just something that you've got to be exceptionally skilled or or knowledgeable to do. And that's not it at all. I think the key to it is to make a start. Start to Change your mindset, as we said before. Start to be accountable. Start to change your mindset. Work on one thing at a time.

Start to start to put it in in action, start to document it, start to put it into action, start to change your thinking, start to uh and what that in turn will do is to start to make trading more important than the the hobby may be. Uh I'm I'm probably not putting that as succinctly as I should, as I can.

It will start trading will start to take a little bit of a different different importance, I guess, is what what I'm trying to get at where this is serious. I'm putting serious time in. Um, you know, would we put serious time into anything else? Yeah, to really not have getten any gotten anywhere after three to four years. That's probably what I'm getting at. Um and I think along the way as well, what's important is celebrate. Your successes as you do look back.

celebrate your successes because I think after two to three years, if you can look back, certainly look back through your journals, you'll realize, well, hey, I've actually come a long way. Whereas it's easy for us to focus on the negatives without realizing exactly how far we've come. To give you an analogy for that too, is if you're not doing your journaling, you haven't looked for your through your trade journal for a couple of weeks and you've taken a bad lot.

And you've journaled it, you think, oh, and you feel terrible. Often when you look back and have a look at your equity curve, it's not as bad as you think it is. We always seem to flick to that worst case scenario.

our um, you know, accomplishments and wins, no matter how small. It's really important. It's also, I feel it's very important too, to to build that confidence. It's so important to have that confidence. to keep you going. Um and So yeah, thanks for for reminding us to to, you know, look at our um journals and you bring up journals a lot and I think that's really important and and um something that

you know, have been a big part of a lot of traders that have um become successful because of the journaling. So at what stage should we be thinking about treating trading as a business? say for a a beginner trader who's going into trading, they're not thinking about this right now because it's they're just trying to like learn and and you know, trying to

explore trading. It's just like so much to think about. I mean, would it be more appropriate to um think about trading as a business maybe after a certain amount of time? Or are you saying that this is something we should like know right away, that we should, you know, set up right away?

anyone learning to trade and thinking about trading, no, I wouldn't put together the business plan until such time as The individual realizes that, yes, I like this. This is for me. I want to be, I now want to be serious about it. I think too early on it's just gonna bog some the individual down with unnecessary um detail. Once somebody likes what likes trading, once somebody Uh has not not early success. That's probably not right. Um, but once they look into it and think that

this is this is for me, this is something that I want to give a go. Then I think you need to then have a plan as to how you work through it. I think being acknowledging and part of that is to acknowledge and realize that you're trading trading's a serious business, serious financial commitment, but also realizing that to get successful at trading and if you can do it early on, where we realise that this is three to four year degree. I enjoy this. I like this.

I want to give this a serious go, then is the time. Otherwise, if you're just dabbling in it, you're just having a look at it, um, no, you're not going to want to do the plan for starters. should only be when you really want to take this on and you're cognizant of how long it is going to take and Look, I wasn't as well. I didn't I wasn't until I started to get into it and I I didn't have any mentors, you know, when I first started, I didn't know any. But once I realised that I wanted to be

that that this was serious and I wanted to take this serious, that's when I started to put together my business plan and my trading plans and other journals and resources. But that wasn't until probably four years, five years into it, um after trading part-time for three years. Um but I did have in that early part-time I did have a trading plan, I did have a checklist, so I did have some things, but

You know, I wasn't trading with sort of m the money that I that I I was trading with, you know, smaller accounts. There were still decent accounts, but not as much as when I went full time.

In a regular business, you would have like kind of your sales target or, you know, revenues target. And you may even forecast that out five, ten years down the road. If we were to treat trading as a business How do we, how does PNL targets um Fall into this. Because you know how uh yeah, because I I asked this because you know how when Traders are learning to trade, the focus should be on the process and on, you know, building good habits.

self-discipline and things like that. But if you're if you're to treat trading as a business, where does PL? Fall into this.

There's a level of consistency where we can fall back on our statistics, and we know for the last three years. We've done 65% win rate, you know, payoff ratio of 1.8 to 1% and a profit factor of, you know, 2.5. We've got our statistics we can fall back on. That's only a matter of just ramping up the risk. But uh ramping up the risk gradually. But I think to do that too early until we've proven it puts unnecessary pressure on you. The within the first year when a student goes live.

The focus should be on basically breaking even. If you've broken even in your first year trading full-time, you've done well. So the focus must be on doing your job properly. The focus must be on. following your processes, following, you know, everything that's laid out in your trading plan, everything that's laid out for the business, following your daily routines. When you're doing that properly and thoroughly and disciplined.

Then you know you've got your methodology down, Pat, and you're um you are performing your job properly. Only then really should you even be thinking about it. And when you do go live as well. Now is the time when you'll start learning about your psychology because now you're going to get those emotional triggers from from from having something on the line. So I always recommend that you go live with a small amount, risk a small amount.

to allow yourself to now get used to trading live, but to experience those emotional triggers that are going to happen because you've got money on the line. And trust me, they're they're going to, they're going to now occur. You'll get a you'll be aware of these early on. But then they'll be amplified when you do have money on the line. So what the last thing we want to do is to have These emotional responses so large from having big accounts that it's putting us.

To use, you know, to steal a a um a saying from Mike Bellafury, it's putting us on tilt and we can't function. If you come out of the week and you've lost$30,$50, that's manageable. If you've come out of the week and you've lost two to three thousand, that's difficult. Losing two to three thousand when you're making five to ten the next week is fine, but you haven't worked up to that point. Give yourself the right to trade bigger. And how does that come? From being consistent with smaller money.

Now, a lot of people say to me, well, look, I can't trade with, you know, risking$30,$20,$30 a trade. My response to that is if you can't make$50 a week, you're not going to make$500, you're not going to make$5,000.

I've said it many times, follow the process and and the money will follow.

in a business fashion, whether they've got a documented process or not, it will still be in the back of their mind in turn in thinking like a business has got to be. Um Some people might be able to not not wing it, that's probably not the right word. Some people may just have a a bit of a gift to be able to do that. Some people may have um, you know, money scripts that are that are that uh lend themselves to be able to, you know, put serious risk on without having

amplified responses, you know, to having money. Um and some people might have the opposite where, you know, money is money is um is actually going to trip them up um because of Yeah, they're they're monetary scripts. So I would recommend people have a look at that as well. Um, just analyze your thinking around money.

You don't need to operate under a you know a big structure. I don't. Um I don't need to. I'll, you know, my accountant has advised me accordingly. um, but I can still get, you know, some of the perks and things that I need to legitimately without going that that full extent. Uh so I think if you are serious about I mean, if trading is your full time income,

Well, yes, there's going to be certain things that you need to follow, but you don't need that level of detail, I don't believe. If you're employing others to trade with you and that sort of thing, maybe, but I would say keep it, you know, keep it simple initially. Keep it Don't uh unless there's huge tax advantages, I wouldn't suggest uh, you know, make adding sort of too much detail. And look each

Each country is going to be different in terms of their tax rules. So I think you need to be I I think at least you need to be aware of that and how trading can you know what benefits there may be. I think if you're aware of that, that will help. Or simply ask your accountant, what can I? I'm training, I'm trading seriously. What can I? I'm considering it as a uh serious part-time business, what can I claim?

You covered a lot here and um I've learned a lot and there are a lot of questions to ask ourselves. And you know, I guess the biggest general takeaway that I got from this is by having a business perspective um on trading, it shifts your mindset in a different way. It it just does, it shifts your mindset to think about trading. Differently. Um, I wanted to ask, as we ask many of our guests on the show. What are your struggles if you have any that you're still working on In your current trading.

usually only up until lunchtime. And then I want to do things in the afternoon, go to the gym, do other things. And I find that's where most of the li the liquidity is here. Unlike the US stock market that I've traded, I absolutely love that. The time slot doesn't suit me. It's too late. But so I intraday trade our Aussie stock market. What those two do give me the swing trading gives a bit longer term sort of um income generation. The

intraday trading or scalping, you know, that's able to bring in, you know, monthly income, that sort of thing. So I love that. But Because I'm not naturally wide for the smaller style, that took me probably five to six years to get consistent at that. Um, the intraday or the scalping. And I also swing trade and scalp.

impatient, but I'm catching myself. So so more. Um a lot of them will stem from personality traits. And one of the probably the biggest which I know and I've heard a lot of others say Probably letting the trade run as much as we come up with our plans and things. When you especially when you're shorter term trading, because those emotional responses are so quick. It's catchy myself.

when the trade is going against me to be objective in what it's actually doing. Now, you know, we're talking one minute, two minute chart. So it's very fast and it's very quick. It's catching myself to when I'm being triggered And then a overlaying and applying that.

thinking script to collapse that initial thought. And that usually probably the w the worst is probably yes, is letting the trade run. You know, does that maybe come from You know, back in the original times, you know, we're trying to get trading, having no other income. You know, trading with sort of scared money, probably, but I'm getting certainly getting, you know, a whole lot better with that. You know, a lot of experienced traders.

uh and others that I speak to on a regular basis. That's one of the most common things letting the trade run. But look at the end of the day, when I look back and you do your reviews, um you know, from for the majority of the time, getting as much out of the trade as to what's on offer. You know, I'm I'm thankful at times that I have actually cut uh where it was and and that first thought was right. Um But probably more just stopping and catching myself.

from starting to cut the trade when it looks like it's maybe maybe run. Um, so that's that's one and I think that's common also. letting too much of the trade go too early. Look, that that's you know, that's kind of fear based. I know where that's come from. And I think that's sort of common as well. And there's ways around that as well. It's always better.

And easier when you've got a couple of wins under your belt early. You know, when we when we've got a couple of trade good trades, we tend to be, you know, the master of trade management. Whereas when we haven't, we tend to want to bank that. So we've got something in the bank. Um, and that is a whole different thing. I think being aware of it, but look, I think a lot of that comes from, you know, I want to have lunch and I want to go to the gym and I don't want to be in this trade anymore.

uh i think that's where it comes from as well a lot of it i'm aware of that i don't want to be managing babysitting this thing you know if it's done it's move and i've you know the momentum kind of looks like it's done you know i don't want to sit there and micromanage it i'm done i'm out Um, yeah. Do I come back in the afternoon? Oh, I've left, you know, quite a bit on the table. Yes.

But that's that's a function of me trading the hours and the times that I want. If I want to just trade for two hours in the morning, I need to just catch that momentum move and be done and be satisfied with that, but there is also always that. I could have done slightly better. But you learn to you learn to deal with that. You learn to accept what you've had. A lot of that comes from being critical of yourself as well, as we spoke about before.

You know, your performance is always you try and be better and better and better. Um, but a lot of times you just need to accept that, hey, you know what, this is pretty good. You know, this I've done reasonably well. I need to be happy. And yes, you always need to be Um uh trying to better yourself, you always need to be in the back of your mind, have your your average win there so you can better that all the time without putting unnecessary pressure. Um So that's just part of, you know.

Performance, isn't it? Always trying to better yourself, always trying to better your average. That's all just part of it. So so that would be probably the worst one. Um trying to let the, you know, trying to milk as much out of the trade as you can. Um with the time that I've got.

And then I like to, and I mean look, when you're when you're scalping, you know, reasonably intensely too, you can't you know, you can't do it. for long periods of time, you need those breaks. So for me, having that big break is is good. Um if there's any trades that I do have open and I've removed seventy five percent and I think this is a good entry, then that might

uh I might hang on to that as a as a swing trade, but I would journal it separately. It just has a better entry. Um those I'll monitor at the end of the day, which is about three Three forty-five. So I'll make sure I'm back here at three forty-five PM for our market close. Um And then, you know, kind of after after um dinner uh and and sort of from then on, I'm free to do sort of what I need. I do a little bit of work, I do my journals.

Uh but I journal throughout, you know, throughout the morning as well. Um, you know, review that, set it up for the next day, uh, you know, do some do some scans for the next day in terms of swings. But look, I've I've worked it into a lifestyle. Um So, um, and that was one of my goals, was a lifestyle goal. And, you know, being able to work it into that. Um, I like to do other things with my time as well.

Um, so it has sort of worked into what I want, my overall plan, but it's taken time to get there. Um, but keeping that plan in mind is is is important. And You know, I love to share what I what I do. I love to teach and train. I've mentored for about eight years as well. So I love to do that, but I only take a sort of a handful at a time as well.

but i'll do that in the afternoon as well if i don't go to the gym if it's my day off i'll do that you know 2 p.m 3 p.m my time um yeah so so i've worked it in with what i want But you know, it's taken time to get to that. But you know, it's it's I you know, I love what I do. I I did enjoy my previous job, and did enjoy the challenge, but I absolutely love what I do now. I think

That's part of it as well. You need to have a passion for what you do. Otherwise you'll just lose interest. Or if it's monetary goals, you want to buy the next Mercedes. If you don't get it in six months, you'll just fall away. So you need to have valid reasons for doing what you're doing, not just fine and not just financial reasons.

getting the global financial crisis early on and get that out of the way. It it now makes you more aware of that in the future and protect yourself from that. Whereas if you've been trading for 10 years successfully, And then you hit something like that, unless you're prepared, um, it it's going to, you know, there's a chance that it could blindside you.

Especially if you're a swing trader and you don't know how to sort of cut out and have a market filter. Um, but yes, look, I probably would have done it differently. I would have had a mentor. I could have maybe cut the, you know, the time to get consistent down, absolutely. Um, but I didn't know any back then. I didn't know any. Uh I knew the importance.

Um, absolutely. Um, you know, I spent spent money on formal education uh and that you know that has served me well, but I think also to being aware being more aware early on of my psychology would have helped me to be more aware of it as it was occurring and having a plan in place when it did occur would have helped me get through those uh and and master my psychology earlier. That's probably the biggest thing.

So when that occurs to you, you now know what to do. You're not blindsided by that emotion. You've got a plan in place. And this is what I teach as well. When So when we've got these routines down, Pat, then it protect us when we do have these responses. So when it occurs, we now know what to do. It's a matter of just following through and knowing, knowing then how to do it. No, it won't make sense at the time.

But when it occurs, it's in the back of your mind, ah, this is what we were talking about. Okay, I now know how to deal with it. You're absolutely right though. You won't know the importance of it until it occurs. But knowing early on, and trust me, eve early on, even in backtesting phases, you'll get a bit of an inkling and you'll get a bit of a um snapshot as to what is affecting you. Um and there's only a couple of root root causes, but they manifest themselves in different ways.

So you can find the workshops on there. And you can also contact me through there. I do, I don't have a big presence. I don't use Twitter. I don't use a lot of social media. I tend to just be a little bit sort of more private. But I do have a website for mentoring and that is www.integritytrading or one word. So integritytrading.com.au. That gives you a bit of an outline as to some of the mentoring that I do. I enjoy that side of it and the email address for that.

site is info at integritytrading dot com dot au. So they're probably the best two ways. Um but a couple of other workshops I've done a chat with traders community there as well. For those that are a little bit newer, you know, a good one is the traders roadmap to success.

the g outlines their steps. So I recommend that you go and check that out. But yep, as I said before, there is the whole trading business plan in detail. So workshop there as well. So that's um a bit more detail on today's discussion. So Thank you, Tessa. It's been been great.