Trading Psychology (How to Achieve the Right Trading Mindset and Master Your Trading Emotions)

Trading Psychology (How to Achieve the Right Trading Mindset and Master Your Trading Emotions)


00:04 In this video I want to talk to you
about one of those things that all of us traders us face. Whether we’re new at this or whether
we’re seasoned professionals, we all face this at one point or another. And actually,
to be honest, we face it each and every day. And that is dealing with our emotions when
trading and our psychology when thinking about getting into a trade or managing our trades.
Or even after the trade is closed, whether that be for a win, a loss or whatever, our
emotions play a big role in our overall success in this business.
00:33 So, today I want to talk to you about what it is that you are going to face on a
daily basis and also more importantly, how you can go about combating this. So, how you
can get control of yourself to make sure that you make the right decisions at the right
time and you have long term success as a trader. 00:49 But before we get into it, please make
sure that you’re subscribed to the channel. So if you haven’t already subscribed, click
the subscribe button now and hit the bell as well to make sure that you get notifications
as and when I release my videos on trading. And I’ll be releasing tips, strategies, videos
like this on psychology, everything to ultimately help you become a better trader and more successful
in the long run. 01:12 Okay. So, looking or thinking about
trading psychology, as I said at the beginning. This is something that’s us as traders, whether
we’re new at this or whether we’ve been doing this for a long time, we’re all going to face
it pretty much on a daily basis, on a trade by trade basis. And it doesn’t just affect
you when you’re going through a bad run. It can also affect you if you’re doing well as
well. 01:34 You see, ultimately, as human beings,
we’re designed to make the wrong decisions when money is on the line. Okay? So we’re
very, very fearful with our money, when we should actually be confident and we should
be gung ho and going for it. And when we should be a little bit fearful, when we should be
cautious, we’re overconfident, we want to put too much money on the line. Okay? Then
we end up losing everything, we ended up blowing our accounts. So, we need to find a way of
dealing with this as traders and I think the way that we can deal with this is first of
all to understand what the various issues are that we face. Okay?
02:09 So the first one is obviously, we are too emotional when we’re in a trade. As I
said to you just now, whether we’ve just come off of a string of winning trades or a string
of losing trades, when we’re in a trade and when we have money on the line, we are too
emotional. And more often than not, when we have money on the line, we’re more fearful
than anything else. Okay? 02:30 So, even if you’ve had a winning streak,
for example, you’ll be very, very confident before you put on the trade but as soon as
you put on that trade, then suddenly you’re afraid of losing that money. You’re afraid
of losing the trade. It doesn’t become about the process anymore, it doesn’t become about
the strategy that you know works. It becomes something about being right or being wrong
and also about losing your money. No one wants to lose their money but you need to accept
that when you are trading that that’s just … That’s a part of the business.
03:01 A lot of you guys that are watching this here probably run your own businesses
and you don’t have a problem investing in stock or investing in advertising or something
like that. You don’t have a problem there because you see that it’s a long term goal.
So, you’re investing in advertising to bring more customers to your business. Right? But
with trading, for some reason, we take a very, very short term view on things. We look at
each trade individually. Like, “This very next trade needs to make me money or it’s
the end of the world.” Okay? Or, “I need to make money today. I need to come out profitable
today or it’s the end of the world and I’m going to fail as a trader.”
03:37 But it’s not about that. You see, short term thinking is going to get you short term
results. This weekend just gone, I actually had a pretty bad weekend trading. Okay? It
was almost like every single trade that I picked was the wrong one. Okay? It didn’t
make money. But, I’ve been trading for a while so I understand that they weren’t the wrong
trades. The trades that I took were good trades and sometimes it just happens that you don’t
make money. Even the best trades don’t make you money. It’s something that you have to
get used to as a trader. Okay? And as I said, I’ve been doing this for a while now so I
can deal with this, I can understand it. But for those of you that are new to this, it’s
very, very easy to have just one bad weekend and think, “Oh my gosh, that’s the end of
the world. My strategy doesn’t work. I don’t work.” Whatever it is. And then pack it in
and look for something else. But that’s not what you need to do. Okay?
04:28 You need to understand that trading is very much a long game. It’s not about what
happens this weekend or what happens next weekend. Or this week or next week or the
next two weeks. Trading is about the long game. Okay? So, it’s about looking at things
and saying, “Okay, I’m not going to look at the next 2 trades, I’m going to look at the
next 10 trades. And then once I’ve traded the next 10 trades, then I’ll look to see
how I’m doing or how my strategy is doing and I’ll make a determination on whether the
strategy is working or not based on that.” And then maybe you want to look at the next
20 trades or the next 30 trades. The point is, is that you have to understand that trading
is about the longterm results. Each and every day can be a day that will make you money
or that will lose your money. 05:16 In fact, there’s a guy called Marty
Schwartz. I don’t know if you guys know him but he’s written a book called Pit Bull and
he’s a very, very successful trader. But even he says that in 70 to 80% of his days, he’s
either making a little bit or losing a little bit and it’s only on 20% of his days that
he actually makes a significant amount of money, that pushes his account up. And that’s
really quite true for most trading. I find that even with mine … My trading, when I’m
doing well, I go up a little bit, go sideways, go up a little bit, go sideways, and then
maybe I’ll take a big leap and my account balance will go up by a lot. It might drop
down a little bit and then I’ll go sideways. But that’s the way trading works, it’s not
a straight line. 05:58 And we really have to understand this.
If trading was as easy as that then everybody would be doing it, right? But they’re not.
There’s that statistic that’s 95% of traders fail and that’s not because all of the strategies
out there are bad, no. That’s because the traders themselves don’t understand what it
takes to make money in this business. And really, that’s controlling your emotions,
controlling your psychology. Okay? 06:22 Now, one of the things that I try to
do, when I’m having a bad time trading. Okay? So maybe I’ve taken a bunch of bad trades
in a row and I’m feeling a little bit emotional about my trading. One of the things that I
do, is I make sure that I have a very, very rigid plan before I get into a trade. So before
I’ve got any money on the table, I will make a plan as to what I’m going to do in the trade.
You know, “If this happens, then I’m going to do that. If that happens, then I’ll do
something else.” All right? 06:50 And what I also like to do where possible,
is I like to trade strategies that have a minimal amount of input from myself. So, if
you look at my football betting strategy, all right, that’s a strategy which is pretty
much set and forget. And at times when you’re having a difficulty with your trading emotions,
what you need to do is execute a strategy like that. And you can go to my channel or
you can see up somewhere around here, I’ll post a link for it, go and take a look at
that strategy because that’s something that you can literally put on … You put it on
when … At half time. So, you do all of your analysis before the money’s on the table and
then once you’re in the trade, you don’t really have anything else to do apart from come back
at the end and see if it made money or not. 07:36 And really, once you’ve had a string
of losing trades, that is the best way to to go about it. Is to trade according to a
plan and where you can, trade a strategy that requires very, very little effort once you’re
in a trade. Because once you have the money on the table, that’s when you’re going to
make mistakes, whether you like it or not. Okay? I do the same thing. If I’ve had a string
of losses and I’m in a trade and it looks like it might be going against me or something
like that, I might be very, very tempted to cut my losses very, very quickly rather than
wait, which is what my plan would dictate that I do, wait until the end to see how the
trade pans out. I might sabotage it because I’m scared of getting into another losing
trade. Okay? 08:21 As traders, we need to understand that
we don’t care whether it’s a loser or winner. What matters is what’s the outcome of the
next 10 trades, the next 20 trades. All right? Really commit to doing that. Commit to taking
the next 10 trades or 20 trades and then assess your balance after that. Don’t judge each
individual trade on its outcome. So, looking at one trade that was a loss, “Oh God.” Next
trade, that’s a loss. Next trade, that’s a loss. So then you’re looking at throwing your
whole strategy in the bin. No. 08:48 Understand that you could have four
or five losses in a row. If your trade has a 50% strike rate, it could be that the next
20 trades out of 40 lose you money, and then the 20 trades after that make you money. There’s
nothing saying that there needs to be an even distribution of your winning and losing trades
and you have to understand that as a trader I have weekends where I can literally not
pick a loser. Everything that I take wins money and makes money. Then I have weekends,
like this weekend that’s just gone, where it seems like I couldn’t pick a good trade
if my life depended on it. You just have to understand that that really is a part of trading.
Okay? So, you have to commit to the process. 09:30 Keep detailed records as well. Write
down when you’ve taken a trade and you haven’t acted according to your plan, and it’s cost
you money. I guarantee if you look back on that, after you’ve taken 20 trades or 30 trades,
you’ll find that most of the time when you’ve lost money, okay, or when you’ve done something
stupid, it’s because you’ve interfered with your plan. You’ve got involved where you didn’t
need to get involved. So your plan said to do something, your plan said to do X and you
do Y. So, make sure that you also keep detailed records. I promise you, that is really going
to help you in the end. Okay? We need to take a longterm approach to this. And I know I
keep saying it but I have to drill it home to you. Strategies are fantastic but you have
to control your emotions. Okay? 10:15 And finally, one of the other things
that I find is, something that hurts my trading a lot is, that fear of missing out. Okay?
Once you’ve taken a string of losses, it’s easy to say, “I don’t want to take the next
trade.” Okay? But what often happens, instead of saying, “I don’t want to take the next
trade,” you’re so afraid of not taking the next trade because that could be the trade
that makes you money, right, that you ultimately, you take every single trade that’s out there
because you want to get your money back as quickly as possible.
10:45 And I know from personal experience, that you can’t do that. You can’t get your
money back on the very next trade or the next trade because when you try to do that, more
often than not, you just dig yourself a much, much bigger hole. All right? What you need
to do, is understand that even if you’ve taken a string of losses, or even if you’ve taken
a string of winners, you need to still be selective about your trades. Fear of missing
out is a massive account killer. How many of you guys have been there, and just post
in the comments below, let me know how many of you have sat there and looked at trades
that you shouldn’t have taken but been so afraid that that trade could have made you
money, that you took it anyway and then it cost you money and you regretted it? How many
of you have done that? I would imagine that 90% of you on here, watching this video right
now, have done that and the other 10% are just lying to themselves because you’ve done
it as well. 11:40 We’ve all done it, but we have to really
control that part because I think if I look at everything, that probably is the one thing
that costs me the most money, is that whole fear of missing out things. So, I’m sat there,
I’m looking at a trade, it’s probably not the best trade but I can make a case for taking
that trade. And because I’m so afraid of not making the profits that that trade could make
me, I take it anyway. And then it loses me money and then I’m frustrated, so I’d go and
do it again because I want to take another trade, I want to make that money back because
I’ve made one stupid mistake and then I’ve go and compound it with another stupid mistake.
We’ve all been there, we’ve all done it, but we need to find a way to combat that. Okay?
12:23 So as traders, these are the things that you have to do. One, commit to taking
at least the next 10 trades. Don’t look at your account balance until you’ve taken the
next 10 trades and executed strictly according to your plan. Okay? Make a plan before you
get into your trade and execute according to that plan. Like I said, if you’ve just
taken a string of losses, try to trade a strategy like the one that I talked about earlier,
and again, I’ll post the link somewhere around this video. Okay? Try to trade a strategy
that requires very little input from yourself, so you can do the analysis before you have
money on the table and then you can walk away from your trade and see how it does. Try and
trade a strategy like that. Okay? 13:05 Then, make sure that you’re selective
about your trades. Don’t be afraid of missing out. Don’t try and make back all of your losses
in one trade and the next trade, because most of the time, that is going to cost you money.
So be selective, only take the highest probability trades. Now, that might mean that in one week
you might only take 3, 4, 5 trades, the next week you might get 10. But just commit to
taking those high probability trades and I promise you, in the long run you are going
to thank me for it and in the long run you are going to see success by following the
approach that I’ve just given you. All right? 13:41 So, if you’ve got any questions at all,
please feel free to post it beneath the video. Remember that I’ve also got a introduction
to football trading course, which you can … There’ll be a link below this video here,
sorry, where you can sign up to it and it kind of gives you everything that you need
to be able to get started and start making money trading these markets. Because they
are wonderful markets to trade and they are very, very profitable markets to trade, especially
if you implement and execute some of the strategies and techniques that I’ve talked to you about
in this video right here. 14:14 But regardless of whether you sign up
for my intro to football trading course or not, or you trade your own system, that’s
absolutely fine. Just make sure that you take into account what I’ve talked to you about
in this video because I promise you, this is going to help you in the long run. Okay?
It doesn’t matter what strategy it is that you trade, if you don’t think about what it
is that I’ve talked to you in this video right here, if you don’t control your emotions,
you are not going to make money. You might make money this weekend or this week, okay?
You might make money next week, but in the long run, you’re going to do something stupid
that’s going to eat into all of your profits and then you’ve going to be back at square
one. Okay? 14:55 So, before you master a strategy, master
your emotions. Okay? And if you’re trading too big and you find that you are too emotionally
involved in things then just cut back your position sizes. Do something as simple as
that. Trade really, really tiny, just to prove to yourself that this stuff works, and then
up your position sizes. Okay? 15:14 I hope you liked this video. Remember,
subscribe to the channel, hit the bell so that you stay up to date with all of the notifications
and I will catch you on the very next video. Thanks so much for watching now.

Comments

(7 Comments)

  • Alex Ong

    Thank you so much for watching. If you have any questions or want any further advice on how to control your trading emotions please post it in the comments below.

  • Ronald Ryan Plays

    he's back!!!!

  • Thee Divine Truth

    I have been the Victim of FOMO also

  • Bob Marslek

    Great Advice!..Thanks

  • Paul Brawn

    Very interesting video Alex. I have taken notes and will pin it above my trading table….THANK YOU!!!

  • Khutatso Khumalo

    That's sound more like me, each trade was my last trade, thank you for putting good thoughts into my mind.

  • Tom Lee

    Hi Alex,
    Great vid had a lot of trouble today with this side of trading.
    I definitely get fomo but i think i struggle with the fear of loosing money more so.
    My first trade was a looser today.
    Then my second trade i went against your strategy rules and traded out of my position early if only i trusted the system it would have been a winner.
    I looked back on it and realised the emotion of fear got the better of me, instead of trusting the system/method.
    Thanks again for sharing really helps my learning.

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