Transcript for:
Understanding Objectivity in Trading Psychology

i talked about objectivity i think a little this morning or last night i'm not really sure i'm on page seven is it possible to be truly objective from from a larger perspective or from the largest perspective we could say that that we could share a reality in other words where you and i would be perceiving exactly the same things the same information and the same possibilities inherent within that information if we had simultaneous awareness of everything going on at once so in other words if i could represent all possibilities as a finite line and i can't but you know because it's infinite but let's say i could represent all possibilities that exist in this in this line that has finite boundaries between here and here the only possible way that we could share an objective reality is if all of us had the capability of perceiving every possibility in every distinction in any given moment because we'd be experiencing exactly the same thing are you with me on this we'd be experiencing exactly the same thing because all the information that was available we would be perceiving in the same way we'd be receiving all of it remember beliefs limit what we perceive beliefs limit what we perceive so if you and i are operating out of different beliefs which we are it means that although we assume that everyone's sharing our reality in every any given moment because each of us think that our reality is self-evident now think about this in any given moment each of us think that our reality is self-evident and everyone else has to be sharing it right why wouldn't we which of course is not the case and the only way that it could be is if again we were we could have the capability of having simultaneous awareness of everything going on at once if we have not evolved to that state of that place where we can have simultaneous awareness of everything going on at once it means that we are perceiving something less than what's being made available what we perceive in relationship to what's available is based on what we've learned to believe if you and i have learned to believe different things then we can assume that in any given moment we are not going to be perceiving reality in the same way it's that simple and so from a macro perspective we really can't be objective however from the individual's perspective the micro perspective we are the micro or the macro okay from the individual's perspective whatever it is that we have learned to perceive out of what's available we can be objective in the sense that are we in a state of mind where we have access to everything we've learned is there anything about what's going on in this moment that's being blocked by some mechanism inside of our mental environment if there isn't then we are being objective to the capability or to the extent that we're capable of we are being objective to the extent that we are capable of to any degree that we are experiencing fear and start shutting down this perceptual process the greater the degree of fear the less possibilities we perceive until we get to the point where if we're in a state of complete terror we may not see any other possibilities at all except what's going on in that moment in a moment where if when if you're in a state of terror in a moment that seems to never end it could be five seconds and it could seem like five days euphoria is exactly the opposite there's it's like there's no capability to perceive any limitations you've lost your capability to perceive any other any other possibilities other than in a sense it's not really not really i don't know if it's really shut down in a way i guess even euphoria is kind of shut down your perceptual process in a way i never really thought of it that way but i think huh yeah in a positive sense yeah really in a positive sense you're in a state of mind that where you're where you would be uh wouldn't be capable of perceiving really anything other than than what you want success yeah you're capable of perceiving any any other possibility other than getting your expectations fulfilled sounds like over trading today oh yeah it's a prescription for it what yeah you can't perceive the risks right yeah there is no risk in a state of euphoria there's virtually no risk no stops no nothing yikes so does everybody understand the nature of objectivity and what's going on basically what you want to do an objective state of mind for each of us as individuals is just making sure that we have access to everything we've learned and our perceptual process isn't being shut down by by some internal mechanism like fear or the potential to define and interpret information in a threatening way um so can we control our state of mind to experience greater levels of happiness and satisfaction in our lives yes but to do so we have to be willing to question and change our definitions to incorporate other possibilities that exist from the environment's perspective in other words we have to be willing to de-energize something that we've already learned i haven't really talked very i've talked very little about this process of questioning but it's something we're going to get into when we get into all the various techniques on how to how to one identify beliefs and how to change them a lot of it has to do really with just your willingness to question things and what i mean what i mean by question things is most of the times people ask questions basically just wanting verification of what they already think is is right and true i mean asking a question from a sincere space of wanting an answer because you have to assume that if you knew the answer you wouldn't ask the question in the first place so so to ask a sincere question now think about this to ask a sincere question you have to be operating out of the assumption that you really don't know that's a really important distinction because when you because what i'm saying is that when you ask a sincere question it creates a vacuum in your mind that will be filled with information it opens up the creative process asking a sincere question opens up the creative process and you start getting access to what what people might normally define as even inspirational information inspirational in a sense that is not coming from a rational thought process it's coming from out there in the universe somewhere hard to know where it's coming from the best examples that i can give you of that is that the disciplined trader and trading in the zone were both written that way you'll notice there aren't any footnotes in either of those books and the reason why is because i did not refer to other people's work i specifically stayed away from other people's work those books both of them were written by simply asking questions and the answer just got dumped into my brain no different than someone writing a song doing works of art but the questions i asked were genuinely sincere questions i really didn't have the answers i really wanted to know i had pieces i had enough pieces to ask a question and then i would just like be in a situation where i was either like doing some consulting or coaching work with somebody and all of a sudden i would i would hear myself saying the answer to the question i asked maybe the day before or a few hours before it's like i'm saying oh my god this is it this is the answer i've never said this before i've never thought it before and one of the things i did was i diligently i mean i had this rule where i diligently wrote down anytime this happened i always stopped and wrote it down no matter where i was at i don't care you know the guy was paying me two or three hundred bucks an hour i actually stopped the process i wrote it all down and then continued with the appointment and that always came first i didn't charge him for the for the time i was writing but you know but the point is i mean it took longer you know he had to stay it might have taken me a half an hour to write all this stuff out you will find as you if you get into this kind of process you'll find you can do the same thing with the market you can simply ask where the next next best edge is going to be and find that the next thing next thing on the chart that your awareness is drawn to just oh you know and see what happens oh i heard something good there hey dave no no i'm sorry but um when you're saying we're willing to question in order to change the state of mind are you saying we're questioning the beliefs that are altering our state of mind uh are we getting out here well no you just what you're doing is just it could be yeah it could be that it could be any number of things it um what you're doing is just you're asking a question well you're asking a question because you want information now a lot of a lot of it has to do with just like you can say asking a question for information that might be subconscious or uh questioning a particular way that you know particular belief that you might have so that you can like i said you can experience if you've noticed that there's reoccurring recurring dissatisfying experiences in your life that's the thing that i'm talking about you can assume that that isn't the only possibility that exists under those circumstances make that assumption and then as a result of making that assumption start asking sincere questions so that you can dismantle the closed loop okay okay i thought you were referring to the trading things that's why i kind of responded the way i did okay about asking where the next best edge is i do that all the time by the way i really do that's great yeah really it's pretty cool the way it works that's right you really will and where does the answer come from that's right yeah yeah i don't know it's like where does it come from it's just you know it's just like it comes from wherever your mind starts working on it because yeah yeah we do have we do have the capability of garnering information and insight from out there somewhere that isn't inside our memory banks okay not organized at the rational level of thinking inspiration yeah exactly but like i said you have to ask us since a question from a sincere space yeah the power of questions that is really powerful yeah well you know the wording has a lot to do with it i mean you know what uh what he's saying here is that is that um because i don't know if they picked it up on the mic but you're saying like you know why am i a failure you can ask a question like why am i a failure you really can that's not that's not a bad question to ask however but what you did say about properly wording the question the wording has really everything to do with it it really does how you word your questions is virtually well i say um it's really important i guess because because the answers you're going to get are going to be within the context of how you worded it you're going to get something that pertains to the wording as opposed to maybe something else that you might have wanted but you didn't worry properly based on what you wanted go ahead and break it it's kind of like you want a better answer ask a better question that's right you're very good that's it okay if that didn't get on the tape greg said if you want a better answer ask a better question because you will get an answer that corresponds with the question you asked what time is it quarter three okay as soon as we get done with this we're gonna listen to the tape we're gonna take a short break and listen to the tape how we do this we'll start from uh i'm on section section four page nine and i'm a roman why don't you start with the first point and read that we're gonna go this way like this just go ahead and read it everything we've learned throughout our lives is structured energy go ahead this structured energy will operate inside of our mental environment as a source of power causing us to perceive and respond to the outside environment in a way that is consistent with this energy the environment can express itself in an infinite combination of ways what each of us perceive what each of us perceive and experience is a very small very small relationship with what is available in any given moment in other words instead of assuming that we already know we can assume that we haven't learned to make it to make every possible distinction that exists in each situation of our lives inherent within the distinctions we haven't learned to make yet is an opportunity to experience satisfaction fear causes us to narrow our focus of attention on the object of our fear drastically reducing our perception of what is available or possible from the environment's perspective many dysfunctional beliefs and fears operate at an unconscious level locking us into cycles of dissatisfaction and frustration learning something new is often blocked by the way the energy is already structured inside of us in other words once we learn a belief it will forever shape our lives unless we unload it or i should say to draw the energy out of it every advancement in human civilization whether it be cultural scientific or otherwise came from someone who challenged the status quo by questioning what he learned the act of questioning questioning opens up to perceive the existence of other possibilities if we assume that happiness and satisfaction exist as a possibility then it is up to each individual to find that happiness and satisfaction by discovering these possibilities to discover anything new you will have to be willing to question and look beyond what you've already already learned to believe about what is true or available now the way that i like to illustrate that last point about the nature of questions that if this circle uh well let's just say this circle again a very erroneous thing to do but this circle represents the universe meaning what's available to be learned in the way of distinctions about the inherent properties and characteristics of the of the whole universe right okay and you can say that let's say a hundred years ago that that the sum total of humanity both alive at that time and recorded in some way up to that time that was that was still in existence might have made in terms of in terms of knowledge or distinctions this much in relationship to everything else that exists and what's happened in the last hundred years is let's say we've expanded that circle let's say by something like that how does the circle get expanded questions yeah in other words someone's willing to operate on the fringe there's always somebody that's willing to operate out there on the fringe of what's possible go out discover something bring it back to the rest of us for us to say what are you crazy yeah you're crazy not not yes virtually always you're crazy no that's not possible no that's not real no that doesn't exist and why because it's just the inherent way beliefs operate right it's conflicting information contradicts what we already believed to be true uh-uh not true but it might intrigue someone enough another person to go out there and come back and say hey this guy's right and then somebody else does and somebody else does the next thing you know the circle gets expanded a little bit all of us are in this circle if you take the sum total of everything that's in everyone's mind alive today everything that's in the mind of everyone alive today plus what's been recorded from human history that exists that this by this circle then each of us are a part of that that make up the hole are some percentage of that circle so how do we expand our own circle the same way challenging what we believe to be true and questioning things and see what happens yeah challenge the status quo it does seem as if that's what we're supposed to do we are evolving into something there isn't any question about the fact that humanity is evolving if that weren't the case then we would still be living like most of people probably in afghanistan the sum total of humanity is evolving there are definitely cultures that are that are not in the same we're all not in the same spot but we are definitely going somewhere and it doesn't it does seem as if there is a desire on the part of the universe as a whole to expand scientists already know that it's expanding now if it's expanding at the macro level wouldn't it make sense that because we live we exist at the micro level of an expanding universe that if the universe as a whole is expanding that if we're gonna if we're going to live within this universe in in a way where we can create let's say happiness and satisfaction for ourselves in other words create a really satisfying life wouldn't it make sense that we have to be in harmony with that expansion yeah that the less that we the more that we resist evolving the more it seems that the universe kind of conspires against us that's it's in conflict with us and that would make sense because everything is in motion everything is constantly changing nothing is staying the same no two moments could ever duplicate themselves ever and the only way that could happen is that every atom of every molecule was in the exact same spot it was in some previous moment now from a practical perspective i don't think that's possible but the interesting part is every belief we've ever acquired can remain static exactly the way it was originally formulated for our whole lives so we've got beliefs that remain static and a universe that's constantly expanding and changing beliefs that cause us to see the now moment as as it exists in our lives instead of the way it really exists from the environment's perspective and if we aren't willing to adapt our beliefs to correspond with this constant expansion it will seem as if the environment is conspiring against us and it will create stress it will create anxiety because the stress and the anxiety is our own resistance to change so let's take a about a 15-minute break and we'll listen to the tape from the monroe institute in virginia and they've been doing um work in the area of how high frequency sounds affect states of consciousness for probably over 40 years they've got a real distinguished staff of uh of doctors and phd mode phds mostly from like harvard and yale and all your eastern ivy league colleges and um i uh i started using their tapes many years ago uh not only for myself but uh to use in my workshops because i wanted a technique where that i could give people that they could use to help them neutralize their fears there's you know specifically those four trading fears on on being wrong losing money missing out and leaving money on the table that was effective what's that uh i don't know it's not any page that that was uh that was effective but at the same time met certain criteria and the criteria was this um instead of using hypnosis tapes or like specifically subliminal hypnosis tapes one of the things that i found is that subliminal hypnosis tapes can be very effective or even hypnosis tapes for that matter can be very effective if what you're trying to do in other words whatever message that's on the tape if the message itself is not in conflict with anything else that's in your mind then the tapes can be quite effective and so when you hear people talk about the power of self-hypnosis or hypnosis and how well it worked for them chances are it was a circumstance in which whatever message they want we wanted to embed in their mind was not in conflict with anything else that was already in their mind and so you what you'd get is a glowing testimony or testimonial however when the message on a hypnosis tape is in conflict with something else that's in your mind then what you're doing is setting up an inherent conflict because because what the tapes generally don't do or don't i've never seen them do is help you neutralize whatever conflicting beliefs that you might have with the new message or the new way in which you want to express yourself so in other words this process of change is always a two-pronged process in many cases one the energizing the con de-energizing the beliefs that that let's say you've determined are dysfunctional or are not useful any longer and at the same time energizing and installing a new belief that that compels you to express yourself in a way that's consistent with your desires or goals so you've got to do both so the reason why i pick these tapes is because instead of being passive meaning that instead of you just listening to a tape this particular technique requires you to be active meaning that what this tape does is it uses high frequency sounds to install what would i guess be commonly referred to as like an anchor inside your mind an anchor would be considered a tool and as a tool like any tool a tool that might be in your toolbox is completely useless until you pick it up and use it in other words it has no use until or function until you actually pick it up and use it and it's the same way with the tool that's going to be installed in your mind from this tape it has to be used or otherwise it does nothing so basically what's going to happen is this i picked the tape and there are a whole range of tapes you can get from the mural institute that have different purposes on this in this hemi sink in the hemisink category there are a number of different programs they have and a number of different types of tapes but if you've looked at the catalog itself has anybody everybody looked at it just take a take a moment to look at the catalog and see the different the different um uses they've designed these tapes for the one that i picked was the um boy that's something where my brain is what's that the um what tapes do they pay what no no that's the name that's the the happy i'm sorry okay dab you'll notice what is what does it say about the dhab tape to neutralize habitually habitual behaviors or diminish undesirable mental emotional or physical habits use any time you're about to follow a behavior pattern you wish to change break free of anger or old emotional patterns eliminate thoughts of failure and move beyond a cycle of negativity okay see john daggett [Laughter] so so what i've done is basically adapt this technology specifically for the purpose of of helping people who come to this workshop who neutralize their fear of being wrong missing out leaving money on the table and uh um and being wrong and and we'll get into the actual techniques later on in other words the techniques of using how we're going to use the tape we're going to get into maybe not today by if not this afternoon by the time you're done tomorrow morning however the reason why we're listening to it today is because it requires three listenings meaning that we're going to listen to it once right now you're going to listen to the prep side of the tape the prep side of the tape is just getting your mind prepared to get this function command installed when you listen to the the other side of the tape the d-hab side of the tape you've got to listen to the prep side of the tape twice we're going to listen to it now i'm going to ask you to rewind it and listen to it again tonight and then tomorrow we'll listen to the dehab side now all this tape is basically high frequency sounds and you'll hear i don't know if it's bob monroe any longer or a guy by the name of mark i remember his last name but anyway um bob and rose now dead but um he used to be the voice on the tape and you won't hear them very much anyway but there's a couple of things one the tapes are are incredibly relaxing i haven't had anybody yet that's come to one of these workshops that really really hasn't enjoyed the experience of listening to the tape now you can listen to this tape as much as you want you can't listen to it while you're driving or anything else like that because you'll probably end up falling asleep you don't have to fall asleep when bob monroe or whoever's talking on this particular version of the tape says you know for your hands and arms and legs to go to sleep he's not telling you to go to sleep he's telling those particular parts of your body to go to sleep if you end up falling asleep that's all right it's no big deal he'll wake you up at the end of the tape and again you can listen to this tape as much as you want if you like it and you want to use it as a relaxation tape listen to it all you want this tape will do nothing do nothing to get rid of your fears by itself listening to the tape has no effect on your fears only consciously using the function command when when it gets installed in your mind on the other side of the tape when you when you consciously take the steps of using the function command will it have any impact on your fears are you guys with me on this i know maybe can sound confusing the tools on the second side well okay what i'm saying is that listening to the tape in and of itself doesn't have any effect on on whatever fears you might be wanting to neutralize although you can listen to the tape as much as you want bob monroe doesn't know what your fears are bob monroe when they design the tape does not know what habitual behavior you want to neutralize that's up to you to decide what habitual behavior you want to utilize by taking the tool out of the toolbox and using it in the appropriate moment meaning that it requires a conscious decision on your part that's why i picked this technology it's not passive it's active you don't take a part in it nothing happens you guys with me on this john are you with me all right okay now okay so put the tape in the machine the prep side of the tape turn dolby off if you've got it if you've got an expensive machine and have dolby sound reduction turn dolby off when everyone gets their headphones on i want everyone to i'm going to tell you when to turn it on and everyone turn around at the same time so we're finishing at the same time it'll last approximately 28 or 29 minutes sit back in your chair and relax and enjoy the experience don't turn it on yet wait everyone's ready and we might want to want to turn those lights down or can we do that anybody bring any incense yeah stage is everyone ready everyone ready to start yes okay turn around let's go where where it worked anybody sleeping where who fell asleep what what heard some snore yeah did you anybody uh got any feedback on the tapes that was it generally a pleasant experience for everyone yeah yeah these are really nice tapes in terms of uh i mean not only are they effective if you use them for the purpose for the for which they were intended but but you can also use them as just a general relaxation tape um as a matter of fact how are you guys doing anyway does everyone want to go for another let's say half an hour 45 minutes or okay good okay oh he said we're wide awake now yeah all right great okay good nice [Laughter] i didn't hear that every time you say 11 which is okay i'm in uh i'm in section five but i'm gonna go right to page um i'm gonna go right to page four no right to page three h3 the beginning of the book no page three and section five right at the bottom of the page it says using the monroe tapes to neutralize your trading fears since we've just done this you just listen to the tape ball i'll go right into how this works the way you're going to do this is is when you well you see you haven't really even got the function command yet maybe we want to do this tomorrow no i take that back we'll do it tomorrow that's i'm sorry yeah really problem is i don't feel like getting into this right now no no hold on that's all right hold on let me i'll make some comments about the self-hypnosis yeah go ahead i've done a lot of work in that area you have yeah okay cool go ahead um notice that you weren't following your normal routine how many days weeks or months i don't know it's been it's been a year it's been a process right you know where it's been a challenge to make any money it's not the market it's it's in me okay so what we're going to learn we're going to there's a there's a particular just a real simple meditation technique that uh we're gonna do tomorrow that um that will if you practice this around you know 10 or 15 minutes a day what it'll do is it'll help you become an objective observer to your own stream of thoughts so you can start to notice when you're not doing or when you're not thinking or when you're doing thinking saying or doing something that's inconsistent with your goal so so that you're not unconscious of of this moment-to-moment endeavor for you know how we're creating our lives and the choices that we're making because you know if you want to be a consistently successful trader then you know what you want to do is collapse the amount of time that it takes for you to notice that you're not doing something that's consistent with your objective of becoming consistent and and hopefully by doing this kind of exercise we're going to do tomorrow what you know what it'll do is it'll collapse the amount of time that it takes for you to notice that to virtually instantaneous that you're that you're aware that you're let's say you're distracting thought because any anything that you do that deviates from what your objective is is a distraction right well doing is the last step the first step is always a thought you're going to think about it before you do it you might even run something through your mind you might even talk about it with somebody but but it's first going to be triggered by a distracting thought now if you really want to become consistent what you want to do is be able to catch yourself in the thought catch yourself to the point get yourself at the point where the thought and the awareness of the distracting thought are virtually simultaneous instead of it taking you know five minutes or ten minutes or you know looking back days weeks or months later saying hey you know what i'm not you know i'm i'm not doing what i know works that's basically even what you were saying you're not doing what you know works yeah i had one other thing because you mentioned it yesterday um and i don't remember in what context i used to keep track of every day before i started trading i write down a number from one to ten or one to a hundred and it was rate yourself on how you feel that day right um and if you feel like you're an 8 or a 9 or an 85 or 95 and if a trade comes along have the courage when you're at the higher end of the scale to put it on and go for it don't hesitate as much and if you're uh if you feel like maybe you're a three or four um put the trade on but don't uh you know don't go balls out on them or scale back yeah you can use in conjunction with money management so that if you let's say you normally might trade 3 000 shares if you rate yourself a 10 then you're going to trade 3 000 or maybe even a little bit more if you get a real primo signal yeah but if you're rating yourself as a five that day then you know what you want to scale back proportionally you might only trade 1500 you might only trade a thousand yeah because what it really gets down to is like what we well at least what i had before is that is that if you're not if you're let's say if you're not in the most ideas this is positive and this is negative okay and you're not in this most ideal state of mind to be trading because that's what it really boils down to and that's and that's really essentially what you were talking about is you he was raiding he learned or at least he he involved himself into in a system where he was basically gauging or rating his state of mind in essence his capacity to make money or its capacity to make money in the sense of how clearly am i going to be able to perceive the market and actually and how well am i going to execute my trades and in advance you're saying you know what i'm uh you know i'm a six today and you can you can learn to do this and you can learn to be honest with yourself about it and as a result use use you know have your money management of course in other words the amount of size that you put on correspond with how you're rating yourself in that scenario would you also take a moment say 45 minutes or an hour into the market to write what the market's doing to make sure that you're in conjunction oh you could sure yeah you could let the market define itself and not trade the open you know nine in the market too in the markets of what two well i don't know what you mean then i i misunderstood you mean in terms of symmetry in other words if you're going to rate the market in terms of symmetry is that what you're saying if you're trying to determine what your strength is as of that morning and either mental clarity physical clarity whatever it is one to ten wouldn't it also make sense at some point after you've seen the weight not trading the opener not trying to just somewhere in that first hour determine what your opinion of the market is that they on a scale of one to ten to make sure they're insane because if you're trading at a nine but the market's reacting at a two uh not really i don't really understand how are you trading the market sometimes maybe you you're completing the mistake and sometimes i have a very strong i feel like that they know what the market is doing like he is confident about that maybe that is that what you're saying is that you you felt confident about about about how the market's unfolding and yet the market isn't unfolding that way is that what you're saying or because look at it this way john even if you know whatever assessment that you might have about the way the market's going to unfold okay whatever assessment you might have about that or what the potential is even if the market isn't doing what you thought isn't that significant so when you look at it that way it's like can you see it sooner if you were trading it on eight nine that's compared to it exactly okay so yeah so it's like you could say hey you know what's significant is the market doing is the market following you know the the projected cemetery and if it is that's great but if it isn't that's telling you something too isn't it right and you're also going to get signals you can also get a lot of signals out of that you give sometimes more signals about what it's not doing in relationship to these significant reference points of cemetery as opposed to what it is doing we're kind of mixing we're kind of mixing it we might you know mixing a little bit in the sense that it depends on the context in which we're trading if we're trading mechanically all this kind of discussion would be irrelevant if we're trading subjectively it's not it's just like for an example if you're if you're trading mechanically you're going to have a predefined a you know a definite predefined entry point where the variables are specific there's no subjectivity whatsoever in terms of you know the conditions under which you enter the market those variables are either present or they're not it's black or white they are present or they are not present if they are present you're you are you're obligated and committed to enter and enter into a trade if they aren't present then you do nothing but when you evolve into the subjective stage of trading then you can use anything you've ever learned about the nature of the market to generate a signal to get in or out so for example so what we're talking about roman is that is that in the in the mechanical stage of trading let's say for example you know uh the market's doing this and you've got to stop down here you entered the market long right here at this point okay at this point right here and your stop is down here if you're trading mechanically you can't do anything with that stop meaning that the market you know your market either goes in your favor stops you out and that's all there is to it either or if you're trading subjectively you know if the market let's make it a little bit easier to illustrate if i made more distance but if you're trading subjectively if the market's trading around in this area and and as a result of the kind of patterns that it might be producing you could say you know what you know i don't i don't need to keep that stop in the market i'm going to pull it and either move it up move it further down based on your assessment of what's happening now see in the subjective stage of trade stage of trading you can do that you can even get out before you get stopped out even if it does wouldn't have stopped you on otherwise in a subjective stage of trading if you make that assessment of what the market's telling you in that moment that's all right did you see the difference in the subjective stage of trading you can do anything you want under any conditions that you want if you put a stop in the market you want to take the stop out then take it out you want to move it then move it in the mechanical stage of trading there's no discretion whatsoever what's that are you then changing the rules yeah you can't go from mechanical to subjectivity yeah yeah in other words you're either on one stage or the other if you're trading a mechanical stage you can't change your rules in the middle of a sample size you can only change your rules after the end of a sample size so whatever you determine your sample size it trades to be whether it's going to be like 20 trades or 25 trades you are committed to take all 20 trades you can't change anything in the middle or until you're done but when when you move to the subjective subjective stage of training i'm assuming that you won't do so until you are you you have worked through whatever resistance you may have to thinking and probabilities when you're when you've worked through all that resistance and you're you're you're confident that you've learned to think in probabilities then there's no reason why you have to continue to trade mechanically unless you want to or unless you know that you have let's say a plethora of self-sabotaging beliefs that you don't want to get into you don't really want to do anything about then what you do is you stay in the mechanical stage so that you can make a clear distinction between what the mark what you need to do based on your methodology and what your mind may be telling you to do based on the fact that you've accumulated too much money and you might start sabotaging yourself because at least in the mechanical stage of trading you can make a clear distinction between what you need to do at any given moment and what you can't do whereas in the subjective stage of trading that that that line is really blurred and it is very easy for self-sabotaging beliefs to enter into the equation okay did you you get the difference so other than that if you guys if you guys have any questions i just i just don't want to do it it's i'd rather do tomorrow morning what yeah well what stories you want what do you know well you know um what was your best day the best uh well there's probably one of the uh one of the most interesting traders that i ever worked with uh was in the bond pit and um and i worked with him for quite a while and uh i'll give you something i'll give you an example of when i said that that it's your state of mind that will determine your results as opposed to the amount of time that you expose yourself to to the market or the opportunities um you could say that i mean this guy he loved to trade and and he was um back in the back in the early 90s one of the biggest traders in the bond pit i don't know if you know his name or not if i said it but uh he wasn't as big as baldwin but there there would be times his his largest position he put on would be about 5 000 contracts futures contracts and but his normal position was between three and 500 contracts so uh a contract one contract in in uh treasury bond futures a one-tick move the smallest incremental move in treasury bond futures is worth 31.25 so 100 contracts would be 3 125 or 3100 33 125 and 500 contracts would be over fifteen thousand dollars so his normal let's say if you put on 500 contracts his normal position between three and 500 one incremental change in price was worth about 15 grand in or out of his account and you know even the bonds especially back then they could easily move 10 ticks in a matter of seconds so you're talking 150 000 and and you could easily be subjected to 8 to 10 price vacuums either for or against you so you're talking 150 000 in a matter of moments and like i said there were times where he put on thousands of contracts not just hundreds so you know scale trader scale into his positions his differentiation from scaling out well he sometimes he'd take on the whole pit practically and it was i i had many other clients in the bond pit who who watched him and said that there were times it would be like watching michael jordan trade bonds he was good he was really good and it was also he just loved what he was doing he loved being there every moment it was hard for him to leave and um and he really didn't give a about the money and the money was truly irrelevant to him in fact out of all the people i've ever worked with in my life i've never met anybody who was on the extreme i mean way over here in terms of how little money meant just didn't matter but he had other problems um when i met him it was in uh in may of 1992 he had a real bad day someone he ran into had come to one of my workshops and said that he should call me he did we had an appointment didn't really in fact we had a couple of appointments and uh not really much happened he he just you know i tried to explain some of this material to him and he wasn't he wasn't really into it or even grasping it for that matter so uh i didn't hear from him for another couple of months and i actually didn't hear from him at all i heard from his wife who called me i never even met her and she called me and she was hysterical because they're gonna he's gonna have to mortgage the house because of a bad day that he had and when i met him in may of that year 1992 he had approximately 10 million dollars flow in and out of his account from january until may that's the kind of swings that he was on okay ten million dollars in and out like this okay the most he'd ever accumulated at the end of any given year was about six hundred thousand dollars that's the most he's ever been able to keep up to that point anyway so uh she was really hysterical and uh want to know what i was gonna do to you know fix her husband and i wasn't really working with him and so we started working together and working together on a real consistent basis virtually every day and um and that was in july of 92 and so by from july of 92 until the end of december he had he had five and a half million dollars and then he went on vacation with his wife and on vacation bought this book called the coming collapse of the either the bond market or the interest rate market and bought into the concepts in the book and from when he got back off from vacation that year bond market was in one of the biggest rallies that had ever sustained of all time and every day he was going in thinking the market was going to collapse based on what he read in this book that wasn't an accident by the way in terms of everything else that was going on in his life and by the middle of march of 1993 he was so desperate over the fact that he lost just about about half of the five and a half million dollars he was down to about 2.2 million that he and i was telling him virtually every day because we were talking almost every day sometimes for an hour a day you know you know this is what the way you need to think this is what you need to do this is how you you know fix the situation he just wasn't listening until one day he called up and he said okay i'll do anything and he meant it i'll do anything and so he and i said here's what you've got to do i've noticed that you're you're capable of staying properly focused about a half an hour a day that's it and so if you want to fix the problem you only get the trade a half an hour a day what was his first response well that was really tough because he just loved doing it and it wasn't just a matter of him loving to be in that pit because of the way a life that that that that it provided him is like there's a work ethic in the future's pets there really is i mean it's like the other where you stand where you stand in that pit is very important there are territorial constraints and you know territorial let's say dynamics involved because if you're not in your spot and and you're not your spot all day long it means someone else is going to take that spot and and these guys do get into territorial wars all the time i mean i've worked with traders who get into these territory wars about where they want to stand and each one of them gets there you know like 10 minutes earlier every day until they're like getting there 3 or 3 30 in the morning until one of them one of them eventually gives up you know and that's and they they go through this a lot i mean this is not uncommon at all you know they're basically got this range war going for this one little square foot of where to stand so uh so there wasn't just that it was it was also also the work ethic in other words when you trade when you you have access to order flow in other words the kind of order flow that's coming from off the floor you know a lot of that a lot of that order flow is is not really trading it's virtually free money do you know what i mean by free money it's riskless that's really what most of the locals in the pit are looking for they're looking for the riskless free money in essence what you're doing is that and they're not always legal trades by the way because all trades are supposed to be open outcry but what if you're standing next to a floor broker that has access to order flow of both buys and sells and their market orders coming into the pit and there's a spread of one to two ticks between you know between the bids and the offers well if i've got a hundred if i've got an order to buy a hundred contracts at the market and you know the bid is uh the bid is 08 and the offers uh and the offer is 10. well i'm going to be you know i'm going to be selling them i'm going to be selling them uh or buying them at the bid and selling them at the offer to my to my buddy standing next to me now that's a two-tick spread on 100 contracts you just made 200 ticks was early risk because he's going to take the other side of both of both orders he's all you got to do is cart it up his buddy's okay carter up 100. okay you bought you bought a hundred at eight you sold them at 10. where's the risk see that's not trading that's just basically free money now you got to pay a price to get into those situations it's not as easy as you think because you know the guys that are controlling that kind of order flow they expect favors in return it's just not just not that simple but you name it you name it it's an extreme environment you name it anything your imagination can think of is is about it was about what it what what it entails uh but anyway that but but it's not just that it's not that i'm not saying even implying that he had access to a lot of those trades he really didn't even need that because he was really just a good trader in terms of in terms of his ability to be able to perceive you know where the direction of the market was and and what he needed to do was your particular time that he traded i'm gonna get into that okay and that's that's really part of that's part of the whole story as a matter of fact it's an important part of it in that like i said he loved being down there he loved doing what he was doing but at the same time his ability now his ability to remain properly focused was about a half an hour an hour at the very outside the rest of the day he was just all over the place so and you got to keep in mind one thing when you're trading at a level where each tick might be worth 15 000 or more it doesn't take much to screw up now you're standing in a pit you've got you've got literally you know i don't know how many guys can stay on the bond pit over a thousand i think and you know they're all screaming they're all in close proximity to one another they're they're jostling with themselves they're screaming in your ears you're getting pencils poked in your in your body your face or whatever there's all kinds of bodily smells going on there are guys who do not want you to make money okay and will purposely purposefully distract you there's a lot of things that the that the order fillers do to to draw to suck people into a trade big locals you know to take the other side of a trade where they know for a fact that you know that that someone's going to hit the market with a huge bitter offer to they're sucking you basically what they virtually know as a losing trade so and not only that it's like if if you're in one of these trades and there are bids and offers that you're leaning against to get you know to get in or out of a position and let's say you're in a position and you know there are bids and offers available that you can hit so let's say get out of a trade out of a 500 lot trade at a two or three tick profit you know then all of a sudden you know just someone says hey and you turn your head and those bids or offers disappear and next thing you know there might be two or three ticks lower now you're looking at a scratch where you had had had a you know like on a 500 lot trade you had 1500 ticks available to you now you've got zero you're going to scratch the trade are you going to think you're going to get your your three ticks back okay or now it's one tick against you now you got 500 ticks against now you then you're a 500 tick loss 1000 tick loss 1500 tick loss yeah okay okay what are you going to do what are you going to do when you're thinking about oh if i just but i just hit that damn bid for the three-tick profit okay all it takes is just this just just this momentary just that's all that's all it takes and so his ability to stay completely focused and what he needed to do and when he needed to do it like i said was about a half an hour a day and so that's what i said you want you want to stop this then just trade a half an hour a day and find something else to do with the rest of your day and he was so desperate that he did it no wait is it oh my god most people to to stay at that level it's just your body's working on it's such extreme uh sense of awareness that it is hard for a lot of people oh yes oh absolutely longer than that oh absolutely it would be like it would be the equivalent well what i'm doing the kind of stuff that he did was equivalent to to if you can imagine being uh in the seventh game of an nba playoff the score is tied there's one minute left right okay you're talking intense every day yeah this is every day right this is every day all day long in tents so and in in in training in the zone a there's there's an analogy that i use where it's like like someone building a bridge over the grand canyon okay like when you're trading just one futures contract you build a bridge over the grand canyon it's like okay the bridge is you know the bridge could be as wide as this room what's that what's what's the possibility what are the possibilities i'm going to walk over this bridge i'm going to fall off you know even if i'm even if i you know i'm staggering okay like you know it's like i got a lot of room a big margin for error right now i could fall off and you know next next stop is a mile down but as you start trading in higher volume meaning that as your contract size grows that bridge the equivalent of that bridge basically narrows narrows to the point where you're trading 500 1 000 2 000 contracts you're basically on a tightrope okay now you're on a tightrope over grand canyon and what does it take to knock you off well if you're on the tightrope of a grand canyon it could take just not even a not even a very hard breeze but a relatively gentle breeze might cause you to lose your balance and fall off that gentle breeze in the pit is the equivalent of one distracting thought that's it just one distracting thought he went ahead and and did this and he said well what what half an hour of the day should i trade and i said you'll find it won't make any difference pick any half an hour that you want because regardless of what half an hour it is regardless of how much volume is available in that half an hour that you pick whether it's a lot or whether it's a little based on your ability to trade and the fact that you're trading that you know that you only get a half an hour to do this and you have the skills to do it and the fact that you're you have maximum focus going into it you will extract the maximum amount whatever it is in that half an hour so it won't make a difference it just won't he didn't believe that he really didn't he found out that it was true it did not make a difference he averaged while he did this he averaged 180 000 a day almost every day for just a half an hour change weight changed the whole character of the bond pit the whole character the bond pit because all these other people in the bond pit who were there grinding it out all day long are watching him stroll in stay a half an hour and walk out with a whole boatload of money and they're thinking hey what am i doing now i'll go ahead and ask a question how do you maintain this position meaning is one square foot it really wasn't a problem just the fact that he was a half an hour they did just yeah he was like because of his stature they stepped aside it's a pecking order yeah it's a pecking order right was he able to keep his profits after a while well he ended up in a really one of the bitterest divorce proceedings you could imagine and and he and his wife actually uh um got him enjoined from even going into the pit he couldn't even he couldn't even trade for almost two and a half years wow because she didn't want him to lose the money that's right well they spent it all on attorneys anyway so it's making a difference i've seen a guy his wife used to come up at 9 15 in the morning and they were going through like a they had problems and eventually had to go just rag and ride and write the guy just way to start the day and it had an effect you know how could it not yeah you think he's watching you know and he'd say don't call me now i'm gonna hang up on people at times i can't talk but i understand no i did that once go ahead john do you ever get traders that are trading well that then come to you no sure yeah yeah what you're saying yeah right you know if a is you know wayne dyer talks about this says a is perfect health and b is where we live and c is death most of us go see a doctor when we're at c to get back to b right very rarely do we are we at b happy or pleased or satisfied and take the steps to get to a to a higher level i get two kind of traders okay or i don't really do much of this anymore but i used to get two kinds of traders the ones who were really successful and just wanted to become more successful and the ones who are in a state of absolute desperation everyone in between pretty much know okay if someone's training at the high end of that is there more room oh there's always more room absolutely so are you looking at their behaviors and finding out that they're successful in spite of some negatives so if we pull the negatives out sure absolutely yeah yeah absolutely absolutely but you can't see it as a trader until someone observes the patterns it's difficult unless you've acquired the kind of skills that you know would take a long time to acquire it's a lot easier for someone else to you know to spot it it's difficult to do even with the skills when you when the kind of self-analysis you're talking about it's still it can it can be difficult you know to do on your own some of the beliefs that we have are so so entrenched and create such uh um let's create these kind of closed loops that are that are really difficult to see into on our own because our lives are in a pattern that is so self-evident that it is it's almost inconceivable that we could even question the pattern because it's been a pattern that has that's existed all our lives so therefore it is a fabric of reality instead of just something that i learned and i'm perpetuating it over and over and over again uh is is the guy on the tape does they have a real rough voice i think it's the same it sounds like is it a bombing row it sounded like an older yeah and at the end of the tape wake up does he does he do that no no he doesn't he doesn't do that makes me kind of panicked well the tapes that i used to listen to is what i did i'm glad you did wake up yeah really yeah yeah really it seemed like it anyway i mean you know you're in this kind of kind of deep real quiet space you know so how do you if you want to buy one of those other tapes well i gave you the catalog no oh yeah there's no question oh there isn't oh just call them you get look we're distributors you can call us we don't really i mean that's not something we do yeah i mean we'll order them for you but you can order them direct okay yeah no it's no problem i thought there was i thought there were the catalog included priceless i'm not the tapes aren't very expensive i don't i don't really remember how remember how much they are but i think they're like i don't know maybe 20 or 25 or something or i don't know just there's prices from the bushes yeah and that's not the only i mean they have they have a number of different types of tapes doing to do a number of different things some would be considered pretty bizarre but i've been down there as part of the professional group a couple of times and uh for a whole week with other people in other other industries mostly i would say uh people in the psychiatric psychiatric industry that use their products and they get together and talk about you know how the products can improve and and uh you know other uses for them and just you know sharing a lot of ideas it was mostly like a summer camp for adults basically what it really amounted to it was really a lot of fun uh well let's kind of review from yesterday we went through a lot of material yesterday and we're going to go through a lot again today anybody got any comments or ideas about some of the stuff that we talked about yesterday everybody's really just just at peace with all this and ready to go huh go ahead go ahead john no i think if you you know the way i would think outside the box you know i came here with different agendas other than trading what i challenge myself with every day you're trying to think outside the box how to look in the mirror and become better if you take the time to do that and you have the courage to actually look and really look deep i mean some of that stuff yesterday was life-changing i mean you just you get access to that information with yourself just if you're open to it it can take a wound to heal it yeah that's right absolutely i mean what we're going to get into in just a little bit what what i call like a practical philosophy for change and just a real practical way of looking at why why consciously altering ourselves and changing ourselves and adapting ourselves can be so rewarding because i think it's really one of the keys to happiness but it does you know the the fundamental component is what john just said a willingness to think a willingness to think what he is he referred to as outside the box but basically just a willingness to think because nothing constricts what we can think about nothing only one thing let's put it this way nothing can limit what we can think about except for one thing and what is that what no fear fear which would mean a which which would mean what what what are the implications of last lack of fear or lie what are the implications of of a fear of thinking in a certain direction because you limit yourself to being not opened all the time that's available to you okay well i'm just thinking like just just just a lack of willingness that's the only thing no desire i'm not going to desire yeah because that was that's what really what it takes that's what's what all of this takes it all boils down to what do you want what are you willing to focus your energy on with conviction because regardless of what technique you're comfortable with if you choose to go through a process of transformation it really doesn't matter what technique you use i shouldn't say it doesn't matter i mean it can matter if you're if you're using it inappropriately and you don't know what you're doing but but technique is not as critical as desire so there's really only one thing that stops anybody from thinking outside of what they've learned to believe that's a lack of willingness correspondingly all it takes to tap into creative or inspirational inspirational information is a willingness desire if the desire is genuine you'll get the information that's that's an absolute fact it really is and i know maybe for some people who who you know might not have experienced this or experience it on a regular basis that's all it really takes is a genuine sincere desire and if you try it and you don't get the information or don't get any information then i would say that your desire was not genuine and sincere it's what would commonly be referred to as lip service you're saying the right words but you know the sincere energy isn't behind the words and that's really what it takes along that same line though if you've never had change in your life where you can see an a b situation to actually put yourself to think that it could change is a huge gap it really is yes but once you find someone that actually gets that a b you can say i was a different person you haven't had a different thought process if that accelerates you're gonna have a dynamic curve straight up oh yeah it's just that first huge step two that makes all the other steps a good point john i would say those kind of changes those kind of those kind of first step changes for me came in years years but you know that was a long time ago and didn't have access to the kind of the kind of insight material that's available today too or let's say it was available but not readily accessible like today put it that way things have changed a lot in the last 20 and 30 years they really have i mean when i was writing the discipline trailer back and you know starting in 1982 and and and you know and dissecting the dynamics of beliefs and belief systems and things like that i mean at the time i thought i was really way out there and and really afraid to even share the material with people because i thought they'd think it was crazy really i'm serious especially the trading community i i see that all the time not all there's times certain degree of people i've come across over the years as traders who kind of think that this aspect of learning about yourself and thinking that that's going to help you as a trader is a little bit unmanly i think it's the way that most people think oh sure not as much now as what it used to be i mean but you know but but certainly back in you know when i was working predominantly with four traders in chicago back in the 80s i mean you know i would say i would say the vast most majority of a floor trader looked at mark douglas like whoa you know get away [Laughter] i i've spoken at conferences there was the first conference actually spoke out tim slater invited me to speak at computrak in uh 1980 april 1983 or 1984 i don't remember and uh down in new orleans and um it was kind of amazing how uh how the chain of events occurred to even me getting getting that invitation in the first place because it was just it was just there's just really bizarre circumstances uh or synchronicities that that were really like that were kind of mind-boggling to me but anyway i was invited to go down there to speak and um one of the and and uh and at the time i mean i you know i had i had no credentials at all i had nothing i really did i had absolutely no credentials to be doing what i was doing and but tim and it was all really just based on a conversation that tim and i had at dinner and i just happened to sit down next to him because some woman broke a date with me and where i wouldn't have even been at that particular banquet and you know she she broke this date i was waiting for and i happened to sit down next to tim slater didn't even know who he was and we talked and then i found out later on that you know he did these um uh he did these conferences and uh thought well since i was working on the psychology of trading and he had technical analysis let's put the two together and do a workshop or something well when i called him up he said well yeah i'm doing a conference if any any you know and he said well think about you know maybe adding you to the um adding you to the schedule um thinking oh man you know so he called me back like two or three days later and he said okay you're on and and from that moment on this is like january and and the conference was in april and from that moment on i mean i just i just obsessed over this presentation i mean totally and completely i scrutinized it sometimes it might have taken me a week to get a sentence i mean literally i'd i i'd go over you know just over and over and over again so when i got down there i mean it was it would be uh a a huge um understatement to say i i was really really nervous uh there were 850 people at that conference and there were probably i don't know maybe 18 or 19 speakers or something like that and of course all the other speakers they'd written books and all that kind of stuff and and had reputations and so tim had a general meeting uh for everyone uh the first day of the conference in the morning it was like i think around you know nine o'clock in the morning or something like that before everyone started and one of the first surprising things that i found that when i got down there is that tim had me speaking like he's either six or seven times in a three-day period and all the other speakers were only speaking like twice i'm thinking there's got to be a mistake here and i'm you know i didn't want to say anything to tim i'm thinking there were some things that just weren't adding up one the number of times he had me speaking two the material that i that i'd submitted for the you know the big book that that you get when you go to these conferences wasn't in the book and it wasn't much material but you know i didn't really have any material but but but it wasn't in the book anyway and it was just in the packet in other words you get these one of these huge satchels and the books in there and my stuff is separate so you know i'm sitting in the middle of the audience listening to tim talk about you know you know some of the restaurants to go to in new orleans in fact i think it was even was it mardi gras no it wasn't mardi gras anyway what to do in new orleans and what to watch out for and and be careful of this or whatever and then he uh he said you know and then he did this this disclaimer thing about you know whatever what the speakers say you know computrac has no legal liability and all this kind of good stuff and then he said but i want you to pay particular attention i'm sitting there i'm just sitting this chair right so i wanted to pay particular attention to um this material that we didn't put in the book specifically because we want you to pay particular attention to mark douglas and i'm like and i'm just like my heart almost exploded it really did i was like what the hell is going on and i mean i didn't hear the rest of what he said because it just it just freaked me out so uh i had to speak uh not really too much longer after that maybe two or three hours after that and um and i'm thinking this whole time that i'm that i'm down there or you know before all this that okay you know nobody knows who i am it's like psychology of trading not something that people are even paying much attention to you know how many people might end up in one of my in one of my sessions right you know five or ten people okay i can make an ass out of myself in front of five or ten people it's all right okay i can do that and so uh i'm standing in front of this door where this you know where the sign says mark douglas psychology of training and i'm talking to another one of the speakers i don't remember his name and and he was just you know he was being real nice and and when i say that that that sweat was literally dripping off my hands i am not exaggerating it was dripping off my hands and um i'm getting nervous even talking about it a little i mean it's just you know just but the memory of going back into that experience is putting me back into that experience in that state of mind so uh uh we're talking and i'm watching people kind of stream into this room and i'm and i'm getting upset i mean i'm literally i'm watching people walk into this room i'm standing you know maybe 10 or 15 feet away from the door and i'm thinking why are they doing this to me what why no why are they doing this to me you know and say i don't understand it you know and i'm you know i kind of glanced in the room there's like maybe 70 or 80 people in there and i'm really pissed i'm thinking come on i wouldn't go listen to me talk why are they going to listen to me talk and so the other the other speaker left because he had to um uh he had to he had a session himself so standing there by myself and it was a real defining moment in my life because i was uh i was more than seriously considering bolting no i was going to bolt i really was i was i was standing there thinking to myself i knew this would be it i knew that tim would never ever invite me back to another conference i mean that that that's what i was contemplating at that point whether i could accept the deep sense of regret that i would experience by by bolting and what i was going to say to tim and i was running it through my mind and just like you know just like checking the probability out and like i said it was it was it was i don't know 50 50 60 40 whatever in terms of 60 in terms of bolting but just at at this right moment i mean like i said this defining moment is the weather and i was literally gonna run this person came up to me and someone was going to walk into the room he walked over to me he saw the name tag and he says i said you're mark douglas right and i said yeah and he said well shouldn't we get going and i said okay and uh i walked into the room and it was really weird because it was because once i walked into the room and because there was they didn't have anybody introducing you or anything else like that it was just you just did it on your own once i walked in the room and and got in front of everybody i was fine and not only that i didn't even use my presentation i just spoke spontaneously off the top of my head and i had to because that first presentation was a little bit shorter than the two-hour presentation that i prepared for well anyway i did a really good job and did such a good job that the next time that i spoke there were like even more people in the room and then by saturday afternoon friday by saturday afternoon i literally almost had the whole conference in the room they were lined up around the walls and out the door and i mean it's just and there was the same people that were coming to these presentations over and over and over again and i was just like i was really astounded absolutely astounded until sunday sunday morning i was in an elevator with somebody and then i figured out what was going on like what was this phenomenon and some guy you know he looked at me so you're mark douglas you're the guy that's making us all feel good now that was not my intent for my presentation but i mean that's not that wasn't the goal of my presentation but as it turned out i was giving people information about the nature of trading that they never ever heard before meaning that there isn't anything wrong with you because back in the early 80s especially futures traders everyone lied about the results everyone was losing literally everyone was losing and everyone was saying that they were winning and so all the people that were saying to their friends oh yeah i'm doing great but they were losing their ass and their friends are saying oh yeah i'm doing great too they all thought it was just them that was lying they didn't know that everyone else was lying too and so and because i worked at merrill lynch and i and i saw how virtually everyone and i worked at one of merrill lynch's biggest offices in chicago i had access to their to the account to the to the uh uh printouts of their customer base where i could say that 99 of all their customers were losing money and i and i said that in the conference i mean i i just said that to everybody it's like it's like i just lifted this huge weight off their shoulders to think okay there's nothing wrong with me and there are specific reasons why i'm losing and so as a result everyone wanted to hear this presentation over and over and over again now the next year when i went back and tim invited me back to speak i thought okay this is really good what i'll do is i'll really give them the meat okay i'll you know instead of you know because that first one i didn't really get into a lot of depth so i said okay i'll i'll really put together a presentation and give them some real substance i would say the first presentation that i did i had probably 300 people in the room and i lost 200 of them in the first 20 minutes and it's been like that ever since so dave when you're talking about people you know like and i have found really the the industry you know the industry is evolving you know back in the early 80s this message just was was not very well received at all especially if there's any depth to it but uh you know things are changing a lot they really are there was which reminds me of a the very first time i ever did a two-day workshop it was sometime in the um late 80s not not the late day maybe 1986 or 1987 i i was doing one day workshops but i never expanded it to a two-day so i'm thinking okay i'll expand it to two days and i have probably 11 or 12 guys in the room and they were mostly all floor traders actually mostly all from the s p pin in at the chicago mercantile exchange and so it just so happened it was in october and the weekend where you have to turn your clocks back and uh and i and i'd forgotten all about that because you know i was preoccupied with the workshop and so i got there you know i got to the workshop about a half an hour early and of course nobody's there and i think it's supposed to start at eight or nine o'clock and at the time it's supposed to start nobody's there so it's like i'm thinking oh my god i really did it this time nobody's coming until somebody finally showed up and i figured out that i didn't do my clock so you know so see the thing is and what this really what this all really gets down to is something that we you know we talked about friday night and yesterday is that you still don't need to have any of this to put on a winning trade that's the whole point none of this is necessary to put on a winning trade none of this is necessary to put on two winning trades or three winning with three winning trades but eventually what we all find out is that we can put on winning trades but there's a huge difference between being able to or let's say you know getting uh getting a few winning trades here and there or even even on a consistent you know a fairly consistent basis there's a huge difference between that and of course and and what your bottom line results are when you experience huge drawdowns or or a series of drawdowns as a result of mental errors and when you become dissatisfied with that you start looking for something to remedy the situation and that's what takes a lot of work because like we've been saying all along it has everything to do with the way you think and in essence the way you live your life uh just so i clear on kind of where we're probably going to be going today i think the essence of what we were trying to bring out up until this point was getting comfortable with the whole notion that it's your belief structure that may be limiting you in whatever aspect of your life or perhaps more specifically you're trading i'm under the impression that what we're going to try to do today is that we're going to try to not only identify those beliefs but also work on patterns or work on techniques to neutralize them or redirect the energy however exactly right that's exactly what we're going to do today remember that we have remember that the kind of problems that we face as traders are going to follow that fall into pretty much two basic categories in terms of in terms of what's going on inside of us we have we have we have a like genetically encoded uh ways of thinking meaning our minds are wired to think in certain ways that cause us to believe that what is what we're experiencing in this now moment is identical to something that's already in our minds as a memory that's a problem because because we know the what's the reality of the situation what's what's true what's really true every moment is unique and see because of our mind's inherent you know propensity to associate it's that mechanism that we have to compensate for so we have to do something specific to compensate for that mechanism that's that's one of the things we need to do because the reality is every moment is truly unique that is that is the truth our minds make it seem as if this moment can be identical to something i've already experienced sometimes there'll be a correspondence okay there will be a course enough of a correspondence that will experience some degree of satisfaction based on what decision we make because our minds associated this now moment this unique moment with some memory that we have but as traders we there's too much of a capability i mean there's too much of a potential let's say to uh to make catastrophic errors by allowing this mechanism to cause us to think that we know what's going to happen next see so what we want to do is is take that gap away between the reality of each moment being unique and what our memories say and say you know what i need to install a mechanism in my mind that will not let me think that this moment is anything other than unique that's what we're doing i need to install a mechanism in my mind that will not allow me to believe or think that this moment is anything other than unique that way my mind is now open to receive anything that may be of relevance in terms of what could satisfy my desires or goals so i can make a decision based on all the information that's available not just what might satisfy my expectations and remember my expectations are going to be what based on what what are my expectations always based on well beliefs yeah because an expectation is a belief projected out into some future moment so that's exactly what we don't want as traders we do not want to be basing our decisions on our expectations because our ex because when our expectations are fulfilled we feel satisfied and happy and that's something that we all desire and when our expectations go unfulfilled we experience emotional pain this is a a universal characteristic of humans probably of anything that's alive and can think i mean we've got cats and we don't get to go out there they're in emotional pain so what we don't want is we don't want to be uh perceiving information based on this limited kind of this limited filter so that only the information that makes me happy gets filtered into my mind or gets allowed in and all the information that has the potential to make me feel anything other than happy gets you know gets filtered out in some in some way either completely ignored or altered or distorted in some way so we need that mechanism so this is what i was saying before what i was saying before is that we're going to use our trading we're going to use the actual let's say process of trading to create these mental mechanisms that will cause us to think that no this moment is really unique that doesn't mean you can't feel or sense or know what's going to happen next because you can but it'll be from a different context it won't be from a rationally based context it'll be from an intuitively based context these are worlds apart because if it's genuine intuition it seems like as if i'm going to maybe counter dick many of the things that i've said earlier but of his genuine intuition you'll always be right because in essence you're in the zone that is that you've tapped you spontaneously tapped into that that framework where you are in complete harmony let's say with the market consciousness that that collective consciousness of everyone who's participating and you are in the zone so it's not a rationally based knowing it's an intuitive base knowing but it's our rational mind that'll always one keep us from getting into it because if i think i know what's happened if i think i know or believe what's happening at a rational level it means that my knowing is coming only from my past you guys with me on this the knowing is coming only from my past my past cannot what's that well you can predict the future you can yeah anybody can guess the future and you know or you know that's not i'm not saying you can't predict the future but let's put this way my past based on what's already in my mind can't know a truly unique moment because a truly unique moment is something never existed my past can only know it afterwards or my rational mind can only know what after the fact so how do you reconcile if your intuition is saying go your intuition won't say go go go go intuition doesn't work like that intuition isn't compelling in any way your rational mind is compelling you feel compelled to do anything it's it's coming from your rational mind your intuition's just spontaneous you just find yourself doing things your rational mind is the one that's going to pull you out of doing it it's like it's like it's doing something without any without weighing and judging you see your rational mind weighs and judges everything based on your past when you're in when you're in that kind of a zone and acting spontaneous spontaneously and intuitively you won't be weighing or judging anything in essence you'll just be finding yourself doing something it's like your rational mind will wake up and say hey what am i doing mark it's kind of abstract can you can you just show me can you show me a trade that's rationally based versus i mean just it wouldn't uh john it wouldn't it wouldn't it wouldn't make any difference you see in terms of showing you a trade i mean i could pull up a whole bunch of charges just tell me a trade that's rationally based versus i mean an example any trade any trade that you that you think any trade that's based on a pattern that you know at a rational level is would be a rationally based trait meaning anything you've already learned about and it's in your mind as a memory whereas something have you ever had john have you ever had kind of a gut feeling about something but didn't you know didn't really have a way to judge it from a rational perspective that's what i'm talking about you know it's i'll give you an example there's i don't even know if i have that chart with me but there was there was a chart i was i was doing um a typical pattern i'm going to show you guys later an abcd pattern where a b equals cd it'd be something like um this would be like a 618 retracement like this and these two lines right here these two waves are exactly equal and one of the reasons why i use q charts is because i can vary i can click on this line when i get this wave when i get this low and this high and this retracement right here and i get an isolated low right here it looks like it might start doing this what i do is i clone this line click on this line i clone it and i can actually move it here put it on this low and see how the market reacts coming up to point d okay well i don't remember exactly when it was but there was a uh there was what i thought was a perfect a b c d setting up in the dow was last year sometime and uh and it was on a 60-minute chart and you know of course the bigger the higher the time frame the chart the more significant the move so i put on my chart i put on my chart by d supposed to sell d didn't even realize buy d okay that would be okay by d okay so when the market i i was i actually didn't trade the day that that this this happened but the market the market came up the d and literally just i mean blew right through it i mean you know it was like a 150 200 point move so that would be something you know it's like i say i don't look at that as being an accident that i made that i i put that i made that kind of an error on the chart by saying buy d instead of seldy that has happened to me and then i spent the next week trying to quantify it how do i do that and i can't i can't put i don't know how it does so i'm in that like trader's hell did you talk to bill right you know we're talking about you know trading intuitively and and it's really intriguing but uh keep something in mind that you know sean just said is that is that one of the things i'm going to suggest to you is that even when we get to the point in the in the workbook where we talk about it we're talking about it now but but um if you haven't if you let's say if you haven't trained your rational mind to trust intuitively based information the best thing to do is just notice it and not trade intuitively not act on it just notice it and write it down and pay attention to it that every time it happens you can start building a backlog or repertoire in of rationally based information saying i can trust this and there's a reason why i say that is because there is you can manufacture you can get you can get so excited about the idea that you can you know have the sense of knowing of what's going to happen that um you can at a rational level manufacture a feeling that that that's very similar to that kind of intuitive sense and and the problem is that uh that manufactured feeling isn't intuition and you will virtually always be wrong when you're operating out of that sense of let's say i call it like a hope like a hope that feels like intuition and genuine intuition what you have to do what you really have to do is get yourself to the point where you virtually have no potential to hope whatsoever like why would you have to hope for anything once you really trust yourself you don't have to hope for anything so if you still have the potential to hope that the market does something for you that's in essence what you're saying i'm hoping that the market does this i'm hoping that the market does this for me and the only reason why you could hope that the market does anything for you is because you don't feel like you have the resources to trust yourself to do it for yourself otherwise hope wouldn't exist so as long as you have that potential to manufacture that sense of hope that feels very much like intuition where you won't you'll find it very difficult to make the distinction between the two the best thing to do is just not train intuitively in other words don't act on it right away let it let yourself work up a you know a nice repertoire so that you can start trusting yourself trusting it put it that way and that might take a long time you took the example of buying pullbacks right you got a narrow range day or something and you're looking to buy over the top of that you say okay the rational ideas it's pulled back we found another level of virus at this price and so i'm buying over that resistance prior day that would be a rational thought correct yeah the intuitive side would be it's pulled back three days i'm gonna go bid here because my gut is or i in totally think multiple bags last three to four days and i'm hoping that i get the bottom and i would say that's not intuition based on the way i define intuition that's just that's just another rationally based that's that manufacturer yeah that could be man yeah manufactured rationally based uh if you're thinking about that that's something you see you're thinking about it you're not you're not in it anyway right see the whole the whole point is that you're really not thinking you're not weighing or judging anything you're finding yourself doing something it's like you know it's like looking at a chart you know i'm looking at a chart and i might have asked myself you know two or three minutes before you know oh where's the next best edge and all of a sudden i get distracted and i'm not really i'm not thinking about where that next best edge is then all of a sudden my attention is drawn to a line that i would normally have not paid attention to because it is not part of my repertoire of what the market does but see intuitively based information is creative creative think about the definition bringing forth something that didn't previously exist i wouldn't have paid attention to that particular line or that particular level and all of a sudden i've got my attention drawn to it and i think oh okay well you know this let's put an order here no weighing no judging really no thinking if you're weighing judging and thinking it's not intuition it's something that's spontaneous it's just like when i would when i'm writing this one trader and trading in the zone and a technique that i'm going to give you in a few minutes i'd ask myself a question now if think about this if i ask myself a question if i thought i really had the answer i wouldn't have asked the question in the first place meaning that i really believe i don't have the answer i'm not trying to figure out the answer i'm not doing any analysis you know like like going through all my memories and and trying to work something out trying to figure out a problem i'm not doing that i don't have the answer and then i forget about the question or in that moment i mean just you get distracted you start doing other things then all of a sudden it's like boom the information just gets dumped into my brain or i find myself speaking it without knowing it that's the kind of stuff i'm talking about i didn't think about the information that's in my brain it was it's now there and i gotta write it down and i find that if i don't write it down it evaporates and i can't re i can't reconstruct it i can't tell you you know how many times it hadn't happened it didn't happen that many times because it was just too painful but the number it didn't the number of times it did happen where i didn't either write it down right away or i put it in my computer didn't save it right away and something happened to my computer and i lost it that that was like and then try to reconstruct it at a rational level i couldn't do it i couldn't do it because it wasn't in my brain at a rational level it wasn't part of my memories it didn't have anything to stick to because there wasn't really a framework because it was because it was new information new for me so i'm not i'm not weighing i'm not judging i'm just asking a genuine question because i don't have an answer and i desire the answer if the and if the desire is genuine you will get an answer that corresponds with your question are you saying that a rationally based trade is something that isn't good no i didn't say that at all jeff no not at all i'm not saying any of this is good or any of this is bad just just it's just all a function of whatever just what what you desire where where you want to go what what you want for yourself in your life because the the abcd that you were talking about is trade yeah okay i jeff i trade rationally okay i'm not giving i'm not you know don't get the impression that this is what i do here okay not every trade is intuitive i you know it's i'm just giving you examples of of times that it was okay and also i don't i'm not at a level in my life where i completely and absolutely trust it either as a trainer i'm still working on it the example you gave that that was really an error in your technique i i didn't put an order in the market number one all i'm saying is that i put i write on the chart what i'm going to do and what i wrote on the chart was what i should have written was cell d and i didn't even notice until the next day where i actually wrote by d okay that's not going to do thank you that's oh you know that to me yes absolutely that's that's not an answer see there are i don't look at it that way i don't look at those kinds of errors as being errors or those i don't look at unconscious mistakes as being uh is not having significance i don't look at them as sort of a random thing at all that was my that was let's say at a subconscious level you know come this information we're gonna we're gonna talk about in a minute about where information can come from one second jake let me just do one thing the different levels of information you can say that you know that there's the conscious the subconscious and i'm looking at the intuitive or spiritual okay i would say that that particular whatever you know what caused me to type buy and sell came from down here and i didn't notice it at a conscious level until the next day go ahead jake i was just going to say if you have an unconscious belief that makes you trade it correctly you separate that in other words it's causing you to make a mistake unconsciously right how do you separate that from what you described as intuition i'm not sure okay say ask me the question again like in other words the intuition made you write sell uh by d yeah my intuition told me to buy d right okay what if you know something in your brain which was a bad belief it caused a training error that they just you know made you say bye here or whatever what about it didn't work okay what about it i just say how do you separate intuition from unconscious belief it's not aware it that's really the question well very easy uh the the i shouldn't say very easy it's just that i you know the criteria is if if it was the perfect thing to do it was intuition there's anything less than that and it was rationally based and i'm not saying that you can't make a decision at a rational level that can't be perfect all i'm saying is that your intuition will always based on my definition and the way that i look at it you can look at it and define it any way that you want all i'm saying is that in my framework in my context intuition will always cause me to step into an experience in a way that's in complete harmony with the environment that i'm that i'm in that moment based on what my desire is is would that be a good definition of it do you think does it make sense issue basically basically should go what roman basically is your goal yeah it'll it'll cause me to step into an experience in a way that's in perfect harmony with my desire and the environment that i'm in in that moment and the environmental forces i'm operating i'm operating let's say in or the environmental forces that are attempting upon that situation anything less than that in terms of an outcome would not be intuition i know this is really kind of hard and abstract stuff but uh you know you guys can listen to the tape over and over again and and or watch the tape and and as a result you know start doing your own explorations in terms of how this works in your life and and how you might how you might use it and let me say something else too that that about five or six years ago i was invited to speak at it at the first annual intuition conference that was in san diego and there were i don't know there were i don't know about two or three hundred people there and and people from all over the world who investigate the nature of intuition and you know one of the things that i came out of that conference with was that nobody could agree on a definition of intuition not that there was argument i'm not saying that people were fighting each other they weren't and just saying that that all the different definitions were mind-boggling okay so uh you know i'm just giving you i'm just giving you one i'm not saying there aren't more you know do your own investigation and and go on your own path and and find what's you know what works for you but uh and i was amazed too at all the different ways that intuition worked in people's lives i you know i was just i was stunned so uh to uh take a phrase out of uh anybody read the conversation with god books by neil donald walsh mine is not the only way it's just another way would i would say that and for some of you just could it could be a good start you know what i've found over the years is i and i'm guilty of you know not being uh consistent with it but um what i try to do is always ask you know certain questions how you can do things better whether it be business trading or other parts of your life and i definitely find that when you stay on that type of a regimen it definitely makes a difference depending on what you're trying to go you know maybe it's the bottom line maybe it's a relationship maybe whatever what ends up happening at least for me is you know you start noticing a change and then you suddenly forget that that regiment was what got you to that point and you kind of stopped doing it sure it's so easy to fall off but you know if anybody hasn't done that type of stuff i mean do you want to be asking questions just always ask yourself you know you know areas that you're not satisfied with or even you are satisfied with and want to make better for me at least it definitely makes a difference which i think is the whole con kind of where we are at this point right in the conference yeah we are and what greg said yesterday too about you know about uh we're just writing early in the morning it's it's a really good technique just write anything you know what are the techniques i'm going to give you we can do it right now for for even identifying a belief it's the same it's the exact same technique only what i do is put a time constraint on it otherwise you've got a specific purpose you know you could say um let's go here go to page um go to page one of section five one of the first things i say here is when it comes to doing mental work your attitude is everything meaning whether you think you can or whether you think you can't you'll be right and that's really true when you're doing mental work your attitude about it is is virtually everything so the more you believe in the possibilities that that you know you can do this kind of work the more benefit you're going to get from it so if you want to find out if you want if you want to find out what's in here okay first of all this is uh this is at the conscious level these are the things that we have conscious access to there may be there may be you may have conscious things conscious beliefs that you have that are in conflict with your desire to accumulate money as a traitor there may be some subconscious okay remember i said yesterday that i think this line between conscious and subconscious is really artificial in some ways even taught taught because you know when when we're children and there are things going on in our minds that our parents can't explain not only can they not explain it in us they can't explain it in themselves they're going to say you know just well just forget about that you know just kind of put it just kind of put it in the back your mind and just you know just forget about it and what ends up happening is that the things that that we can't explain and we can't deal with they do and the things just automatically in many cases will drop down to a subconscious level of operation anyway okay but it's like you it's like you don't i'll put it this way the more you do this kind of work and ask questions the more this line between conscious and subconscious starts to get perforated and and weaker and weaker until there really isn't any definition at all i mean there isn't any declination between the two at all you can have access to anything that's in your mind not only here here but also here it's just a matter of the kind of work that you do and and that work is is in essence asking yourself questions so for an example i just gave you one example here you want to find out what's going on say you say to yourself why can't i why can't i accumulate vast sums of money now if i knew the answer to that at a rational level i wouldn't have to be asking the question in the first place now keep in mind i'm going to keep repeating this because i don't i don't know if i i have the if i have the right words to really convey how important it is that this question be genuine and sincere because any lack of sincerity and you won't get an answer it's like the forces that that exist in the universe let's say or exist at these deeper levels you you can't it's like you can't fool god if you really don't want an answer regardless of how much you might say to yourself yes i do yes i do yes i do if the the asking the question isn't genuine and sincere then you won't get an answer in other words you have to be completely honest with yourself and you will get an answer that corresponds with your level of honesty so if you're asking a question that you that you sense you're afraid to get an answer about then you know ask another question that you might not be so afraid about getting an answer that you that you can say sincerely and genuinely that i really do want an answer i really want to know then write that question at the top of a piece of paper and then give yourself about 20 minutes and what are you going to do for that 20 minutes you're going to write what well what are you going to write you already said if i if i knew the answer i wouldn't have to ask in the first place so what are you going to write what do you think you're going to write just whatever come write whatever thought comes to your mind uncensored write your stream of consciousness thoughts whatever comes to your mind uncensored don't censor anything don't judge anything don't stop and contemplate it don't think about it if the word or the thought or the feeling comes into your consciousness write it down so and after 20 minutes you can go back and re-read what you've written in other words hopefully once you get used to the idea of writing uncensored you're going to find that you lose this kind of conscious thought process of judging what you're writing in other words you won't be judging it you're just so busy trying to write your stream of thoughts that you're not thinking about what you're writing and then when you go back and reread it what are you going to be reading you're going to be you're going to be discovering yourself you're going to be reading something that came from your mind onto that piece of paper and you should have you know what'll will hopefully end up happening is that you'll read something that corresponds to the question that you wrote you'll have at least an answer or part of an answer and there should be enough there for you to ask another question or to stimulate another question and you put that question at the top of a piece of paper and keep on doing it until you get to the source of of the original question of why can i accumulate vast sums of money because it may be i mean that's that's a big one by the way i mean you can do you can do smaller ones but you know you know working on one like that could take quite a long time yeah more than 20 minutes okay jake say that so people can hear it this whole thing is like song writing basically like i love rock and roll as an example the biggest song i ever wrote it was like complete inspiration wrote itself i was taking dictation it wrote itself in 20 minutes it's like automatic i have no idea where it came from actually i do have an idea i was listening to the rolling stones it's the only rock and roll i like it and i had like a knee-jerk reaction to it i said what do you mean it's only rock and roll i love rock and roll oops how long ago would you write that song over 20 years ago and you're still getting a pretty substantial income from it well bernie spears is covered so that's going to be a good and if you're posing a very deep question like this one and you can't you can't i mean as as we're as we're talking about it i'm i'm trying to think of you know we have a b c d e here i'm i'm trying to think of what things could be inside me uh those are just examples by the way right okay i'm just but when when when we've been talking about asking questions and sometimes well well while you're talking i'm thinking of things right and and asking questions and not coming up with even like the first thing so you're just a a technique to try to uncover that which stop one second i would then i would ask then i would ask what's stopping me from getting an answer you're not you said you're not coming up with the first thing right then i would do the technique based on well what's the opportunity to do an answer and then do that exercise for 20 minutes and write down every thought that comes to your mind break it down break it down to it you know to like the the most fundamental or basic components i mean just break your questions down as as as you know as far as you can if that kind of a rule of thumb i'll give you a rule of thumb that i use when i when you know in my consulting work in my coaching is that one when people uh when people call up we identify i help them identify the challenge that's going to be in relationship to whatever they desire their goal create a process in other words how we're going to get there and then break the process down to its smallest incremental steps and then just take one step at a time and so that that particular formula you can use for any particular trading skill that you want to learn any trading skill at all if you put it within the context of that formula if you can think to yourself you know i'd like to be able to trade breakouts i'm not a good breakout trader that's something i haven't spent any time really you know anytime teaching myself how to do so at the time when i'm ready to you know to get to the point where i want to you know acquire this skill of being an excellent breakout trader i will create that's my challenge i'll create a process i'll break the process down to the smallest incremental steps and take one step at a time another example that would be a traitor that comes to mind that i worked with many years ago he owned some construction companies uh down south he was a guy in his uh late 50s at the time uh you can imagine the kind of guy that would own construction companies let's say in dallas okay and he and he'd been trading he'd been trading uh bond futures and just getting just getting just getting wiped out so he thought you know what he's gonna come up to chicago and show these pawn traitors something and bought a seat at the chicago board of trade i'm sorry i'm laughing anyway people ought to see this chicago board of trade and went into the pit the train and found out that it was just a little bit more a little bit more violent athletic than what he was what he could have imagined but anyway i'm sorry but um normally situate another one of these situations where someone told them to call me and uh um so we did and and we spent probably i don't know maybe a week or so a week or week and a half where one one of the problems he had is he really didn't even know how to define support resistance and i was and i was using point-and-figure charts at the time which i think are really good by the way but there isn't really much software where you can i don't know of any software that really does two-point figure charting anymore but um anyway so what i did is i helped him uh i helped him be able to identify support and resistance within a uh eight to ten tick range okay in the bonds so uh when we got to the point where he were you know he was comfortable and and we thought he could do this uh for the next day we you know we had support we had resistance here support here and and here you know here was the deal okay this guy's a multi-millionaire here's the deal this was the task we broke the process down smallest incremental steps right the task was fortunately the task was for him to buy one bond contract one bond contract at support and hold on to it until it if it came to support first and hold on to it it came up to resistance sell it out for the profit and then you know sell two and that was it okay he was supposed to risk uh three ticks one hundred dollars okay that's all you said now that that was that was the task he just had to go in and fortunately for us in this particular exercise the market you know opened up somewhere in the middle right here and uh so when the market came down was coming down to i don't know what this price was let's just say it was oh nine mark is coming down to oh nine uh he starts getting panicky and thinking that it's not going to get there number one and so he uh so he he bought him at uh right around 11 and then when it hit 09 he's thinking it's going to keep on going of course he sold it out for a two-tick loss it bounced off nine went back up to went back up to 19 okay and then he did the exact same thing you know came back to the office and was thoroughly exasperated and frustrated with you know with what happened right so the next day he went down there and did the exact same thing and uh and uh and then after that i i didn't hear from him and i didn't hear from him because he didn't want to have to account to me for the fact that he couldn't do this because you know what what are we talking about here we're talking about 100 buck risk that was it i mean this is i mean this is gen really genuinely less than chump change for this guy so uh uh so i didn't hear from him for about two weeks and then i get a call well as it turned out after two or three weeks maybe maybe three weeks after two or three weeks what had happened is that he had gotten pretty good at identifying support and resistance and he'd also gotten pretty good at buying them at nine let's say or selling them at 19 but he was still getting out at 10 or 11 and not holding on you know for the full range so he's only getting a one to two take profit and what was really exasperating for him is that in many cases enough it turned out that 09 in this example was the low of the day or he'd look back at the end of the day and say you know what i bought the low of the day and only got one tick i bought the high the day and only got one tick so his solution to the problem what do you think his solution was oh yeah absolutely yeah not double up triple up okay he's a one lot trader and i was going to be trading 25 or 50 lots okay and actually he'd made some money he'd made some money in that two or three weeks now he'd made maybe a couple thousand dollars doing this so yeah now the problem is you know going from a one lot trader in the pit to doing 20 or 25 or more you're dealing with a whole different range or a whole different set of people and you know it's just not easy to step up from one to twenty it's just based on the dynamics of the way the pit itself works i knew he was going to get his ass handed to him there wasn't a doubt my mind about it i didn't say anything to him and uh i say hey yeah hey go ahead and so it wouldn't have made any difference if i said anything to him or not so uh and that's exactly what happened he he lost all the profits he made plus another two or three thousand dollars and then he said okay like this okay i'm ready what do i need to do based on the formula i just gave him what would you tell him to do you tell me now if you're in this situation you're in my shoes and he's asking me what do what does he need to do to resolve this problem what that's right why can't you want sustain as winning trade what's the process we know the challenge what create a process break the process down to its income most the smallest incremental steps because this is stuff you're going to need to do on your own anyway you tell me what i told him well not at that point if you haven't done what you asked him you're close but well i added one of the dimension louie's close what what other what other dimension let's say in fact or factor criteria that i add to originally what i told him to do that would that that would solve this problem if he'll do no we're going back to what louis said go back to trading one contract okay you move to stock you know uh that's a real tough thing to do you know we're talking about pretty small range in the first place and and a lot of the up down movement in an 8-tick range it's just going to be noise so you'll end up you'll end up getting you can't i don't think you could do a trailing stop in this kind of a situation you truly stop you got to give the market a little bit of room use trailing stops when you're training higher time frames so that that would be i don't think that would be difficult and i'm not a big fan of trailing stops anyway but we'll tell you why later we'll do it 20 times that's where your grains matter uh well yeah but there's if you add one other factor to this that would what we want to do is this keep in mind that what what we're dealing with is is mental energy we're dealing with conflicting energy energy that conflicts with his desire our goal to hang on to that trade right that's all we're really talking about when he buys support we do not know if it's going to even going to get up to get up to resistance but the whole idea was it doesn't really matter because all he's really risking to find out is 100 bucks anyway so it's either it gets there or he gets stopped out if it gets there he reverses or and it gets down here or he gets stopped out one or the other but if you add one other dimension to this it will that that could force him to confront these conflicting forces because in essence all we're really talking about is petting the dog this distance right here is the dog now we know the kid as a child you know it would be almost impossible to teach a kid this kind of a process where where not impossible but it would be difficult because they wouldn't understand the underlying dynamics but with an adult at least you can say okay here's the situation here's what you've here's here's the resistance let's say that you want to neutralize that means you're going to have to confront it what would cause or force him or cause him if you wanted to to confront that resistance on a moment-to-moment basis add one other factor one other rule in here and and and the process goes really quick can you think of anything write down what his thoughts are no he's in the pit and will he accept the laws yeah well that's something we're going to work on that's something that's going to that's going to happen as part of this process right not really no but we really in this case we don't even have to know what the belief is we don't even have to know why he can't hang on i mean i know why he can't end up but it doesn't make any difference whether he knows or i know it doesn't make any difference you can actually think of a process that would that would cause it to all go away by doing something anybody think of anybody come to any anything come on until this price comes back close very good stop order no walk out no i didn't tell them to walk out of the pit quite the contrary however if you're close by adding time adding a time dimension in other words the market comes down to nine he gets in he doesn't get stopped out he's got to stay in that trade for let's say 10 or 15 minutes or it hits this point or whatever comes first so in other words what i wanted to do was actually get into this trade turn around and look at the clock and deal with his uncomfortableness moment by moment second by second and the more that he could do it the more that he could let's say be in that in that uncomfortableness the faster the energy neutralized because if he didn't get stopped out then basically he was in a winning trade and he was letting the market unfold in his favor and and the more that the market unfolded in his favor he was actually he was actually creating an experience that directly conflicted with his resistant energy just like as remember yesterday the example that all dogs are dangerous not all dogs are dangerous okay as okay we've got energy dynamics so the more that he faced that clock and faced his uncomfortableness second by second minute by minute the faster the energy dissipated so if he could only do it five minutes the first time well great maybe the next time he could do it six and the next time he could do it 10 and the next time he could do it all 15 then at some point it didn't matter he could do it it was simple it really was it was a simple exercise not easy to do but it was a simple exercise that's basically what you guys are going to be doing for any trading skill you're going to think of a process break the process down to a smallest incremental steps and do the steps because you are you don't have to know you know in many cases you do not have to know what the conflicting energy is on the self-sabotaging beliefs your your you know these are exercise you know the kind of things you're going to need to do to neutralize self-sabotaging beliefs in some cases you're going to have to know what it is but in some of the the trading skills that you need the basic fundamental trading skills you don't necessarily have to know but you do have to create a process to neutralize it and this is a perfect example of what i mean about using your trading to accumulate skills he was trading but he was trading for the specific purpose of being able to hang onto a winning trade now if you have a problem hanging onto a winning trade you know what this exercise would work for you too jake 15 minutes the maximum is 20 minutes and we'll try that but what if you dealt with the belief what is the typical belief that keeps people out of what you train as simple as what you did well in his case and because he because he'd been burned so many times you know where the market came back and took his profits away where he didn't take it because he never had a consistent or methodical way of taking profits that's all it really was for him it's just his past experience of being burned so many times where he thought the market was burning him of course it was his own it was his own his inability to trade consistently or have a consistent methodology that was burning him go ahead greg um being patient is one of my challenges let me use this example if it starts going up to 15 you know i have this i got a solution for you later on what time is that john 9 15. you know i'll take a little break okay where'd we leave off anybody remember 20 minutes oh i left off with the exercise that was it about about creating processes anyway he uh he went on to uh he went on to make quite a bit of money trading bonds and then went to uh thailand in the late 80s and not early 90s to trade their stock exchange and and took advantage of a lot of people down over there [Laughter] and i kind of lost touch with him about probably about eight nine years ago so i don't really know where he's at right now um okay you've got you've got information now i want to precede uh what i'm about to tell you right now with with kind of a caveat or warning i'm just exposing you to technologies and or ideas or let's say methodologies that you can use but i suggest that you don't until you've acquired some sophistication in working with us in these areas and and expertise that you do this with somebody who knows what they're doing a professional i don't know well i'm going to tell you you'll see in a minute okay uh what i'm doing all i want to do is i want to give you the i give you an idea of what's possible and the kind of things that you can do again these are things you you know you're certainly under no obligation to do any of this stuff uh but if you do decide to do it i strongly very strongly recommend that you do it with a professional someone who knows what they're doing here's what i mean we left off doing journal work writing questions getting answers discovering yourself and and discovering things that you know that uh hopefully will pique your curiosity to ask another question you're accumulating all this information about yourself what are you going to do with it where are you going to go with it well there are a number again there's a number of different things that you can do a number of different techniques or technologies there are all kinds of self-help books that you can buy uh you know one of the things when people even ask me to suggest certain books i i'm a little reticent to do so what i suggest that people do instead of me recommending what book might be good for you you find out what book is good for you by going to you know a pretty large self-help bookstore and finding out by just what book resonates okay as you're going you know as you're you're perusing all these books that tell you what you can do and how you can do it and everything else like that which books resonate which books are you attracted to books books and in essence because once you open yourself up here again this process of opening yourself up by asking questions you will be naturally guided from this area right down here you will be naturally guided to pick up the book that's that's right for you in that moment and that's the one you buy and that's the one you start with but it's that's how i thought i first booked up about larry williams i went to one of those bookstores because i was just in training and larry's book almost fell off the shelf hit me on the head somebody pushed how i made a million dollars what i'm saying to you is that in many cases the kind of stuff that that's going to happen once you open yourself up will seem quite magical it really will they'll just come into your life you'll be attracted to it you're not thinking about you know it's not not analyzing not judging you just find yourself picking up this book and go oh yeah okay this looks good that's the one you buy the one that feels good is the one you buy see so for me to recommend a book it's like i'd have to you know tap into where you're at and you know and i mean not that i haven't done that sort of thing but it's just that you're better off just doing it on your own does that make sense everybody so one of the things that you can do and and and this this kind of this is an example of um of a traitor that i worked with a while back and um uh who had a pretty abusive relationship with his father and it it hampered he was a well i'm not gonna tell you i'm not gonna tell you what where he traded or what the deal was but anyway um uh he found a lot of the things that he had learned as a result of his relationship with his father quite troublesome not only in his life but of course for his training and what i'm going to do is i'm going to read you an exercise that i gave to him and basically this exercise you can see this is his work right here it's about 20 some pages or more it's all single space type written and these are experiences that he wrote about with his dad okay and and the exercise was to write the experience and then boiled the experience down to um in other words distill it down to like a couple of sentences about about what he learned about the nature of his relationship with the world as a result of these experiences and then boil it down to a one sentence belief if possible because what we want to do when we're when we're working with these kinds of uh with you know with these kinds of um beliefs that we want to neutralize we want to distill it down as you know as as much as possible so that we have something tangible to work with because we've got something tangible to work with there's even another exercise that i'll give you again that i that i'm going to caution you to use not on your own but with you know with guidance and with help that will help you neutralize that one sentence concept when you get it down to that but basically what this exercise is about is this is that you're not going to change your memories of your experiences it's not the actual memory that you're changing but you're going to change the context of the memory in other words you can put the memory into another framework from negative to positive because remember that you know remember that that life the universe life okay offers us a range of experiences and this line cannot represent that range of experiences because those experiences are virtually infinite now think about this those experiences are infinite and every moment is truly unique but if we start out with you know a particular experience in a particular category from a negative perspective we will continue to perpetuate that negative cycle over and over and over again until we break the cycle which means it's something that we have to choose to do we will think that cycle is reality just like the boy and the dog example dogs had a range of experience a range of possibilities to experience happiness joy satisfaction these are all states of mind this child can only perceive one possibility out of a range of possibilities that one possibility was his reality and something that he would vehemently defend as being the true and only reality so i could say that every negative cycle that exists in each of our lives and all of us have them because none of us grow up pain-free nobody grows up free everyone gets hurt emotionally everyone and the problem is if we don't reconcile our own pain we will pass it on to our children we have no other choice as much as you might want to try not to and even be conscious of it unless you have a way to reconcile the pain you will pass it on and then your children will pass it on to their children and it'll keep on getting passed on until somebody decides to break the cycle and the cycles don't get broken until somebody like i said decides until makes a conscious choice to work on it now you don't have to again you don't have to change the memory because you couldn't anyway really i mean i guess people can they can you know they can create another memory and try to deny the the original one but you can put it into a different context you can put something from from from a negative into a positive context if for an example as in this case as in this particular person if he were to go back and had a way let's say or even imagine a way of accessing the child the person that he was when these experiences happen and explain these experiences in a different context in a context that wasn't emotionally painful but you think that might be helpful because that's in essence what he's doing he's explaining these experiences in a context that would help this let's say eight or nine year old create a set of memories about this that even though the actual experience themselves didn't change the context of the experience changed from negative to positive because there's something else another dynamic here that you need to really understand and that's the dynamics of forgiveness people generally think of forgiveness as doing something like to forgive the kind of pain that someone else perpetrated on us now there's no doubt about the fact that let's say we we interacted with someone in a very painful way and let's say even if even if it was intentional on their part that you know the pain exists it's there but here's the problem or here's a way that uh and but here's a way that i'm going to give you a way to think about this that would help you help you work through some of this pain so that you can clean your mind out of negative energy so you can live your life in a you know more happy and satisfying way because people will say well they don't deserve to be forgiven and as much as that might be true there's something that everyone needs to consider and that's let's take an example of a person in our lives okay let's take mother father brother sister whatever a relative we can say that that person has a range of expression that that let's say let's say that for the sake of this argument or this discussion that that particular person exists in a finite way all their inherent qualities and characteristics can be described in some sort of finite way all their memories all their experiences all the energy that's inside of them they exist in some way that can be described so we've got them that exists outside of us and then we have our representation of them okay the representation of them that exists in our mind in other words some component part of our identity that we would describe as them first of all i would ask you is our representation of them them is it who they are it can't be right right in other words it's something less than because for us to know them as who they are we'd have to know them as their consciousness we'd have to be literally be them in every every aspect or every component part of who they are so any way that we would represent somebody else is less than who they are and usually much less than who they are some small part but it is a but it is a component part of our identity meaning that that representation of that person this unique representation is a unique representation of that person exists nowhere else in the universe now think about that you've got brothers and sisters or other relatives that have their own mental representation of that person that may have similarities to yours but your representation is unique it exists no other place no other place in the universe other than your mind and the problem that people have is that we have this we have this tendency to think that our representation of another person is that person when in fact if it's the only representation of that in other words the only place that it exists is in our mind it's really part of our identity it's not them it's us that's the way you need to think about it any representation that you have of another person in your mind is part of your identity and if that representation is a negatively charged energy then it's having a negative effect on your life we're the ones that are going to be suffering because what do we know about the nature of beliefs they demand expression see so so we grow up let's say with parents who are let's say inflict their own style or whatever of abuse whether it was intentional or not we say to ourselves i'll never do that to my kids and find ourselves doing just exactly the same thing to our kids why because all beliefs demand expression and find ourselves being in many ways exactly the same way matter of fact if you go to a relationship kind of a conference or a certain relationship you know conferences that you can go to or workshops you can go to to help you you know understand the nature of relationships and get more intimate and all this kind of stuff well there are some that you can go to that uh before once you get there let's say there's a room of maybe hundred people or so when you get there they'll give you these extensive personality inventories or characteristic inventories and not only of yourself but also how you how you just you would describe your mother your father your brothers your sisters your husband your wife and then after you take all the inventories after everyone's done with all of that you're in the you know you're you're a part of the audience and you're asked you you everyone has a turn and you're asked without knowing anyone else in the audience now you really haven't said you might have just maybe briefly met a few people but otherwise you are asked to go into the audience for the sake of the work that you're going to do later on and pick pick a dad pick a mom pick a wife pick a brother pick a sister pick you know a daughter or or a son and then what they do later on is they compare your description of your you know your relatives that you picked with the description of the way these people describe themselves and people you will find that you will just naturally pick your you will be attracted to the energy that's inside of you meaning you will pick a mom and a dad that has characteristics almost virtually exactly like what you described your mother and father to be and these are perfect strangers people say opposites attract no that's not true likes attract like energy attracts like energy it may seem on the surface as if people are opposite but it isn't the case i work with with enough couples where it's like i've just just just it just blew my mind how on the surface two people look i mean i if you would ask me to describe it i'd say there there is there is a far apart is what people could be and then the more that i worked with them the more i found that underneath the facade and underneath the surface they were two peas in a pot they were exactly the same so what i'm saying is that the idea the notion or the you know the concept of forgiveness is that you're not forgiving that person outside of you it's not for their benefit it could be you could make it for their benefit but i'm saying you don't have to it's for your benefit because any negative energy inside of us has the potential to express itself in negative ways not only in the way that we see the world not only in the way that we interact with other people but also just the effect that it has on our own physiology does this make sense to people other people are not other people anyone that we perceive in our environment is some limited version of who they are which means that we can't perceive in other people what's not inside of ourselves it's impossible we cannot perceive in other people what's not inside of ourselves otherwise that characteristic or trait that may exist in them is invisible to us until it's inside of us so that we can then it acts as a force on our senses so that we can recognize it so i'm going to read you a little bit of this to show you just how this works okay uh one one time my father grabbed me by the neck and the head and slammed my head into the front door i remember that it hurt and that i was feeling the top of my head because a bump formed i remember that that john was there also that's his brother i think we're being punished for making a game out of sliding down the stairs so this is what he says to you know his previous self you might say to kind of help reconcile the situation he's saying i say to him that it's all right to slide down the stairs in fact it's great that we have fun that i have fun with my brother let's see that i have fun with my brother john we talk about which blankets to use and the best method of sliding i agree that i did nothing wrong to deserve the punishment i also think about why my father hit us so hard for having such innocent fun i say that my father does not know how to have fun i say that my father does not have any play friends and that he did not know how to play so he saw me doing something that made himself mad at himself and that by smashing my head into the into the door it was like he was punishing himself i say that his father beat him even harder and he just did not know better i say that some people do not have to have reasons for doing the things that they do i tell myself that there should not be an association between having fun and being punished i tell myself that being totally wrapped up in the moment of fun does not mean that something will happen to punish me for being me i tell myself that i accept me and that i've learned to accept my father for being insensitive and acting like an animal and that and that because i love and i tell myself that because i love such an abusive person i love myself and all the richness that life has to offer now keep in mind who's he loving it's really not this representation it's really the representation of his father inside of him that's what he has to accept it's a form of self-acceptance because it's inside of us and then he's got um i resolve that playing fun and accepting and loving myself have no correlation to physical and emotional hurt and by loving and he's got stupid angry people which he's got a little bit of work to do here i grow as a person anyway he had to do this exercise by the way i had to do the sections about five times you know you know to go through and rewrite it over and over and over again this is one of the first versions anyway and there's there's a bit of a discussion here when i was a child and i was happy and having fun i learned that i had to always be on guard and careful and hide the fact that i was having fun when i was having fun i learned that i could be hurt by by a seemingly by the seemingly randomness of my father i learned to associate feeling good with expecting pain now he boiled these experiences down to one sentence with the sentence he used here was i learned to hide my feelings i'm gonna give you one more you want one more is that all right all right because i won't if you guys don't like this i won't do it yes or no yeah okay um i remember sitting at the dinner table and my father telling me that i had to eat my asparagus i said that if i ate it i would get sick he told me to eat it and i did i immediately threw up all over the table [Laughter] i think he hit me and sent me in my room without any more food this is the discussion that he that he said to himself i know what is best for me as in i know what is best for me in this moment my instincts are excellent my father is not as aware my father has the awareness of a sea slug i did not do anything to deserve to be punished my father's reaction to many things is like an animal to strike out at whatever's there i tell myself not to associate my father's angry actions with my beliefs and actions i tell myself that there is not another son who could have had kuda who could have been better better for my father my father beat whoever was his son and therefore i do not feel guilty for being me i do not feel guilty for being a son i tell myself that my father must have a total lack of self-esteem because he hit a small child for such an insignificant thing i tell myself that my father does not know how to relate to children that he never learned to be that he never learned to be a father i tell myself that i've learned to love myself and learn self-respect so that i won't act like my father i tell myself that i will continue not to eat things or do things that will harm me or make me sick i tell myself to use this as an example as an example to tell myself to believe in myself i explained that that is that that what a metaphor is and say that i must not swallow what others tell me or i will or i may be sick so i resolve in the face of stupidity anger and ignorance i love myself and have high self-esteem i cannot feel guilty over another's attitudes and actions uh and then over here the discussion i spoke my thoughts i expressed my feelings of what i thought was best for me and i was punished the incident involved food i was forced by the threat of physical punishment to do something that made me physically ill a combination of mental stress physical punishment and physical illness i was given a choice of physical pain or eating something i thought would make me sick and when i went against my best instincts i was still punished there was no escape i felt helpless powerless i turned inward i learned that when i speak up i'm slapped down and then the one sentence belief is i learn to act against my instincts now i don't have to read the rest of these just by reading the beliefs you can kind of extrapolate what was going on by i learned to create an expectation of pain i learned to punish myself i learned to pretend to act against my feelings learned to be erratic getting like his dad i learned to be inadequate i learned to be insensitive to others i felt guilty about not having guilty and embarrassed about not having enough money i learned to carry my fear with me everywhere i learned to bury my feelings eventually i replaced them with things my thoughts didn't count i learned to sublimate my feelings i learned how to lose respect for myself i learned to distrust i learned to hate i learned violent thoughts i learned not to be intimate i learned the dark side i learned to lie now what are you going to do with this anybody got any ideas yeah how you going to do that forgive yourself what forgive yourself you know what what greg is saying is actually quite good because what did we say yesterday about about the power of making up your mind you can do anything that's right you can do anything actually when you really get right down to it you could really wipe away all the negative energy associated with these experiences by making up your mind with enough force and conviction it'll move all that energy out that's not something that most people are willing to do for a lot of different reasons a lot of other beliefs that come into play beliefs about right and wrong and you know and in other words there's all kinds of judgments that come into play that would keep people from doing something like this and typically when they are ready to do something like this is when they start getting involved with you know usually some sort of spirituality or or religious beliefs that are consistent with let's say their desire and how to put this into a context that it makes sense for them and one of the only ways that you can really do that is is to is is through a lot of times spiritual beliefs otherwise it just doesn't make sense but with enough conviction you can move this energy out without enough conviction you'll go through exercises one of the exercises would be something like this this is an exercise uh for collapsing painful experiences you'll get it on the tape you don't have to write it down i i don't really want you using this exercise by yourself anyway when you get right down to it in most workshops i stopped even giving people this exercise but i'm going to do it for the sake of this tape and you know just with the caveat that just do this with professionals so you take an experience like this okay and then the exercise would be right 20 times i resolve that the experiences i've written about on this paper no longer have any power in my life then write 20 times i resolve that it's not in your workbook greg i resolved that these experiences no longer have any no longer make me feel guilty powerless or unworthy of success then write another 20 times i resolve that it is time for the effects of these experiences to vanish from my life both inside of me and outside of me and then take the piece of paper that you wrote the experiences on i am now burning these experiences as a symbol of my willingness to let go of the effects as i watch these experiences turn to ashes the energy they contained inside of me is also collapsing with it collapsing into ashes and then pick a new set of beliefs that correspond to the way you really want to feel and say i'm now installing these new beliefs in my mental environment as a new way of expressing myself is it shawn you're kind of looking at me like does it make sense to you yeah i'm just wondering what's going through my mind is when you're working with the professional what is the outcome that you have to that you need to have someone rent you what what is so powerful about that that's what i was thinking oh uh this is a good question i'm glad you asked it because i found that um when i when i just used to when i did these workshops and gave people this exercise and i got some feedback uh some people didn't really understand how to distill these experiences down into one sentence beliefs and and what they were what they were trying to collapse uh i thought was might might create additional difficulties for them never mind suppressed things that make math that weren't even there yeah right yeah exactly there and some of this stuff is some of this stuff can be really overwhelming i do believe that nobody's going to get in touch with any information they can't handle anyway is as difficult or as painful as it may be but even so it still can be really overwhelming and you really want to do it with someone who can help you through it for some people it won't be an issue it really will for some people they will be able to do it on their own but that's that's not going to be the case with with a lot of people another technique that's in the workbook that you can use for identifying beliefs is just follow your emotions back to something in others if you're feeling a negative emotion about something you're angry about something just ask yourself a question follow it back when you think about the nature of anger i mean anger is a natural is a natural expression is it not it only exists in humans but it exists in the animal kingdom so it has to have some sort of meaning in our lives just the mere fact that we're expressing anger or frustration i i define frustration as simply an indication that i'm following an inappropriate set of steps to my goal does that make sense i'm frustrated and since i know that that what i'm doing in any given moment is a function of what i perceive that was the information i perceive in relationship to what's being offered what i expect what i decide to do and the actions i take if i'm not getting an outcome that i find satisfying and i'm feeling frustrated well that's just telling me i'm following an inappropriate set of steps to my goal change the set of steps and try a new path anger to me is a denied reflection when i feel angry i know that i cannot perceive in another what's not inside of me it's that simple i cannot perceive in another what's not inside of me and if what i'm perceiving in another is making me angry whether it's what they're saying what they're doing their behavior whatever whatever way they're expressing themselves then i know that to some degree or another that same tendency or characteristic also has to exist in me whether i'm aware of it or not i know this is a tough one this is a hard one so for an example if i said i hate liars i hate them they make me so angry what would that tell you about me that's right i have an issue with lying now does that necessarily mean that i might consciously lie no not necessarily not to somebody else but if i don't lie to somebody else then i would say that i'm lying to myself in some way or another i'm lying it might not be to the same degree that the other person that i'm you know that i'm perceiving but the point is at some level there's some there has to be something like that going on inside of me or otherwise it wouldn't make me angry see because once you resolve all your issues about what it means to lie and understand that people that everyone's doing what they feel is in their own best interest at any given moment even if they're misrepresenting what's going on in their mind or misrepresenting their intentions that everyone is doing the best they can and if i trust myself to be able to perceive someone's capabilities to either do what they say they're gonna do or not do something they say they're gonna you know that they won't do and always act in my best interest then what do i need to what do i need to be angry about in other words once the issue once all those issues are resolved inside of me then it doesn't make me angry outside of me because i accept it it's fine they can be who they are and if that's if and if that's their capability to misrepresent things and that's just who they are and that's fine i just take that into consideration when i interact with them but if for some reason it were to make me angry then i'd follow that emotion back to something that's inside of me otherwise i wouldn't be able to perceive it because what is anger okay what is it it's a self-defense mechanism is it not anger is a self-defense mechanism i can't feel angry unless i feel threatened don't tell me that i don't want to hear that no no you you you're this you're that you're you know see when i when i talk about these denied reflections keep in mind it doesn't necessarily mean that we have to be expressing ourselves in exactly that way but you but it has to reflect something in our mental environment you know that that is a composed of the same kind of energy that's negatively charged or otherwise we wouldn't feel like we have to defend ourselves against it it's that simple and the reason why we defend ourselves against it is because we don't want to feel that negative energy we don't want to feel bad okay let's get into some better stuff techniques for neutralizing a belief we've already talked about focus intent and this relates to self-discipline by the way um who's our guest here what's that vincent yeah you're going to help me with the q charts right in case i have a problem aren't you glad you showed up vincent [Laughter] poor vincent i mean you you you know you've missed like a whole day and a half of of underlying material that would you know help you put this into a context that yeah interesting right i feel like i've got to apologize i'm sorry oh my uh anyway okay self-discipline uh most people think of self-discipline is actually a technique for changing okay most people think of self-discipline as a personality characteristic in other words oh he's so disciplined and the reason why people think of discipline as a personality characteristic simply because they are doing something that so effortlessly that we find difficult are you guys with me on this someone else is doing something effortlessly that we find difficult and so therefore it seems as if they're so disciplined but that really isn't the case that doesn't mean that they they aren't they don't have the capability of being disciplined but what i mean by it isn't the case is that when someone can do something express themselves in some sort of effortless manner what is that indicative of what is that what would that be indicative of not self-discipline but what their beliefs yeah they're just expressing themselves in a way that that's natural to them that's simply natural would you also say that they're in harmony with that whole that whole process they're just doing it as a natural extension of themselves exactly exactly right right and so self-discipline is one of the more powerful techniques remember what is the most powerful technique for change that i've given you so far what's the most powerful technique well yeah that's you're yes asking a question that uh that that gives you the information what's the most powerful technique for change taking the energy taking the energy yeah we know that yeah desire okay focused intent desire conviction that is the making up your mind what it means to make up your mind when you guys watch this tape later on from yesterday we because we talked quite a bit about what it means to make up your mind when you make up your mind without any conflict you're completely resolved about what you want you can move an enormous amount of energy that is the most powerful technique i'll give you an example from my personal life probably the best example i could give you for my personal life and that's uh i grew up when i was a child i had an allergy called rose fever just like hay speed behavior only get it in the spring so usually around the first week in may of every year from the time that i could remember i would get you know the this allergy would come on and my eyes would puff up and i'd be constantly congested my nose would be running i'd be sneezing sometimes i'd even miss like days of school because i'd wake up my eyes were so puffed up i couldn't even open them now i went through this all my life just something i accepted you know it would be may june and sometime in august when people started getting hay fever the rose fever would subside so i was taking in in the late 70s i was taking this class kind of in self in self awareness and i was uh in commercial casualty insurance at the time and it was the class was after you know after work and uh and in one of the classes in one of the weeks the instructor was talking about conditioned response how how whatever stimulus or experience whatever forces caused you to let's say react in a certain way under certain circumstances the actual stimulus can be gone but but you're going to continue to act that same way even though the stimulus doesn't exist any longer like i said psychologists call that condition response anyway so the next week i walk into the class and i was late and i had my briefcase and i had a box of kleenex because the rose fever had started and so the instructor i walked in and said well mark what's going on i said well i explained you know with the boxer kleenex the congestion and everything else and she looked at me and she said hmm do you think that just might be a conditioned response and you know what i know because i it's hard for me to get back to that state of mind that i was back you know because it was like 25 years ago or 20 some years ago it's like for some reason her words hit me like a ton of bricks i just knew that whatever reasons that i had or whatever conditions existed when i was a child when i got that allergy no longer existed they were long gone and the only reason why i was suffering every year is because it was the first week in may and that's when it was supposed to start i just knew that there wasn't any doubt in my mind about it i just knew it was just the kind of thing oh it's the first week in may i'm supposed to get rose fever now and so therefore i get it when i went home that night and this i do have a vivid recollection of when i went home that night i was so angry with myself i i i can't the the anger was really intense i was angry because i because of all the suffering that i'd done up to that point in my life almost 30 years of suffering that i knew that just was completely unnecessary and what i did is i focused that energy and i directed it and said to myself when i wake up this is it it's over with it's done i am not going to experience the effects of this any longer and when i woke up it was gone and i have not experienced the effects of it since but i'm telling you i was pissed really pissed and and i can also say that there isn't really anything anything that's really come up in my life since that you know i could say that that i've had to generate that much energy about where normally the kind of exercises i go through the ones the one i'm gonna give you right now as a matter of fact but that is the most powerful way to change it really is strong making up your mind with conviction making up your mind with conviction see yeah it's a conviction part see see people think that change is a function of time time has absolutely nothing to do with it time doesn't exist in our mind anyway you know close your eyes or go into an environment where you where you have absolutely no sensory stimulus whatsoever where you can't even feel or hear your heartbeat go into a non-sensory environment you can't see anything you can't hear anything you've got no way to measure anything not again not even your heartbeat and you will not be able to tell the difference between one cent of one second or one week there's no way for you to know think about it that's true there'd be no way for you to know the difference between one cent one second or one week one second or one day all i'm saying is that time doesn't exist and the other way the other way to really know that is that all you've got to do is tap yourself into something that you forgot 10 or 20 years ago completely forgot the pathway to never nothing ever triggered it nothing for you to remember it and you can go back into that experience and relive it as if it just happened or it's happening everyone's had that kind of an experience everyone's been with somebody who was having that kind of an experience and explaining it to you in a way as if it just it was happening now or just happened same intensity same memories vividness everything all that energy will remain static until we do something to move it or it gets moved inadvertently see we can move it consciously or it can get moved inadvertently over time that's why people say time heals all wounds time heals physical wounds because our body's made of atoms and molecules atoms and molecules are spinning over time there's movement over time mental energy is not made of atoms and molecules it can remain static now something can move it we can move it based on our own conscious direction or we can have inadvertent experiences over time that cause incremental changes in what we believe that move this energy in other words inadvertent experiences we're not thinking about it but we what we have like a nice you know surprise positive experience causes us to think a little bit differently than another one then another one then all of a sudden we kind of look back on our lives and say you know i don't think that way anymore i remember and always to be afraid of that i remember when i used to think that way so it makes it seem as if change is a function of time it really isn't it's just a function of movement of some sort and the movement can take place instantaneously or through a process in other words if you can direct enough force in some way you will get movement just like when people have an aha experience another example uh when i first started when i first the first time i got hired by a commercial casualty insurance agency i was i was like one of these kind of uh where i did um auto and homeowners and life insurance for teachers and then i got hired by a commercial casualty agency and it was kind of strange because i didn't know really what casualty insurance was even though i was selling it i mean this is kind of bizarre but i really didn't it was a mystery to me and i was young i was in my 20s and um you know and and you know this agency that that hired me was a real fast track agency that did commercial accounts where we're talking where the people pay you know a half million a million or more for their insurance you know big corporations and that sort of thing i know the slightest idea what i was doing i mean not the slightest and um and so when i started working for him they didn't really pay much attention to the beginning anyway but i thought to myself you know what i want to understand the casualty policy because i didn't i didn't really know what it was all about and so i read one i read a typical casualty policy for liability insurance and i didn't understand any of it hardly a word and i read it again didn't understand the word i read it again now the reason why i ended up reading it about a hundred times and that's what i did during the day i went in and that was i said okay i'm going to read this until i understand it now here's what's interesting the reason why i knew to do that is because of another experience that i had when i was in college i took evan evelyn woods reading dynamics and it was a speed reading course where when i went in i was reading like a maybe average of 250 words a minute or 300 and by the time i was done i think i was reading it like 5000 words a minute and and the the interesting part of this process was that what they did was first of all teach you how to turn pages fast enough where you can read at that speed but the other thing is that as you practice doing this you got nothing out of it just absolutely nothing you're just looking at these pages with words looking boom just looking looking looking and it was different for everybody but everybody at certain point at a certain point had a breakthrough some people as the first couple of weeks other people's like four or five weeks into it but what was interesting is that the breakthrough happened instantaneously it was from nothing to everything like that from nothing to everything so all of a sudden you know you're running your finger down the page at a pace that they told you was like let's say 3000 words a minute and you're getting nothing out of it nothing nothing and you keep on doing this for weeks right then one time you open the book to do the exercise and you run your finger down the page and it's like you saw every word and you understood it and i mean i may not understand the material but you read it you knew you knew what you read it was really bizarre it worked it was very bizarre now because of that experience when i got into the insurance situation i thought okay i'm going to read this policy until i understand it and it took about a hundred times i remember exactly what it was but i did i read it word for word about a hundred times but the understanding and the comprehension came not gradually i didn't i didn't understand it a little bit more after 25 and then from 26 i understand a little bit more i didn't understand a word of it let's say from the 95th time to the 96th time it was like i didn't understand it and then the next time i wrote read it i understood it i i felt like i understood it completely and it turned out i did because i then i could go through these things and and see where the attorneys were were really screwing people over and how they contradicted themselves and i mean it purposefully contradicted themselves that when they go to court you know they they had they had the means and the grounds to deny claims i mean you know i understood it i understood exactly what was going on and then i understood the corruption of the insurance industry so you went to the market instead yeah all i'm saying is that these kinds of changes usually happen instantaneously not over time so as a result now even now in my life when i get a book that i'm really attracted to that i know that there's insight in that i haven't integrated that insight into my mental system in a way that i'm satisfied with if i have to read a book 50 times i'll read it 50 times and there are many books i've read that many times that goes back to conviction right or the desire to make sure you get it exactly right and just an understanding of knowing that that that until that until that that kind of aha that that shift happens you know i just do it until i get the shift is basically it however many times it takes that's interesting i've read several books over the years and i've read it once and i didn't really gather everything from it i just put it down to just can't comprehend it as opposed to saying well i'll go back and read it two or three more times that's interesting it works in terms of going back yeah and i've never done that the only books i reread are the ones that i've really thoroughly enjoyed and i would say that if it weren't for that evelyn wood experience i probably would would i i don't think i'd have done it either but see it not only happened for myself i saw it happen for the whole class right right it didn't happen you know and everyone was in different stages like i said some of the people like after the first week they were just they were they were comprehending everything and i'm like hey well yeah you know it's like i'm getting nothing they're getting everything it's just like it was really bizarre to me do you still read it that level no you gotta practice you gotta keep it up it's not you you stop doing it you lose it at least i lost it put it that way maybe somebody else didn't i don't know i'm saying that i stopped i lost it so i'd have to go through the whole process again so in the absence of extreme conviction we'll use self-discipline [Laughter] okay and self-discipline is simply a technique i define self-discipline as simply a technique to stay focused on the object of your goal or intent when that intent is in conflict with something else inside of you does that make sense to everybody it's just a process of continually refocusing in other words making another choice making a choice being conscious and making a choice that's consistent with your goal the example that i like to do is just one i wrote in trading in the zone about when i decided to become a runner it was like i it was in the late 7 late 70s and and up to that point in my life my life wasn't going exactly the way i envisioned it when i was a kid and i can look back on it now and say i probably would have been would have been assessed as being clinically depressed and uh although i didn't think so at the time you just said mark you don't look happy i'm happy i'm happy i'm a happy guy you know but i wasn't i was really depressed but anyway something something just triggered about i wanted to become a runner i didn't know why i just did and it was it was a pretty strong desire and so what i did is i went out and ran hey i found out i couldn't win a couple of blocks now and this is coming from you know my my late teens and you know in high school i played hockey and football and in college i did some sports i mean you know not a whole lot but but you know i was real athletic and the fact that i couldn't run more than a couple of blocks i found very disheartening extremely discouraging i thought it was really bizarre and as a result i didn't run again for a while it didn't even try and then maybe two or three months later however long it was i tried again got the same experience although i had enough enough let's say conviction to do it a couple more times to find out that your body really you know really adapts quickly and that you get you know better results you know that the more i mean in other words like i couldn't maybe the first couple of times only ran a couple of blocks but then i found i could run three blocks and four blocks i thought hey okay so i went out and bought a set of you know running shoes and uh and a stopwatch and got pretty pretty encouraged about the whole thing and and um uh and set a goal for myself that i wanted to run five miles by the end of the summer and uh i set up a five mile track where i lived or i mean it broke it off into like quarter mile increments and um and that seemed insurmountable to me at the time i mean at the time i couldn't even run a quarter of a mile so the idea of running five miles really did seem like it was impossible um but anyway here's what i found is that you know after i bought the running shoes and did the whole bit you know i found that every time i decided that i wanted to run my mind would get flooded with all these conflicting and competing thoughts mostly what i did was watch tv and that was the big one i mean the big one was well you know there's a good program on i'll go after the program and of course i never went or i had you know it's cold it looks like it's going to rain you know nobody else i know does this and just anything i would say that in the beginning i was all i was only able or only managed to get through my conflicting thoughts about a third of the time every time i said to myself i want to go out and run two thirds of the time i didn't do it and i'm not even saying i wanted i said that to myself every day so that was a problem but i did what but but by getting out enough and improving myself enough and getting enthused about the fact that let's say i'm now able to run a mile i'm getting close to running a mile i found that i was i was running into another problem and that's my enthusiasm for how much i'd already done would not take me to the five miles i mean as inconsistent as that might sound i'd be so pleased with the fact that let's say i'd run a mile and a half i'd run two miles what would compel me to run five so i knew that i needed another rule and i called the five mile rule the five mile rule was if i manage to get my shoes on and get through my competing and conflicting thoughts that i always had to run one step further than the time before and i and i had a journal i mean i still have that journal where you know uh uh the date uh uh uh how the time in other words the amount of time that i ran how far i ran and usually some notes about what was going on and i never broke the five mile rule i really didn't if once i got out i always at least ran one step further many times it was more than one step but i never let myself run less than one step no matter what now here's the interesting part about this and here's here was the the kind of breakthrough that i had is that there was a point in this process and i don't remember exactly where in other words whether it was at the five or at the three mile mark or the two and a half mile mark or whatever but there was a point at which at which the energy inside of me in other words i don't know what my conflicting beliefs were at that time about why i had so much resistance to being a runner i don't know what i don't know what they were even to this day i mean i could go back and probably figure it out i haven't i haven't there's no point to it but the point is there was conflicting energy keeping me from fulfilling my desire in other words you would think that if i decide i wanted to run and i'm capable of it that i'd be able to do it well i wasn't able to do it because of these competing and conflicting thoughts inside my mind but what ended up happening is that every time i created an experience of running by getting out there i was building what was i not building a positive belief structure in my mind that said what i am a runner meaning every time that i went out and ran i added energy positive energy to this belief as that belief grew and became more and more of an inherent part of my identity the conflicting thoughts correspondingly course correspondingly dissipated until there came a point at which i had no choice but to run now think about that instead of there being any conflicting thoughts about running i was then compelled to run the belief said i am a runner uh oh i gotta run today are you guys with me on this yeah you had no option i had no option to run to where until i got to the point where see where i was i was then then starting to do damage to myself into my body because i wasn't paying attention to what my body was telling me in any given day some days my body just did not want to run it didn't matter i ran anyway because i am a runner then i had to create another belief about what it means to pay attention to your body and that i don't have to run every day just because i am a runner you see i felt compelled to run so someone could look at me and say oh he has so much discipline he's running every day uh-uh i didn't have a choice now does everyone understand what i just said what if we had a belief inside our mental system that said i am a what if there was a what if there was a strong belief inside your mental environment that said i am a consistently successful traitor and all the principles that made up that definition of what it means to be consistently successful what then you would have no choice but to be consistent because it's a function of your identity it is who you are in other words once you integrate those principles into your mental system in a way that's consistent with this definition this will be your results because it you can't be any other way this is what this workshop is all about right here is getting to this just this belief that says i am a consistently successful trader because the principles which we're going to in a minute the principles that make up this belief once integrated will not allow you to act in any other way that's inconsistent with those principles and so you will have no other choice but to be consistent no other choice but to create consistent profits it will not be an option for any that doesn't mean you'll never have a losing trade all i'm saying is that anything other than consistent results will not be an option guys with me on this and so what does it mean to be self-disciplined then what is discipline how did i describe discipline it's just a process right it's just a technique it's a technique to refocus in other words in any particular exercise that you may you may adopt or devise for yourself to to install the principles of what it means to be a consistently successful trader whatever conflicting energy that may be inside of you that just that distracts you from the way you need to be focused all you need to do is simply make another choice become aware of what you're thinking what you're saying and what you're doing and i'll give you an exercise to help you do that but as your awareness grows then what you do is you stop yourself in the middle of a thought and say you know what this thought leads to this when this is my objective my objective is consistency therefore i'm going to redirect my thoughts and this is what i'm going to do the best i can and even if you don't do it very good that's all right because the next time it comes around you're just going to do it as best you can again until all the conflicting energy is gone and then it's simply acting in this way is not as effortless it takes no particular energy because it's simply a function of your identity it will be effortless even if you're trading mechanically or subjectively it will be effortless which is the way trading should be anyway it should be really an effortless endeavor except for the amount of energy it takes to work your mouse do you find the desired curve change inversely as you get closer to your goal well it can i mean it you know there it can that's why as the conflict becomes less getting there the desire doesn't have as much energy because you're not fighting such a negative belief pattern well that's why i set up the five mile rule that is exactly why i set that five mile rule up because because i recognized that while i was in the middle of it because i'm thinking you know what i'm so enthused with with my with my results at this point when i hadn't reached my goal yet that i'm thinking well what's going to get me to my goal because i know i'm going to quit so basically what you're saying is you need to you need to i'm not saying you need to do anything i'm not saying you need to do anything all i'm saying is that is that yeah keep in mind so when you use those words you know you're using them in a definitive way implying that i'm saying that that this is all individual dave okay so go ahead i'll not say what you're gonna say if i understand then what you're saying i would want to in order to what john had just mentioned in order to keep that desire at 100 percent you would want to make the goal something that is far enough out so that you're constantly achieving is that what i'm understanding as opposed to something that's achievable with ease maybe i'm missing something here i i don't know that you're well babysitter these hypothetical things yeah what about bob no baby i love that movie by the way i mean the principle of being you need it far enough out right but you need enough that you you don't get distracted right now which i think what you guys are maybe also implying or talking about is is is reaching a level of comfort and that comfort can can be insidious in other words we reach certain comfort levels cover plateaus and it's very difficult at that point to even even generate enough desire to to formulate another goal that's what i'm referring to yeah that's yeah and these are you know these are kind of these are kind of difficult questions to answer hypothetically they really are i mean the reason why i say that is because uh unless you're unless you can give me something specific in the moment that you're working with it's really hard for me to come up with like a hypothetical answer okay analogous you know i want to be a successful trader but you have the five miles in front of you maybe you say that i want to average x amount per day or week you can do that too absolutely sure as long as you're not as long as you don't let yourself get obsessively focused about that amount of money in other words one you don't know how much the market's going to make available to you based on your methodology and you've got to be willing to accept whatever whatever's there some days it might be more some days it might be less that's why i said average you know and i've worked out yeah and i've worked with floor trader one second jake i've worked with floor traders where we've done these kind of goal settings you know where where you know you know we're specific dollar amounts and one guy in particular comes to mind where you know we went through this process and said okay he wants you know uh i think it was five thousand dollars in his account at the end of the week okay so we like put that we projected that goal out there five thousand at the end of the week he forgot all about it he really did he just went about his business and then at the end of the end of the week he looked at a statement and he virtually had five thousand dollars and it's not gonna freak him out he wouldn't do it again he wouldn't do it he didn't do it again right the implications were too powerful for him he didn't want to know that he had that much power to control his life and and the destiny of his life and and uh you know and what his outcomes were it was empowering but too empowering for him at the moment yeah that's what i was thinking is you're saying that you're to install the belief i am a consistent successful trader not making a goal though aren't you i mean or that if unless that belief exists inside of you now jake that yeah that is your goal you're saying that that's the belief you have to instill in yourself jake no i'm saying that that that's your goal to instill that belief all right the goal is to install what okay no are we no you say it again then how we misunderstand goal is to instill that belief yes that's the objective the objective is to get that belief you want to get that belief with as much positive energy in it as possible okay until and how do you know it's there when you act effortlessly you behave you express yourself effortlessly that's consistent with what that belief means be together in this how do you know when that belief that belief is present is when you're going to act effortlessly out of the principles that make up that belief okay okay now this is a complex belief it's not like you know petting the dog or becoming a runner you know this is very complex which is multi-stepped in many cases i mean and not maybe not as many steps for some people as others but the point is there's a lot of steps involved here there's a lot of principles that make up this belief to be consistently successful but the point is is that when it is installed at a functional level you will simply express yourself in this way as a natural function of your identity you won't be able to do anything different because it won't let you it's how we install it jake come on that's what we're doing right now okay we're getting there okay take a five-minute break for a restroom yeah we're gonna take a break anyway you're right i was gonna i'm glad you because i was gonna take a break anyway jake come on you're all right that's all your patience is one of my people that's right i know that's why that's why i'm holding this off did you know that yeah so i have to feel the discomfort that's right are we ready back here are we all set okay everyone understands uh discipline right self-discipline not a personality characteristic just simply a technique to refocus now the whole idea is that is that you know you you want to get to a point where you can pay attention to what you're thinking or what you're saying or what you're doing like to become an objective observer to your own life process you might say so for example when i told you that uh that you know many times when i'd asked myself a question about you know when i was writing the discipline traitor in particular um uh you know like the answers might come you know hours later days later or whatever i mean i just you know this came when they did and you know but in many cases these answers were coming while i was in a situation with like another trader while i was acting in the capacity of a coach and and i heard myself or in essence listening to myself say this answer that that you know i didn't know at a rational level now unless i was paying attention to myself i might not have even noticed what i'm saying is that i had become like an objective observer to my own stream of thoughts and that's what you also need to do you also need to learn how to do that so that as you're listening to yourself as you're listening to your own self-talk inside your mind you can redirect redirect your focus of attention onto the object of your goal when you find that you're you're you're experiencing conflicting and competing thoughts so i'm going to give you a technique to learn how to do that and this technique is simply to learn how to become an objective observer that's all and we're going to do this in a minute uh and by the way for the video guys when we do this you can you can shut the camera off because we're going to be doing this about maybe seven or eight minutes but you can leave it on if you want it doesn't matter but we'll end up cutting it out probably but um uh is it technically it written out no no it's not it just says the accounting exercise that's where we're at right now we're on page three of section five we're at the counting exercise that's what i'm giving you i'm sorry i should have pointed that out um it's like it's it's called it would almost be like in a in my previous workbook i called the coaching quarterback technique it would be like you know the coach and the quarterback in years ago anyway used to formulate game plans together in a football game they don't probably isn't like that now probably it's a coach the offensive coordinators and all is very sophisticated now but back you know probably 20 30 years ago it was a function of the coach and the quarterback they get together formulate a game plan and the coach is sitting on there standing on the sidelines the quarterback is in the game supposedly to execute the plan right well let's say the quarterback gets emotionally involved in a game that can be particularly destructive in that let's say it gets sacked a few times and as a result of of things that are going on he gets completely distracted from the actual plan that was as it was agreed to by he and the coach right the coach on the other hand is standing on the sidelines watching him well the quarterback himself is oblivious to the fact he's so caught up in his emotions at that moment that he's virtually oblivious to the fact that he's not following the plan anymore coach on the other hand is looking from an objective perspective and says hey okay he's screwing up so what he does he grabs a guy by the collar says hey you know get your mind right are you gonna be out of this game right okay we as traders don't have the luxury of having somebody in our minds you know as an objective observer saying okay you know you're not focused in a way that's consistent with your objective you've got you've got to make another decision make another choice think something else make a choice of things something else think something that's consistent with what you want we've got to learn to do it ourselves and so this exercise will help you learn to do it yourself and when we do it it's very simple the objective is simple i'm saying the task is absolutely it couldn't be simpler the task will be this i'll sit down and do it with you i'm going to say take a deep breath let it out close your eyes breathe normally and all i'm instructing you to do or you're instructing yourself to do is count your breath so that when you inhale say one and when you exhale say and and when you inhale say two and when you exhale say and when you inhale say three and when you exhale say and and then back to one so you're gonna go one and two and three and four and one and two and three and four and we're gonna do this probably for six or seven minutes i would suggest that you do this for about 10 to 15 minutes a day at least 10 minutes a day preferably 15 minutes a day now there are there are going to be some inherent problems number one if there's so much so many thoughts swirling around in your mind in other words your mind isn't very quiet you will probably experience bleed through what i mean by bleed through is that you cannot make a distinction between counting and distracting thoughts you're not doing one or the other you're doing both if that if you find that's the case with you then i'm that i'm saying that you will probably have to do this exercise for two or three weeks before you even get to the point where there is a clear definitive distinction between your counting when that's the only thing that you're doing and a distracting thought because the object of the exercise is to stay focused on counting and that when you find yourself in a distracting thought you just simply acknowledge the distracting thought and go back to counting just make another choice okay i'm distracted i understand that and go back okay i'm going to count oh i'm distracted again i'm going to count i'm distracted again start counting again i'm distracted again start counting again now as you do this exercise over time you will find that you'll be able to go through more and more cycles of just staying you're training your mind basically by making this choice to go back and count you're training your mind to stay focused on one thing the objective at hand whatever it is in this case it's just counting what you'll also find is that when you do make this clear distinction between counting and being distracted you will find that sometimes you're in a distraction that you could be in for several seconds if not several minutes and not even know it in other words you're not even conscious of the fact that you're distracted then all of a sudden your your mind kind of wakes up and say oh oh i haven't been counting now how long was it was it a second was it a minute virtually impossible to know so what as now as you continue to do this exercise and you continue to practice what you will find is that the amount of time that it takes for you to recognize and acknowledge the distraction starts to collapse it gets smaller and smaller and smaller until it gets to the point where the distraction and the awareness of the distraction become virtually simultaneous at that point you have become an objective observer to your own stream of thoughts because your constantly and consciously aware of the stream of thoughts that are running through your consciousness in any given moment which gives you the option of making a choice if this is what i'm going to think or is this what i'm going to think right the best way to catch a trading errors is your thought first right instead of after the fact does everybody understand what's going on okay so what are we gonna do we're gonna i'm gonna sit down we're gonna take a deep breath we're gonna close our eyes we're to breathe normally and we're going to set this task for ourselves of just counting our breath by cycling the inhales by counting the exhales by saying in and going from one to four and back again we're doing it silently oh no silently you can visualize the number you can say the number to yourself whatever that doesn't that doesn't make any difference what makes it the the but the object is just keep your your thoughts focused on counting and when you find if you do make a clear distinction between counting and distraction then whenever you notice you're distracted just simply acknowledge it and start counting again make another choice okay again does everyone understand what we're doing okay let's do it um like i was on the last day i traded three positions five minutes to the close and you're watching each one go and it was like the focus and the concentration was just there as i'm counting you know so it was a good experience i mean yeah you did real well what you're saying yeah okay yeah because it's something you're used to doing anyway yeah how'd you do jake you did it yeah losing a little bit getting impatient wondering when i was going to wake you up can everyone see the benefit of doing this do you need any further explanation about this i think i think i know what the benefit is but i'm trying to see how it would translate into when you're trading or doing any other tasks for that matter you're trying to get yourself to be objectively focused on one thing in this case the breathing correct in the count so let's say after two three weeks you're you've become pretty proficient at it you'll find it automatically you'll find it automatically yeah oh yeah absolutely you see you're becoming more aware and in the exercise itself you're you're forcing yourself to stay focused but what i'm saying is that what it the what ends up happening is that as you're just going through your daily life you're just finding yourself paying paying attention to what you're thinking so when you're trading it's going to it's going to translate into into your notice that you're not that you're not focused properly to to accomplish what you intend to accomplish as a trader because ultimately i said what your results are a function of what remember what i said that was what are your results a function of i don't mean ultimately this right here but remember your results are a function of what what desired no no well yeah but you know even more so there's remember there was a statement i made yesterday your results are a function of your state of mind state of mind do this exercise frequent enough that you find yourself not getting sidetracked well you can i mean you know the thing is it's not a matter of how often you get sidetracked as much as you're being acknowledging and being aware that you're sidetracked to be conscious of it and being conscious of it because once you're aware that you're sidetracked then you can make a choice of staying sidetracked or refocusing and should i keep trading right now yeah exactly remember i said if you're not in the most appropriate state of mind to trade what are you going to do scale back in a way that that's that's consistent with your with the state of mind you're in or not trade at all because not trading is like putting money in the bank just because you want to trade all the time doesn't mean that if you want this if this is your objective guys remember we can have other agendas for trading other than this you can be training to have fun you'll be training to be hero you can be training to in essence subconsciously lose your money there's all kinds of other reasons you can be doing this you may not even be conscious of some of those reasons but i guarantee you there's you wouldn't be sitting here right now if there weren't other forces inside of you they were in direct conflict of this belief right here how are you going to become aware that you're acting in a way that's inconsistent with this belief unless you become aware of the fact that you're acting inconsistent or thinking in a way that's inconsistent with this belief awareness is the key so if you so if there's something going on in your life where you know it just makes sense that you shouldn't be interacting with the market then you know don't trade you know i'm sure everyone's read trading books they said you know you get traumatic experiences in your life you know deaths divorce moving you know a lot of things that cause a lot of trauma well you know what they said don't trade right it makes sense don't trade if it's having a negative impact on the way you see things now those are the big things okay those are the things that are easy okay the things that aren't so easy are the subtle little things that's where you need increased awareness because remember you don't need to do any of this to put on a winning trade [Laughter] winning trades come whether you're aware or not totally oblivious or not make mistakes or not you can still win but if your desire is to be consistent then you have to have a way of knowing whether or not you are thinking or acting in a way that's behave that's consistent with this objective and you can see the implications of doing this kind of work can you know there could be some pretty profound implications in our lives which is why so few people ever get to the point where they break through that threshold of consistency what time is it 20 of 12. probably just enough time greg you wanted some things you want to share some things with us enough time just greg can do that before lunch and we'll break for lunch that's fine um i guess i just wanted to acknowledge the power of this i am and whatever follows uh i made mention yesterday uh you know i was a marginal trader i was probably breaking even losing i don't really exactly remember but there's power as i am i made mention that i went to this um meditation type class or whatever it was a session you know over six weeks or whatever it was one of the things in addition to meditation was you had to identify i am blank and it's whatever you had to do whatever the blank was you had to identify it in the positive frame and be and it was basically part of who you are you know there was um you know some mothers there so it's like i'm a good loving mother uh my own i will share my own and i'm gonna share them two-fold because that's how i had them in me um and you know i think this made me the two hundred thousand in six months and i know that i need to get back to well first of all they don't know that so why don't you state that where you were and where you ended up being [Music] in other words you just assumed we knew that one no i mentioned that yesterday okay okay yeah i mentioned that yesterday okay that's why i was just sorry i forgot uh i would find myself you know uh driving down the highway um and i would go through my iambs you know so you can do it there um and what the what you find yourself doing is uh you may come up with uh one of them um that i'm it's like i want to argue with him as i want to put it because this is the way i used to say is i'm a consistently profitable trader uh and i can see now where maybe successful is better because successful encompasses a bigger because profit is one of the functions of success and there are other pieces to success so if you find yourself saying this and arguing with yourself well no i'm really not i didn't make money this week or last month that's fine argue with yourself and maybe he can put it a little differently but the point is we'll then get to the point what are you successful about maybe you're back to your questions and then answer those um and it it had an effect on me so if i could ask when i get to my trading ones um i just want to the ones i'm leaving out i have my own little list i wrote here on the on the train or i should say on the plane on the way out if i could have someone you know maybe after they've heard mine maybe we can go through and check them off because i want to find the ones that i'm missing but these are these are mine and i'm going to start with my personal ones first and then get into my trading and if it's going to start my personal one is going to start with i am and then all these adjectives and then i'm going to say the nouns the four nouns at the end and then i'm going to do my trading ones and i always say a little differently because it's i don't know why i just do it's i am an adjective trader i'm an adjective trader i'm a blank trader i'm a blank trader i'm a blank trader so uh here i go i am greg i am a warm loving caring happy positive optimistic opportunistic grounded centered balanced extremely wealthy healthy wise easily releasing physically strong awesome traitor husband father friend i am lightning fast on the keyboard trader i do perfect keyboard work i'm consistently profitable trader i'm an intuitive trader i'm a quality trader i'm a skillful trader i'm grounded centered and balanced trader i'm an opportunistic trader i'm a positive trader because i haven't done them in a while i'm kind of forgetting some of them give me just another second here and they'll come back to me i'm goal exceeding trader um i think i already said this i'm calm and relaxed uh grounded centered and balanced trader i'm concentrating trader [Music] and now i'm kind of blanking i'm looking i'm big one i'm missing and this is probably affecting my trading lately i am a flexible trader meaning i'm not seeing necessarily the turns or i'm seeing okay it's time to short and no it's not it's always it is a little pulling and we're going out still i'm an adaptable trader i'm learning and transforming trader i'm a valued trader one i guess i got a little problem with is i'm a hard working trader because i don't know because trading should be easy and i'm a lot and i love it i'm a love it trader i'm friends with the market trader i'm a patient trader that's the one thing i'm working on i'm a patient trader and i'm easily releasing trader make a bad trade and i just wanna let it go with love so i can get on and be ready for the next trade rather than um you know why did i do that why was it so stupid i don't want to i don't want to go there let's just give it away so i'm ready for the next trade um those are some of those are the ones that i use so thank you for allowing me to share because it will anchor them into me more okay yeah can you have too many i am i mean i'm just asking that as a i mean my reaction was can you be too many things and lose focus or should would you be better i've wondered that um and i guess i was it okay i think you can because the woman who instructed me in the beginning um you can and i think i've added i probably have a little bit too many um and i may have resolved it to i'm going to use the ones that i need at this point in time and it's a function of maybe the ones that i can't remember like i am patient and i'm flexible that's and right i need to move those a little higher in the list and maybe initially you'd want to keep it to three or four uh key ones i'm going to give you seven by the way you say if that's what you go go ahead i'm sorry greg but yeah um and i think um i've gotten away from these lately and so i'm dedicated to putting myself back in my circle my ims and my trading and um and just be there make it happen i've got another one for you but it's not an i am the one that popped into my brain as you were talking all right market loves giving me money yeah market loves giving me money oh one other one i wrote knew when i put that i'm a grateful trader i'm grateful for dessert what time is it michelle oh it's well you know what we don't have enough time to listen to the other side of the rotate at this moment um but you know what uh what what i do want to do though is i do want to go over how to use them and rotate when you when we listen to the uh because we've got just about enough time to go through that just before lunch when we listen to the other side of monroe tape bob monroe is going to install in your mind this function command it's called plus no more no more and what he's basically saying is that whenever you notice yourself see now you've got the skills you're requiring the skills to be able to notice when you're thinking in a way that's inconsistent with your goal or objective especially something particularly negative something you want to neutralize then you can use the plus no more no more command to dissipate it that's what it's there for it's a tool that's exactly the express purpose for which it is in your mind now like any other belief the more you use this tool with conscious conviction the stronger it gets and the easier it becomes to neutralize any let's say negative or unwanted beliefs absolutely right conflicting beliefs it will work if you believe it it will not work if you don't it's that simple i'll believe it when i see it that's right that's what i believe that's right everybody what john's saying is there's a title to a book that wayne dyer wrote which i really love instead of i'll believe it when i see it he turns it around is you'll see it when you believe it it really is it's an awesome statement it's a great book title and it's true for this if you believe it it's going to work if you don't believe it it ain't going to work it's that simple and it doesn't matter how many times you listen to the tape again you can listen to the tape as much as you want for other purposes all i'm saying is that bob monroe doesn't know what you want to neutralize you have to make up your mind and you have to do it with conviction however what i have done is i've given you starting on page three of section five i've given you a way to at least work with the four uh primary trading fairs that you know that cause most of the errors that we're going to uh we're going to be you know uh inflicting upon ourselves so when using the monroe institute to neutralize your trading fears to neutralize any first and foremost you have to decide to step through it you want to step through a fear because you are attracted to the results meaning an expanded freedom of expression or as a traitor being able to trade without fear so the way you'd use this plus no more no more command would be when every time you notice yourself thinking or feeling the fear of being wrong what i want you to do is capture the thought or feeling and use the plus no no more no plus no more no more function command to dissipate it then purposefully redirect your thoughts to a new belief you want to energize now when i say capture the thought you know what i mean by that make it tangible in your mind and you can do any number of things to make thoughts tangible just use your imagination like one one technique or exercise that i used to give people years ago was to imagine that particular fear being a you know a battery with all this negative energy in it like imagine a battery inside your mind and label the battery being wrong or what it means to be wrong and then see yourself attaching these lead wires or ground wires you know into into the ground and watching all the negative energy just flow right out of that battery while you're saying plus no more no more but most also what's just as what is just as important as going through this exercise of using plus no more no more is to also redirect your thoughts to what you want to believe what do you want to believe i want to believe my success will come from a string of trades not this next trade but a string of trades because if i've got an edge that edge is going to play itself out in my favor over a string of trades or i'm more training is not a right or wrong game i'm committed to staying focused on the skills i'm attempting to acquire or i don't need to be right on this next trade i don't need to know what's going to happen next to make money those are all positive beliefs that can replace trading out of thinking that it's a right or wrong game or has anything to do with being right or wrong it's just a probability game they go back to that fellow if you didn't follow your rules and consider that wrong you want to follow resistance that would be wrong though right that would be okay to say you're wrong because you didn't i mean you just well john i don't see the thing is like i don't know if that serves you okay you can do whatever you want to me you know if it depends on on the uh the context of the word wrong for most people the context of the word wrong is that it's extremely negative now and the problem is that if it causes you to experience a negative state of mind that's something you're going to want to avoid and as a result of wanting to avoid it you may not be be completely honest with yourself and so therefore if you can take even that out of a wrong context it's just something that's there it's just something you did it's just you know if you just like it's just like looking at the nature of mistakes mistakes don't have to be mistakes in the negative context in which we're taught mistakes just point the way to what we need to learn so if you didn't follow your rules when you're doing that bond exercise what is that saying that's just saying okay i'll just do better the next time instead of saying i'm wrong this is wrong i'll just do better the next time just the same thing you'd tell a kid or something that was you know do the same thing to yourself give yourself the same break okay losing money we're going to go through the same process repeat the plus no more no more procedure from above than purposefully redirect your thoughts to a new belief that you want to energize so i truly these are the new beliefs i truly accept there's a cost associated with trading therefore i have determined what it would cost me to find out if this trade is going to work and i'm willing to spend the money now if you really have a problem with spending the money there's another technique that i can give you that's really quick pretty powerful keep your checkbook by you and write a check out as a symbolic gesture for your willingness to spend the money on this trade so if you're willing to say if you've determined that the risk of this trade is 500 you write a check out for 500 as a symbolic gesture saying okay i'm this money i'm willing to spend to find out if this trade's going to work you can't write that check you can't write that check you're happy you know what are they telling you okay now now what's important here is to participate right so if you can't write the check then what are you going to do what okay maybe not take the trade there is something that's the last resort not taking the trade what's something was that lower the numbers lower the number of shares you don't necessarily want to trade what you have determined the actual risk is of the trade now whatever that dollar value the distance is you don't want to move the distance just to accommodate the fact you can't write the checkout trade smaller that's a problem that's one contract if you're trading futures you're trading futures you're a one contract trader that's a problem yeah yeah go yeah go to corn and wheat right mini contracts and corn and wheat yeah mini wheat 12 and fifty cents a penny and the range is only two cents a day so you know it's like yeah scale out right or trailing stop here we go great i guess the way my style is sometimes i will i'm accepting a risk being a nickel excuse me the second accepting of the risk being a dime in 15 cents and due to market conditions it's a quarter you know it's like i think i think to myself gee i never thought i was going to lose a quarter or 30 cents that wasn't my goal but it just you know due to the function of the market at that time how do i get around that i mean because you misassess the actual risk yeah then or you just then you just misassess the actual risk that's all that's there isn't the difference between misassessing the risk and executing a trade at your stop slippage i mean it's one thing if you say i'm going to lose a dime or 15 cents and maybe trading if you take the trade out of 15 cents but you don't get filled i mean you were still true to your car that's right you know just yeah there's a bit changed and there just wasn't anything hey you know what greg greg guess what anything can happen see greg if you didn't believe it before you believe it now right the extra 15 cents proved it to you give it away that's right right just count because it is sometimes just that's right okay missing out repeat the plus no more no more function command procedure from above and redirect your thoughts uh alternative beliefs could be the markets are in perpetual motion will stay that way until everyone agrees on value therefore there is always another trade amen i accept that my results are a perfect reflection of what i've learned and how well i can act on this knowledge this acceptance allows me to extract the insight out of the experience to determine what i need to learn to do better so in essence you really can't miss out on anything if you had the capability of staying in that trade or putting that trade on at the time you would have done so it's that simple if you allow yourself to get you know to tap into whatever it means let's say the negative connotation of what it means to miss out then you're you're not you're not helping yourself at least uh i don't know this goes back to the to number two that goes on here yeah and i don't know if this would be i always thought it was useful but maybe in the context we're talking about maybe the way it was worded wouldn't be but i used to work with the trader who was a good trader very carefree good attitude and whatnot whenever he uh lost money on a trade if it was like let's say let's say the bid fell away really hard as opposed to just losing five or ten cents first words out of his mouth would be like geez man i didn't think that was gonna happen and it just seemed like a very calming way for him to and he'd be right on to the next that would be good for greg you see that was that would be perfect for him i didn't think that was gonna happen yeah yeah but he'd say it in a very jovial way didn't think that was going to happen how could you still you know if you're not taking your trades consistently right how would you incorporate it i'm not i'm not sure if that really fits with us well i'm not not really fit with what if you're not taking your trades consistently so you're getting a signal and you take it sometimes sometimes you don't do it whenever do it whenever you're in the moment whatever whenever that is whether you're training whether you're taking your trades consistently or not it's really not a function of using this right when whenever you're in the moment that you feel these these fears of missing out being wrong or losing money money on the table then you use your function command whenever that is so in other words you feel like at the moment when you should be taking the trend you don't you use the functions that's right exactly whenever you remember capture the thought okay capture the thought and use the plus no more no more function that's gonna be based on fear of some kind exactly right right and do the best you can okay leaving money in the table go through the same procedure i can't leave money on the table because i know that i will give myself an amount of money that corresponds exactly with the skills i've accumulated in combination with what i believe i deserve that's the way it works so i resolve to find out what i need to reconcile to deserve more money any questions about how this procedure works yeah i'm still a little fuzzy so in the tape of all people all right okay go ahead i want to get the benefit okay good so in the in the tape as he's going through this these negative thoughts may come to us in the tape this has nothing to do with the tape no but as we don't know it doesn't have this has nothing to do with the tape whatsoever no no when we listen to the other side of the tape the tape is going to sound exactly like the first side it's not going to be any different except the difference is the only difference is that he will install this function command which is going to be just a few phrases oh okay it's just a tool and if there's tools in your mind that's waiting for you to use it at a conscious level if you don't use it it just it just dissipates basically right okay so like i said bob monroe doesn't know what you want to do he's just giving you a tool to do to use in a way at your discretion okay okay oh okay okay yeah okay good i'm glad you're glad you asked because maybe other people didn't either how often do you listen as often as you want is it instantly farther no no it'll just like i said before listening to the tape won't do anything to help you neutralize your fears or any unwanted beliefs it's using the tool that will do it will it make the tool stronger for you to use or better able to use it i i would say no i would say using the tools the only thing that's going to make it stronger it's not like having a little knife and then sharpening it when we're listening to the tape the only thing that's going to make the knife sharper is using the tool your conscious decision to use that tool so you only have to listen to the tape once that's it no you don't have to listen to this tape ever again after today you can listen to it as much as you want because you like it okay but like i kept i said yesterday and i'm gonna say again today listening to the tape has nothing to do with this process it's using the tool when you believe in the tool it will work and the only way you're going to believe in it is by using it and seeing the benefits and the more you see the benefits the more belief you energy that you're going to put into it and the faster it will work is there a way for us for example the first time i listened to the day it was relaxing the second time i was very distorted um it didn't work it was the same way as the first time okay now when i listen to the second one is there a way for me after i listen to know that i actually ever stood over it just like i didn't fall asleep the first time or the second time would they know that they have the tool just uh daniel just use it and see what happens okay do go through the you know this regimen as i've given to you and use it and see what happens and if you feel like you need to listen to the tape some more we'll then listen to it but just you know just use your own discretion about it okay that's really i you know because like i said the only thing that's really going to convince you that this works is by using it and and then the more you use it and the more benefits that you see from it the stronger it becomes and the faster it works so it's self-perpetuating remember i said that it won't work unless you believe it so the whole idea is to use it and then believe it it's self-perpetuating self-prophesizing as people might say [Music] great so i guess so as i'm sitting there trading away and i have a negative thought come into my mind what i do then is say plus no more no more and then capture the thought go through the instructions okay capture the thought make it as tangible as possible then with as much conviction as possible say plus one more okay you have to make the tangible thought negative almost as though you're saying it to yourself to seize it and then do the plus no more and more to chase it out and put them in well it's already negative you don't have to make it negative yeah i know you know in the middle of the day and the markets are going crazy and you have this fleeting thought you're trying to do it on the fly yeah you've got some problems i mean it's almost like you take that moment say i had that fleeting thought of disruption so let's bring it back because it's gone let's bring it back and make it tangible that i actually thought through if it's gone and you want to bring it back and do it that way yeah you can do it chances are we'll be gone that's what i'm saying okay you know what i mean like once it pops into our brain unless it gets reconciled in some way it normally doesn't go away right so as soon as you get you become conscious of that thought yes capture it and right say the plus no more and more redraw right right i'm glad to see all this enthusiasm this is good no it really is i'm not being facetious i'm being quite sincere nice but i think it's time for lunch yeah good quick one or what are we going for yeah just an hour for lunch that's it okay an hour a little less whatever they yes if what if what coming let's put it this way if what you got out of coming here was just the impetus to do that time exercise in other words if you could walk out the door in a couple of hours with just the conviction to do that exercise alone it was well worth your while to be here i think it was worth it no no you don't have to say that that's not what i'm saying that's not what i'm getting at yeah i want you to i really want you to to to see to kind of grasp what i'm getting at is that if going through this experience for two and a half days caused you to come to the point where you've made up your mind just to do the one exercise that one exercise about staying in helping you with your patients and you know putting a time constraint on the amount of time that you stay in a trade that you either stand that amount of time or get stopped out if it just caused you to get enough conviction to walk out and do that exercise then it was well worth your while because if this is what it took if it took all this just to get you to come to that ask yourself how long it would have taken otherwise had you not come here yeah it's good what's it going to produce for you i would definitely do it i've made up my mind okay but do you see what i'm getting at if it took all this stuff from friday night all the stuff we went through yesterday and all the stuff this morning to get you to the point where you say you finally met up your mind to do it then that's what it took right and that's why you came here that's true okay now all the rest of the stuff you know just put on the back burner until you get done with this because by doing just this one exercise this is what i'm talking to all of you not just jake by doing this one exercise it will give you a resource to do another one right if it's necessary and and see one of the reasons why people focus in on all of it in other words like okay well what about this and what about this and what about this like you kind of have this tendency to do okay in a way what you're really doing is kind of sabotaging the whole process by focusing on on trying to grasp all of it you won't do any of it and therefore because the implications of doing just one small slice of it is so powerful and you know that subconsciously intuitively you know doing the one exercise will have very powerful implications in your life so therefore to keep you away from those implications you'll focus in on what about this this this and this end up not doing any of it and end up not getting anywhere okay i agree the smallest incremental step that that exercise right now is the smallest incremental step so you said basically anyway that's how you're gonna do it right break it down to small steps right go ahead craig i guess i'm a little bit more of an intuitive trader but i'm working on my patients which the exercise has great implications for me how do i i just got to shut my while i'm doing these exercises just kind of turn my intuition off yeah if your intuition doesn't really have anything to do with this exercise you might say the intuition would have to do with how you set up the exercise if you get an intuitive impulse about how to set this up or how to set it up directly for you like if you were to ask the question how do i need to set this up let the question go and wait for an answer that would be using your intuition as part of this process the process itself is is somewhat mechanical because what you're doing is is going through a set of steps to neutralize any any resisting or conflicting thoughts yeah i guess because like one of the things that i have developed is if i can i start feeling comfortable that i can hold this for an hour two or three or a day it's an immediate self signal it's it's feeling that comfort that's it it's an immediate i'll just hit the you know hit the bit or get out yeah and that's worked for me well the other thing too is what we're about to get into is scaling out scaling out will also do you do that absolutely no okay that's not an issue that's uh that's part of your regimens yeah well then what do you have a problem with on the last portion of what last portion of your position letting it ride let it level yeah do you have you have points you project out in the future that that where it might get to sometimes well it can't be sometimes it gets there well what do you mean it feel bad well it's like um the other day i was like damn it i knew it was going up i knew it was going to go to 19. um all i had to do was just sit on my hands part of your position you've already got most of it off generally yes no well not generally i mean that's the whole point either you you've got it you've got to have a regimen where where you've already you've already booked a substantial amount of profits from the move right you've got a small portion left yes that small portion should be virtually meaningless meaningless now think about it you've already booked a bunch of profit there's no possible way you can lose on the trade even if it comes all the way back to your entry point because at that point you just scratch it right okay so so where where is the significance here i guess in my in what goes through my mind is you don't have to answer it now that's a question you can ask yourself okay why it can't why it can't be completely a risk-free opportunity for you because you can project your point out to the future i mean project your point of where you think it might go it either gets there or not it gets close to there you can get on anywhere you want and the other thing too if your point that you're projecting it to as a possibility of it getting there if it gets there and starts to back off but it looks like it might blow through it and you've gotten out you can always get back in as a breakout trade right yeah right wait for it to break out and confirm yeah wait for it to pull back a little and buy it back right there exactly that's what i used to do years ago when i first moved to chicago and i was trading silver a lot when i would ride a move up to a significant reference point and and and get out close to the top you know get booked all all the move on the last portion of of my position and then uh if it was something like this you know like i had in my and you know i had a significant reference point let's say on a daily chart the market's coming up here and what and what and i'm to go over this again in a little bit but basically what i said to myself and the clients that i had you know also in silver trades is that you know if i got in somewhere down in here i don't know if the market's going to get through get through this resistance or not but what i do know is that if it does it it could be significant and keep on going so basically what am i risking to find out if it gets through there in other words people want to be on for the big move they want to be on for the big ride okay as big as they can get now i've already got most of my position off anyway so what i did is that i just always took my position off close to this high right here and then and then had added it back on as a as a buy stop up here so if it went so what i was basically risking i was risking not getting the opportunity to book that much profit and saving myself or booking that much profit just to find out if it was going to break through in other words this is what i'd be risking to find out if it was going to break through i didn't want to risk all that so i would forgo the possibility of getting this much profit if it did go through and i hung on as opposed to getting out and taking my profits and reinitiate the position right up here alternatively many times they pull back and then they go again especially right towards them yeah well it depends you know it depends on your methodology and how much you need to in other words you say it goes through it pulls back a little bit and then does this okay well you know that's just a function of how much you need to risk to be into this trade okay yeah once it breaks through how much how far you're going to let it go back you know back past this line to tell you that it's possibly not going to work that's all that is and there are a lot of different breakout methods that will tell you exactly how much you need to you know how much you need to risk in these cases it depends on the time frame you're doing it anyway you know two minute charts gonna be a lot different than if that were a daily chart or even an hourly chart okay the the part that um i'm just going to briefly go over this because i've already really covered a lot of it except for a couple of points that i want to make and that's on page six of section five the practical philosophy for change remember we've talked about how we're we're in a universe that is constantly expanding and if that and if that universe is conscious i mean we're conscious there might be certainly other aspects of the universe that's conscious there might be a consciousness at let's say the macro level and if that universe is conscious it would seem as if that universe has a desire this universe has a desire to expand it is doing so definitely and we are expanding we are evolving animals evolve insects evolve plants evolve even the earth evolves so if you just kind of look at this from a practical perspective what do we got we got a universe that's constantly expanding we got a universe that seems that if you know this might be this might be making a huge leap in terms of an inference but i'm going to say a universe that even desires to expand we exist at the micro level we're a part of this universe and it would seem to me like if we are in harmony with it our lives would be infinitely easier simpler and if you look at the evidence of that there is an abundance of evidence to suggest that what we need to do is continually expand and how do i why do i know that why look at look at the emotion of excitement what gets us excited what come on what gets us excited what learning ah learning gets us excited what does learning imply change expansion a mind once expanded can't go back to its original form a mind once expanded cannot go back to its original form you can't be who you once were once you expanded once you've expanded yourself learning excites us starting a new project excites us starting a new job unless we're dreading it for some reason we're acting out of desperation excites us there's some powerful implications here in relationship to a kind of life philosophy if all these things excite us and create a sense of satisfaction and happiness then not doing it would imply what not expanding not learning but imply what that we ain't gonna feel so good it's called depression hopelessness feeling sorry for ourselves stress anxiety what is stress simply our beliefs are inflexible beliefs in relationship to an environment that is changing and we refuse to acknowledge the changes right environmental forces that are in conflict with our beliefs and we are refusing to be adaptable to the extent that we are feeling stress [Music] now at the same time look at look at like this we have one external source of information i say one meaning all the by all the forces in the universe that exist outside of ourselves is an external force generating information about its nature and characteristics but we have three internal sources of information and it and if you look at it from one perspective it would seem like if we've got if we're in a universe that's constantly expanding where every moment is truly unique because atoms and molecules are are in motion and as a result of being in motion they're in a constant state of change making what what's really out there constantly changing but at the same time everything we experience and and record in our mental environment as a memory remain static and the beliefs that we acquire as a result of these these these concepts that we end up formulating about the nature or how we describe the nature of the way things exist if they remain static it would seem as if and it requires and to be happy requires being adaptable and adapting and expanding it would seem like the universe has played a cruel hoax on us right except for what is there a compensating factor there something that assures us that we can change and adapt our ability to decide our ability to think remember our willingness to think it all boils down to our willingness to think our willingness to think the thinking process is not bounded by any constraints what so ever it's only our lack of willingness that keeps us from asking a question you can ask a question about anything if the question's honest and sincere you will get an answer i thoroughly 100 unequivocally believe ask and ye shall receive so all the answers are out there it's a matter of in yourself that's right right all the answers are out there whether they get dumped in your brain you know as inspiration or whether you know you find yourself opening a book or turning on the tv you know some synchronistic thing or overhear a conversation as long as you are open i guarantee you you will get an answer well i think too we things come into our life when we're ready to learn them too right that's that's the open that's the sincere openness okay that's just another way of saying i am sincerely open because this part see we've got what relates to this would be see how we got that set up yeah yeah we've got beliefs and memories see at this at these two levels right here we have beliefs and memories and associations now i don't have to write it down beliefs memories and associations which can all remain static but we also have and in the way scientists also relate to this is left and right brain this is like this could be left brain stuff that's rational everything that's rational has to do with something that already happened a rational thinking process is a process bounded by our past but creativity definitely exists and by definition it means bringing forth something be used to trust the intuitive level more meaning you may to the trades on some intuitive uh idea but yet you're rigid enough to know that you'd employ money management not objective parts went into that absolutely so that could be a way for you to trust that intuitively absolutely okay um what i was basically getting at it i just basically had just occurred to him and we were talking about this um there's many times i think you'll probably get more related as to when trading there'll be many times where i'll see an opportunity but it doesn't meet the traditional of the credit use for it you know right as a result they can't justify it and therefore i don't take the trade i was just thinking to myself if there's a way for me to take the focus on that impulse that intuitive impulse reinforce with the concept that once i'm in the trade i use all the traditional measures i used from trading objectively david anyways money management rules how can i get burned any worse than if i'd taken a trade based on purely objective measures it would give me validly take that trade provided i immediately kicked into gear with all the other measures i use on a day-to-day basis which keep me out [Music] which is exactly what you need to do which is exactly what we're going to cover anyway when you when you said we're getting ahead of ourselves you're kind of right because because that's how you counteract euphoria this could be in a completely euphoric state of mind and in essence riskless but yet you'd still have to have a mental mechanism a monitoring mechanism for you to notice that you're breaking your rules but the piece that i'm not obviously at yet i've made the connection i think what i think i would need to work on is getting myself now to put the trade on understanding full well that the other rules will fall into place right after i've never made the connection up to this point and i still know if that's going to be the solution at this point in time it probably will all you've got to do is say how much have i got a risk to find out right you're willing to accept the rest then you'll take the trade and wouldn't wouldn't part of it just be doing it and then if it's working it's something that you can trust and if it's not working then you know that it isn't working and not to take those trades in the future well see it depends see the problem is we're this is this is the kind of thing we have to watch out for when we start mixing levels of development in other words you know what we want to do right now is just stay focused in our own level of development whatever that is if i've got to trade mechanically because there are certain skills that i need to acquire like learning how to think of probability carefree state of mind objectivity if i don't have all those things you know you know at a functional level in my mental environment then we shouldn't even be having this discussion it's irrelevant it really is because because like i said before you can get you can get intuitive impulses and i'm saying notice them write them down don't let don't act on them don't act on them until you've got all these other skills in place firmly in place and there are ways to know that you do we're going to go over that in a minute so so there is some you know it can create confusion about you know what stage of development you're in and what you need to do as a result of that stage of development i'm going to dispel that confusion right now hopefully but you know just the important thing is to stay focused on where you're at and where you need to be because look at it this way what he will find out hopefully to answer your question jeff what dave would find out by taking a trade like that is that if it was really an intuitive impulse it'll work if it wasn't if he was manufacturing that impulse because of something else going on in his life okay then he's going to find that out too because i guarantee it's going to be a loser how can i i know how can i say that i just write works but i mean no it could still be no you're going to say how can i say i know it's going to be a loser i just because if it does if it's if it's a loser does it mean that the trade wasn't the right thing to do i mean we know no i didn't say it was right or wrong i just said it wasn't intuitive it wasn't a true intuitive impulse so you're saying that every every exactly intuitive trade is a winner every intuitive trade is a winner yes okay that's what it means to be in the zone you're in complete harmony with your environment just because you're in harmony it doesn't mean that the trade's gonna work out i mean oh no that's exactly what it means when you're in harmony it's going to work out there's no one there's nothing else that could happen no other trader could could come in when you're in harmony it will work out nothing else can happen i'll stop asking questions when you're in the zone what you do in relationship to what's going on will be virtually perfect that is definition of being in his own perfection if it was a true intuitive impulse it will be perfection if it was something else it won't be that's what it means to be in the zone when you see athletes in the zone what are you seeing what are you seeing perfection perfection then i understand that you're saying yeah you could have different definition see the thing is you can have a different connotation for the word intuition and and mine you know my definition your definition might be different which i maybe obviously is and your definition might include things that wouldn't be included in mine but if like and that's one of the problems even doing a workshop like this is because because we can you be using i can be using words that we think we're sharing meanings on and we're really not so by me saying the word zone then that that now you related that uncon it's unconflicted that that's you know that's just an example of how that kind of thing can work but by definition jeff what i'm saying by definition is perfection okay and if it didn't turn out to be perfect then i can say that by definition you weren't in the zone you may have thought you were but you weren't i'm glad we went through this because there was obviously some misunderstandings about it i guess right or was there no well anyway uh okay let's um oh so are we done with that part that kind of philosophy about you know like a just a little practical philosophy about changing that was on page six and seven of section five and i've already gone through this really plenty of time so we can move on can't we okay good okay let's create and grow the most ideal beliefs about trading we need to do the tape first oh you know no we're going to we'll do that last here's what we're going to do well i want to finish up the material here we'll do the tape and then if you guys want to go through some uh some trading patterns i don't normally do that by the way and i didn't really know the consistency of the group before i got here and i was planning on putting up a bunch of charts and and patterns you know just just kind of some fib patterns and a b equal cd patterns i normally don't ever do this uh but if you guys want to later on after we get done with the rest of the stuff we can yeah okay but i'll make sure we get done with all the rest of it because shawn has to leave at by what three o'clock or three thirty okay we wait till four we can start trading [Laughter] okay what's the primary objective what's the primary objective i mean it's written in the book but you know what's that consistently successful you forgot two words you've got the two biggest words phrase alex yeah the two biggest words i am that's our objective to install that belief unconflicted install that belief unconflicted i wouldn't use the word i will i'm not saying that can't work for some people just wondering you know semantics is really important it really is um i don't know if i can answer your question really uh uh but other than just to say that i would stick with i am i would say trust this yeah i'm not saying that saying it your way wouldn't work for you i don't know that sean there's no way i could know it really all i'm saying is that i agree with greg trusty i am okay so consistency is a function of a carefree objective state of mind where we're making ourselves available to perceive and act upon whatever the market is offering us from its perspective in any given now moment that that's a that's that's a mouthful in terms of a statement right there's a lot there so this is a very complex process that we have to go through to get to this to get to the primary objective of one installing that belief conflicted because basically it means that i will be able to function in a carefree objective state of mind carefree meaning fearless objective also implying that i completely and absolutely trust myself to act in my own best interest without any reservation or hesitation or internal conflict under all circumstances where we're making ourselves available to perceive and act upon whatever the market is offering us from its perspective in any given now moment that means no potential to associate this now moment with anything in our rational mind as a memory and no potential to perceive or no potential to define or interpret market information in a threatening way how are we going to get there i've got seven principles of consistency on the next page how are we going to get there how are we going to how are we going to install these seven principles consist of consistency in our mental environment one i am a consistently successful trader because i objectively define my edges two i predefine the risk of every trade three i completely accept that risk or i'm willing to let go of that trade four i act upon my edges without reservation or hesitation five i pay myself as the market makes money available to me six i continually monitor my susceptibility to making errors seven i understand the absolute necessity of these principles of consistent success and therefore never violate them how are we gonna get there we need a five mile rule anybody got any ideas if we're going to set up an exercise if we're going to set up an exercise to do this what might you do based on what you've learned so far start small it could start small yeah that's that would be that could be part of it trade mechanically ah okay what what what benefit is that going to be the following definite rules you're not guessing okay but but how's that going to help you be objective to trade in canada because your mechanical system will probably have many of these rules implemented into it well trust the rules well well they could do all those things but that's not really what does it mean to be objective guys that's thinking of probabilities right right okay what is thinking and probabilities anything can happen every moment is unique i don't even know what's going to happen next to make money there's a random distribution between wins and loss and they give a set of variables to find an edge was their last one did i get them all need a flash card for that there you go [Music] that is printed in the beginning somewhere verbatim isn't it yes yeah it is fine page five no did i say five would i say four did i say all of those what i'm asking it's uh section three page five is four oh here we go yeah anything can happen every moment is unique there's a random distribution between wins and losses on any given set of variables define an edge and you don't need to know what's going to happen next to make money there's actually four there's a sub one of number three okay that's that's what it means okay now how are we going to get those those four let's say fundamental truths of what the market is into our mind at a functional level what are we going to do we know let's put it this way we know that there's going to be some sort of conflicting energy inside of us right we know that because our minds are inherently designed to associate and we have all these probably cultural beliefs that are going to cause us to have the potential to define and interpret market information in painful ways so we don't even have to know exactly what those beliefs are but if we set up an exercise or a regimen that causes us to confront one of these regardless of what they are at least we know that we're experiencing conflicting thoughts something different than what our objective is then we can eventually dissipate the negative energy and build up the positive energy now what might we do to do that [Music] until the point you have no confidence in them you're going to do a time exercise this particular well you're what we're talking about now doesn't that's not necessarily dependent on time another or number a sample is there a problem yeah you pop it off so i'm at the sample size not time duration okay so you mean trade and sample sizes right okay so here's what jake is talking about the way you can install these four or five fundamental truths about the nature of the market which comprise the principles of what it means to be objective and stay in the now moment is by going through a specific trading exercise one that will cause you by the mirror merely by the way that it is designed it will cause you to confront any internal argument that will come up into your consciousness causing you to want to do something different than what your objective is the objective will be this first of all you have to have what your entry signals and your exit signal on a loss have to be precise meaning that there can be no subjective decision making as to whether or not the variables that you use to define your edge are either present or they're not they are either present in the market based on a specific set of variables or they are not present you have to know exactly and the reason why you have to why would you have to know exactly i'm going to ask you why would you have to know exactly otherwise it's subjective otherwise yeah otherwise you don't really know if it's internal resistance or you're saying oh this really isn't a signal okay it precise and then you commit yourself to trading in sample sizes sample sizes meaning 20 to 25 trade sample sizes so instead okay so what you say to yourself is that instead of taking the next trade the next time these set of variables roll around in the market the next time my edge appears instead of taking just the next trade i am committing myself this is the five mile rule i'm committing myself to take the next 20 trades to take the next 20. why is this oh wow can you guys still see that is everybody all right i'm going to commit myself to take the next 20 trays now what is that going to do for you i'll set up the details of this in a second what is this going to do for you by taking by having to take the next 20 trades force you to confront everything yeah because see even though you may have a methodology your your uh your edge may work let's say 60 of the time and by the way i want to stress the edge that you use for this exercise does not have to be particularly particularly good it can be very mediocre it doesn't matter it's doing the exercise that counts it doesn't really matter what your win loss ratio is i mean except for the fact you don't want to hit 20 in a row as losers i mean you know but here's the important part of this what do we know about the nature of the market that anything can happen that every moment is unique and that there's a random distribution between wins and losses and i really don't need to know what's going to happen next to make money doing this exercise appropriately will convince you of every single one of those statements every single one of those concepts you will be thoroughly convinced of if you subject yourself to this exercise you want to know why because you don't know the sequence to wins and losses on this 20 trade sample size you don't know what it's going to be it could be win loss win win loss loss loss loss now what do you do no it doesn't matter i'm just saying no now hey you you've just taken four losses in a row yeah you still no you still have to take the trade but what is your rational mind going to be screaming i know what's going to happen here i know this trade is a loser and when you put this one on and it turns out to be a winner and i will say that in almost all cases it will be really i'm serious it will be then what you just added energy you just added energy to a belief that says you know what i thought i knew what was going to happen you know i didn't like anything can happen every moment is unique meaning that okay i don't you know there's i don't know it only takes one traitor somewhere in the world to negate the positive outcome on my edge but and i thought i thought that one traitor or more was definitely going to do it but the reality is it didn't happen that way anything can happen meaning winner or loser and you know what since i didn't know what was going to happen next when i thought that i did i really don't need to know what's going to happen next to make money and you go through this exercise let's put it this way you go through the exercise all 20 as best you can if you can't get these trades on perfectly that's all right because the whole idea is to do this until you can so if it takes two or three or four or five of these 20 trade sample sizes or more it's going to take as many as it takes and keep on doing it until you can do it what what how do you know when you're done without giving your thoughts carefree yeah you can do it without any conflicting or competing thoughts that's how you know you're done you you can say i've arrived i have arrived when you can go through one whole sample size without anything in your mind telling you to do anything different than other than what you set out to do that's how you know you've dissipated all the conflicting energy is that making sense to everybody how you know you've dissipated all the conflicting energy is simply i can get through a whole sample size and you know what i didn't have one conflicting thought every time my edge appeared i did exactly what i needed to do that's right now we'll get into the details in a second but yeah i just wanted to get conceptually what was going on here so if you if you get through those first maybe six or seven and then you just say i'm not doing this next and i don't care do you just go ahead and finish your 20 or do you start over no when you finish your twenty so i'll be here and see the thing is you're thinking about finisher 20 is that is that is that is that if whatever whatever set of variables you use to define your edge in this 20 trait sample size you can't change in the middle of a sample size however once the sample size is over with you can go back and look at your results and say you know what you can tweak your variables at that point and that's why we limit the number of trades because you just might have a really dysfunctional set of variables to define your edge and you want to keep on going indefinitely what you want to do is you want to make the sample size large enough to adequately test your edge small enough so that if it isn't if it isn't a good edge you're not losing an inordinate amount of money before you find out so in the middle of a sample size you can't make any changes whatsoever at the end of a sample size you can go back and then use your creative juices and possibly getting some inspiration on how you might change your variables to improve your results i think that's really important because i think even myself in developing my own system i would get stuck but i wouldn't have enough emphasize to really wait and change things in between can't change things in between finish the sample size if you don't get this trade on then when the next time it rolls around do your best to get that one on just keep on doing it until you can do it flawlessly the execution of mental thought probably not the results yeah not the results yeah the results might be the results might be quite mediocre as a matter of fact as a matter of fact if you can do these and end up scratching paying for commissions i think you're doing great [Music] just think about what i said you can do a sample size and scratch or even pay for commissions you're doing great [Music] okay great i i didn't say good i said great if you just do well enough to pay for commissions you're doing great at the end of a sample size go ahead um like two things kind of occur to me they have two different sample sizes with two different strategies or techniques that i'm trying to perfect within myself can i mix them or just work on one at a time i don't know you confuse me okay one of the things i want to do and that i do now but i is buy on the bid buy a strong stock when it's pulling in on the bid and i want to hold it against me longer okay because that would be that would be a set of rules for one sample size okay now let's know what's the other one um hold my last 100 shares to go but just hold it longer why can't you do the same sample size because one because two different functions but that's why i'm i don't know because what's the function of taking profits you're not mixing anything we haven't gotten into taking profits yet i haven't gotten into details on how to do this i'm just conceptually i'm just talking about the concept right now so a lot of it seems to me like based on what you told me unless i unless i still have misunderstood you you can do both those things in the same sample size okay so if you'd only have one set up in the sample size only yeah only one set well only one set up right right in one edge only one edge i also did my first okay so for example um if now what i'm proposing is that because a lot of you guys are stock traders i trade futures so so if you trade futures you're going to have to trade three of something because what i'm proposing is that you uh to satisfy one of the principles is you have to uh pay yourself as a market that makes money available to you that and that what i'm proposing that you do is learn how to scale out which we'll get into in a minute but but i had to say that to set this up is that so that means you have to trade at least three or something so you can so that you can scale out in thirds go ahead jake can i go ahead and do this methodology before i do the time thing or at the same time i'm not quite sure what to do well you can do it you can you can do yeah damn it that's like uh yeah you can do really uh you can do it at the same time i can see i could say you could set this up where you could satisfy i think we you're just adding a time dimension to your edge i think i can i agree yeah okay now you don't have to trade you don't have to trade three contracts and you can do this with one contract although if you trade futures but if you trade stocks it's really easy because you can divide your number of shares you trade into any fraction that you want i mean you divide it into quarters into thirds or how can you do with less than three contracts just do it with one if you can't go out well i know you can't scale out but that's you know but if that's not if you're not at a point where that's the part that matters what difference does it make just doing it one step at a time when you get right down to it if you can't take you can't stay in the market contract more than take you to what different doesn't make you have three on sometimes easier sorry jake but you know it's like it doesn't make a lot of difference okay you just want to do it with one dude no i would just do it with one do it with one it's all right okay one will satisfy the objective of your exercise okay okay however it will not satisfy the obj one of the principles one of the principles of consistency but that's all right because when you can do that exercise and do it flawlessly then you can move to three contracts and then integrate the money management part of scaling out into it okay one step at a time jake okay see that's where your impatience comes in which is good it's good i'm glad you're here you see if you didn't come you wouldn't get this would you that's right see listening to the tape of someone like jake wern here so you wouldn't get any of this i'm sorry sean i just said that's that's harder to do than it looks yeah it could take it could take people a year to make up their mind to do this more easily a year or more to get to the point where they make up their mind to do this easily easily i would be surprised actually if there are more than one or two people that can walk out of this room and start doing this i'd be i'd be shocked i really would go ahead and say in the book you mentioned about the fact that there are sight of the one side a little bit louder because i can hardly hear you and i probably know the people on the tape probably can't either in your book you mentioned that there's one sort of sign where you can probably go through this without actually placing live trade oh yeah you can use simulated brokerage accounts or a simulated brokerage service put it that way no that's not true no it's no they no no if that's where you're at new if that's where you're at then that's where you start you're not dealing with any of the real emotions oh yes you are that's not true you think so absolutely no doubt about it there are people that do not have to have the real money involved and they feel exactly the same way whether they're putting on a broker a simulated brokerage account or a real one right no difference whatsoever is there a site oh there's uh auto track for one thing um you don't have to be customary oh no well no that's what they do that that's their whole purpose their whole purpose is our simulated brokerage accounts uh auto transportation uh auto traffic a u r a b i t what say it again [Music] all right okay the other thing too is that uh there are quite there are a lot of brokerage firms that have uh you know online uh execution services that'll let you use them for 30 days without opening up an account it was in a couple of competitions no competitions you can do that you just do and you can just wait let's say go ahead in setting up the sample the only thing that has to be consistent throughout the 20 is the uh edge yeah the edge for considering the trade and how you define what a law says they have to be absolutely precise absolutely precise you can have different stocks you have one you can trade different stocks you can trade different stocks i mean i wouldn't necessarily recommend that you do so you can trigger stocks but the edge has to be consistent whatever the stock is and again it has to be precise entry and exit on the lost side have to be absolutely precise now the other reason why a simulated brokerage account or like something like audit track would would be good for people is that they're um it's a good way to forward test your edge see before you want to put your real money on the line you may want to do you know 20 or 30 trades or 40 trades using using a simulated account so you can see how well it works because some people don't have the sophistication to back test and they don't have the they don't have the proper the proper software or want to go through the learning curve of learning how to do appropriately anyway or pay a back testing service you don't have to do that you can just forward test in a simulated account let's ask a question about track is is it basically a service whereby you're seeing live price data and you're putting putting the trades into a fictional account with x amount of dollars in it i don't i don't know that that uh audit see i haven't it's been many years since i've even seen their their site uh and and so i don't really know what they have available right now it's probably pretty sophisticated but i just don't know that okay um but i do know that that uh there are like i said there are brokerage firms that allow you to use their online execution which will give you live data and and and executions really live but there's just no money behind it it's you know it's it's a you know a simulated account and it's a perfect way to test uh to test a set of edges or an advantage okay if the strategy that i want to do the same on if the strategy that i'm trading now has three different edges let's just say you know breakouts pullbacks and something else for the purpose of the test i'm just choosing breakouts is that right i'm just using one pick one whatever one you like the best one and you want to do two then then do it based on two different sample sizes now the other thing is that since our loss you know what we what we determine we need to risk uh what we determine we need to risk to see if our edge is going to work has to be precise we can actually calculate in advance exactly how much i need to risk on every on all 20 trades if all of them turned out to be losers right if under the unfortunate circumstances he had 20 losers in a row which is pretty unlikely but it's possible under those unfortunate circumstances the amount of the accumulated amount of money of 20 losses in a row you have to be able to afford obviously utilizing a mechanical stock when you couldn't get there if you were using breaks the love of apply your day because you don't know where you're you're you have to stop has to be precise yeah okay so in each case so it has to be something that you can define in advance that amount of money and it should be consistent in each case it really should like a dollar stock well i'm not saying the dollar the dollar picking an arbitrary dollar stop it should be a stop based on based on technical indicators okay yeah but even if it's using the prior day's low you can just change your share size so you're risking a hundred dollars per trade or twenty dollars per trade that's true you could do that too good point very good would you repeat that even if if your exit is is going to be the prior day's low so for every trade it'll be a different a different fraction it'll be 30 cents on one and 50 cents on the other you can make each trade you can say that you only want to risk 200 so that each trade you'll you'll value your share size so if you're if you're closing out if the fire day's low you're still losing the same set of them yeah good yeah thanks jeff that's good [Music] everybody clear so far and why are you doing this exercise why would you even consider doing it if you do decide to do it confront your confront everything head-on yeah head-on it'll create a head-on confrontation a head-on confrontation with every conflict that you have inside of you about what it means to think in probabilities and that's exactly what you want we're not avoiding this confrontation we are looking forward to it because the sooner we get through it in other words every time i act in a way that's consistent with my goal or desire i am adding energy to a positive belief about what it means to think in probabilities i am detracting energy energy from all the other conflicting beliefs it's that simple we are looking forward to the confrontation not a bad idea actually i want to create one go how many people come ahead of the room what's that how many people come out around how many people come out what come out and make it through thank you i'll make it through the other i don't know not that many people will even do it really i can try once that's tough it's a hard thing to do as simple as it is it's hard to do it's hard to get to the point where you're willing to do it put it that way and then and then do it until you can do it without conflict especially after the third loss i can see the wheels rolling in dave's brain he's going to make everybody in his office go back and do this well actually i was thinking back to a time when uh when i first got started as a trader um someone who was far more experienced you're never going to learn how to hit fastballs by hitting softballs and i don't know if it really relates directly to that but there was an element of truth to that with the exception of the fact that you can't can't what he was really defining or what he was trying to point out to me is um you should trade larger on a per trade basis but you know if you don't have the skills necessarily you don't want to go in there swinging a thousand shares if you're still learning but maybe what he was trying to get through to me was something like this or something on this level you could do as many trades in one day it's come up yeah you could theoretically get through in the day you couldn't yeah that's true you could take trays one minute charts yeah if you're trading five or ten minutes then it might be a couple of days before you do all 20 sure yeah sure if on the other hand your daily chart only does once a week that's right it could take you 10 weeks in terms of you know well it just depends on how fast you want to learn if you if you use daily or weekly charts to generate signals they don't come up very often it's going to be tough to do this exercise you want to go down to an hourly chart or something so you can at least get four or five trades a week you know getting paid officers attitude getting comfortable with being discomf this in a state of discomfort getting comfortable with being in a state of discomfort would help you a lot because the more comfortable you are or get with being uncomfortable the faster the the faster the discomfort leaves where it just becomes a natural sequence of events meaning that i intend to neutralize this belief install this belief and there's no discomfort at all anymore whereas initially in this process you know neutralizing beliefs can create some some degree of discomfort for a while because in some ways it can be a little disorienting you know it's like you if you really effectively you know knock the energy out of something it's like it's just like a part of your identity is gone for a little while and you kind of get used to it and everything's fine you just kind of say okay this is who i am now but the more you do it the easier it gets and the less discomfort there is in fact there doesn't have to be any discomfort at all can it create feelings of anxiety as the least yeah i guess it's hard to say i mean everyone's probably going to be a little bit different just underlying even if you did feel that way just just know that just say to yourself that you're going to be fine you know you're just you're just stepping into a new version of yourself that's all because you're going to be fine i'm just stepping into a new version of myself okay a much greater version to it i'm stepping into a greater version of myself and i will be fine and you will you really will you guys ready to go again one of the things we're talking about whenever everyone else was talking was that john also did evelyn woods reading dynamics and i asked him did you experience the same thing and go ahead john oh yeah and actually i was mentioning comprehension was better too but it was the same thing once i once i stopped reading oh i got out of college i stopped reading but i went home for the summer came back in the fall it was gone and oh one other thing i mentioned too is that is that years later i i saw a tv program one of these kind of amazing feat kind of tv program tv programs where they they took a guy who claimed to i guess they measured him at about maybe 25 to 30 000 words a minute and what they did to confirm it is that they picked out randomly some books some very obscure books on the library of congress or something and then put them in front of a video camera to have them read the stack of books in a very short period of time or something the equivalent to how many words there were you know based on the amount of time and then asked them you know detailed questions about what he read and he did it how do you turn the pages of that right that's the way that's another thing you've got to learn how to do is turn pages really fast not and they're also big books that was that too it was very small print and really big book so so he could in fact like where you're you could have you know like several thousand words on a page you know so that you don't have to that's the other thing i remember they were really big books what big pages yeah the big pages make it easier to turn so otherwise you couldn't be reading these pocketbook novels that thirty thousand words a minute because you couldn't really couldn't turn the pages fast enough and is that is that does that is that as effective as actually just reading the book normally in terms of the retention that's john that's what he just said you're more effective you know you're kidding faster you read the morning is it enjoyable like if you're reading just a novel or something let's put it this way don't think of it now let's put it this way first of all you're reading let's say three to five times faster than you normally do and so if you enjoyed it the first time or you didn't feel like you got enough out of it read it three or four times and you're still doing it faster than what you normally would you said no i wasn't using no no no no i wish the other the other thing is that one of the things that does it cuts out the sub vocalization process one of the reasons why it's so fast that you're no longer sub-vocalizing you're not saying the words to yourself anymore okay so there's a direct there's a direct see comprehend there's nothing there's no no other thought process that's pretty cool it really is how long is the course how long was the course about eight weeks something like that you can take them locally i assume you know there's videos you can get for this now i mean i see infomercials that's probably the same thing i know there's other companies that have kind of ripped ellen wood off basically you know but go ahead john no i think the guy that you saw the library of congress actually had an infomercial four years really yeah so there are i've seen infomercials would and it's probably the exact same process i would have you know i would imagine you know and i think does everyone would still exist you don't think so anymore okay we're all right um oh okay we got this down precise entry precise exit on the um you know this is starting to piss me off precise entry precise exit on the on the lost side so now we're going to do uh profits now the way uh when i first uh i started trading like back in 1978 or 1979 i don't remember which and when i moved to chicago and went to work for merrill lynch the board of trade i was trading a lot of silver and um there were there were two things that that acted two two kind of two things that that kind of came together that caused me to think about this whole idea of scaling out of a position in other words when you put a position on divide it into fractions and then take money as the market makes it available the first thing that happened is that back in the back in the early 70s it was like 1971 or 72 i went to las vegas for the first time i think it was only maybe how old would i've been maybe 23 years old and but before i went i got this book by by a guy by the name of dr edward thorpe called beat the dealer anybody know this book anybody read it okay john you no okay anyway this guy was a mathematician he's the one that started the whole blackjack card counting craze edward thorpe's the guy that did it and what he did is he went through based on you know the primitive computers that were that existed back then and he said that you could take you know a a a basic playing strategy and blackjack not it wasn't actually basic and based on the consistency of the deck and how do you know the consistency of the deck you have to learn how to count the cards and back in vegas at that time they predominantly played one deck games that so it was very easy to keep track of the card so what you basically did was had to he had to keep track of how many um how many face cards and tens were in the deck in relationship to all the rest of the cards and the a aces and and so you had a plus minus count you kept this plus minus count in your mind and then what he had is they had four basic tables that that consisted of whatever the dealer's up card was in relationship to your two card total in relationship to the card count whether you would double down on double down whether you would split your cards you know if you had if you split two split threes split fours eights or aces and um or whether you took a hit or not so what i did is i memorized all the tables and then i practiced for months counting cards i flipped the cards as fast i could and see how fast i could keep the count okay and then i even and this is like back in the early 70s i even did my own self-hypnosis tape and the tape the tape consisted of the fact that i was telling myself that i wouldn't get distracted that you know because the books would say you know they're going to give you drinks they're going to do this they're going to try to do everything to take away you know your ability to stay focused and so i did the self hypnosis tape and said i was a winner and all those kind of good stuff right so i went to vegas to test this whole thing out and i tell you i could not lose i really mean that i had winning streaks of 15 16 winning hands in a row getting black jacks like crazy i mean just i was just really lucky i had lucky i did i did what i needed to do i mean i shouldn't say i was just not only was i lucky i mean i was i was doing i was following my rules i was doing all the right things however i didn't have any money management meaning that i was just betting one unit at a time i wasn't increasing my bets i wasn't taking advantage of the fact that i had all these great winning streaks going and the next thing that i did too which was typical is that once i was winning in blackjack i started pissing around with craps and roulette and other games and then piss my money away okay so i did i i lost almost all my money on all these other games and so and this and this really could be like out of a movie i swear i look back on this event it was really like out of a movie and so it was like my dad and i had i went with my dad and uh we had about um maybe an hour two left before we had to leave for the airport and i only had like i think maybe 50 or 60 bucks left that was it to gamble with and so uh i sat down at a table with a guy who was playing from one hundred to a thousand dollars a hand he had all black he was playing black chips that their hundred dollar chips were i remember the casino we were at and um and uh and so i i i don't know if i sat exactly right next to him but we played for a while we're the only ones at the table and he saw the way i was playing and he probably assumed i was counting cards or something i don't know but he really liked the way i was playing and he got up from the table kind of tapped me on the shoulder and he and he you know and he's kind of put his arm around me he was a professional gambler he's a professional blackjack player he's like you know hey kid i'm going to teach you something here okay i like you i like what you're doing i'm going to teach you something you you you know you listen to me follow me right and so he why are you pointing at john what's going on here we i did this i actually took lessons oh really okay so you know exactly what i'm talking about here okay so anyway he taught me this money management technique called one two three five five ten and uh uh and and he goes i shouldn't really step i should have set this up in advance so i'm gonna it's gonna take me a minute um let's see let's see and [Music] foreign [Music] god 50 cents oh [Music] i got 20. i think i did that right okay here's the concept behind this now he didn't explain the concept he just told me how to do it and then interestingly enough about three or four years later uh i was a charter subscriber to gambling times magazine and uh and this system was in here it's called one two three five five ten and basically it the philosophy behind it would be like this winning streaks and losing streaks occur okay in other words winning can come in streaks and losing can come in streaks and the whole idea would be to take maximum advantage of a winning streak and lose the least amount on a losing streak the problem is you don't know if you're on a streak basically until it's over one way or the other is there a way to mechanically handle maximizing your profits on a winning streak and minimizing your losses on a losing streak this is one way of doing it like i said it's called one two three five five ten and it works like this you divide your available capital into 100 units whatever it is so let's say you've got a thousand dollars to gamble with you're going to divide it up into 100 10 units and so you always start out with one unit which would be 10 in this case and if you lose that unit then the next hand you put down one unit again and if you lose that unit the next hand you put down one unit so in three losing hands in a row you've lost three units but if you win here's what you do so i'm i'm playing this this is a hand one in this case i bet ten dollars so yeah this is a hand one see one two three five five ten that's how you know how this system works so i bet ten one unit that 10 is equal to one unit i win a unit i have twenty dollars i don't rake off anything i put that twenty dollars on the next hand and let it ride i win two hands in a row i've won twenty dollars i've got forty i rake off 10 which now i have my original unit back with two hands in a row i've got to win two hands in a row to get my original unit back but i've got 30 that i'm betting with i win three hand win it again i've got three hands in a row i've got sixty dollars i take off another can now i need three hands in a row to make a one unit profit but on my fourth hand i've got fifty dollars bet i make fifty dollars i've got a hundred dollars i rake off fifty so four hands in a row winning i've got seven units or seventy dollars on the fifth hand i bet fifty i make fifty i get a hundred i don't break off anything on the sixth hand i've got ten units riding see one two three five five ten that's the number of units riding i've got 10 units riding i make 10 i've got 200 i rake off 10 i've got 170 or 17 units and i keep that 10 riding until i lose it and go back to one it automatically takes care of the winning streak by maximizing my profits on a winning streak without me knowing that i'm on a winning streak minimizing my losses on a losing streak without even knowing it because on a losing streak i'm only losing one unit at a time it using this kind of and you can do any combination you want by the way he taught me one two three five five ten you can do other combinations of this and mathematically i don't really know what's best i really don't all i'm saying is that but this does work if you go to vegas or someplace where there's a casino and try this out and follow the rules do it it works it really does because what this is not taking into consideration this particular example it isn't taking into consideration the times for an example you might be have have a hundred you might have a hundred um or might have fifty dollars five units writing and you get an opportunity to split your hand or double down you win again stay with it just take the additional profits off but see those circumstances in in this area right here when you've got one two three or five units riding in any of these circumstances where you get an opportunity to double down or split your hand and win it just magnifies the outcome as well as magnified the outcome on the law side if you're you know if you if you happen to double down and lose under these circumstances too so from this experience after you know i i went to chicago and like i said i traded one of the things i traded the most was silver i really liked the silver market at that time it was really volatile number one if anybody if anybody remembers back then one of the reasons why it was so volatile is because gold and silver were were still you know a real uh significant part of what people thought to be you know the monetary monetary stability and at that time in like 1982 especially there was the threat of an international banking crisis because a lot of the south american countries were going to default on their loans did anybody remember all that all that crap well as a result the silver market was the gold and silver were particularly volatile and and one of the things that i did is when i would go back and review all my trades and analyze all my trades i found that it was really rare say one out of 10 times i don't remember the exact statistics but let's say it was rare that i entered into a trade where the market went against me and stopped me out without giving me anything first nothing just i put my order in my my order gets hit and i get stopped out the market never went one tick in my favor maybe one out of ten times then i looked at how many times did i actually end up getting stopped out where the market may have gone two or three ticks in my favor before stopping me out and then it occurred to me and i said you know what what if i divided my position up into thirds and took my first third off religiously after i got two or three ticks so what would end up happening well maybe the same isn't going to be so good so what would end up happening is that if i if i put on three contracts right here at support if i got let's say five cents on one of them i took that five cents off every single time not only did it reduce my risk if i ended up getting stopped out on the last on the last two thirds of my position it ended up overall paying for my expenses doing this every single time without hesitation ended up paying for my expenses in the event you guys laughed out yeah no not no i don't mean in this particular trade it wouldn't pay for my expenses because the amount of profit right here wouldn't pay for the loss on the last two thirds that's not what i mean i mean overall accumulatively accumulated accum accumulatively yes whatever it ended up paying for my expenses by taking by always taking this first third did you take a third after two or three takes did you say and i had in silver at that time i think it was five cents so it's going to be different every market by the way i'm not percentage though yeah some small percentage right percentage of what your stock is you know it had nothing to do with where my stop was it just had to do with with with the way this the volatility of the silver market and and what in my assessment of of what the possibilities what generally the possibilities were in most cases in other words based on the way i defined support at that time at that time i would almost always get at least except for under rare circumstances always get at least five cents before it stopped me out if it was going to stop me out at all which let's say that happened let's say 40 of the time and then the other 10 of the time i got stopped out without getting anything where i got stopped out on my whole position now this whole concept was based on what i learned from this guy in vegas because i'm thinking to myself you know i don't when i get into a trade i don't know how far this market is going to go in my favor and so what i wanted to do was maximize philosophy from a philosophical perspective basically i was thinking i want to maximize my my profits on a winning trade minimize my losses on a losing trade when i don't know how much i'm ever going to get yes one thing i've never quite figured out you know is how do you really minimize the losses when you're going out of trees at once well i'm not sure if i when i when you're initiating the trade with your full amount of contracts right yeah you're going through right so if you're like you know like you say get into like a series of losses because of the markets or whatever how do you minimize how can you minimize that you you just can't only in relationship to your risk reward ratio that's in other words you're is not minimizing it the same as in the example the example that i gave you for the blackjack was just philosophically okay uh but i'm still not sure sure what you're asking me jake i just wonder if there's another way besides going and like scaling in or you have to just go in with your pull you can scale in i you know it seems to me to be a lot of trouble to do that but you know it's if you want to but see the problem is jake is this it's not a matter you wouldn't even be asking the question if you if you if you've accepted the risk now think about why are you even asking this question in the first place what are you trying to do by asking the question what your answer is saying to me is that i'm trying to avoid the risk in some way or minimizing this well so is what you're saying to me is that you can't afford to trade no this is one of you if you ever thought about another way of getting into it without having the full position about itself well no you can you can you can scale into a position but but again it's like it's like do take the available capital that you have to trade with and if you can afford to lose that available capital then reconcile don't trade until you're reconciled that you can spend that amount of money then you won't even be worried about whether or not you're minimizing your risk you minimize your risk based on your ability to make an assessment as to how far the market has to move against you to find out if that edge is going to work that's how you minimize your risk now from a money management perspective if you're uncomfortable if you're legitimately uncomfortable trading more than let's say the minimum amount for this exercise which is three then don't then don't do it really don't do it until you're comfortable and that's the only way that i know of to minimize the risk other than other than you know you the way you define an edge consistently gives you at least a two to one to three to one risk to reward ratio so in other words you tested it enough in your own training with so much to know that most of the time it's going to work that's exactly what i said yeah that that i analyzed my trades i analyzed my trades and found that that you know that if i was going to get stopped out let's say that 40 percent of the time that i have 50 percent of the time that i end up getting stopped down on the trade the market gave me something first it just didn't go i just didn't get in here and it did this it went like this and then this okay and i thought you know what if i take off if i take off a percentage of my position when i get this that it'll make a huge difference in my results overall and it did because remember now i'm only getting stopped out on two-thirds of my position i've eliminated a third of the actual risk and i've also booked some profits right okay yeah so it really minimizes my losses right and so now i've got two thirds of my positions still on what am i going to do i'm going to take them off at predetermined you know predetermined points or as close to predetermined as i can and and i don't like when daniel brought up trailing stops i thought to myself because you know i'm thinking okay i'm going to let it go and then maybe literally come back this far against me and get out i didn't like that at all did you work it on a percentage basis or just based on the market itself yeah based on the swings that i trained based on what i because because i like everyone else wanted to be in you know in a big move and i'm thinking myself how am i going to assure myself of ever being in a big move if what normally happens is that if i don't book any profits if i let this market go up to here and then come all the way back down to my entry point which it could happen without having taken any profits along the way i will blow out of this position without really even knowing for sure whether or not it's just coming back down to test support and make a double bottom then go right back up again and that happens a lot and so it happened enough times where i said you know i that really pissed me off because it was extremely difficult to stay in because i didn't want to break a rule that says i'm not going to take a winning what was a winning position and and let it go into a loser without having taking any money at all it's bad enough i didn't take any money i'm not going to let it go into a loser so even though based on let's say my technical expertise i could have said well it's probably just making a double bottom emotionally i couldn't i couldn't let myself lose money on that trade and so i'd get out of it until i started scaling out and then if it came back i didn't care because at the very least if i wanted to scratch it i would in many cases i wouldn't even do that i'd still let it define itself based on my original risk point on that last contract or that last third of the position we never move it to break even oh yeah i would move to break even i'll just say i'm not saying i never moved at the break even but after the second one after the second one was off i probably yes i'd move it to break even for sure but taking that first third the first third right allowed you to overcome that yes right taking the first third and see the thing is here's what's really important from this psychologically too is that is that one remember there's a couple of things one what's the primary objective what is our primary objective oh come on craig you did that on purpose right oh okay oh my anyway what's our primary objective successful what yeah remember the belief to create a belief that i am a consistently successful traitor remember that was remember this that's where that in the book if you guys recall yeah that was the primary objective and if that's the primary objective then then for me to for me to install a belief like that i essentially have to create experiences of consistent success do i not yes and so therefore every time i take every time i take part of my position off as a winner how am i not making myself a winner and by making myself a winner am i not creating adding energy to a belief that says i'm a consistent winner and therefore that's exactly what will happen and so and by doing this it also gave me the psychological resources because now i'm in a really a carefree situation i mean a risk-free situation i don't have really any money at risk right now except the last third of my position based on the amount of profits i have those profits are mine and i do look at that as being at risk in other words when i'm in a position i i feel like i'm obligated to make a constant never-ending assessments as to the risk-to-reward ratio think about this as traders we are obligated to make trading subjectively or even even mechanically for that matter we are we're this is what makes trading so hard this is what makes trade taking profits so difficult is because we are obligated to make these constant never-ending assessments assessments as to what the risk to reward ratio is in any given moment because the market's going in my favor i am at risk at market risk to giving all these profits back am i not so i have to say to myself how much of what i've already gotten am i willing to risk to find out if it does this to find out if it does this to find out if it does this and what's the potential now you don't necessarily have to do it to the extent that i'm talking about many of these places that you take off your profits can almost be arbitrary they really can't educated guesses edu e-d-g-u d-e-d-g-e you catered guesses educated just do it as nike would say just scale out but i like scaling out at places where it looks to me like the market will will will you know give me a little bit of a retracement meaning that if i'm if i'm going to move from here to here or if i'm going to move to here to here what i'm doing is i've got this high and this low and i'm looking at my fib my seven eight six my six one eight my fifty percent my uh three eight two and i'm looking how it behaves at each one of these spots and so i'm saying what's the potential based on based on this wave right here of it getting up to a 50 or a 618 and and at the very least i'm going to have my second contract or second second or my second third off by then instead of waiting for it to come back as a trailing stop i'm going gonna look for it all take it off the six way oh yeah sure then you've got the rest left over to see yeah the rest left over to see isn't it yeah to see if i get away to see if i get at least a one two seven up here right a one two seven of this move right here like this see if it even goes through and other times what i'll do too i mean even though i have i have not done that i haven't done this in years actually but i used to do this is that i would take i would take it off right under this right under this this support or this resistance spot right here and then re-enter on a on a buy stop so i wasn't i would see because in essence i'm saying i'm gonna am i gonna willing to risk all this to find out if i can get this because if it goes through here chances are it's going to keep on going and giving me a 127 right at least but am i willing to risk all that just to see if it does that numbers am i willing to give up this opportunity this is opportunity cost right here the opportunity cost of this i'm willing to give up to book all of this right and that just made all the sense in the world to me and i i you know and as far as mike one second john as far as my customers that merrill lynch that did the same things as me at that time this this saved us an enormous amount of money by doing this enormous john go ahead so you're just going to take your last third if you have your breakthrough for your next leg out you're just going to take your legs position or you would oh yeah just it has a breakout trade then becomes a new trade it becomes a new trade okay yeah just yeah go ahead it's not like oh my gosh it's going more it's a brand new it's a brand new decision trade right just as as if i take it off at a 786 and i get it now depending on the swing if you're trading two minute charts this i'm not going to be doing this and see the problem is i trade two minute charts now so whereas before i used to trade daily charts so what do you do now what what do you do now a lot of it i just i'm out of the whole thing i'm out of the whole thing at a six one eight or seven eight six you're never gonna do that no [Music] no but on a daily chart what i would do is that if i got say the market did go up to like a seven eight six uh i would if it came back down and i got another swing where i'm getting it like this like this i would re-enter into the whole position if i got an isolated low right here i put on the whole thing again as another trade based on whatever kind of retracement i was looking at i think that's a really you have to make that decision in your mind that you're not adding to the pass trade it's a new trade it's a new trade yeah out of this though keep in mind john i'm already out of this i've already booked my profits i'm making a decision based on this retracement as a brand new trade this is the decision-making process that's based as as a brand new trade but as an amateur we could make the mistake of not pulling that last third see that break through go back in and mentally get into it's a continuation of the first trigger if you you could do that just as long as you only had it on added on two thirds right you've already got a third on okay so in all your see it's either problem well then it doesn't have to be a problem but yeah you're not going to add the whole thing back on not going to add another little hole position yet on two thirds of the position goes because you've already got a third on and the other thing i've got i really just popped my brain again is that that not only are you making yourself a consistent winner you're creating these experiences of consistency i am a consistent winner because you're constantly booking profits as the market makes it available to you the only drawback to this is that if the market really gives you a monster move you you might have the tendency to say to yourself oh i wish i had my whole position on which i found over the years teaching people this that's typically the reason why they won't do it this is one of the most important concepts you can learn as a trader other than all the other stuff we were teaching about thinking probabilities in terms of taking profits i can't i can't stress how important this is what if you're having in a five-minute time frame maybe do two units and still try to get some of that concept to work that's the the question's too vague jake i don't know what you mean what did you say we say five minute time frame right you know all right like you're i don't know what kind of swings you're trading like for example you're using two minutes i trade a two-minute chart yeah i trade the patterns that a two-minute chart gives me right so it's hard to scale out three units on a two-minute time frame right no no no it's not hard to divide into thirds i just don't i just don't don't do it the way i did it on a daily chart based on these retracements that you know because this in a lot of cases just just noise i was if you looked at what i'm giving you as if it were a daily chart a market coming back to this point right here let's say which would be let's say a six one eight of this move right here instead of this move right here six one eight that would probably be a good place that the market's gonna reverse and i'll just add the whole position back on on a two minute chart you know if the market if the market does this or let's say you know the market does this on a daily chart and comes back to this that would still be a good trade on a two minute chart that might only be you know two s p points you know it's not there's not enough there that's what i'm saying okay i think on that two minute time frame i can relate really well to that you know if it's there's no need to put a stop the market stop going up oh yeah right and i don't put stops in the market i mean i just yeah i just get out you know now if you don't trust yourself just get out then you gotta put stops in the market now the other thing the other part the other thing that makes it so important is that if you resist you find yourself resisting scaling out if this is predicated on you understand the uh understand the underlying dynamics of what i'm saying here in terms of its importance to establish a belief in your own consistency and you find yourself resisting doing it what would that tell you about your mental makeup or in any given moment if you're in the market you're in a winning trade and you find yourself excuse me resisting doing it [Music] the conflict yes but that what you you you're convinced it's going to keep on going okay you would virtually have to be convinced that's going to keep on going which in essence means that you think you know what's going to happen next just like people who add to a winning position there are floor traders that i've worked with that were psychologically nimble enough to add to a winning trade as the market was going in their favor they were actually adding to it but they were psychologically nimble enough that if it came back a certain percentage they blow out of the whole thing and you know with their profits normally if they have the opportunity to the problem is from a psychological perspective as you add to a winning position you're becoming greater you have a greater and greater psychological commitment to that market for that market to keep on going you don't know how far it's going to go and the greater your commitment the less the mental flexibility and the chance of you making a trading error are almost 100 percent how are we doing time wise 320 oh my [Music] well first of all i use the one two three five five ten just just as a concept as an analogy to to to show conceptually why it was so important to use a money management regimen that didn't that did it for you automatically in other words those what i'm really saying is that do i really have to do i have to know how far a market is going to go in my favor to be able to book consistent profits no i don't just like i don't didn't have to know how much of a winning streak i might get in blackjack to book consistent profits in another and to maximize it at the same time now based on what i just said what what is your question because i didn't understand it um i understand how you implement something like that with a single hand or black jack if you only have one you're only making one bet at one time okay but if i'm making 10 bets at one time how do you in blackjack or another trade okay then relate it to the stocks then just tell me i've got 10 different positions i'm putting on in 10 different stocks for 10 different reasons 10 different edges it could all be the same all the same edge okay uh i don't know how many of them are going to be winners right but what do you know at the time i put them on i don't know what's going to happen but what do you know about about anything what do you know what do you know when you put these 10 positions on what do you know they meet the criteria of my edge and so i put that and i put them in what else do you know i know i know much of the risk i know my targets are then then then again i don't really know what you're asking me it sounded like maybe i didn't understand the way the one two three five five work but it sounded like you're increasing your risk as you generated more profits or did not understand that oh no yeah you're right you're right okay now i understand what you're saying don't relate this directly one to one it's just a concept that that that just using as an analogy you're right based on the one two three five five ten it would seem as if it would seem as if i i am actually increasing my position if i related to trading right and i'm not doing that i'm actually doing the opposite the difference is the difference is the only thing that really relates directly is the fact that we're talking in terms of streaks a streak of winds in blackjack relates to a trend a streak in your favor that that's all that's all the analogy gave you okay was streak for streak but in this case i'm scaling out of the streak in my favor using using a scaling out money management technique to assure myself that i will be a consistent winner then what what this example gave you was that it assured you assured you that you would minimize your losses on a losing streak okay not necessarily completely maximize your winnings on a winning streak but give you you know give you so much more in a winning streak than what was on a losing streak that overall you're going to come up on that winner right you can't apply that if you just traded one position you could apply that uh i'm not sure how i'm not sure how i don't know are you not raising your wrist there when you're playing blackjack with each hand no not really not no absolutely not profits well how can i be raising my risk if once i'm passed once i'm past the second hand i've already i've already booked by the second hand i've already booked that so i saw you i'm raising my bet but not my risk right see the difference between what you were saying is if you raise your ben you turn over one hand you're always at risk to unlimited foot i mean i can raise my i can raise my bet the problem is if i slip if i put on ten positions right now all at once [Music] how to really do this yet because if you put on your full position you know you're at maximum risk that's not the full position oh i mean here in order to decide how much to bet you have to know what happened in the last hand right it's predicated on the last hand absolutely but if i put 10 positions on i don't have the last hand until one of them starts to come off okay the only thing i say george is do not relate trading to this okay in your case forget this okay just do it with blackjack okay i thought you had some way i could just continue to raise my bet so yes there is no there is and would you bring up a very important point because because this because doing it this way what it does is that as you as you increase this you know the strength of this belief in your mental system that i'm a consistently successful consistently successful trader what you do then is increase your size so instead of starting out with 300 shares let's say dividing them into third thirds after you get to the point where you've where you can do this and do it without error and do it without conflict then you then you divide a thousand share position up right and then you go to 3 000 shares and then you go to 10 000 shares or whatever capital and as the capital goes up exactly maximum dollar losses exactly right right so that when you do get you know do get some of these moves even that last third you're piling up some big dough so does that help you jake well i'm not sure where you're still confused no i just tried because of the time frame i'm in because i'm just trying to figure out how do i really but the thing is jake you already know what to do there is nothing else you need to do right now and i'm serious about that you can't really scale out with three contracts jake you shouldn't even be training three i don't have to do that immediately jake then don't worry about what i'm gonna do later on just do just do what you need to do now okay i'm really serious about that one contract do the exercise forget about everything else okay okay because i'm telling you jake the only reason why you're going through this mental masturbation you're trying to talk yourself out of doing this you really are and i'm serious about this here write him a prescription the doctor dr douglas says okay okay you know when jake is as these things start to come to your mind your your task now is to say to yourself i understand i may not understand exactly where this is coming from but i understand the implications you should be writing this down jake i may not understand where these thoughts are coming from but i understand the implications and i am committed to stay on my chosen path of training one contract using the time exercise as you have already designed it here's your prescription [Music] so jake when these conflicting thoughts come up just just say that to yourself just refocus redirect your focus okay because that's what they are they're just conflicting thoughts in essence trying to talk you out of what you need to do trying to talk yourself out of what you need to do okay [Music] okay anyone who hasn't checked out yet it's almost 3 30 they're going to be blocked changing the lock soon okay let's let's uh let's take about a 15-minute break that'll give you guys enough time 15-20 minutes yeah come on back excuse me we'll finish up okay mom yes i'm going to go to my wife [Music] okay i've got some things here under uh under training mechanically that will uh i just want to review we've really talked about a lot of this already you're going to commit yourself to trade a mechanical system in a predefined sample size to cause this head-on collision between the variables that define your range and any mental forces that are in conflict with the seven principles of consistency effectively working through this conflict will create a resolute belief in probabilities and build a sense of self-trust that you will always without hesitation act in your own best interests these are some additional tools that i'm giving you to help you work through some of the difficult moments frequently review and memorize the five fundamental truths everyone know what they are i don't refer to them as the five fundamental truths here in this manual although in trading in the zone i do they're in section three page five i think it's page five or page six yeah anything can happen every moment is unique you know there's a there's a uh random distribution between wins and losses and i don't need to know what's going to happen next and then the sub one about an edge is a is a higher probability of one thing happening over another so what you want to do is you want to keep those things in front of you all the time you really do so that you can review them at least memorize them or keep them in front of you two courage is its own reward meaning feeling meaning it feels good to be courageous by stepping through your fears we don't really need any more of a reward of the fact that we were courageous in any given moment so that if you can if you can muster up the courage to expand yourself in some way it will feel good i mean an interesting eventually not only in that moment in that moment anybody wants a fear factor yeah okay but one of those shows i remember they had to uh when they had to eat no no when they had to eat some of these bugs and worms one of these they had these these disgustingly thick grubs or whatever those no not the beetles no no there was a grub one it was that there was a huge conflict with every single one of these people right that they had that what did they do they had to make up their mind with enough conviction to work through not only the physiological aspect of or you know the resistance but the mental resistance of eating these disgusting things live right money whatever the reason it doesn't matter they made up their mind every single one of them on that program that particular knight did it and and what were the results every one of them were in the state of euphoria afterwards did you notice that because the bugs are good yeah right every one of them did it and every one of them were in a state of euphoria courage is its own reward monitor your thoughts and actions and constantly ask yourself is this who i am when you're about to when you're when you're monitoring your thoughts and about to do something based on what you're thinking and now you're catching yourself because you're doing that that counting exercise you can ask yourself is this who i am is this who i want to be is this an expression is this an expression is what i'm about to think say or do an expression of who i want to be because if you want to be a consistently successful if that's what you want to install in your mental environment as as as a functional part of your identity then what you're going to want to do is constantly be asking yourself is what i'm going to do in this moment going to contribute to or back from that belief because everything we think say or do contributes to a belief in something [Music] everything we think say or do contributes to a belief in something so if you want to be that consistently successful traitor you want to start paying attention to make sure that you are thinking saying or doing something that contributes to that belief and if not at least make sure that you're not thinking saying or doing something that detracts from it [Music] training subjectively once you've accumulated we've already talked about a lot of this by the way i'm just going to review it a little bit once you've accumulated the appropriate mental skills you can move into the subjective stage of training in this straight stage you can use everything you've ever learned about the nature of the market to do whatever you want to do so there's a couple questions that i've given you can ask yourself to stay focused on the market's perspective the chart represents what traders believe about the future is there is there any symmetry to this collective behavior look for symmetry trade charts that have symmetry if the markets aren't acting in a symmetrical fashion don't even bother with it because chances are the relationships that you look at aren't going to work anyway i'm getting looks here roman you got a problem you know what i mean by that just explain a little bit more and submit yourself okay not not all markets are are going to be trading symmetrically every day in the s ps these releases a b equals cd relationships and fibonacci patterns that i trade you know some days they are right on i mean you know every single relationship is is is is a fib and then other days you hardly get one or two of them that would that work you'd have to sit there all day you know to catch the one that does and so you just look at it and say based on the present symmetry where is there likely to be the greatest degree of imbalance between trainers who believe the markets going up and those who believe it's going down because that's all it really is [Music] all price movement is a function of what traders believe about the future so you can draw even a trend line just draw a simple trend line and and you know the the longer the line meaning in the higher the time frame the more significant if the market trades below or above that line because that line represents symmetry that line represents where the imbalance is in a particular direction if the market can all of a sudden start trading below a really valid valid trend line that's powerful the cemetery's been broken and therefore what you've got is a high probability that there that they're the imbalance between buyers and sellers has shifted dramatically or significantly enough for you to put on a position in that direction always ask yourself what's possible how probable is each possibility and how much is it going to cost me to find out and take the obvious and easy trades really just take the easy and obvious ones they're there they really are don't make it complicated it sometimes it seems as if some of the trades are so obvious that it just can't be real i don't really know that there's anything i can even add to what we've already uh what we've already gone over unless there's any questions about it otherwise here's i put these affirmations in here because what i what i would suggest that you do is take these affirmations and read them into a cassette yourself in other words empower these words with your voice you can go to somebody else if you prefer but i would prefer that you not because you would be empowering yourself as opposed to giving the power to somebody else to speak these words for you and i'll just read them i acknowledge there may be maybe aspects components and principles of successful training that i may not be aware of as my awareness grows of what it means to be a great trader i will not take for granted or assume that these new awarenesses have integrated into my mental system in a way where they are completely functional or not in conflict with anything else i've already learned therefore the words i'm about to speak to myself i willingly and wholeheartedly give the power to enhance and change the structure and content of my mind i accept these enhancements and changes enthusiastically and lovingly let go of any reservations or resistance i empower these words to become my internal and external reality my methodology identifies patterns and market behavior and gives me signals to do something it is normal for my mind to think these signals are telling me what's going to happen next but to be a consistently successful trader i realize that i have to train my mind to think in ways that don't feel normal until these new ways of thinking become a functional part of my mental environment during this process of integration i may find the rational part of my mind in one way or another arguing for knowing what's going to happen next i resolve resolve that when i find myself in the process of either thinking assuming or believing that i know i will gently refocus my thoughts on my new understandings about the nature of the market and trading what i know now is every trader contributes to the overall behavior patterns of the market and therefore everyone who trades is a market variable that has the potential to confirm or invalidate any pattern and any signal what's that [Music] believing this makes it easy where there's a higher probability of one thing happening over another do you guys need me to stop no but you know if you could raise your mic up a little bit you're hitting the papers hitting it i'm sorry that's okay yeah smoke thanks okay as a result i no longer place any particular significance on each edge that presents itself each day becomes easier and easier for me to put output less significance on each edge because i now believe at the very core of my being that i don't need to know what's going to happen next to make consistent money i just need to keep my mind focused on the probabilities therefore i'm always asking myself what's probable what's possible how probable is it and how much is it going to cost me to find out meaning what does the market have to look like sound like or feel like to tell me this trade isn't working in the time frame i trade in i know now that every market moment is truly unique regardless of how similar may look or feel to something i've already experienced therefore every time i find myself connecting what is happening now in the market with something that is already in my mind i will actively disconnect the two my past and the present moment and we focus my thoughts on the fact that anything can happen all i need to know is a the mark is the market conforming to my definition of an edge b what is the risk of finding out if the trade is going to work and see can i accept the risk if the answer to questions and c is yes and if i have a plan for taking profits then i resolve to enter the trade without reservation or hesitation i know now that i am not responsible for what the market does or doesn't do nor am i responsible for predicting what the market will or won't do what i am responsible for is making sure i'm in the most conducive state of mind to be able to objectively perceive what is possible from the market's perspective and behave in a way that is consistent with my objective of making consistent money therefore i resolve to pay attention to the quality of my state of mind by asking myself am i in the best state of mind to be objective and trade without the susceptibility to making an error if not then i resolve not to take the trade or scale back in a manner that corresponds or i resolve not to trade or to scale back in a matter that corresponds with my diminished capacity day i'm getting better and better at making these assessments about myself because i know that mistakes exist in my life to point the way to success i was not born with a definition of what it means to make a mistake children do not have a concept of what it means to make a mistake until they're taught these concepts are learned in more often than not their learned and painful ways it is natural to avoid pain and therefore natural for me to avoid taking responsibility for anything i've learned to define as a mistake however there's a problem here mistakes point the way to point the way to success fulfillment fulfillment and satisfaction can take within each misstep is the insight i need to find my way to that success fulfillment and satisfaction if i continually avoid making the connection between my perception of information the actions i take as a result then i will likely stand a cycle of emotional pain and dissatisfaction wondering why the world seems to conspire against me i resolved that it is now time for me to reverse any cycle of pain and dissatisfaction by accepting my results as a true level as a true indication of my level of development my goal is to make myself into a consistently successful trader the process of doing so has several steps but most importantly jake it has a first step and that first step has to be consistent with my true level of development where i am right now not where i would like to be or assume i am based on what i would rather not face about myself to find that most important first step i have to be willing to stop beating myself up i have to be willing to truly accept that i don't need to be perfect but at the same time acknowledge that every outcome was a perfect reflection of my level of development i resolve and give myself permission not to have to prove anything to anybody especially with my trading i just need to give myself permission to learn i'm willing and whole i willingly and wholeheartedly give myself that permission now knowing that by definition anything i need to learn does not yet exist inside of me otherwise i wouldn't need to learn it which means that i am not yet the person i'm about to become the consistently successful traitor i can imagine myself to be is a future projection of myself i will go into that future projection step by step accepting my results along the way not as mistakes but simply indicating what i need to learn to get to where i want to be and with that guys we're done what should we do with what tank [Music] no just no just listen to it and then do the techniques that are that are in the book the techniques remember the techniques during the book here page it's like that half hour as well yeah they're all about 28 minutes uh on page um page uh three and four or no of a four and five of section five page four and five of section five page four and five of section five so numbers one through four yeah okay yeah numbers one two four okay that that's that's what yeah that's how you use the tape okay okay that's how you do it that's how you use the tape was was those techniques that i gave you for that okay jay see [Music] okay any other questions more i wish we'd had more time because i planned on actually demonstrating these patterns to you uh uh but and they're really and it's really tough to demonstrate this way it really is you really have to see them because they're they're there all the time but yet until you train your eyes to actually pick them out they can be right in front of you even me i had to i had to go through a process of you know several weeks if not months of just drawing highs and lows highs and lows and connecting them until i saw these patterns pop up all the time i didn't these patterns i did not find myself there i don't even know if they were developed by a friend of mine but i learned them from a friend of mine by the name of larry pasaveno he's written about five or six books on fibonacci relationships although i used to use fibonacci relationships almost from the time i started trading back in the late 70s um because they've been around for a long time but this a b equals cd i don't know who actually developed that but basically what you're going to find is this what yeah dan do you think oh is that is that a gan thing again yeah that's a 50 retracement rule though i'm talking about what you have is any high and low in any time frame it doesn't matter any high and low in any time frame so i have i have a market that's coming down to make a low i get and and then it did this okay i got this i'm starting i'm starting here this would be my a doesn't matter pick any high or low this becomes a high and i know that because the market started to go down further now what you need is for this for the mark this swing this swing right here this b swing to be it can be really a 0.318 a fifty percent a six one eight or seven eight six but mostly what you're going to get are 0.618 so what i mean by this is that if you measure the point from here to here from this low to this high the market retraces 61.8 percent of this distance okay in fact i'm going to do it here let me do it here because it's not really i'm going to do it big that way okay now [Music] this is a this is b now when the market starts to do this right here i take this line this distance right here a and b and and my software will allow me to click on this line and it'll clone it the exact line at the exact angle and then i put this line right here and this becomes d now the market hasn't done that yet and you i can watch the market and how it trades around this line if at all and so what i'm saying is that i will sell d and d will be a one two seven 127 percent of bc a b c d and then a b equals c d the a b line equals the c d line you sell at d especially if d on the in a lower time frame is comes to get comes in at a point that's a that's a fibonacci relationship from a higher time frame but uh the best way just get just get one of larry's books just you know go to traders uh traders uh library or something and uh he's got like seven books on it but you can get fibonacci relations relationships and patterns for stock traders right i think that's probably the one that uh and all this is explained go ahead just don't read it once yeah one time well what you really have to do is you have to stop picking out the patterns you have to have to have to just start drawing the highs and lows and seeing how seeing how these patterns um works it didn't all sink in the first time no okay yeah i would say i've been working with fibonacci relationships for like 20 or 20 years so you know go ahead john friday night we discussed when we're talking about fear how we narrow our focus to concentrate on the most it causes us to yeah right okay and within that first page you were writing up down higher low lower bottoms right and you said when we get the sunday i'll show you how to stay in these trades and fight that off was that taking size off yeah oh that's what you meant yeah that's just how yeah how to scale out that's all that's what i meant yeah that's all i meant was just how to scale out of trades like that if you're in them on the right side of the market yeah not like the guy you're exactly where yeah if that's it guys we can go this can be it this is gonna be a wrap thanks a lot for coming thank you