Mastering Trading Psychology and Strategy

Traders love to argue until they're literally blew in the face between what is more important between technical analysis and your strategy and trading psychology now you could be born with the most amazing natural-born Traders mindset in the world and if you are then then Happy Days good for you but if you don't have a proven profitable strategy in your hands then you're not going to make any money right so at the start of your journey understandably it is a lot more important in my opinion to focus on the technicals to develop that strategy andove you have a strateg Edge but then further along in your journey that is when you quickly realize as you start to try and scale up trade life Capital Etc that actually it's about 80 90% of psychology is going to be the difference between whether or not you are profitable at that point now thanks to the regulations in the EU if we look at uh many of these regulated retail Brokers we can see at the top of most of their their homepages the stats of their winning and losing Traders on their websites right so if we can see that on average about 75% of Traders are losing then you could be forgiven for thinking well why don't we just find out what they're doing right and do the opposite of it and then that way we can be in the winning 25% well okay let's dive into that what is normal in trading so back in 2015 fxm did a study of 255,000 of their Traders and they looked at 43 million trades taken and they actually saw that 62% of the trades were winning trades but what's going on here well when on they took a winning trade they only made on average a gain of 48 Pips but when they lost a trade on average they lost 82 Pips so we can quickly see here that their losing trades were almost 70% bigger than their winning trades so as a result over the course of let's say 100 trades that's going to be a 140 pip deficit which means you have a negative profit expectancy in the long run now this is not a strategy problem it's not really a technical analysis problem there are hundreds if not thousands if not millions of profitable strategies out there you can trade the market any single way you want um there's thousands of strategies on YouTube that that are probably successful this is more of a human problem and I'm going to show it to you so an absolute classic psychological error in trading that I'm sure you've experienced um I know how I have in the past is moving your stop loss to break even when it's not within your rules to do so so let's say your strategy tells you to buy here for whatever reason you get in long and the market starts moving nicely in your favor so what do you do you move your stop loss to break even even if it doesn't stay in your rules simply because we want to remove any potential risk on the table and then as you probably experienced plenty of times the market will then come back to your level stop you out for break even and then goes on eventually to your profit Target okay so this is just one of many mistakes that Traders are making that is not conducive to a long-term profitable Edge so if you break your rules by TR triling your stop loss to break even too early you know what's the reason you're scared of taking a loss and the subconscious reason of that is because you were trying to avoid the pain of losing money now Tom hugard did an amazing lecture on this where he breaks this down right and there's so many common mistakes that we as Traders make right taking low probability or even invalid trades why do we do that it's because we get fermo right we're scared of missing out on potential um you know profits but what's the subconscious reason it's the same thing it's to avoid pain right the pain of potentially missing out on what could be ours Another one not executing another trade after you've taken a winning trade a reason is usually because well you know I've made some money I don't really want to give back any profit today I'm happy with what I've got but you're not executing your Edge and what's the reason again to avoid pain the pain of potentially giving away that profits taking profits too early right not following your management plan similar thing you want to keep on to what you have why avoid pain avoid pain of losing that perceived money of you know what you've got within your account the other thing increasing your position size after a loss why do you do that well you want to get back to where you were right you don't want to go home with that loss you want to get back to break even or or make some gains why you want to avoid pain now I'm sure we've all been there and we sure we'll make some of these mistakes in the future but it's only afterwards once you're out of the trade and you've made that mistake and you look back and you just think what is wrong with me why I'm an idiot why do I keep doing this why am I stuck in this Perpetual cycle of making mistakes that's stopping me from getting to where I need to be okay today I'm going to show you exactly why that's happening I'm going to show you why it's not your fault but then show you the key of what you now need to do to prevent this from happening in the future or at least drastically reduce the amount of times this happen so we're going to get stuck into some super es esoteric stuff we're going to look at biology we're going to jump into physics I'm super pumped to get stuck into this so make sure you stick around but who am I and why should you listen to me well I am M dony and I am the founder of photon trading and we help Traders not just acquire funding but actually Bank their profit splits long term using the power of mechanical strategies so like I was saying you probably make one of these mistakes you wonder what is wrong with you but actually there is nothing wrong with you we are walking around with the same brains in our in our heads that were formed 200,000 years ago okay so we are literally walking around with the same Hardware as our Paleolithic ancestors back then we lived pretty much in an immediate return environment where having that fight of flight response was extremely conducive to survival whereas only in the last 500 100 years maybe 50 years that we have had insane technological um advancements that has led us to now live living in a delayed return environment okay so our brains are designed to Value those immediate returns to respond to those fight flight responses rather than making the decisions that are conducive to long-term success so what does that have to do with trading well let me explain when you're in the markets right you probably experienced this with your demo trading you have your profitable strategy it's quite easy a lot of people can make money but as soon as you have that real risk on the table whether it's your own high Capital you've scaled up you going for funding challenges whatever it is suddenly It all becomes way harder right your brain almost melts and that's because your primitive survival instincts are taking over that decision- making and critical moments in other words when you are stressed it's extremely hard to make the right decision when you have risk on the table okay we are using our primitive andal brains to try and fight Japanese candlesticks rather than fighting Toth Tigers so it's extremely hard to do because back then you know that is an evolutionary uh advantage of our brains right to be wired to want to win and survive at all costs back then trying to get your lunch could literally kill you so you had to believe that you going to win you had to believe that you're going to overcome that challenge um and you were going to be able to you know win that hunt otherwise you either weren't going to hunt and then you would die from Hunger or you'd probably end up getting killed by that animal right because you're going in with the wrong mindset now that has served tons of evolutionary uh purposes and benefits to even our lives in the modern world today right to be competitive to want to win to do well in business Etc but bringing in that mindset into trading is a recipe for disaster wanting to win wanting to win at all cost wanting to avoid the pain of losing money we know is going to lead to the you know not most optimal training decisions of allowing our Edge to play out over time okay and to explain that in a more succinct term it say from Randy H it says your brain's short-term survival orientation is going to compromise your need to take that long-term perspective in order for your Edge to work in the Heat of the Moment okay so what that means is we know we're going to have losing trades in the short term losing winning trades right it's just the cost of doing business but over the long run we know our AG will play out but then when you're experiencing that losing trade in the moment right that's when your brain goes into meltdown and we end up making those mistakes that we just went through taking your profits too early avoiding trades Etc because we can't think about the longterm our brains really really struggle with that and why it's a biological reason our brains are caveman brains they view all Market uncertainty or any uncertainty in your life any risk it views it as a direct biological threat to your life okay so those Japanese candlesticks on your charts when they're moving around and you feel some uncertainty of the market environment the probalistic nature of what we're trying to deal with here the potential that we could lose some money you're brain sees that as a biological threat to life that's when your fight or flight respones kick in and you end up making those mistakes so let's apply this to a trade example right as it's a lot easier to then understand now we've all probably felt this right we we get into a trade it starts moving nicely along in our favor but if price starts to pull back and go into our stop loss and then we see you know it flashing red against us we have that risk on the table a heart rate starts to go up right you feel those emotions and that's because your biology right your your animal brain is seeing that as a direct threat to your life and this is when your emotional brain is going to hijack your thinking brain and you're going to you know make those mistakes because it sees that threat as a threat to life it's a threat to your Financial Health um it's a threat to your training goals right it's a direct threat to you getting funded potentially it's a direct threat to you quitting your job um perhaps it's a direct threat to Your Ego right maybe you shared your trade before you got into it in your community or maybe you posted on social media maybe you made a post about how you're going to smash your day and make because of profits now all of those thoughts are now swirling around in your brain and this is like danger danger so at this moment what do you do well I'm only half a% down at this point let me just get out let me just get out cuz I don't want to take the full loss I'm probably going to take a full loss so what you do you close the trade for let's say half an hour loss and then rep play the price forward and then ends up going to your favor if you had have just stucked your rules and then you look back afterwards and you just think what did I do why did I do that and it's because your animal brain yourid it hijacked your thinking brain just to protect yourself at all costs from experiencing any pain so when our emotions going up like that our decision making is going to go down and we'll make decisions that don't appear to be based on any logic or reason it's because our emotional brain is taking control and this is when we make a number of you know classic and tipical actions that we've all made and probably will make in the future and it's all the subconscious wanting to avoid pain now we are taught from a very young age that only winning and being right is pretty much rewarded right whether you win a trophy in sports or you get your grades on your exams now I'm not someone who believes in awarding everyone a participation medal but bringing this you know only winning and being right mental model which serves us well in most areas of life but bringing that mental model into trading it's terrible it's it's the worst environment to bring it in it's not a normal environment we need to be extremely comfortable with the idea of losing with having that uncertainty and risk on the table and dealing with a probabilistic environment a successful trading mindset requires you to not care about winning it requires you to not care about being right and ultimately all that matters is that you make money in the long run we know in a conventional business think like a brick-and Mor business you have costs you have rent you have supplies wages Insurance Etc but then you make your sales and then hopefully you make more sales than your costs and your difference is net profit right everyone gets that in business it's fine but in trading most people are trying to avoid those losses okay but actually if you just view them as the same way they're simply a cost of doing business taking a loss is just a cost of allowing your Edge to play out over the long run so that eventually you have a net profit over time now that's an extremely simple logical concept for us to understand but here's the problem we are not logical beings we are emotional beings who then try to rationalize our emotions with logic really it all boils down to the problem with the brain on uncertainty our brains our animal brains that we have evolved with they want to control the outcome they always want to be right and it wants to predict the future but none of those three things are controllable but we are hotwired to think that they are and that is what causes or what is makes trading so hard in the long run so let's dive into a bit of biology here right and just think about two parts of the brain first here we have the amydala so the amydala we can think about this as our lower minded animal this primitive brain that we have been talking about okay now this part of our brain it constantly wants to seek pleasure and avoid pains avoid pains at all costs so this is where you know our emotional center of the brain is that is just rooted to think about survival and protect us at all cost rights our primitive brain now here we have the neocortex so think about this as more of a higher minded animal this is responsible for our self-governance strategic thought and execution okay so rather than like just thinking about imminent survival this is thinking more about you know long-term thrival um and you know your Advanced thinking part of the brain okay now when you are stressed rest which is a lot of time when you're trading right when you have that risk on the table um you're trying to go for a funding challenge whatever it is all that um perceived sensy information right comes in and it gets processed by the amigdala first and that is where that emotional brain is kicking in with that flight of fright response and it essentially can hijack and block that information going up to your Neo context which is where your thinking brain is because the amigdala that makes decisions in nanc and it leads to you making impulsive decisions before you've even had a chance to think you know why did I even do that before you can um think it through so our job as Traders is to try and regulate the emotions that happen in migler and allow that to come up to neocortex then we can make the correct logical decisions that we know is conducive to long-term profitable trading so again remember our brains are amigdala it cannot see the difference between what is a true danger to your life right a biological threat to life biological fear it can't differentiate that between that and what is literally just a psychological disc comfort of having a bit of risk on the table so to the untrained brain any triggering of that threat it automatically produces biological fear responses in our body right from our primitive brain I'm sure you've experienced it trade starts going against you you sit forward in your chair you feel tight heart rate's going up you start selling whatever it is that is what is going on there your brain can't tell the difference between essentially like a saber t t sabertooth tiger coming at you right and just potentially you about to lose a bit of money or lose a funing challenge or whatever it is because you know it seems so simple I have a plan I'll follow my rules I'll make money I can do it on a demo account I can do it on back testing I bring that plan into live market where I have that real risk on the table and as Mike Tyson says everybody has a plan until they get punched in the mouth okay fight and flight response will kick in and then those Behavior patterns of you know fear and an aggression or avoidance those will kick in and that's when we make those classic mistakes so let's take these two parts of the brain that we've been talking about and let's draw them into a diagram and we're going to jump into some juicy stuff here now right so think about your higher animal mind at the top this is your soul your objective truth down at the bottom this is our lower animal mind right our primitive brain think of this as like the Physical Realm so all of our senses what we can see what we can touch and what we can smell what we can hear Etc so up at the top think of this as light now science tells us that if you are a particle of light right you are a photon you do not have any time you do not have any space you don't have any charge and you do not have any Mass okay okay now if you take two photons two particles of light and you smash them together they will split into a electron and a positron okay so now you have these and these do have mass these do have charges they do have space and they do have time okay now an ion is a charged particle okay that's what science tells us what psychology tells us is that an emotional person right we say they're a Charged person right they're charged with emotion so down here if we think about positive charges right positively charged emotions Elation right you're completely happy a lot of people a lot of the masses are constantly trying to chase this Elation chase this happiness chase the positive side right all the positives without negatives they're trying to chase the winning trades and avoid the losing trades avoid losing money all they want is that but the more that you swear away from being centered and balanced the more you trying to chase that one pole chase that one side Chase only the winning trades in the happiness guess what's going to happen you're going to snap back completely the other way okay so the more that people are constantly just trying to be elated you probably met them guess what they're some of the people that really struggle with depression when eventually they snap back the other way they're not calm centered and balanced in the middle um and this goes for every polarizing emotion optimism and pessimism right Pleasure and Pain greed and fear those are the big ones in trading so you know the more you chase the one side the more eventually you're going to snap back it's Newton's third law right for every reaction there is an equal and opposite reaction so the more you sway away from the center and the middle the more likely you're then going to snap back the other way and this is where the masses are the down at the bottom trying to chase the one side right trying to continuously Chase pleasure and avoid pain right getting drunk on the weekend doing drugs whatever it is just trying to escape from their mindset and what happens the more they chase that the more they push it comes Monday they're going to swing back to that depression that hangover and that anxiety okay so this is where the masses are down here now what I want you to think about the reason why I've drawn the diagram like this like a triangle is that there's a pendulum okay swinging down here so this is where the masses are swinging from pole to pole from trying to chase the positive swinging back down to the negatives okay so this is a low vibration now as you become more and more centered and you don't chase the two sides and you stay in the middle right naturally your pendulum is going to swing less and less and less and you're going to get smaller and smaller vibrations so you're essentially vibrating on a higher frequency okay so evolution is towards the light so our job as Traders is to do that right is to stop swinging between those two poles and to try and see things objectively as they are rather than being blinded by our emotions um you know in the moment what we spoke about okay that's where the Masters are the winning 10 20% whatever it is of Traders at the top they're the ones who can do that so down here remember we have our lower animal mind the emotional Center up at the top is our higher thinking mind where we're no longer you know swayed by those emotions but we can see things objectively as they are so to try and bring this back into a more simple example of what we're talking about when we made all of those mistakes before you're in a trade the emotions get high you break your rules you jump out of the trade whatever the mistake is afterwards that evening the weekend whenever it is and you Journal your trade the emotions are no longer there because the risk is no longer on the table right it's over you can think about it with your higher mind that is when you are calm and centered and you can see ah this is what I should have done oh there was negative or positive Confluence that I can see now but I missed it in the moment because I was so attached to one side right you know like your your um you're in a trade and it starts going against you all your brain can see on the chart is reasons as to why you should get out of the trade right you are blinded to the objective truth saying everything your brain literally plays tricks on you because it wants you to avoid that pain your middle is trying to protect prot you so it just wants you to get risk off the table your migdala um you know takes over and it's not letting that information pass through up to your um thinking brain so another way to think about this diagram is like you know let's say you you you win a trade followed your rules you win a trade do you then jump up start fist pumping high-fiving your mes of there like getting super happy about it posting screenshots of your mt4 everywhere getting super excited okay cool you do that you chase that positive side you're all the way over the here what do you think then is going to happen when you inevitably take a losing trade that's going to hit you so much harder right and you're going to swing into that depression that fear that pain whatever so the more that you chase the one side the more naturally you're going to go the other way so a simple exercise to do is next time you take those winning trades going forward win or loss try and just practice regulating no emotion right no physical reaction no emotional reaction just did you follow your rules did you follow your plan yes and you should ultimately strive to feel the same way no matter what right win or lose did you stick your rules that is all that matters okay so how do we do that how do we say centered calm and balance so we can strive to evolve towards the light right so we can become Photon Traders particles of light so we can see that objective truth and we can make trading decisions with a higher mind how do we do that because like we keep saying right we now know that we are wired to fail the brains that we are bought with cannot give us the success that we seek with trading right because we are asking our brains to do something that is a nightmare it's a deal with the risk and to be okay with it and to accept it right what Nature has given us is not what the artificial world of the market needs right we need to retrain it and rewire it to be able to deal with those probabilities to make the right long-term decisions and to be comfortable with risk in an uncertain environment right so how do we evolve towards the light where we can allow um you know our thinking brain to be in control well you've got two solutions here really the shortterm fix is to build and develop and acquire a mechanical strategy right one where you have a very tightly defined system where the rules are so crystal clear that you know what to do in every single scenario okay and that's going to give you the biggest chance of being able to stick to your rules and not let those emotions dictate your decision- making now the long term we need to work on rewiring our brains becoming the designer of our minds so that we are not essentially slaves and victims of those faar those flight or flight responses okay in my opinion both of these required this is the path that I'm trying to my own trading and what we try to teach at Photon trading okay so mechanical trade plan if you don't know like I said it's essentially something that just tells you what to do in every single scenario if this happens I do this if that happens I do that right okay you have a very tightly defined system because once you have that you learn a mechanical strategy you build a mechanical trade plan you can then quickly prove your Edge in the market with back testing or forward testing prove the data behind it that it works once you have that data this is the quickest way to get that more Bulletproof mindset right so you can rely on the data and you know that in the long run following those rules will be profitable that then gives you the consistent results because you're making consistent correct actions in the market and now you have a sustainable method that you can rely on right to scale your accounts and to grow your Capital long term okay and that is exactly what we help our Traders with at Photon trading where we literally hand them our exact mechanical trade plans for both our day and swing trading strategies right we help you implement that into the market we help you collect data on that to prove it quickly that your trade plan has an edge your brain can then see that becomes a lot easier to follow your rules in the long run okay and you can see all of our case studies here on the website some of our members who have had um yeah really good success with this so we do this for you our full endtoend course absolutely everything is covered even if you have zero knowledge in the market so this is all done for you where we literally teach you and hand you our strategy but we don't just leave you there we show you day in day out session by session how we Implement those mechanical rules into the market and capitalize on different market conditions we have daily session Recaps every single day going over this in depth markups analysis a lot and of course we have our community on Discord um where you can ask any questions they all get answered um yeah the level of mentoring in here is just unrivaled um you you will not get this anywhere else you can see here just the course um we've got over 148 lessons I think at the moment um you know we go super in depth there every single topic is covered in extreme depth um you know we have tons of lessons and even you know more lessons in here hidden beneath as well as all of the session Recaps trade Recaps back tests live meetups that we have um yeah it's just an insane amount of useful resources within here and then of course we also have the community like I said where um we've got all of our markups posted every session for three pairs every day in depth where we go through this we've got swing channels analysis channels day trading the lot it is absolutely insane so if you're interested click the link in the bio below I would love to work with you I'd love to get our plans in your hand hands work with you to develop them get them in there build that bulletproof mindset and start making consistent gains now all training strategies fit somewhere along the scale where on one end you have completely discretionary right so there's you almost have no rules all the way to 100% mechanical where literally that is how you would have to have something that you have coded into an algorithm right where there is zero room for human discretion in my opinion if you are a manual Trader right so you're human who executes your strategy I believe The Sweet Spot is kind of around that 70 to 80% Mark where you have some room for human discretion as that's actually what gives you an edge over algorithms because you can take in all of that information based on your intuition and experience with many different variables and choose whether or not to execute a trade okay now even if you had a strategy that is 100% mechanical and you had an algorithm executing it so you're not even getting involved I've still seen people who have this in their hands they have access to an algo and they still let their psychology get in the way and they mess it up right it goes into a bit of expected draw down but their brain can't handle it their amigdala can't handle it fight flight response comes in and they turn off the algo and they wait until they see the algo starting to make those profitable trades again right and then they turn it back on but if you know anything about trading and trading an edge that's a recipe for disaster because you cannot predict when your winning and losing trades will be okay we are dealing with random distribution so no matter what we need to rewire our brains because the brain that we brought to training cannot give you the success you seek until you do this now rewire your brain it sounds like a bit of an iffy concept but scientists are now proving that this is literally biologically possible through neuroplasticity which is the ability of the brain to reorganize itself both in structure and how it functions okay beyond the scope of this lesson we're not going to dive into uh you know the exact science behind that but it's about we need to become you know this is what Randy how talks about learning to become the designer of the mind that engages that uncertainty of the market rather than letting our fight uh you fight or flight response taking over okay from our primitive brains this way as he says we move from the fantasy of trying to control the outcome trying to control what will happen in that individual trade okay we cannot influence that instead what can we influence we can focus on the things that we can control and we can control the mind that we bring to managing that uncertainty so what does that mean well it means that when you have that uncy and risk on the table and the trade's going against you you don't interfere okay you feel the emotion you do not act upon it like I said here we have random distribution so you might know your stats tell you that your strategy has a 60% win rate in the long run so our brains think yeah okay every 10 trades we probably have six winners and four losers but we have no idea what sequence those wins and losses will occur and that is an absolute mind [ __ ] for us it's so hard to deal with right because we want to win we don't want to experience those pains and losses we don't want to have three or four trades loses in a row right we want it to be predictable which is really really hard to deal with so we need to learn to manage the emotions that give rise to the mind that engages that uncertainty right we want to learn with to approach it with discipline impartiality and to be patient right to have that long-term Vision so you're always going to feel these emotions but you need to learn to choose one thought over another let your thinking brain be in control and as Randy H says you need to let go of the need to win and then your job becomes one of performance instead you need to win every trade it's not like a sports game you need to be in control of the things that you control how do you do your analysis do you turn up on time do you join all your trades right all of these things and then when you have that mental Edge in place that is then what drives your strategy Edge successful training is really those three things having a profitable strategy having the correct risk management in place to allow it to play out and then your mindset is what then allows you to stick to your rules and to allow that to play out you need all three so a good analogy is to think of a Trader's mindset as like a surfer okay the surfer is not trying to fight or control or predict the wave the surfer lets whatever wave is produced whatever price action the market wants to do and he learns to go with the flow right he learns how to deal with whatever way whatever wave presents whatever way the wave wants to move he learns how to deal with it and go and you know goes with the flow there so bit of a simple analogy there but I think it's something that kind of made a lot of sense to me that help me to think about that not getting attached to biases going with the flow of how price action moves literally think about about it as order flow of you with um and yeah I think it's a pretty cool way to think about how we want to be because it's Paramount to think the correct way otherwise you'll be emotionally robbed of your greatest opportunity now this secture was inspired like I said earlier by Tom hugard the Hermetic principles John D Martini leis mocka and Randy how so do feel free to to uh go diing deeper into some of these resources if you so desire so hopefully you now understand a little bit more about the brain what it is that we are trying to deal with why we make those mistakes that we make because the first step is understanding the why because then that allows you to take the responsibility of your actions going forward you now know what you need to do to start to work on that to start becoming the designer of the mind to start trying to regulate your emotions so that we can not let our our amigdala our lower animal mind keep taking control and stopping us from making those long-term decisions that are conducive to profitable trading so the short-term fix get a profitable strategy the easiest way to do that is make it as systemized and mechanical as possible within reason prove your rules collect data on it and then from there you can build on it whilst long-term working on developing the mindset so I really enjoy this lecture you know there's a lot of other people in there who have influenced this that I've taken from and kind of mixed it all together with those philosophies that I've now applied to trading um in a way that makes sense to me so I hope you guys resonated with that it's not it's not for everyone um it is what it is but yeah if you like that let me know in the comments otherwise watch these next two videos to make an instant Improvement to your trading cheers

Traders love to argue until they're literally blew in the face between what is more important between technical analysis and your strategy and trading psychology now you could be born with the most amazing natural-born Traders mindset in the world and if you are then then Happy Days good for you but if you don't have a proven profitable strategy in your hands then you're not going to make any money right so at the start of your journey understandably it is a lot more important in my opinion to focus on the technicals to develop that strategy andove you have a strateg Edge but then further along in your journey that is when you quickly realize as you start to try and scale up trade life Capital Etc that actually it's about 80 90% of psychology is going to be the difference between whether or not you are profitable at that point now thanks to the regulations in the EU if we look at uh many of these regulated retail Brokers we can see at the top of most of their their homepages the stats of their winning and losing Traders on their websites right so if we can see that on average about 75% of Traders are losing then you could be forgiven for thinking well why don't we just find out what they're doing right and do the opposite of it and then that way we can be in the winning 25% well okay let's dive into that what is normal in trading so back in 2015 fxm did a study of 255,000 of their Traders and they looked at 43 million trades taken and they actually saw that 62% of the trades were winning trades but what's going on here well when on they took a winning trade they only made on average a gain of 48 Pips but when they lost a trade on average they lost 82 Pips so we can quickly see here that their losing trades were almost 70% bigger than their winning trades so as a result over the course of let's say 100 trades that's going to be a 140 pip deficit which means you have a negative profit expectancy in the long run now this is not a strategy problem it's not really a technical analysis problem there are hundreds if not thousands if not millions of profitable strategies out there you can trade the market any single way you want um there's thousands of strategies on YouTube that that are probably successful this is more of a human problem and I'm going to show it to you so an absolute classic psychological error in trading that I'm sure you've experienced um I know how I have in the past is moving your stop loss to break even when it's not within your rules to do so so let's say your strategy tells you to buy here for whatever reason you get in long and the market starts moving nicely in your favor so what do you do you move your stop loss to break even even if it doesn't stay in your rules simply because we want to remove any potential risk on the table and then as you probably experienced plenty of times the market will then come back to your level stop you out for break even and then goes on eventually to your profit Target okay so this is just one of many mistakes that Traders are making that is not conducive to a long-term profitable Edge so if you break your rules by TR triling your stop loss to break even too early you know what's the reason you're scared of taking a loss and the subconscious reason of that is because you were trying to avoid the pain of losing money now Tom hugard did an amazing lecture on this where he breaks this down right and there's so many common mistakes that we as Traders make right taking low probability or even invalid trades why do we do that it's because we get fermo right we're scared of missing out on potential um you know profits but what's the subconscious reason it's the same thing it's to avoid pain right the pain of potentially missing out on what could be ours Another one not executing another trade after you've taken a winning trade a reason is usually because well you know I've made some money I don't really want to give back any profit today I'm happy with what I've got but you're not executing your Edge and what's the reason again to avoid pain the pain of potentially giving away that profits taking profits too early right not following your management plan similar thing you want to keep on to what you have why avoid pain avoid pain of losing that perceived money of you know what you've got within your account the other thing increasing your position size after a loss why do you do that well you want to get back to where you were right you don't want to go home with that loss you want to get back to break even or or make some gains why you want to avoid pain now I'm sure we've all been there and we sure we'll make some of these mistakes in the future but it's only afterwards once you're out of the trade and you've made that mistake and you look back and you just think what is wrong with me why I'm an idiot why do I keep doing this why am I stuck in this Perpetual cycle of making mistakes that's stopping me from getting to where I need to be okay today I'm going to show you exactly why that's happening I'm going to show you why it's not your fault but then show you the key of what you now need to do to prevent this from happening in the future or at least drastically reduce the amount of times this happen so we're going to get stuck into some super es esoteric stuff we're going to look at biology we're going to jump into physics I'm super pumped to get stuck into this so make sure you stick around but who am I and why should you listen to me well I am M dony and I am the founder of photon trading and we help Traders not just acquire funding but actually Bank their profit splits long term using the power of mechanical strategies so like I was saying you probably make one of these mistakes you wonder what is wrong with you but actually there is nothing wrong with you we are walking around with the same brains in our in our heads that were formed 200,000 years ago okay so we are literally walking around with the same Hardware as our Paleolithic ancestors back then we lived pretty much in an immediate return environment where having that fight of flight response was extremely conducive to survival whereas only in the last 500 100 years maybe 50 years that we have had insane technological um advancements that has led us to now live living in a delayed return environment okay so our brains are designed to Value those immediate returns to respond to those fight flight responses rather than making the decisions that are conducive to long-term success so what does that have to do with trading well let me explain when you're in the markets right you probably experienced this with your demo trading you have your profitable strategy it's quite easy a lot of people can make money but as soon as you have that real risk on the table whether it's your own high Capital you've scaled up you going for funding challenges whatever it is suddenly It all becomes way harder right your brain almost melts and that's because your primitive survival instincts are taking over that decision- making and critical moments in other words when you are stressed it's extremely hard to make the right decision when you have risk on the table okay we are using our primitive andal brains to try and fight Japanese candlesticks rather than fighting Toth Tigers so it's extremely hard to do because back then you know that is an evolutionary uh advantage of our brains right to be wired to want to win and survive at all costs back then trying to get your lunch could literally kill you so you had to believe that you going to win you had to believe that you're going to overcome that challenge um and you were going to be able to you know win that hunt otherwise you either weren't going to hunt and then you would die from Hunger or you'd probably end up getting killed by that animal right because you're going in with the wrong mindset now that has served tons of evolutionary uh purposes and benefits to even our lives in the modern world today right to be competitive to want to win to do well in business Etc but bringing in that mindset into trading is a recipe for disaster wanting to win wanting to win at all cost wanting to avoid the pain of losing money we know is going to lead to the you know not most optimal training decisions of allowing our Edge to play out over time okay and to explain that in a more succinct term it say from Randy H it says your brain's short-term survival orientation is going to compromise your need to take that long-term perspective in order for your Edge to work in the Heat of the Moment okay so what that means is we know we're going to have losing trades in the short term losing winning trades right it's just the cost of doing business but over the long run we know our AG will play out but then when you're experiencing that losing trade in the moment right that's when your brain goes into meltdown and we end up making those mistakes that we just went through taking your profits too early avoiding trades Etc because we can't think about the longterm our brains really really struggle with that and why it's a biological reason our brains are caveman brains they view all Market uncertainty or any uncertainty in your life any risk it views it as a direct biological threat to your life okay so those Japanese candlesticks on your charts when they're moving around and you feel some uncertainty of the market environment the probalistic nature of what we're trying to deal with here the potential that we could lose some money you're brain sees that as a biological threat to life that's when your fight or flight respones kick in and you end up making those mistakes so let's apply this to a trade example right as it's a lot easier to then understand now we've all probably felt this right we we get into a trade it starts moving nicely along in our favor but if price starts to pull back and go into our stop loss and then we see you know it flashing red against us we have that risk on the table a heart rate starts to go up right you feel those emotions and that's because your biology right your your animal brain is seeing that as a direct threat to your life and this is when your emotional brain is going to hijack your thinking brain and you're going to you know make those mistakes because it sees that threat as a threat to life it's a threat to your Financial Health um it's a threat to your training goals right it's a direct threat to you getting funded potentially it's a direct threat to you quitting your job um perhaps it's a direct threat to Your Ego right maybe you shared your trade before you got into it in your community or maybe you posted on social media maybe you made a post about how you're going to smash your day and make because of profits now all of those thoughts are now swirling around in your brain and this is like danger danger so at this moment what do you do well I'm only half a% down at this point let me just get out let me just get out cuz I don't want to take the full loss I'm probably going to take a full loss so what you do you close the trade for let's say half an hour loss and then rep play the price forward and then ends up going to your favor if you had have just stucked your rules and then you look back afterwards and you just think what did I do why did I do that and it's because your animal brain yourid it hijacked your thinking brain just to protect yourself at all costs from experiencing any pain so when our emotions going up like that our decision making is going to go down and we'll make decisions that don't appear to be based on any logic or reason it's because our emotional brain is taking control and this is when we make a number of you know classic and tipical actions that we've all made and probably will make in the future and it's all the subconscious wanting to avoid pain now we are taught from a very young age that only winning and being right is pretty much rewarded right whether you win a trophy in sports or you get your grades on your exams now I'm not someone who believes in awarding everyone a participation medal but bringing this you know only winning and being right mental model which serves us well in most areas of life but bringing that mental model into trading it's terrible it's it's the worst environment to bring it in it's not a normal environment we need to be extremely comfortable with the idea of losing with having that uncertainty and risk on the table and dealing with a probabilistic environment a successful trading mindset requires you to not care about winning it requires you to not care about being right and ultimately all that matters is that you make money in the long run we know in a conventional business think like a brick-and Mor business you have costs you have rent you have supplies wages Insurance Etc but then you make your sales and then hopefully you make more sales than your costs and your difference is net profit right everyone gets that in business it's fine but in trading most people are trying to avoid those losses okay but actually if you just view them as the same way they're simply a cost of doing business taking a loss is just a cost of allowing your Edge to play out over the long run so that eventually you have a net profit over time now that's an extremely simple logical concept for us to understand but here's the problem we are not logical beings we are emotional beings who then try to rationalize our emotions with logic really it all boils down to the problem with the brain on uncertainty our brains our animal brains that we have evolved with they want to control the outcome they always want to be right and it wants to predict the future but none of those three things are controllable but we are hotwired to think that they are and that is what causes or what is makes trading so hard in the long run so let's dive into a bit of biology here right and just think about two parts of the brain first here we have the amydala so the amydala we can think about this as our lower minded animal this primitive brain that we have been talking about okay now this part of our brain it constantly wants to seek pleasure and avoid pains avoid pains at all costs so this is where you know our emotional center of the brain is that is just rooted to think about survival and protect us at all cost rights our primitive brain now here we have the neocortex so think about this as more of a higher minded animal this is responsible for our self-governance strategic thought and execution okay so rather than like just thinking about imminent survival this is thinking more about you know long-term thrival um and you know your Advanced thinking part of the brain okay now when you are stressed rest which is a lot of time when you're trading right when you have that risk on the table um you're trying to go for a funding challenge whatever it is all that um perceived sensy information right comes in and it gets processed by the amigdala first and that is where that emotional brain is kicking in with that flight of fright response and it essentially can hijack and block that information going up to your Neo context which is where your thinking brain is because the amigdala that makes decisions in nanc and it leads to you making impulsive decisions before you've even had a chance to think you know why did I even do that before you can um think it through so our job as Traders is to try and regulate the emotions that happen in migler and allow that to come up to neocortex then we can make the correct logical decisions that we know is conducive to long-term profitable trading so again remember our brains are amigdala it cannot see the difference between what is a true danger to your life right a biological threat to life biological fear it can't differentiate that between that and what is literally just a psychological disc comfort of having a bit of risk on the table so to the untrained brain any triggering of that threat it automatically produces biological fear responses in our body right from our primitive brain I'm sure you've experienced it trade starts going against you you sit forward in your chair you feel tight heart rate's going up you start selling whatever it is that is what is going on there your brain can't tell the difference between essentially like a saber t t sabertooth tiger coming at you right and just potentially you about to lose a bit of money or lose a funing challenge or whatever it is because you know it seems so simple I have a plan I'll follow my rules I'll make money I can do it on a demo account I can do it on back testing I bring that plan into live market where I have that real risk on the table and as Mike Tyson says everybody has a plan until they get punched in the mouth okay fight and flight response will kick in and then those Behavior patterns of you know fear and an aggression or avoidance those will kick in and that's when we make those classic mistakes so let's take these two parts of the brain that we've been talking about and let's draw them into a diagram and we're going to jump into some juicy stuff here now right so think about your higher animal mind at the top this is your soul your objective truth down at the bottom this is our lower animal mind right our primitive brain think of this as like the Physical Realm so all of our senses what we can see what we can touch and what we can smell what we can hear Etc so up at the top think of this as light now science tells us that if you are a particle of light right you are a photon you do not have any time you do not have any space you don't have any charge and you do not have any Mass okay okay now if you take two photons two particles of light and you smash them together they will split into a electron and a positron okay so now you have these and these do have mass these do have charges they do have space and they do have time okay now an ion is a charged particle okay that's what science tells us what psychology tells us is that an emotional person right we say they're a Charged person right they're charged with emotion so down here if we think about positive charges right positively charged emotions Elation right you're completely happy a lot of people a lot of the masses are constantly trying to chase this Elation chase this happiness chase the positive side right all the positives without negatives they're trying to chase the winning trades and avoid the losing trades avoid losing money all they want is that but the more that you swear away from being centered and balanced the more you trying to chase that one pole chase that one side Chase only the winning trades in the happiness guess what's going to happen you're going to snap back completely the other way okay so the more that people are constantly just trying to be elated you probably met them guess what they're some of the people that really struggle with depression when eventually they snap back the other way they're not calm centered and balanced in the middle um and this goes for every polarizing emotion optimism and pessimism right Pleasure and Pain greed and fear those are the big ones in trading so you know the more you chase the one side the more eventually you're going to snap back it's Newton's third law right for every reaction there is an equal and opposite reaction so the more you sway away from the center and the middle the more likely you're then going to snap back the other way and this is where the masses are the down at the bottom trying to chase the one side right trying to continuously Chase pleasure and avoid pain right getting drunk on the weekend doing drugs whatever it is just trying to escape from their mindset and what happens the more they chase that the more they push it comes Monday they're going to swing back to that depression that hangover and that anxiety okay so this is where the masses are down here now what I want you to think about the reason why I've drawn the diagram like this like a triangle is that there's a pendulum okay swinging down here so this is where the masses are swinging from pole to pole from trying to chase the positive swinging back down to the negatives okay so this is a low vibration now as you become more and more centered and you don't chase the two sides and you stay in the middle right naturally your pendulum is going to swing less and less and less and you're going to get smaller and smaller vibrations so you're essentially vibrating on a higher frequency okay so evolution is towards the light so our job as Traders is to do that right is to stop swinging between those two poles and to try and see things objectively as they are rather than being blinded by our emotions um you know in the moment what we spoke about okay that's where the Masters are the winning 10 20% whatever it is of Traders at the top they're the ones who can do that so down here remember we have our lower animal mind the emotional Center up at the top is our higher thinking mind where we're no longer you know swayed by those emotions but we can see things objectively as they are so to try and bring this back into a more simple example of what we're talking about when we made all of those mistakes before you're in a trade the emotions get high you break your rules you jump out of the trade whatever the mistake is afterwards that evening the weekend whenever it is and you Journal your trade the emotions are no longer there because the risk is no longer on the table right it's over you can think about it with your higher mind that is when you are calm and centered and you can see ah this is what I should have done oh there was negative or positive Confluence that I can see now but I missed it in the moment because I was so attached to one side right you know like your your um you're in a trade and it starts going against you all your brain can see on the chart is reasons as to why you should get out of the trade right you are blinded to the objective truth saying everything your brain literally plays tricks on you because it wants you to avoid that pain your middle is trying to protect prot you so it just wants you to get risk off the table your migdala um you know takes over and it's not letting that information pass through up to your um thinking brain so another way to think about this diagram is like you know let's say you you you win a trade followed your rules you win a trade do you then jump up start fist pumping high-fiving your mes of there like getting super happy about it posting screenshots of your mt4 everywhere getting super excited okay cool you do that you chase that positive side you're all the way over the here what do you think then is going to happen when you inevitably take a losing trade that's going to hit you so much harder right and you're going to swing into that depression that fear that pain whatever so the more that you chase the one side the more naturally you're going to go the other way so a simple exercise to do is next time you take those winning trades going forward win or loss try and just practice regulating no emotion right no physical reaction no emotional reaction just did you follow your rules did you follow your plan yes and you should ultimately strive to feel the same way no matter what right win or lose did you stick your rules that is all that matters okay so how do we do that how do we say centered calm and balance so we can strive to evolve towards the light right so we can become Photon Traders particles of light so we can see that objective truth and we can make trading decisions with a higher mind how do we do that because like we keep saying right we now know that we are wired to fail the brains that we are bought with cannot give us the success that we seek with trading right because we are asking our brains to do something that is a nightmare it's a deal with the risk and to be okay with it and to accept it right what Nature has given us is not what the artificial world of the market needs right we need to retrain it and rewire it to be able to deal with those probabilities to make the right long-term decisions and to be comfortable with risk in an uncertain environment right so how do we evolve towards the light where we can allow um you know our thinking brain to be in control well you've got two solutions here really the shortterm fix is to build and develop and acquire a mechanical strategy right one where you have a very tightly defined system where the rules are so crystal clear that you know what to do in every single scenario okay and that's going to give you the biggest chance of being able to stick to your rules and not let those emotions dictate your decision- making now the long term we need to work on rewiring our brains becoming the designer of our minds so that we are not essentially slaves and victims of those faar those flight or flight responses okay in my opinion both of these required this is the path that I'm trying to my own trading and what we try to teach at Photon trading okay so mechanical trade plan if you don't know like I said it's essentially something that just tells you what to do in every single scenario if this happens I do this if that happens I do that right okay you have a very tightly defined system because once you have that you learn a mechanical strategy you build a mechanical trade plan you can then quickly prove your Edge in the market with back testing or forward testing prove the data behind it that it works once you have that data this is the quickest way to get that more Bulletproof mindset right so you can rely on the data and you know that in the long run following those rules will be profitable that then gives you the consistent results because you're making consistent correct actions in the market and now you have a sustainable method that you can rely on right to scale your accounts and to grow your Capital long term okay and that is exactly what we help our Traders with at Photon trading where we literally hand them our exact mechanical trade plans for both our day and swing trading strategies right we help you implement that into the market we help you collect data on that to prove it quickly that your trade plan has an edge your brain can then see that becomes a lot easier to follow your rules in the long run okay and you can see all of our case studies here on the website some of our members who have had um yeah really good success with this so we do this for you our full endtoend course absolutely everything is covered even if you have zero knowledge in the market so this is all done for you where we literally teach you and hand you our strategy but we don't just leave you there we show you day in day out session by session how we Implement those mechanical rules into the market and capitalize on different market conditions we have daily session Recaps every single day going over this in depth markups analysis a lot and of course we have our community on Discord um where you can ask any questions they all get answered um yeah the level of mentoring in here is just unrivaled um you you will not get this anywhere else you can see here just the course um we've got over 148 lessons I think at the moment um you know we go super in depth there every single topic is covered in extreme depth um you know we have tons of lessons and even you know more lessons in here hidden beneath as well as all of the session Recaps trade Recaps back tests live meetups that we have um yeah it's just an insane amount of useful resources within here and then of course we also have the community like I said where um we've got all of our markups posted every session for three pairs every day in depth where we go through this we've got swing channels analysis channels day trading the lot it is absolutely insane so if you're interested click the link in the bio below I would love to work with you I'd love to get our plans in your hand hands work with you to develop them get them in there build that bulletproof mindset and start making consistent gains now all training strategies fit somewhere along the scale where on one end you have completely discretionary right so there's you almost have no rules all the way to 100% mechanical where literally that is how you would have to have something that you have coded into an algorithm right where there is zero room for human discretion in my opinion if you are a manual Trader right so you're human who executes your strategy I believe The Sweet Spot is kind of around that 70 to 80% Mark where you have some room for human discretion as that's actually what gives you an edge over algorithms because you can take in all of that information based on your intuition and experience with many different variables and choose whether or not to execute a trade okay now even if you had a strategy that is 100% mechanical and you had an algorithm executing it so you're not even getting involved I've still seen people who have this in their hands they have access to an algo and they still let their psychology get in the way and they mess it up right it goes into a bit of expected draw down but their brain can't handle it their amigdala can't handle it fight flight response comes in and they turn off the algo and they wait until they see the algo starting to make those profitable trades again right and then they turn it back on but if you know anything about trading and trading an edge that's a recipe for disaster because you cannot predict when your winning and losing trades will be okay we are dealing with random distribution so no matter what we need to rewire our brains because the brain that we brought to training cannot give you the success you seek until you do this now rewire your brain it sounds like a bit of an iffy concept but scientists are now proving that this is literally biologically possible through neuroplasticity which is the ability of the brain to reorganize itself both in structure and how it functions okay beyond the scope of this lesson we're not going to dive into uh you know the exact science behind that but it's about we need to become you know this is what Randy how talks about learning to become the designer of the mind that engages that uncertainty of the market rather than letting our fight uh you fight or flight response taking over okay from our primitive brains this way as he says we move from the fantasy of trying to control the outcome trying to control what will happen in that individual trade okay we cannot influence that instead what can we influence we can focus on the things that we can control and we can control the mind that we bring to managing that uncertainty so what does that mean well it means that when you have that uncy and risk on the table and the trade's going against you you don't interfere okay you feel the emotion you do not act upon it like I said here we have random distribution so you might know your stats tell you that your strategy has a 60% win rate in the long run so our brains think yeah okay every 10 trades we probably have six winners and four losers but we have no idea what sequence those wins and losses will occur and that is an absolute mind [ __ ] for us it's so hard to deal with right because we want to win we don't want to experience those pains and losses we don't want to have three or four trades loses in a row right we want it to be predictable which is really really hard to deal with so we need to learn to manage the emotions that give rise to the mind that engages that uncertainty right we want to learn with to approach it with discipline impartiality and to be patient right to have that long-term Vision so you're always going to feel these emotions but you need to learn to choose one thought over another let your thinking brain be in control and as Randy H says you need to let go of the need to win and then your job becomes one of performance instead you need to win every trade it's not like a sports game you need to be in control of the things that you control how do you do your analysis do you turn up on time do you join all your trades right all of these things and then when you have that mental Edge in place that is then what drives your strategy Edge successful training is really those three things having a profitable strategy having the correct risk management in place to allow it to play out and then your mindset is what then allows you to stick to your rules and to allow that to play out you need all three so a good analogy is to think of a Trader's mindset as like a surfer okay the surfer is not trying to fight or control or predict the wave the surfer lets whatever wave is produced whatever price action the market wants to do and he learns to go with the flow right he learns how to deal with whatever way whatever wave presents whatever way the wave wants to move he learns how to deal with it and go and you know goes with the flow there so bit of a simple analogy there but I think it's something that kind of made a lot of sense to me that help me to think about that not getting attached to biases going with the flow of how price action moves literally think about about it as order flow of you with um and yeah I think it's a pretty cool way to think about how we want to be because it's Paramount to think the correct way otherwise you'll be emotionally robbed of your greatest opportunity now this secture was inspired like I said earlier by Tom hugard the Hermetic principles John D Martini leis mocka and Randy how so do feel free to to uh go diing deeper into some of these resources if you so desire so hopefully you now understand a little bit more about the brain what it is that we are trying to deal with why we make those mistakes that we make because the first step is understanding the why because then that allows you to take the responsibility of your actions going forward you now know what you need to do to start to work on that to start becoming the designer of the mind to start trying to regulate your emotions so that we can not let our our amigdala our lower animal mind keep taking control and stopping us from making those long-term decisions that are conducive to profitable trading so the short-term fix get a profitable strategy the easiest way to do that is make it as systemized and mechanical as possible within reason prove your rules collect data on it and then from there you can build on it whilst long-term working on developing the mindset so I really enjoy this lecture you know there's a lot of other people in there who have influenced this that I've taken from and kind of mixed it all together with those philosophies that I've now applied to trading um in a way that makes sense to me so I hope you guys resonated with that it's not it's not for everyone um it is what it is but yeah if you like that let me know in the comments otherwise watch these next two videos to make an instant Improvement to your trading cheers

Transcript for:Mastering Trading Psychology and Strategy

Transcript for:
Mastering Trading Psychology and Strategy