Trading Psychology | Why Normal Doesn’t Make Money | Part 1

I'm not going to try to show you how to trade. I'm going to try to show you how to think while you're

trading

and this will become very clear in a second as an introduction. My name is Tom, who got and I come from a unique point of view in relation to you, you see, I started working in the city about 20 years ago and for the first decade of my career I sat back and watched how it operated. I must have seen a hundred million trades on tape in the ten years I sat on a

trading

floor while managing and covering positions depending on which direction you saw the market going up or down and it gives you a pretty unique view of watching 50,000 people. trade for a decade.

Get an idea of ​​how people think when they are sitting in front of their monitors at home or anywhere in the world and notice that people tend to

make

the same mistakes over and over again and in reality, very few people do. able to

make

money

consistently, so when I got out in February 2009 in the middle of the bear market, I realized that trading actually had absolutely nothing to do with technical analysis, fundamental analysis, and it was difficult to begin with. because he no longer had a security blanket in the form of a monthly paycheck, instead he was there, man oh man oh, in front of the screen, the markets were his best friend or his worst enemy depending on the day and here I am, about 10 years later, this year has been a good year, I won over a million pounds last year, I managed to lose almost 90,000 on Christmas day.

Would you believe that's one of the reasons I'm so grateful that the CMC market prevents me from trading lean? train day and unfortunately it is a challenge, would you believe it would be at a Christmas lunch and dinner? I think you call this Boxing Day. Yes, look, we Europeans, pagans, celebrate Christmas on the 24th while you wait a day or so. and then you have Boxing Day and there I was on Boxing Day in a moment of celebration, while at that time I was. I don't know if you remember what Dow Jones did on Boxing Day last year: he had the biggest game in his history.

It had fallen 500 points on Christmas Eve, the move I captured absolutely every tick, and on Boxing Day I had been long, but since the MA and the Dow were up five six hundred points, I figured it was probably about time to start selling this. I took my profits and sold again and the Dow rose another 600 points to make it a 1100 point move day and I walked out of there thinking it was an expensive Christmas dinner. Fear is what stops people from making

money

in the markets. Sometimes I'm good at making money, but the tendency is to make it lose.

I think the only reason I'm good at what I do is because of my relationship with fear. I am what is called a high level trader. Call it an extremely high institutional sized state trader, the average bet among CFD traders here in the UK is £7 per point, my position here equates to £750 per point in attacks, it means if - goes 20 30 points against me, I am facing a loss that would be equivalent to the average annual salary of a worker here in the UK, therefore it is necessary to have a quite special relationship with the loss and also with the victory and with what I hope to do.

The next two hours are about changing the way you view trading now. He could have come here and he could have thrown all kinds of techniques at you. Bollinger Bands. Keltner channels. Moving averages. Cross stochastic. MACD. RSI. Oh God, I've spent countless hours. studying it as I'm sure you have too, but I'm sure you've also realized that in reality, no matter how well you understand technical analysis, there are still those days when you just refuse to accept its loss and despite your best intentions. You just can't get yourself to do the right thing, so you can rightly wonder if I get scared when I trade and trade with the size I do, of course I get scared, but the narrative here is not that I'm a fearless trader.

I'm not even a fearless person. I'm afraid of losing my loved ones. I'm afraid of sending my kids into traffic. I'm no different than any other loving parent if you get me off the balcony here. and stared at the gun. Do I feel fluttering or nervous? But with practice comes experience. Now I actually firmly believe that practice does not make perfect and I would like to elaborate on that point a little later in this article. presentation I'm also afraid to do a complete Twitter of myself today I'm afraid you won't get the message I'm afraid you'll think this is ridiculous I came to hear how you navigate the stock indices and I promise I'll give you my rather unique take on how I trade with stock indices, so if you are inclined to that and prefer to stick to technical analysis, I assure you that you will not leave here empty-handed, but the truth is that my relationship with fear has reached the point where I have sensitivities, no , that's not right, come down, it's just that I tried with all my might, sometimes foreigners can fight with these words.

I have become desensitized to certain levels of stimulus that you face when, for example, a car comes speeding. I'm sure that if it were somehow possible to produce a brain scan while I was operating during

part

icularly stressful situations like Boxing Day last year, I would discover that my amygdala

doesn

't light up like a Christmas tree, you probably wouldn't even be able to discern that I'm losing 90,000 pounds because I blocked it. I can't block out fear in many other aspects of my life if it puts me in front of the television screen I watch on Friday. the 13th I don't really watch much TV, so I don't know what's scary these days, but you know, Freddy Krueger, kind of style.

I'm sure I'll sit with a pillow like everyone else does, you probably won. I don't sit with a pillow, but I will because I don't like horror movies, but when I am faced with scary situations while trading, it seems that I have developed an immunity to fear. which allows me to make the right decisions when necessary, whether because I have trained myself or whether I was born with it, I don't know, but the fact of the matter is that my father was a vacuum cleaner repairman and my mother was a nurse, so I don't think I come from a heritage of risk-takers, so my argument is that if I can do this with a unique way of doing it, then I think you can too, but it all comes down to that practice

doesn

't make the practice. be perfect, practice makes it permanent and if you continue practicing incorrectly you will simply establish a pattern of behavior that does not serve you, so what can I achieve in two hours?

Well, don't look I'll do it no way. I put myself in the League of these four gentlemen, but it only took Steve Jobs 15 minutes to galvanize a class leaving Stanford University in 2015 to go out and connect the dots and not so much work from the head's point of view but to work from the heart and it took Martin Luther King 17 minutes to create the strength for a generation and a segment of the American public that was repressed hey, one day he paved the way for me to win the Nobel Prize and I don't think it's necessary to present another JFK no Winston Churchill at least not when I'm in the UK since ESMA set the rules last year or was it yes no it was last year in August, September last year we are all EU riders now they had to reduce the amount of leverage they gave their clients, we used to enjoy 200 to 1, now we only have 20 to 1 and another thing we later established was that each broker had to put in their favor how many of their clients were losing clients, that It was a bit like tobacco companies being forced to put warnings on their cigarette packages and show draconian photographs or people in hospital beds with emphysema and lung cancer and everything in between, but that didn't stop. people to stop smoking and certainly that hasn't stopped interest in the trade either, but the fact of the matter is that asthma has done us a favor, it may not have done us a favor in terms of the margin, although There are many ways we can avoid it if you really want margin, just think overseas and you'll get your two hundred to one if you want it.

No, they have done us a favor because they have actually highlighted the true nature of the trade. You see if there are a hundred people here and 75 of them are losing, as shown here on the CMC market website, well this is no longer a technical analysis problem, you are not a losing trader because you are deficient in MACD and you are not executing your positions, you are losing positions because I don't understand stochastics or moving averages. This is not a technical analysis problem. It's a human problem. The sooner you accept that this is a human problem, the sooner you can do something about it.

I thought it would be the end of the industry view when all the brokers had to post these winning and losing statistics on the website, but it wasn't because people know it, people know it, but people think that this statistic It doesn't apply to me any more than the warnings on cigarette packages did, so when we're faced with charts, there's something about the point here where I write here at that point you can buy by the market, so to speak, I buy the market here, well I am buying it because we have a bullish gap and now we have traded sideways in what I consider an ABCD correction.

Yes, I know my technical analysis. The other side of the coin is that you could also say no. Actually, I'm going to sell because if this were so. In such a strong market, the bias would not have taken even an hour and we also know that 48% of all gaps are filled within the first three hours of trading and 78.6% of all gaps in the Dow Jones index They fill up within 72 hours. free days to trade, but it's not really that interesting to know if it's a winning or losing trade, maybe I'm right, maybe I'm wrong, it really depends on how many traders agree with me and support my trade as well. being a buyer when I'm buying or being a seller while I'm selling, since I have no knowledge of the future, every time people ask me where do you think so and so is going, where do you think so and so, going and saying, you know? what will greet me again next week my crystal ball is under repair is a fun way to tell people to stop bothering me but where do I think the market is going because I'm NOT Nostradamus I have no idea and anyone who says who believes that I think the market is going this way is because they have a vested interest or a bias towards one direction or another and that's fair enough if you are long Bitcoin, of course, you are going to say that Bitcoin is going to go up. and you think it's going to go up, you wouldn't say I think bitcoins are going down and then you're long Bitcoin, so it's not like I don't forgive people when they say they think the market is going to go up or down or Tesla is successful like this. way or that, it's just that the opinion is biased from your own position, so if my entries are purely random and I am a professional trader and you may think that as a professional trader, I may have a close hit rate . the 80% and 90% oh no I certainly don't have a hit rate in the 80's or 90's, in fact you could even argue that I would have a better hit rate if I just flip the coin and then apply money management .

So, either way, the sooner I accept that the nature of what I'm doing is basically random, the sooner I can start trading as it should be done. I hadn't seen it coming and I certainly hadn't seen it coming either, but that's the nature of the game we're playing now. I think Joss is the Holy Grail. I like the graphics. I could devour 1012 hours each day, a little more on the weekend if I may. Do you know if there is no grass to complain about? or windows that need polishing, you know, I'm very happy to sit down and devour endless reams of stock charts that I analyze solely to train my mind, but I'm also fully aware of the way my mind works and my mind is not my best friend when It comes to highly profitable trading, so I don't believe for a second that the chart is the Holy Grail, any more than I believe that fundamental analysis is the Holy Grail.

The problem here, ladies and gentlemen, is that we have a brain that is chaotic at best. and in the worst case, our worst enemy and one of the little complexities of our brain is that it has a tendency to see things that do not exist. This is a phenomenon that in Latin is called apophenia now if you were to translate apophenia into common language, it would be something like the isset e pattern, so when you think about the nature, for example, of the indicators, take some common indicators known as Fibonacci, let's say we look at some of the Fibonacci ratios.

I go a little further. I digress a little here without notes, not that I really stick to notes anyway, when a market makes a 61 percent pullback, some would say this is the ideal time to buy or sell short depending on theaddress and if that fails. then there is also the 78.6% retracement and why doesn't it give the proportions of eighty eight point six and 94.5%, so there is always a proportion for the

part

icular season, however my argument is that if The market has already traded up to a 78 percent retracement. Surely if you sell short at seventy-eight point six you are actually betting against the prevailing trend.

Some would say against me. I'm really not that interested in what other people think. I am more interested in trying to explain to you that the Most indicators are a time available for most people, considering that between 75 and 80Percent, maybe 90% of all people involved in trading are losing, such It may be time to take a closer look at what we are really doing when we trade. Let's see that the purpose of trading is for us to make money. Not being right is not gaining glorification through our efforts reading has one sole purpose and that is to make as much money as possible and the way to do that is to simply start thinking differently and I said before that if seventy five eighty ninety percent of all people are losing merchants, we also have to assume that those seventy eighty ninety percent are

normal

people who function perfectly well within society and keep their jobs just as well as everyone else they are intelligent, speak well, pay their taxes, take care of their kids, etc., but they can't change by shooting because they just think like everyone else.