How to make money in the stock market part 2

Hi everyone. Welcome to this new video. This is the second part of the how to make money in the stock market. If you have not watched the first part, I suggest you to do so before watching this video. Otherwise what I say will not make much sense. If you remember last time, what we did was to explore some of the reasons why some people are able to make money in the stock market and other people cannot. And I want to repeat what we said last time at the end. That is the profile of the successful trader. If you remember, we said that there are three key points to consider. How to be consistent, profitable and how to have a very high winning rate. And successful trader usually focus on the first two, the consistency and the profitability. And what was the point here is that in order not to focus on the very high winning rate, you need to be able to accept losses. And that may not be very easy. That's why emotions management is very important. And that's what we are discussing in this video, how to better manage your emotions. And I want to show you two techniques to do that. The number one is called reframing. So what is reframing? When something happened to you is fine, is an experience, but you have the choice to give you an interpretation to that experience. In other words, even though you cannot control what is happening to you, you can very much control how you decide to interpret that event. And these will also affect the action that you are taking or not taking. The second one is a technique that we can use to de. Intensify a negative experience. What could be a negative experience in trading? Suppose you have a series of losses and then next time you have to take a trade and you are looking at the chart, you feel bad. Why? Because you remember the previous losses. So maybe even though the setup is right and you should buy, you will not do it because you are afraid that you will lose again. And that again is related to the fact that people are not really comfortable taking losses because it means being wrong and nobody likes to be wrong. So let's go through these two techniques and see how they work. Well, the reframing, as I said, is basically changing the interpretation of an event. And why is that important? Because according to the interpretation we give to an event, we will take different actions. Now how can we do that in trading? Well, suppose that you are trading and then you have some wins and some losses and then you start to have a series of 3, 4, 5 losses in a row, as we discussed last time. The problem is that you may start to doubt that the system you're using is good, you may start to feel bad about that. You may even think that you need to change something, maybe add some other indicators to the system. And as we discussed last time, that's when you start really to make the mistakes that will bring you to not being profitable. So we need to find a different and more empowering way to interpret the series of losses. And one is here, it's just an example. You can think at many, whatever is more reasonable for you. And this one is, for example, that if you have a system and you know that in the long term is profitable, meaning you will have wins and you will have losses in this part of the game, having a loss, another loss means that you are closer to the next win. Now, you look at this sentence, you may feel that, well, okay, makes sense. But what's the point here? The point is that if you give this interpretation, then you will feel better about the loss. And this is something they do a lot in sales. You know, in sales, when people have to do the cold call, they. They have to call people. And then most of the time they feel rejected. Why? Because people just say no. They can even be very rude with them at the phone. So how can they have the confidence to keep calling? Because they know that eventually, looking at the statistics, after let's say 10 or 20, at least one will say okay. And they know that one person say yes, I'm interested, then it means they will get commissions. So looking at the long term, looking at the statistics, they will know that even though there are rejection and rejections coming, this means they are closer to the next one that will say yes. And so they feel better and they are more motivated to keep calling. And here is more or less the same principle. Now I want to say something at this point that is important. What I'm sharing here is not Science is not true with the capital T. It's just a set of techniques that I found to be useful. But how useful they are really depends on how you use them and especially how much you practice. Because the more you use these techniques, the better it will be. The first time you use them, you may feel a little weird because it's not something you're used to do. But in my experience, when you do it a few times, you will start to feel that there is something different and you will start to feel better about managing losses. Now let's move to the second one. The second one is a technique that is used to de. Intensify a negative experience. And again, the negative experience may be when you trade and then you have a set of losses and say that next time you see the screen, just looking at the chart, you feel bad because you associate these picture of the chart to losing money. So how can we change that? Well, this technique is taken from the NLP Neuro Linguistic programming and basically is based on this idea. The way you represent an experience in your mind will affect how you feel about that. So by changing how you represent this experience, you should also experience a different feeling. So these techniques work like that. First you have to think about the negative experience. What is the trigger in the example that I just gave you? It may be, for example, when you see the chart, when you open your trading platform and you see the chart of the stock and you may immediately feel bad. So first thing is think of this negative experience and especially the trigger. And you may close your eyes to do that. I found it useful. Sometimes it's easier to go through this process when you are closing your eyes and the first thing you have to notice is where is the feeling? Now what does it mean by. What do I mean by that when you feel something, it usually located somewhere in your body. For example, it's very common that when you feel bad is a sensation of weight that you have in your stomach area. And most of the time this sensation is not still is moving. It may be spinning forward or spinning backward. Now as I say, this is really not science. You may imagine that if you speak with scientists about feelings that are spinning, they may laugh at you. But that's not the point. The point is let's do something that can really help you to manage it. Even though you cannot really find the scientific explanation. Just trust the process and see for yourself if it's helping or not. That's what I did. So suppose that your feeling that you had this bad feeling when you have these negative experiences in the stomach area and the spinning forward, the first thing you can do is to. When you're closing your eyes, imagine that the feeling is slowing down and then is spinning in the other direction, okay? And you can do it because in your mind you can do what you want. So the first thing is this. You close your eyes, you think that this feeling can be in your stomach, in your head, it can be moving, spinning, rotating, whatever. And then you slow down and you change direction to the opposite direction. And already by doing that you should start to feel differently. But that's not all. The next thing is when you, when you have done this and then you are thinking in your mind and the bad experience probably this is a picture you see yourself looking at the screen. In the example we just considered, you see yourself looking at the screen with a chart. And probably this picture may be color, it may be very big, it may be really close to you. So what should you do? You should imagine, first of all, if there is a distinction to do, if you are looking in your mind directly at the screen or you see yourself looking at the screen, in other words, is it a first or third person kind of situation? Okay? And if you are looking directly, so it's a first person, you should move to the third person. So the first thing, I repeat in case, in this picture of the bad experience, you are directly there, you are looking at that with your own eyes. Step outside your body and look at yourself looking at that, okay? And when you have done that, then you have to make the picture black and white. If it's not already black and white. And if it's moving, make it still, it should be frozen, okay? And then make it small. And imagine that you push it far, far away, that you cannot even see it anymore. Okay? Now, the first time you do this, it may take some time, but the trick here is to make this process very quickly. And the more you do, the faster you will be. So the first time, you may take some time to imagine yourself stepping out of your body and then making the pictures more black and white, still push it far, but the second, third, fifth time, it will be easier. And you may. You can do it faster. So the idea is that if you repeat this process at least 10 times, okay? And every time you have done it, you open your eyes, you wait a few seconds, you close your eyes, and you do it again. Eventually, when you think again at this experience, you should not automatically see the first version, like the big one with the screen and the bad feeling, but you should see this one, the small one, where the feeling is also not as bad as before. So the main idea of the whole process is actually changing the way your mind is representing the experience so that your feeling will be different. And again, I know it may sound a little crazy. That was my reaction the first time I heard about that. And then I say, well, let's try. Worst case, I spent five minutes. It's not really a big deal, but if it's working, it may be really, really good. And actually it's working for me, but for many other people is working. So what I suggest you is just do it without any judgment. Don't think, oh, it's bullshit, or it may not work. Just go through the process and then see if you really see a difference or not. So the conclusion of this series of two videos is. Well, we have three, three main points. Number one, the first thing you should do is you should learn the basics. Because if you don't know the basics, the failure is very likely. And also you can learn a profitable system. And there are so many systems that it's not really a big deal to find one that is profitable. You can find in books I suggested last time, the Turtle Traders as an example, or you can attend courses where people are very happy to sell you some system. But the bottom line is that this is not the most challenging part. The most challenging is once you know this, you have to learn how to manage your emotions. And in this second part of the video, I give you two techniques that are taken from nlp. It's not the only way to do that. There are so many other ways, but I wanted to give you these two because they are easy and in my experience, quite effective. And finally, very important point, you need to practice what you have learned. So you need to practice definitely the trading system and the basics. So please start with a demo account and get familiar with the platform, with the system, with even the simple operation, how to place a trade, how to do this, how to do that, and also managing your emotion. Practice this a lot. The two techniques I told you you can practice a few times. You can even use it for other contexts outside trading. Because managing emotion is important in every aspect of your life. Feeling bad for some event is something that may happen, not just when you're doing trading. So these are the three points that I wanted to share with you and I really hope that it will help you to improve your trading profitability in the long term. And with that, I would like to thank you. If you like this video, you can put a like and subscribe. And as well you can click on the small bell to be notified next time I upload a new video. And with that, I thank you again and see you next time.