High Performance Trading Strategies and Tips

Welcome back everyone. This is the final video in the high performance trading series. And this is where I'm going to give you some strategies you can use to improve your trading decision making to help you stick to your rules and see better results. I say repeatedly in my videos that discipline is not required for trading, and that's true. If you need discipline while you're watching the market and engaging in opening or managing trades, you're doing something wrong. Trading should be effortless and easy. However, profitable trading has very little to do with your time in the market. What separates winning traders from losing traders is the work they do outside of the market. We all know who Usain Bolt is the world record holder 100 meter sprinter. @ his peak when training for competition, he used to physically train for 20 hours per week. And you might think he did a lot of sprinting. He didn't. 85% of the time was spent in the gym lifting weights. For the short amount of time he was on a running track, most of it was working on technique like accelerating out of the blocks. It's estimated he did only around 2 minutes of actual 100 meter sprinting per week. For the best sprinter of all time, he did very little sprinting. Sprinting was almost just a byproduct of the skill development work that he did. And, and trading is the same. It's the work you put into your training outside of the markets that determines whether or not you'll make money when in the markets. And for that discipline is required. We all want a quick fix, usually from a system or an indicator that will transform our results overnight. It isn't going to happen. The 1% of traders who succeed and make money putting the hours and the miles in the less glamorous areas that no one else is interested in. There's a saying that's worth remembering. Today I will do what others won't, so tomorrow I can do what others can't. So let's jump in. I'll start with some basic tips that can be implemented immediately to give you some faster results. And then I'll go into the more detailed strategies that have a much bigger impact and will give better results, but that also require a bit more time and effort. There are nine strategies in total. So first off, we'll look at some really simple physical aspects to improve your brain function and power, which makes it you. Your brain accounts for only 2% of your body weight, but it consumes 20% of your total calorie expenditure. 25% of the oxygen you use, 25% of the nutrients and 70% of the glucose energy that you burn. It's extremely demanding and resource intensive. So it's a good idea that we take care of it. And it's 85% water. When you're just 1% dehydrated, you suffer a 5% drop in cognitive functions. A 2% dehydration leads to short term memory depletion. Problems of focusing, trouble making basic maths calculations and it exaggerates depression and anger. Prolonged dehydration even causes your brain cells to shrink. So a simple and immediate fix is to ensure you drink plenty of water before you trade and keep a glass of water on your desk as you trade. You will make worse trading decisions when you're dehydrated, even slightly, and better decisions when you are fully hydrated. The next thing is food. Now I'm not going to preach, I'm just going to give you the facts. This is how sugar and being overweight impacts brain function. It causes increased oxidative stress in the brain from free radicals that causes brain tissue injury. Brain areas which control impulsive behavior can shrink, making you more impulsive. Other brain areas which control willpower and self control also shrink and can even die completely, which means you will have less self control. The hippocampus, which is critical for memory, shrinks. For every 2 point increase in body mass index, the hippocampus shrinks by 7%, giving you a poorer memory. Refined sugars trigger an immune response, which in turn causes cognitive deficits that mimic the effects of Alzheimer's disease. High blood sugar when you are performing a mentally challenging task such as trading triggers high levels of cortisol, a stress hormone which also impairs memory. Refined sugar will also slow down neural communication, leads to ruptured brain cells. It causes neurons to misfire and send erroneous messages that take time and energy to sort out and it damages your new ones. So if you start your day with any processed sugary foods or drinks, you are basically handicapping your brain and making trade in more difficult than it already is. The simple fix is to avoid those types of food. I personally trade early in the morning and I do so in a fasted state. I don't eat breakfast. The next thing is sleep. Being sleep deprived has the same effects as being intoxicated with alcohol after just 17 to 18 hours of wait. Your cognitive impairment is the same as as having a blood alcohol concentration of 0.05%. The drink driving limits in most countries is 0.08. Do you go any longer than 20 hours without sleep, your impairment rises the equivalent of 0.1, which would instantly put you over the legal safe driving limits. Presumably, you wouldn't trade drunk, so it's pretty foolish to trade if you didn't get a full night's sleep. Without adequate sleep, the frontal, temporal and parental lobes in the cortex of your brain shrink. The connection between your amygdala, which is the part of your brain responsible for fear and emotions, and part of your intuitive system, and the prefrontal cortex, which is your rational thought in your logical system, is actually cut, making communication between the two impossible. Rational decision making is impaired, judgment is dulled, and emotional desire ratchets up your brain's reward center because becomes overactive, making you more likely to take risks to seek reward. And the punishment center is turned off. So you don't care about losing money. You're also more likely to lose focus and find it hard to maintain your attention on a single task for very long. So in no uncertain terms, if you're coming into trade in after a poor light sleep, you are setting yourself up for poor performance. The solution is to make sure you are well rested, and if you are tired, just don't trade that day. And the final thing on these quick physical fixes is exercise. As little as 20 minutes of aerobic exercise facilitates better information processing, rational decision making, and improves memory by actually increasing the size of your hippocampus, your prefrontal cortex and the medial temporal cortex. So we've just seen how food and diet can shrink your brain, and now we've got something that can help grow it. Exercise stimulates the release of growth hormones that promote the growth of new brain cells. It also increases serotonin, which counterbalances the chemicals that your amygdala releases to prepare you for fight or flight. And it improves sleep, which we've obviously just talked about. But one of the best benefits specifically for traders is the improvement in your stress responses. Exercise is a form of stress. It pushes your body out of its comfort zone, increasing the workload on your muscles, heart and lungs. And what that does is desensitizes you to many of the physiological symptoms of fear and anxiety associated with trading. As you become more accustomed to those physical sensations of, say, a faster heartbeat, for example, you become habituated to them and less likely to respond to them when you experience them in in trading. So hydration, food, sleep and exercise, four really simple factors to be aware of and make small changes to, which can instantly improve your trading performance. But now I'm going to cover some more complex strategies that Although they take more effort, will produce more significant changes for you. These are the important ones. The first thing we want to work on is retraining your intuitive system. Remember this. This is your defense system that is oversensitive and maladaptive to the trading environment. So let's recalibrate it and I'll give you three strategies for this. The first one may sound a bit silly, but it's backed by science. It's to talk through your decision process. Live brain scans show that talking out loud about what you're thinking engages more of your brain than merely thinking to yourself. And and with more of your brain involved in the process, you are able to think more efficiently and make better decisions. So the next time you're trading and you face a decision junction, talk it through out loud. Say what you're thinking, admit any indecision or confusion and explain out loud why you're going to go ahead with a particular choice. I know you will feel silly and this isn't a technique that you're going to use for the rest of your career, but it's a very effective strategy in the early stages of retraining your systems. The second strategy is progressive desensitization. Now imagine going straight up to a 10 meter high diving board at a swimming pool and trying to jump off. Most people would be too scared. But by starting jumping feet first just off the side of the pool and then slowly moving up progressively higher boards, you can become desensitized and comfortable with each new height. VARI is a classic example of retraining your amygdala. You gradually become more and more familiar with a situation until it becomes normal. You need to do the same in trading. Start with demo trading to experience zero risk and then move on to a small live account. And then increase your exposure slowly and progressively in stages. What you want to do is reassure your defense system that certain levels of discomfort are normal and don't need to be reacted to. And this way you'll learn the difference between acceptable risk that is unavoidable in financial markets and what is excessive or dangerous. And so your intuitive defense system will be relaxed under normal trading and you'll be able to stick to your strategy. But but it will still be alert and protect you if and when the real risk increases. For some reason, this is using your defense system to your advantage as an asset, exactly like the professionals do. And the third strategy is rebalancing feedback loops. Most traders think about their trades based on whether they won or lost. A winning trade is good and means we did something right. A losing trade is bad and something went wrong. And we should probably add a new filter indicator or perhaps look for a new system that inadvertently creates a handicap for your intuitive system. Remember earlier in the course when I talked about memory recall? Well, if you pay more attention to losing traits, you will have a disproportionate memory recall of losing traits. Secondly, and more importantly, you're feeding your intuitive system worthless information. A good trade is a trade that is executed according to your strategy. A bad trade is one that isn't. Good trades can win or lose. Bad trades can win or lose. Successful traders assess their trades based on whether it was a good trade or a bad trade. The win or loss element is meaningless and as such they train their intuitive system so it knows what to look for and what to avoid. Losing traders, on the other hand, ignore all the winning trades and they only assess the losing trades because they think a loss means bad bad. But losing trades will have some bad and some good. Their intuitive mind is never taught the difference and therefore never learns and is never capable of helping the trader. So what you need to do is start conducting proper, balanced post trade analysis. Pay attention to your approach. Do you tend to do more analysis after a loss or after a bad day and less after wins and good days? After wings, are you happy and you just ignore whether or not you stuck to your rules? And likewise after losses, are you frustrated and do you quickly assume that something went wrong and you look for a mistake and try and make improvements? If you do any of those things, you are mistaking outcome for process. And if you're doing this, you are training your intuitive system very poorly. In fact, you can't really call it training at all. You're just doing yourself harm. Make sure you assess every single trade, win or loss. Go down your checklist for your system rules and ask yourself whether you followed your process exactly. Identify the trades that you did not follow the process. Identify where you fell down with that process and plan to fix that on the next trade. This is how you correct mistakes and likewise identify the trades that you did. Follow your plan because these are your good trades that you want to reinforce and do more of. This is non negotiable as part of your trading. If you're not doing this kind of post trade analysis, you are wasting your time even attempting to become a trader. Okay, so now we're going to move on to your logical system and improving the communication between your logical system and the intuitive system so that you've got better oversight and control. And I'll give you two techniques for this. To begin with, you have to remember that your intuitive system is lightning fast. It's always alert, it's only interested in right now, and it reacts to situations automatically. It is absolutely amazing. But for the sake of puttedness in layman's terms, let's just describe it as a bit impulsive. Your logical system is more considered. It's rational. It weighs up the pros and the cons, it thinks about the future. And importantly, it can exert conscious and deliberate influence over your intuitive system. This is what acts as an oversight to keep your intuitive system in check and harness its incredible power. The problem you have is that your intuitive system is 20 times more powerful and 25 times faster than your logical system. And your logical system is easily distracted and can even go to sleep. And therefore it's not always paying attention. So the challenge is to keep your logical system from being distracted and keep it aware of what your intuitive system is doing. So the first technique is an attention control method. Pick a routine that's highly automated, something like brushing your teeth. The aim of this is to try and direct your attention to the automated task at hand without wandering off. You're going to see just how untrained your logical system is. The next time you brush your teeth, try and concentrate just on the brushing. I guarantee within seconds you'll be thinking about something else and daydreaming. Notice how long you can remain focused before your mind wanders off, and when, not if, when you're distracted. As soon as you realize it, gently bring your attention back to the brushing. You may only be able to last five or 10 seconds to start with, but if you practice this daily and you make it part of your routine, you will gradually increase the time that you can control your own attention. And this is literally strengthening your logical system. And the better you get at this, the more control you'll have when trading. This is the equivalent of going to the gym for your logical system. The next strategy is to slow your thinking down. Part of the vulnerability to being pushed around by your defensive intuitive system is down to the fact that intuitive system is 25 times faster than the logical system. If you want more control and oversight, you've got to learn to slow your thinking down. So you're going to train yourself in this by taking advantage of everyday situations where you feel strong urges, like checking your phone, your email or your social media. First of all, recognize and describe the urge. For example, I really want to check my Facebook. Or I want to check the news and so on. Next, identify if there is a physical feeling that that accompanies that urge and if so, where is it? And I know that may sound odd, but this is about self awareness and taking notice of early warning signs. So at this stage you pause and you say to yourself, okay, I've got this urge, but you're going to consider acting on it after you've counted from one to 26. Now, it's important that you count slowly. Make it last 26 seconds rather than just blast through it in five seconds. When you get to 26, ask yourself whether the urge is the same. Is it just as strong or has it reduced? If it's the same and it's just as strong, repeat the counting, but this time count even slower with bitty gaps in between. After that, you should find that the urge has subsided somewhat, even if it's only a tiny bit. But if it has, you've had a small but hugely significant success in slowing your thinking down and interrupting that domino effect, that cascade of urges to actions. What you do in here is strengthening your ability to control how you respond to urges. Urges come from your intuitive system, and if your logical system is weak, you will always give in to the urge. And that is disastrous in trading. As you learn to slow down and control this on tasks like checking your phone, you're going to carry that strength over into your trading. Now, none of the techniques that I've explained here are going to turn you into a millionaire trader overnight. You wouldn't change from Homer Simpson to Arnold Schwarzenegger simply from one visit to the gym. And trading is no different. You need to repeat the exercises again and again over weeks and months with a slow linear progression. It's not the sexy instant fix that most traders are looking for, but as I've said before, 99% of traders fail forever because they're looking in the wrong place for the solutions. The 1% who succeed do what is necessary, not what is desired. Remember the phrase from the start, today I will do what others won't, so tomorrow I can do what others can't. I hope you've enjoyed this short call, guys. It really is only a very basic introduction to high performance trading, but I hope it was enough to spark your interest and point you in the right direction. It's not going to fix all your problems just from looking at a few 10 minute videos, but as the channel grows, I'll try and upload more and put more meat on the bones of this topic. If you've enjoyed this, please like comment and share. And if you're not already, please consider subscribing to the channel. Thanks for watching and I'll see you next time.