i asked @TraderTom if banks hunt my stop loss (lol)

Former institutional high stakes trader Tom Hogart, author of one of my personal favorite books in trading and best seller Best Loser Win, recently held an amazing conference in Prague. I had the luck to join him and ask him kind of controversial questions and I loved the way he answered. Do you think that banks and institutions hunts for retail CFDs traders stop losses?

Nope. Please don't.

I really appreciated Tom, not only because of his brutal realism in trading, he's definitely not sugarcoating it. He knows what he's talking about, he's transparent with his losses. So not only he's an outstanding and impactful professional in this industry, but also he's an amazing person with a very contagiously positive energy. In this channel, my goal is to interview a lot of these legends of this trading professionals and share with you their insights so that they can impact positively on your trading journey. So if you want to see more of these videos, subscribe now to the channel and click the bell so you're notified when a new interview comes out. Now, without further ado, please enjoy these few controversial questions I asked to Tom Holgaard himself. Hi Tom, thank you so much for the workshop. It was really amazing. Couple questions for you. So this probably you've, you've heard this a lot. If you had to choose between focusing on trading psychology or focusing on having a concrete edge on the market, which one do you think has more impact on short term and long term on the results of a trader?

That's a good question. So say that you have a really powerful edge. I know that you use something called footprint amongst others. I use more price action based. But let's say that we have a really good edge. What happens if you don't believe in the edge? You know, because every strategy, no matter how good it is, will have periods where it will go through a drawdown where it's not working. But if you don't have the movement mental resolve to see you through those bad trades, well then it doesn't really matter how good the edge is because at the first sign of a flaw or first sign of failure, you're going to bail out. So I would rather have a really strong mindset and then subsequently have to learn a good setup. But I think the prerequisite for being a good trader is to have a strong mind. But not all of us are born with strong minds. We're not. Sometimes our parents would be the first to say, oh, don't do that, don't be so silly, you can't do that. And so oftentimes when we grow up later in life and we become adults. You less or me, I'm in my 50s, you in your 20s. Sometimes we have to unlearn some of the things that our parents and our brothers and sisters have told us, and. And we kind of have to almost.

Invent a new identity. I'll tell you something that what not many people know about me is that I left Denmark so that I could actually reinvent myself into who I really am as a human being. Because in Denmark, I was being held back by what my family saw in me, what they thought I should do. And sometimes you just gotta sing from the heart and trust that what you know in here is. Is right. And then say, I'm off. Hasta la vista. I will see you later. I need to be true to me there's someone once said, you must follow your bliss. And the bliss is what's inside. I know this has got nothing to do with trading, but I also don't think that if we don't love trading, if we don't act from a place of love. I love the process. I love footprints. I love price action, of course. Or Fibonacci or Bollinger bands or whatever we do. Whether you won't last, you got to have a love for what we do. So that's my answer. Mindset first, technique second. But, you know, can I just add something? Of course, most people get it the wrong way around. Most people will say, oh, no, it's all about technique. Oh, you got to have a strong technique. But that's why I think most people lose.

Nice.

Okay.

So also true, because I see nowadays a lot of traders may be focusing too much on. On psychology instead and not having an edge in the first place. So that's why I'm asking. Sometimes there can be the opposite problem.

I haven't encountered that. But, you know, I think sometimes the pendulum of knowledge will always swing. Okay. You know, there was a time when you look at diets, there was like no fat diets, so we didn't eat any fat. But we didn't think about sugar then, like, no sugar diet. But now we're eating a lot of fat and meat because that's the ketogenic. Right. And sometimes the knowledge of mankind, the pendulum sort of swings. And eventually we will settle on the right path.

Definitely. Definitely. So next up, you talk often about situational analysis rather than technical analysis. And I love that. So you analyze session by session market behavior. At the beginning of the session, I wonder, do you use in your process volume macros or you're just purely price action basically.

Yeah, I can answer this very quickly. So for example, if I could give your, your, your fans an idea of situational analysis and I just want to make sure because it gets a little technical but you have something called the regular trading session which for you in Italy would be 3:30 in the afternoon for the US until 10:00 clock at night. And so if I observe that the Friday regular trading session, if the high during the Friday is not as high as the high on Thursday the day before the, then the odds are overwhelmingly high that whatever low you made on Friday will be visited on Monday during the regular trading session. That's an example of situational analysis. Another situational analysis that I have published is that if Wednesday is lower, if Wednesday's high is lower than Monday's high, then you will see the lows of Wednesday being visited on Thursday with I think when I did it I had 24 out of 25 is really quite a mind boggling statistic. But it's just, that's, that's a situational analysis and for me it's just fun to uncover these shall we say idiosyncrasies in the market. It also because a trader, I'm not just a trader, I'm also curious individual and for me the research is every bit as lovable as the actual act of trading as well. Especially, especially if you've got something you think that's going to happen today and you got this game and you're kind of excited about. I'm waiting for this to happen and then it happens and it plays it out and you walk away a big winner. That's a lovely feeling.

Amazing. So being a high stakes trader you often talk about how you scale up in a position. Do you have also a strategy to scale out of a position as well? And if yes, how?

No. I think it's one of my flaws as a trader is that I tend to.

I, I'm a high stake trader because my, my, my stake size alone is high but I add to my winning trades and not many traders do that. They add to losing trades. Please don't do that.

Don't do that.

No, please don't do that. Uncle Tom has spoken. But you can also imagine that if you had bought say the DAX at or the s p at 50 and then you add more at 55 and maybe you add again at 60. If the s and p then goes back to 55 you are break even on the second, you're losing on the third and you're winning on the first and basically you're break even now, even though technically you should have 10 points. And.

February was a big losing month for me and I have to rethink my strategy about adding to my winning trades because it was the winning trades in February that that blew up in my face.

Yeah, of course.

Well, it had worked in January and December, but I guess at times you will just encounter.

Does it matter on market condition? Do you blame it on market condition as well?

I never blame market conditions because, you know, we take as traders and as human beings, we take ultimate responsibility for everything in our lives. We don't blame our wives or children or friends. We blame ourselves and we find a way out from that.

Definitely. Sure. Still there's, you know, black swans can.

Happen, of course, but then we have a stop loss, don't we?

Definitely. Definitely.

My problem is more of a I'm trying to push the boat too hard and it has spectacularly backfired on me. And I as a responsible trader, I have to go back and review that, say, have I done something? Yeah. So anyway.

Okay. Yes. So now into really quick question.

Sure.

Do you think that banks and institutions hunt for retail CFDs, traders stop losses? Nope.

Please don't. Now here's the thing. What I want to say to you is this.

So you worked on a CFD broker.

So. Yeah, but bollocks to that. No, sorry. Don't swear, Uncle Tom. Look.

I did everything, some intense work on the whole conspiracy theory of institutions chasing.

Yes.

And one of the things that I use as a resource for my argument against it is the BIS report. BIS is the bank of International Settlement. And in the bank of International Settlement they estimate that retail traders, which basically is still you and I definitely we make up 5% of the daily volume. We are not even small fish. We are so insignificant. No, the real problem is that people like you and I and everybody else, we always place our stop loss above the old highs or below the old lows because that's what we do. And we don't have big budgets either, so. So therefore we are easy target.

Of course.

Do you know what my best friend and mentor David Paul once said? And maybe you should pass that on to your students. He said, I always like to place my orders where the crowd place their stop loss.

Definitely.

Isn't that amazing?

I've heard that quote from him, definitely.

Anyway, anyway.

Yes. So contrarian kind of mindset is always, I think, good. But getting that into the conspiracy and blaming the algorithm to, you know, I.

Think the algorithm that was Supposed to.

Be the next question. Is there one algorithm controlling the market?

Well, like a, like a big mighty.

Yes.

Well, if there is, yes. I have found no evidence whatsoever.

Amazing.

Because sometimes it's turned on and sometimes it's turned off. And you know, like, I have friends that I really like as human beings.

Yes.

But I don't, I don't like their views on conspiracy theory. If I lose, I don't blame the market. I don't blame some algorithm. I blame me.

Definitely, definitely 100% agree. Last two, really quick like this. On a scale from 1 to 10, how important is subjectivity for a discretional trader?

Would you mind defining subjectivity in your.

Like knowing which.

A bias.

Yes, let's say a bias.

All right. I wish I could send you a chart. I actually, since I'm sending you my entire presentation anyway, I might show it. Yes, that slide.

Maybe.

So there's a slide in there that has the data of 30,000.

Sorry, 30 years of Dow Jones history. But it's in a bell curve.

Yeah.

And if it's below, it's because the Dow has lost for the day compared to the previous day's close. And if it's above, it's because it's gained for the day compared to previous day's closed. That allocation of winning days and losing days over 30 years, 7,500 trading days. The distribution of winning days and losing days for the Dow Jones index is 49.6 to 50.4. Okay.

Basically 50, 50.

Yeah, it's 50 50. And so having a bias might serve you to calm your own mind. But I never trade with a bias. I never go in and say I'm really bearish or I'm really bullish. I'm going, hey, let's see what the market will give me. And that's why I think mechanical strategies has an edge for me because it doesn't really factor in whether the market is very bullish or, or very bearish.

Definitely. Sometimes maybe. Though it's hard to quantify some things that you are implicitly learning through experience.

Right, I agree with you. And also I was very careful how I answered. I said it's not useful for me and I have substantiated why that is. But I will bow to the person like you and your performance. And if you use discretion with, well, clearly, then there's more to the story than just a one dimensional perspective from me.

Definitely. I don't use a lot of discretion or instinct if you want. I'm very pragmatical and mechanical, but I Think even if you wanted to use your instinct, you should track your instinct and see how it performs and.

Great comment.

Definitely. So what do you think? Last question. What do you think about the actual current retail trading educational battleground and what would you change or what are you doing in your community to bring a better impact on the community?

Well, look, first of all.

Have you ever heard the expression that everybody wants to be shepherds but no one wants to be up in the mountains? Yeah, it's a saying that I kind of invented that there's a lot of people who would like to get paid to tutor other people and they save money in teaching other people and, you know, they could be a good business. I'm not so interested in teaching people for money. Not because I would be ashamed of it, but because I don't think that I have the necessary qualities to be a good teacher.

On a really granular level. I'm better at maybe addressing like 70 people here in Prague and then give them the notes so that they can work through themselves. I'm not the one who's perhaps hand holding them like a personal coach, because personal coaching, well, I make more money from trading than I would from personal, unless you can afford to pay me £5,000 a day, which very few people can do anyway. But I also am. I'm distressed as a more mature person. I'm distressed by the.

Volume of deceit that I see by educators. Because it feels to me as the qualifying factor for these educators is to show the world that they have a Penthouse or Ferrari or Bugatti. But to me, that isn't the deciding factor. The deciding factor of whether you really become a successful trader to me is how do you handle losing? Because everybody can have good periods, but it's usually the losing periods that will kill you. And that, I think isn't being expressed at all because most educators will focus just on the winning, not realizing that showing vulnerability is actually a strength that you can own up to. Yeah, I should have gotten out sooner. I didn't. It won't happen the next time.

Nice. Well, thank you very much.

Thank you.