Master The Mental Game of Trading In 60 Minutes (STOP TILT/FOMO)

This guy has mastered trading psychology.

The world famous author of the Mental Game of Trading.

This is one of the primary derailers of traders continuing to be in the zone. This is why I see so many times you've got a great like Monday through Wednesday and then Thursday can be a little rough or Friday can be a little rough and it's not because pay attention because this is a critical concept that a lot of people don't know. And if you don't know it, you're behind the eight ball and in a sense you're kind of going to a gunfight with a water pistol.

Jared Tendon in this episode on Chart.

Fanatics, Jared gives the exact blueprint to stop you going on tilt, stop you revenge trading and most of all stay on process.

A lot of people think that the optimal in trading is to be that kind of cold blooded killer who has no emotion whatsoever. And the reality is that so to me this is basic maintenance for traders and it's a bit of a kind of buying insurance on being able to get into an optimal state profit.

By the end of this episode you will no longer strip struggle with your trading psychology. You will now stay consistent and disciplined.

In your trading journey.

You do not need to be optimistic to start the trading day. You do not need to feel like today is your day or today you're going to be in the zone because you've done all these things. In fact, if you have the expectation of checking all these boxes that that means you're going to be in the zone. Guess what? You're not going to be in the zone. One of the biggest mistakes that I see traders make with regards to the mental game of trading. It's.

Welcome everyone back to Char Fanatics the Go to channel for all of the very best strategy and concept breakdowns with some of the best traders and people involved in trading around the world. Now why did I say it in that way this time? Because finally we have our very first trading psychologist with us today. He actually is the author of the Mental Game of Trading bestseller. Incredible book that so many people have given such positive feedback for. And I was so excited to be able to sit down today so that we can break down exact concepts and actionable steps to help you improve your trading psychology discipline and hopefully confidence. It's the one and only Jared Tendler.

Riz, great to see you.

Thank you for being here man. I really, really appreciate it.

Yeah.

And yeah, I'm really excited to go into this today. It's the first of its kind for us. You know, and you know, we've been talking strategy, we've been talking trading concepts, but this is the first time finally. And I'm super excited to see how we do this in terms of breaking down steps and actionable steps that people can take in terms of their psychology. Where do you feel like the best.

Place to start is the most important piece of the puzzle? So for you watching, if we could tattoo or burn this to the inside of your brain, pay attention because this is a critical concept that a lot of people don't know. And if you don't know it, you're behind the eight ball and in a sense you're kind of going to a gunfight with a water pistol. So, all right, I call this the malfunctioning mind. The research term is the Yerkes Dodson law. So if you want to do some research on that Yerk Dotson law, it's been around for over 100 years. This is not new. I didn't invent this. But what it does is help describe the relationship between emotion and performance. Okay, A lot of people think that the optimal in trading is to be that kind of cold blooded killer who has no emotion whatsoever. And the reality is that that is not true. Because passion, intensity is an emotion. We need that kind of vital energy in order to power the frontal lobe, right? The power, the thinking part of the brain where decisions are made, planning, you know, all that kind of foresight comes from the frontal lobe. If you don't have enough emotion to power that brain, enough energy to power that part of the brain, you suck. So here's the relationship. Okay, so here's this kind of upside down U curve. We've got performance to say. And then like emotion.

Is on. Yeah, you can read it all right? Performance, emotion. So bottom line is your peak performance exists up here. This is where you are in the zone. So again, you have a high amount of emotion, but like the right amount of emotion. Now everybody experiences this state differently. Some are, you know, kind of the bug eyed, you know, kind of crackhead intense, right? They need tons of market activity, like 4 to 500% more trades per day because the market's just giving them just like constant. And they're just, they're making a ton of money, right? There's, there's a lot of opportunity. Others more calm state, serene. You know, you almost kind of like heart rate wise, you know, almost like resting heart rate. You know, when they're stressed, they start to get a little bit. Performance drops. Other people, you know, describe it as kind of like this more like kind of heightened engagement. Right. The market is intense, there's a lot going on. So to be at your best, there's got to be enough activation. So it commonly what I see with a lot of traders is, you know, they'll kind of start the trading day here.

Yeah.

You know, they're a little too low, a little too flat. You know, for whatever reason, they haven't had their coffee, they haven't gone through their full warm up. You know, it's Thursday after a couple rough trading days and it kind of takes, you know, some market action to drive their energy higher. Right. Or it takes, know, unfortunately, like making a couple mistakes. Right. To get pissed off to drive their energy higher.

Yeah.

You know, and this is a prime example where we could say that anger is not bad. Okay. Anger is bad when you're here and then you start to fall down the curve. Right?

Yeah.

And that's, that's where the emotional system starts to become overactive. Okay. So this is the problematic side. This is where, you know, like I said earlier, you get a tattoo, something to your brain. It's this, it's understanding that as your emotions continue to rise. Okay, so again, the ratio is, you know, this is emotion, that 100.

Right. Emotion at zero. Right. So as your emotions get to, let's say 60, 70, 80, there's a progressive shutdown.

Yeah.

Some people think about this as the fight or flight mechanism. I like to call it just the malfunctioning mind. Just to describe that it's not a binary like fight or flight. Like it just doesn't get triggered instantaneously. You don't go from being perfect to 100.

Okay.

Instantaneously unless there's a factor. And I'll get to this later, but in general, for most traders, there's kind of a progressive action that occurs here. Right. There's a progressive nature to how you kind of fall down, how this emotion continues to rise and escalate. So for example, the start of the trading day, let's say you actually are in a great state. You don't, you didn't need, you know, coffee's there, like you're, you're raring to go. But out of the gate you've got a nice juicy entry. Take it perfectly. It rips 80% of your target and then just completely crashes and it stops you up by know, just a couple ticks and then races to your target and you're like, you know, pound the desk, whatever little bit of frustration gets created. Again, not overwhelming, you're still Clear minded, you know, another trade opportunity doesn't happen for another half hour so you kind of are able to reset but then the next one just chops around, doesn't really do much and then fails.

Yeah.

And now, so now you're over two and frustration is starting to kind of build here a little bit. Okay. What happens is, and this is why again it's progressive, you begin to start to lose access to the thinking part of the brain. The planning, the decision making. Your access to new knowledge starts to kind of fade away. It's to me it's almost like kind of holding sand. Right. Like things are starting to kind of.

Fall through the cracks.

Yeah, through the cracks. And so again you're not trading terribly here, but maybe there's a little bit less patience. So your next entry is a little bit premature. Yeah. Right. And now. Yeah. Okay. Let's say even say you get lucky, right. Trade, you know, works out in your favor. Like again you're still not totally reset here. And the reason it's called the malfunctioning mind is because one of the key parts of the brain that I haven't discussed yet is the emotional system. So higher brain function while you're power, well you are automatically correcting any flashes of things that might have triggered you, whether it be anger, greed, overconfidence, fear. Because your mind is very clear, the part of the brain responsible for controlling emotion is powered. But as this emotion rises.

You begin to lose the ability to actually control your emotions. So it's a very sadistic way the brain is designed. The part of the brain responsible for controlling emotions gets shut down as your emotions continue to rise. Okay. And this level right here I think is the hardest for traders to deal with. So here, this is when you are clearly making mistakes.

Yeah.

Okay. And the problem is that you still retain enough self awareness. So again, awareness is another higher brain function. Right. When you're at 100 and you're in that blind rage, blind panic.

Yeah.

Emotional system slowly shut down. I think the blindness in terms of how we typically describe these things is a function of our awareness just going away by the wayside. We're raptured by our emotions and we lose control entirely. Yeah. But at 80 you still retain enough self awareness. Without the ability to translate that awareness into control, into action, into stopping yourself, it feels like you're on a train or on a car like driving off a cliff and you can't stop the car. You just like it's gonna lead to an inevitable know crappy conclusions which has happened Many times, many times before. So it's really, really hard for traders to understand this concept. And the problem is that when mistakes are made, and I've had clients who've physically tried to restrain their, their hand from clicking, you know, getting into certain positions.

When they're in this position, there's a ton of self criticism that happens. So now you make mistakes in this position, and then it just keeps accelerating. So, you know, you think about some of the blown accounts, some of the significant drawdowns that happen on, on, on Big Red days. You know, you turn, you know, 5% down day into a 30% drawdown. Right. Because the frustration, the rage that builds here is like, this is where revenge trading really kind of clicks in. And so I've kind of described this mainly from an anger standpoint, but the same thing can happen in any other emotion.

So in terms of, let's say, for example, this cycle takes place, we get to this point, and you create that negative experience, as you mentioned, let's say you come the next day. Is it a reality that the next day this curve actually is much shorter in terms of you never really get to a high because you're carrying that baggage. More than likely, the emotions are already heightened in terms of the, the scale, but the performance element is actually reduced because of that baggage.

Yeah. So it's interesting to frame it as, like, it being kind of reduced in that regard. I hadn't thought about it in that. Typically, the way I've thought about it was you were just sort of starting kind of farther down the curve.

Got you.

Yeah.

So rather than.

Yeah, yeah, yeah. You're. Yeah. The emotional baseline has been increased.

Adjusted.

Yeah. And so now after that first loss, you're already kind of here.

Got you.

Yeah. And the problem with a lot of that accumulated emotions, kind of the term that I use for it is it's generally hidden, especially because traders tend to be pretty optimistic. So, you know, you go have a good workout, have maybe a drink, you go for a walk, like, spend time with the family, whatever it is, to kind of reset yourself. Yeah. You come back the next day and you're like, all right, today's a new day. Optimistic. Let's, you know, grab it, take whatever we get, and you don't really know that you're being, know, a little compromised. Right. There are some warning signals, but they've got to be studied. Like, like patterns in the market. You got to study the patterning in yourself to recognize like, you know, did you sleep as well? Did you wake up with trading more in your mind a little bit kind of itchy and antsy to get to the charts and maybe spending more time in your prep which you know theoretically is not the worst thing in the world. But when you understand kind of what helps to produce your optimal performance. To me I think of it like a mixture. You know there's, there's lots of different data points. Right. There's a certain amount of sleep and exercise and, and rest that's required. You know, nutrition is important, hydration. But then there's also, you know, degrees of preparation and sometimes when traders over prepare now there might be more strongly biased now they might be looking for something and, and not really as, as tuned in. I think of you know, this space up here and I've kind of like made it a little bit cluttered but I think of this place as being really, really clear. Right. When you're at your best you are clear minded, you're very receptive, you're open to what the market is telling you. Yeah. You know, and so that, you know, how can you tell when you show up to the markets? Not quite as clear minded a little bit as you said, maybe over prepared and trying to fit in. You know what you think is going to Happen.

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Do you think is there things and processes that traders should be focused on in order to quite consistently put themselves into this bracket?

Yeah, yeah, I mean, I think so. Oh, you mean into like their, their opt. Like the zone? Yeah, yeah, yeah. I mean, so, yes.

Aspirationally I think sometimes, especially when clients come to me, it's like there's clear problems that we're trying to solve here. But I found that the answer sometimes is aim at this. Figure out how to get in the zone more often. And that kind of raises the threshold for what you're trying to accomplish day in and day out. And sometimes that actually prevents. Right. It sort of stops that from happening more quickly. Because if you can define the characteristics.

The characteristics of what your zone looks like, you create a target. But it's like as you said, aim at that every single day. Right. Optimal performance. Who wouldn't want that? But to understand that it's not. So I think sometimes a lot of traders come from sports and the, the old methodology, the old, you know, philosophy on this was remember the times when you were in the zone?

Yeah, right.

And you can meditate on it. You can, you know, imagine yourself at the start of the trading day or the start of, you know, right before you're going to go play a big baseball game or football game or whatever, envisioning your best performance and really kind of feeling that and you know, responding to the nuances of what's going on. I, I think that's generally not advantageous, especially for trading. Okay. Because the conditions vary so greatly.

Yeah.

It's less about kind of envisioning the optimal and more about understanding what are the key variables and elements that fit in. So yeah, number one, you're going to define what the zone looks like for you. So emotionally, like I said, I said earlier, like there's a specific way in which you experience it. High energy, low energy, medium engaged. What is your focus? Like what is your decision making process? Like I mentioned clarity of mind. So kind of trying to like describe almost in paragraph form or bullet point form, define in great detail what the zone looks like for you. And it might take you two weeks, a month. Right. But you know, certainly when it happens.

That'S when you, that's when you are.

Yeah, nail it down. But you can, you know, obviously in hindsight go back and think about times when you've Been in the zone. And then we, then we want to start to look at the factors, right. What produces the zone for you reliably? We're not looking for correlation. Okay. A lot of people confuse correlation and causation. Right? Correlation is two things are happening simultaneously, but they're not actually causing one or the other. Yeah. So I, you know, walk my dog every morning and that gets me in the zone. It's like, is it the walking of the dog or is it that you're actually just outside getting fresh air? What's the piece that's causing you to actual thing? The actual thing. We want to understand what those are. So determine the factors. And again, I think energy is the number one factor. Okay. So if your energy is too high, there's times where you just come into the market just way too intense, you know, and it's. It's a problem, right. That higher brain function starts to shut down. Your. The clarity of mind shrinks, right. That the working. So the part of the brain. So we're kind of talking about, you know, optimal performance here. There's a part of the brain called working memory. Okay.

If you have thoughts in your head, you know, that's occurring in a space that researchers call working memory. If I ask you to remember a phone number. Yeah, right. That's what we're talking about here. So in normal circumstances, average people have between five and nine pieces of information that they can think about at one time. Okay? So not. Ironically, this is why phone numbers, at least historically, were seven digits. Right? Because the average is seven. Okay. Okay. Now obviously we've got area codes and whatnot, but bottom line is, average people can, you know, hold seven digits in. What? Now here's what happens. So this is in, you know, in the zone. I would argue that you're able to expand that. So if you're normal seven, maybe get the eight or even nine. And that is where intuition starts to get accessed. You're able to bring in data that is very, very subtle. Right. And normally not accessible. When the emotional system starts to get overactive, two things happen. Number one, you start to lose this space. Right? That's gone now. Okay. Now you also have.

Space.

That'S being used for defense. Right? So when you're in this, at this zone of, you know, emotion rising, like, you're not going to just like, allow it to just keep happening. Like you're going to try to correct it. You're going to do things actively to try to get yourself back reset. So here you are using a portion of your Working memory for defense. So now you're left with like five or six or four. Right. And so you can't get in the zone when you don't have access to full mental functioning.

Yeah.

So clarity of mind is really key. And if your energy is too high for whatever reason, just because you're like, excited, you know, want to take on the world and like overly motivated, you'd be, you can be too inspired. That can be a problem. Because working memory gets compromised, that mental space shrinks, and now you're kind of down floating in that 60 to 70% range. So. Yeah, what we're looking at here is, is trying to define factors. Energy is number one. Okay. What are the factors that help you to find this space reliably? Okay. For some it's, you know, sleep, but it's maybe not always. Like, you can still get in the zone if you have poor sleep, but there's other factors that come into play. So I'd say, you know, energy is made up of.

Physical energy.

Motivational.

So you sleep poorly, but you're not gonna let that deter you today. You can tell this is, you know, there's some ripe opportunities here. I know market conditions, you know, sometimes get, get pretty tough. Maybe they've kind of ebbed in your favor. Now it's like, all right, it's go time. Like, you know, the, the, the fatigue you feel is not a reason to not get this update. Motivational. Then we've got emotion. Right. Again, emotional energy is, you know, kind of what we're talking about here. So. Yeah. What is the, the, the mixture of, of or what are the factors that help to influence your energy most? And then as I said before, kind of clarity of mind.

Is another kind of primary factor.

I think a lot of traders skip out on their, their, their journaling.

Yeah.

You know, and not realizing how much it's costing them. So here we've got this working memory.

Would you say you mean trade journaling or like actual journaling your emotional. And so.

Yeah, good point. I, I, perhaps both or both. Yeah, I mean, I think I was thinking the trade journal that, you know, the kind of post day.

Yeah.

You know, just like making sure you've got all the data there. And, and I've kind of worked through and went through all the trades. As an athlete. Right. No professional athlete is like walking off the field, walking off the court, whatever, and hopping in their car, going home. Yeah, right. They ice bath, stretching. Like there's some rehab that they're doing to get their body.

Like reconditioned. For the next training or competition.

Yeah.

Mentally speaking. Right. Like traders are kind of like mental athletes. So like the cool down has to mimic that same idea and in this case it's more about the, the absorption, the consolidation of both.

The, the thoughts, the, the details about the trading day. Not even on a mental side but just the pure details that have kind of come to you that day. Like yeah, there's a lot of learning, there's a lot of absorption going on and so if you don't digest that then working memory gets consumed because now your mind's kind of chewing on that stuff. Maybe you don't rest as well, sleep as well. You come down, it actually affects your energy. Conversely you can kind of come in the next day with your mind a, a bit cloudy, a little bit foggy, a little bit kind of harder to think maybe it's like harder for you to sort of see and have a sense of what the market's going to do today. Your pre market prep's a little bit worse. Other traders like see things that you don't see. You're like kind of feeling more out of sync.

Yeah.

Ironically being in the zone regularly can make you out of sync. So the journaling post session cooldown is a, is a critical component but also it's, it can help you to digest some of that emotion. You know, like you said earlier, like kind of not fully reset. Well you've got an opportunity to kind of journal and get out of those emotions and yeah, maybe there's not like a massive release from it but just putting it out, seeing it. Sometimes the emotions when they're just kind of in our head just continue to spiral and, and getting that on paper helps to digest them a bit.

No, definitely, I think it definitely does. And you know, I think it's a very simple technique to be able to really reduce that mental pressure down because I think there's a huge point to what you're saying in terms of by keeping it inside it's easy to spiral and allow that energy to continually almost take over your inner dialogue versus once you put it on the outside you're now able to actually observe it and you know, think about it rather than just kind of letting it go back and forth within your own mind actually think about the reason. Would you say though that a lot of these can almost so have a knock on effect. So if your clarity of mind isn't there then can impact your sort of emotions and your energy. If the energy is then down then you know there's certain, certain Factors that normally should be part of your process to have peak performance you're now not doing because of the way you feel. And then therefore you start to sort of have this knock on effect in a negative manner. You can probably do the same thing on the positive side by having, say, the certain process helps you with your clarity of mind, which then helps you to have a good energy in terms of your physical, your motivational emotion. And therefore would you say that a lot of it does come down to how people structure their day to day to facilitate peak performance?

Couldn't have said any better, honestly.

I'll try.

No, that's great because that's, that's exactly what it's a, it's a formula, it's a mixture. And so you're kind of adapting based on kind of what's going on in the day. Like, all right, today was a very emotional day. Then you got to do spend more time, you know, doing that journaling, you know, maybe you're feeling a little bit burned out. So like more rest is a, is a better component to it. Yeah, you've been doing really, really well. So confidence is high. Maybe motivation's lagging a little bit. Right. You kind of get a little fat and happy and you know, have like monthly targets and you're, you know, kind of killing it like, or you're off to a great start with the year. Like, you know, motivation kind of lags. So it's like you're kind of finding the key variables and just understanding like, all right, well this one's lagging a little bit, so what do I need to do to keep that one up? It's like, all right, well I'm clear minded, my energy is lacking. Right. Because for that reason. So yeah, it is very much of a formula and a mixture. The other thing about the clarity of mind component too is if you are again kind of regularly in the zone, you know, that working memory starts to get consumed, you know, and you can actually start to feel physically fatigued. So it's an interesting thing because the way you can kind of test this is at the end of your trading day if you feel really tired but you still have the physical energy to go, you know, do sport or whatnot, it's unlikely that you're actually physically fatigued. I think there's like a physical or emotional experience where when your mind kind of gets full and you know, the easiest way for some of us to recognize it is like, you know, we all maybe in like university studying or when you've been, you Know, maybe back testing for hours. Yeah. Right. And you're like, your mind just gets like, it's like I, I can't, you know, like I'm done. Well, that's like an extreme example of what this happened. It's like you're not tired.

Yeah.

If you need to go, you know, go for a run or whatever it is, physically you could do it. It's the amount of kind of mental data that you're carrying. Yeah. Is like metaphorically like weighing down on you, giving you the feeling like you're tired. And I believe that that's a primary excuse the traders give to not do their journaling. At the end of the day they're like, ah, I can't, I can't. Like, no, no, you'll actually feel better.

Yeah.

In 15 minutes if you spend five minutes just getting your thoughts out.

So it's like building up of this energy and your, your mind and body, but your mind in particular only has certain capacity. So when you've overloaded it through the day, especially if it's built up with a lot of negative experience and that negative energy, if you will, that you're taking from that experience and what you've done and the actions you've taken, then obviously that's even worse. But even from a positive standpoint, if you've done really well, it's still the same principle. Right. Of the capacity being limited. So even on the positive side, if you feel tired and you don't want to journal, it could then have that negative impact in going into the next day because you haven't decompressed and let it out.

And that's the crazy part. This is one of the primary derailers of traders continuing to be in the zone. This is why I see so many times you've got a great like Monday through Wednesday and then Thursday can, can be a little rough or Friday can be a little rough. And it's not because market conditions are so different. It's because maybe your motivation is lagging and maybe you're also motivationally lagging because you've been so locked in.

Yeah.

There's so much kind of in your mind now and yeah, you're just not clear minded. Your energy's low. And then, you know, ironically what happens in this stage too is.

You kind of go looking like you know, that you're kind of not quite fit. Mm. And it's almost like you're trying to compensate for it. Right. You'll take a higher risk. Trade.

Yeah.

To kind of just like try to like Break you out of it. But it's. Even if you do, so let's say the trade wins. Like now, now you get euphoric, like now you feel more overconfident. Overconfidence is now here. Like you can't kind of find this place. You end up like teeter tottering on either side of it, like trying to oscillate in between. Like, you know, overconfidence, anger, fear. And then it's like, like, and then you breathe too many. You, you, you then release too much energy. You're just kind of too flat. Yeah. So I like to think of the, the kind of high level performance, the, you know, being the zone. Like you're a sponge absorbing a ton of data.

Yeah.

And the cooldown is you just sort of squeezing some of it out. Like the body will process and digest it. You don't have to do all of it, but you got to get it started because what you're doing is too intense for it to naturally do on its own for you to then be able to trade incredibly well tomorrow. Because look, the reality is, I don't know too many Premier League games that happen back to back, right? Like they've got plenty of time to absorb what had just happened and be able to make sense of it.

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The other thing that I want to pick up on from what you mentioned earlier was this. You know when you're journaling, you're kind of getting thoughts out on paper and there's a, there's a way of kind of interacting with it. That's how we can escape the limitations of working memory.

Okay.

If you are only trying to process the information in your head, imagine reaching into a box of puzzle pieces.

Yeah.

Let's just say it's a pretty, pretty simple one, one that you give it to a kid. It's 100 pieces but you have no picture on the COVID Right. And you can only look at between five and nine pieces at one time. So you grab a handful. You're like looking at it like, this is interesting. Like, okay, I still don't know what this is yet. Yeah, right. And so then you have to like maybe grab two and replace. What? It's hard to work it. But like if you can grab a puzzle piece, look at it, put it on the table, grab another one, put it. Now that's how you start to make sense and complete a picture. Yeah, because at the end of the day you do not collect data around things that are already mastered. You're only collecting data around things that you're learning. So to me, this is basic maintenance for traders. Yeah. And it's a bit of a kind of buying insurance on being able to get into an optimal state more often.

Would you say, by going through this process and having a focus on getting into this state, that to begin with you might find yourself on these sort of, these parameters on the extremes, but over time and doing repetitions and building a process and being disciplined over time. So yes, in the beginning you might stay within these fluctuations, but you know, given a focus and consistency and allowing yourself to build momentum over say a month, you start to bring them in and bring them in. And yes, you may not ever, every single day, be in the zone, but really the goal is to bring those parameters as closer in as possible over time because that process becomes a part of your routine. It becomes really part of your day to day life of being focused on these things and decompressing and keeping these things in mind. You think a large part of the mistake that traders make is that they're just not aware of what's actually happening internally and what's happening between the, between their ears there. When they're having these reactions and these thought processes and these wild swings in both emotion and P and L and everything, they're not actually aware of how the body's responding. So a large part of it doesn't even cross their mind that it can be fixed, it can be something that can, can change because they're really not aware of actually what's going on. They're so focused on it's strategy based. It's, it's, you know, how I'm trading, that's the problem versus actually, you know, dialing in on why am I responding in this way? Because at this point our mindset is that we have an edge and that's why we're going to the market. But then why am I not performing with this edge long term? Because I think what a lot of people, what they do is they'll go away, they'll do some deep work. And when I say deep work is less so on this, more so on strategy. So they go to strategy, they come back and then they, they do about maybe a week, maybe up to a month where they get to be in this zone quite often for a large portion of time. And a large part of that is probably because they Went away for three, four months away from the market, focus on a strategy and. Yeah. And through that process got clarity of mind and really sort of have this nailed down subconsciously, I'd say probably not consciously put effort into that.

Yep. But then the natural byproduct. Yeah.

And then they've come and then they have that week, maybe a month where they're really in that zone. But what ends up happening is this emotional factor. They start coming, you know, maybe towards the end of that week or month. However, it's normally around the month mark. I've seen anyway from personal experience. So then they get to a point where they're now feeling the emotion on this end. And then the cycle begins.

Right.

The cycle of being on this emotional side, being out of flow, out of the sync, out of that zone. And again, now, again, still not aware of why this is taking place. And they end up back. Well, I guess back over here. But they end up basically having to reset. They take three, four months away. They blame the strategy. They look at the strategy side of things in. As a, you know, subconscious thing. The clarity of mind's coming back. Their emotions are coming in. They're feeling more motivated, you know, and these factors are taking place. They come back. They do. They're doomed to repeat the same cycle. So do you think that a lot of the time it's because they're not aware of what's actually taking place and how, why these responses are taking place that they, they find it difficult to maintain something long term?

No doubt. Yeah. I mean, there's, there's blindness on every aspect of this. I think you, you've, you know, kind of articulated the cycle well, which to me, I think reflects the utility of this idea because.

We, we all can acknowledge the times where, you know, we are a bit kind of tired and unmotivated and maybe bored and then times where our emotions are kind of rising. But like, have you spent time to actually map, chart, pattern those with the kind of precision that would allow you to look if you, if you drop to 60. Right. If, if, if. Or I should say rise to 60 because there's some increased hesitation right now you're, you're doing incredibly well. And you know, you know that you've kind of messed things up in the future. So now you get a little bit fearful of messing up. Yeah. So now there's the hesitation. Maybe your sizing gets a little small or whatever that if you know that you're there, you're not helpless. Right. Obviously the awareness is number one. You can't do anything without it. Yeah. Right. You're blind. You're going to end up where you end up in without much to do about it. But if you're aware of these different levels. Right. And I think this is the, the homework that I generally give any new client. And, you know, if they, if they don't have a good beginning, you know, recognition of that pattern. Yeah. It's to spend time being very diligent in writing down the details that characterize each of these different levels. And it might mean somebody is dealing with both fear and anger at times, or some greed and overconfidence and some anger. It doesn't have to be sort of singularly like one emotion, but you need to have that precision so you can recognize it. In retirement, you spend so much time looking at charts to recognize when there's opportunity.

Yeah.

Right. There's metrics and.

Data points that you see in certain patterning that you see that, like, clearly indicate to you opportunity. If you're not aware of the patterning in yourself, well, then you don't know that you have the opportunity to actually stop the car before it drives off the cliff.

Yeah.

Turn things around. Now that what you do about is the second step. But the first step, absolutely, is to spend some time looking at the triggers.

Okay. What sparks that deviation?

Yeah.

Right. So as you said, it's. It's a month of doing really well. And what triggers. It actually is a beginning of feeling out of sync. And so when you feel out of sync, there's just a little bit of loss of confidence, a little bit of desperation to try to, like, kind of force and make something happen.

Yeah.

Because if you win, well, then that means that you're still good and you're still in sync. So that would be one example, obviously, a loss, rough market conditions. You know, things are just kind of chopping around, you know, getting stopped out by a tick, having, you know, a bit of bad luck.

Yeah.

You know, there's a wide variety of triggers, but you want to know the things that spark the greed, the fear, the fomo, the revenge, trading. All that needs to be understood. The triggers. You want to look at the thoughts.

The thoughts. It's. It's rare that you have unique thinking at these times where your emotions are getting high.

Yeah.

Right. And that's how you know that it's not like real working memory. It's more of a pattern associated with these triggers, with these emotional reactions. When you have the same like. So for example, you get down to, like, level 80 from an agreed and overconfidence standpoint, you're like, ah, you know, buying the Lambo. Like, I figured it out. Like I'm the next trading guy. Like, there's just, there's a, a very clear description of that state of mind, of that emotional state. And it's not new. It's repetitive. Right. The, the revenge training, like, oh, like, you know, mother effort. Like, I'm gonna get you back. Like, I can't believe that I, I got so screwed. Like, there's a. Again, the thoughts are not usually that new. Yeah, obviously try to define the emotion. Right. What are you actually feeling? Then we'll say kind of like the behaviors.

And actions, more kind of the physical stuff. So, you know, you get pissed off. Do you slam your desk? Yeah. You know, do you kind of have like a death grip on the mouse? Do you actually start to feel tension and heat in your head? Can you recognize how your breathing patterns change, you know, posture? Like sometimes traders will just like kind of get locked in the screen. They're just like so burrowed in. Or look on the flip side, you know, you're kind of just like disinterested, bored, like not really kind of feeling it. You're just like going through the motions. So again, there's, there's physical signs that you can chart here as well. Yeah. And then lastly, it's perception. Right. And again, perception.

Of the market, of your positions, of the viability of your strategy. Effectively, we're kind of looking at like the technical ways in, the ways in which your mind kind of changes in from a technical standpoint.

Yeah.

Again, they're not going to be that unique. Right. You have a bias. You become overly convicted of that bias at times when you're angry. Why? Because you want justification to take another trade so you can try to make back the money you just lost. Yeah. Right. Or, you know, FOMO is rising. And so, yeah, of course this thing is, has more room to run. I mean, look, everybody else is making money like, you know, or you missed out on a previous opportunity, so of course now is the time. And so you again, you convince yourself that you know what's being represented in the charts is actually there. And I, I know traders. You, you can make yourself see things. Okay.

Yes.

Yeah. And so that, that, that perception, you want to understand precisely how that perception gets altered. What's kind of the BS in your head that convinces you to get into these trades that, you know, you shouldn't.

Would you say, as part of that, like, especially the thoughts and the perception side of things? How many people do you speak to when they are going through this, this area? But initially, before they start making the mistakes and the poor decisions, initially their first four is actually I shouldn't, I should cut this trade or I shouldn't take another trade, but then completely gets pushed to a side and Yeah, I.

Mean I think you'll see that generally anywhere as you start to come. Yeah. As you're kind of falling out once you, once you get into the like the 90 to 100 range.

Would you say people should be though as part of like this practice and sort of homework in terms of trying to collect the information on what is that's taking place? Is that something that should be included of like, did you feel, did you think the right thing before you went down this path?

I think you're talking about some corrective actions and that is the next step. So the first step is what is the actual patterning? And so if it does generally include.

Yes, okay, I'm aware that what I'm doing is dumb, but I can't stop myself then that's, that's part of the pattern. Or if it's a way you're aware that you're, you know, sometimes at level 60, right. You are able to recognize the impulse to.

You know, jump into a trade prematurely. Yeah, right. It's like, and you stop yourself. You're able to hold like that's a very clear pattern. Right. You, you know at that point that there is an existing competence to recognize what's, what's occurring and stop it. But then as the emotion accelerates that then that, that ability to fight.

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Now let's get back to the episode. Would you say like, let's say factors wise, you know, for the zone, on average, you know, random case study, someone as you say, walks their dog in the morning, of which it's not the dog walking, it's more so the discipline of probably waking up and getting outside, getting that, you know, oxygen and getting moving. But that's their normal routine. And they normally sleep on average 7, 8 hours. They go to the gym as well in the day and they eat healthily. And I'm just speaking on that side of things, routine wise. Okay, but then on this one particular day, they woke up late or they didn't sleep well. First of all, they woke up late, which meant they didn't go outside and get moving. Do is the thought process that they then come to the market in this area. Right. More heightened already. So like, I don't know, you probably noticed. I've noticed in my own journey where I can't. I woke up late and I had to go to myself or I've had an argument with my missus. Right. Something's not right. 100. Not completely off grid. But I'm not in peak. And the funny thing is in my head I'll say I should probably shouldn't trade today. Right. But then it's one look at the market and something happens and you convince.

Yourself there's something there.

Exactly. Yeah. And so my thinking is based on this graph is that in those scenarios when you have happened to maybe not sleep, whatever it may be, it could be a combination of things or just singular. Are you automatically almost starting in a more heightened state already.

If you have not done any work?

Exactly. Yeah, yeah, yeah.

So yes. Correct. Or you're actually aware that you're probably stressed. So then you're kind of actively trying to calm yourself down, but then you're likely to kind of overdo it.

Yeah.

So then you come into the market a bit flat and kind of a little bit, but you're just gonna, that's your attempt to manage the emotion.

And then the same thing though, if you did do that and you came into the market still and then you take again a poor decision, you kind of just jump straight over to the other side.

To me, it is like the teeter totter, like the seesaw. You cannot, when you have too much emotion that you're trying to manage, your. Your mind is not clear.

You.

You cannot find that optimal place. But our minds kind of keep trying to find it.

Yeah.

You know, and so the reality is we look again at causality. You having argument with the misses, rough night's sleep, you know, for whatever reason, just not having your normal prep time.

Yeah.

That does not cause you to not be in the zone. Okay. That means that it might be harder for you to be today. It does mean that you have to adapt the factors that are what's going to take you to get in the zone. One of my favorite examples of this and I would also argue too, you do not need to be optimistic to start the trading day. You do not need to feel like today is your day or that, you know, today you're going to be in the zone because you've done all these things. In fact, if you have the expectation of checking all these boxes, that that means you're going to be in the zone. Guess what? You're not going to be in the zone. Right. Because that's not now. Now you're actually likely have too much, you know, emotion at play. And ironically, when you have expectations, it clouds your judgment. So clarity, mind tricks. But this story comes from baseball, right? I think there's been at least at this time that there was like 19 perfect games in the history of Major League Baseball, you know, going back 100 plus years. So very rare occurrence. This pitcher named Mark Burley from the Chago White Sox going back maybe 15 years now pitch the perfect game. When asked afterwards, hey, like, you know, you know, warming up in the bullpen, did you have any indication that this was possible today? He's like, no. In fact, actually it was the exact opposite. I could not find the strike zone. And he had the distinct thought, like, oh my God, like today could be bad. Like this could be awful.

Yeah.

So again, I think there's a, there's a misconception that preparation causes you to get in the zone. The reality is perfect preparation is defined by what the outcome is. Did you get in the zone. Then, yes, your preparation was great for that day, which is why we retrospectively look and examine, like, all right, on this kind of a day, this kind of market conditions, this kind of physical state, this kind of like, how did I do it? You know, and again, you look at it the first time, maybe, maybe it's not really clear what the causality is. So then you kind of pull out a few factors. And, you know, whenever I talk about this with clients, I say, do not change your entire routine. Just try to tweak a couple things to see if that helps to encourage it to happen more often. Right. But, you know, Mark Burleigh made the adjustments to his emotions that day. He was, like, very realistic and likely more focused because he understood that he didn't quite have his stuff. So he wasn't going in there with a lot of expectations, trying to overdo it and be like, oh, yeah, like I'm going to strike everybody out. Like, again, clarity of mind decreases, emotions rise. So, yeah, the retrospective piece is really key.

And where should we go from here?

Task of charting those individual thoughts. You know something, I call you. I have a data collection worksheet that I have clients fill out. It's freely available on my website, so. Jaredtemdler.com worksheets. Yeah, you can get it there for free. But what I would do is spend, you know, two, three weeks doing this, certainly around every trade you take. But as we all know, when you're not in trades, you're technically in a trade. So you can. You're just kind of looking for deviation in levels of discipline, deviations and levels of motion, and just begin kind of noting those times. Like if you recognize, you hate losing, right? So anytime you take a loss, just, just take. Just take notes down what you're thinking, even if it's very, very minuscule. Again, early warning system, if you can recognize it there. Right. Just factually speaking, it's a lot closer to recover. If you catch it here versus if you catch it here. You have a lot longer to go. It's going to take you longer to recover. So the faster you catch it, the earlier signs you recognize, the easier it is to recover. Okay, so give yourself two, three weeks and then examine what you found. You've got a bunch of puzzle pieces. Try to put them in order. And you're looking for creating order in levels of severe. Excuse me, in putting them in order in levels of severity. And that's the key piece here. Now, what you might find is fear or hesitation is the beginning. And Then once you miss a couple trades because you're worried about losing, then you get pissed off, then you feel fomo. And so then it kind of converts into something different. Maybe at the beginning it's, you know, a bit of greed or overconfidence. And then, you know, when that, you know, kind of bubble bursts and, you know, you realize a couple losses, well, then it turns into anger and revenge trading.

Yeah.

So it can be blended. Don't think that just because you got one. And it certainly could be that way, but it could be, you know, standard anger, greed, fear, fomo, confidence, or it could be a blending of the others. The other thing I want to call out, which I think is super important, you know, just to make this even messier here.

On this side, we are dealing with emotion.

And on this side we're dealing with discipline.

One of the biggest mistakes that I see traders make with regards to the mental game of trading, it's mistaking emotion for discipline problems or like, oh, I can't adhere to my rules. I, you know, blow my risk management parameters. I, I, you know, don't adhere to my daily loss limit, whatever, you know, jump into business too early. It's like, oh, my first question is like, are you, you know, can you reliably prove that it's not fear, fomo, greed, overconfidence, anger that is driving those violations of discipline? To me, the pure versions of discipline come from your energy being too low. So impatience is, like, probably one of the bigger examples of it. And ironically, impatience oftentimes happens when our energy is too low. We're, like, looking for something to kind of wake us up. And so, you know, especially markets open, video games on roller coasters there, like, let's have at it. And so you're, you're kind of looking for the market to get you into a better state of mind. So, you know, if you're, if you're going to.

Let'S say very quickly, and I don't be pivoting a little bit too much to, like, the next stages. Right, because you do want to still do the same kind of patterning as I've mentioned here, with the discipline so you can recognize the charting. But a very quick and dirty way to get yourself more disciplined is through your goals. So this motivational component, look, the reality is you are driven to care because today is an opportunity to realize your goals, whether they're short term, long term, whatever. If you didn't have goals in trading, I mean, true hobby, you're just there for, like, what's Going to drive the energy. Like, there's still. There's got to be something that you're trying to get out of it. So in other words, have your goals very clearly written down and understand that being at this level is not going to get it done. I mean, you, you are choosing to trade poorly. So you're using your goals as a wedge to drive your mind to have more energy so that you can effectively kind of have more control over your performance rather than what a lot of traders are relying on is market conditions to naturally kind of pull their energy higher. It's like, ah, there's more going on.

Yeah.

Right. But there's less going on. Or I'm like, I kind of want there to be more going on. So then, you know, I am now actively trying to make something happen in the market versus. No. Generate the intensity internally.

Yeah.

And understand that. Yeah, while it's maybe harder to stay out right now, that's what's required. And I know it's easier said than done, but that's the, that's the task.

Would you say as well, that just as we say, not every day is a trading day, meaning, you know, there might not be an opportunity every day, but is it the same, would you say, with being in the. In the zone, in. In the flow, if you will, like, not every day you're going to be able to achieve it. Your goal is to try. But equally, as you do the work to get as good as possible of getting close. But equally, you need to accept the fact that when you're not in that zone, you are probably better off scaling back, like just not going to the market when not in the zone. If that makes sense. Because would that then lead to. If let's say you're not in the zone, you then make a mistake based on that. It then can lead you to going down one side or the other.

Yeah, I mean, I think it's, it's a. To trader's discretion. Right. How much, how much control have you established Right.

In this. Within that area?

The next big step here is like, I think it's a little bit too fine of an edge to say if you're not in the zone or you're not like near the top, like, don't trade. Okay. Because I think you're, you're gonna like, really remove a lot of opportunities, but it could mean I'm gonna be more intolerant of just some of the noise. So I'm really only going to take like my A plus setups or my A setups.

Right.

I'm not gonna even try the B stuff because, you know, there's a, like an emotional EV component to it. Right. I think sometimes traders start to look at trades too myopically, so you're not in an ideal state of mind. Right. So, you know, let's say you're. You're here at level, let's say 55, so still at a high level.

But if you take like a suboptimal trade, let's say a B trade, and it fails, well, now, now you're just going to creating greater risk. And especially if the risk is like you are, you can really lose a lot of control. And of late, you have been a little bit of a drawdown, lost a little bit of confidence. So objectively speaking, the emotional EV of the situation suggests, like, you actually do need to quit because the upside of taking another trade and having it win is a lot lower than the downside of having another trade fail. Because you might lose 20% on the day.

Yeah.

Versus like, maybe only gaining back like three.

But again, I think it's everybody's discretion to kind of figure out, you know, kind of where those firm lines are in terms of how much they're going to allow themselves wiggle room. And I would say for those that are just starting, starting out with this, there's not a lot of risk in the short term to kind of overdo it and just gain some experience being more disciplined and more controlled with how wide of a latitude you're allowing yourself to, you know, let your emotional range exist. And because once you establish these kind of firm, you know, kind of guide, you know, guardrail, so to speak.

You. You've proven that there is some discipline, there is some control that's being established. And so then maybe there is more room to go here because maybe, maybe instead of going down to 80, you know, you. You're going to now stop yourself at 70. But giving yourself more room to kind of trade here means that you're able to capitalize on the upside. You've taken away some of the emotional downside upsides there. So, yeah, I think establishing control is a huge sort of second stage, which I think we could get into later, but it would be a whole nother time.

Right. We'll do a part two for sure. Well, thank you, Jared, really, for breaking this all down for us. Like I said, no one better, in my opinion, to be able to do the first psychology breakdown and concept breakdown on chart fanatics. But everyone at home, drop a comment of your biggest takeaway from this episode. Any questions you might have, Me and Jared will be taking a look at the comment section, so make sure you drop them there too.

Links for Jarrod will be in the.

Description below, so make sure you go check them out. If you struggle with your psychology, there's no one there to reach out to and well, hit subscribe, hit like and until next time, everyone, this has been Char Fanatics. Take care.