Scared Money Knowing Better, But Chasing Losers

Scared money. Have you ever found yourself chasing a loser and literally you were doing well, everything was fine. You may have taken a loss or two before, and the thing is, you didn't want to take another loss. And before you know it, that's influencing. You don't know it. Okay. And what's happened is that a big loss like that or two or three during a month just can just kill a P and L statement. And all of a sudden you go, whoa. This is very common. When I'm looking at traders, I will see their P and L statements, and you will see that they're consistently profitable most of the time, but then they take these horrific losses and the whole month is gone. That's common, particularly for the retail trader, because it's usually scared money. And what are you going to do about that? What is it? Well, let's take a look. Okay. And this is a case that I'm working with right now. And so I want you to take a look at what happens. This guy, and he's got five years into the project, he wants to become a trader. He also knows that he has a limited amount of capital, and he sees it shrinking week by week, month by month, and he knows he needs to get the job done. So he works hard. He's really there. Okay. That's the kind of the background sounds like a retail story to me, doesn't it? Yeah, it does. I see it all the time. So we get this thing, and he takes a loss and an loss, and then he's in this trade, and he's already down $500. Okay. And at the same time, he's looking at that and saying, now he's seeing a trade go against him again. And there's a moment right there. There's this moment that a discomfort swells up. He doesn't necessarily see it. And then an urgency starts replacing it. And before you know it, that urgency has bushwhacked the discipline. The discipline just flies out, the very thing you need the most. And all sudden, that. That trade's bouncing around into its hit. It's getting. Oh, it's getting near that stop. And he says, you know something? I just need to get this a little room. He gives a little room, and all of a sudden, oh, my God, it's taking that, too. And more room, more room, more room. And then you're chasing the loser. There's no way out now. You're cooked. What just happened? Okay, let's take a look at the problem. The problem is, first, this trader I'd already Said he has a finite set of resources on a financial scale, and he knows that he was, well, he was well prepared. That's not the problem. But the thing is, he thought that it was going to take him, say, three years to get into the trading and be able to make it profitable. But here he is at five years, he's seeing that dwindle, dwindle, dwindle, and he sees the end of the real estate. He knows that if he fails and continues to fail, then it's going to come to the moment where, boom, you're at the end of the line, and then you become a loser.

Now, this is when we really get into the psyche of the trader, and we're going, oh, my God, he wants to win. This guy's. And he comes to me, he's talking about, yeah, Randy, I get up every morning and I say, let's make some money today. And I'm already telling him, you've already lost. You're sitting there and you're trying to force control over something that you do not have control over. You do not have control whether or not you win or lose. And yet the thing is, literally from your evolutionary psychology, your caveman brain, you're sitting there and you want to win. Because if you don't win, you're dead. You're somebody else's meal, you're a loser. And I think about when it's not just shame, oh, my God, what are people going to think? No, a loser back in caveman days meant you were somebody else's meal. So you can see the power. And yet he's sitting there and going, whoa, you know something? I don't want to fail. Because if I fail, I going to end up being a loser, and I'm going to be losing all this time, all this money. My spouse is going to be really upset with me. What do I do? I don't want to take that loss. Do you see the hijacking? Do you see that at the very bottom of this, there's a belief system.

If I fail, which means, you know, you either landed on the wrong side of probability or there's a competence problem in your execution of methodology. The competence problem can be handled by trader psychology. But if you see it as a global assessment, suddenly that guy is stuck. And this is where this guy is under the pressure now. He talks the talk. He's got the affirmations, he's got the visualizations, he's got all that stuff. But the thing is, it breaks down under pressure. And there he is at the moment of saying, oh my God, I'm going to fail again, I'm going to lose again. I'm just getting closer and closer and closer to the inevitable decision. I'm a loser, I'm going to have to get out of trading. Friends.

Most of the retail traders I work with, that is ultimately where the rub happens. Yet at the same time, that's caveman thinking. That's a certainty based model where you're making predictions about the future and they become pretty dim. Okay, catastrophic thinking is what would be called in cognitive behavioral therapy. But let's take a look at here. This friends, it's when you need to develop your eq, your emotional intelligence. At the very bottom of it, the very first thing you have to separate is winning from losing, winning from performance in particular.

You will never have control over the outcome, no matter how much evolutionary psychology calls up your name. And it makes so much sense in the moment. I mean, it makes sense throwing bad money after good. But the thing is, is it finally gets to a moment of where it takes you out. And that's not what we want. That's not what we want. The evolutionary psychology is tearing you up. But what we want is say, you know something, what is this winning business? What is this winning business?

Why do I have to be a winner? Well, we were born that way. We come up culturally that way. We, you know, it's in our family of origins. But in trading, the truth is it's more about being a really good loser. Because even really good traders are going to be missing 50, 60% of their trades can be losers. But keeping them small and being able to ride the winners, man, that's what, that's, that's what makes the deal. They lose and they lose a lot. But what happens is they manage that loss. And here you are, you're hitting that thing and you really see this existential problem of the, of literally the end of the real estate. That is what has to be focused on. Because winning, you don't have control of performance. You do, you have control over your performance. You can do that. Literally this whole game of trading is about what mind you bring into the moment of performance. That's what generates the probability based mind needed for trading. That evolutionary mind, the certainty of survival is going to kill you. I mean your survival instincts truly will kill you in trading. So you're there and you go, okay, I need to separate winning from performance. What you control is your performance. You can't control a bad day. You can't control other traders having a Great day. You can't control the markets, but you can control the mind that's there. And in this particular case, at some moment, the urgency cranked up and the fear of failure kicked in. And before you know it, he didn't want to be a loser.

And before you know it, he blew up his week. Okay, so we see that. But the next stage, though is how do you ultimately, how do you produce this? It's called self mastery. In trading, you really don't have a choice about the matter. You're going to have to produce self mastery. You're going to have to be able to say, I can face the biggest demons inside me. This idea of being a loser that needs to be confronted, not run from. Because it's deep limbic learning that you're going to pull forward and say, I'm willing to face this demon. I'm willing to face this side dragon, and I'm willing to master it. Because ultimately, coming to that core, the self recognizing that. Honestly, this may sound weird, but you're a child of the universe and you literally right here in your brain are creating your future. And if you've already got a resistance to losing, guess what's going to keep showing up, the potential of losing. What we're looking for is the potential of probability.

When you have a disciplined, impartial mind, that is what comes up, that fear that produces, or what in my language I call orphan, that fear is going to literally tunnel vision you so that you're looking at the potential of fear instead of the greater potential of what happens if you follow your rules. That mind can be built, friends.

It's not what evolution gave you, but it is what can be built. And you can build.

Starts with managing the emotion. I use breathing and relaxation. It goes to observation so that you separate yourself from thought, separate yourself from belief. Remember this guy I'm talking about has a belief of being, oh my God, if I fail, I'm going to be a loser. And how am I going to. How am I going to have any status in the world? Okay, and you're going, oh my God, I'm not my beliefs. No, what you are is potential.

The observer of that potential is what brings forth its form. As long as you're locked into being a winner, you're gonna have a really hard time in trading. But if that observer starts going in at something. Whether or not I win or lose is not about my value as a human being. It's about my competence as a trader that I can do something about my value as a human being.

That's existential type stuff that you need to redesign and reclaim yourself as potential of a probability based trader and that your performances are not a reflection of your being. That's what really has to happen in trading.

My invitation to you is look further, be able to produce the difference between the person that loses and says, okay, it's a loss, it's okay. And the one who wins and says, oh yeah, yeah, look at me, look at me.

That winner is not going to continue winning. He is going to fall into euphoria and start making really poor decisions and find himself chasing losers again. The one who's saying, you know some, I took a loss, I followed my rules, it landed on the wrong side of probability.

Yeah, that's the mind. Friends, come and learn. Come to our website. Take a look at the article associated with this video. Get a free ebook for goodness sake. All you have to do is go there, hit the free ebook, and you begin this journey of going, what is this Randy Halguis saying? Come and learn folks.

This is really about you organizing your potential so that you find success in trading. The brain you brought is not going to work. Fortunately, as a human being, you're so much more. You can build the brain, the mind that engages uncertainty. Okay, you can perform. Take care. Good luck.