Staying Disciplined When Urgency Strikes -- The Core Challenge of the Alpha Trader

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Of the most common problems for Alphas, you know, the winner, the one that wants to win, highly competitive, is that before they get into trading, they're quite successful. They've built good businesses. They have, they've made things happen. They have a right to believe that what they're doing is winning. They know how to win. They have that success formula and they can do it over and over again. Then they get into trading.

Everything changes there. Suddenly, literally what used to be useful for them, that will, that stamina, that will to win and not lose, whatever you do, blows up in their face. And here's a case in point. I worked with a guy a couple years ago, he was what I would call a successful serial entrepreneur. He, over time has done really wonderful stuff. He had built his business up and it just so happens that in one of these businesses he sold for cash and out of cash, okay? He was sitting there talking to his brother and his brother, basically he and my client came to the moment of realizing that trading was a capital intensive business. Now to this guy, he looked at it and said, well, I've got the capital, I got lots of that. All I need to do is learn how to trade like a business and then I've got the whole thing. I've got it all together. This is going to be great. Well, four years later, that's not happening. What's happened is this is he came to the moment of where his winning ways, when he brought them to trading, he wanted to control outcome, he wanted to win and for God's sake, he didn't want to lose. Yet the problem in trading versus the rest of the world is this is you don't have control over winning or losing. As a matter of fact, you have to change the whole notion of what it is to win or lose. Because winning to a trader just means landing on the wrong side of probability. You know, to an entrepreneur, a businessman, Alpha, it means, oh my God, I have to be more competitive. Losing to a trader is just simply landing on the wrong side of probability. No big deal. To an Alpha, it means a lot. It's something about me personally, I can't lose, I hate losing. And consequently they end up blowing a lot of stuff by chasing losers, throwing good money after bad. Now what I want to do is I want to take you through an experience of where the Alpha is really beginning to come to grips with himself. He's this successful guy who's been in business and he's come into trading and he's, he's got the capital, he's just going to learn how to trade, right? Wrong. He meets me because he's blown up a lot of accounts and blown up significant capital. So here we are, and I'm watching him, and here's what happens. He enters a trade. Understand, this guy knows how to trade. Knows how to trade. And yet he does his charting, he gets ready, the charts come up, and he begins waiting.

Waiting and waiting. Tick, tick, tick, tick, tick, tick, tick. And then about two minutes into waiting, maybe five minutes, what you would see him, he would be getting bored.

And that boredom, he starts saying, well, let me, let me go look around, let me just look around to see what's going on while nothing's happening. Do you see this logic going, okay, the hijacking is already underway and he doesn't even know it. He's just bored. You can go find some checks out some different markets. He sees some pretty exciting stuff and before you know it, he has this urgency. I'm just going to take this trade right here while I'm waiting on this other stuff. And then he gets in. Of course, it's not in his trade plan, of course. It's just something where woom. And all of a sudden it turns against him, it's turning around and he says, well, I can't lose. I can't, I can't let, I can't let myself lose. And before you know it, before the smoke clears, he's blown the account. What I want you to see, where this problem begins is the notion of winning and losing. Now, to your caveman brain, very active in your trading mind, okay? And lets you know how to work with it. To that trading brain, winning means I get status, I get to feed, I get to be. I get to live another day. Losing, okay? Losing, wow. That means you are literally becoming somebody's meal. And you don't want that. You'll fight against that. And when you see guys, really, when they start losing, it hits that stop and you start moving it and stuff like that. What, what they're doing, literally in the primitive brain, they are fighting for their lives. The thinking brain never had a chance. So here's this guy, okay? And he wants to win and he's proven it. And he doesn't want to lose. And he's highly competitive. What he's doing is he's trying to prove himself mattering by winning and accumulating money. That money becomes representational to his power, to his mattering to his worth, to his competence, okay? And all of a sudden he's always been able to Control it. But now, no, he doesn't control losing. And he panics. It goes on tilt and he starts going. He starts doing really what a caveman would do. He no longer is in his trade. He's no longer in his plan. He's gambling. And the trading gods just don't really get into that at all. They don't get into gambling. So what you're seeing here is just the attitude, the mindset about winning and losing. Set this guy up, then he gets into the trade, okay? And he's having to wait now he sees. He sees it as, I've got to be trading to be trading, okay? And what he is as a hunter, he's a stalker. He's going after the prey. He's making things happen, when in fact, that's the alpha stuff that works so well in the other world. But in the world of trading, stalking is dangerous. No, what you do is you become an ambush predator where you wait for the market to give you something. And while you're waiting, you convert that boredom to patience. You practice patience, and you recognize that patience is probably one of the biggest skills that you're ever going to develop. The alpha has a very hard time with that because they're not patient. They want to make things happen. They have been able to be very action oriented and success oriented. And then they get into trading and discovering trading is really sitting around waiting a lot to see what the markets will give you, not going out and making things happen. What I want you to see is the mindset, the winning and losing mindset, and really not wanting to lose, okay? Gets him in a lot of trouble.

Well, what is a guy like this to do? Well, ultimately, he's going to have to retrain his brain about what it is to win and lose winning. He has to recognize he does not have power over that you may or may not win. I mean, look, when you're trading, if you only lose 50% of the time, you've done really well. The whole key is how can you lose and to keep it small, okay? So that you don't lose capital. When you finally see that your guess, your hypothesis was wrong, what happens? The trading mind just simply backs out, realizing, if I stay in there, I'm gambling. Not so for the alpha line, though. The alpha line looks that it starts losing. I got to work harder. I got to push harder, okay? This is what has to change. You have to become an incredibly good loser to keep them small. And you realize that what you're doing is you're trading to live Another day and you're looking with a long term view. The alpha looks at a short term view saying all this aggression comes from caveman, you know, push, push, push. Because it was a dangerous world. You had to push, you had to have, you had to believe that you could make things happen. You even created a bias that said you were in control. Control bias. And when you apply it to trading, it doesn't work. Ultimately, this guy that we're talking about, he's gone through that. He's realized he's really, it's really shifted for him and he recognizes he can't think that way anymore. So here's what happens with this guy. He ends up learning how to practice patience. He starts noticing that the boredom is actually a sign that he's actually accessing something that feels uncomfortable doing nothing. Okay? Let stuff start swelling up that makes him feel uncomfortable. And what this guy comes to really recognize that he's trying to prove to someone that he matters by making money. Okay? For instance, I don't have a business. If it weren't for a bunch of guys in their 40s, 50s, and 60s that were not still trying to prove to one parent, usually the dad, that he mattered. But he didn't get that kind of approval and now he's out trying to prove it or grew up in a competitive family where the whole thing was to win. Okay? And you have to go, well, you know, what I have to do first is establish patience and, and be comfortable in that patience, okay? And there's a whole school of being at the way you breathe, the way you hold tension, the kind of, the way you manage the mind that you bring to the watchfulness required to be a good trader. That's a big movement for an alpha to make. Okay? So that's the first step. You start redefining that and you recognize you don't have control over winning. What you do have control over.

Is the mind that you bring into the moment of performance.

What they have to learn, the alpha, they have to learn that winning really is about your performances. Yeah. If you perform really well, if you win the performance game, the likelihood of your edge falling in your favor grows exponentially. If you have to win to matter, to get money to prove you matter, then you're setting yourself up to gamble, to not be able to control what is uncontrollable. So that first thing is, you say the very first thing is, I have to focus on performance. That's what that psychological edge of what you can control, the mind you bring to the moment of Performance gives your edge in trading the room it needs to operate. So there you go. You're looking at this guy and you're realizing that he has to decide to change. He comes to the point after a lot of painful stuff as he realizes that the mind that I brought to trading is not going to be the mind that produces success in trading. In his case, what we did, we went from saying, okay, you're not going to be a gunslinger anymore, going in and making things happen. I can do this and I can do that.

But the energy, the energy of that, we wanted that, but we wanted it to evolve. We wanted it to evolve, to become a sniper, a patient sniper, where the victim never even knows. Not a big show, just patient, waiting for the setup to come. Taking that, taking that moment. Boom, just like that. That's what he had to learn to do. He had to convert that energy of stalking.

To ambush, okay?

It's more work to produce that than it just sounds like, in my words. Because ultimately, you're not. When you start changing the beliefs in the neural network, you're not interchanging. It's not like a computer system where you change the programming or you take one part in, you put in another or something like that. No, you're taking your brain as an organic substrate, and you are encouraging to build new neural pathways. It takes time, okay? It takes effort. It takes also recognizing that you have to become the designer, the director that shapes the mind you bring to trading. And this guy, he recognizes no matter how successful that mind was at another time, in another place, it's not going to work in trading. It's a different environment, okay? Like the African lion's a stalker, and they work in teams to take down really big animals. They also take a lot of injuries, a lot of capital loss, okay? You pair that to the American cougar, where he climbs up a tree and waits very patiently. And you would look at him just. He's just sitting there. He looks like he's sleeping. No, he's watchful. Waitfulness. Waiting for the forest to give him something to pounce on. And then if he were to miss that deer, he will not chase the deer. He just lets it get away. He climbs back up. He takes that small loss and he comes back up and sits for the next. That's the transition. We're not asking you not to become the alpha that you are. We are asking that you take that alpha and teach it and evolve it so that it can become alpha, the apex predator in a new environment, okay? If you want to learn more about how to really take the Alpha in you. It's again, we don't want you to. We don't want you to not be Alpha, but we want to teach the Alpha how to evolve, to become the kind of mind that it needs to produce the kind of success that it seeks in trading. That's where the magic is. Come, come and come to the website. Look further, look deeper, read the article, okay? Really explore the offerings. Because ultimately there comes a moment where knowledge is never enough. There's plenty of knowledgeable traders that as soon as money's real, they can't trade. The knowledge goes out. What we're looking at is see that knowledge, but then start looking about how you go about changing the mind, the brain that engages the uncertainty. That's what our work is all about, redesigning the brain that engages uncertainty. We want a disciplined, impartial mind, not a winning mind. Okay? That's what we're looking for. So I wish you well. Come to the website, take a look, start coming to some of the webinars, really begin to look at our courses. Okay? And if you've never seen this, go get my free book, okay? I will see you next time. I have enjoyed this and I hope you benefited from it. Thank you.