Staying Disciplined While Taking Losses

Let's talk about staying disciplined while you're taking losses. And I don't mean just one loss, but when you take a series of losses. Let's talk about that particular incident. Let me give an example. Guy that I work with, he's been working with me for a while, and he's finally got tools down now. We go into this thing, and yet he ends up doing really well. Takes this thing, and then he takes a loss and just took him underneath being profitable for that day. And it was a big deal for him, you know, to start becoming profitable. And before you know it, what he was saying, I hate losing. I hate that. That took me down. And you begin to see a little bit of urgency, a little bit of. A little bit of anger, a little bit of disgust, a little bit of, like, urgency. But he did it okay. He stayed to plan. And so he's in the next trade. Everything's cool, everything's sort of okay. But then he takes another loss. It hits that, and then out of nowhere, he didn't see it coming, but there was this, oh, my God, I'm losing. I'm losing. I can't allow myself to lose. I can't allow myself to go down. I have to get that money back. I have to win. Okay? And then he gets past that, though. Then the third one takes a loss, and before he knows it, he's not going to let that loss stay there. He's gonna make it turn around as if he had control of winning and losing over the outcome. And what he does is he sees that thing heading down. It's going against his hypothesis. But then he says, oh, no, I know this thing's going to turn. I know it is. And so what does he do? He starts putting good money after that loss. He moves the stop. And then it gets a little lower, and he says, I know it's going to turn. I know it's going to turn. I can't lose. I can't let myself lose. And this goes on and on and careens out of control, blows up a chunk of his account, okay? That's the fear of losing friends. And what happens is he doesn't know how to take loss. And it's completely understandable. Where does that come from?

What I propose is part of that problem has nothing to do with you personally. It has everything to do with your evolutionary psychology. Remember, not too many tens of thousands of years ago.

Our ancestors lived in caves or on the plains, and it was a dangerous world. And the truth is, they had to win or they Wouldn't survive. They would die. And then if they lost, they were somebody's meal. You can begin to see right there the power of going, oh, I can't allow myself to lose. Because on the emotional brain level, losing is dying. And so now you take a look at this guy and go, well, let me take a look at what's happening. He's taking a loss to that caveman brain of his. That's part of his trading mind, okay? That loss is like, I'm gonna die if I take that. The saber toothed cat wins. I can't allow that. So, of course, he's willing to risk more and more in the hope that he can turn it around and things will happen his way.

Caveman was built to deceive himself because the odds of him surviving were very small. And he built this delusion walla land that he could make up for those. He could win. He could win against all odds. Okay? He could bet everything. He would win. In the end.

It was good for the survival of the species, but not necessarily good for the long term benefit of the individual. That's part of the game. You're built to win, to prevail. You live another day, you feed the clan, and if you lose, you die. So right there you see the dilemma of this guy is a lot bigger than him just facing a loss.

It's a dramatic story that is 6.5 or so million years old, and he has no preparation to be able to deal with that. And of course, it just swallows him up. That's the first part. That's the evolutionary psychology. But there's more. There's also your personal psychology of winning.

We personally, if you're an American, grow up in a culture where winning is really important. Winning is everything. And boy, don't want to. Just don't want to be a loser, man. That's the worst thing in the world. You don't want to lose. Ah, bad taste. When I was playing competitive high school football, American football, there was a sign on our locker room, and it said, winners never quit and quitters never win. That was just built. It was built into us all the way down on an institutional level. And then it's put in from an academic, institutional level, too, where you have to make good grades, you have to do this, you have to do that. And all sudden, that defines winning. I get to do all this. And of course you want to. Now, in caveman times, the winner, the one that could provide for the clan, understand, he had great sense status, but he also had access to Breeding, he had access to babes, really important. And it would pull him into a situation where he would risk everything to be able to build and maintain that status and to be maintained the ability for him to project genetics into the future.

Now, pulling it back to the personal psychology area, though, we can see from our families to our institutions that this whole notion of winning and not losing is built into us and it's just not American. It's all over the world. You can see it everywhere. What you discover is that we were built from the literally inception forward to be winners and not losers. Yet here's the rub is that when you come to trading, the truth is you're not in control of winning or losing. Okay? Not in a moment by moment basis. You're not in control of the outcome. And also that great need for us to be able to predict the turn in trading that also comes from our caveman days. And what you discover is, wow, we can't even do that reliably. We're built to predict what's going to happen, okay? And we see that playing out in a trader who says, I predict this is going to do better. It's going to come back.

Do you hear that? The moment he did that, he stepped out of his rules that actually keep him safe. And he has now become a gambler the same way that our caveman ancestor was. So you're beginning to see it and you go, oh, my gosh, there's a lot stacked against me. Yeah. The truth is, in trading, winning isn't such a big deal. Winning is only landing on the right side side of probability relative to you. And losing is only landing on the wrong side of probability relative to you. And you don't have control over that. But what you do have control over is the mind that you bring into that moment.

That's true. Self mastery is if you bring the right mind, the one that is deeply disciplined, deeply impartial, soothing, and has courage to face the loss or the win. What you do is you allow yourself to say, what I can control is the mind that I bring into the performance, and that is the psychological edge that everybody is seeking. We get stuck in trying to be winners and not losers, yet we don't have control over that. The market's a pretty wild, crazy place. Sometimes you win, sometimes you lose. But the thing is, what the disciplined trader understands is this is that I'm going to keep my losses small because that's just part of the thing of doing business here. And I'm going to let my winners get as big as I can get them. Okay. And so what you do is you actually see that you have gone beyond winning and losing to performing friends. This is the game, this is the discipline, this is the idea that you have to be able to incorporate into your trading mind for you to transcend beyond your caveman days into the possibility of becoming the kind of trader you can be. Look it up, go to the website, take a look at, read more, look at more of these videos and start drilling down and start really noticing what it takes to win. Not like winning on the outcome, but winning in mind recognizing you control the mind you bring into the moment. Not outcome, not prediction, not winning or losing. This my friends is self mastery. This is what requires in trading. Watch it tomorrow. Watch what happens. Your conversation about losing and your conversations about winning, winning, losing. Yet to the trading mind it's just landing on one side of probability or the other. What you control is your performance. That friends is the psychological edge you need to drive, you need method is that's when you become not weakest link in your trading system. You become the powerful driver of your system. That's what it takes for takes work, takes training. Come see us take a look at their website. Really dwelling. Okay, take care.

Sam.