The Link Between Financial Performance, Trading, and Your Gambling Instinct

People talk about trader psychology. They talk about over trading. They talk about impulse trading. They talk about revenge trading. They talk about giving your profits back. They talk all these things, and they say these are trader psychology issues. Well, they are trader psychology issues, and I work with them every day. However, before there were trader psychology issues, there was something much more primitive, much more dangerous. What these are are gambling instincts.

Most traders actually are gambling.

They are not trading. They are not working with probability and accepting probability as the rule. They are trying to produce control one way or the other. And when they hit that section of, like, over trading, what they are doing is they are walking in with a very deep, primitive belief about, I can win, I can make things happen, I can get the pot of gold at the end of the rainbow. And they get so fixated on it. They don't see that trading is really about randomness, about managing randomness. And ultimately, though, they come in with a bias that allows them to jump into trades and to do really dumb, stupid things. That's the same thing that happens to the gambler at the casino. They come in thinking they're going to win. They don't see that it's a random event. The casino does, though. The casino knows that if you play cards long enough that table, they're going to take your money.

Same thing happens in trading, doesn't it? That's why only 2% of traders are actually consistently profitable. But it starts just there. If there's an instinctual mechanism that has us wanting to find that pot of gold, it drove our evolution. It drove us to become the successful species it wired in. We don't see that bias controlling the way we think, perceive, and act. We fall into gambling mind, not trading mind. Then let's take another one. Let's take.

Let's take impulse. How many times have you sat there and said, I don't know why I did it. I just did it. What happens? You saw opportunity. Your caveman brain saw opportunity. It jumped on it before it could get away. There was a fear of missing out. They jumped in. And at the same time, there wasn't really a good evidence that it was something beyond randomness. Yet there they are, they've jumped in, and disaster ensues. The same thing happens with revenge trading. Revenge trading is caveman's ability to say, you know something, I need to get it back because I'm gonna die. It's the death instinct, and you're trying to overcome it. And you're scared that if you lose, you die. And so what happens? You don't want to lose. You keep throwing good money after bad, good money after bad. And actually the casino knows that too. They know that once you go on that winning streak and then it falls back is that you get hooked by the gambling instinct. That mechanism that says I'm not going to allow you to fail, you're going to by sheer will make it. I want you to listen to this, I want you to look at your trading and I want you to go beyond trader psychology down to the primitiveness that's behind the bias of winning. You know, it's a random event. And really good traders, they're neither trying to win nor lose. They are performing, they're performing a standard practice consistently, over and over again. That allows them to find a small edge within the way they trade, that allows them to extract more capital. Then they give back. They full well know that winning is just landing on the right side of probability. Losing is just landing on the wrong side of probability. There's nothing more to it. That's how they get to the edge. Yet we find ourselves in gambling mode where we want to win, where we see the pot of gold at the end of the rainbow and we become obsessed by it and it gets us out because we start thinking that we can win and that that is not random, when in fact it is. Your ability to manage the randomness is what takes you out of the gambling mind and moves you into the trading probability mind. Yet what I want you to notice is how few people, few people evolve to the moment where they actually are able to, to move from that caveman stuff that got bred into us during thousands of years of survival and move from there.

Into probability management. Very big difference. I want you to look at that next time you over trade start really asking what's going on here. You know, there's lust that need to like provide that need to jump on opportunity when it's there. Not thinking that it's random, thinking that you can make things happen by doing something, you're doing something. The last one I want you to look at is how gambling is an escape from boredom. It gives you a sense of excitement and trading friends gives you plenty of excitement. Risking all that capital and stuff like that, you don't know what's going to happen even though you want to. And you say, my gosh, that's exactly what's happening at the casino. They're going in, they get this excitement. You know, someone may be comping your food, your room, you feel like a big man or woman and yet what you look at is this is basically a mechanism built for hundreds of thousands of years for our instinctual survival in the short term.

Like primates. What we're looking for is something completely different. We're looking for the probability mind where you're not over trading because you see it's a random event and you have to manage the randomness and winning and losing becomes.

Just winning and losing. And yet.

Here we are, we are at the gambling instinct. I want you to look at it. Take a look at when you are sitting there over trading, revenge trading, really getting into the excitement.

And start noticing that's exactly the ramp up, that's exactly the mentality that the casino needs from you to be able to take your money from you.

The same thing happens in trading. So I want you to see the link between gambling.

Trading mind and financial performance. The only thing you can trust is your trading account. You start looking at it and you start going, okay, that's that, that's that trader psychology term over trading. No, go beneath that. That's that gambling problem instinct that has you wanting to seize opportunity and not seeing that this is a random event to be managed rather than something that you can control and make happen. If you do this, if you start really framing again that sense of excitement, that sense of wanting to win and knowing you can win that revenge, trading, all that. What I want you to do is to look at it from a different lens and see the physical biological impulse to gamble. Gambling has been with us from the beginning. You know, you think about when, when they were choosing a new disciple in Jesus's group, what did they do? They drew straws.

Okay, what happened at the crucifix? Roman soldiers gambled to get his clothes. It's been there all the time. And what I'm asking you to do is take a look at your trading, start seeing it and start claiming it. Not as just a traitor psychology issue that evades the point. I'm asking you to look at something much more, much more primitive, something that you're going to have to really begin to say, you know, something I'm going to have to reprogram the way my brain interprets uncertainty and particularly my will to win. It's a different mind that produces consistent profitability in trading. It accepts the uncertainty, it accepts the randomness. It gets. It lets go of winning and losing and focuses on performance. It doesn't get hooked into the gambling instincts. Friends look at that and start noticing it and start recognizing, oh my God, I've been saying this is just trader psychology. No, this is gambling. That's the piece I want you to see. Because you have to be able to see it before you can start fixing that problem.

It's a big deal. Friends, I wish you well. And if I can help you, come see us. Come to our website, really check in this stuff. Read the article that goes along with this video.

And really start thinking and start looking at the gambling instinct.

Versus the probability mindset. Thank you.