Once You Learn Psychology, Trading Becomes Embarrassingly Simple

I want you to picture this. You see a trade setup, and when the conditions for that setup were met, you entered the trade. But 5 minutes later, price starts moving against you, and so you do the natural thing and you simply move your stop loss to give it a little bit more room. But eventually price keeps going against you, and so you move it again. And if that scenario right there sounds familiar, you're not alone, because we recently ran a survey where more than 200 people wrote out in detail the single biggest thing holding them back in their trading. And the most repeated answer was, I keep moving my stop loss. What I usually see people do next is they tend to go start looking for a new strategy, a new indicator, or some new concept because they feel like if they could just feel a little bit more certainty on the trade, they'd stop moving their stop loss. But let me tell you, and you've also probably realized this yourself, that's not going to work. After all, you planned the trade before you took it. You already knew where your stop was supposed to be. You just ultimately could not follow your plan. So what I'm trying to tell you is that you cannot fix an execution problem with more information. And the reason why I know this is because I've made this mistake more times than I care to admit over the past 6 years that I've been trading. But eventually I managed to figure it out. And once I did, magical things happened, because over the past 2 years, I've managed to get a 75% win rate on more than 250 publicly documented trades on X. And the secret sauce to this level of consistency was not simply more discipline or some secret technical concept. It's honestly something a lot more boring. And in this video, I'm going to walk you through a few simple ideas that make trading feel embarrassingly simple for me and for the students that I coach. And the best part is you're going to be able to take these ideas and apply them right away to your next trades. The first one is what I like to call outsourcing your decision-making. Now, I want you to stop for a moment and think about why you're ever asking yourself questions like, should I move my stop? You know, should I take profit here? While you're actively in a trade. Now, if you don't know why, I can tell you. You're asking those questions because those decisions simply haven't been made yet. And so you end up making it right there in the moment when you have real money on the line. And depending on the time of day, your mood, your energy, or maybe how your last couple of trades went, you're in a very different state of mind every single time you make this decision. And so what naturally happens is that this decision comes out slightly different every single time. And then you wonder why your results look different every day. See, human decision-making can be amazing, but if your biggest problem in trading is inconsistency, you need to start handing those decisions over to a set of rules. And that set of rules is what I call a system. Now, a lot of you watching this think you already have a system, but what you probably have is a collection of concepts. And just to give you an example, knowing that the 200 EMA can act as a long-term support or resistance is knowing a concept. A system, on the other hand, is more like, if price touches the 200 EMA on the 4-hourly chart, I might market enter with a 5% stop and a 10% target. Now, what makes this a system? Because the entry, the exit, and the exact execution steps are already defined. At some point in business, I realized I needed to stop doing everything myself. When you're writing out an SOP for your team, you have to think through every little step, even the ones that feel too simple to write down, because that's how you get the same quality of work every time. Now, just to tie the story back home to trading, in the early days of running my flagship program, there was an issue that I observed amongst all of my students, which is that even though I Have taught them everything they needed to know in terms of technical analysis. Everyone was executing the system slightly different, and so I thought, what if I just set some hard rules? For example, if A, B, and C are met, you take the trade. If any of them isn't met, you do not trade regardless of how you feel. And the way that I explain it is that anything in trading that can be defined should be defined. This goes for the big things and the small things. Now just to give you an example, I can tell you my entry criteria in one go. I take a trade when I have time frame alignment on the daily, hourly, and five-minute time frames, and when price. There's a 5-minute CSD in the direction of my daily bias while the timing is within the kill zone, I simply place a limit order at the CSD line. My stop goes under a strong low or above a strong high. I risk 1% and my target is always 2R. Now you don't need to actually know those terms for this video. I'm just showing you that my entry criteria is clear because if you cannot describe your trading like that with criteria that are that clear, then every single time you open up a chart, you're simply back to asking, does this look good? Does this look bad? Or do I enter? Do I not? Now just to use myself as an example, nowadays whenever I find myself feeling uncertain about a setup, I simply ask myself one very simple question: Does this trade idea match the criteria I have already defined beforehand? Now, if the answer is yes, then I take the trade regardless of how I feel. But if the answer is any form of no, I don't take the trade regardless of how I feel. Now, you can do the same thing for your stop loss as well. For example, one of my rules is that when price hits 1R in my favor, I will move my stop loss to break even, and there is no in-between. This is a hard and fast rule. I never sit there at 1R thinking price could come back and potentially stop me out at break even before it eventually hits my target. So maybe I'll just leave it this one time. Now, each and every single time with my trading, I simply execute on a decision that I've already made beforehand. That rule didn't come from some science or study that said, oh, 1R is the best number to move your stop loss to break even. The way it came about was when I started looking at my journal, I saw that a lot of losing trades could have actually been closed at break even at some point. And so when I actually went in and checked these trades individually, I saw that a lot of them ended up going above 1R at some point before they eventually turned around. And that leads me something that I talk a lot about with my students, which is that in the markets, you've got to pick your pain or the market is going to pick it for you. See, something you need to understand is that every single thing you do in the trade is painful in some way, shape, or form. For example, if you decided to enter early because you didn't want to miss the move, but then eventually you realize you could have actually gotten a better entry, that's painful. But on the flip side of the equation, if you ended up waiting for like the absolute pinpoint entry, but then you ended up missing the trade altogether, that's also painful. If you close your trade early, but it keeps running further and further, you could have made more money. That's painful. But if you end up holding the trade and price comes all the way back to stop you out when you could have just made money or exited the trade at breakeven, that's painful as well. So here's what I actually want you to take away from this. There is no textbook answer when it comes to trading that will objectively always be the right decision in every single situation. Because if everything is going to cost some way, shape, or form, you might as well pick the pain that you're willing to accept instead of letting the markets pick it for you. And the way that I do this is I simply take 2 scenarios and ask myself which one I'd hate more. And for me, I hated the idea of Being up a decent amount and potentially still end up losing money on that trade. But on the other hand, I realized that I'm actually more than happy to get stopped out at breakeven and simply reenter if price provides me with another entry. And so that's the pain that I ended up picking. And this is the story of where my breakeven after 1-hour rule comes from. But if there's one thing you take away from this is that you should simply pick your pain. Otherwise, the market's going to force you to decide what you're comfortable with when you're in the middle of a trade, when you have real money on the line, and that's not gonna end well. Now, just to tie all of this together, I mentioned earlier in the video that I've achieved a 75% win rate more than 250 publicly documented trade calls, I've outsourced my decision-making to a system beforehand so that I'm never relying on myself to make the decisions when I'm in the moment feeling emotional. But simply writing the rules down doesn't mean you're actually gonna follow them because once real money is on the line in the trade, this is where the second idea comes into play, which is to think in art and treat every feeling as a trigger. So I was on a live trading call with my students one day and one of them told me that he was getting really inconsistent results from trading and he felt like his psychology was the main thing that was holding him back. Now, this, by the way, just for context, was someone who'd already passed the backtesting phase of our program, which means that he's already demonstrated and shown that he can execute the system as though it was second nature and get profitable results during backtesting. I asked him a very simple question. If you could rate your confidence when taking a trade in backtesting from a score of 1 to 10, what would it be? And he proceeded to say 9. So I asked him a follow-up question. Now, would you rate this any differently if you were live trading instead? His answer shocked me. He said 7. Now, mind you, this is the same person using the same system that he's already backtested hundreds But when there was actually real money at risk, he admitted that he did things differently. He starts hesitating, he moves his stop more often to protect his downside, and he takes profit earlier more often to secure something. And he ultimately admitted that doing these actions kind of helped him take away the pain of being in a trade and not knowing what's going to happen next. And hearing it laid out like this, you already know this makes no sense. After all, trade is trade, and it should not change just because there are now dollars attached to it. But the moment you start thinking, I could lose $1,000 on this trade, and that's half my rent. You've now started to assign a meaning to the trade that has nothing to do with price action. So what I do and what I tell my students to do is to think strictly in terms of R-value. Now by default, 1R is whatever you've decided to risk on a trade. And for me, I always target 2R on every single trade. So in this case, a loss is always worth -1R and a win is always worth +2R. Now I also go a step further on my own screen where my chart is black and white. And the reason why I do this is because I'm aware that society has conditioned us for a long time to see that green is good Red is bad, and I don't want something as subconscious as green making me feel euphoric or the color red giving me anxiety. And I know that this sounds a little woo woo, but it really does help. Also, I don't have my PNL on my screen in dollars either. Instead, I have ticks. So at any point while my trade is active, all I see is plus 100 ticks or minus 50 ticks. Now I have an idea of you know what that is in terms of dollars, but I can't see the exact number, and that alone keeps me focused on executing the trade. Objectively, now you can do the same thing on your platform as well. But if you'd still like to see dollars on the screen, that's perfectly fine. As long as you're not attaching a meaning to the trade that isn't supposed to be there. Now taking the dollar amount off the screen is not going to remove all the emotions that you're going to feel from trading. But what I'm about to share with you next is going to help immensely. And to start things off, I want you to take a moment to think about how much of your emotional reactions happen completely on autopilot. And just to give you an example, let's say you know you see a red number on a trade and you subconsciously start feeling scared or anxious. So you take an action to hopefully alleviate those negative emotions that you're feeling. And in that moment, it feels like the right thing to do. So here's what I'd like you to realize after telling you that the emotions were not necessarily the problem. Rather, it was the lack of self-awareness to realize that you were about to make an emotional decision fully on autopilot that eventually caused the damage from the emotional trading. So in this case, how do you become more self-aware of your emotions? Well, the trick for me is to view every emotion as a trigger. Basically, anytime you feel something when you're trading, and when I say something, it could be positive, it could be negative, it could be big, it could be small. It could even just be a gut feeling. Don't just write it off as background noise, but also don't rush to decide whether it's a good thing or a bad thing. What I simply want you to do is to catch it and then ask yourself why it might be there. Sometimes it could just be a trade that you took yesterday that ended up losing, and that's what's taking away your confidence on the setup in front of you right now, even though you know full well that this is a good trade. Or maybe the reason why you feel uncertain is because there was something you missed on the chart. For example, when I find myself feeling uncertain for this very reason, I tend to go back to my trading checklist where there are 7 criteria criteria, and I simply go through them one by one. And if I realize that all of these 7 criteria are met, I just take the trade regardless of how uncertain I feel. But as long as one or two of these criteria isn't met, then it was a good thing that I caught and I was aware of that feeling of uncertainty, because that feeling ended up keeping me out of a bad trade. And there's a line that I use pretty often, which is that what gets measured gets managed, and what gets managed gets improved. But you might have also realized that you can't put an emotion into a spreadsheet and kind of track it, right? Which is why being aware of it is the equivalent of the measuring And once you become aware of your emotions, you can manage it and make sure that it does not affect you negatively. But even if you do all of these things perfectly, there is still going to be one situation that's going to ultimately get to you, which is when you get a trade where you followed every rule and you still lost money anyways. Which brings me to idea number 3, which is to control what you can and let go of what you cannot. When I see somebody trying out different indicators or when they're constantly on the hunt for a new secret technical concept, what they're really looking for is a feeling of certainty. They want the feeling of being certain. Secure and knowing that the next trade is going to play out in their favor. But it's also ironic to look for this. But here's what you need to understand: you cannot look for the certainty in a market that is fundamentally uncertain. And if you do, it's going to feel a little bit like, you know, you're banging your head against the wall and expecting that brick wall to eventually come crumbling down because of the constant headbangs. And so here's something that I teach in my program called Systems Theory, which will really help you with this issue. And the way it goes is that in every single trade that you take, there are 5 variables. Namely, that's your input, which is the raw price action that you see on the chart. So it's basically every single candlestick that gets printed on the chart. That's what's known as input. Then you have your process. This is basically your trading strategy or your system, which is a set of rules and a set of steps that you take the raw input and process it through, which you then end up with your output. This is the result of your trade, right? Whether it won or lost, whether you made money or you lost money. And then you have your environment, which are the market conditions that you're operating in. Macroeconomics, for example, is a part of your environment. It's not something you can control, but it's something you must always account for. And then lastly, you have your feedback loop, your journaling and Reflecting on the trades that you've taken fall under this category. And here's what I want you to understand: out of those five variables, the only ones that are within your control are your process and your feedback. Now, just to explain what I mean, let's use the input, right? You can't control whether price prints like this or prints like that, or in terms of the environment, you can't just ring up the Fed chairman and like, "Hey bro, do you mind cutting interest rates so that the markets can pump?" I know Donald Trump recently tried to do that, but most of us are not the President of the United States. Now, you also cannot decide the output because you don't get to just say, "Hey, I really want this trade win," and then it wins. The output is pure luck. Purely a result of the input that you were given and the process that you took it through. Now, this is something that's helped me and my students immensely. Now, just to put this into perspective, using myself as an example, I'm currently sharing my trades publicly on a daily basis, and every single day thousands of people are judging me based on the result of my last 3 trades. And I cannot tell you the amount of times that I've lost 3 trades in a row and people start saying my system sucks, or that I suck as a trader, or that I'm an absolute fraud. Now, reading those definitely hurts, and on top of that, I also do a live trading call inside my program every single week And even though I know my students are fine with a trade losing, I still feel a heavy burden and responsibility on my shoulders when I'm doing these live trading calls. I never judge myself on whether any trade wins or loses. I focus instead only on judging myself based on the quality of my process and making sure that I remind myself to journal often. Just to give you an example, after every trade, I usually give myself an execution score from 1 to 10. Now, a score of 10 means that I've executed all of my rules perfectly. And even when I run into situations where the trade loses, I'm perfectly fine with it because I know I've already done everything perfectly. And at the end of the day, something that most people never really think about is that even a system with a 70% win rate, it still loses 3 trades out of 10, even assuming that everything was executed perfectly according to the rules. So judging myself purely based on my execution score ensures that whenever I do go into losing period, which is a perfectly normal part of trading by the way, I never start losing confidence in myself or in my system, nor do I start looking for ways to improve my strategy with like a new concept so that I can start feeling a little bit more certainty the next time around. Instead, I just just focus on asking myself a very simple question. Based on everything that I could control, did I make the best decision with the information that I had at the time? And if the answer is yes, then that means I've already won. There are 2 kinds of losses in trading. Now, the first of which is what I like to call a self-error, which can basically be explained as you lost the trade because of something you did. Maybe you reacted emotionally, or for whatever reason you broke your rules. Now, those you definitely want to reflect on and fix immediately. But then there's the second type of loss, which is called a system error. That When, just like what I've described earlier, you execute your system perfectly, but you end up with a negative result. And honestly, even saying this out loud into the camera right now, I am hard pressed to even call this an error because it truly isn't. After all, no system has a 100% win rate over a large sample size. Like, for example, if your system had a 50% win rate and you take 20 trades, you are statistically going to lose 10 of them, even if you followed every single rule as intended. That's just statistics. So whenever I realize that I may have just lost a trade because of simple statistics, I just let it go. And one of the biggest reasons why I'm able to let it go so easily is that I know from my own numbers that my trading strategy makes more money than it loses over the long run. And honestly, none of the knowledge on psychology I just dropped will help you if you don't have a profitable system you can trust. So psychology aside, if you don't yet have a system that you can trust like that, and if you'd like our help in building one and installing it alongside you, I want you to click the first link in the description and book a call with my team. Now, whether you book that call or not, there are 5 very important things to set up before you place your next trade. First, write the elevator pitch version of your entry and exit criteria within a sentence or 2. And if you cannot, that means you have now identified a very big problem that you need to work on first. Secondly, I want you to pick your pain now instead of letting the market pick it for you. Just think about the few common scenarios you usually run into and ask yourself which outcome you'd hate more and define a rule right now that prevents that situation. Third, make use of the tactics I shared earlier that allows you to disassociate the dollar amount from your trading. You could quite literally take the dollar figure off your screen You could switch it to percentages or to ticks, or just simply thinking in terms of R. Fourth, focus purely on becoming more self-aware on your emotional state, because what gets measured gets managed, and what gets managed gets fixed. And lastly, give yourself an execution score out of 10 after every single trade, and ask yourself whether any of your trading losses was a self-error or a system error. Do these 5 things, and the next time price moves against you, trading is going to start feeling embarrassingly simple for you. Now, if you want to see exactly how all of these psychology lessons that I've shared with you in this video looks like on a real chart and on real trading days. I'm basically breaking down the trade I'm looking at for Bitcoin every single day on this channel before it happens. The latest one is on the screen right now, so watch that next and look for the rules that we've just talked about.