Trading success hinges not on finding the perfect strategy, but on managing the ingrained psychological survival mechanisms (fear and greed) that prevent traders from consistently executing a profitable edge.
Mind Map
Click to expand
Click to explore the full interactive mind map • Zoom, pan, and navigate
most Traders jump from strategy to
strategy hoping that that will be the
fix that would finally make them
profitable but the truth is your brain
is hardwired in a way to keep you
failing as a Trader and the moment you
find a trading Edge even if it's a very
small Edge it's your job now to learn
how to manage your psychology so that
you can consistently stick to that edge
and reap rewards from the market so in
this video I'm going to show you why
your mind is currently wired the way it
is and how you can learn to rewire your
mindset so that when you finally have
that strategy that has even the smallest
Edge you can consistently stick to it
and you can get paid as a
Trader now the first idea is we need to
understand that the brain each and every
single one of us has in our head right
now has been developed over thousands of
years in a very particular way and
hundreds of thousands of years ago our
an ancestors were presented with very
different environments to what we have
today so thousands of years ago our
ancestors were put in environments that were
were
life-threatening they had situations
where they had a predator that wanted to
attack them and wanted to kill them and eat
eat
them whether that be a lion or a
saber-tooth tiger and our ancestors had
to develop a mechanism in their brain
that would label that as a threat as
something bad as something terrible
and would Kickstart the fight of flight
response so that they could keep
themselves safe from that threat they
could either fight that threat or flight
that threat run away from
it and really the mechanism that our
fear so too our ancestors lived
thousands of years ago in a very scarce
environment when when they were
presented with prey something that they
could consume and eat they had to take
full advantage of it
so we also had situations where our
ancestors had prey that they had to
consume and they had to eat and our
ancestors had to develop this greedy
mindset in that moment to capture all
that prey and consume all that prey
because without that they may die they
may starve whereas if they didn't have
that fear mechanism to keep them away
from the threat again they would die
because it would get attacked so
thousands of years ago fear and greed
were necessary to keep our ancestors
alive they were necessary as a survival
response now what you have to understand
is that human nature never gets rid of
old components it only builds new layers
on top of so you and I we all have this
same survival mechanism hardwired in our
brain we just have new layers built on
top of
that now when we're trading today
knowing that we have this same survival
mechanism inbuilt in our brain the issue
here is that our brain cannot
differentiate between a trading
loss and a saber-tooth tiger a true
life-threatening situation so too our
brain can't differentiate between a
trading win and prey or dinner that was
presented to our ancestors thousands of
years ago so our brain in particular
subcortical parts of the brain the
amydala can't make that difference so
when we're trading today sitting in a
very safe environment using proper risk
management as a Trader if we take a loss
our brain is going to perceive that in a
way that's life-threatening and it's
going to have that same fight ORF flight
response kickstarted that same fear
response kickstarted and our brain the
subcortical parts of our brain will
perceive the win as something that we
have to continue to to get and continue
to consume and hoard and have more of
because if we don't capture that win now
then that could mean starvation later
down the track that's what our
subcortical paths by of thinking so in
summary we have this survival mechanism
developed thousands of years ago it was
necessary thousands of years ago but now
today when we're trading in an air
conditioned apartment using proper risk
management we have to learn how to
manage and quiet down this survival
response so that we can consistently
stick to our plan irrespective of wins
and losses because every Trader
understands theoretically that over a
100 trades you're going to experience a
sample space some of those trades are
going to be
wins some of those trades are going to
be losses win loss win loss you're also
going to have a strike rate and an
average risk to
reward now ideally your strike rate is over
over
50% or around 50% and ideally your
average is to is at least one to two so
that means that every time you win your
winners are two times bigger than your
losses and what that means is that
sometimes you're going to win sometimes
you're going to lose but when you win
you win bigger than when you when you
lose so at the end of the larger sample
space you're going to end up profitable
now the issue here is if we don't manage
the survival mechanism what's going to
happen is we can only approximate this
Edge if we're strictly sticking to our
trading plan but if we take a win and
then we have that amular response
kicking in we're going to go off track
and we're going to go on a greed and a
self- exaggerated greed where we puff
ourselves up we exaggerate ourselves we
go into this greed State and we think we
can take more from the market than what
the Market's willing to present us and
we deviate from our our plan we minimize
the risk and we go for more even when
the market isn't ready for that and that
leads to losses that leads to us getting
off track from our Edge and so too when
the inevitable loss comes through
instead of just embracing that loss as
part of the sample space we have that
fear response that fight or flight
response kick in and again we deviate
from our plan we're too scared to
execute again in the market or we go on
to Revenge that loss and revenge trade
try and make it back immediately because
we're in this vlight response so as a
Trader it's critical that we learn to
manage our inbuilt survival response
it's critical that we learn to embrace
both winning and losing and we can
Embrace both winning and losing
unemotionally so that we can approximate
our larger sample space in our Edge and
it's it's crucial that we don't get too
zoomed in on the individual trade but we
focus more on the larger sample space
okay it's very very important because
our current win may be making up for for
you know future losses or it may be
compensating for past losses and our
current so it's we don't want to get
elided by that it's foolish to get
elided by a win because it's just
averaging out for our yearly average and
a current loss let's say this is the
current loss we talk that could be
making up for a win a very profitable
win in the past or that could be
compensating for a very profitable
future win to give us our monthly and
yearly average so it's foolish to get
elated over winning and depressed over
losing but if we don't know how to
manage this survival response that's
exactly what's going to happen Okay so
now I'm going to give you a solution to
this I'm going to show you how you can
start to quiet down the amydala the
survival response the subcortical part
of your brain
now to preface this a lot of the times
what Traders need to do is they need to
address the subconscious mind and what
that means is that in the subconscious
mind you have certain associations of
this event's good this event's bad
winning is good losing is bad in your
perception right being wrong is bad
being right is good we have these
mind and let's say for example we now
take a loss if that loss resonates with
one of the programs we have run in our
mind say for example this loss is
terrible it's life-threatening it's bad
I need to get away from losses that
script is going to run that's going to
affect your trading so the first thing
is I want to bring awareness to
everybody to understand that you have
to understand that you are programmed in
a very particular way based on your
subconsciously stored information and
assoc iations in your brain and if you
don't go in there and address that then
that subconscious programming is going
to impact the way you're making
decisions the way you're perceiving the
market and the way you react in that
moment now to give you actionable things
you can do as a Trader right
now one of the most important things you
can do to quiet down the emotional
response and start to rewire your brain
so that you can become profitable Trader
is to not be attached to the individual
trade being a win and what I mean by
this is the reason losing is so painful
is because you're so addicted to a
certain positive outcome a certain win
the only reason losing would be painful
is if you were Desiring over a win a
certain percentage a certain dollar
amount or maybe status or maybe payouts
something else that you've attached to
that win so Traders get extremely uh
emotional and activate the subcortical
parts of the brain in the amydala and
take losses so poorly because their
expectation is that this is going to be
a very positive win before they get into
that trade so as a Trader you need to
detach from the
outcome of the individual
trade and there's a couple things you
can do with this the first thing that I
encourage every single Trader to do is
to start using my bulletproofing mindset
tool this is a three-step process that
helps you identify ground unrealistic
expectations get you back to your
trading plan that's a completely free
tool that each of you can download in
the link in the description I give it to
all my six figure Traders and they have
crazy breakthroughs with that tool now
the second thing you can do is a
visualization exercise just before
you're about to take a trade visualize
both outcomes visualize an outcome where
it's a win the trade comes enters and it
hits your take profit it's a win and you
being unemotional about that detached
from the outcome of that individual
trade because remember it's not about
the outcome of the individual ual trade
it's about the arome of a largest sample
space and the second thing you can do
and you need to do is visualize the
trade entering and then hitting your
stop loss and you're being again
undeterred emotionally about that
outcome because the outcome of the
individual trade doesn't matter what
matters this is what you want to
visualize you sticking to your trading
plan and your processes irrespective of
the outcome and if you've already done
that visualization before the trade and
you've set those expectations that it
could be a win or a loss but I don't
care because I'm sticking to my trade my
trading plan on this individual trade
you've already done an enormous amount
of work to rewire your expectations and
rewire your reaction after the trade
okay now the third thing that you want
to do is alluded alluded to it before is
you want to
see a broader
perspective and what I mean by that is
if you're so attached to the individual
trade because maybe you're risking too
much on that individual trade or maybe
you're emotionally putting too much on
the individual trade thinking you can
get a payout or greater status whatever
it may be then so much relies on that
one trade being profitable and the
outcome of individual trades are
unpredictable as a Trader and there are
so many factors influencing price at any
one point in time that to predict the
outcome of the individual Trad is
impossible but the whole point here is
you don't need to you want to practice
good risk management only risk 1% or
less on an individual trade stick to
your trading plan on the individ ual
trade don't set expectations of what you
think is going to happen on that
individual trade and just trade your
plan irrespective of win and loss and
consistently stick to your plan so that
if that individual trades a loss it's no
big deal because you're seeing the
broader perspective win or loss and the
individual trade doesn't matter I'm
thinking about the largest sample space
because I know if I stick to my plan I
will end up profitable at the end of the
largest sample space so this is how you
start to rewire your brain into one that
is successful for trading and you start
to redefine how you see winning and
losing you start to redefine
expectations you set more realistic
expectations and you start thinking in
probabilistic thinking as opposed to
this has to be a win and when you do
that as a Trader you're more likely to
stick to your trading plan you're more
likely to keep the subcort parts of your
brain quiet and put the more advanced
parts of your brain in charge less
reactive Less in fight ORF flight less
likely kickstarting that survival
response and you're going to stick to
your plan you're going to build
consistent profitability so these are my
suggestions on how you start to rewire
your brain and start to succeed as tra
as a Trader but make sure you have
profitable Edge then implement this work
and you'll see incredible results in
Click on any text or timestamp to jump to that moment in the video
Share:
Most transcripts ready in under 5 seconds
One-Click Copy125+ LanguagesSearch ContentJump to Timestamps
Paste YouTube URL
Enter any YouTube video link to get the full transcript
Transcript Extraction Form
Most transcripts ready in under 5 seconds
Get Our Chrome Extension
Get transcripts instantly without leaving YouTube. Install our Chrome extension for one-click access to any video's transcript directly on the watch page.
