Best Loser Wins

Smart Next Actions

Continue to take an approach to trading that enables me to continue mastering yourself.
Continue to read the best trading books in the world, and apply and synthesis the knowledge.
Continue to re-wire your brain to feel a sense of detachment when experiencing trading losses.
Remember that the top 1% of winning traders do the things that 99% of losing traders will always fail to do.
Remember that the top 1% of winners trading master themselves by using self-interrogation and conditioning.
Remember that making £250,000 in a month is a normal reality in the trading world.
Continue to carrying out your 7 step trading process in the knowledge that this will result in you mastering-self at levels that may have never occurred before so quickly.
Remember that with a failure rate of more than 80%, profitable trading is one of the hardest things to achieve.
Remember that if you carry out your 7 step trading process, it will always keep your emotions in check.
Continue to practice thinking differently than 99% of other people.
Continue experimenting with using the Involgize Intelligence Algorithm to master the trading game.
Remember that daily silence and solitude will, easily, give birth to trading Genius.
Continue to not exit your active trading positions until the 4 hour timeframe’s price structure has been broken.
Continue to grow into the trader that you have always dreamed of becoming.
Act different to 99% of losing traders by adding more capital aggressively at the diagonal trendline when things are moving in the right direction.
Watch Floored film trailer.
Listen to a book summary of Phantom of the Pits.
Read Phantom of the Pits.
Move your stop-loss on the TONUSDT trade to break-even point.
Continue to scale into positions, then add capital aggressively.
Continue to strive to be the ultimate role-model (a combination of Rashid and Tom).
Continue to monitor the inter-market relationship between USOIL and the general US stock market.
Continue to use the M25 service station to condition your mind and apply 24 hour aggressive focus.
Continue to feel the fear and do what you have got to do anyway.
Continue to focus and condition your mind, everyday, in relation to being an extremely rich trader (I already have a huge advantage in the respect that I have been doing so for the last 10 years or so).
Consider changing the colour of your candlestick charts and trading spreadsheet records to grey and blue to emotionally detach from all losing and winning trades.
Continue to ensure that everyday you obtain sufficient silence and alone time.
Self-mastery or mastering-self is really all about being able to take a deep breathe and control the current emotion that you are experiencing.
Continue to acknowledge that it is all about have a fast and smart (strategic) learning rate.
Continue to acknowledge that it is all about being a master, smart and fast, thinker (Grandmaster Involgizer).
Continue to focus on a trading style that demands the highest levels of discipline, patience, and consistency; as this will successfully separate you from the 90%.
Consider not setting any specific financial goals.
Consider setting yourself up to just receive whatever the market wants to give you.
Continue to forget about winning, and just focus on the process, as the process will cause you to win by default.

Smart Learning Points

The writer drew a very powerful analogy of the financial market being like a girl that he has been in love with, but who kept on rejecting him because he did not learn to know himself (love himself), regardless of his degrees and accumulated trading experience working within reputable financial firms. The vital point conveyed: working within financial institution will, definitely, not teach a person how to trade properly. In fact, it almost guarantees that you will not, really, know yourself (thus causing you to become a poor trader).
The top 1% of winning traders are doing what the other 99% are not doing. They are brilliant losers. They are so immersed in the process of trading that, psychologically, they prevent their losses from altering their trading rules and steps.
They know themselves masterfully in comparison to the majority of traders who have done little self interrogation and conditioning.
The writer made £345,000 in one month alone whilst trading his live trading account. This is great information for me as I am in the process of setting highly ambitious financial goals in the preceding future.
The writer’s approach to trading seems to confirm that I am totally on the right track, as he argues the importance of placing little emphasis on technical analysis and indicators. He asserts, instead, that focus should be placed on mastering-self (advanced trading psychology). This is precisely why my trading method emphasises the significance of reading, reviewing (elaboration), applying (daily trading journal), and synthesising the knowledge from the best trading books as soon as possible.
The writer has been trading for himself (privately) for more than 10 years, and was forced to do so when he was made redundant.
Knowing how to carry out technical analysis without behavioural response training is pointless because it will only be a question of time before our emotions cause us to react to the charts irrationally.
He makes a fair point when he mentioned that experienced traders rarely mention their losing trades, because the truth is that in order to be profitable they will be taking many, many, small losses. I now better appreciate why Sheldon at Crypto Banter was always destined to fail many inexperienced traders (including myself), because he is teaching us how to trade in terms of technical analysis. But what we really need most to succeed is trading psychology training.
This book reminds me of the extreme importance of reading in order to get constant access to world-class teachers at the reader’s leisure and convenience. I was totally correct when I concluded that an absence of intentional reading will cause a person’s learning rate to be slow and totally inefficient.
Reminded that trading is one of the hardest things to learn, with a more than 80% failure rate, because it requires a person to completely re-wire the way they think, and behave, so that they can trade profitably. This is why I don’t recommend others to trade unless it is something that they really want to do, and they have the necessary determination and commitment to see it through. My 3^rd Brain (Involgize Capital) really captures and reveals how arduous the trading learning journey is likely to be. And the writer is more pessimistic than I am about the average person being able to become a successful trader.
“Whatever happens, my job is to read the sentiment and to keep my own emotions in check.” This is what my trading process (trading with the Ichimoku, using the 4 hour timeframe, writing a trading journal, keeping a trading spreadsheet, reading trading books, and writing trading book reviews) allows me to do effortlessly.
The writer argues that we need to learn to think differently than the 99% do, when we are trading. I would say the same applies to life in general. We need to think differently than the 99% if we want to discover our unique Genius and master our Purpose in life, because the society is simply not setup to equip an individual with this type of know-how. And this is probably why I have always found that trading is naturally in harmony with my ambition and spiritual orientation.
The writer states the following: “normal behaviour is to engage in a never-ending cycle of education, looking for the next new edge.” My interpretation is that the writer is attempting to capture the fact that most people do not learn strategically (in a targetted way) so, inevitably, do not really apply what they learn. It seems, therefore, that he has never come across a person like myself. Someone who uses a never-ending cycle of trading education to focus, with precision, on strengthening their current trading edge.
This text is reminding me of importance of internal analysis in a person’s life, raising the question, where is a person getting their internal analysis from? Silent and solitude mornings? Weekly planning? Daily journaling? Daily meditation? Trading book reviews?
(1) Most traders listen to fundamental news and so most traders fail… (2) most traders do not keep a daily journal and so most traders fail… (3) most traders lack discipline and patience and so most traders fail… (4) most traders do not read trading book and apply the information straight-away (book reviews) and so most traders fail… (5) most traders don’t keep a trading spreadsheet and so most traders fail… (6) most traders lack expert personal development life skills and so most traders fail.
The writer makes a crucial point within this book: if we are going to put ourselves in a position to gain from wildly profitable trades, then this will come at the expense of losing a lot of potential profit when the price action of many trades suddenly reverses. However, if we always take profit when the price action hits our target level, then we will always fail to gain from the wildly profitable price action movements that move past the profit taking mark. The middle ground, I guess, would be to still set the target level, but assess the likelihood of the price action reversing when it reaches there. On further reflection, this middle position would still cause some potential profits to be lost. Also, experience has revealed to me that a price reversal may open up a profitable swing trade in the opposite direction (mitigating the lose of profit from the original position). All in all, the writer’s main point still stands: this way of trading will only be open to the minority of traders who are sufficiently, emotionally, detached.
Arguably, my current trading actions reveal that I already think like the 1%?
Closing a losing trade is the same as a great metaphor of life: best to own up to your errors quickly and be done with them – if necessary double down on acknowledging your mistakes when talking with others to put them behind you as fast as possible.
Reminded that it is extremely important that we do the things in life that we would do for free, in the dark, when no one is watching (if we intend on perfecting our Genius and to continue rising level after level).
It is true that small step by small step, as long as I am patient with myself, I will grow into the trader that I always dreamed of becoming.
Consider reading the book about the importance of trading mindset ‘Phantom of the Pit.’
“You are buying a market that is moving down…. If I buy, and the market begins to rise, I will eventually lose anyway, because I have now taught my mind that it is okay to stick my hand out and catch the proverbial falling knife.” I see traders that I know make this mistake all of the time (including today as I type this), especially because it is something that I did that lead to a series of trading losses. When I analysed why, I saw it was because this approach was amateurish and relates to the overall bargain hunting conditioning of the general public.
Reminder that the financial markets are counter intuitive in the respect that “… it generally makes sense to buy something because it is more expensive today than it was yesterday.” Likewise, it generally makes sense to short something because it is less expensive today than it was yesterday. If we just listen to what the market is trying to tell us then we should have no problem making money. However, if we fill our heads with fundamental news about what is supposed to happen, then it becomes harder and harder to see what the charts are showing us in plain sight. This is where having a spiritual orientation may provide an extreme advantage as it is all about being extremely patient, forming no attachment to a specific outcome. Just going with the flow, in the present, with whatever presents itself (riding the surf wave).
In order to not trade like 99% of traders, it is extremely important to cement the habit of increasing my trading size at the diagonal trendline when things are going well (price action is moving in the anticipated direction). The reason that most traders do the opposite is that, deep down, they are afraid (fearful that their winning streak will come to an end).
Consider watching the trading movie “Floored.”
The key sign of being a good trader is the “… first day you were able to win by holding and adding to a winning position.”
I have got to get to the point where adding to winning trades is habitual for me also.
Just remembered that I have to move the stop-loss on my TON trade to the break even level in the next 4 hours or so.
It is important to not be afraid to sell short “… something that has already fallen in price. This is consistent with what the majority of people do not want to do.” Scale into position, then adding aggressively once the position is in profit.
The question is what is the stronger emotion… disgust or inspiration. Using my personal experience, I am more likely to return to content that is inspirational and motivating than I am to content that creates fear or disgust. That said, I am probably more likely to remember when something was disgusting, whilst need to continuously obtain more and more inspiration, as inspiration is like fresh milk.
It is so important to visualise ourselves carrying out activities that we intend to master. In my case that means seeing myself going through my 7 Step trading process regardless of what is happening in the markets around me… then hitting the gym in order to continue being highly systematic and methodical… then hitting the running track to continue possessing a dynamic character… ultimately, becoming the perfect role-model that can be emulated by others.
This book also suggests (like Gareth Soloway) that the oil price provides a heads-up (early signal) on what the US stock market will do. Currently, USOIL has been declining, but has hit a support level so is expected to pull-back before resuming its price decline.
Intriguingly, out of 137 trades in May 2020, the writer lost the majority of them (66), broke even with 18, but won 53. My current approach is to just carry out about 10 trades a month, 1/13^th of what the writer submits every month.
Everything is about relentless practice.
It is true, our relationship with fear and adversity will shape the nature of our whole life… it will literally dictate what we do, and what we become.
The writer makes a powerful point: the trading industry makes people think that they can become a good traders with just the right tools, but that would be like expecting someone to be a professional tennis player by jus knowing how to use a pro tennis racket.
I should definitely run mental simulation of sustaining trading losses and large trading wins whilst I am training to ensure that I become professional (always remain emotional detached and disengaged).
90% of traders (who inevitably fail) focus on day trading, and programme their minds with red and green candlestick charts, which is even more the reason why I should stick with swing trading, and change the colour of my charts to grey and blue.
It is truly the case that success will necessitate that we change our behaviour in some shape or form. In my case that means making sure that every morning I obtain sufficient silence and alone time… that I am focused on creating digital content… and that I focus my energy and attention, solely, on building a wildly profitable trading business.
The primary importance of adding to winning trades cannot be overexpressed or overstated. This is a central point that I must continue to implement immediately after reviewing this book.
It really is all about mental strength: being able to control our emotions… control our mental programming and conditioning… control our phone usage… and so on. It is all about self-mastery or mastering-self. Being able to take a deep breathe, then roll with whatever it is that we have got to do. So, in essence, this is the specific thing that I became good at during the course of my life (bloody intriguing).
Reminded that trading, and life in general, is all about knowing how to assess ourselves (strengths and weaknesses) and administer the right learning solution that will enable use to continue making rapid progress.
The writer stated that “patience, however, is not a quality that is easy to come by. I am a man in my 50s,” and this is why I deliberately adopted a trading style that requires this characteristic in spades in the full knowledge that the majority of traders (the 90%) will, justly, struggle to perform at this level.
Money is the by-product of possessing and mastering the ideal trader’s mindset.
Reminded that… “we have do whatever we have too, so that we can do want we want to do.”
The writer’s way of functioning speaks to me. He prefers to not set any specific financial goals, whether that’s for the week, month, or the year. Rather, he gains tremendous wealth by just being ready to take what the market gives him. This is such a perfect spiritual approach to the markets. One that I will definitely adopt for sure.
It is always the case that if we forget about winning, and just focus on the process, we will always win.
It is all about having the mental discipline to cut a lose.

Key Strategic Sentences and Paragraphs from ‘Best Losers Win’

Dear Markets

“So, you sent me a message that would change my life, and I took you up on the invitation, leaving everything behind me to pursue you. I studied you at university, two degrees in fact. I toiled for hours and hours, trying to understand you through the eyes of the conventional economic thinkers, through the eyes of Nobel Prize recipients, and through the eyes of well-meaning journalists and experts (Loc 51).”

“And I struggled to dance with you for years, until one day by chance you told me your secret. You told me to stop trying to understand you. You told me to understand myself (Loc 71).”

“And when I returned to the dance floor, you welcomed me with open arms, smiled, and said, “Welcome back, I see you get it now. Did you bring the band-aids?” (Loc 73).”

Preface

“What 99% of traders do not realise is that they are looking for answers in the wrong places. Knowledge of technicals, fundamentals, indicators, ratios, patterns and trend lines… well, everyone knows about them – and everyone loses, except the 1%. What do the 1% do that the 99% is not doing? What am I doing, enabling me to have the success in trading that I have, which the others are not doing? The answer is as simple as it is complex. I am an outstanding loser (Loc 78).”

“My knowledge of technical analysis is average at best. My knowledge of myself is what sets me apart (Loc 86).”

Introduction

“Where am I today? As I type this, I have not had a losing day in 39 trading days. I run a Telegram trading channel, where my followers witnessed me make £325,000 in the last month alone – in real time, with real-time entries, money management, position sizing, and ultimately the exit of the position. No time delays. No lag. All done before their eyes – time stamped (p 1).”

“It has been a journey that saw me initially pursue the path that everyone else takes – a lot of books about a lot of indicators, patterns and ratios – before finally realising that the real answer to the elusive quest for trading profits was right inside of me all along. It truly was the last place I ever thought of looking (p 2).”

“Marconi went to zero and I was asked to find another job. Fortunately, City Index hired me the same day I left Financial Spreads. I spent seven years on the trading floor at City Index. In 2009 I was made redundant and I have been a private trader ever since (p 3).”

“I have spent the last 12 years of my life perfecting my craft. I am what brokers call a high-stake trader. The average stake size amongst retail traders is about £10 per point risk. I risk anywhere from £ 100 per point to £ 3,500 per point (p 3).”

“I truly enjoy passing on knowledge and I did the best I could with the knowledge I had. However, what I didn’t realise back then was that technical analysis is rather pointless unless it is combined with behavioural response training (p 5).”

“Rarely if EVER will these gurus risk their reputation by disclosing their trades in real time. It is always after the fact. We never hear about their losing trades (p 6).”

“I have written a book that is an antidote to all the rubbish that is being peddled in the trading arena by charlatans who are 99% marketing and 1% trading (p 6).”

“More importantly, I have written a book which is all about the aspect of trading they never teach you, and how to get to the top of the trading pyramid (p 6).”

“They perpetuate the illusion that trading is an easy endeavour. I think it is fair to say that with a failure rate around 80%, there is absolutely nothing easy about trading (p 8).”

“I am arguing that a normal human being, displaying normal thinking patterns and traits, will never stand a chance of making money trading. In other words, normal won’t cut it (p 9).”

“Let’s face it, we can all learn to walk a tightrope suspended one foot off the ground. However, can you walk across that same tightrope when it is suspended 100 feet off the ground? (p 9).”

“In the same vein, we can all trade bravely and aggressively when we are trading one lot, but can you trade with absolute clarity and emotional detachment when you are trading a 10-lot or a 100-lot? I can’t guarantee you will trade 100-lots, but I will describe the process that got me to trade that kind of size (p 9).”

“And let me immediately make an important declaration: I am not going to sugar-coat my message. It is an insanely difficult profession, one that is beyond the apparent mental abilities of almost everybody, yet at the same time a profession that will reward you with wealth beyond your imagination, once you understand how this game really should be played (p 9).”

Liar’s Poker

“My job is NOT to understand the implications of a virus. My job is to understand the players in the market and what they are feeling. They are scared, and I have spotted their fear. So of course I am short. I am not short the market because I think a virus is going to wreak havoc on the global economy. I am short because I think they think something terrible is about to happen (p 18).”

“Whatever happens, my job is to read the sentiment and to keep my own emotions in check (p 18).”

“The health of the underlying economy will drive a market up or down. However, as a day trader I need to have a mental flexibility that is never described or accounted for in economic theory (p 18).”

“What if I were to tell you that I make more money than the average professional football player, and I do so not because I am gifted with special abilities to read the markets, but because I have learned to control my emotions? (p 18).”

“I am not an unemotional sociopath. I feel. I love. I cry. I ache. I mourn. I laugh. I smile. You can be a nice guy and still finish on top. But you do need to learn to think differently than the 99% does, when you are trading. We will get to that soon enough (p 19).”

“By the time I left the bank, I was a hardened and seasoned workaholic. I don’t say that with pride, but I don’t think there is any point in hiding the fact that the reason for my success was not due to immense intelligence, but rather my work ethic. I just worked longer hours than the others (p 20).”

The Trading Floor

“CEO: No, I would not say they were. We had clients who were well-known personalities in the City, and their personal trading was often atrocious, even though they were hedge fund traders or fund managers. It was almost as if they lost their discipline when trading their own money. I am certain they would not be allowed to trade for their clients in the manner they traded for themselves (p 24).”

“The truth of the matter is that you can clearly see the difference between a consistently profitable trader and a normal trader. Their approach is very different (p 25).”

“Normal behaviour is to engage in a never-ending cycle of education, looking for the next new edge. I knew from the moment I read Liar’s Poker that I wanted to be a trader, but I never had any formal training in how a good trader behaves. Why should I? I was always told that a good trader buys low and sells high. But every time I bought low, it always went lower and lower. So what kind of advice was that? (p 32).”

“That doesn’t make any sense at all. Usually when people work hard at something they will succeed, or they will see some degree of success. That doesn’t appear to be the case with trading. Other professions do not have a 90% failure rate (p 36).”

“For every hour you spend on technical analysis, you must set aside at least 25% of that time for what I call internal analysis. You need to know what your weaknesses are. You need to know what your strengths are. You need to know what you are good at, and you need to know what you are not good at (p 37).”

“If making money trading is your goal, and 99% of people lose, and 99% of people think analysis and strategies are the key to trading profits, you can be 100% sure that strategies and analysis are not the key to trading profits (p 37).”

“It gives me much less pain to kiss a 100-point winner goodbye than it does to take my 100 points, only to see the market moving even more in my favour. It is because of this philosophy that I am at times able to make 400–500-point gains, as I did today. It is one or the other. I don’t think you can have the best of both worlds! (p 40).”

“The winning trader, however, is not emotionally attached to an idea of ‘cheap’ or ‘expensive’. He is focused on this moment right now, and in this moment right now the market is trending, and he trusts this trend and can unemotionally join this trend without internal discomfort (p 41).”

Everyone Is a Chart Expert

“I truly believe that what separates the 1% from the 99% is how they think when they are in a trade, how they handle their emotions when they trade. That is not to say that there is no merit to learning the craft of chart reading. I know from my own experience that chart reading is an absolute must for my decision making, but that is only a small part of the whole trading picture (p 45).”

“You truly can be a master trader. You truly can live in the house you desire, with the cars you desire in the drive. BUT you must believe me when I say that in order to get what you want, you need to think like the 1%. In fact, you don’t even need to think like the 1%. You just need to not think like the 99% (p 46).”

“I don’t think Tiger is a better golfer than me, if you measure it in how well we putt, or how far we hit the ball, but Tiger Woods does have an amazing ability to forget his mistakes and move on (p 51).”

“That is a truly insightful perspective of what really separates the very best in a chosen field. It is the mind, and what it processes at any given moment in time. Is it working with you or against you? (p 51).”

“The best way for your rational mind to resolve the discomfort of a profitable position is to close it. The best way for the rational mind to resolve the discomfort of a losing position is to let it run (p 52).”

“How does Petit overcome these doubts? With a simple visualisation exercise (p 55).”

“It is such a great metaphor for life. Own up to your errors and be done with it. So, when the radio host is trying to engage in a line of questioning aimed at getting me to defend myself, I always double down in the opposite direction by saying something like, “Oh my lord, I don’t think I could have been more wrong, even if I tried,” or “Oh boy, even a five-year-old could have done better than me” (p 58).”

“Very different people, yet all obsessed with the journey, the enrichment of their lives and the perfection of their craft. Studying their approach to their work suggests they found the thing they would love to do even if they didn’t get paid for it (p 62).”

The Curse of Patterns

“There is nothing wrong with trend lines, but they will not make you rich. What will make you rich is how you think when you trade. If you think like everyone else, then your results will be like everyone else’s (p 72).”

“It should also serve as a reminder that there are many ways to make money in the market. Your job is not to follow someone, but to find a way that you like, that resonates with you and who you are and what you like to do (p 80).”

“Now I don’t know about you, but I like the story. It reaffirms the idea that I have about trading. How you think when you trade is much more important than whether your strategy has a hit rate in the 50s or in the 70s or in the 90s (p 82).”

“It will be a journey of progress and setbacks. It will be a journey of progress and status quo. I can guarantee you that. You have to grow into the trader you dream of becoming (p 83).”

“You must be patient with your trade entries. You must be patient with yourself. If you can bring those two qualities to the table, then the rest will solve itself in time. You will grow your trade size at a pace where your mind will not be alarmed or fearful (p 83).”

“… an inner game, and you need to spend time – maybe not as much time as you do on charts, but a huge amount of time – contemplating what human qualities you are bringing to the game of trading (p 84).”

“The first time I became aware of the importance of mindset in trading was upon reading a book about the trading life of an anonymous trader called Phantom of the Pit. It is a free book. You can find it with my own notes on www.tradertom.com – in the resource section (p 88).”

“… double bottom. You are buying a market that is moving down (p 89).”

“If I buy, and the market begins to rise, I will eventually lose anyway, because I have now taught my mind that it is okay to stick my hand out and catch the proverbial falling knife (p 92).”

“The fewer impulse trades I had, the more money I made, and the more satisfaction I derived from my job (p 92).”

“The perverseness of the financial markets is that it generally makes sense to buy something because it is more expensive today than it was yesterday (p 94).”

“And then it hit me like a thunderbolt. I wasn’t trading the market. I was trading my opinion. I began to laugh, because I felt for the first time that I knew what had to be done to make money in the market. I understood that the very thing I was trying to avoid was the very thing that was killing me right now. I was trying to avoid losing trades at all cost, and now I was in a trade that was losing me – only because I refused to listen to what the market was trying to tell me (p 98).”

“I picked up the phone, called my broker and sold out all my long positions. Furthermore, I sold a large number of contracts short as well. And sure enough, the market continued – down and down and down (p 98).”

“Look at your own life. You love to surf. You wait for the waves, and you paddle into their energy flow, and you ride the wave. How is that any different to what we do as traders? (p 99).”

“If it means we have to change our opinion because the market dictates it, so be it. A more spiritual person than I would perhaps express this as “empty your mind and let the market guide you” (p 99).”

“… got out of my long position and reversed my position to short, relatively early on in the downward spiral of the index. There were some 500 traders attending the event, and what pleased me most about the outcomes was not that I lost on my first trade, or that I won my money back soon after (p 100).”

“When I started trading, there was no chance in hell I would have done what I did there. I would have held on and held on to that losing position. “I know I am right,” I would have said; except I wasn’t, and I wasn’t making money (p 101).”

Fighting My Humanness

“As long as a losing position is open, there is hope that the position will turn positive. The moment you close the position, and you crystallise the loss, the pain of the loss becomes real (p 104).”

“If you are in doubt whether you are trading from an opportunistic frame of mind or a fear-based frame of mind, then answer this simple question: when you are winning, are you increasing your trading size or decreasing your trading size? (p 105).”

“You see, the vast majority of traders will decrease their trading size when things are going well, because they are afraid their winning streak will eventually run out (p 105).”

“As Greg De Riba, an S&P 500 pit trader of superior quality, said in the movie Floored: “99% still don’t get it – when they win, they start betting less. Bet more! (p 105).”

“You learn a lot from observing millions of trades. If you want to stand a genuine chance of making money as a trader from the financial markets, I believe with every string of DNA within me, with every fibre in my body, that you need to change the way you think about fear and pain and hope (p 106).”

“He would do everything in his power to understand the nature of his fear of spiders. He would study spiders. He would learn everything there was to know about spiders. Through his study he would come to appreciate the nature of his fear (p 109).”

“The discipline to wait for the right entry, combined with the knowledge of past price behaviour, will set you apart from the majority of traders. They are unlikely to have done the same level of preparation (p 115).”

“Before I show you the sentiment report for stock indices, I want to tell you that as I type this, on the day of the sentiment report, stock indices all over the world made fresh new all-time highs (p 116).”

“You would be wrong. Sadly, I was right about traders’ behaviour. 71.39% of all Dow Index positions were short positions – on a day when the Dow made fresh new all-time highs (p 117).”

“This is why the 90% lose (p 117).”

“It reminds me of the late Mark Douglas, a phenomenal light in the trading industry and an inspiration to thousands of people, when he said that good traders “think differently from everyone else” at the start of his book Trading in the Zone (p 117).”

“You need to teach your brain to be fearful (about losses) when it is mistakenly hopeful (about the position turning positive) (p 118).”

“When the trader is confronted with a loss, they hope it will turn around. The operative word here is hope. When they are confronted with a profitable position, they are afraid the profit will disappear. The operative word in this scenario is fear (p 120).”

“However, I must warn you. Your mind is like a muscle. This is not a one-off quick fix any more than doing 100 push-ups once will make you look like Captain America for the rest of your life. Atrophy is not just something that happens to bodies. It also affects our minds. You need to strengthen that mind of yours through repetition. I present my own training regime at the end of the book, although I am actually describing it piece by piece as we move through the book (p 120).”

“The time you know you’ve become a good trader is that first day you were able to win by holding and adding to a winning position. There are many people here (in the trading pit) that have traded for a long time, and who have never added to a winner (p 122).”

“This was no ordinary drill. It was the kind that sucks gas out of the ground as it drills, and thus saves lives by more or less eradicating the occurrence of explosions (p 123).”

“David Paul spent much of his time investing and trading. He made himself a wealthy man. On the second day of the course David said something that would change my perspective on trading (p 123).”

“He said something along the lines of this: “When you are in a winning position, instead of thinking where to get out, why don’t you think about where to get in more?” (p 123).”

“David argued that this was what the 90% would do. He didn’t use those exact words, but he did argue that if you want to make money trading, you need to do that which the majority finds difficult to do. The first time you try it, you may fall flat on your face. That is to be expected, but the next time it might be a little easier, and the next time a little easier again (p 123).”

“If I bought at 12,325, and the market is moving in my favour, I am relieved. Now other emotions will enter the consciousness. There will be greed. You want to make more. There will be fear. You want to protect what you have made (p 125).”

“When we add to a winning position, we decide to dwell on the fact that the market may take our profits away, because we have now decreased our average price. We decide not to dwell on the fact that the market is corroborating with us (p 126).”

“Put simply, the market disagrees with us, but we have faith that the market is wrong, and we add to a losing position; or the market agrees with us by showing a profit, but we doubt the market is right, so we don’t add to our winning position (p 126).”

“The purpose of adding to winning trades is at its heart an attempt to fight your normal human behaviour. In the beginning it is not about adding to your profitability. That will come later. The purpose is to stop you from taking half profits (p 127).”

“Do you remember what Mark Douglas said in the opening lines of Trading in the Zone? In trading, consistent winners “think differently from everyone else”. When you start to think, “Where can I add to my winning trades?” you are beginning to think differently. From then onwards, it becomes a matter of habit. You have built a new neurological pathway in your mind, or at least taken meaningful steps in the right direction (p 127).”

“There is no magic to it. It is a philosophy, and it is born out of a desire to not be normal. The normal thing to do is to close half your position and let the other half run (p 128).”

“That is what the 90% are doing, and I don’t want to do what the 90% are doing, no matter how logical it may seem. They are wrong over time, and I want to be right over time! (p 129).”

“The same applies to trades. You may be on a hot run, and have nothing but winning trades on your screen, but over time it will even itself out. Therefore, it is vitally important you don’t think too much about the outcome of one trade, but rather the outcome of 100 trades (p 129).”

“The outcome of one trade is random. The outcome of 100 trades is predictable (p 129).”

“Did I just say that I don’t believe in the whole risk-to-reward argument? Yes, that is correct. I do not. I believe in defining my risk. I don’t believe in defining my reward (p 131).”

“PRESSING WINNERS Adding to winners is habitual for me. I have new and experienced traders following me on YouTube and Telegram exclaiming they want to know how I do it (p 140).”

“Because by adding, I am actively combatting the brain’s proclivity to scaling down risk. Our brains want to take profit. I am doing the opposite. I am adding to my position (p 143).”

“The Dow falls strongly. I am in the safe zone now. My core position cannot be threatened. My stops are placed at breakeven. However, I am still prepared to let this trade turn into an insignificant trade (small profit trade) in the hope that it will turn into a significant trade (p 146).”

“That is very important for me to get across to you, because I think it is important that you establish some criteria for how much of your paper profits you are prepared to give away in order to capture the really big days (p 146).”

“I have a philosophy to trading that means I am prepared to sacrifice profits in order to discover how big the profit can get. If you don’t have that philosophy, you will never discover how big the profit can get (p 147).”

“I am not afraid to sell short something that has already fallen in price. This is consistent with what the majority of people do not want to do (p 150).”

“I scale into the position in this example, and I add aggressively to my short position once my position is in profit (p 150).”

“As you become better at trading, you will want to trade bigger and bigger size, and the market on a big position doesn’t have to change direction by a lot before you give away a big portion of your open profits (p 151).”

“At the point of the screenshot I am short 4,500 kroner per point, and I am losing 25 points. I close the position shortly after for a loss (p 151).”

“In a nutshell, what separates the 10% of winners from the 90% of losers is which brain they are listening to. It took me many years to realise this (p 152).”

“I admire his mental agility – flowing from being convinced on the long side to turning the position to the short side. Sadly, this is one trait that is hard to acquire. I know some traders with decades of trading experience who are unable to flip the switch and go from being long to being short (p 156).”

“I told him that I had many clients who had said exactly what he was saying now, but about Marconi five years earlier. Fortunes were lost by clients who kept buying Marconi, even though it was falling and falling, because they engaged in bargain hunting. It had been horrible to see the losses our most valuable clients endured simply because they did not want to admit they were on the wrong side of a bad share (p 158).”

“I use an analogy to illustrate the concept I have just explained: it is akin to firing the CEO of a successful Fortune 500 company and betting your money on the junkie turning his life around (p 161).”

“Crude? Yes. The junkie might turn his life around, but I think the odds of the CEO continuing his successful run are higher than those of the junkie turning a corner for the better (p 161).”

“This is a thought process you have to constantly reaffirm. Our minds tend to drift. There are so many distractions in life, so much superficial noise that doesn’t bring substance but that our brains are attracted to nonetheless. The brain would rather look at Facebook and YouTube than sit in quiet contemplation (p 162).”

“If you really want to trade the markets using leverage, engaging in high-octane speculation, you have to learn to desensitise your normal emotional response mechanism to fear, greed and other delightful human reactions. You have to fight your humanness (p 162).”

Disgust

“I believe that disgust is a much stronger emotion than joy or happiness (p 165).”

“We all have reasons to be happy every day, but we tend to forget that. However, disgust is not something we are likely to forget (p 165).”

“No one in their right mind enjoys exposing themselves like this. It is why we get defensive. It is why we fight our corner. Our identity is being questioned. Call it ego, call it identity, call it what you want, but no one likes having their intelligence questioned. It is a lot less painful to continue down the known path than to stop, evaluate, and turn around (p 169).”

“Take yourself apart, clean up the process, take on board my guidance for the mental side of trading, put yourself back together again, fund a small account and start with an entirely fresh mindset and approach (p 170).”

The Drifter Mind

“I suspect the majority of the population of the planet is put together like I am. They just haven’t realised it yet, so they drift through life, rather than taking charge (p 172).”

“I don’t like this metaphor, but being good at the technical part of trading is like being good at putting together a sniper rifle; what good does that do you when you go into combat and you don’t know how to handle yourself? I actively take control of my inner world. I have to give myself enough confidence to reassure myself that I have enough to go out and kick ass in the markets every day (p 172).”

“I have been as lost as they come. I tell you that not to inspire you to get lost, nor to evoke sympathy, nor to tell a tale of rags-to-riches, but to make sure you understand that exposing your weaknesses will be a good thing (p 173).”

“This is part of my preparation. It has been the most useful tool to build mental stamina and discipline. It reminds me of everything that is weak in me. It reminds me of how my mind, if left unchecked and untrained, will go on a rampage to seek excitement and gratification (p 174).”

“I see a big profit turn into a small profit. I smile and accept it, and I move on, telling myself it is okay. I place my brain under as much stress as I can with imagined scenarios. I am long and the market is going my way, and a sudden news story breaks the market (p 174).”

“I observe my fear shooting through the roof as my P&L turns into a bloodbath. I see myself closing the positions and going in the opposite direction. I see myself not getting unhinged just because the market is moving against me (p 176).”

“My action in the morning is about changing the patterns that do not serve me. This started by observing another very successful trader and asking myself what was holding me back from becoming him (p 177).”

“Over the last week oil has dictated the mood of the stock indices. Naturally, I expected to see the same behaviour on Friday. The Dow started off with a 200-point rally at the open. However, 30 minutes into the trading session, it seemed to lose momentum. Oil on the other hand was in full-blown panic. I started shorting Dow, expecting it to follow oil. In Figure 24, Dow is on the left, and oil is on the right. Both are five-minute charts, and both show the entirety of the trading session from about noon until late evening (p 179).”

Trading Through a Slump

“For Adam the bumpy road caused him to lose everything. His trading account, his wife and his house (p 184).”

Embracing Failure

“The Market Wizard trader Ed Seykota put it another way. “A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do” (p 193).”

“Only through a dedicated approach to practice, with a specific attention to finding your mistakes, will you improve. Otherwise you just are just cementing your unprofitable behaviour (p 193).”

“How you feel about failure will to a very large degree define your growth and the trajectory of virtually every aspect of your life. You may want to close the book and think about that for a while. It is quite frightening how deep that sentence is (p 194).”

“As I write this on a quiet trading day on 1 June 2020, I look over my trading statistics for the month of May. I made a total of 1,513 points. Yet out of the 137 trades I executed, I lost on 66 of them, won on 53 of them, and broke even on 18 of them (where stop-loss was moved to entry point) (p 196).”

“By the end of the seven-day holiday, I came within a few strokes of 50 metres. My son was a metre or two behind me. Passing this test is one of the major stumbling blocks for aspiring Navy Seals. I am not saying that my son or I are Navy Seal material, but I am saying that there is no way you are going to swim 50 metres under water without relentless practice (p 199).”

Best Loser Wins

“I have no secrets. I have no special abilities, with the possible exception of one. Do you want to know why I am so good at trading? (p 201).”

“I am exceptionally good at losing. When speculating in financial markets, the best loser wins. Don’t underestimate these four words (p 201).”

“Instead, it’s about losing. Your relationship with fear and adversity will to a very high degree define your life (p 201).”

“And that’s why I win. I win because I’m really good at losing. In trading, unlike life, it’s the best loser that wins. Do you think a dentist, or a doctor would be in business if they had a 60% win rate? Of course not. But a trader can thrive and prosper on that kind of success rate – as long as they are prepared for it. Most are not (p 201).”

“If you look at the trading industry, we are led to believe it is all about the tools. Hang on – do you think I can play tennis like Roger Federer just because I have a Wilson Pro tennis racket? It’s an illusion. How do I know? Because, for years, I was an insider working at one of the largest financial market brokers in London (p 202).”

“The answer is as simple as it is complex. It isn’t the market-beating them. They are beating themselves (p 202).”

“And this is a problem, because to be successful as a trader you need to be very good at losing. This means constant conflict with your built-in subconscious protection system (p 204).”

“A system that protected you from death as a caveman guarantees you’ll not survive as a trader – unless you can learn to overcome it. And overcoming it begins with accepting pain (p 204).”

“Neurobiology has shown we experience a financial loss 250% more intensely than an equivalent financial gain. After going through this exercise of feeling pain and then not feeling pleasure, I then swap back to feeling the loss again. The purpose of the exercise is to align my feelings of gain and loss. In truth, I don’t really want to feel anything – I have found that if I get overly happy about a win, I tend to get overly sad about a loss. I don’t want that (p 205).”

“I am not a dentist who has a win rate of 99.99%. I am a bloody trader, who has to live with being wrong around 50% of the time. It is exhausting to feel joy and pain many times a day. I prefer not to feel anything at all, rather than going through that emotional roller coaster. I win. Move on. I lose. Move on (p 205).”

“If you want to be a success in a field where 90% or more fail, how do you think you should approach this task? (p 206).”

“The road to consistency, success, and enlightenment in trading begins in the last place you’d ever think to look. Inside yourself (p 206).”

“If you want to succeed in an endeavour where 90% are failing, you have two choices. You can study the large 90% losing group and do the opposite of what they do, or you can replicate what the 10% do (p 206).”

“If you are not as successful as you want to be, sooner or later you need to change your behaviour. It doesn’t matter if you’ve been trading unsuccessfully for three months or 30 years, you are much closer to success than you realise (p 206).”

“I can sum it up in a few sentences: 1. I assume I am wrong – until proven otherwise. 2. I expect to be uncomfortable. 3. I add when I am right. 4. I never add when I am wrong (p 207).”

“I flip the switch in my mind from negative mental imagery to positive mental imagery. I see myself riding this monster momentum wave. I see myself being at the forefront of every tick higher. The 90% will focus on what they want to avoid. I focus on what I want to achieve. The 90% give in to their fears. I expect my fears to come in abundance, and I have a plan for counteracting them. I see a different image. And when I am losing? Well, I already expected to lose anyway, so the market disagreeing with my trade will not be associated with pain or fear. I expected it. I have accepted my loss already (p 209).”

“I don’t entertain the idea of compounding my mistake by adding to my losing position (p 209).”

The Ideal Mindset

“Can you acquire an ideal mindset? Yes. Without a doubt. You may have to grow into it. You may have to begin a period of significant introspection and get to know thyself. I will discuss how to get to know yourself as a trader shortly (p 210).”

“Trading is just like that in many respects. You don’t judge your system on the merit of one trade. You judge it over many trades (p 212).”

“In a similar way, I decided I needed to relive my trades to truly figure out what my problem was. So, I downloaded my trading results into an Excel spreadsheet and went to work (p 219).”

“Your prime objective is to follow the strategy you have developed. More importantly, your prime objective is to follow the process you have designed for yourself. If you follow the process, the outcome will take care of itself (p 221).”

“Trading is a battle of the self. Every morning I have to shed my skin and become someone else. The Book of Truths is key to my transformation. It arouses a desire to do better than the old pattern of behaviour. I am certain that had I not taken the steps to focus on my mental game and confront myself daily with my old behaviour, I would not be where I am today (p 223).”

“As I have said before, it was not an epiphany. My change came slowly. It was a gradual realisation that all my chart studies didn’t move me meaningfully towards the goals I wanted to accomplish. Rather, they merely distracted me from the real problem, which was my behaviour when things did not go to plan. Instead of focusing on the process and having tools to get me to operate from a stress-free mind, I succumbed to foolish trading, intending to make back the lost ground. My mind desperately wanted to get rid of the pain of having lost money, and its solution was to chase every movement in the market recklessly. And all I did was dig the hole deeper and deeper (p 223).”

“The reason why I was not more successful in my early trading was not because I didn’t know enough about technical analysis. It was because I thought the only thing I needed was technical analysis. However, that was, and is, simply not true (p 229).”

Patience, however, is not a quality that is easy to come by. I am a man in my 50s (p 233).”

“That is important to remember when you set out on a trading journey. Not long ago, I read about a gentleman called Navinder Sarao, a trader who became synonymous with the infamous 2010 flash crash. In the book Flash Crash, by Liam Vaughan, it becomes apparent that some of the primary skills that Navinder possessed were focus and patience. According to the book, Navinder Sarao would hide himself away from the other traders he worked with, so as not to be disturbed. He needed quiet around him to exercise focus and patience (p 233).”

“It is important for me to remind you that money is a by-product of the ideal trading mindset (p 237).”

“I often tell my children this. Do what you have to do, so that you can do what you want to do (p 237).”

“How do you know when you are successful? When you can trade without any conflicting or competing thoughts (p 239).”

“I am a process-oriented trader. I do not believe in goal setting. There are no Post-It Notes on my monitor reminding me how much I want to make today or this month or year. I have no monetary goals or pip/point goals. I will take what the market will give me. I never trade with targets (p 242).”

“However, I know that if I forget all about winning, and I focus on the process, I will win (p 242).”

“It tells you that they are good at picking winners, but when they are faced with a losing trade, they don’t have the mental discipline to cut the loss (p 246).”

“It tells you that they need to work on their mental game so that they are better equipped to handle losses. Their minds are most likely wired to associate pain with taking a loss. The mind has at its core a mandate to protect you against pain – physical as well as mental pain, perceived pain and real pain (p 246).”

“That said, I accept that my way is not the only way. I don’t describe the way. I describe my way. Whatever you decide is right for you is right for you. Trust it (p 248).”