Use your psyche to improve your trading success

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• 0:00Speaker 00

  The number one thing that I had going for me when I started was my mindset. And I think that's the unspoken hidden asset that you need to make it pretty much in anything. Never mind making it as a trader, which is very strenuous, enormous, you know, enormously high failure rate. To me, the mindset is the asset here. And that means, what do you do outside of all your trading work? So you have your screens, you might have a group of people, your pod, whatever this might be. What is the amount of time during the day where you're not thinking or talking about or actually sitting at your desk trading?

• 0:45Speaker 00

  Well, how much time is that every day? And if you say, "Well, I think about it all day long," that's actually a negative. It's not an asset. It might sound tough, like, "Hey, man, I eat, drink and sleep this shit." No one cares, first of all. Two, if you can't act consistently, why would you spend so much time on something when the actual doing of it, right, is really where you have the consistency, not in all the aftermarket or pre-market routines, you see? So the thing that saved me, that kept me from burnout, that gave me the marathon-like

• 1:24Speaker 00

  ability and stick-to-it-iveness, is that I had other interests outside of trading that I executed and filled my days with, especially after work, right? To have a balance. Because to me, you might be like, "Ah, this is one of those stupid episodes." But the truth is, is like, this is a marathon, it's not a sprint. And as much as you want sprint-like results, it's probably not gonna happen. There's very, very few people, even Michael Marcus, rest his soul. It took him a long time.

• 2:05Speaker 00

  It took him over three years to get his calculus down, to marry with his enormous intellect and his eventual ability. It didn't necessarily come easy to him. In many ways, he was too smart to be a trader. You know, he was Phi Beta Kappa at Johns Hopkins. And he was a psychology major, smart as hell, mind the size of Manitoba. But it's hard for smart people to know when they're wrong, right? Because they take it as an affront, because they're used to being correct. They're also used to being, I don't know, in a table of six, they're probably the first or second smartest person at the table all the time.

• 2:48Speaker 00

  But the markets don't care about any of that. So you have to think like, "Okay, what are you gonna do? You wanna run a newsletter? You're gonna collect wine? Or, twice a week, if you live in the city, go to MoMA or the Met? Or any museum? Check out some art and just chill, get your mind off things." You know, having that balance is key to the success, I think. Because this is a long, arduous battle. And even once, once you get to the level of success that you want, now you have to maintain it.

• 3:32Speaker 00

  And that is really when the marathon kicks in. Because now you know you can do this. Now you know you have positive expected value and that you can control your behavior and that you can act consistently day after day after day. But then, okay, like, what is it that you're living for? Do you have a partner? Can you take, I don't know, take a dance class? Study a foreign language somewhere? Go meet with a group of people who are not in the market, not one of these trader meetups? I would say, get the hell out of the market. Do you like doing hikes? You know, it depends where you live. If you live in an urban environment, it's tough to hike. But if you live in a rural environment, you might not have any museums around you.

• 4:15Speaker 00

  So you have to kind of find some things that are appropriate for, you know, your, your environment. But I would find some things that are outside of the market hours that you can do with other people who are not in this industry. It's good to meet other people, too. You learn. If you get good at this, they might be people who you could run their money and earn an incentive fee. You know, same thing if you're an investment advisor. Being out and meeting new people is the lifeblood of the business. Why? Because it's a lot easier to get a $10 million ACAT, right? ACAT stands for Automated Clearing Account Transfers. It's like these umbilical cords that the firms have between them so that when clients

• 4:58Speaker 00

  transfer, the client doesn't get penalized because the process is overly cumbersome. So it's paperwork that you file that says, "Take all my stock and cash and otherwise, and transfer it from member firm A to member firm B." They call it ACAT. A-C-A-T. So it's a lot easier to get ACATs than it is to grow your, you know, your assets by that amount of money. So always be asset gathering, right? That's the rule of the game if, if you're an investment advisor. And you could still consider yourself a portfolio manager, but at the end of the day, the best thing to do is to always be gathering assets. What's the best way to do that? Well, when I was coming up, there was, there were two books.

• 5:42Speaker 00

  And this can help you as well with today's topic, which is to have, you know, the mindset being the goal. And the books were by Tom Stanley. He wrote The Millionaire Next Door, which was terrible, terrible book. I know people liked it, but if you know about money, it, it seemed hollow and, I don't know, I didn't like it. I know it did well. I just, I didn't care for the book. But he wrote two other books way back when, called Selling to the Affluent and Marketing to the Affluent. And those were important books for me to think like, "Okay, how can you appear in the, in the middle of a convoy of affluence?

• 6:25Speaker 00

  So what can you do that you like to do where other people go or, you know, meet and there's affluence there, where you could raise money? Or enjoy, you know, the finer things in life? Because you are with like-minded people." So this way, when you start making money trading, you have a group of people who are outside the profession, but they are like-minded in other ways, right? And you get to enjoy some, some key time with these people. And they can become friends and expand your network. That was enormously important to me, was to get outside the office and meet people and get outside my peers. Because my peers were the same as me.

• 7:08Speaker 00

  They were very smart, they were hardworking, most of them were blue collar, children of blue collar families who, you know, were trying to, they were up and comers. They were all in the same boat. They had a lot of promise, but they had no money of their own. And they all had very similar laments, you know? So I, I didn't abandon them, but I needed to find a way to, to have a different audience who didn't have those same kind of concerns. And having that balance made a lot of sense to me because when I did have a drawdown or I did have a losing streak, I didn't go home to it, right? I didn't go and have three other, I didn't have any roommates, but I didn't come home to three, four roommates who were all traders and talking about the same losing trades.

• 7:51Speaker 00

  Like, I had to get away from it, I had to take a break, right? So a million things that you can do, but to me, the mindset is the asset. Because the mindset comes first. Then it's your trading style is a reflection of who you are as a person. So whatever you need to do to feed yourself, to have the best mindset that you can possibly have, that to me is gonna pay huge dividends for you when you're thinking in terms of five and 10-year windows of time. Every trader that you could read about in the latest Market Wizards book said that there was an enormous cost that they paid personally in their lives and their mental health from becoming obsessed. It sounds sexy, the mad genius, but it's, it's hell.

• 8:32Speaker 00

  It is not, you know, I, I, I had gotten myself to be sick to my stomach worrying about positions, you know, earlier in my career, because I was just internalizing everything. And it was just very, very unhealthy. So that seems to be more the norm than not. And I think you can do, if you focus on what your personal goals are, usually with, in the system that, that we teach, you know, you have a professional goal, but then you also have a personal goal. Like, what's something that you want to achieve outside the markets for you and your own life? Right? So think about that. Leave a comment, tell me what you're working on. And if you have any questions, I'm happy to help. See you next time.