Predictive value of getting comfortable with small gains

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• 0:00Speaker 00

  Hey everybody, happy Friday. Thanks for being here. I'm going to be launching a trader cohort. It's a four-week program that's going to be launching next week. If you're interested, there's a link below. It's first come, first served. It's going to be a handful of people. It's not going to be a money grab. Very, very reasonable. We're going to talk and work on, as a team, building your own playbook so that you have an idea of what to do on any given particular trade. They'll teach you about preparation, whether it's the night before, the morning of, where you know how to enter risk. You'll have breakout patterns and other initial entries. We'll also go over continuation patterns, risk reduction, adding to risk, position sizing algorithms,

• 0:42Speaker 00

  knowing when to take winners, looking at reversal patterns, and catching the initial moves. Perhaps if we have time, we'll talk about how to use option contracts as well. But it's going to be action-packed. We're going to do it all together. The end result is that you're going to have a playbook that you can put to work and use for any particular situation, given the timeframe that you're trading, as well as what your appetite for risk is. Link is below. So, let's go back. It'll be a short episode today. I want to talk about building your confidence as it relates, like when you're newer and taking small gains to build that confidence. Totally legit. The good news is that you're making money. Congratulations. That's good.

• 1:28Speaker 00

  The thing to be aware of, though, is that you don't want to become complacent with that. You don't want to get used to taking small gains because it can become... The dopamine hits can become addictive, right? Not addictive addictive, but you know what I'm saying. You don't want to get used to that and have that become habitual. Because again, go back to what your goal is. Is your goal to feel the feelings of being right because I need that win? I need that emotional win, right? Because the emotional win, you have to see, okay, well, what's the order of magnitude here with the emotional win versus the financial win? There are two payoffs to every trade. There's the emotional and the psychological, and then there's the financial part. Know when you set your goals, which one you want to amplify.

• 2:10Speaker 00

  Because if you want to be right all the time, then by all means, make your 100 bucks, go away. Risk 50 to make 100. That's great. That's a grinding way to do it, but you might find efficacy in that for yourself. Then after you do that for a while, you have to say, okay, I'm working like a dog. I'm not making enough money. So, while I'm not saying that it's... I'm not poo-pooing it. What I am saying is that you want to be mindful of all your activities, study your results, and then know when to scale. We've talked about that before on the show. Is, once you build your confidence, you kind of become unstoppable. That's the good news. But in your planning and in your pre-trade checklist, and then in your modeling that we talked about yesterday, you would have a model built in

• 2:53Speaker 00

  so that if you were in like a 5% or 10% drawdown, you'd take a haircut on your capital so that you lose less, you still take every signal because you don't know where the turn's coming. Likewise, when you start making money, you can employ rules to know when to press by either saying, "I'm going to trade on margin," or "trade 200, 150% of my net equity," or, "I'm going to trade 100%, but I'm going to deploy leverage another way by trading a larger size." Or, "Since I'm in winning streaks, I'm going to actually add to my winners using continuation patterns and adjust my protective stops up to take into account the larger position, as well as the ebb and flow of my unrealized gains now on a larger position." There's an art and science to that.

• 3:35Speaker 00

  So, that's all I'm saying, is be mindful of what you're doing because so much of this trading stuff is outside the stuff that we're going to build in the playbook, in the cohort. It's how do you handle all this stuff as a human being, right? Because you're a human being first, trader, risk manager, same thing to me, right? Is a subset of who you are.

• 4:01Speaker 00

  It might be very important, but there's probably a lot more to you than just being a trader, and you want to have a solid life. You want to have a good life. So, what I'm saying is, be mindful of what all that looks like so that you don't get comfortable taking small gains and let that go on and on and on because you're afraid to push through to the next level. Two, about goal-setting. Like, goal-setting is an ongoing process. Goal-setting isn't like Mount Olympus where you set a goal, you hit that, and then you're like, "I'm just going to chill now." You always have to be setting goals beyond that. So, once you hit one goal, you set your next goal. I typically have two, right? There's one for your business, then there's a personal goal that's separate from your trading. But once you hit your trading goal, now build another one

• 4:43Speaker 00

  and make sure that it makes you slightly uncomfortable. Goals, to me, mean growth. In fact, when I look at that on my Post-it notes, goal equals growth. It should leave a stretch mark. It should scare you. If it doesn't scare you, it's probably not a goal, it's a task. You see what I'm saying? So, build that out and then make sure that all your behavior are like these micro-steps, mini and micro-steps, that are pointed towards your hitting your goal. Some of that might go back to what we talked about yesterday, is your willingness to feel all your feelings and understand what they're trying to teach you. That may take a little while. It's probably harder to do that and takes more time necessarily than learning new trading chops. That's why this channel is kind of built around the mindset part because it takes a little bit more time.

• 5:26Speaker 00

  And you also have to have a willingness to want to feel feelings that you might be uncomfortable with. But it's all good for you. There is no such thing as a bad feeling, and I'll leave you with that. Check out these videos and check out the link for the cohort. Have a great weekend. I'll see you Monday.