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• 0:00Speaker 00

  September morn. Happy September, everybody. Thanks for being here. Today, I want to talk to you about something that we all have going on inside our brain. It's called the anterior mid-singulate cortex. Now, you might first have heard of this if you had watched an episode of The Andrew Huberman Show. Dr. Huberman was interviewing a man named David Goggins, who is an ultra-marathoner and a former special ops person in the military. The episode, I believe, is called "How to Build Extreme Willpower", dated January 3, 2024.

• 0:43Speaker 00

  Again, it's on Andrew Huberman's channel. You can go watch the whole thing yourself. But the part of the brain is called the anterior mid-singulate cortex. And that's the specific brain region that's responsible for willpower, tenacity, and overcoming hardship. Hmm. Where do you think that might play in your life if you're an aspiring trader, or just getting over the hump, or having a difficult time in your trading for what's probably just the short term? What's beautiful about this is the more you learn about the body, this is why I believe that anyone can do anything. You remember, I brought up jiu-jitsu yesterday, not because I'm a threat to anybody.

• 1:27Speaker 00

  I can stop people from hurting me because I'm highly trained. But at the end of the day, I did that because I wanted to exercise my discipline muscle from another angle. I already had it in trading. I already had it in sitting down and playing my Phrygian modes and my Locrian modes and my harmonic minor modes and, you know, taking lessons from legendary jazz guitar players, where, to be frank, if I didn't record what they were saying, I didn't even know what the hell they were talking about. It was a whole other language. And I started playing guitar in 1973. So, I mean, I knew what, I knew the instrument, right? The thing about the anterior mid-singulate cortex is this,

• 2:08Speaker 00

  is it only grows when you do hard things, key here is that you don't want to do. What's something that you don't want to do? I'll give you an idea that's probably, will resonate with a lot of people on the channel. You might not want to take risk home overnight, right? So, scientists view this area of the brain not just as the center for grit and discipline, but potentially as the core neural substrate for the will to live, right? Now, I want to achieve many more things in my life. I also want to be much more of a philanthropist.

• 2:50Speaker 00

  So, what I want to try to do, though, as opposed to spending down the corpus, is I want to earn enough so that whatever I earn, I can give the majority of that away. So, that's, I have an incentive to perform. So, again, reading from definitions on the internet, because I am not a neuroscientist, although I play one on YouTube to help all of you. The research shows that this region is larger in elite athletes and people who live exceptionally long lives, and in individuals who routinely push past their limits. Wouldn't that be great if you could develop yours, right? Because that's what we have to do is trading. In trading is like every year, you want to get better. You want to take on new strategies.

• 3:34Speaker 00

  Now, when I started, I was humbled. Because I came into the business from a great school, thinking that I had an asymmetric understanding of knowledge, right, because of my education. When I got to the street and started trading, I realized very quickly that I was 100% wrong. I had zero edge. And that everything I had read, all the papers, all the books, all the access to, you know, a couple Nobel Prize-winning guys, including Robert Mundell, who hadn't won his yet, but he would eventually go on to win, I think in 99. I was like, "Man, I have to start over, and I don't even know where to start."

• 4:16Speaker 00

  Like, that's how lost and how wrong I was. So, it can happen to anybody. The thing with this is that it's a use it or lose it kind of proposition. So, based on what we were talking about yesterday, have the grit and the level of persistence and determination to want to go and achieve whatever goal it is that you want to achieve, because it has greater benefits for you outside of your success in trading. You see what I'm saying? That's why we want to try to do those things that scare us and help us grow. Because you don't know where you're going to eventually be able to take these skills, right, as transferable skills and use them in other areas of your life, right?

• 4:59Speaker 00

  You might face other challenges that you can't anticipate right now. But having a fully-evolved grit muscle, if you will, even though it's not, it's part of your brain, you will have that as a skill, right? And to me, that's one of the reasons why so many people don't make it, is because they quit at the 11 o'clock hour. They just can't take it anymore. So, my whole thought was like, I have to start and kind of work this thing out and get to a spot where I have to pace myself. My thinking was wrong. I have to regroup. So, now, what do I have to do? And some of you who have been here a long time, like, you know, MJ and the other folks who've been around since the beginning, you'll remember, there were like four asset classes.

• 5:43Speaker 00

  There were stocks and commodity futures. There were options on both of those. And then, there was the foreign exchange. And I was so humbled, I had to cut that list in half. And so, I let go of options. I let go of foreign exchange. It was 24 hours. I just didn't have the bandwidth to follow the markets and trade something that reacts, like, short-term interest rates to every little news headline. It drove me crazy. And I couldn't figure out how to develop an edge with that. So, I said, "I have to put this on the sideline. I'll come back to it." Never really, I never really did. Then, options. Why? Well, because there's so many moving parts to options when you look at just the volatilities and the Greeks. And then, you know, choosing what's the right delta, what's the right amount of time, days to expiration.

• 6:28Speaker 00

  Remember, in those days, there were no weeklies and there were no zero DTEs or anything like that. You were dealing strictly with monthly expirations. And the education opportunities to really learn how to trade options from somebody who was a master was very, very difficult. So, when you would read kind of static and very linear and flat research, it was very difficult to learn how to trade options the way you would do it today, the way like my friend Sean McLaughlin would, or Steve Strasser, for example, or Tom Sosnov, anyone at Tasty Trade, you know, those kind of experts. That really didn't exist. That's a very new market. It's very young, you know, comparatively speaking.

• 7:12Speaker 00

  And so, I had to focus on some basics and break things down into something that I could find like work. What was, where could I find one little beacon of light and get it to work? And that took a lot of persistence and determination, willpower, tenacity, and overcoming hardship. Why? Well, because I was in an office of 70 people at 605 Third Avenue in Murray Hill. And it was interesting, because upstairs was the great Michael Steinhardt, and downstairs was the mutual fund company Neuberger Berman. And I would see Michael Steinhardt and the late Roy Neuberger all the time. In fact, in sometime, in like, I want to say it was 95 or 96, there was a fire.

• 7:56Speaker 00

  I don't remember. And I remember I had to help Roy Neuberger, who was in his 90s, if not older at the time, down the staircase. They were only on the second floor. But at any rate, when you start to do these types of things, just have faith that if you put, if you know what your goal is, that's going to be the thing that keeps you, that sustains you and keeps you moving forward from where you are now to where it is that you want to be, knowing that once you get where you want to be and you become a bit of a cash-printing machine, all that money is going to go to good use, because it's tagged into the goal that helped motivate you to get started in this the first time, right? And maybe you want to pay a parent's mortgage. Maybe you want to go buy bonds. Maybe you want to go buy yourself an annuity.

• 8:38Speaker 00

  You know, maybe, like I said, you want to fund 529 plans. Or maybe you want to buy real estate and then rent it out. Like, there's a whole number. You might collect artwork. Whatever it is that you want to do, you can do it. But start with something that's reasonable. Pick the goal. Stick with the goal and let the goal be your guiding light. Don't be discouraged on any one particular day, because you don't, it's always darkest before dawn. Man, I can't tell you how many times, I used to have that as a Post-it note on my machine when I would get discouraged. I would just look up at it and say, like, it's darkest before dawn. You're right around the corner from making a discovery. It doesn't have to be a big one, but it could be just a one little section of something

• 9:20Speaker 00

  that springs you, right, like a Sudoku puzzle. You fill in one square and it helps, help you complete the rest of the board very, very quickly. So, learn about this stuff and learn how to help yourself grow, because you're likely to be your own, you know, best teacher. I've called up the episode here. It is, it doesn't have the specific date, but I'll tell you the title. It's on, it's Huberman Labs. This is the clip, Huberman Lab Clips. But there is a full episode. It says, "How to Build Extreme Willpower: David Goggins and Dr. Andrew Huberman." It says, "Two years ago." And it doesn't have the exact damn date. Maybe it does if I click here. Well, you know enough to go look the damn thing up.

• 10:05Speaker 00

  This clip is about 13 minutes and 13 seconds. I kind of understood this intuitively, because when my sister and I were younger, we didn't have a chance. I can remember when I was 12, and the summer was coming up after that school year. I don't know what grade it must have been, 6th grade or something like that. My dad was like, "Get out of the house." You know, "You're not going to be sitting around the house all day watching", you know, because we didn't have even cable. So, what would I be watching on TV during the day? Soap operas and game shows? Like, come on. So, I was pushing a lawnmower, helping people do work around their yard. And, you know, I had to be productive. So, we learned from a young age that we had to make those types of trade-offs. And when you make those trade-offs and you do, again, the key definition here

• 10:49Speaker 00

  is that you're doing something that you don't want to do, right? The growth rule, the AMCC, only grows when you do hard things that you do not want to do.

• 11:02Speaker 00

  If you do something difficult that you actually enjoy, like a cold plunge, that brain region doesn't expand. So that's why a lot of people say slangly like, enjoy the suck, or embrace the suck, something like that. You know, you've probably heard it in your own way, in your own peer group. And then this way, if you take that and then you focus on designing a system rather like, I need to have a winning trade to validate myself, or to make myself feel good.

• 11:30Speaker 00

  Learn, learn the different moving parts of the system, right? First, you have the screen. Then you kind of need to know what's your risk unit? How much of your capital going to risk? That's easy to do. It's a percentage, you could do it in your head. Then you need to have an entry rule. Then you have to have a managing the trade rule. What do you do once you're in it? And that, if you want to just have one step in that manage the trade, is when do you adjust your protective stop? Right? When do you, like, if it starts moving in your favor, when do you adjust your stop up, or and/or to perhaps even break even? Right? And then what do you have as a definitive exit rule? When you want to take profits, which is kind of a harder trade? Now, once you get all that stuff down, you can start to consider like, okay, am I going to add to my winners?

• 12:14Speaker 00

  Do I put on a suboptimal risk unit when I get started? Just to get a feel for the market, knowing that I'm going to add? Right? As opposed to removing risk if it moves up a half ATR or a full ATR? It all depends on your timeframe. If you're a scalper, you're kind of risk on, risk off. Maybe you sell half and then you have a runner with another exit strategy. That's certainly one way to do it. We'll talk about that this week. But I think in order to develop your willpower, that's going to help you with respect to the things that we spoke about yesterday, which is about having grit and saying that it's not really about the market. That provides the difficulty about my becoming a new market wizard. It's what I decide to do. Because right now, some of you are watching this, and I guarantee you this.

• 12:58Speaker 00

  I don't know who's watching for the most part. I know who comments and I appreciate everyone's involvement. But if someone said, is it possible that there's someone watching today that's just starting? That doesn't know their backside from a hole in the ground? And that, you know, in five years could be in the next Market Wizards book? I would say absolutely yes.

• 13:18Speaker 00

  You just have to make up in your mind that that's what you want to do, because the behavior is what's going to get you there. What is your process? Your process is the four or five steps of the behavior that's going to get you to the results. Right? So focus on that part. And when you get down on yourself, just remember that if you keep persisting, it's good. Like Jaco says, you had a tough day? Good. Something's not working? Good. Because this is what he's getting at. You know, you never hear like the superstars, right? Ever complain. They're just like, well, I got to go back to the drawing board. I got to figure it out. I got to see what my new entry point's going to be. If you look at Wayne Gretzky, Tiger Woods, Mike Tyson, you know, Michael Jordan.

• 14:02Speaker 00

  Pick your favorite, you know, Serena Williams. Right? Steffi Graf. Any of those, you know, great players. They might have blown a gasket, like Sabalanka says something in the media. She's just blown off steam. You don't complain and bitch and bellyache your way to success, right? You have to go inward and say, okay, where can I improve? What's this one step that I could make a change on? That's why I believe in you. Maybe more than you believe in yourselves. Because once you start to believe that you could actually do it, that's when you start doing it. There's nothing magical that's going to happen in the external environment that's going to be like, oh, aha. It's something that you're going to do. It all starts with behavior, right? And I'm almost tired of hearing myself say it, but behavior predicts where you end up. It's up to you. That's why I believe you can do whatever you want.

• 14:48Speaker 00

  That's why I keep talking about this stuff. And I don't do all these stupid trade setup stuff, because it's not about that. That's the easy part. The hardest part is knowing, what do you want to do? Right? So, anyway, please like and subscribe. Please leave any comments. I read everything and I try to, I try to get them on the list and return the, return the favor. But I appreciate you being here very much. And I'll see you next week. I mean, I'll see you tomorrow.