Original subtitles

over the course of the next few modules we are now going to begin building out

the process side of running your trading business

mark navernie talks about this interesting concept that there are two

types of traders inside you me and everyone

one type is the builder and the other type of trader within us all is the

wrecking ball now builders are extremely disciplined and process driven wrecking

balls act impulsively and are driven by their ego

builders are focused on following their procedure and perfecting their method

whereas wrecking balls are absolutely fixated on immediate results and if they

don't materialize right away then they get discouraged you know if a strategy

doesn't produce winning results quickly or it goes through a bit of a difficult

period builders are trusting the process and that trusting the results will come

over time if they get that process right whereas the wrecking ball you know they

tosses it aside and they start looking for a new shiny strategy and they never

really commit to the process builders have developed a mindset that

allows them to view mistakes as teachers that are constantly providing valuable

lessons and a continuous feedback loop whereas if wrecking balls make a mistake

then they start to beat themselves up about it or worse they look for someone

or something else to blame and they fail to take extreme ownership

for their actions and results you know builders are always optimistic

so they actually look forward to the day when results are achieved regardless of

whether they are good or bad results because they then know that their

process is constantly being improved because they are taking extreme

ownership of those results regardless of whether whether they perceive them to be

good or bad but wrecking balls however they just

have an endless stream of excuses to disassociate themselves from their own

weaknesses insecurities and imbalances and they mask them with pride arrogance

and blame they rarely take ownership of the

outcome and as a result they never build anything lasting or successful

builders understand the power of slight edge

they understand the power of compounding that small and simple disciplines

repeated daily carries you upwards towards success

whereas wrecking balls they fail to understand the power of the compounding

effect but it is relentless and it is always working either for you or against

you the simple errors in judgment repeated

consistently over time it then pulls them down towards failure they don't

stick with the simple daily disciplines that it takes to get to where they want

to go easy to do but just as easy not to do

so if it's extremely clear that simple disciplines repeated consistently

actually get you the result then why is it that wrecking balls why is it they

can't stick to those simple daily disciplines well it's actually quite

simple it's because they don't know how to look ahead far enough along the curve

to see the results that they are creating now it's really really hard to

see the effects and the fruits of your consistent actions and your disciplines

in the short and even the medium term it takes a really good while for the

exponential effect to kick in and really start to take off

but whether you see it or not those results are coming either way

and we all have both of these types of traders within us but we need to focus

on our processes and perfecting our methods so that we can have the power of

the slight edge working in our favor rather than against us

see traders often say that you know one of their goals is to have consistency in

their profits you know they want that 10 month or that 20 month every single

month you know they have this idea of a nice smooth upward equity curve in their

minds right now while that is without a doubt you

know it's a pretty nice goal to have and to aim for it's kind of debatable to

what degree this is actually achievable in reality you know to generate a fixed

monthly return and of course over what period of time

because we know in photon we know that due to the very nature of trading

results vary because it follows a random distribution model

each individual trade has a random outcome but over the long term our edge

plays out so your trading account balance now

experiences short term fluctuations in p l but then when you look back after a

long period of time and you look at say the monthly or the quarterly average of

your results then you can start to see more of that smooth equity curve but of

course when you're in the middle of that you know day to day month to month you

don't always see it like that and this can drive some traders insane when they

just struggle to zoom out and focus on that bigger long-term picture and

they're just way too caught up in those day-to-day fluctuations

because if you remember this slide from the lesson

that was called are you destined to fail in the trading and edge module then this

is a list of all of the common mistakes that traders make and it's all due to

your in a caveman brain taking over in order to try and protect you to help you

avoid any of those perceived pains just because it wants you to survive and win

at all costs but you cannot bring that into the

market you're bringing that ancient brain to

the game and your emotional caveman brain remember it sees all uncertainty

as a threat everything uncertain was a threat and a

danger to our ancestors and that's the brain that you're bringing to trading

and it's activated by stress but as traders we actually need to

embrace uncertainty you know we need to learn how to accept

the risk and then take the risk or because you lose the chance of that

reward now your brain's short-term survival

orientation it's going to try and compromise your

need to take that long-term perspective in order for your edge to work in the

heat of the moment and 80 are blowing up because

you know they're sitting there in front of their computers and pushing their own

agenda thinking i'm going to win i'm going to win i've got to win i've got to

win it all odds you know i can make this thing happen but what in fact you notice

you know when you're trading is we obviously do not control the outcomes of

trades we don't control whether or not we want to lose we don't control whether

or not we are right or wrong because we are engaging in randomness we are

engaging in the uncertainty of the markets

but what those losing masses don't realize is that the more that we value

those things that are outside of our control then the less control we have we

have zero control over the market absolutely zero

but yet many traders you know they're constantly focusing and obsessing over

the outcome of individual trades but if you are searching and aiming for

that consistency in your results it's far better to aim for consistency in

other areas of your trading that you actually have control over

so what can we control in our trading business well we can control our

consistency in personal preparation you know we can control the consistency in

our daily pre-trading routines so with this aspect of my own training i

kind of like to always ask myself that if i were investing my own money into

someone else to trade for me would i be happy if they prepared for

the trading day the same way that i just did

and that little thought exercise that kind of really helps me to hold myself

accountable to a really high standard but also consistently

so what else can we control well we can control the consistency in

our processes for market analysis and trade selection because we follow a

systematic framework for analyzing our charts and of course we have a clear

mechanical criteria for actually entering our trades

we can control the consistency in our process for risk management you know we

hold the power to choose our position sizing we make the decision to use a

stop-loss or not we decide where we place that stop-loss

you know we can control our consistency and our process of processes for trade

management you know we decide if and when and where to set take profit orders

even where to take partial profits even where to trade our stop loss and you

know even when to manually exit a position

we can also control the consistency in regulating our emotions

we're human obviously it's okay to have emotions but we just have to observe our

emotions and use techniques to regulate them and actively choose not to act upon

them so that we train our mind to accept probability-based decisions

and we also control our consistency in routines for both recording and

reviewing our performance and we can then use that feedback to drive further

growth and development into all of those aspects of our trading business that we

are personally in control of now what is you know really interesting

is that if you achieve consistency in those areas that we just went through

you may give yourself the best chance possible of achieving consistency in

your results over time because then you are no longer trying to

win or lose which you cannot control because those are simply just

expressions of uncertainty instead you are focusing on your

performance which you can control and that is the psychological edge that

is needed to drive your method edge your strategy edge

and then losing only becomes it's just landing on the wrong side of

probability you know relative to you there is no need for excitement or

dejection it's only the management of probability

that matters consistent

efficient and conscious daily effort whilst maintaining you know a detachment

from outcome-based thinking that is the pursuit of excellence and

mastery of your craft that's a very long-winded and fancy way

of saying focus on the process

you need to be getting up every single day and just focusing on taking off your

three daily high priority actions that are getting you closer to your long-term

goal so that you are focusing on the process

side of your training and not the short-term outcome-based results

now let's talk about the nature of process then and the importance of

valuing good process so there is any situation in the

position that you see that someone is in so you know we see someone up there and

that is what is visible to us but what often you know isn't so visible

is the process that created that position that holds that position up in

place so this down here is everything that

exists below what you see visible up here

everyone can see their position but not what has put them up there

so it's essentially the iceberg metaphor right and the reason that that metaphor

is is super interesting and you know so commonly used by people is because it

really is about the stuff that you do when nobody can see you

and that's what actually makes the difference so for example

maybe you'll go on youtube and you'll watch a nice motivational video you know

maybe you'll watch another 30 videos after that but ultimately that's not

going to change your position right it's everything you do behind the scenes

the work you put in the hours studying journaling back testing tweaking

refining the decades of practice of your craft is what actually reinforces that

position up there i think you know there's a bit of a

common tendency for people to try and position themselves high up

here without first building out kind of this solid foundation below because all

of this stuff that exists down here is what makes you what produces your

results and it's what gives you your edge over time

so if you are not investing your time your focus and your energy down here on

the process then you're just desperately trying to increase your position you

know up at the top maybe it might work for a little while

in the short term but ultimately there's nothing solid

underneath to hold it up so guess what if you are not building

down here eventually you end up having to start

all the way down at the bottom again now up until now you've learned the

fundamental basics of what trading is how the market operates how to manage

your risk how to understand probabilities and what trading an edge

actually means you know how to analyze price action and finally how to both

enter annex in the market now over the course of the following few

modules we're going to focus on applying all of

that knowledge into the process side of running and operating your trading

business so those are the processes that are the

backbone of your business and they are the foundation that determines and

upholds your position up there at the top

so what i want you to think about is if an investor was going to invest in a

company and they were going to buy up a large

share of that company's stock what do you think they would look at

of course yes they would initially look at the headline you know profit and loss

figures of that business but that's only just one tiny part of it

they're going to want to look at the full business plan they're going to look

under the hood and examine all of the inner workings of the business right the

operational procedures the long-term strategy the research and development

department the systems the software their intellectual property you know all

of the contracts and agreements that they have in place

and why you know why would the investor want to inspect and audit all of that

before they commit their money to the business because if they can see all of

the inner workings of the business the processes the methods and the systems

that are in place this will give them a much better

understanding a more accurate assessment if whether the current profit and loss

figures are actually sustainable or maybe they've you know been produced

from a bit of luck and they want to see if that business is

positioned in the market is actually held up by a solid

foundation or if it's just hot air and the house of

cards is about to come crashing down but they also want to get you know an

accurate future profit and loss projection to see where that business

might be heading because both the current and the future

profit and loss of the business those are both an outcome of the current

processes that are in place within the business

so that's what the focus of these next few modules are going to be on

and we're going to get the process side of your trading business absolutely

nailed down process beats mission

deciding that you want to be you know in the hall of fame that is not the same as

deciding that you're going to spend every single day

doing what it takes to become a better player

the hard part isn't visualizing the win at the end

the hard part is winning when you don't love the game

so fall in love with the process and not the end result that you desire

the process is the prize