Lesson 15 part one, the master trader mindset. Welcome to Lesson 15 part one. My name is Sam ADA. I'm a global macro Currency Trader and the owner of effects renewed calm. This is the advanced forex course for smart traders. market was advanced up said, there are three primary factors involved in duplicated success, beliefs, mental states and mental strategies.

By immersing yourself in the mentality of some of history's greatest traders, the understanding of what it takes to be successful becomes subtler and more integrated into your trading. Here are six common themes amongst how the market wizards think. They create their success to discipline. They take a rational and practical approach to money management. They have no balance Andres and are open to everything. They think against the hood.

They play the good hands and drop out of the poor hands, and they trade bigger when they are trading better. By adopting these mindsets, I can guarantee you'll become a much better trader. The exception that proves the role. One of the more interesting things about the market wizards is that one might hold the exact opposite view from another. Yet both are highly successful in their own right. One obvious example is the concept of cutting your losses short and making profits around.

There are examples of traders who either let the losses run or cut the profits short and make spectacular profits doing so. This does not mean that the overall mindset is wrong, just that there are many ways to be successful. So what I attempt to do in this lesson is create a glide path. I look for the commonalities between top traders and focus on the things that we as retail traders. can apply in our approach to the markets. I will outline the country view where I can.

Let's get started with one of the most commonly known but least well understood master trading mindsets, discipline. The most important thing is discipline. Imagine a trader with no discipline, they fail to follow their own rules. They enter and exit on a whim, or perhaps much worse, they fail to have any trading rules at all. Contrast a highly disciplined trader who executes a plan flawlessly without exception, even when it seems like the most difficult thing to do, which one would you rather be? The answer is obvious, but perhaps somewhat elusive to achieve.

So, how to be disciplined. There are a number of mindsets that highly disciplined traders share. market was at Bo Lipschitz said I like the game, I think It is a great challenge. It's also an easy game to keep score of. trading is a game. Many of the traders interviewed in the market wizards books viewed trading as a game.

If you view trading as a game, then making a mistake is necessarily a failure to follow your own rules. view through this means perfect play becomes a lot easier to work towards. Whether you make or lose money on a trade is not important in the long run. What is important is that you follow the rules of the game. market was it Tom Baldwin said in our business, you have to have a total disregard for money. You can't trade for money.

Money is not important. Top traders view money is not important. Of course they want to make money and they're very respectful of their capital and profits. But it's not about the money. It's about following the crowd. Trading processes.

If they do that, then the money will come. Instead, if your focus is on the money you're making you're losing, you tend to make emotional decisions based on fear and greed. Focus your attention on trading well and let the results take care of themselves. market was at Steve Watson said, I usually don't get excited by winners. I'm too busy looking for the next trade. Don't care if you win or lose on a trade, not every trade you place is going to be a winner.

Some will win and some will lose. It's important as a trader not to get invested in the results of any one individual trade. So when you try to control your emotions, strive for a sense of balance, no matter what the market does. If you have a one, don't get elated. If you have a loss, don't get upset by instead be happy at all times just to follow your own roles and play the market game. in your own way.

Trading is like rolling a dice loaded in your favor. When you place a trade, it's helpful to think that it's like rolling a dice loaded in your favor. trading is a game of probabilities, where the results of any one individual trade don't matter. Over time, if you continue to roll the dice, your losses will be far outweighed by the profits from the winds generated by your systems each by your loaded dice. This means that as a trader, your job is to follow your system, irrespective of whether the last trade was a win or a loss. If your system does something that results in losses, that's just part of the system.

And so it's nothing to be greatly worried about. Think of the next trade as the first and the next 1000 you're going to do as humans we tend to overvalue recent results. So it is helpful to put the trade in the context of your trading lifespan Reality is the trade is one of potentially thousands you will place over your career as a trader. Well, it might be nice for the trade to go for you. The market is going to do what it does irrespective of your feelings. If you can put the trade in this perspective, it becomes much easier to come and exit the results good or bad.

Market was Invictus brandy I said, planning to get out before putting on the trade is a means of enforcing emotional discipline. A plan enforces discipline. Without a written plan, it is incredibly difficult to be disciplined. If you try to have no plan you are what is termed a non roles based discretionary trader. That is a trader that interest positions on feelings tips are simply what looks good at the time. By having a set of written roles that you follow when you trade, you're exercising discipline.

You're into the realm of rules based decision traders. And this is where market was advanced up suggests that 90% of successful traders love. The other team is also a mechanical traders. Market wizard Richard dry House said, You must fully understand strongly believe in and be totally committed to your trading philosophy. Have a core philosophy. Without a core philosophy, you're not going to be able to hold on to your position.

As well as having a plan is very useful to develop a core trading philosophy by knowing what you are trying to achieve. And by being very comfortable about your trading, you can continue about your trading business with a minimum of fuss or emotion. It's by really truly knowing what you are about as a trader, that your trading discipline goes to another level. This is why it is difficult to trade someone else's plan. You can have a great set of roles but if you're not in tune with the reasons behind the roles, Then you will find them tricky or even impossible to follow mistake free. This is particularly true when it comes to trading at larger sizes, or holding on to winning positions.

Without understanding why you are holding on to the position, you'll be tempted to grab your profit prematurely. Objectively evaluate your progress. If you're holding yourself accountable for following your plan, you will instill a large degree of discipline. By being honest with yourself when evaluating your progress, you'll pick up on the things that are hampering you or areas where you're making mistakes. A good way to do this is to establish a review process for your trading. This could be done daily, weekly, or on each individual trade.

This is one task that comes highly recommended if you want to achieve peak trading performance. Furthermore, it will force you to accept unpleasant truths about your trading. Perhaps you think you've been disciplined when you have not been? There was actually a story in the market wizards books about an amateur trader who believes his wife is hiding his trading statements, when in fact he is subconsciously hiding them himself to avoid facing his losses. While this is an extreme example, sometimes we are doing things we don't realize until we take the time to reveal it. Market wasn't willing, he said, ironically, even though money management is more important than the price model, mathematically, it's the more tractable problem.

Have a rational and practical approach to risk management where you'll hate buzzwords, but it's hard to get away from them. Initially when we hear the term risk management we are intrigued. But after a while, we realized everyone is using the words and they're losing meaning. But if you want to try it successfully, risk management is not something you should dismiss all the market was heavily emphasized risk management is crucial to their longevity, it is ingrained in the trading mindset. Thankfully, risk management is not rocket science. Rather, it is a matter of being practical and taking a logical approach.

Market was at William Eckert said two of the cardinal sins giving losses too much rope and taking profits prematurely. Both attempts to make the current position more likely to succeed, to the severe detriment of long term performance. Cutting losses short and leaving profits run. A trade that works 50% of the time can be really profitable if you apply a good money management plan that keeps your losses smaller venue wins. While it is not universal amongst the market wizards, some of whom practice high probability trading a high percentage of small winning trades, a lot of them attribute a large portion of the success holding on to the winning trades. And quickly getting rid of losing one's funds.

Fletcher said when discussing based in philosophy, to commit very little capital to take on very little risk and still make a significant return consistently, they are very smart firm. Play great defense first. A powerful risk management mindset is to manage the downside and not to worry about the upside. If you have a good system, the upside will come as long as you avoid psychologically damaging large losses. Good traders have very little tolerance for losses. First and foremost, this starts by preserving your core capital.

If you lose your capital, you're out of the game. It's as simple as that. This is particularly true for retail traders. The longer you're around the greater chance you have of learning what you need to do to start making money. It's also important to protect your profits, not just your principal capital. Don't be Cavalier when you are profit.

Just because you're playing with the markets money does not mean you should be any less respectful. market was it it would thought said, varying the position size can be important as the entry methodology. Trade size is more important than the entry point. A common theme amongst market wizards is that the how much you trade is more important than the entry price. Your position size will determine your profit or loss on the trade. Controlling the size of your loss is the key to risk management.

So this is an area that should receive a lot of your attention. The trade size impacts not only the profit or loss on the position but also liquidity. You need to manage the liquidity on the trade so you can get out quickly when you're wrong. If you get stuck in a large position that you cannot easily you'll be faced with a risk management disaster. Paper prepared to deal with situations that might say statistically impossible always expect the unexpected from the markets. Statistically improbable events occur far more often than they theoretically should.

Work out what you will do when you experience one of these events in your risk management plan. Jessica, the founders of long term capital management, about how they bought the financial markets to the brink of disaster in the late 1990s. by assuming that they're statistically impossible would not happen. Or ask anybody who experienced the 1987 Black Monday crash, or any of the several flare crashes that should never have happened in a rational market. If you're not prepared, and stick around when the market is severely against you, then eventually they're going to carry you out. part two of this lesson, we'll continue in the next video.

I'll see you there.