[00:00:00] I want to talk about handling things, particularly with trading. But of course, anything in life is...
[00:00:08] You can relate anything to trading or any other skill or craft pursuit that you're into.
[00:00:14] But the topic is handling losers.
[00:00:18] Not only losers, but handling...
[00:00:20] I'd say handling things that happen with your
[00:00:24] path or your trading plan that you don't expect. So
[00:00:27] maybe you have a strategy that has worked well and then you're excited.
[00:00:32] This especially happens when you're a little newer, maybe on your journey. And you're excited because
[00:00:38] your expectations are very high for the next year because it started to work the previous year. And then all of a sudden
[00:00:43] things, the market changes and
[00:00:45] things don't work out as well. And it's not necessarily because your strategy or your hard work was wrong or it was misplaced. It was because
[00:00:52] it's not quite in favor. Maybe the market's very choppy or
[00:00:57] I don't know, whatever happens, right? That makes it different. I experienced this many times.
[00:01:02] I had this... an extreme example was 2008 when I was trading and then 2009 the fear and
[00:01:09] negativity of the media and everything was so strong. It was
[00:01:12] stronger even than we recently had in 2022 because I felt like that was really strong too.
[00:01:16] The market didn't go down as much but the apathy about the future of America and the future of asset prices
[00:01:22] and all that was so high.
[00:01:24] And you could see how that turned out, right? The market finds a way to rally. It's typical. But
[00:01:29] in 2009 I didn't have the experience of
[00:01:31] of how cycles worked as much. I was newer, which doesn't really matter that much for short-term trading but
[00:01:37] it did get my way because I was kind of stuck on the 2008 game plan. A lot of
[00:01:42] selling rallies and being aggressive when things went down
[00:01:45] and things just kept springing out of the hole and being resilient. And a lot of times it cost me
[00:01:50] basically I worked really hard all year with a lot of expectations and I just had like a small winning year in 2009
[00:01:56] and I had a monster year to this data career year in 2008.
[00:02:00] And so I made that good 20th of what I made in 2008, 2009 or something like that.
[00:02:06] And then it was very frustrating for me.
[00:02:10] And part of the reason was because I just couldn't handle...
[00:02:12] I couldn't handle the fact that it was different than my expectations. And
[00:02:16] the other thing I wanted to talk about today is just handling losers in general.
[00:02:20] And I think that one thing, no matter what you're doing, you know you're going to have losers. Absolutely.
[00:02:24] 100% of the time you're going to take losses.
[00:02:26] And some of them are okay and you feel like they're good business losses and some of them you feel like they're unjust and unfair.
[00:02:32] You shouldn't have had them because of all the work you put in and the study you put in and you missed the move.
[00:02:37] And other ones are somewhere in between the two extremes, but nonetheless they're still losers.
[00:02:41] And a lot of times you'll notice that at the end of the month, if you're trading during the day or even your swing trading,
[00:02:46] at the end of the month, you don't even remember what the hell you did.
[00:02:49] You just look back and see that your P&L was up or down
[00:02:52] and you forget all the emotional turns and the injustices and the
[00:02:56] good losers and bad losers. And they're just losers and there's just a number and there's just a
[00:03:00] result. So a lot of times handling losers is about like can you have the maturity
[00:03:06] to sit through and not react?
[00:03:09] So I was listening to a Michael Singer who I love podcast and he talked about primary ripples and secondary ripples.
[00:03:15] So primary ripples are the things that happen in life that don't feel good.
[00:03:18] Someone screwed you over, someone yelled at you. Primary ripple. The secondary ripple is all the
[00:03:23] reactions and the things that you do that
[00:03:27] because you couldn't handle it. So things that were upsetting to you because that happened
[00:03:32] now you've created like five or six different reactions of reactions of reactions that are way worse than the original
[00:03:38] because you couldn't handle it. And we can all laugh and look at our trading and say,
[00:03:42] oh man how many times in trading have you done something stupid after a loss because you couldn't
[00:03:47] handle it and blown up or sometimes for me even I think I can handle this is the tricky one.
[00:03:53] I think I handle it and then all of a sudden like I sit still I don't do anything
[00:03:58] and then a couple days later I get run over because I still at some level have not handled it yet.
[00:04:02] I haven't been able to emotionally move on. Like I haven't cleared my head. I haven't balanced
[00:04:07] I haven't cleared the decks or got into a centered mind or however you want to say it.
[00:04:11] And then it causes pain and suffering. This often happens that's why after a big winning streak
[00:04:16] you often have your biggest losing streak and it might not be
[00:04:20] instantly. Sometimes it's instantly because you're thinking you can trade every price,
[00:04:24] you're really good at this, you know you take more risk, you trade bigger. Other times
[00:04:30] it's because you simply just think that you have experienced that enough times where
[00:04:36] you can kind of go along and say well you know I've gone through this enough times where I
[00:04:42] I've gone through this enough times where I can handle maybe what I can ward it off.
[00:04:47] Like I can see it coming right? I've been here before and then all of a sudden
[00:04:53] you know two or three days later even a week later you get run over
[00:04:57] and it comes back and gets you and you think you did. I've actually had this with
[00:05:00] personal interactions where something happens where I'm upset by something somebody did
[00:05:05] and I sit with it excuse me on a walk right now so I'm passing people.
[00:05:11] So if I trail off and sound goofy that's why but so I'm handling something in a personal
[00:05:15] situation or business situation or whatever and then I don't like kind of how it goes.
[00:05:21] Something happens where I don't feel very good so I have to really wait until I can
[00:05:26] have my emotion cleared understand why that person did that or just accept the reality
[00:05:31] of the situation basically and then I can move forward right but if I react from that lower
[00:05:35] level of emotional response it's always bad just like trading anytime there's a FOMO trade or
[00:05:42] you got to get in or you know I missed it so now I got to buy out a shitty price where I
[00:05:46] don't know my risk isn't as good. If you do that the way to look at that is if I do that one
[00:05:51] time two times five times I can get away with it but if I do that like 10 times or 100
[00:05:57] times or 1000 times I'm going to go out of business and it's just bad business it doesn't work.
[00:06:03] So you have to start training yourself to handle it and then one time and then you do it
[00:06:07] you start doing it all the time and you get stronger and stronger and stronger and eventually
[00:06:10] the big ones happen and you can you can deal with them and that's why I said this is you know
[00:06:14] this is like this life boiled down into trading so I think this can happen in your trading plan
[00:06:21] conditions for what you're doing could be good or not good doesn't mean your plans and
[00:06:25] plans not good doesn't mean your losses aren't good and then there's like the nitty gritty
[00:06:29] individual trades that are stirring up emotions so all of it is just constantly stirring up
[00:06:33] emotions of how you should be doing how what you'd like to do versus what you are doing
[00:06:40] and it's it's like a chamber of personal growth and it's really hard sometimes and occasionally
[00:06:47] it's easy and you have a great run and then you remember that oh it gets hard again
[00:06:52] it's not always easy I don't care who you are anybody who's been around for 20 or 30 years has
[00:06:56] gone through so much stuff that it's hard to even understand to survive that long what they've gone
[00:07:01] through just like a marriage or something that long or any any relationship or any business
[00:07:05] that you've been that long so for me it's been I don't know 2003 20 years 22 years something like
[00:07:12] that but I know a couple people who are over 30 years and what you learned I think some of
[00:07:20] it is some of it's just etched into you right but a lot of the things you learn are just that
[00:07:24] it's always coming back around again things that you used to learn that you learned that stopped
[00:07:28] working eventually work again and human nature keeps repeating itself but this humility to understand
[00:07:34] that you might be wrong or how it feels to really sink down and the opportunity cost of
[00:07:40] sinking down really low and what that does to your whole life your energy
[00:07:43] everywhere and how those big losses can do that to you like I had one of those um
[00:07:47] I think in 2022 I had some you could tell by my tone of my voice it was
[00:07:51] I had some white doubts um I had some kind of life I don't know trying to maybe find myself
[00:07:58] in in trying to push expansion in areas that weren't natural and trading way too big and
[00:08:02] caused myself a lot of harm and a lot of hardship and I lost a lot of money doing that and I had
[00:08:07] the you know kind of battle back and and rebuild and go back to kind of what I was good at and
[00:08:12] and that those things sometimes happen and it's easy to act out of um it's just easy to react or act
[00:08:20] out of uh some kind of a lower emotion and then once that change starts it's hard to break so I
[00:08:25] can see an intervention you need a vacation or a I don't know you can but if you're always up on
[00:08:30] it you're always catching yourself you can break it right away you can say oh I'm I'm
[00:08:33] you know I'm not here I'm gone I'm somewhere else I'm thinking about that that emotion you
[00:08:37] can feel it in your chest and your stomach whatever your throat this emotion is bubbling up
[00:08:42] and it's it's making me want to do something right now and it's so intense that I have to do something
[00:08:47] always always bad pretty much it might work but it's only going to screw you more later when
[00:08:51] you're trading bigger so you might as well figure that out now so no matter what stretch you have
[00:08:56] I feel like at a high level of anything coaching being a CEO like anything this is a primary skill
[00:09:03] that high achievers have is being able to handle these things without being emotional and of course
[00:09:10] you're going to be emotional right but learning how to not make the big move until you can see it
[00:09:13] clear which is not usually when you're emotional so the emotions aren't a bad thing they're just
[00:09:17] a thing and I had another recording about this before and it's like I kind of feel like why even
[00:09:23] do any other recordings because this is really the record these are the recordings that trump all
[00:09:27] of them because never going to change technology markets AI it doesn't matter this is there
[00:09:33] it's never going to not be there so this is primary to everything else but going into 2024 for me a
[00:09:41] little bit of personal information so 2022 was my first losing year it sucked for me in another world
[00:09:48] if I'm trading futures like I have been you know doing most of my career I probably have a good
[00:09:53] year in 2022 it was a busy year it was good for that instead I'm off doing other stuff and I paid
[00:09:58] the price and I talked about that in the past so 2023 was about getting getting back on track for me
[00:10:03] rebuilding and going back to my core skill set which I did and that kind of got me going again
[00:10:10] and then I used a lot of this AI stuff to make a bunch of thought experiments into coding coding
[00:10:19] I don't even know what the word is it Python code and things like that and have come up with
[00:10:23] a few different trades now that I'm using that are more structured and more like rules based
[00:10:28] that are going that are running alongside my regular discretionary trading so I'm finding
[00:10:32] myself doing the discretionary trading less in the rule-based stuff that I come up with
[00:10:38] coding which I couldn't do before the AI so that's been really great for me more so so that's
[00:10:44] kind of the transition that I've been making and I think it's going to keep going that way
[00:10:47] where if you have a skill set or something you're able to you have a lot of years of experience
[00:10:54] you know where you want to direct the machine or the intelligence you can better yourself and
[00:10:58] you can have a lot better results but if you you know if you don't have any skills then all the
[00:11:02] great tools in the world aren't really going to help you that much and I think that's what
[00:11:05] a lot of this is doing so I'm trying to think about how markets are markets are all the
[00:11:11] structure of markets is always changing so you're getting I had my recent podcast talked
[00:11:16] about that the things I've gone through with the different structure but I think it's happening
[00:11:20] again right now with more retail trading more options trading more oh I don't know more
[00:11:27] the AI stuff I mean that's probably been in there a lot for with hedge funds but
[00:11:31] we'll see now when it comes into the hands of the general public how that changes things and
[00:11:36] having to be humble and understanding that things are going to change and you have
[00:11:39] to be able to change with them so 2023 was I would say decent I got back on track I made money
[00:11:48] it was more of a rebuilding year for me and I think 2024 is now setting the stage for a much
[00:11:52] bigger year or a more successful year where I could really see some of the the seeds that
[00:11:57] I planted take off and then so I have my kind of my legacy business and my regular stuff I do
[00:12:02] and then I have this new stuff that's been working and we'll see if it starts working bigger
[00:12:05] I'll start raising the size up and then there's always the unknown of what happens next or things
[00:12:11] change which is kind of the beginning of this podcast about setting those expectations and not
[00:12:15] really always knowing what's going to happen and being able to handle it no matter what so
[00:12:20] that's kind of where I'm I'm positioned right now and I'm pretty happy with that
[00:12:24] and you know it's funny because it's like there's an old trader saying about
[00:12:28] getting hurt after a drawdown and trying to increase too fast and if you don't give
[00:12:32] your size up you could really get hurt and the analogy was always if you fall down a
[00:12:37] like a like a step or two and roll your ankle you can kind of jog it off and you're okay so
[00:12:41] that's like a small loser or drawdown medium size you fall down half the steps you might need
[00:12:46] a day or two right you fall out of the window and break your leg if you start running right away
[00:12:50] on that leg you're in big trouble and that's equating the the connection is to the size of
[00:12:55] your drawdown and the pain and the suffering of the loser and how it happened and you know
[00:13:00] you try to run on that broken leg and it's ugly and I ran on the broken leg a little bit in 2022
[00:13:04] and I knew better and I did it anyway and I'm just you know you get stronger when you have to learn
[00:13:10] again it might be many years but lo and behold I guess you need to learn again sometimes so
[00:13:16] now I feel like um I'm I've been having whenever I have a little ankle roll I'm kind of stronger
[00:13:21] and I'm shaking it off and I'm you know respectful of that risk because of what happened
[00:13:26] it's putting me in a mental state where things can be
[00:13:29] so much more balanced much more centered I think just listening to myself talk I feel
[00:13:34] you can hear that there's more of a more of a steady ship here than in 2022 which was me
[00:13:41] kind of in my lower the lower version of myself so yeah that's that's kind of where I'm
[00:13:47] where I'm at with everything but back to the beginning about handling the losers
[00:13:52] not only handling the losers but handling the change in market conditions and it's like
[00:13:56] well if we can get really good at that everything else is kind of easy because if you don't take
[00:14:00] that personal and you just deal with it like in a business sense then it just becomes about your
[00:14:05] your execution and your plan like am I am I doing what I want to do and how can I do it better
[00:14:09] it's very it's very um cut and dry and you can do I need to use technology do I need to help
[00:14:15] get people to help me with certain things like what am I struggling with do I have no idea
[00:14:19] like what works do I need to find out a new trade like I had to develop a new trade this
[00:14:22] year which is not always easy so I developed a few new trades I figured out how to do it
[00:14:27] I had some help from some people um sometimes I come up with them on my own sometimes I don't
[00:14:32] doesn't really matter you just figure it out so that's one thing that's a problem to solve if
[00:14:37] you have you know the will in the direction of that you can seek that out and then there's
[00:14:42] bouncing back and recovering and balancing your life exercising more recovering emotionally
[00:14:47] having the right time the right schedule the right trading plan that manages
[00:14:51] itself with your life that's another problem another thing to solve you can become very tactical
[00:14:57] about what you need to do when you get in the right mindset but when you're emotionally reeling
[00:15:03] it's hard to solve I need those problems so that's why I just think this this stuff is everything
[00:15:08] so I'm spending most of my I spend most of my time I used to read so many so many self-help books
[00:15:13] and we can laugh you know people like that whereas me reading everything like oh my god hundreds
[00:15:18] and hundreds of books audio books I mean taking down multiple 2x speed model all your books every
[00:15:24] week every topic imaginable silent retreats all this stuff not that it was all what I needed to do
[00:15:31] and I'm not saying I'd never do any of it again it was just now it's like just accepting
[00:15:37] reality that comes up and handling it and then moving on and trying to not make problems where
[00:15:42] there's not problems that's why I love the Michael Singer stuff very simple um and I try to bring
[00:15:47] that into my trading and not have that making problems where there's not problems I feel like
[00:15:53] I've spent a lot of time my life creating a mess around things and I had a lot of success in this
[00:15:59] neurotic state I will say so it's not like you can't have success but in terms of well-being
[00:16:04] and the peace of mind and a gentle flowing life I could have had a lot more of that with the
[00:16:10] success if I would have handled all this stuff better so as I'm 42 now I feel like there's a
[00:16:17] the last year or two especially there's a change in in really moving forward in a more balanced
[00:16:23] mature fashion with handling all these things and I don't think that's gonna it probably helped me
[00:16:27] do a lot better I feel like I'll have even more success but you're happier I mean you don't feel
[00:16:35] the ups and downs of this business which can be brutal don't bother you as much
[00:16:39] because you're handling them more if you want to stay around doing it for a very long time with a
[00:16:43] lot of cycles that's kind of that's kind of some of the work you have to do and the things you have
[00:16:49] to go through because if you don't do that it's I mean you got to do it at some point right I
[00:16:55] mean no one no one makes it through 20 30 years or more if you want to have a long career even
[00:17:02] if you're working another job without doing these things because you end up being miserable
[00:17:05] and eventually you quit out of pain and suffering you can quit out of losses or you can quit out
[00:17:09] of pain and suffering usually they come together but it doesn't have to be like that it can be
[00:17:15] it can be fun and invigorating and exciting because it's uh it's a great I can't think of
[00:17:22] a better I mean I'm sure there's other businesses but it's a great business for pushing those
[00:17:27] personal growth triggers and buttons and things you can work on yourself and that's what I
[00:17:31] but I really love about it and I think a lot of people I talk to are the same way solving
[00:17:35] the puzzle figuring it out adapting dealing with themselves it's it's great so that's kind of where
[00:17:41] I want to leave off just being grateful for that and then being ready for maybe a little bit
[00:17:46] of unknown next year good luck out there