Lesson 15 Part Two the master trader mindset Welcome to Lesson 15 Part Two My name is Sam EDA. I'm a global macro Currency Trader and the owner of effects renewed calm. This is the advanced forex course for smart traders. Market wizards Stewart Walton said my philosophy is to float like a jellyfish let the market push me to where it wants to go. Have no boundaries be open to everything. The market wizards are remarkably open minded, though they may hold a strong view in a particular mood.

If they see evidence to the contrary, they will turn on a dime. They are also uniquely adept at identifying opportunities based on what they see in front of them. This flexible mindset is essential both in avoiding losses and uncovering opportunities. Market wizard Mark cook said the thing is that every trader has to be honest about his or her weakness and deal with it. If you can't learn to do that you will not survive as a trader. being wrong is acceptable, but staying wrong is totally unacceptable.

Good traders have humility. They have the ability to admit when things are not going the way and make a new decision. They know that part of trading is being wrong. Sometimes well constructed ideas just don't play out as hope. This is okay. It's a natural part of trading.

But what is destructive to your trading account as being wrong and stubborn. If your ego gets in the way of admitting that the market is not doing what is anticipated, and causes you to ignore the signs that you need to make a change, then that is totally unacceptable. It's not about being right. It's about how much money you make when you are right Good trading is not about being right. It's about making money. In fact, for many people, the need to be right gets in the way of making money in stock market wasn't Stephen Cohen suggest that his top trader makes money only 63% of the time, and that most traders only get 50 to 55% of the IVs correct.

Even though the aim may come out way in front, to make money, you have to be prepared to change your opinion. You should have no loyalty to possessions. Anything that has happened up to the present time is history. And if things change, you need to change with them too. clinging to wrong beliefs is a recipe for sub optimal returns. If you are wrong, get out and focus on something that is looking more promising.

Market was at Stewart Walton said I sit back and try to see what idea rises to the top. The mind is like a parachute. It's only good when it's open. Don't be picky about how you make your money. Keep an open mind to the opportunities the market is presenting you. This is about being conscious.

Consciousness is one of the traders most critical tools. Be self aware and open to ideas that are presented to you. Keep your trading models as flexible as possible, so that you give yourself the ability to jump on the opportunities when they come your way. Have a curious mind and continuously ask why. Why do you have that view? What is the evidence and what can you do to best capitalize on it?

Market was at Bell Lipschitz said it's not enough to simply have the insight to see something apart from the rest of the crowd. You also need to have the courage to act on it. It's very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you're doing if you're a successful trader. You own person and think against the herd. A critical ingredient of the master trader mindset as a maverick mind, the market wizards have the courage to act against conventional wisdom. If you can do the opposite of what people around you are going to do, then you should be able to make a good return.

The market wizards tend to have a large dose of contrarian thinking they're quite comfortable acting against the herd. They tend to how little regard for the opinions of Wall Street analysts in a relaxed and taking a contrary view. market was a Michael Steinhardt said in order to win as a contrarian, you need to get the timing right to when you need to act like the minority but timing is important. When no one wants to do it, sometimes there is a great opportunity, but being a contrary and also has a large degree of risk. If you are trading against consensus, you need to be very careful about the timing to get the timing Right many of the market wizards look to find catalysts that trigger the move. This could be a news event or it could be the price acting contrary to expectations when news as announced market was Michael Marcus said you have to follow your own light.

There is a big mistake to surrender the decision making responsibility to someone else. A number of the market wizards had large losses when they first began trading. Generally this was due to poor discipline and risk management. For some it was also a result of not trusting your own judgment, from following tips from brokers or friends. If you surrender the decision making process to others becomes difficult to follow through on the trade. Should you close it out or hold on?

Because it's not your decision to enter? You'll find it difficult to know when to exit market was at Mark cook said by trading lists I was picking my best spots Pay the good hands and drop out of the poor hands. Top traders know when to go for the kill. If they have a great deal of conviction about a trade, they have the courage and discipline to trade in a much larger size. Similarly, if they don't know what's going on, they simply don't play. The trades are very calculated, and they're very good reasons for putting them on.

They only enter the market when the edge is very clear, and they are quick to drop out of those trades that don't give them the best opportunities for a larger turn. The Elite traders combined risk management and discipline with a patience to wait for high conviction ideas, and then the courage to act on them by taking a large position and holding on until they are either proven wrong or they have reached the maximum profit potential. market was as Jim Rogers said, I just don't play wise until there is money lying around the corner and then go and pick it up. The first thing great Have this mentality is patience. Top traders will wait until the stars align before getting into a trade. Your top 10 ideas will perform better than your top 100.

So if you have the patience to wait for the very good ones reflect in your performance market was Larry heights did the speculator can choose to only beat when the odds are in his favor. This is an important positional advantage. Trade bigger when you have conviction on a trade. When you do see an opportunity go at full force or don't go at all simply don't dabble. Be confident in varying your position size to trade much bigger when you have conviction. This does not mean you should not be placing trades in the meantime, a lot of good positions eventually over time from a small start.

If you have a good idea, you can take an initial position and see how it plays out. By placing a trade on your idea like this, it focuses your attention Many of the market wizards practice this type of scale and approach. market was a James Rogers said, I don't do anything until all the pieces fit. Don't confuse activity with accomplishment. Many traders spend a lot of time trading but only a small amount of the trades generate the majority of the profits. It's the old 8020 rule 30% of the activity generates 80% of the profit.

I would bet that a lot of traders make profits on their long term trades, and then run the short term trading at a loss even though this takes most of the energy. So if you can isolate the things that really work for you, work out which types of trades are the ones that make you the most profit and focus on those. This is often more when it comes to trading. Pick an area and become an expert to develop high conviction ideas. You don't want to spread yourself too thin If you can become an expert in a particular area or technique, it can provide you with a significant advantage over others who are trading with a lesser degree of expertise. don't participate in too many markets at any one time.

Once you are in high conviction positions, you need to be very focused on me. If you look to diversify into too many positions, your best trades might not get the attention you need. Give yourself a limit over a number of trades you'll have on at any one time. The video during the bigger you can play, some traders are able to turn small amounts of money into very large amounts. It might be tempting to believe that this is because of risky trading practices. And sometimes it can be if you take a large position compared to your account size, you could get lucky.

If you're willing to take big risks, you can earn big rewards. Of course, while this may work for a while, it's not a recipe for long term success. The thing that's separates the top traders from the traders that do not make it as they learn to temper their risk taking with risk management. They've developed processes for risk taking that protects the capital, while leaving the profit when things are going well. You can be far more aggressive when you're making profit. To make large profits you can increase your bit size after periods of high profitability.

This allows you to take larger positions while avoiding risk to your core capital. When you are feeling more attuned, gradually increase your position size. When you are doing things correctly, you can expand your involvement in the market. This is a very common mentality amongst top currency traders, along with the flip side of trading smaller when things are not going well. market was it Stanley Druckenmiller said the way to build long term returns is through preservation of capital and home runs. It takes To be a pig Stanley Druckenmiller, the here parent to George Soros his quantum fund, colorfully suggests that what truly superior returns you need to have the courage to be a pig.

And one of his particularly insightful interviews, he says that the way to make superior profits is to grind it out until you're up 30 to 40% and then have the conviction to go for 100% year. You work hard with well contain risk until you've achieved a moderate return, then you really go for it and increase the position size on your best ideas. This method allows you to keep your risk to your core capital small, while still having the potential for very large returns. Market wasn't Marty Swartz said I've always had my biggest setbacks after my biggest victories, I was careless. Increasing your position size on a winning streak can lead to a large loss. This is a downside to increasing your position size when you have profits.

If you're on a winning streak and you increase your position size You're guaranteed to have your biggest loss. Other good traders, particularly those involved in system trading, prefer to keep their risk small and constant. This is the exception that proves the rule. It depends on the personality of the trader or the requirements of the system. integrating the master trader mindset, there's no denying the importance of your mindset when it comes to trading. To integrate your newly adopted mindset, you can follow the three step process.

Firstly, write down your mindset and keep it by your trading desk. When you're making trading decisions, refer back to what you've written. And then notice you have made mistakes and conduct self work so that you stop making them. If you do this, your trading performance should gap several notches. Trust me, you'll notice a difference. And this week's coursework, start writing your trading Manifesto.

I'll see you in the next lesson.