ICT Forex - Trade Psychology & Effective Journaling

Okay, folks, welcome back. This teaching is going to be specifically dealing with trade psychology and affective journaling. Okay, trade psychology and effective journaling. The points of focus in this module: major psychological barriers and my personal opinion on solutions for overcoming them, and effective journaling—how journaling can assist your development.

Okay, so major psychological barriers. The first on our list is the fear of missing moves. I believe this, personally, is rooted in not fully understanding what your setup is. Now, you see this glibly tossed about in seminars, webinars, videos—whatever it is, folks that are teaching today, many of them aren't even, you know, qualified to be in the role of a teacher, in my opinion, but we'll leave that for another discussion. The fear of missing moves is rooted in your unique setup. Now, every trader is going to have their specific setup. It may or may not have an indicator. I personally don't believe that indicators should be a part of your trading, but that's just my personal taste. My faith in price action is sufficient enough. But if you have a tool, if you have a method, if you will, that relies on an indicator to give you that buy or sell decision for you, then whatever it is, you need to stick with it and know that that's the one you're going to trade. If you have defined that setup in a written form—in other words, a trading plan—you're not going to have many times that same feeling a neophyte trader or a lesser-organized trader would have. Now, it doesn't mean that we're going to be profitable; it just means that we're not going to be fearing missing a move. Because once you understand this setup, the setup should be directly linked to time and price. There should be a time when this setup forms, and there should be a consistency to it. If your pattern doesn't have that and it's rather ambiguous or untimely—you don't know when it's going to happen—then you probably don't have a valid setup, and you're going to have hit-and-miss results. And when it wins, you're going to falsely attribute it to your setup when it's really just randomness. So, to overcome fear of missing moves is obviously to have a well-defined plan and what your setup is. Knowing it intimately will keep you far less anxious about missing a move because you'll know when they're most likely going to form. This is why I use kill zones—this time element of the trading day. I know what I'm looking for; I know my setup. And if I know what time it should occur, I know when, what days of the week it should form, and I know it should be either a bullish model or bearish model. I'm not anxious about missing a move. Even if I do miss that trade, I know when the next one's going to form. Most neophyte or novice traders do not have that luxury; they're on the seat of their pants all the time, not knowing when it's going to happen or what it's supposed to happen at all for them to take a trade.

Fear of losing. Well, this one's going to have you looking for systems to have high accuracy, and there's not a real need for high accuracy. It's wonderful to have it, but the fear of losing comes by not having a plan. And if you don't have a plan, if you don't have a method that's shown consistency in hindsight and back testing, and then walk forward with it, seeing it working and in having momentary lapses of accuracy, you will not have the wherewithal that's necessary to do what is necessary as a trader. That means embrace uncertainty. The ability to do this is not going to be for everyone, and there's going to be a fine line between those individuals that hit this wall that every one of us will hit, and we had to determine for ourselves if this is really right for us. And for some of you, it isn't. No one's going to be able to make a decision before you, but it's important that you understand that there is always that element. If you're a new, developing trader and you're unproven, it may be that trading isn't for you. You would have to more or less rely on someone else to do the trading for you, or don't trade it at all. But if you're going to trade, you can't fear taking a loss. Fearing a loss is many times directly linked to over-leveraging and/or over-trading. Both of those two elements are very easily fixed: lower your leverage, and you won't be so fearful about taking a loss because it won't hurt you so many times in a row if you have a losing streak. If you slow your frequency down in terms of your over-trading, again, even if you're not trading a high-accuracy method or setup, the high frequency won't be quickly eroding your equity. Very simple solutions to an otherwise rather routine problem that comes up in many traders.

Impatience between setups. This is going to come by way of infancy as a trader, especially if you have a setup that is profitable, and you can be well organized. You could have a well-groomed money management strategy, and you know what your setup is, but you're impatient and waiting for it, or you see the setup forming, but you're trying to get in just before you're really supposed to. In other words, you're looking for a specific level—you're looking for the 50 level to be buying it, and it's flirting with 65, and you just can't stand it; you've got to get in. That's going to be dealt with over time and forging discipline by following the rules in your method. The problem is is you don't have the time—killing it enough in the experience trading—to know what this is going to require of you, and you're going to have many times previous exposure, either by demo—preferably—or if you eventually go into live trading, which I don't ever try to tell anybody to do that because it's a decision you're going to make on your own if you ever do it at all. But if you find success—that feeling or that rush you get when you make a profitable decision—you want to have it right away, as quickly as possible, and many times immediately as soon as you close the trade or it hit your limit order and you're out with a profit—another demo or live—worst-case scenario, it's live—you're going to want to go right back in again, and you're going to jump in before your setups. You're going to take things that aren't necessarily—aren't your setups. And I can tell you, as a commodity trader, when I had initial luck back in the early 90s, I would have an idea what I wanted to trade, but I would also feel that impulse to want to get back in and be a winner again. So I would look at the market and say, "Okay, well, that's not my setup, but I still think it's going to go up," and I would buy it. I had no idea what I was doing, but I still succumbed to that impulse that, "Hey, look, you know, I need to be doing something 'cause I'm sitting in from the charts, and I want to feel good again, so let me roll the dice and see what happens." That impatience comes by way of your infancy and your lack of experience. Experience is going to teach you one of two things: one, that losing sucks, and it's better that you tried not to lose too much when you do lose; or experience is going to teach you that you're not perfect, so therefore you have to wait for the best scenarios for your quote-unquote luck to be in favor. We don't know if our setups going to be accurate, but we also don't know if our cells are going to come when we are expecting them to. So forcing it or jumping ahead and more or less anticipating the setup whereas we're interested in the next move in price—that's what trading is. It's a statistical guess. Now, with that, there's a measure of uncertainty, and that uncertainty and the waiting side of trading—it's just like a water torture. Okay, it's—you can't stand it, especially if you're sitting in from the charts; you just want to get into getting a trade already—and accept the wider risk if you need it, and that's wrong; you don't want to do that. Demand your price, demand your setup, and by doing so you'll combat that impatience that resides between setups that novice traders always feel.

Fear of not being good enough. Well, this is a byproduct of being on social media. Everyone's going to be better than the next guy, or they're going to be trained by the person that's leading the pack, or they themselves are, you know, the rock star. If you are not equipped to handle the tomfoolery that takes place on social media like Facebook and Twitter and Instagram, it's probably better for you not to be on it. Now, I understand that I have an online presence on Twitter, and I have a Facebook, and I have a YouTube channel, but I have a thick skin, and I like to engage other traders because I like the feedback; I like to see what their responses will be, and I just like to engage. So if you are quickly feeling like you are not sufficient or your learning speed is not up to snuff in terms of what you've seen other people—and many times what you see online, they're lying anyway—they may say they have their things together; they're all, you know, completely figured it all out in terms of what they're doing. Many times the ones that are saying that aren't really as astute as they claim to be, and they're trying to fake it until they make it. So don't let it wear on you too much or make you feel like you're insignificant in terms of where you're at in your development because your report card on your own results—as you'll hear me refer to in the journaling section of this video—that's the only opinion that matters. It's not mine or anyone else's that matters; it's are you seeing development progress? And by measuring that and by keeping tabs on that in terms of your journal, that's the scorecard that really matters. And obviously, know your bottom line—that's the one that really makes the case for whether or not you're developing. So fear of not being good enough is simply a game that's between your ears; it's all a trap. So don't think about being on social media; don't engage other people because if you're developing—sure, the worst thing you can do for you, man—is to go into this arm-wrestling match about, you know, what's better, who's better, how much is, you know, a good amount, and what you should be making in terms of pips—all that stuff is—it goes back to the proverbial measuring contest, you know, who's the bigger man. And it's not about who's the bigger man; it's about surviving long enough so that way you can appreciate and develop as a trader.

Fear of losing streaks and drawdown. Well, this is going to be directly related to money management, and if you're afraid of taking losses in any set or series and/or fear drawdown, it's because you have no process or protocol in place or what you would reach for should you have a loss or a losing streak develop. I've given you a teaching to help you flatline your—your losses, that way it removes the effects of drawdown in your losing trades. And by implementing something as simple as that, quickly changes your perspective on fear and anxiety about taking losses or a single string of losses.

Lack of discipline and following rules. Well, it's in our nature to be human, and I've said this many times: if the sign says, "Don't walk on the grass," your first impulse is going to be, "What, I'm going to tap-dance all over that!" Look, just like your children—you know, God bless them—you know, I have four boys, and I have literally watched them do these very same things that they should know not to do, but they still do it. Well, with an account with money or a demo, we do those same things. We know we shouldn't be doing something, but because there's an opportunity to do it and there's really no one keeping you from doing it, you end up doing it. As soon as you enter the trade or mess around with your trade like you shouldn't, as soon as you do it, that little voice in your head says, "I should not be doing this," or, "Don't do this," but you ignore it; you want to see what's going to happen. And if you want to experiment, okay, do it somewhere else—not in the marketplace—but you have to have discipline, and you have to have rules, and when those rules are made, you have to stick to them; do not deviate from them. And over time, this forges discipline, and it'll also serve you well because you're going to have periods of drawdown; you're going to have periods of losing trades. And if you don't have the discipline to stick to doing the very things that will eventually lead to longevity in this business, you're not going to fare well. So discipline comes by forcing yourself to follow a set of rules, and those rules have to be rigid; they have to be concise, detailed, and not ambiguous. They're very binary in the sense that you do this or you do that, or you do nothing at all. And they have to be three conditions for every decision-making process: either it's a go, it's a no, or you sit still and you don't do anything.

Searching for the next best thing. I think this is one of the biggest problems. If you just look at Twitter—whoever is hot right now, whoever's got the most attention by everyone—that's where everyone's going to flock. Okay, and it's always been like that, not just in trading, but in anything. Okay, whoever's barking loudest draws the biggest crowd. Now, whether or not they have anything to say once the crowd gets there, that remains to be seen. But you can see how folks that are in love with one concept or one guru or method this month will change teams and go somewhere else in the thought process, thinking that this is the better way of doing it or this is something different—it's an amplification of something. And I have learned that there's nothing really better for me as a trader, so therefore I don't look anymore. I know everything I need to know in terms of price action; the open, high, low, and close tells me everything I need. There isn't anything out there that entices me personally. And like the Bible said, "There's nothing new under the sun." So if I have arrived at something that makes sense for me, even if it's not perfect—I don't need perfect—but I know I have a statistical edge in the things that I do; they're highly accurate, they're very precise, and they're time-based. I know when my setup is going to form. You—if you were able to pull the majority of individuals that were trading any asset class—if they could set a time on when their next trade was going to be—90% would say, "I don't think so; I don't think I could do that." That's why trading is uncertain to me—it's not. Because I know what time certain things should happen; I know what days of the week certain things should happen, so therefore I'm not anxious about when the next trade is going to be. I don't care about missing a move. In fact, it's fruitful for you to take vacation time, scheduled time away from the marketplace, and do that. And I would suggest to do that even more so if you're hot right now—if you're really, really doing well—the best thing you can do is forge development in terms of your discipline and also your experience. Force yourself—as if, "Okay, I'm taking a break now. I've been killing it; I got 25 winning trades in a row," or whatever it would be—"I'm going to stop trading; I'll take a week off; don't even look at the marketplace." You're going to want to look at it, but don't. By doing that, you're going to prove yourself; there's nothing better than the thing you're doing right now because you understand it. It doesn't have to be my material; if you found something in another discipline that you've really gravitated towards and it made sense for you to use it, great—that's awesome. That's all that matters is that you find something that you can make a wager on and then wager that with sound money management. Because ultimately, no matter whether we're talking about order blocks or ICT breakers or anything else that's out there, none of that stuff really makes price move, and we can't control price once we're in the trade—once we're in the market—all of the control—the steering wheel—is not ours; now the market's driving what we're going to see in terms of profit or loss. So understanding that everyone's going to have losing trades, and the first thing that happens is folks that go through a losing streak and the experienced drawdown, then they show their lack of discipline and following rules, so they think there's something better out there—okay, something easy or something that doesn't have losing streaks. Everything has losing streaks, folks, believe me, everything does. No one stays hot or at the top forever, and there's always going to be some measure or drawdown in whatever system or method you're using. So the best thing you can do is find something that works enough time to warrant investigation and stick with it, use sound money management, and you can turn it into something really impressive, and you may surprise yourself.

Okay, effective journaling. About doing journals—every single day I make a journal entry. In my personal journals, at the end of the week—usually it's on a Saturday—I do a weekly vlog in my personal performance and what I have seen happen in the previous week. More or less, I'm reviewing the total week's range. I do this on the two pairs that I trade, which is predominantly the euro dollar and the cable—pound dollar. I don't do a lot of trading in a lot of other pairs. If I want to be a deviant, I will trade sometimes the Canadian dollar or the Aussie dollar, but generally that's about it. I don't like to do anything more than that, and the reason why is because I actually spent a lot of time planning and investigating certain setups and things I'm looking at, and I want to go through that time and use that time the most economical way I can, and I don't want to be doing that with 28 pairs. So if I'm going to put the time into doing a sound top-down analysis and/or review of my own setups, if I'm following 28 pairs, can you realistically do that every single day? You're never going to have any time to do anything else. So I have a life to live, and I can find all the setups I'll ever want to find in these two pairs. In fact, I could just trade one, but because they're closely correlated and it fits my model as far as a short-term and day trader, I look at both euro dollar and cable. And if I want to find something else that may or may not have a setup in a cable or fiber, then I'll trade, like I said, the loonie or the Aussie. But I try to make a daily entry whether I take a trade or not, and I give myself an opportunity to stay in a routine. But every single week, I'm doing a complete review of the weekly performance as my trader half of me has performed, and then the analyst half of me. So I'm always giving a voice to the two people that reside in me, just like you—oh, you all—are going to be looked at internally as a trader, but there's actually an analyst inside of you, too, and there's also a gambler. So you have to figure out who's in control at the time when you're doing the trading, and many times you don't see it before you enter the trade; you always see it after the trade. Okay, the ones that pan out really, really well and you're not feeling a lot of exposure to uncertainty or fear and anxiety, generally you're going to find that that's going to be the analyst because they're focusing on the numbers and they're not really worried about it. The person that finds themselves excited about the results—many times—no, they're good, or I guess the adverse side of things—they're weighing things in terms of the outcome—that's the trader. And then you have the gambler, where they're impulsive, they're doing things that are undisciplined, and they're pushing more leverage than they should—that's the one you want to keep your eye on. Okay, the gambler is going to get you in trouble; the trader will take care of himself because the analyst will speak to that side of you—to your conscience—but you want to reside in the mindset of the analyst, sticking to what you see in the chart, sticking to what your process is—your—your model. Okay, the analyst is what's going to keep you on the right path. That formation that makes a trader—it's made up of three people, but you're all the same person. The analyst—generally, they're the ones that are most sober-minded; the trader is the one that wants the opportunity and the right or wrong measurement; but then you have…

The gambler who wants the thrill of it all, and it's also going to be the person that takes the hardest hit in terms of the grief that comes when there's a losing trade. That part of you is gonna always be negative; it's going to be, well, it's not my fault, it's something else. Call that the gambler. The gambler is only gonna be worrying about when it was right and when they made money, or when you made money, when it was in your favor. That's when you want to consider it. But when it isn't making money for you, the gambler's gonna cry; it's gonna manifest itself into a spoiled perspective, toxic thinking. So you kind of like want to keep that side of you on a short leash, and you don't want to allow it to manifest itself in your journaling.

How you felt going into the trading day is really important. There were times in my life as a trader that my oldest son would have to go into surgery, and I wish I would have stayed out of the market those days because I was already anxious; I was already nervous about the outcome of the surgery. So those are days that I wish I would have had the discipline to not trade. But because I was feeling anxious and helpless because I couldn't do anything to fix my son's ailment, I would try to satisfy my anxiety by having a win. Because even if I made a hundred bucks doing something in the marketplace, it would keep me distracted from what I was feeling in my personal life. So you're gonna see that your losing trades are going to be directly related to things that are going on in your personal life, and the only way you're gonna see that trend or that truism is if you go through your journal and you index all of your trades based on a negative mindset, or if you're sick. If you're physically ill, probably not a good idea to trade. If you have a migraine, like I have migraines sometimes, and I have made the mistake of sometimes still trying to take control, because there's nothing worse than feeling like your head's gonna explode. And I already have sensitive eyes, so I can't look at the chart long enough to follow out what is the best procedure for me right now: should I stick with the trade? Should I move my stuff? Should I do anything with it? When it would be better for me just to not be in it at all and just relax and go to a quiet, dark place and just relax and let my migraine take care of itself.

So how you feel—okay, and this is not only physically, but how you feel emotionally—did you just have a death in the family? What we're seeing in the world is you can medicate yourself by rolling the dice. You know, you just have loss in your family, or you and your spouse, you're separating, God forbid, or something terrible happens; okay, you don't want to open yourself up to gambling, okay, because that's what's going to become in those environments. You want to be relaxed; you want to have a neutral mindset going in; you want to feel healthy. It's why it's important to have a good exercise program, good healthy diet, and staying active and stretching out and giving yourself hobbies outside of trading, because you want to have a fresh perspective; you want to have an alert mind; you want to have a healthy, fed body going into the marketplace. With a sickly, unrestful—add which I didn't enter me for—but sleep is important; you need to have it, especially if you have jobs and businesses; you need to recuperate. I've been blessed, and I don't have to need those things because I'm home most of the time doing whatever I want to do. So sleep for me isn't as needed versus someone that has a business and you know, doing all these things, or has a job and they have to commute. I mean, commuting alone, okay, if you're rushing home from your job, you know, and you had a bad experience on the road, you're angry. So what are you gonna do? You're gonna want to take it out on the marketplace; you're upset, so you're looking to have that replaced by some kind of a feel-good feeling, and what better feeling is there than to make money? Okay, it's like there's a lottery, so you're gonna do things that you shouldn't do because you're acting impulsively because of the way you feel.

So it's important that you always be honest with yourself when you journal. I always give myself an opportunity to debrief, okay, and also release those things, and it's almost therapeutic because you know what you're doing is the wrong thing when you do it, and you're acting impulsively because you want to have a different feeling than whatever it is that's bothering you. Okay, if you're stressed, if you're worried, if you're angry, you just want to replace that with something, okay? And since we're traders, we can clearly see that there is a reason to expect a market to go up or down, so all we have to do is roll the dice and just gamble and see what's gonna happen, and our attention will be diverted from whatever the things that we are stressing over, or anxious about, or mad about, or sad about, or fearful of—all those stimuli will be replaced by "I'm in a trade." And I made the mistake of doing that as a young man, and it filled my head up with all the wrong things as a trader. So the way you want to avoid that is be sober-minded going into the trade and also know what it is you're feeling at the end of the day when you're done trading. You want to put that into words and write it out and be honest—not if you know you were angry at your spouse, or if you're angry at your child, or if you're worried about something that's taking place; if you have a job, you're anxious about losing your job, or if you're angry that someone else got a promotion that you didn't get—okay, make sure that you do that in your journal by allowing it to come out. Because if you don't release it and put it in your journal where you can see it in text, read it and release it; if you don't do that, you're gonna harbor it, and it's going to become cancerous to you as a trader; it's going to infect your mind; it's going to infect your performance, and it's not going to always be what you want; okay, it's going to be many times the opposite of what you're expecting; it's going to have an adverse effect on your overall development.

Anyone record any of your concerns or fears that you had while you're watching price action? So if you're in a trade or not in the trade, whenever you feel a sense of anxiousness or not trusting the setup—the beautiful opportunities for you to learn—because that's when you want to be doing screen captures. Okay, if you're in front of the chart, you have the luxury of being able to do that screen capture that very moment, and then in your chart you want to make a notation of what you're feeling and what you're thinking at that time. You may be feeling that it's getting to go up, but it's retraced a little bit deeper than you thought, and you're starting to have anxiety about it; it may not pan out. That's a time when you want to screen capture and make that notation and log that; keep that as part of your journal entry. Each time you do this, you're gonna find that you're gonna find less sensitivity or emotional attachment to these ideas because you've been there before. And yes, you see that there may be an opportunity for the trade, this, you know, to fail and hit your stop-loss, but if you stick with it, how many times did it really actually go there? And that's the benefit of keeping a journal because unless you write the things down and keep a journal of what the chart looks like and what you were thinking, you're never going to remember them. You're gonna remember that really good trade, and you're gonna try to forget with all of your energy and effort—a night to forget those trades that you should have never been in; you knew you were getting into it, and you should have never done it, and now you're gonna do your best to try to avoid it and forget that ever happened. And they're your lessons; see what you want to learn from. So journaling is absolutely crucial to your development as a trader, especially if you want to be organized and you want to be collected and calm about what you're doing. That only comes by doing this exercise here: journaling.

Every professional, whether it be a doctor or a lawyer, physician, psychologist, long and short, is, they keep good records about what they say, what they have done; they do not want to rely on their memory, and you can't rely on your memory; you're gonna forget things. Okay, every seven years your brain breaks off this little nodule, okay, and part of that you lose memory. So it's important to keep a record of things that you've said and done because when you have these adverse times in the future as a trader—because you are going to—you want to go back and reflect on those times, too. You forgot how you've been through that before and what you did to go through it. It's important to contrast your personal expectations of what you thought was going to happen in the marketplace and how you were going to do versus the actual result. This is where you get to be more or less than the scorekeeper; you're able to soberly and balanced give an opinion about what you did in terms of your analysis going into the day, for the week, and then what actually happened. Now you're not in this section of journaling to beat yourself up; that's not what this is. But what you're trying to do is highlight the things that you missed, but you don't want to draw so much attention to it that it seems like you're writing, you know, a suicide letter, like, you know, "I'm no good, um, this or that." What you want to be doing is highlighting the opportunities for you to develop the better or spend more time focusing on in your weaknesses, because that's what journaling helps you do; it identifies your weaknesses. You, if you were too honest with yourself, you probably would have about ten things that you could list as a weakness, but you're probably gonna have four to five times more than that that you won't really readily discover until you go through the journaling process. And it's not something you do for a short term and then you abandon it; you always do this. I've been doing it for 25 years, and I did journaling before that and other things in my life. So to me, it's something I've always done, and you don't need to spend a whole lot of time doing it, but I've always made a reference to what I've done or said in the previous day at the end of the day; in other words, I'm looking back in reflection. Otherwise, if I try to go to bed, my mind will not allow me to because my mind's gonna race: "I should write this down." Many times I have tried to go to bed even after journaling, and I have something on my mind; I can't do it until I get up and I write that down on my journal, because then it's—I've released it. And the only way you're going to trade with an emotion-free, or as close as you can get to, and a well-balanced mind is to have a clear conscience. Anything that's bothering you, you release it into your journal. Your journal's not gonna call you a name; it's not gonna say it wants a divorce; it's not gonna say you don't love me enough or you don't spend time with me enough; okay, it's only gonna say what you write in it. So when you go back to it, it's going to say the words that you put in. So it's important to—what you put in it is gonna benefit you, but you're not sure coding it either. So you want to be honest about your evaluation about what you did or thought going into the day or the week and then what the actual results were. Keep it simple; all you're doing is: this is what I thought, and this is what actually happened. You're not using adjectives; you're just stating the facts. This is what I thought was going to happen; I thought it was gonna go here; I thought it was gonna have this effect; it was going to move this much, and this is what the actual result was, and you're not adding anything to it or attaching any emotionalism to it. Okay, you want to detail where you felt uncertainty, and this is important, how you actually coped with it. You're gonna find that many of your coping skills for stress aren't really coping skills; they're actually feeding that emotional stimuli, and it creates even more stress. The only way you're gonna find that is by actually recording it, writing it down. And you may be in a trade, and it may be flirting with your limit order, and you've already had your profits taken, for the most part, scaled out; your stop-loss is child up now, but now you're feeling like it's going—you hit your stop, and you know I'm gonna get that last piece of the move. What are you doing to cope with that? Are you staring at the chart screaming, or are you taking a walk, or are you turning the computer off and then saying, "I'm gonna see what happens at the end of the day; you know, come hell or high water, it's gonna take my stop, or it's gonna take my limit, or it's gonna trade sideways until the next session, and then whatever it's gonna happen is gonna happen." Whatever that coping mechanism is that you used for that stress trigger, you want to include that because it's important. The ones that do not work, you're gonna see in that way. When you start feeling that stress trigger come up, you immediately discount that felt process to follow that same regimen again if it's something that hasn't worked in the past and it's maintained a stressful level, and you know you're wanting to think about it or do that same thing again, like smoke cigarettes, okay, or grab a drink that's alcoholic—those things you may feel like they're soothing you, but actually they're not. So what you wanna be doing is focusing on when the coping mechanism that you've used to get through that stressful environment—when it helps you—it's highlighted on an opportunity for you to use that in the future. And here's the thing: many times I've learned coping skills that were in high-stressful events through trading when I had stressful events in my personal life; I used those same coping skills. So, for instance, you know, while I'm trading, I usually have a deck of cards in my hands; I'm a fidgeter, okay? And now they have these things called these fidget spinners, which I had loved them; I absolutely loved them. For me, it keeps me distracted from worrying about what next move's gonna be in price; I'm allowing my method to pan out and do what it's gonna do. Before I did that, I used to have a coin; I'd always keep a coin in my hand, and I'd either roll it through my fingers or I would just keep it pressed in my palm, and I would just practice palming, okay, because I've—some of them—amateur magician nonetheless; I would do those things to keep me distracted and not being hypersensitive to every fluctuation in the marketplace. So whatever the coping skills are, okay, that you find work in high-stressful environments of trading, I found that they were—they were just as equally effective in high-stressful environments, like when my son was in surgery, you know, I would take out cards, and I would fidget with those, or I would have a coin in my hand, and it would just keep me distracted enough where I had to go through that experience; I couldn't escape it, just like you can't escape the trade unless you just kill it. If you're going to take the trade, you have to go through the trade; either it takes your stop or it takes your limit, but you have to submit to that. So whatever it takes for you to submit to that—over time these coping skills—that you will find that there really isn't a "this is what you do" because it's only gonna work for you when you discover it works for you. It may be something as simple as having something in your hands to fidget with, and maybe something that it requires you to completely step away from the charts and grab a book. You know, my mind, personally, I can't read if I'm in the market; you know, I can't do that; I have to read when there's no one talking to me and I'll have complete silence. So whatever those things are that you discover through journaling to help you and your trading—don't look at it as "that's your fix for trading stress"—many times if you apply it to your stressful personal life, it fixes it as well. What's many times is that's a plus.

You want to use positive words for the things you did well on; you don't want to sugarcoat it; you won't say, you know, "I'm the best trader in the world because I did this," but you do want to say, "I'm happy with my execution with this trade because I did this, and I had that in mind, and I did exactly as my plan outlined, and I did not deviate; I'm glad that I used the 25-pip stop-loss and didn't try to get short and sweet with it with a 15 or 10-pip stop; I followed my rules regardless of what the trade was doing." Anything that you did that was predetermined and you follow through with it, you want to record that in your own words and use adjectives like happy or pleased or proud; okay, those types of things, because your mind's gonna retain that, and when you go back to it—this is where it's important—when you come back to your journal and you read those things, you certainly don't want to litter it with things that are just gonna be mundane or not impactful; you want to be—well, you want to cheerlead yourself basically, because there's going to be times when you're gonna go through periods of drawdown, and it's gonna feel like trading is the worst thing you could have ever done. So you want to have that old friend of your conscience to feel soothed when you read your own words in your journal. You don't want to read it like, well, you know, "I really didn't feel well that day, and I'm lying to myself in there." You want to be honest, but you also want to be—well, you wanna be comforting to yourself, but you don't want to sugarcoat, and you don't want to embellish and lie about how you did something right when you really didn't. You want to be accurate about what you're describing, but you also want to do it in a positive light. And here is the kicker: when you do things messed up, okay, and you do the wrong things and you make errors, you want to avoid negatively charged words. Wherever you struggled in the execution or the application of money management or your leveraging, or if you ever traded, you do not want to say, "Oh, I'm a stupid so-and-so," or "I am a failure," or "I'm never going to get this." Do not do those things in your journal because your mind will latch on to that, and whatever you use negative words on, your subconscious is gonna see that and say, okay, well, this is a problem, or it's a source of stress, so I'm going to avoid it. So what's going to happen when you look at the charts subconsciously? Your mind is going to say, "This is stressful; I want to avoid this," and you're not going to pay attention, and/or your mind is not going to let that setup jump off at this chart at you so that way you can engage it properly. So it's very important not to use negative terms.

So while this is not an exhaustive list, I wanted to have some measure of journaling suggestions, and I wanted to have some measure of psychological well-being solutions, and both of these topics can be really explored in greater detail, and it comes by personal experience. And while there's a lot of books written about both—that's ugh—the subject matter that I mentioned here tonight, I don't think it's something that you need to make any more complicated than what I have here because this is really the bare bones of what I've done for 25 years. And the best trading book out there is the one you're about to write in your journal; that's the best one because they're going to be directly related to you and your own experiences. You can't teach your experience to someone else; you can talk about it; you can share it; you can share your journal; let them read it, but it still won't have the same impact that your experience has for you. And that's the wonderful treasure and well, secret weapon if you will, of a trader by using.

A journal? It seems like extra work. It seems frivolous. Oh, I got time for that? Who does that? Well, I'll tell you who does it: winning traders do it. And we know what we're looking for because we've studied it. We've had days and days and days on end where we have recorded the same exact setup. The same winning attitude that we went into is always there. So these are all signatures; these are hallmarks of classic setups.

So that way, when you start feeling a certain way going into the market day, if you're not Owen, you'll know it, and you'll be honest with yourself and say, "Okay, I got to not be in the market today. I got to take a day off." Otherwise, how would you know those things? Because you're gonna talk yourself into taking a trade if you're feeling bad. That's the normal response for a human: distract me. I need a distraction. What's a better distraction than getting money? Nothing. So you want to play the lottery? It's time for casino. So many times that results in a negative withdrawal from your equity, whether it be demo or live, and we want to try to avoid those things. Okay, so what type of thing we look for in terms of adding charts to our journal? And then we can go through the charts now and give you some suggestions.

Alright, so this is the Canadian dollars, the daily chart. And this particular week I was looking for the market to want to run above there's equal highs, and I'll have that actually in recording so you can go back and look at that. But we have double tops and a third time the market trades up to this same level. So we know that this is too clean of a level. We had a nice rejection down here, so markets most likely gonna want to push above this level. Now, if it's so clean like that, what's the most likely outcome should it trade to that level? A blast off and continue higher or retreating back down into the range? Oh, look what's happened: we've had a sell-off. People have made money there, so now let's sell off. People have made money, and now we're going right back up to those levels again. So to take those individuals out or put new traders in on the wrong side, buying the market's going to want to push up there.

So in your journal, when you start seeing these things, you want to print out your chart or screen capture it, and in your notations you want to write down what you think is going to happen. What's the most likely outcome? Okay, so that we have a condition that we can wait against what actually happens later on. But you want to build the context in your chart and your journaling so that way when you go back and look at it, if it pans out well, you're gonna be encouraged in the future when you have periods with time when your trades don't actually pan out. Okay, and soon as the event that you've been waiting for occurs, like I share a lot of my trades at the time of the setup or the confirmation, if you will, of whatever I'm looking for that sets the ID a lot. This many times is the screen capture where either hits a level I was reaching for or a level I'm trying to get in it. This is where you want to take a picture of it again, and this is why I don't do 28 pairs or a lot of different markets because I'm only focusing on two things: cable and fiber. So it's very easy for me to dial in and get the screen capture what I'm looking for. And then I don't share my chart with all the notations on it because there's a lot of things that I do in my own finances and in my own trading that I don't make public. So, but I do make references to the things I'm talking about here in terms of, okay, this is the run on the buy stops. So I'm right now I would say I would have an expectation of seeing a strong reversal, and I would look for price don't want to reach down into those wicks here and see how far we can go in as far as that low here. And now we can start dropping down into a four-hour chart and working to an intraday price action, and we can see how noting areas of stops. Because if we thought that price is going to go up all these highs here again, we give more details about what we're looking for, the time of day that this occurred and how long of a timeframe we would reasonably expect to see this move take place if we're going to run out this low. All those things you can add in all these open spaces on your chart. You want to make it personal. You want to make your journal and your charts something that's unique that you're comfortable with, and it's something that you're really not aiming to share with anybody. It's comfortable for you to be able to look at, and it gives you all the information at the time, what you were thinking at the time, at the time the chart was creating the very setup that's being screen captured.

Okay, dropping down to a 30-minute chart, same mindset here, we're adding any details that we're noticing. Okay, and we're here we have Monday's trading and the anticipated rally up. Once we see those types of things, we know that this is the setup, so we want to be a seller up here. But where are we gonna be reaching for? What's the draw on price? So you want to have that before the trade really starts to unfold as its setting up. You want to get extreme capture, but at that time you also want to outline what you're reaching for and what was the context behind why you would expect it to occur. We have an old low here, got twenty and ten pip grades of swing that would be expected to go below it in here just for the sake of keeping the chart neat on this, the referencing tempest below that low and on Monday because I don't like to trade on Monday. I would like to use that Monday range and project it like the power three study that was used. I'll tell you in the Asian session and or power three, and I would take that Monday range if I'm bearish looking for that run. I'm going to take that range of Monday and apply it right on top of its daily high, and that gives me a projected range of one standard deviation, and we take that out in the future. It's approximately what Tuesday's high of the day is, so I know that I'm looking for a Judas swing. So how far will it go up? Well, it could go this far, which would take us right above that old high at 129 10 where it touched three times, and that's where the buy stops will be residing. So we're looking for a move above that, so it could be a seller right there. But before we do that, we have to remember if this is in fact a bearish week and this is the weekly high forming. This Judas swing is useful, and we can apply power three concepts to it. We can get the range of the Judas swing and apply it in one standard deviation below the low. In other words, I'm taking this range and adding it or, in this case, subtracting it from this low and projecting it down. You give me one standard deviation. So we're seeing power three, which is accumulation, accumulate more, manipulation, run the stops, put them in buy side. We're gonna see, hopefully, I moved down with power three with distribution and a final area distribution down here. So we have three measurements of the actual Judas swing projected down, and that gives us just below that old low, so that validates this potential stop run. While prices like this only we don't have anything else capping yet, so we have power three scaled out, accumulation, manipulation, and distribution framed before the move even occurs. You can see that 10 pips below this low is what we're looking for, so 10 pips below that we're gonna have a little level there. And now we see Wednesday's trading, and during the New York setup we have an optimal trade entry form, and we can run projections on the fit. We can see there's a 400 extension overlapping exactly with one of the levels we've already arrived at, and then here's Wednesday gives an optimal trade entry short-term swing here, trades back up, athol trade entry short sells off aggressively and reaches down into our 10 pip sweep below the Oliv low, and we're going to get a measurement from the highest body to the lowest body and these two price swings, and that projection down gives us exactly a 300 extension right there, and it actually gives you the low today, which actually overlaps with the approximate 10 pips swing below the old low. So we have several things being used here that I've given you in the recent teachings. Every one of these screen captures you would write down any notation that would be necessary for you to have as a benefit, and that way when you go to the end of the week, usually on Saturday morning for me, may not be Saturday for you, but I like to take about thirty minutes and go through to the market and see what I didn't see and note that. But every day I'm writing down what my expectations are, what the daily high-low should be, and then I'm recording what actually happened, and it builds a lot of confidence seeing how many times I'm right and when I'm wrong. Even though I learned something from the well the time I was not accurate, it proves that I'm more right than I'm wrong. So therefore, I don't fear being wrong, and I used the times when I'm wrong to learn what it is I did wrong. So I'm taking no pain out of the experience. I'm looking at it as, okay, this is actually like a workout. Okay, I'm strengthening myself. I'm I'm putting stress on my body with the attempt to make it stronger. Okay, so I don't look at adverse --'tis in trading as a defeat. I look at it as exercise and strengthening. Iron sharpens iron. So we can see how using the tools here we get one more instance. Well, this could be the very weekly low. Okay, if we trade through it, so be it, but if this is all I would ever get, that's fine because this would be power three applied to the weekly range. Okay, and I apply that to weekly. It's on the opening vertical line if you hit control Y, and I use the thickest trendline to draw right on top of that, then I delete the actual control wide line and I draw a little horizontal tick representing the open, and I forecast where I think the close is gonna be, and it doesn't have to be words you actually gonna close. I like to do that just to keep myself entertained and trying to dial in as best I can for where I project the close. Sometimes I'm really accurate, and other times I'm not so accurate, but I'm more inclined to focus on what if I'm bearish, what the highs going to be, and how far of a reasonable objective, how low it can go. If it keeps going lower, who cares? Long and short it is is I want to have an opportunity that get some kind of range expansion. And on Wednesday we can also see that there was no return back to that opening price on Sunday once it moved away from it on the New York session setup. We accelerated away from it. There's a lot of things that took place in the dollar CAD this week, yet we have outlined before they are hallmarks to the things I've taught you, and we did in fact run there's equal highs out as I mentioned in the higher time frame scenario and conditions video for this for Xmas set of videos for 2017. So hopefully you enjoyed this presentation. If you'd like to find more, you can visit my website at the inner circle trader.com.