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00:00so let's take a trip down memory lane about trading you see when I started trading you
00:15are enjoying the DAX and the FTSE and currencies at extremely tight spreads back then when I traded
00:22do you know what the spread was in the Dow intraday you know you can trade the Dow at a
00:28one one and a half point spread do you know how much I had to pay in spread in 2000 2001 when we
00:35started trading that any any takers eight points someone has done their homework yes intraday you
00:44paid an eight point spread can you imagine trying to make a living trading the Dow with an eight point
00:51spread intraday and if you wanted a quarterly contract you had to pay a 16 point spread and
00:56euro dollar which is today trading I don't know what CMC spread it was but it's probably about
01:00a point five point six there about back then we paid free pull full points to get into euro dollar
01:06and dollar yen was a five points I mean this was this was you you're you're thinking holy smoke how
01:13did you how did you not blow up immediately we did blow up immediately because we paid all our money
01:18away in commission and spread but not only that we don't have access to what you have access today
01:24I heard I think it was his name is Ed he was talking about that with CMC markets you have
01:29patent recognition programs you will have news you will have level two data you will have extremely
01:35tight spreads we didn't even have any of that I spoke to an old colleague of mine who I used to work
01:40with in city index and we discussed when did city index actually get their charting packets and we
01:46agreed it was probably around 2005 that we actually got a fully working charting package
01:51yeah can you imagine trading with a broker today that doesn't have a charting package no of course
01:57not yet even though that you have far better spreads you have access to news you have access to data
02:04you have access to patent recognition programs that tells you it's a double top or double button or head
02:08and shoulders and a wedge and a pennant etc and a flag even though that you have access to
02:14way more information in any shape or form
02:19can you trade
02:23no
02:25you're losing as disastrously as we did 20 years ago
02:31and so with the greatest of respect to CMC market
02:34but you're not going to become the trader you want just because your relationship manager at CMC markets
02:40is a great guy a girl nor are you going to become a trade great trader because the CMC market platform is great and award-winning
02:48I don't care if it's NASA themselves that has designed the trading platform won't make a blind bit of difference to your long-term results
02:56until you learn to think differently
02:59so what's normal behavior when you get into trading oh let's do some let's do one of those weekend courses with one of those gurus you know
03:06oh he's
03:07talks so elegantly and he's really good looking and his smile is from here to here
03:11I want a bit of that
03:12surely he must know no one can be that good looking and not know what they're talking about
03:18I'm gonna learn about candlesticks
03:20I'm gonna learn about RSI
03:22MACD RSI
03:23oh have you heard about that Bollinger band it is amazing
03:27what's that Fibonacci thing
03:30a ratio for every season 38% 50% 61% 78.6% 88.4%
03:38you ever heard about the secret ratio of 94.6%
03:41it's just between you and I and 2,000 pounds of your money thank you very much
03:45unfortunately it's still not going to make you a penny
03:50am I annoying you now
03:52are you bored are you thinking I want technical analysis
03:56I don't want to be told that I am rubbish at this
03:59but you are
04:00statistically speaking you are doing what everyone else is doing
04:08and if you continue to do so you are just going to continue with the inevitable
04:14and I would like to give you an opportunity to get off that path
04:19and start thinking differently
04:20see this book here it's called the Bible of technical analysis
04:24not the King James Bible for Christians
04:26but the Bible for technical analysis
04:29Richard
04:30sorry written by Edwards and McGee
04:32were Edwards and McGee traitors?
04:36ladies and gentlemen
04:37were Edwards and McGee traitors?
04:40no they were not traitors
04:42they were journalists
04:43more than a million copies of this book has been sold
04:48normal leads to broke
04:52following what the brokers are saying
04:55not their advice
04:56and the brokers
04:58they're well-meaning
04:59they want you to do well
05:01why does a broker want you to do well?
05:03well hell
05:03the better you do
05:04the more you're going to trade
05:05the more you're going to trade
05:06the more commission you're going to place
05:07it's logic
05:09of course the brokers want you to do well
05:11CMC included
05:13I'm not knocking CMC
05:14but CMC are not traders
05:16IG is not traders
05:17CD Index is not trading
05:18Gain Capital is not traders
05:19they are not the ones
05:21where you should be getting your guidance from
05:23sure
05:24by all means
05:25learn about technical analysis
05:27but technical analysis
05:29has never made anyone anything
05:30you're not going to get rich
05:33from trading
05:34by learning technical analysis
05:36in short
05:37your problem is not
05:39that you don't know enough
05:40about technical analysis
05:41will you trust me on this?
05:44that you don't need
05:46any more technical analysis
05:47you need a serious review
05:50of how you think
05:52when you're trading
05:53so let's try with that
05:55my argument is
05:57that if 80-90% of people
06:00are losing
06:00when they're trading CFDs
06:02this is not a broker problem
06:04this is a human problem
06:06and particularly
06:07I think I mentioned it before
06:09I believe that those 80-90%
06:11are perfectly rational people
06:14intelligent
06:15good looking
06:16smiling
06:17good moms
06:19good dads
06:19good students
06:20good everything
06:21they're just rubbish traders
06:23because they haven't learned
06:23to think properly
06:25they haven't learned
06:26to deal with fear
06:27so what I would like to do
06:28what I would like to propose
06:29is if everyone's normal
06:31please show me
06:32what not normal looks like
06:34please show me
06:35what a 10% trader
06:36or 1% trader looks like
06:38and I suppose
06:39that's why I'm invited tonight
06:41so here's a normal person
06:46according to Google
06:48how does a normal person
06:51think?
06:53well if you ask Rodriguez
06:54from FXCM
06:55the broker
06:55he did a research
06:57on 25,000
06:58of their traders
06:59who had executed
07:0143 million trades
07:03over a 15 month period
07:06here's the shocker
07:07those 43 million trades
07:10actually had more winning trades
07:14than losing trades
07:15yep
07:16the FXCM traders
07:18they were good traders
07:20they had a hit rate of 62%
07:26that's not bad
07:27the problem is
07:29that when they won
07:30they won on average
07:3148 points
07:32this is all trading currencies
07:34but when they lost
07:35they lost 82 points
07:37you see
07:40if this had been
07:41an analysis of my trades
07:44or your trades
07:45eh we could say
07:47well you probably had a bad week
07:48or a bad month
07:49but when you investigate
07:5125,000 people
07:52and their behavior
07:53it's no longer bad luck
07:56that's a sample space
07:58that is worthy
08:01of an investigation
08:02and if it had been
08:03a couple of trades
08:0410 trades
08:05100 trades
08:05you can argue
08:06well it's a small sample space
08:07but 43 million trades
08:09of which the majority
08:11of them were executed
08:12in Eurodollar
08:12one of the most
08:14liquid instruments
08:15globally
08:16that's a pattern
08:18I am
08:23proud to say
08:25that I have
08:25written a book
08:27that will be published
08:28next year
08:28I received an email
08:30back from the publisher
08:31to say
08:32it's excellent
08:33well that's good news
08:34actually a word of warning
08:36to those of you
08:37who like to write a book
08:38writing a book
08:39for me was
08:40an incredibly
08:41cathartic
08:42exercise
08:43I had something
08:44that was just
08:45boiling up inside me
08:46like Vesuvio
08:47and it just exploded
08:48down on paper
08:49and I just wrote
08:50and wrote
08:50and wrote
08:51for two months
08:51before I knew it
08:52I'd written 60,000 words
08:54and 200 pages
08:55but they never tell you
08:57those publishers
08:58that writing a book
09:00is actually only
09:01half the battle
09:02then comes the editing it
09:03and then you have to do
09:04this and that
09:05and before you know it
09:06you're beginning to regret
09:07you ever wrote
09:07the damn thing
09:08but the titles
09:10in themselves
09:11is telling a lot
09:13about my mindset
09:14normal is a loser
09:16show me pain
09:17do you have a trading
09:18philosophy
09:18everyone's a chart expert
09:20everyone knows charts
09:22to be continued
09:26in March next year
09:26I've been told
09:27so on the face of it
09:30I was interviewed
09:31by CNN in 2005
09:32and they wanted to know
09:34how do your traders
09:36your clients trade
09:38and I said
09:39well
09:39the problem with
09:41and at that point
09:42I'd only worked there
09:43five years
09:44I have another
09:45five years of experience
09:46since then
09:47God it's horrible
09:50to look at yourself
09:5115 years ago
09:51and think
09:52oh geez
09:52I wish I looked like that
09:53people love
09:56to find the low
09:57in a bear trend
09:58people love
10:00to find the top
10:01in a bull trend
10:02there were people
10:04when I walked in here
10:05saying
10:05when do you think
10:06the crash is coming
10:07what crash
10:08I don't know
10:10if there's a crash coming
10:11what crystal ball
10:12is it that you're looking at
10:13because I just see
10:14a market that keeps
10:15making all time highs
10:16sure
10:18let's talk about a crash
10:19if the market is in a downtrend
10:20let's not talk about a crash
10:21when the market is
10:22setting at its all time high
10:24people think
10:27every reaction in a trend
10:29is the beginning
10:29of a new trend
10:30I would be sitting there
10:32night after night
10:33watching the market
10:34fall or rise
10:35and our client
10:36sure as hell
10:37the moment the market
10:38just ticked
10:39in the other direction
10:40by a little bit
10:41they would pile on
10:42as if the trend
10:43had now changed
10:44so my argument here
10:46is that people
10:47are generally fearful
10:48when they're hopeful
10:49and they're hopeful
10:50when they're fearful
10:51and I will explain
10:52that momentarily
10:53now
10:55what is normal behavior
10:57I am letting my
10:59losses run
11:01why am I doing that
11:02what am I telling myself
11:04well I'm telling myself
11:05that I hope
11:06that this market
11:07is going to turn around
11:07but the real reason
11:08is
11:09I would like to avoid pain
11:11we have a brain
11:13which is millions of years old
11:15and it has one
11:16primary function
11:18that is to keep you alive
11:19at all costs
11:20and by the way
11:21also
11:22love to make sure
11:23that you never experience
11:24any pain
11:25some people
11:26in particular psychologists
11:28refer to this
11:29as the ego
11:30it wants to make sure
11:31that you maintain
11:32your ego preservation
11:33your state of mind
11:35where everything is rosy
11:36and good
11:36so you'll do anything
11:38to avoid pain
11:40not you
11:41but this thing
11:42up here
11:43and it doesn't matter
11:44what scenario
11:45I throw at you
11:46I'm letting my loss run
11:48because the intercase
11:48says so
11:49or the Fibonacci
11:50says so
11:50but actually
11:51you want to avoid pain
11:53I'm taking my profits
11:56because hey
11:57you can't go broke
11:59from taking a profit
12:00still
12:01it's still you
12:02avoiding pain
12:03why
12:03well because you
12:04hate the idea
12:06that the market
12:08is going to take back
12:09some of your profits
12:11in a moment
12:12I'm going to show you
12:13one of my charts
12:14after the fact
12:16not with
12:17I bought here
12:18I sold here
12:18but how much I made
12:20and how much I lost
12:21I am winning
12:24so I'm reducing
12:25my stake size
12:26why would you do that
12:28well because I want
12:28to take it easy now
12:29nope
12:30you want to avoid pain
12:31you can't bear the fact
12:33that you made
12:34400 pounds for the day
12:35and God forbid
12:36that those 400 pounds
12:39would disappear
12:39let me ask you
12:40a different question
12:41I'm just going to come out
12:42here on the floor
12:42for a second
12:43because I'm tired
12:44of standing there
12:44imagine that you made
12:46a thousand pounds
12:47on the day
12:48versus you lost
12:49a thousand pounds
12:50on the day
12:51who is most likely
12:53to carry on trading
12:54the person that
12:55have made a thousand pounds
12:56or the person
12:57that have lost
12:58a thousand pounds
12:59the person
13:01who has lost
13:02a thousand pounds
13:03is far more likely
13:04to carry on trading
13:05because God forbid
13:07that he carries on
13:09that pain
13:09into the night
13:10and he will do
13:11anything to get rid
13:13of that pain
13:14but when he's made
13:16a thousand pounds
13:16he'll do anything
13:17to protect that
13:18because it feels
13:18so good
13:19to have made
13:20a thousand pounds
13:21so I don't want
13:21to jinx it
13:22I could carry on
13:32and on and on
13:33I think you should
13:33see it for yourself
13:34you're more than
13:35welcome ladies and gentlemen
13:36to have a copy
13:37of this presentation
13:38more than welcome
13:40if it can help you
13:42then you can have it
13:43now
13:46I've been told
13:47that I have
13:48five ten minutes left
13:48before you have
13:50a well-deserved break
13:51and some food
13:51so let's carry on
13:53this for the next
13:53ten minutes or so
13:54you'll be happy
13:55to know that I'm
13:56on slide 48
13:57out of 157
13:58it doesn't bode well
14:00for the second half
14:02does it
14:02did you have plans
14:03on going home
14:04then you may want
14:05to call the people
14:06at home saying
14:07might be a little late
14:09people are fearful
14:11when they're hopeful
14:12and they are hopeful
14:14when they should be fearful
14:15what do I mean by that
14:17imagine you are sat
14:18in a position
14:19that is making you
14:20the aforementioned
14:21a thousand pounds
14:22you're no longer
14:23hoping that that
14:24thousand pounds
14:25is going to turn
14:25into two thousand pounds
14:26or three thousand pounds
14:28no
14:29you're fearful
14:30that thousand pounds
14:31is going to be
14:31taken from you
14:32and if you are losing
14:33a thousand pounds
14:34you're most likely
14:36going to sit there
14:37and thinking
14:37wouldn't it be great
14:39if this position
14:40turned around
14:40you're not
14:41you're not fearful
14:42that that position
14:43is going to get
14:44even worse
14:44you're hopeful
14:45that it's going
14:46to turn around
14:47and if you want
14:48to have a fighting
14:49chance
14:50of making the markets
14:51your ATM machine
14:53and this is not a sales pitch
14:54it's a bit of a cliche
14:55I admit that
14:56but if you want
14:57to have a fighting chance
14:59of making the markets
15:00the place where
15:01you take money out
15:03on a fairly regular basis
15:04you need to turn
15:05this around
15:06how are you going
15:07to turn around
15:07well I have my own ideas
15:09so let's take a look
15:10at not so normal
15:11let's take a look
15:12at how I operate
15:14and people who are
15:16what we call
15:16the one percent
15:17rather than talking
15:21about me
15:21which is something
15:22I'm not that good
15:24at doing
15:24I prefer to throw
15:26the attention
15:26to some truly
15:28great traders
15:29one in particular
15:32is someone
15:33who I wish
15:34I could have met
15:35but he's no longer
15:35with us
15:36his name was
15:36Charlie D
15:37an excellent book
15:39called Charlie D
15:40the legendary bond trader
15:42is something
15:43you can buy
15:44through Wiley
15:44here he says
15:47the time you know
15:48you've become
15:49a good trader
15:50is that day
15:52you're able to win
15:54by holding on
15:55to a winning position
15:56and rather than
15:58taking half profits
15:59you're adding
16:01to your winning position
16:02rather than beginning
16:04to think
16:05where should I get out
16:06you're beginning
16:07to think
16:07how can I get
16:08deeper in
16:09how can I commit
16:11more
16:12he says
16:14and he is a floor broker
16:15sorry a floor trader
16:16at Chicago Border Trade
16:17he says
16:18there are many people
16:19in here
16:20in the pit
16:20that have traded
16:22for a long time
16:23who have never
16:24added to a winning position
16:26have any of you
16:27ever added to a losing trade
16:29sure we have
16:30oh of course
16:31we've added
16:32you know
16:32you bought at 20
16:33and then it goes down
16:34to 10
16:34you're thinking
16:34it looked good at 20
16:36it looks even better at 10
16:37but how many of us
16:39have bought at 20
16:40and then bought more
16:41at 30
16:41and bought more
16:42at 40
16:43and bought more
16:44at 50
16:44now the raised hands
16:46are becoming few
16:47and far between
16:48sure there will be people
16:49who have done it
16:50and good on you
16:51but it's very difficult
16:53emotionally
16:54to add to a winning trade
16:56it's a lot easier
16:57to add to a losing trade
16:58because hey
16:58you feel like
16:59you're getting a bargain
17:00you feel like
17:01you're buying something
17:02which is cheap
17:03and hey
17:04when we started
17:06learning about trading
17:08what were we told
17:09we were told
17:11buy low
17:13and sell high
17:14quite possibly
17:16the most expensive
17:18piece of advice
17:19ever dished out
17:20in the history
17:21of mankind
17:23because every single time
17:24I bought low
17:25it always went lower
17:26and every single time
17:28I tried it to short high
17:29it always seemed to know
17:30that I was in
17:31and it would go even higher
17:32no I prefer to
17:35buy high
17:36and sell even higher
17:38and I sure do like
17:40to sell short low
17:41and cover even lower
17:43so Charlie D goes on
17:46to say that
17:46it's in our human nature
17:48to want to cut
17:50our winnings
17:51you bought at 6
17:53and you can get out
17:54at 7
17:54get me out
17:55I'll take that profit
17:57that's just human nature
18:02that's who we are
18:04so he says
18:06if you want to be
18:07really good at this
18:08you need to accept
18:10that everything you do
18:12when you're profitable
18:13hurts
18:14it feels uncomfortable
18:17if you're in a position
18:19and it doesn't feel uncomfortable
18:20you're probably not
18:22betting big enough
18:23I want to repeat that
18:28when you're a good trader
18:29everything you do
18:30hurts
18:31and I'm not talking about
18:32a smack in the hand
18:33kind of hurts
18:34or a smack in the bottom
18:34kind of hurts
18:35but
18:36if it doesn't feel
18:38uncomfortable
18:38you're probably not
18:40pressing the position
18:41big enough
18:42here's a snapshot
18:46from an open trade
18:48this is equating
18:49to being
18:50100,000 pounds
18:51and profit
18:51this
18:53is not the result
18:55of normal thinking
18:56you see
18:57what I'm doing here
18:58is
18:59see if I
19:01can navigate
19:02this gizmo
19:03I'll just stand
19:05over here
19:05my first entry
19:09the market is trading
19:12at
19:12135
19:1425,135
19:16but my first entry
19:17was at
19:1725,458
19:19but as the market
19:23fall
19:23I keep adding
19:25to my winning position
19:26what do most people
19:29do when they are
19:30in a winning position
19:31now I know
19:32the answer
19:32because I sat
19:33and watched this
19:33for 10 years
19:34when you are
19:35in a winning position
19:36what do you do
19:37I mean
19:38humor me here
19:39take half profit
19:42nip a little bit more
19:44move the stop loss
19:45down so it
19:45is almost
19:46meaningless
19:46to have a stop loss
19:47because you are
19:48going to be stopped
19:48out by the slightest
19:49move in the other
19:50direction
19:50people are great
19:53at taking half profits
19:54they are just not
19:56great at taking
19:57half losses
19:58we love to take
20:01a bit of a profit
20:01home
20:02because it feels
20:03good
20:03it feels like
20:05we are doing
20:05the right thing
20:06why on earth
20:08would I risk
20:09losing some
20:10of my open
20:11profits
20:11you can't go
20:13broke taking
20:13a profit
20:14that is what
20:15the books
20:17are telling me
20:17now
20:19the amount
20:20of time
20:20that I have
20:20had 10
20:21or 20,000
20:22pound
20:23open profit
20:24positions
20:24that will
20:26then turn
20:26into a zero
20:27a countless
20:29my trading
20:30philosophy
20:31ladies and gentlemen
20:31my trading
20:34philosophy
20:34is that
20:35I will
20:36never get
20:37out
20:37at the
20:38maximum
20:38profit
20:39potential
20:40ever
20:40and that
20:42is the
20:42only reason
20:43why
20:43I am still
20:44running this
20:45position
20:45not
20:45actually
20:46that would
20:46be disastrous
20:47if I still
20:47running it
20:47because
20:48that was
20:48in 29,000
20:49but in this
20:50case
20:50where did
20:51I get
20:51out
20:52did I
20:52get out
20:52at the
20:53absolute
20:53maximum
20:54profit
20:54potential
20:55no I
20:56most certainly
20:56did not
20:57now
20:57it's come
20:58to the
20:58point
20:58where I
20:59probably
20:59need
20:59to take
20:59a break
21:00so I
21:01think
21:01I'd like
21:02to do
21:02that
21:02with this
21:03slide
21:03here
21:03and then
21:04we'll
21:05carry on
21:05after the
21:06break
21:06the
21:07mental
21:07foundation
21:08for
21:08profitable
21:09trading
21:09is
21:09are you
21:10prepared
21:11to do
21:11what the
21:1290%
21:13are not
21:14doing
21:14and of
21:14course
21:15the answer
21:15is yeah
21:15of course
21:16I'm prepared
21:16to do
21:16I'll do
21:17anything
21:17for profit
21:17but actually
21:18you don't
21:18really
21:19fully
21:20understand
21:20what is
21:21required
21:21it takes
21:24a lot
21:24of introspection
21:25which I'll
21:26cover in
21:26the second
21:26half
21:27but I am
21:29aware
21:29of my
21:29worst
21:30habits
21:31I am
21:31aware
21:32of my
21:32weaknesses
21:32and I
21:34have a
21:34routine
21:34to counteract
21:35those
21:36I am
21:38constantly
21:39pushing
21:40myself
21:40you never
21:41get to
21:42trade
21:42100
21:43200
21:44300
21:44pounds
21:45a point
21:45unless
21:46you
21:46constantly
21:47push
21:48the
21:48envelope
21:49there are
21:50some people
21:50in here
21:51who are
21:51well past
21:5250 years
21:53old
21:53including
21:53myself
21:54now
21:55interesting
21:56story to
21:56set you
21:57off
21:57for
21:59your
22:00dinner
22:00I assume
22:03most people
22:03in here
22:04have a
22:04driver's
22:04license
22:05and I
22:05assume
22:06that many
22:06people
22:06in here
22:07have
22:07driven
22:08for
22:08many
22:08years
22:08and we
22:10all consider
22:11ourselves
22:11good
22:11drivers
22:12and I
22:14thought I
22:14was a
22:15good
22:15driver
22:15I mean
22:15I've been
22:16driving
22:16since I
22:16was 17
22:17which is
22:17a miracle
22:18because you're
22:18not allowed
22:19in Denmark
22:19to drive
22:19until you're
22:2018
22:20don't ask
22:21me how
22:21but that's
22:22the fact
22:22and now
22:23I'm 50
22:24and so
22:24I've been
22:24trading
22:25I'm sorry
22:25I've been
22:25driving for
22:26what
22:2732 years
22:2833 years
22:29and then
22:30a friend
22:30of mine
22:30decided
22:31he wanted
22:31to give
22:32me a
22:32present
22:32for my
22:33birthday
22:33it was one
22:34of those
22:34red letter
22:35days
22:35where you
22:36go out
22:36on a
22:36race
22:36course
22:37it could
22:37have been
22:38any
22:38red letter
22:38could have
22:38been
22:38anything
22:39but this
22:39was
22:39you get
22:40to drive
22:40some
22:41very fast
22:41cars
22:42and then
22:43I realized
22:44just how
22:45bad
22:46a driver
22:46I am
22:47because
22:48when it
22:49really is
22:50a matter
22:50of putting
22:50what do
22:51you say
22:51in England
22:52pedal
22:53to the
22:53metal
22:54is that
22:55the right
22:56saying
22:56when you
22:57really do
22:57press that
22:58accelerator
22:59and you're
22:59not just
22:59driving
23:00straight ahead
23:00down the
23:01M6
23:01but you
23:02have
23:02twists and
23:02turns
23:03that's
23:04when you
23:04know how
23:05bad a
23:05driver you
23:06truly are
23:07so we
23:08can do
23:08something
23:08for 30
23:09years
23:09without
23:10actually
23:10being
23:10particularly
23:11good at
23:12it
23:12and you
23:13can continue
23:14down this
23:14path of
23:15trading
23:15for the
23:16next 30
23:16years
23:17but there
23:18is an
23:19enormously
23:20high
23:20probability
23:21that you're
23:22never going
23:23to fulfill
23:24your maximum
23:25potential
23:25unless you
23:26begin to
23:27shall I say
23:29stop staring
23:30so much
23:30at the chart
23:31and begin
23:32to cultivate
23:32a very
23:33different
23:33mindset
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18:38
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