Dr David Paul - Trading Psychology

it is with great sadness in my heart to announce that my friend and trading mentor not just to me but mentor to tens of thousands if not hundreds of thousands of people all over the world Dr David Paul has passed away David Paul was one of a kind in the video that I'm about to share with you David will take you through the psychology of trading like you have rarely heard it before this was recorded during the London price action Symposium in 2022 and my colleagues and I have decided that we want to make David's

lessons available for the world to consume and for the world to share I have an enormous amount of fond memories of David Paul here's a couple of black and white stills from a seminar that we did together with Larry passavento who is sitting and David Paul to the left next to me David was one of those characters that you don't see coming he was always humble but when he stood up and he started talking it was that of a presbyterian Sunday Reverend he could raise the roof and when he spoke people paid attention such was

his power and such was his conviction to his topic a profession that he had embraced for 40 years of his life he was a true Trader in every sense of the word cunning when he needed to be decisive when he needed to be Brave and Bold when he needed to be and yet humble in taking losses when he needed to do that as well this is the heartbeat you David I'll miss you you were a fantastic friend you are a great Trader I witnessed that when we shared a house together in London you really knew

when to press a winning position and I will forever treasure the advice that you gave me when you said that when you win make sure you win big press your winners and that's what I will take with me amongst many other fantastic memories that we shared over our nearly 20 years of friendship rest in peace my friend over the years I was fortunate enough to on many occasions present at trading events and conferences alongside David and for those of you like me who were ever lucky enough to hear him deliver a presentation there's probably a

few things that are going to stick in your mind so for my side the things I always took away from any presentation he delivered was he was a person who obviously one of those unique person who really loved and lived what he did he was he was obviously you know amazingly knowledgeable I had high levels of expertise in all things trading and markets and David you know I had a shared passion I guess for trading psychology but one of the things that will um I will always remember about him and I'm sure many of you

will be the same was a very unique humor that he brought to his presentations and a way of delivering his messages uh in very memorable ways and uh you know a man uh obviously deeply intelligent and with that with a real sharp wit um which which would be you know a key part of David that will live with me uh forever and I think um you know David um why he's no longer with us he is a person he's been you know involved in the markets for a long time and you know I think he's

going to leave a legacy in his teachings and in his work which people will still be able to access and you know many people have been fortunate to have benefited from David's teachings um while he's been with us and I hope that he you know he will be pleased with the Legacy that he's left all of us in the teachings and in his work which people can continue to learn from going forward good afternoon everyone I hope you had a good lunch I don't know whether I'm supposed to start or not but uh I think

our batter is getting late uh who wasn't here on Friday afternoon anybody oh quite a few people who weren't here on Friday afternoon okay uh well I feel uh a bit like the comedian who comes on after the dancing girls uh after the presentations that we've had over the last uh few days uh they've just been great information having uh this all started for me about 40 years ago when I went off to South Africa to play rugby and I was bulleted into an office outside Johannesburg at the beers Research Laboratories and uh I was

building into this office with an old fellow who started off life in Cornwall but it'd been in Africa a long time he's long since dead and every day he had a routine where he would go to the corner of the office where the engineering drawings are hanging in a big filing cabinet a0 I believe is the he would take the drawing he would put it on his drawing board he would line it up with a set square and masking tape and out of Iran Daily Mail he will update the high of the day the law

of the day the close and the volume traded and every day he would update about 50 charts that he was following on the Johannesburg Stock Exchange he was making a money by trading basic chart patterns and he had a tattered copy of the Bible of that era it was called technical analysis of stock trends by Two Fellas called Edwards and McGee and I Andrew had a copy of it the other day I watched him and I've saved up some money and between April 1981 on October 1982 I saved up some cash and I put on

my first trade uh it was a trade on South African breweries now called nbev and uh it was a winning trade and they say if your father takes you fishing and you catch a fish the first morning will you fish for the rest of your life so um uh that's exactly what happened to me I traded on my own until 1988 and in 1988 I had a bigger Mercedes-Benz than the head of de Beer's research and development and that seriously pissed him off so I I there is a Gold stock it's not called sabanya but

before it was called sabanya one of his companies that had bought out was a a mining company called ranfontina States and in an era before intraday trading I jogged randfontein Estates on another company called Harmony gold mine up and down in and out and I paid off my first horse on that brand new resource from uh Harmony gold mine in about 1985 and that seriously upset the wife because the next year I paid off my house because she was upset that I spent the money on the horse rather than paying off the house so and

I left the Bears in 1988 traded on my own I had an interest in an engineering company as well and I sold the engineering company to Smith mining of Texas I think in 1992. uh and I I did my first seminar on the stock market by pure accident in 1988 and it went so well that the technical analysis Society of Southern Africa asked me to do a seminar one day seminar at the University of Stellenbosch in Cape Town and I did my first uh seminar in an auditorium just like this uh in 1989. uh done

an awful lot of institutional trading over the years uh an awful lot of institutional training over the years and I've trained all of the big banks of the world uh especially in Africa especially in Southeast Asia and I think it was because Standard Charter couldn't get anybody else to go to Africa so they sent me it was great uh and they couldn't get anybody else to order Pakistan so they sent me but they told me I had to change my name from David to William because David sounded too Jewish so they reckoned that would be

a good idea in Pakistan and I mean so but that was a great period folks I met Tom in about 2005. we ran which way today together uh and then uh I tripped over Vector vest which I now promote in the UK I uh started with VectorVest opened it in South Africa we went from nothing to to a quite a big company relatively quickly and uh VectorVest in the UK one stage VectorVest in South Africa was five times the size of VectorVest in the UK that should not be the case it's a very small community

in South Africa in terms of people who are investors uh and I came back to the UK where I was born and I've built objective s UK as a retirement business for me uh into quite a big company these days uh and uh I'll talk a little bit about that later on in the afternoon uh in terms of academic background I've got a degree in engineering I've got an MSC in Metallurgy and a PhD in Applied Mathematics those of you that any Engineers here well you'll know that the backbone of engineering at University is a

subset of mathematics is called calculus yeah well kelvis sort of came to me without any worries whatsoever I could just do it in my sleep and I had no great academic leaning uh but uh my PhD gave me enough time to play rugby and that's all I was interested in at that stage um all of that academic stuff doesn't help you greatly and taking money out of markets and the thing that I've done that's helped me most in taking money out of markets is that in my youth I was an officer in the greatest organization

the world has ever seen they're all Marines and that's given me a level of confidence and discipline that I have drawn on for a very long time I'm 45 years later I can still fit into the uniform okay ah 66 unfortunately but anybody that feels like having a go we can have a go I don't care who you are okay so uh that's me folks there was enough a lot of questions this morning of the different types of trading folks uh and it is my conclusion after 40 years at this is that we don't really

trade any markets at all we trade our beliefs about markets and everybody's beliefs about markets are slightly and sometimes markedly different and you've only got to read Jack Swaggart's book where there's dozens and dozens and dozens of winning traders who have made a heap of money and they all have got completely different beliefs about markets so your objective is to find something that suits you out of these three days develop that process something at such a belief system about markets and then do your best to refine the process as Steve talked about yesterday and then

to try and size that to scale that so out of all of this you've got an awful lot of work to do personally to find something that suits you and unfortunately it is a Rite of Passage to put that into place and nobody can do it for you it's like me doing your press-ups you've got to do your own damn precepts am I correct okay there's no short there's no going around it okay uh Larry has been a great mentor to me over the years as I told the people on Friday I bought his first

book uh and I've still got it Larry I've still got it sir uh and I use a variation of a b equals c d technique every single day however it is my own variation slightly different from what Larry uses uh and quite honestly two people arguing over their methodology is like two ticks arguing over the spot on the horse just below its tail you okay the objective is to learn how to play the game to have the resilience to go through the inevitable boats of drawdown which are going to come as soon as sure as

the sun rises tomorrow morning and to have the testicular fortitude to get through that clearly a bit of position sizing will help okay and those of you that are new there's a great Paradox and positioned sizing in other words you're sitting here today it seems obvious just one percent of your account and any one trade but I assure you the young fella in the blue there you're going to do your research tomorrow and you're going to say to yourself well it's definitely going to go up I've done all my work Larry says it's going to

go up and must go up so you say to yourself at a very deep level well if it's going to go up let's have a big punt you give me too much let's have a big punt let's accumulate the rate of let's accelerate the rate of wealth accumulation so you end up having a big punt I speak about this I do a webcaster VectorVest subscribers every Monday afternoon and videos during the course of the week unboring all conservative me always talks about risk rest risk risk Christian am I correct there risk risk risk and sometimes

I'm boring about it I know especially when markets are raging up uh but we have one guy one of my favorite stocks is a platinum ah it's just outside rustenburg I know the mine well I know the people well I can saddle up my horse I could ride there if it does what it says is going to do by the end of this year it's going to 80 of its share price will be on cash in the bank it's on a price to earnings ratio of five but anybody that's been at this for a while

you know that Anything Can Happen okay it's Africa eskom doesn't give them electricity some idiot drops a wheelbarrow down the shaft it's stuffed one wheelbarrow down that shaft okay uh so Anything Could Happen what did he do he put us all Isa his whole Isa 600 000 pounds into the one stock after me rabbiting on every Monday afternoon about risk so there's a great Paradox and position sizing so let me not grab it on I've got an awful lot of material to cover and I I don't want to have to rush it those are the

court four core values of the Royal Marines yes unselfishness determination courage and number four quite important cheerfulness and adversity now yesterday afternoon Thomas Steve uh the major beliefs that are successful uh and consistently winning Trader has to have uh Tom that was my that's my answer to your question yesterday of the Three core beliefs uh first believe money can be made in markets do you all believe that yes well there's a whole industry out there saying that you can't it's called the asset management business they're saying we want your money okay I frequently get Brokers

coming to us uh at VectorVest they want to recommend me for me to recommend them clients uh and they'll give us a backhander and they say Well they're looking for clients who try it themselves screw up and then they'll move in and take their money that's what they want so this whole industry out there time to tell you that you can't make money in markets the second thing is I can make money in markets and that's going to take a bit of work because the market will do its dumbness to prove to you every other

day that you can't and then I deserve to make money in markets and uh I can help you with that but I think maybe your mother would be better go and have a chat to her and maybe you've been harshly toilet trained I don't know okay but the whole concept of self-esteem is really really really important and if you're not going to waterstones down the corner here they have a whole row of books on self-esteem and I can't imagine they're philanthropists they're there because lots of people are buying them so uh those are my that's

my best shot at uh uh that question that Tom sent to Steve yesterday so what do I do well I I trade intraday these days mostly the S P 500 I used to trade in today Forex and I haven't given up Forex but I decided that when I'm speaking to VectorVest clients that uh trades in the S P 500 are in sync with the stock market and that just makes a great deal of sense okay uh so I I swing trades lasting two to ten days stocks Forex and futures core trades and stocks lasting two

to six months I manage a portfolio for the VectorVest subscribers uh and uh every trade that I do is on there and they see it work to know pretty much the same as Tom uh those in this telegram group in a different time frame and then lastly a pension stock for portfolio focusing on yield uh dinner last night we discussed uh uh having uh enough money in your account to retire to trade and I from the outset when I started I put money for my speculative account into a long-term account focused on yield it took

me about seven or eight years in South Africa to become financially independent in other words if I didn't trade I would have enough yield coming in uh to actually cover all my expenses and when I came back to the UK I started the same thing uh uh so I put every year I put about 50 percent of what I make into a long-term account and I have stocks now that are paying me 15 dividend yield and I've owned only on the only only owned them two or three years and that's what VectorVest is really really

good at uh so that's that's what I do uh and uh as I say you need some form of process and then you need to develop the discipline to follow that process through thick and thin and this is what Mike Tyson has to say about that Everybody's Got A Plan until you get a smack in the mouth unfortunately folks unfortunately and this is my experience over many years that after one or two bad trades everybody changes uh our recency bias and you're actually you actually curve it to what worked well yesterday so it takes I'll

always say we've got to follow a simple set of rules through thick and tin it takes a great deal of effort to follow those simple set of rules through thick and thin a great deal of effort and I hope that the the live trading that Larry and Tom did on Friday will help with that I'm going to try and talk about how to build that discipline a little bit later on this is one of the greatest bits out of a movie that I've seen ever this is Million Dollar Baby do you remember Hilary Swank and

Million Dollar Baby Clint Eastwood movie she got an Oscar for it or he got an Oscar for it very motivating fellow old Clint Eastwood at 92 he's in fact producing his life's past work when he was a Youngster the movies are made were rubbish absolute rubbish but uh his the movies has made over the last few years have been quite magnificent in my humble opinion so Hilary Swank is working the old jabbing bag and he didn't want a woman in his gym and he got that wonderful Clint Eastwood stare you know what stare and he

said to her are you working the bag or is the bag working you I'll never forget I say that to myself that's the first thing I say every morning when I go near that trading screen okay are you working the bag or is the bag working you in other words are you reacting or are you sitting and preparing and waiting I'm patiently waiting for your setup to turn up uh uh helps me a lot that as I say we're all quite different so and Dr Brooks spoke about this a methodology and the most important thing

about that methodology is that it has to what I think the first person who put this in paper was the fellow who died recently called van Thorpe I knew reasonably well and uh he said uh he called the whole concept of an edge expectancy and in simple language you've got to make more when you're right than you lose when you're wrong and there's three things that contribute to that expectancy one is the hit rate the number of times out of ten let's say that you get this right two is the risk to reward yeah reward

to risk and three is it as spreads on commissions and based on those three you can work out how much money you're going to make so as Dr Brooks pointed out it's just not the number of times that you get this right it's this mixture of these three things and to quote Marty zweg he said so beautifully that I educated two children out of the stock market Unfortunately they were the broker's children so those uh those expenses and those spreads Mount up especially if you're a short-term Trader so there's three things you need to account

and the expectancy and most people in fact at a mental level only think about the number that they get right and don't think about the rest reward don't think about the ex the uh spreads and the commissions okay uh need to manage your money very well and I'm going to make a case for adding to winning positions uh and clearly we've got to manage ourselves very well and clearly uh Steve handled a great deal of that much more professionally uh than I can do it but I'm going to give you my own thoughts on that

uh so let's say we've got a trading system are there any Trend followers here simple old-fashioned Trend followers buy a 21 day high buy a 55 day high well it works because if you're the fella who owns Boston Red Sox and the same fella owns Liverpool Football Club he met John Henry he made his money as a trend follower and there's a little book called the little book of trend following I think was written by Michael Covell and he puts together uh 20 or 30 guys who've made a fortune just simple Trend following well the

hit rate that they have folks is less than 50 percent in fact about 38 percent of the time they're correct the rest of the time they get bounced around but it's a very profitable system because you can make lots more when you're right than you lose when you're wrong emotionally very very difficult uh swing Traders uh can get it right let's say sixty percent of the time as Dr Brooks said uh a while back uh and I think that if you're in the stock market and you play a strong Edge you can certainly get it

right I think about 70 percent of the time and in the stock market I I follow a methodology broadly similar to what two of the market Wizards use uh Bill O'Neill do you know Bill O'Neil Larry I know him very well yes and uh he had a birthday the other day I sent them a card and his Protege a guy called David Ryan where we put together a strong earnings growth and a strong Trend and that has worked for me for a very long time and that's the basis of the VectorVest methodology uh so why

is this so darn difficult now Larry and I've read a lot of Larry's detailed work has gone into this in a great deal of detail but this is just to give you a very basic idea of how your mind can play tricks so let's say that you've got a trend following system and it's right five times out of ten would you all agree that if you make twice as much when you're right as you lose when you're wrong five times two is ten and five times one is five so you should make 50 pence have

you better poned on every tread you should make 50 pence every time you trade would you agree five times two is ten five times one is five so you make five out of ten you've got a positive expectancy system so that can be very profitable but folks the probability of a bad one is a half would you agree no this is going to really tax the mathematically challenged what's the probability of two Batmans in a row half times a half which is one over four just toss a few coins and you'll find this out a

quarter what's the probability of three badmins in a row that's it every eight trees you've got three badmins in a row that is a mathematical certainty every 16 trades four badmin's in a row every 32 trades five badmins in a row can you put your system on without fear or hesitation after five bad ones and that's fifty five out of 10 is a really good Trend following system so you got clusters and quite honestly it's not the clusters of bad luck that really get you assuming you've got a reasonable position sizings it's the clusters of

good luck that get you because I think Mark Douglas writes about this uh he says that between your ears you've got this little thing uh pituitary gland and it is responsible for all the emotions so sir when you fell in who was the guy who was making love to his wife the other afternoon in the seminar was that you well we had a guy who was who was let's say on the job in the seminar and when we were at University we had this code between all our all all my friends and we know we

never we never made love to young ladies we always stuck England into bat that was the expression okay so uh let me get over that one uh when you met that young lady of yours the pituitary gland was sending out all this emotion and you remember that night you were floating on air sir okay when I come out of the gym after a good session I'm no longer 66 I'm 18 and I'm back in the Royal Marines and I'll nail anybody in sight okay so after one good trade two good trades three good Trends you

change folks you completely change and you say sold all that position sizing bollocks let's accelerate the process of wealth accumulation so you trade bigger and bigger and bigger and bigger my son is a classic at it okay and that's why he always needs to borrow money the if you if I could find a leading indicator better than what's up messages from my son as a leading indicator of him wanting to borrow borrow money uh you know there's nothing like that in the stock market okay as soon as the WhatsApp messages come how are you you

know that there's a request for lit on the way uh so uh let's say you can get to two-thirds I think you can get there folks you need a bit of discipline to stand aside and to wait for everything to set up and I think that my system of the Wyckoff system was simple Springs and up thrusts that I'm going to speak about later will get you there but you don't trade the way Dr Brooks traded this morning you you'd be waiting for a half a dozen good trades a week not 20 a day uh

I think you can get to that 66 out of 100 but there uh four good trades you've got every 81 you've got four good trades so as you go that way and you sit and wait you're the emotional hurdles go down so if you can sit in your hands and wait then it becomes much much easier to execute because the clusters of bad luck go away and if you can get to 8 out of ten right and sometimes you'll get a period where you can you'll find the Clusters go away immediately so these clusters are

real okay now there's a great temptation to say that these things happen to everybody else they don't happen to me but I assure you they do okay and us this is uh uh one account uh no I don't know if Tom is here but when Tom came down Tom when you came down to see me at nedbank remember that time that's correct that's correct uh and and he did yes and he also there the airline lost his suitcase so he was in the seminar on a pair of Bermuda shorts and a t-shirt everybody else was

suited up and I think Tom was in the corner in his Bermudas Tom that guy that sat beside you that day you you won't remember he's called Muhammad MO uh this is his account he's got one billion under management at Green Light capital in Connecticut and that's his account and you can see the clusters of good luck on the clusters of bad luck coming in there he was up 42 in 2019 a very good man he's the guy uh his company my son worked for before he started his own company uh and uh five losers

in a row after 32. the fear of bit there's this is Mark Douglas's fears folks fear of being wrong the fear of losing money fear of missing out the fear of leaving money on the table uh and those two fears one and two and certainly for a man of what above 50 and there's a few of us here that are above 50. the fear of being wrong and the fear of losing money is much much worse than death itself okay we're doing good to die anyway you know so but the whole concept of being wrong

or losing money you know this is slightly cynical but I want you to think about this what is your true motivation for being in the market are you in the market to make money or in the market to solve a puzzle I'm going to leave that with you think about it make money there's nothing to think about it what's there to think about [Music] um a lot of people are in the market to solve a puzzle they don't they they think they're in the market to make money but they're really not they're trying to solve

a puzzle just think about that okay uh so those two big fears are real uh I've gone over those myself because one I firmly believe that anything can happen if you're right 80 of the time you're wrong twenty percent of the time on the next trade you don't whether it's one of the 80 or one of the 20 that is the reality of the situation uh my money management is good and that comes from being smacked quite a few times I still probably I've still got a problem with missing out anybody got a problem missing

out yeah still after all Leisure maybe another 40 years I'll get that right and then leaving money on the table now I I coached a group of farmers in South Africa uh these are not Farmer Brown type Farmers or the we Red Tractor these are guys the poor ones Drive Cessnas okay they ex the really rich ones have Lear Jets and they're all pulling diamonds are legally out of the Orange River uh and uh they take them to Antwerp in their upholstery of the Learjet uh seriously Rich dudes I had one guy who was up

uh 10 million South African Rands a million quid half a million quid now uh on uh White maze contract and he gave it all back every last bit of it back because he thought the market was going to move further okay so um and if you haven't read trading in the zone I think you should read trading in the zone uh and um uh just to pity the author is no longer with us uh so our journey folks is to be able to execute without fear or hesitation and I'm going to address my best shot

and fear at the moment running away quick letting winners run and pushing winners let me take you back to 19 92. 1992 a small I sold a mining tools company to Smith of Texas and for the first time in my life I was really really wealthy couldn't believe it uh the company was worth bugger all uh but I I designed a mining tool and every oil well that's drilled in the world is drilled with my drill bit believe it or not every last one uh and it was something that I took with me out of

De Beers and I developed it on my own but I I didn't have the cash to uh commercialize it so I sold it but did really really well out of it I was in London at the time and I managed to get a copy of this little book I bought it at waterstones it's called the little money Bible uh by a guy called sturt Wilde this is a guy long since dead and sturt ran the Las Vegas MBA and uh the theory was that if you could go to Vegas and when and take money off

the casinos that making money in business would be a piece of cake so we I went I didn't have anything better to do I went to Vegas for a month to learn how to play uh Blackjack and roulette and craps craps my favorite game no I I don't have a I've never gambled and I come from a Scottish Presbyterian family where gambling was looked upon as the work of the devil and by the way they're largely correct in that I think uh so but I I had a friend of mine who's a psychologist not a

trading psychologist and he said that I would actually benefit from learning how to gamble to become more aggressive in my trading okay so I thought it was a good idea so I went off with Stuart to learn how to play uh roulette mostly and we sat there for the first day and let's assume that you're just playing red and black and you're playing a 10 BET on red or black and you bet ten dollars and you make ten dollars and you've got seven winning trades in a row you make a miserable seventy dollars right now

one of the methodologies that's proposed by the uh casinos on the casino of books is that what's called the Martingale betting system and this is a system that my grandfather on my mother's side used for the horses he would go to the track and we had better Fiverr on the second favorite and the very likely event of the second favorite not winning he would bet a tenor on the second favorite on the second race and they're very likely event of the second favorite not winning he would bet 20 quid on the second favorite on the

third race so he would average down his treads and frequently he came ahead did well at that and he had a bit of fun and believe it or not The Bookies have in fact stopped that second favorite bet because it is a good bet so unfortunately with the Martingale system if it goes against you you double up and by the time you get a winner you've got to bet twelve hundred and eighty dollars to get your ten dollars back not good so here's what sturtwild proposed and this is when I first was alerted to the

par of adding to winning trades this is where it all came from he proposed in our course which lasted nearly a month a Nanty Martin Gale system which I still use on the roulette wheels to this day well if we have a winning trade wrong way David so did I get this right now there is a we lose and we just keep batting so with a reverse Martingale if we have seven losers in a row and then we get one win we lose a miserable sixty dollars but if we have if we add when we've

got a winner we in fact make twelve hundred and seventy dollars and when we lose we go back to the basic back again so this and you can this still works so if you go to the casino some night and you play red and black okay uh there's a little white ball which is the spread same thing you'll get a wheel that is not trending where you get a red a black a red a black a red a black and if you get a wheel like that well you don't lose much money if you get

three or four in a row you lose three times four times your bet but the trick is that when you get a red and you win you double up and you'll find that the wheel Trends just like a market now there's a little scoreboard the next time you're in a casino go down to the end of the table have a look at the scoreboard the electronic scoreboard and you'll see long runs of Red Run lungs are black so when I see a red I double up and I probably double up for the third time make

good money and then as soon as you get black you lose one you go back to the basic bat again that works exactly the same way as a market so from that I first from that months in Vegas I first decided away back in 1992 that the way to really accelerate profits was to add to winners Tom I have a guy in South Africa who's who's tried this and he actually plays it the same way as you would play roulette in other words if he takes a trade he scalps it uh he gets in it

makes 10 points that's a win he takes the money and then the next time he gets in again he goes in at Double the size takes the money quick gets in again travel the size so he doesn't let the position run and add to it he takes his money along the way for what it's worth uh so uh and many people would say there's extra costs in that and there certainly is so that's that's where this whole concept of adding to Winners came from it was that months in Vegas uh many many years ago and

that system still works to this day and I've gone through this very quickly but I'm going to give these notes to Tom and Tom will send them all out to you can actually uh uh work through that on your own and and uh he'll also send you out uh the roulette course and Larry I've decided to go up a thousand pounds more than you it's thirty six thousand dollars for my roulette course okay yeah you won 35 000 for your course so um I'll put another thousand dollars on mine for the roulette course okay uh

uh so Tom will send the stuff out on Monday okay uh so uh it's great fun and when you go to that roulette table and you win and you double up everybody the devil will be looking at you as if you've got two heads okay who's this friggin Egypt and then you double again and then everybody will be just freaking out because you're not supposed to do that you're supposed to go the other way Double Down great fun great fun indeed and I've been chucked out of a casino on the edgeware road for taking too

much money off them chucked out there is one will and the casino in edgeware road that Trends a lot so if you go to Vegas just wander around look at the school board and see which wheels are trending because they get worn a little bit and some of them Trend uh and what I mean by Trend I mean a long row of Reds a long roll of blacks in a row that's the one to go for you can't lose money when you're wrong that's two gambling tips I told the people who came in Friday that

my son uh plays poker at six o'clock on a Sunday morning that's midnight one o'clock in the U.S and he takes money off drunk Americans he says it's incredibly easy okay so uh a piece of cake so they were through that for in a great deal of detail and that's where this all came from so I've answered this question folks can discipline be built or as one person got it and another person hasn't got it uh and I believe it can be built and can be built relatively easily now I build personally disciplined I build

discipline very easily indeed and many of you think that that's a good thing but it's just as easy to build a bad habit assist by to build a good habit yeah very easy if you let yourself slip so I never have the chips with the meal not because I don't like gypsum because chips once in a while will not do me and won't do me any harm but I'm scared because I know myself well that if I have chips once or twice in a row I could build a habit to have them every day and

I don't need that so I'm very very careful and it's that little D thing that Steve talked about yesterday what what little thing can you do today so that you can move towards the person that you want to be so you really have to be very careful about those small things my humble opinion I'm no psychologist uh I I I I I frequently have to refer to the world's greatest trading psychologist and Steve if you're here unfortunately it's not you it's a little doctor who practices out of Tennessee Dr Jack Daniels okay has anybody consulted

with in fact you remember the Al Pacino and the Scent of a Woman he says I know him so well I call him John oh such a good line that yeah we have a VectorVest customer up in our growth north of Scotland north of Edinburgh cold place uh and uh she says that there's a great trading psychologist Andrew up and Edinburgh up in Glasgow Dr Johnny Walker okay works wonders she tells me uh so I'm no trading psychologist but the Paradox is that when you've got discipline you don't need it and I assure you that

I don't need any discipline to go to the gym none whatsoever in fact I need to exercise a great deal of discipline not to go and I Antonio tell you every morning in the which way today room about half past 10 I would get Twitchy because it's time to go to the gym simple as that uh I'll uh Larry I did early on one of Van Thorpe's courses a lifetime ago and I got to know him quite well we had to fill in this just at the early days of the internet we had a fill

in why we got air new the normal trade log and whatever and he gave me a bollocking online uh it was Escape meeting RuneScape remember when scape was new you could chat and Escape it was it such a novelty and he gave me a bollocking in front of everybody said David getting out of a position because you want to go to the gym is not a valid reason okay uh so he passed away the other day old van Thorpe uh so uh when you got discipline you don't need it and you'll find and where's Belinda

Belinda you'll find that if you go through that exercise that I'm going to talk about and I've printed from Mark Douglas I don't care where it comes from as long as it works uh you'll find that you'll build that discipline okay to get over any hurdle and we've all got the same hurdles to go over and it is a rite of passage so out of all of this folks all of this and my word you've got a bit of work to do because there's been an awful lot of stuff presented here and first class stuff

not as they would say in Afrikaans not by hurt bullshitters but by people who have traded an awful lot uh stuff that works that guy on the internet that sits in front of that car and is skiing and he's playing Polo or Harry and Woolly uh uh that guy that's my fastest move of the day when I see him coming up on YouTube I Sprint across the floor to try and switch it off YouTube you know so uh the the industry is populated unfortunately with Scoundrels uh so ah I think I put that in twice

so so I used to do this as a business believe it or not and there was a brokerage that a big a big brokerage used to say David we got this uh chap from Saudi and he spends uh he gives us two hundred thousand dollars a month's Commission and he's losing money hand over Fest we can't afford to lose a comb can you go and sort them out uh so I would sit there for two or three days going through the trading discipline exercise I don't do it anymore I just couldn't be bothered to tell

you the truth uh and I had a fight with the last one that I did it with uh so but it was a very it was a very profitable time it taught me an awful lot so here's what Mark suggested you need uh to decide on a system out of all of this that suits you and my challenge to you folks is to resolve to follow that system for a batch of Trades without changing the rules who's been through that exercise already okay well that's wonderful Tom has I know many times hania has quite a

few of us had well the rest of us and ladies and gentlemen that is a rite of passage otherwise you're going to be coming on courses for the rest of your days you're going to be buying books for the rest of your days you're going to be having a double Johnny Walker at night and you're going to see some block who said who sells you the long lost secret to wdigan there's a guy in Australia whose charges 25 000. I can't remember what's American dollars or can or Australian dollars for the long lost sequence of

wdigan okay uh so and it's so easy to fall for that stuff after you've had a cluster of bad trades especially if you've got a little bit of lubrication at work easy so you've got a bit of work to do folks it's an exercise that I do myself uh at least two or three times a year because the discipline slips will you humor me and do that okay don't make it complicated the last time I was here I put on a very simple mechanical system that's trivial and I'm sure Tom will send you that if

you need something that's mechanical it's just a couldn't be simpler uh just a it's called a Tipping Point and it's it's just a few lines of code that you can write but I'm going to suggest something later on in the afternoon that you can do and you know building discipline uh it's still the old personal trainer has anybody got a personal trainer here I I had for a long time and I I did again after the pandemic personal trainers would like to think themselves that they're in the exercise business but they're not they don't they're

not bright enough to work it out that they're in the discipline building business because invariably unless you're playing for Manchester United uh the the it's the hire a personal trainer because you make a commitment that makes a commitment to get there because you're paying her a hundred dollar a hundred pound Nar so you want to be there she'll tell you that she's got a set of exercises that are ideal for your body type but you can see them writing the exercises out in the car park you know so they're necking them up as they go

along and it doesn't matter okay they're in the discipline building business as the same as I was uh when I was trying to get uh people back on the straight and narrow so if you want to do this folks uh quite honestly you can start to do it in a demo account if you if you want or start to do it uh with a real account but just trade very low in size traded at a pound a point until you get the hang of it and and just write it off as a training exercise now

something very special happens when you do this uh somewhere between 10 and 15 trades all the internal resistance goes away I've seen this so many times with myself with dozens of people that I've done this with you're going to find that you have resistance and then it just goes away and I don't understand why this whole concept of neuroplasticity that everybody can talk about but nobody really understands electrons firing together in your head neurons buzzing and making connections so you're going to find that somewhere between 10 and 15 trades the resistance goes away as I

say I build discipline very easily so I found myself that after 8 to 13 trades all the resistance went away so that's your task out of this quite honestly all of the technical analysis is largely irrelevant compared to this okay and the more you resist that the more difficult you're going to find this business is going to be for you of course the purpose of this is that to make 10 to 15 trades 30 trades 33-0 you're going to find your resistance to following a simple set of rules melts away just melts away now maybe

you haven't got resistance to following a simple set of rules that would make you very special that would make you very special indeed most people have actually okay you've picked whatever methodology you want makes no difference to the exercise anyway it's worked uh for everybody that I've put them through it that have been honest enough to do it it's worked for them uh now let's tackle fear folks the condition of fear uh the first trading fair is divorced from any true and immediate danger would you agree and it is my opinion that you can always

cope with the present moment but it's very difficult to cope with the future now I was taught this in the core in the Royal Marines that when some other swords firing at you or you're going into a conflict situation that the key to managing that is to keep your mind incredibly present not focused on the past not focused on the future but totally focused on what you're doing now and I assure you that when some other soldiers shooting at you that you get there quite quickly that thing Wings over your head sorry guys you're making

a noise there okay uh and it says my humble opinion that it's impossible to feel fear in the present moment and that's why on Friday I asked you to complete that exercise at dinner will you do your best to go through dinner focused on what was happening then did anybody try that how did you find that anyone pardon sir it didn't work it's difficult yeah it's difficult okay all right well I think that as she directed the conversation that way and you addressed that then you were present okay you were okay I think one of

one of the challenges that I that I think about myself a lot and I'm lucky enough to live in a lovely part of London as it's a picture-perfect square called Pembridge square and Kensington Gardens is just on my doorstep and I do my best to try and walk in Kensington Gardens and to be totally there and you'll find that your mind comes to distractions very frequently indeed it takes a bit quite a bit of practice to stay in the moment to be totally there you can get better at it I'm going to suggest three ways

that you can get better at it and I know you all want to get into charts and whatever but I think you've had a lot of charts by now I'm going to go into charts in a moment to keep you happy uh uh it is my opinion uh and observation over many years that all winning Traders are very present people that are focused on what's Happening Now in relation to their trading rules and I've found that building presence into your trading is essential to get that 30 trade exercise sorted out and Tom talked about this

on Friday I think where he made uh you work through the exercise of being on a motorbike and turning the throttle at 50 mile an hour you're watching everything that's going on at 70 mile an hour well you're reasonably focused and when the little pointer or whatever they have these days goes up through 100 miles an hour you're not thinking about what you're going to have for dinner you're totally not really there 100 it's not so much no well take it to 150 then okay they're all different okay but there is some point where you'll

be focused totally there okay and that's where you want to do your Trading have you all been to that point if you'll turn the throttle yes yes that's where you want to be when you're there time doesn't exist so if you're at your desk Trading and you're trading on the time frame that Dr Brooks spoke about uh and you're watching the clock at the same time well you're not present and you're going to find it in your best trading sessions from the open right through opens half past two right through to four o'clock 4 15.

time just disappears does that happen to anybody time just completely disappears that's a really good sign that you're there time does not exist in the present moment just flashes past I remember once upon a time I flew from Heathrow to New York City and beside me was the fashion editor of Vogue magazine she was lovely it was my shortest ever trip to New York I think in hindsight it was probably her longest [Laughter] yeah so time just to contract I was totally and utterly there my word in this trading rooms and the city who trades

in the city here uh if you trade in the city a young lady is known as excuse the chauvinistic moment Ladies as a belter okay she was a belter of note there are degrees of belters a bit of a belter is even more of a belter than a belter okay a bit of a belter okay uh Chauvin please excuse me that one uh similarly asked some block at the gym I go to ages ago uh you just come back from a trip to the hard bit of Everest uh and I said to him why do

you climb mountains and he gave me the old stick uh just because it's there but I assure you that the reason that people really climb mountains is that when they're up there on the side of that darn Mountain they're not thinking about whether they're going to have to check our chicken or fish that night no totally and utterly there special for soldiers that have seen battle very rarely settle in because In the Heat of the battle they can be in the present moment for many hours and days at a time and they struggle to go

back to normal and they become quite difficult to manage and normally end up blowing their brains out so intense presence is required when a certain situation triggers a reaction with a strong emotional charge we've all got people I think you would agree that cause you to get really upset and believe it or no those political mean-minded sobs are doing you a favor now the first method of building presence and you can get really good at this is by becoming totally present when your self-esteem is not being threatened and I assure you that little bar bouncing

up and down can threaten your self-esteem or going against you so when you're walking in the park when you're at dinner do your best to be completely there and very quickly your threshold of presence will grow Nature's good holidays are good when you've got that on your watching Niagara Falls you're watching Victoria Falls uh you're watching a polar bear Steve's polar bear Meander around some or other in the Antarctic that can keep you totally grounded in the moment you can go through these at your leisure folks uh focus on what's Happening Now and tell me

what problems you've got there's a really good book that I think is worth the read so long reads called A Course in Miracles and in that it says I'm only affected by my thoughts now Steve spoke about this on Friday and this is what the more spiritual people such as Eckhart Tolle have been talking for a long time it's called Uh cultivating the silent Watcher to become a silent Watcher of your thoughts don't judge those thoughts and you'll find that the same thoughts especially trading related thoughts will come over and over and over again so

don't judge them but do your best to laugh at them and dismiss them so you get yourself to a point where you're watching your own thoughts and you'll find that the thoughts will come and they will act like a room full of naughty children and the same thoughts rattle on in there for many years uh and my don't believe everything you think and the final uh method of building presence is to try and get the reptile brain on the more conscious brain and sync and invariably there's a half a second lapse between the two and

in fact I was speaking to a young man on Friday who'd just done a course on that from the same chap in Cape Town that I quoted on Friday and something will happen for example on your desk there's a pen have you ever knocked a pen off your desk and you've caught it and you can't believe how quick you are does that ever happened to you and that's because the reptile brain has reacted to this pen falling half a second before your conscious mind got that thought through to you that's what's happened similarly uh when

somebody Chucks a ball at you fast you duck Chucks a ball at you slowly you catch it fall coming slowly gives a conscious mind and the reptile mind time to actually work together so I think your mother all always told you that before you're going to hit somebody take three deep breaths did your mother tell you that sir I'm just about to deck somebody take three deep breaths well I think that uh 11 deep breaths is what the old butter spoke about to try and put yourself on the real reasons to keep the reptile mind

on the more conscious Minds uh in sync there's a half a second lapse between the two in a dangerous situation and that half a second is responsible for many of the emotional errors that you make or use your resolve that you're going to let this run and all of a sudden you take your two takes profit and then you swear to yourself that you're never going to do that again and the next day you do the same damn thing over again that's that half second difference between this fella whose job is to keep you alive

when a tiger is about to nail you and this one that processes information uh much more consciously big big part of emotional overreactions quick reactions is caused by that half second and the more present you are the easier it's going to become become to overcome those actions that occur and a part of your brain that you know bugger all about that was designed to keep you alive when the old cyber tooth tiger was hunting you down so end of day Traders end of day Traders so if you're sitting at your computer in the evening and

you've got some decisions to make then do yourself get yourself into the Zone by taking 11 deep breaths I think of all of the methods of building presence cultivating the silent Watcher is the most important now I quoted a book on Friday it was called uh practicing the Power of Now Kathy here spent a six weeks I believe studying the book uh and uh you know I did an awful lot of mentoring at institutions and they used to look at me funny when I actually handed out a copy of practicing the power of no at

uh institutional trading seminar and all Traders live in the present moment all big Winners live in the present moment golfers live in the present all good golfers live in the present moment all good tennis players live in the present moment in fact there's a book called the inner game of tennis by is it golf by Tim Galloway uh and uh if you tip X out to golf and write in trading it really works there is a golf coach what's the name of the golf coach he's written a book on Peak Performance in golf and uh

he was Tigers coach I was Ernie Elsa's coach pardon no no not that guy uh pardon I can't remember his name I've got his book uh sitting and Notting Hill in fact if you tip tip backs out for those of you that can that are under 50 typics a little white stuff you put on the paper uh if you tip X Out uh uh golf and you write in trading his books are really really great Manchester United have got uh two coaches uh and uh one a new age fella and one University trained chappie and

uh their job is to keep people in the present moment especially when they're kicking penalties you imagine you're taking England against South Africa and it's injury time and you're sitting there trying to take a a three-pointer you know presence required to do that when Rooney said so beautifully they're never a formality okay when uh I don't know who's who's at the top of the Formula One at the moment okay well they they are all coached uh to be in the moment when they're in their little red car or whatever color the car is to stay

there all winners and every Endeavor folks live in the moment now uh I think it was Belinda asked or somebody asked Tom yesterday what his goals were I don't know who that was but uh it is my view folks that we all should have some goals yeah and then forget about them uh maybe break them down into steps and to do our best to be fully in the moment and put everything into that one particular step review your goals once a week but if you get to a point where you're continually chasing that goal you

lose this moment so by all means have goals by all means I think we all should have but don't allow this moment to become a stepping stone to a future moment so I I don't know what your goals are but certainly break them down stick to have a daily list of what you're going to do prioritize that daily list and then do your best that when you're completing your list to be completely and utterly there when you're writing that report when you're completing this trade uh so I'm not knocking gold setting at all but I'm

saying that many people chase goals and they never get there the reason they never get there is that they're actually always chasing and not putting a great uh the only place where there is creativity is in the present moment so don't allow this moment to become a stepping stone to a future moment but I'll leave that with you uh uh and and talk you through all of that uh in trading hours in life don't be concerned with the fruit of your actions give attention to the action itself the fruit will come of its own accord

and uh I've got ahead of myself don't allow this moment to become a stepping stone to a future moment and our job is to exact execute perfect trades over and over and over again uh I perfect and I I think I've uh hammered that to death now uh and you can read uh these bits and pieces for yourself uh surrender to the market itself to surrender to accept the present moment without reservation or inner conflict you see this at airports British everybody says flights delayed for two hours an old fella goes completely mad you know

it's not going to help he's going to get a heart attack pretty sure others don't care uh so uh so uh to be able to surrender to the markets is quite something uh non-surrender hoggins the shell of the eagle the market is perceived as threatening the market was nice your enemy and it's quite common to hear Traders swear at the screen when you have an expectation I'm speaking to Belinda about this earlier uh uh when you start who's brand new here is any people are brand new or consider themselves brand new few of us not

many of us a few of us well you've got a huge Advantage sir because uh as you're new you probably don't know anything when you don't know anything you've got no expectation to be able to work out whether the Market's going to go up or down and you'll find that you make a heap of money six months into the journey you're now a guru you've been on courses you've read books and slowly but surely that expectation comes that you know what's going to happen next and as soon as you've got an expectation in anything and

that expectation doesn't work out you actually got a dose of pain from the universe and it sits there like about three pints again us at lunchtime okay causes an awful lot of pain that pain grows and grows and grows uh and makes trading quite difficult indeed so one of the ground rules of this is to try and get yourself to a point where you've got no judgment no resistance no negativity and as Mark Douglas says in his book get yourself to a point uh where you have two levels of belief at the level of one

trade anything can happen anything only takes one Egypt somewhere in the world to totally stuff your position remember vividly Tom and I were trading online a lifetime ago again when scape was new and we were we were talking online and I I went into an oil position and within a few minutes well half an hour I was up five thousand pounds in that position it was good monies this is nearly 20 years ago I was feeling so flush I went down to the kitchen and I brewed up a big pot of tea earl gray and

I threw all away all those Presbyterian principles away I put in an extra tea bag all right I was feeling really flush I came back my five thousand pounds was gone and my fifteen hundred pound stop loss was gone I hadn't brought the stop loss up some Egypt had blown up a pipeline in Nigeria until you can predict an idiot who's about to blow up a pipeline you don't know what's going to happen next folks you really don't so to have an expectation that you know what's going to happen next in this environment where the

lead is in the sky as The Dubliners once said in a popular Drinking Song it's just crazy nobody knows what's going to happen next if you write 80 percent of the time you're wrong twenty percent of the time on the next trade you don't know whether it's one of the 80 or one of the twenty that's the reality of the situation so if you think you know what's going to happen next and it doesn't happen the Guinness is on the way not pain grows and grows and grows and it's got some terrible consequences that pay

so and this is the one thing that helped my trading when I first read trading uh the disciplined Trader was that Traders need two levels of belief Folks at the level of one trade you have to firmly believe that anything can happen but at the level of 30 trades you have to firmly believe with every core of your being that your Edge will work out and that's difficult all of us understand thinking and probabilities at an intellectual level we're all taught stats at school but to understand probabilities at a stomach level is quite something and

certainly that month gambling in Vegas helped me immensely at that and I suggest and I used to do with all my coaching clients that we learned how to play backgammon because if you play learn to play backgammon with the dice okay you learn to think in probabilities very quickly I know we've got one backgammon player here yeah there is maybe we've got two so one of the things that I could recommend heartily to get yourself to a point where you can think in probabilities is go to your local store or buy it online a simple

cheap Backgammon set learn how to play backgammon do not get tuition from a Greek fella because he will rob you blind those Greeks are taught how to play backgammon any Greek folk here at their mother's knee and if he brings out that doubling Cube you Run for Cover okay that's how the back Rises geometrically so uh but learning how to play backgammon is a very simple way to get your mind into thinking and probabilities thinking on a batch of Trades as opposed to one trade and backgammon uh no backgammon's good if you ever get a

casino that plays craps craps is a great game as well to get you to a point where you can think in probabilities and I love the craps game it's my favorite game in the casinos only there's only a few tables in London uh and uh again uh the table Trends and if you bet that it's going to keep going you can take money off the table you've got to be bigger when you're right than you are when you're wrong and I don't think it's possible to beat markets without doing that I'm going to talk about

that in a second so and here's my metaphor for this folks and this is something I would like you to think about I think that in trading we're working we're walking along on a dark night surrounded by a thick fog we have no idea what's going to happen next none not in this environment not in any environment you've got a torch not torch illuminates a narrow path in front of you the fog is your life from the ups and downs of the market the torch is the torch beam is your conscious presence and the focus

clear pressure head is the present moment that's my matter for for what I've just been talking about uh and if you find your trading unsatisfactory it's only by surrender where you can take positive action to change and you certainly won't work out what's going to happen next let's go back to the Guinness let's say that you have an expectation that this trade's going to work out and it doesn't work out the Guinness arrives it sits in your stomach here creates a great deal of pain that happens again more pain arrives you've now got your setup

comes again and your job is to execute that setup without fear or hesitation but our minds have got two characteristics they are associate one moment with a previous moment and they want to avoid pain the setup comes again sir and at a level that you knew nothing about your mind sees the last two and it says this caused me pain and at a level you know nothing about your subtly hesitate has anybody ever hesitated to take a trade here that's the reason why and the way to get over that is to stop the pain and

the only way to stop the pain is to believe with every fiber of your body that at the level of one trade anything can happen so if you have pain it's because you haven't fully accepted that fact and Mark Douglas's exercise of 30 trades will do its best to get rid of that pain for you so that's your process that I think you should work through Nobody Does it I do courses for VectorVest there's a hundred people in the course I say to them all every last one of them I want you now first of

all to write out a trading plan for me and send it to me and I'll critique it for you out of the hundred you get five people who send it back and out of the five you get three people that uh do the 30 threads it's difficult and I can see in your faces that these clusters that are the old fellas talking about in fact don't apply to me so this is an exercise that has to be done in my humble opinion it is a right to passage uh Tom has done it and done it

a hundred times Linda that's your next step girl I'll work with you all the way okay more than happy to help uh if anything uh and old Nasim taleb the guy who's written full by Randomness Nikki Talib you met him Larry yeah he's a nice guy nice guy Norm well we brought him to Johannesburg to the tasa technical analysis Society of South Africa uh uh years back first class fellow uh he says that a stoic is a Buddhist with attitude so uh and if you have you like to read like me uh there's a book

written two thousand years ago by a Roman Emperor all in stoicism a very useful read Marcus Aurelius anybody read it first class stuff isn't it uh so uh I read too much probably I read too much probably uh so Tom do we need to break or do you want to go right through I think maybe 10 minute break yes yeah okay and then we'll I promise you guys we'll move into charts we all be much happier all right yes of course you can what was that question again why are you still standing here okay uh

I I I'm just answering the question because everybody's thinking it you know he's selling VectorVest uh and uh he uh does uh the old seminar this is the first seminar I've done since the last seminar that Tom and I did together uh but uh I think the answer to that is that when I'm up speaking I'm never more present I'm actually more present when I'm actually speaking to a group of motivated people like yourselves and I am when I'm trading and the time just flies now those of you that don't think that I could talk

for three days don't know me that well okay so I can talk about this and time just disappears and I just fall through that little crack on the floor and time completely disappears and that's the reason why I still do these okay I never feel more present more grounded more there than when I'm talking uh to an audience of motivated people that's why I still do them otherwise I wouldn't be bothered [Applause]