What Was Learned Losing A Million Dollars

Question 1

Importance or a trading plan

Answer 1

Question 2

Edison’s Menlow park lab burned to the ground, when asked what he’d do…

Answer 2

He replied “start rebuilding tomorrow” - he didn’t take failures or losses personally

Question 3

Henry Ford has nothing, and 15 years later had the largest company in the world

Answer 3

15 years after that it was in shambles, did he take success too personally and become arrogant? Personalising success weakens people and makes them vulnerable without them realising it. Makes them think they alone and not the process or methods cause success. Hubris, overconfidence arrogance etc are debilitating

Question 4

Jim make 240k in a single day - He had a desk that looked like it levitated, then, 75 days later he was broke, losing 20-25k a day for a few months. He was an exec on the Chicago stock exchange

Answer 4

. His ego pushed him down that hole, he borrowed to keep trading, until finally he was fired

Question 5

What’s a sure fire path to massive failure

Answer 5

Personalising success, they treat success as an honest reflection of themselves as opposed to sound judgement, intuition / programming

Question 6

There are two types of people, smart and wise people, what’s the difference

Answer 6

Smart learn from their mistakes, wise learn from other’s mistakes. I learned trading from others mistakes. My counter party lesson I had to learn

Question 7

There are people for places and places for people

Answer 7

Don’t get too upset about things that don’t come naturally, probably eventually someone else can do it for you I

Question 8

Jim had multiple Midas touches then a crash

Answer 8

Dated multiple girls, then they’re split from him. Trading loads, then fired for overconfidence and Black balled from industry: MTS - Midas Touch Syndrome causes massive loss.

Question 9

Jim simply walked up to the smartest person in the room and asked them to lunch and asked them how they did it.

Answer 9

I basically did that with Nils.

Question 10

I made $400k in a week (XRP pump), then I lost $400k in a week a year later (FTX). I didn’t take profits and store them safety, I got casual and thought I was smart so I didn’t keep thinking and using intuition

Answer 10

stay humble

Question 11

Oldest rule - if the market is hit with mega bullish news, and instead of going up it goes down, get out of longs

Answer 11

The high from being right and rich is so intoxicating it can catch anyone off guard, you just need to spot it when it comes. He lost everything from a board of an exchange to broke in 6 months, and his mum then killed herself and dad got terminal cancer.

Question 12

He was on top of the world the trades turned against him, he started fighting with his wife, lost loads of weight, wasn’t sleeping etc

Answer 12

Risk management protects the rest of your life. He sat at his desk crying as they ripped out his levitating desk - he had borrowed to trade. The guy started thinking about killing himself to get his family some life insurance and when driving drunk got bust by the police for bad driving when trying to find something to crash into.

Question 13

All the great traders have gone bust once in their careers

Answer 13

He tried other markets, failed and EUR/USD trading,

Question 14

The best investors in the world give loads of contradictory advice on to make money…but what do they all agree on????

Answer 14

How not to lose money, and how to protect what you have?

Question 15

Cut your losses, let your winner run
Protect what you have.
Unskilled investors stubbornly hold onto what they have.
There are innumerable ways to make money in markets …..

Answer 15

There are innumerable ways to make money in markets ————————————————————–But, there are very few ways to lose money. Most of them are psychological factors, and some of them technically analysis flaws

Question 16

People often don’t want to accept loses because they’re admitting they’re wrong, that and losing money is what we need to get used to accepting very easily

Answer 16

We must be able to accept we are wrong and accept we lose money with ease, this will allow us a clear mind to see the innumerable opportunities the market presents

Question 17

Many traders and even entrepreneurs are simply gamblers

Answer 17

Gambling when done continuously fails, having a system and process to place bets will bring consistent results.

Question 18

Risk and probability fallacy

Answer 18

People overvalue the benefits of betting big on a low probability high pay off bet (like finding ETH at the ICO price), and people undervalue the benefits of limited gain trades that are likely to pay off

Question 19

Risk and probability fallacy

Answer 19

People think the probability of more than one event occurring is additive, not multiplicative. This means not understand the AND , OR, throwing 1 and then 1 out of 6 on a dice isn’t 1/6, or 2/6 or 1/12, it’s 1/36. 1 in 6 x 6

Question 20

Risk and probability fallacy

Answer 20

People believe a number of successful trades in a row mean the next trade is now more likely to be unsuccessful and vice versa. Each is independentz

Question 21

Risk and probability fallacy

Answer 21

We psychologically enhance the likelihood of an event occurring behind the maths. Example, being struck by lightening and winning a lottery ticket, both 1 in 10,000. But most consider it more likely we’ll win the lottery.

Question 22

Risk and probability fallacy

Answer 22

People overestimate how frequently something will occur when it’s infrequent (a BTC pump for example). The things that occur very frequently are often thought to be infrequent (black swans in crypto and massive price crashes)

Question 23

Risk and probability fallacy

Answer 23

People equate conflate and mix unusual events and low probability events. Example, missing the lottery by one number, is it’s almost winning the lottery, you still just missed, it’s just unusual. It can’t be looked through the lens of “I was so close” mathematically it simple is unusual, it’s not a low probability event or almost one, it’s just unusual.

Question 24

Probability fallacies

Answer 24

Some confuse upside and downside with probability of it occurring. Example - 1:3 ratio, win 3 dollars or lose one. These are different.

Question 25

Probability fallacies

Answer 25

Assigning value to likelihood of something occurring. Every market moment is totally unique even if it looks similar to something in the past it’s not the same. Trying to figure a probability number is a fallacy and leads to pointless complication. All you can do is manage exposure and downside, you cannot predict profits and doing so will cause “expectation” violating Trading in the Zone’s rules.

Question 26

Reward fallacy

Answer 26

There are two rewards in the word, appreciation (recognition), and money. Wh
The Money is the reward, professionals ignore the recognition, you see this in so many spheres. Women, dating, rugby, the best performers see results as the end goal, recognition is not relevant.

Question 27

Characteristics of a crowd

Answer 27

Sentiment of invincibility, contagion affecting peoples emotional state, being easily suggestible, totally fascinated and expecting to win, confirmation bias and getting high on the correct news.

Question 28

Characteristics of a crowd

Answer 28

Friends ask you about crypto, you get adulation, you start to build illusions of support and confidence around positions you are already in

Question 29

Characteristics of a crowd

Answer 29

Mania, hope and often well disguised fear. People trying to replace uncertainty with certainty.

Question 30

Solitary mania, convincing yourself

Answer 30

9th dev see image with Solitary Mania written above iPad

Question 31

Breaking rules and being successful is the WORST TRADE OF ALL THAT WILL COST YOU THE MOST even if it’s profitable, why?

Answer 31

It will inflate your ego you don’t need the restraints of rules and eventually this will cost you big time as a traders confidence compounds to make them more reckless

Question 32

Successful traders are speculators, a plan is essential or you are a bettor (if you just want to be right), or a gambler (if you just want thrills and recognition)

Question 33

Just because a trade is 3 to 1 pay off this doesn’t mean there’s any statistically probability backing hitting the 3, don’t confuse ratios of profit vs loss with likelihood of it happening

Question 34

Stages some traders go through when it comes to loss

Answer 34

Denial - Anger - Hopium - Depression - Acceptance

Question 35

The more you can treat the markets like a game the less..

Answer 35

game = avoids being tripped up psychologically (life is like this)

Question 36

Do you have a plan laid out for each trade

Answer 36

Picture 9th

Question 37

Should we express opinions about the market

Answer 37

In general you should just read the facts the market is bringing up. Opinions are now personalised and your own, everyone has their 2 cents regurgitated opinion.

Question 38

Participating in markets isn’t about being right or wrong or ego…so what is it about

Answer 38

Making money, that’s all the matters

Question 39

How to combat the opinion trap…

Answer 39

Gut Think before you answer and saying “I haven’t read about that” is what wise people say when it’s true -

Question 40

Your choice of words is important, why?

Answer 40

Words you use will determine how you think about the market
I’m right not I’m wrong or we lost are ego saturated phrases and so thought patterns even if you didn’t mean to put it that ways

Question 41

Always write out your trading plan / strategy, when getting in and out

Answer 41

Morgan Stanley has been the most profitable bank and they force people to write out their plans on paper, this has allowed them to stay ahead of developments or be prepared if they occur

Question 42

Random chance reward is the worst trade you can make. This is when you deviate from your rules and plan and win profits. The reinforcement from random chance successes when you don’t follow rules will create havoc with later trades and you’ll pay for it.

Question 43

If you get one this out of this book it’s what?

Answer 43

You must stick to your plan.

Question 44

trading is easy and simple once the fear is gone, like what>?

Answer 44

like climbing a super high ladder