Lower Your Expectations.

We’re running some simulators today. Probability simulators.

I find there are three levels of trader progress in this area.

They believe that once they find a good system they will be able to come into the market and be absolute killers every day. They just need to find that system!

They have a system but know it’s not the full answer. Most days are good but trading is a mental disaster. It’s hard, it’s stressful and they are living their lives from one trade to the next.

This group has stopped caring. It is what it is. They understand that probabilities work out over time and if today isn’t the day, they bugger off.

The point of this post is to help you find the level you are in and perhaps, play a role in guiding you to the next level.

In the following images, I have run a little test. I have 10 days with about ten trades each. My trade stats are the same for each day. We’re running a 30% win rate and a 4:1 Risk Reward. Pretty good right!

Well, even in this high potency system, you will see that, in the day to day work of it all, it’s not perfect.

So far so good. With a killer Risk to Reward, like we have, one would expect to be pulling in killer days with little draw down. While these charts don’t fully encompass the stress of trading, having put out many of your own trades and reviewing them, I am sure you can ride the emotional waves to some degree.

Then it shifts.

Here we are, Day 4. This would be a Thursday. LEVEL 1 can’t make it this far. LEVEL 2 can put up three good days but the day below is a disaster. It absolutely should not be. This is what it looks like to let the odds play out. Understand this on a deep level. I find MANY traders beat themselves up for things when in reality, it’s just the probabilities. They go on endless searches of self and meaning (while I also enjoy those, they should not be because of odds) and find more problems, never solving the issue they face.

This day below is a blow up day for LEVEL 2.

Here we are, back on track again. Life is good.
The professional is happy this day has happened but they could generally care less. They know that it could have just as easily gone the other way.

Here we are again:

LEVEL 1 traders ditch their system and continue their endless search.
LEVEL 2 traders feel lost and hopeless. They call their mom, they call their therapist, they kick the dog and punch a hole in the wall.
LEVEL 3 traders could honestly care less. We came in, we took our swing and it didn’t work out. It’s another fine chance to display our resolve.

Unless you are LEVEL 3, you don’t see these next few days below. That is the real gift of solid mental resolve aligned with the expectations of your edge.

Where do we go from here?

If you got this far, you might end up at level three one day. Seems likely. In my opinion, 90% of this job is about understanding how the probabilities work out and building mental skill in handling that reality.

A few things to do before you start each day trading:

1. Visualize yourself being stopped out a few times in a row.

2. If your system requires a 3:1 or 4:1 trade after a few stops, visualize yourself being stopped out and holding the winner to target, or adding.

3. Set yourself up for a fight. This means you role up those sleeves and get ready to lose some money. You’re gonna do it with strength and power.

4. Make a plan for slowing down your mind. The reptile mind will kill you here. Learn to slow it down and be fully present in the pain of the moment. That’s the fun part after all!

You are welcome to run the simulator yourself and see what happens. Put in you own edge stats and see if what you expect each day from the market aligns with reality:

Good luck and godspeed,

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