In this episode I had the opportunity to deep dive into the topic of developing the ideal trading mindset with Rich Friesen.
Rich brings a deep wealth of knowledge to the table drawing on his many years as a broker, floor trader, financial software developer and entrepreneur.
Now he works with financial professionals, independent traders, business leaders and entrepreneurs who want to expand their mental game to make more consistent profits.
Rich traded 20 years in the pits at the Chicago Board of Trade, the Chicago Mercantile Exchange and the Pacific Exchange. He went on to start Trade Management, LLC one of the few consistently profitable firms on the Pacific Exchange options floor which he later sold.
Rich holds a B.A. in Philosophy, a Masters Degree in Clinical Psychology and is a graduate of the Gestalt Institute in San Francisco along with Master’s training in Neuro Linguistic Programming (NLP).
In the show we talk about –
- How most of us grew up in what Rich describes as the two-storey nut house and how that affects our beliefs and behaviours
- Rich describes to us what a NEME is (or a neuro meta structure ) and how we use NEMES as the lens in which we perceive the world and support our beliefs
- Why suppressing feelings and emotions is simply stabilizing a system that will not deliver the benefits that we want.
- Why Rich believes the more integrated path forward is to look for ways to constantly create rapport within ourselves
- Why the path towards creating a better trading mindset is through the “Triple A’s” – Awareness, Acceptance and then Action
- Rich shares an exercise on how to create a technical indicator of your internal / physical states
- How this exercise not only improve your awareness but just like any technical indicator it tells you whether you should be trading or not
- Rich answers the questions on whether all traders come to pre-loaded to trading with emotional baggage
- Why you need to beware when a trading coach tells you that you need more discipline.
“The real question for me is what mechanisms are you using, what beliefs do you need to have, what is your identity that supports that and once we’ve identified that then the question is does that still fit you?”
“One of the things that I always do in my coaching is move people toward self-rapport because ultimately that change is not just trading but that changes life significantly.”
[49:51]Houston: Yeah, so how does, what do you think – for new traders, in your opinion – is there a best place for traders can kind of start with trading like is it best for us to start with systems and methodology and then progress to psychology or do you have a prefered journey for traders to devlop themselves? [54:29]Rich: Yes, start with a sim account, start with a real simple strategy – it doesn’t matter almost what it was – even a moving average cross-over whatever it is and just learn execute that – execute it, execute it, execute it, execute it and if you execute it consistently 100% of the time then you don’t miss any trades, you don’t avoid pulling the trigger on your trades and then you can evaluate the system and by doing that you get used to execution first over and over again the traders I get have gotten either complex systems or unclear and they’ve lost money and they’re afraid to pull the trigger or they intuitively trade off the system and it’s hard to even to determine whether the system is viable, because they have introduced so many psychological variables into it. The other piece of it is – and oh we don’t have much time, is how we look at strategies, I like to flip strategies on their head. But not by looking at what strategies can I use, but what is the quality of the market right now and to focus on that and that is a whole other hour of itself, but there is just so much for new traders and but just to start simple and start training your brain to create these new neural patterns that you can build on as you get more complex. [55:52]Houston: And then when do you start developing the psychology part of trading, does that sort of become kind of common sense once you start to see how things react to you system and managing trade plan and how compliant you are; or is it that you have to kinda stumble into it? [56:04]Both talking and laughing together [56:17]Rich: One hundred percent of trading is psychological and especially for the independent non-algorithmic trader so as a result that’s the biggest influence and that I believe is where our attention needs to be – the strategies, the methodologies, the markets – they can all come later once we’ve got our mind sets right, the rest is fairly easy. [56:35]Houston: Great and we are running low on time so we are just going to ask for a couple quick questions for you as we look to share just one more tactic to traders. What would you advise to traders who are having real issues, you know they have a strategy set up – they’ve defined it, it’s pretty simple but they are still having a real issue with compliance and they just can’t seem to follow the signals? What would you advise that person? Do you have ant tips or tactics? [57:00]Rich: I have tried to undo some decisions I made in the past and it’s really difficult. You know to go back in time and redo it, it’s just really hard because the time machines are expensive and they’re not that ([57:14]Houton: reliable). And I’ve tried to make decisions in the future for myself, so going into the future and making those better decisions so again that’s really difficult, but I can make a decision right now, right now, right now so the important focus is to speak in the now and be aware of everything and bring those awareness to this moment where it is relatively easy to make new behaviors. So just focusing on the now, being aware of it, being aware of the voices in your head – your physiology and being aware of hesitation; that’s interesting I’m hesitating before I make this trade; you know there is something in there that has positive intent for me again rapport with yourself, be curious about it and letting it be. Because if you can just let yourself be and accept all those parts eventually they will start to evolve on their own as versus the two storey nut house where you try to discipline yourself. [58:16]Houston: I like that, that’s great advice, but just one more question. You talked about John Coates’ book about The Hour between Dog and Wolf. Are there anymore related trading books or any other related material that you will recommend traders to read up on? [58:31]Rich: Mark Douglas is good, Steenbarger is good and there are just a lot of great books. So just stay on, beware when a coach tells you that you need more discipline. That means, red flag, they really, they are buying into the bifurcation of your brain, which is a two storey nut house and I think that for me and my life – let’s forget about trading for a moment but let’s just look at our lives. How do we want to live our lives, if we are fighting ourselves how can we love others? If we accept and love ourselves and notice ourselves and be curious about ourselves – we can now transfer that same feeling to others. My relationship with my wife and kids has improved immensely as I learn to love myself, as I learn to accept myself; I am able to accept them. And as a result when people are around me I am much more attractive, I am much more engaging, I’m a better salesman as I have stopped fighting myself and have accepted all my parts. Wow, what a change it can be for everyone as we move toward that place of self-kindness, self-acceptance and allow ourselves to just build that rapport so that all parts of ourselves are working together. [59:58]Houston: Well said; we don’t need to beat ourselves up traders, that part of the business but we don’t have to reinforce that by building on beliefs and mindsets around that; what a great way to end things. So Rich, I just want to thank you again for today’s call so many great nuggets. What’s the best way for people to stay in contact with you, if they like what you said, how can they keep in contact with you, where can they engage you? Where can people follow you? [60:24]Rich: Rich at mind muscles dot com, plural rich at mind muscles dot com. Or you can go to mind muscles for trader’s dot com. And mind muscles for traders, I love talking to almost everyone, I love meeting new traders, I love talking to new people because sometimes in ten minutes I’ve had dramatic shifts because people have shifted just the way they have looked at the problem. So feel free to contact me we have online courses, we have recordings, we have boot camps, we have private coaching. So I’m happy to engage people in terms of their budget, in terms of their needs, and I’m always willing to talk to somebody to figure out how they can improve their lives cause that’s where my heart is. I come from this and see people changing their lives this is just so thrilling to me; I just love that and that’s a big part of what I get out of this. [61:02]Houston: I appreciate your work, thank you so much Rich. [61:22]Rich: Ok, take care Houston. [61:24]Houston: just one more thing before I wrap up – as usual I just want to say we will have a link of all the things Rich talked about here in the show notes, we’ll have a transcript of our call and all the resources will be there as well, so if you want you can go to the trading edge dot org, back slash episode ten and for all the listeners what’s the one big insight you got from today’s podcast. I love to hear, just drop us a line in the comments section. And you know Rich gave us a lot of tactics and ideas today so what would you be willing to try, so take one thing from today, I don’t want this to be just information that no one uses. Try one thing, Rich really layered a lot of stuff so pick one and try it for seven days or thirty days and let us know how that changes your trading. [62:06]Rich: Perfect [62:07]Houston: Thank you again Rich, we really appreciate it today [62:09]Rich: Thank you Houston; you take care, have a most wonderful day. [62:11]Houston: You too, take care. Bye bye
mindmusclesfortraders.com – Rich’s training program for traders
Self awareness exercise – Deep dive into the exercise we speak about in the interview
The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust – Book by John Coates on the neuroscience of trading
Trading psychology presentation by Rich-
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