Welcome to the Rapid Recap, it is November 19th 2015 I am Sasha Evdakov and this week’s discussion is going to be about Trading Stocks without Fear, the overlooked goal of any trader really. So in this week’s recap we’re really going to tackle fear and I’m really finding that these recaps are transforming more into lessons rather than recaps of the market.
That’s one of the things I wanted to announce today and just a few other announcements is that really going back and looking at the recaps that we’ve done over the last couple of years is that many of the recaps that what we used to do was more on stock picks.
What I found was that you know there’s so many stock picks out there so many stock pickers out there and that my goal for you especially with these recaps is really to take your trading to that next level, is really for you to just get better, to just improved to continue moving forward, to evolve yourself and become better whether that’s in just managing your risk, managing your money picking stocks whatever it is.
Some of those things have nothing to do with actually looking at the market some of those things are internal and that’s what we’ll be tackling on this week which will be here. Now because of this and because of what I’ve discovered and found we’re really going to focus a lot more throughout these recaps in the future more about lessons.
Some of these had to do with my own personal awareness of what’s going on and what’s happening in part to the recaps that have to be the awareness and part of what’s going on with the podcast that we were creating.
Now the podcast for those of you that were waiting for it is actually now live so bravo congratulations and I guess welcome to the podcast world. So for those of you that was waiting for the podcast and wanted it on podcast format your recaps on the podcast format it is now live.
You can go to the iTunes and search for Let’s Talk Stocks with Sasha and in that podcast you can go ahead and get all the recaps that we’ve made in the past. Now not all of them are up right now we’re releasing one every single day for the next few weeks and then we should be caught up probably by mid- December to the current time frame.
Now the beauty behind this is that were able to go back and look at what are the recaps that had some popularity what are the recaps that weren’t very popular and one thing I did notice was some of the great recaps of the wonderful recaps that I did in the past that were private they may only have two or three hundred views by people on Youtube.
Now the newer recaps you know still have fantastic content of course they have maybe two or three thousand views within a couple of weeks or within a month they have a lot more views but because those other YouTube recaps were private they were only sent out to the newsletter members what I’m actually going to do is released those on the iTunes Podcast.
For those of you that missed out on some of the Private recaps or those of you that are not on the newsletter list will be able to get those on the podcast website or podcast subscription iTunes whatever it is that you do on iTunes you’re going to be able to get it there in the audio format.
That way if you’re going to work you’re driving if you’re going on a subway whatever it is that you’re doing you will be able to download those podcasts and listen to them in your spare time, free time or as you’re traveling on an airplane to go to your vacation you’ll be able to get some more knowledge insight and wisdom for the future.
With that in mind really my goal to summarize is the podcast is launched and we’re really converting these Rapid Recaps it’ll take about a month and a half for about a month to get all of them up so within a month you’ll probably see this recap on there and we’re really going to name the podcast Let’s Talk Stocks with Sasha Evdakov unless there’s a better name that we come up with.
For the meantime let’s use that and chances are we’ll probably rename the Rapid Recaps as well to let’s talk stocks just so that they’re all in sync and in alignment there won’t be separate content for podcast and separate content for YouTube it’ll be the same but it’ll just allow you to get it in another format.
Now one thing that I would appreciate and probably other viewers as well or listeners is that if you’re in the podcast or if you listen to other podcast I would definitely appreciate a rating or review on the podcast.
Supposedly from what my adviser told me on one of my helpers who helped me get the podcast going what they said was that you know it helps to have more reviews on your podcast just get listeners and get people downloading your podcast so that way other people can discover the podcast.
If you do listen on other podcast you know other traders that are listening to other trading podcast other mediums then by all means it would probably help them out as well for you to post a little review and just say a few words of what you think about these recaps that we do and that way they can also discover us and when they discover my content my material and what we have to offer.
Then it just the only benefits you as well because it allows me to create more content more material as we have a bigger audience it just makes things a lot easier and it allows me to have more people on my team to take care of some of the other little needy greedy things that I still have to do like uploading some files converting some files and things like that.
Either case podcast ready to go Rapid Recaps are still going to be there and we’re going to release some premium old Rapid Recaps in the podcast so check. Those out those are not available on YouTube unless you have the private link and you were a member on A Weber and the newsletter from months and years ago.
We’ll release those on the on the podcast here shortly with the next few weeks and then this podcast or this recap that we’re doing right now will be live on the iTunes as we catch up with all the episodes in sync.
In that way they’re sequential and in order altogether so moving on into this week’s lesson of Let’s Talk Stocks or the Rapid Recap, my goal this week is really to hone in and focus on fear and I think it’s really important to discuss and talk about Fear, because it’s one of the drivers and one of the most important things that makes our trading decisions.
In order for us to make healthy trading decisions you know we really need to essentially trade without fear and one of the ways that I found to be able to do this is just personal self-awareness. Now as we get into the subject of fear there’s a lot of deeper things that we can get into when talking about fear you’ll go down the path of discussing emotions and you’ll go back on the path of talking about feelings which are basically a subset or tie into motion.
There are a lot of areas and avenues and things that we can get into as we start talking about fear and emotions and then you also have the positive of fear and the negative of fear. For example in the business world what we like to do is talk about the fear of success or fear of failure.
When you have someone that’s fear of failure, well that’s basically someone doesn’t get up and go someone doesn’t get up and make a trade because there’s fear or if they’re scared to fail on that trade or fear of success then they’re unsure of where they would be in the future if this doesn’t work out then am I going to lose my friends?
I mean if I’m multi-millionaire, if I’m successful am I going to lose some of the friends that I currently have, are my activities going to be different it’s the changes really that happen. Now when we get into emotions and studying a lot of business topics, psychology topics as I’ve been doing in reading a lot of books over the last decade I’ve really looked at emotions and one of the things that I picked up from reading all these different books is that emotions are more like a channel.
Similar to how we have stock channels just like here we are looking at Nike and you can see that we’re moving in a channel, emotions are also tied into channels such as this one and you can see that in this channel what we are basically doing is we’re hitting some highs and then we’ll also come back and we’ll hit some lows in that channel.
We’re hitting different levels different peaks and different points and you as a human also hit these highs and lows as you go through your day today as you go through trades and as you move through your training path.
Now before we get into hitting these highs and lows, I do want to bring awareness to you that when you trade with emotions it’s not necessarily a unhealthy thing, it’s potentially bad for your trading account but you need to be aware of what state of emotions you are in.
Emotions really or the fear aspect was there and designed to protect us so back in the old days when the wheel was discovered and caveman and everything else everybody was making little fires to cook their meals and dinners on, then at that point this is where the fear was actually a protection mechanism for us being human beings.
For example we were sleeping in the night and a bear would come out from the forest then the fear aspect would kick in and this was our amygdala which turned on and this would turn on your fight or flight mechanism.
It would actually gear you and move you towards safety so this amygdala works in multiple ways in the current or modern world. Now in today’s world chances are you’re not out camping with the Bears but if you are this is what happens if a bear shows up that amygdala creates a rapid fire and you’re in a dangerous situation.
Now you either fight or flight, you either fight with the bear or you run like crazy or you do what you were trained to do, maybe stop and pretend to play dead. In either case, long story short, the thing that happens in the modern world with this amygdala is you get different situations that come up.
Now in the modern world we typically have things more like burglaries, we have terrorist attacks, we have you know situations like car accidents and this amygdala starts to create this rapid fire. So if a burglar shows up and you know you’re sleeping in your bed and in your house, now you have a fight or flight mechanism that goes into overdrive.
Now let’s say a burglar did walk into your house and you know woke you up and now you have something available to meaning you have opportunities, situation comes up you’re able to react or do something.
Now your reaction to the situation could be a variation of a few different things. Now one of the first things it could be just simply your past experience, your past experience could determine what you do if you’ve been in those kinds of situations you may decide to fight rather than flight or run away or just stand still.
Your past experience has something to do with your potential reaction or what you do and how you control that amygdala. The second thing that may happen is your own personal self, your own personal awareness. So if you’re in the upper channel feeling a little bit more high-value if you’re feeling a little bit more rambunctious from your amygdala, the rapid firing if you got the adrenaline going and kicking off.
If you’re in a higher state you may feel more confident and when you feel more confident, now you say hey all I’m going to take this guy on and now I’m going to say “Hey! I can take care of myself I’m going to do it I don’t care what’s going to happen to me but I’m going to take care of the situation”. So that’s the fighting situation.
If you’re in your lower self, you would probably be “I’m going to run away or I don’t feel good you know I’m just going to do exactly what they say” so that would be you in the lower channel or lower part of yourself.
Really, it’s the environment and then you also have your higher and lower self, depending on your own situation is where these variations can come from.
Now for us our main thing that we want to focus on is the fear and where does that really come from and if we’re talking about this channel right here of Nike, you can see we’re hitting the highs and lows in the stock even though we’re trending higher you still are in the channel.
Now the important part to remember and understand about your amygdala or your safety mechanism that happens within your human body is we’re constantly scanning for things in our environment we’re constantly scanning for things for protection.
Women when they’re looking for a mate and when they’re looking for someone to be with, typically they’re looking for safety they’re looking for safety in various ways this could be safety in terms of physical safety it could be in terms of a psychological safety but they’re looking for a comfort level.
I mean we all want to be comfortable around our friends, our family we’re looking for that safety mechanism and safety net.
Now that safety net has a lot to do with our decisions, it has to do a lot with what we do with our money, what we do with their time, what we do in terms of choosing a restaurant. If we don’t feel safe at a restaurant, if we look at a restaurant there’s mice or rats that are going on and walking out of that restaurant or crawling out of that restaurant the primary primal thing that we’re looking at is, is it safe to eat?
Now we could make a decision or we could say that you know this restaurant has great ambiance it has a waterfall, it it’s got a great seating there’s romantic fireplace, it has a lot of great other aspects and great food there but the main important thing is am I scared to eat there.
This is our most basic human fundamental reason when it comes to fear is our utmost base level when it comes to you know going out to that next step into eating into a restaurant it is, is it safe for me to eat there and I know it may seem trivial that there’s a lot of places out there to eat but really that’s what it comes down too and we’re constantly scanning our environment for this.
In the market what’s fascinating is that this is also what happens so when you’re looking at trades as you start making trades you’re constantly looking and scanning and for those of you that are new to trading or just putting on your first few trades your brain and your mechanism is constantly scanning for, number one trade opportunities and number two you’re scanning for a safety net.
Before you even get into a trade let’s just backtrack a little bit before you even get into a trade you’re looking for a safety play, you’re looking for a where can I be safe where can my money be safe and the next step for the next question you’re asking is where can i capitalized the most, where can i gain the most from the trade.
So at your base level you’re looking for safety and if that’s your base level then that’s what we’re always looking for a scan. Now once you get past that safety mechanism beyond that fear and you already feel safe you go ahead you make a trade you execute that trade and now you’re in the trade.
Now what’s happening to your brain? What’s happening to your mindset? Now again you’re looking for safety so as that stock powers higher you’re like wonderful great I’m feeling good about my trade and now you’re in your higher self you feel good.
There’s a lot of different books out there that are about the Higher Self and the Lower Self if you just take a look at you know self-help books, if you look motivational books there’s a lot of different things and the higher self and the Lower self is.
As we mentioned like this channel, the upper part of this channel is think of it like the higher self or if we break it down on this channel and Nike let’s say the 135 level as the higher self and 130 or 120 is the lower self.
As we are in the trade now and this stock powers higher and it moves higher we’re feeling good, we’re in the Higher Self we feel good about ourselves and we feel good about that trade. So now anytime that stock pulls back even just slightly now we start getting a little bit of fear in us.
We say okay well how low can it go, oh my goodness is it going to be really low and we start getting this year kicking in and our amygdala starts running wild and now we have that fight or flight mechanism or basically stay or run away and get out of the trade.
What happens is when stocks starts selling off many people’s amygdala starts kicking in and rapid firing so for those of you that have been trading for a little while and have enter trades but then what happens is your selling that stock as it’s moving lower so basically let’s say you get into the trade you make a little bit of profit, meaning you’re up in the trade but you didn’t sell it you didn’t sell half you didn’t sell a third you didn’t take some profits and the strength.
Now that stock starts pulling back and even though you got into the stock let’s take Nike here as an example we have 120 to the 135 level, so let’s say you got into the trade at 127 right here you got into the trade at 125, 127. 127 right there you got into the trade that stock continues to move higher you have a little bit of profits but you didn’t take some profits off the table and you didn’t sell some shares in the strength.
Now that stock starts pulling back and you start getting a little worried and fear starts kicking in and now that stock continues to sell more and the selling continues to accelerate and now you’re down to 124 or 122 and you’re saying well now I have a gap over here at 119 and 116 price level so this stock can actually get into that gap and fill and you decide to sell it at 122-123 even though your entry price was 127.
The reason this happens is because that amygdala was rapid firing, it was scanning the environment for protection this is your natural human instinct to protect yourself. So if you’re the kind of person that you know is being aware of this and this is happening to you meaning you get into the trade, you’re in the right trades but then you get into a losing situation, you’re constantly losing it is because your amygdala or your natural human behavior is dominating your trade.
Think about that for a minute that was profound what I said if you’re in the trade and you were up on that trade and then later you turned it into a losing trade it is because fear is stronger than the positive emotion of a capital gain and that is why stock selloff much faster than they climbed higher.
If I tell someone hey invest in Apple, invest in Nike, invest in Google you know it takes time, you say next week, ok next week and this momentum takes time to build however if I tell them the world is going to end next week they build themselves a bunker, they go get themselves a gun, they go get some protection to go do whatever it is they will need to do to protect themselves because the world is going to end because fear is a much more critical driver than positive gains in the market.
What’s important in this topic for conversation? What’s important from watching these stocks? So as you start looking at your personal-self what’s important to recognize is that you’re constantly scanning for dangerous situations in the market, whether you’re in the trade or before you even get into the trade, whether you think about it or not this is a natural human instinct you cannot change it.
So don’t think that Sasha is messing with me right, now it is actually true and the emotions that you project, the emotions that you’ve Telegraph into the market is in fact going to implicate or it’s going to make changes to your trades.
If you’re trading in a higher self if you’re happy, if you’re feeling good, if you’re feeling fantastic about yourself you know you might be patient because you’re feeling good hey I just worked out I feel good I got a girlfriend. Hey you know I’m ready and I’m just waiting for the right opportunity to get into the stock when that stock breaks that 127 level and Nike breaking 128 boom I got in right there I’m feeling good.
Now my emotions are great and I’m making good trading decisions but if you were in a lower self, if you were feeling bad about yourself, if you’re not feeling good about yourself, if you feel uncomfortable, if you feel weak, if you know your best friend just told you know that you upset them and there’s a lot of mental stress or mental clutter you know what you want to do is clear that mental desk.
If you’re feeling like there’s a lot of clutter on your mental desk then what you want to do is really get rid of that mental clutter and the quicker you can do that the better off you’ll be in making your trading decisions, so if you’re feeling in your lower self then what you want to do is stay away from trading or making trading decisions.
Here would be our lower self, Nike at 120 this would be our lower self here and our higher self would be out 135 so let’s just use that as a gauge and sometimes we feel bad so at this point we shouldn’t be making trading decisions other times we feel normal and content this is a good time to make some trades potentially depending on how or where you are of your feelings and other times we feel really good and when you’re at these higher peaks you know you want to watch your emotions out where it is you’re making it the best trading decisions and the best trading that you’re doing.
For me personally I make the best trading decisions when I’m actually not at my highest self and not at the middle point and not at the low self but actually right around that 75 percent level. So I make my best trading decisions when I’m feeling pretty good but not overly confident, if I’m feeling overly confident let’s say I’m feeling really good and really confident way up here at that 135 level and my trading decisions are sometimes overconfident and just you know little sloppy at times because I feel too good about my trades.
Instead I’d rather be a little more humble about it and that’s when I make my trading decisions. So looking at yourself when getting in and out of stocks, when making your trades it’s important to start recognizing when you are in your higher self personally and when you are in your lower self because that fear factor is going to dominate you, it’s going to transcend into your trades, it’s going to move into your trades.
It’s kind of like you know when you’re around an animals like a cat or a dog when you’re around on animal and you’re feeling scared, you’re feeling you know you’re crying or you’re nervous whatever it is animals can sense these things and those energy vibes they rub off on the animals and in trading what you don’t want to do is you don’t want to make trading decisions when you are in your lower self, when you are upset or when you are feeling bad about yourself.
What you want to do is wait until you’re in that mid-level to a higher level feeling good confident but not overly cocky and make appropriate decisions for the trade logically and rationally because if you make the wrong decisions and you don’t properly have a trading plan, you don’t have a trading system that amygdala is going to start kicking in especially ones that stock starts pulling back just slightly.
Even when that stock starts climbing up to here to 134 – 133 to these higher levels and the stock just starts lightly pulling back to this level, why do you think that there was so much selloff here on this bar that was about a few points rather than you know a few one or two points earlier.
Why is it that happens that that bar accelerates so much quicker to the downside and then these further bars continue to accelerate faster and faster they just start to roll over very quickly? Why does that happen? Well, it happens because of the fear because of the mental brain that kicks and all these neurons are firing off and they force other traders to sell because the fear factor is much stronger than the positive reward factor because we’re always as humans looking for that state safety net.
We’re always looking for something to be safe, so for those of you looking for trades having trouble getting in the right trades the right stocks you’re getting in at appropriate times and you had a light profit but then you’re selling with a losing position or you’re not making any money a lot of that has to do with in part fear you’re just not ready there yet but you’ll get there.
It takes a little bit of time takes a little bit of awareness understanding how these things play out and it’s one of the overlook things and I say it’s one of the overlook things because most people focus on shiny objects, they focus on technical analysis they focus on you know squiggly wiggly things that you know can give them a direct precise entry point for the stock
Unfortunately, the plan the risk management the money management that goes along with that there’s a lot more to it than just having buy and sell points or alerts that happen.
It’s one of the reasons why I don’t personally run an alert system instead I run a charting service that helps people learn a little more about technical analysis and you need to do your own due diligence to learn more about those charts and learn about your own risk to reward strategy.
It’s there to help you looking at charts in different ways or condensing your time scanning for charts is because I want you to get better, I want you to continue to increase your education level so that way you’re not dependent on alert, so that way you don’t need to worry about these buy and sell signals or alerts working and not working or text message not getting through or something isn’t posted on the website.
Instead you have your own plan, you have your own knowledge to be able to make your trading decisions and that’s what I want you to have, I want you to be confident enough to make those decisions on your own and it takes time to get there, it takes energy to get there, it takes a lot of practice time a lot of study time but you got to do the work and you got to do the homework.
With that in mind you know focus on your higher self and your lower self and start recognizing it you should be able to recognize it in day-to-day life, that means with your friends when are you feeling more angry, when are you feeling more sad you know and once you’re aware of this ok today I’m feeling a little sad and if you’re feeling a little bit sad then pop yourself out of that lower self or figure out a way to get out of that whether that’s exercising which is a way to boost that morale or doing something a little bit different reading a book.
Changing something else which there’s a lot of other topics that we can get into as we start converting the lower self to the higher self but start looking for being aware of what level or area you’re in first. Are you in the lower self or are you in the higher self and once you’re able to spot that, that’s where you’ll be able to start being better at trading decisions.
You’ll start being better at hey am I selling too early getting out of a stock too late, you know this fear taking over my trade and am i selling it because I am really scared to lose and a lot of times this is what happens and that’s what happened to me for many years is that the fear would kick in, safety net is just part of human nature because you need to be going against the grain in the market.
There’s a lot of things that you have to put together to make it work and this is one of those things because you need to be aware of all these situations and this fear that comes up. So before we conclude the Rapid Recap here or the let’s talk stocks session or the lesson I do want to talk a little bit about the market.
We’ll just talk about the Dow Jones or the diamonds here and one thing about the market and just looking at the market here were at the basically 172 to the 183 level and we’ve talked about this a few weeks back talking about what we could do.
We could pop higher comeback retest it and that’s actually exactly what we did. There is a few other variations that i mentioned that could happen was that we could have continued to sell off further which I would have preferred.
We could have continued to power higher and blast through this 182 level on the diamonds but so far we haven’t done that. So right now we’re kind of consolidating here we’ve bounced then retested this level so chances are I mean between 2015 or most of 2015 we stayed in that range in this channel and it’s been a sideways market.
As more of a stock pickers market and the S&P looking at it very similar in that way as well so really more of a stock pickers market and that’s kind of where I’m at we still have certain specific stocks that we still hold onto like the Google’s as you notice right here still moving well and holding up well.
We did have a little bit of a sell off there this last week but you know these big stocks and you know after they power let’s say some of these stocks they power thirty points a ten point selloff even on a stock like Amazon is not anything crazy, it’s not major.
You can see how these stocks they power higher then what happens the fear kicks in, the fear the amygdala kicks in for everybody and they start selling and these stocks they have great personalities, they have fantastic personalities.
They’ll go beyond that support point just like Amazon here going below that 630 price level and going down the 622 almost nine points spread just right there on the hourly and then they’ll pop higher and then continue moving higher for a forty three point gain from those lows.
You have to have large stops in place for these higher-priced companies and that includes the Priceline, the CMG, Chipotles all these higher companies you have to have larger price spreads for your stop to be profitable and you need to be taking profits in the strength something that we talked about in the risk and money management section of the previous week’s lesson.
Otherwise what’s going to happen is your fear’s going to kick can you may have a stop somewhere here you get out and boom but if you sold eighty percent of your position let’s say you got in it right here you sold eighty percent of your position over here and you let the rest ride and it sold off then you can let it come back maybe a bounce and boom you’re back to where you were.
Again depends on your plan, depends on your strategy and a lot of other factors but look at what happens when fear kicks in and what happens when fear starts taking over it’s just all a bunch of red bars whereas here you get a mixed green red green red green red but here all red bars.
Bidu has been holding up well since breaking out this point and then we had Netflix we got into Netflix as well right here after breaking this resistance line and holding about half the shares and half the position now. So we already took half our profits off and if it comes back to right here 114 let’s say 65 or out but we’ve traded that one this week.
CMG with the earnings you see what happens here we were looking for a short position but because of earnings you know you want to avoid stocks that are waiting for earnings and the news catalyst this is what happens with news catalysts things that pop these stocks you know they can pop higher and stop you out real quickly but you know with these larger stocks you got to give them a little bit extra room.
Thanks again for joining me in this week on the recap or the Let’s talk stocks lesson and like I said we’ll be focusing a lot more on lesson specific on chats on more about learning from the charts, we’ll apply both of the charts and visuals as well as just lessons in general to educate you rather than talking about news about oil, talking about news about gold because that only last for a week.
If you can get better if you can trade better, if you can learn to become a better investor spot things better whether that’s becoming a better technical analyst, whether that’s becoming a better money manager just of your own personal account and if you just make an extra $1,000 a month from trading that’s an extra $12,000 a year that really can change a lot of people’s lives.
I remember back in the day when I didn’t even make 10,000 to $12,000 a year you know I was still living and we’re eating ramen and hot dogs and all these kinds of things you know but it takes time you know but if you can make those changes you’ll grow and then you get to the next step and the next step and you continue to grow and once you get to a comfortable level then you know you can choose to do what you want to do.
Thanks again for joining me, thanks for sticking around for the lesson if you want to get the podcast go ahead subscribe to the podcast do a review if you would you know and put your little tidbits and comments in there it would be helpful not only to me but other viewers and other people that are looking to increase their knowledge and education.
It would help them out as well to discover the channel and discover the insights that we share on the channel and you know just be prepared that we’ll have some really new and exciting episodes for those of you that haven’t watched some of those private episodes on the podcast as well.
I hope you have a great Thanksgiving ahead we may or may not do a lesson next week and that really just depends on the holidays if I can pre-recorded which would be the beauty of you know focusing on more or less than specific, if I can pre-recorded then by all means we’ll have a podcast, we’ll have a lesson and you’ll get a lot more knowledge coming in and improving your game but if not then I’ll see you the week after and I wish you and your family a great holiday, a happy Thanksgiving and a wonderful time.
Thanks again and remember to do what you love, contribute to others but most importantly live life abundantly see next time.