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I do not claim to be a trading wizard. That is why I
am reading these books. I am just here to share
my personal takeaways and interesting excerpts.

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“If 90% of traders lose money, let’s study what
the 90% does and do the opposite!!!”

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 Brokers

Brokers actually want you to be successful,

because they’ll make more the longer you
survive. However, most traders eventually
end up self-sabotaging and leave.
You probably think you’re not in the 90%. But that
is statistically very unlikely. Everyone tries to beat
the markets and studies charts/fundamentals.

But 90% still ends up failing. Why?

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Best Loser Wins.

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 What does the 90% Do?

The 90% looks at the same thing and does

the same thing everyone else does.

To be the 10%, you need to work not only on

analysis, but your own psyche as well.
The Financial Market is not the Supermarket.

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If something is going up a lot, there’s probably a
good reason. If something is going down a lot,
there’s probably a good reason.

The financial market is not a supermarket.

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 Human Conditioning

We are wired to think that cheaper is good.

Therefore, the 90% think like this.

The 10% are wired the same way, but they

are able to view the market objectively.
Cognitive Dissonance

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 “The markets are up, should I sell?”

“The markets are down, should I buy more?”

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 Cognitive Dissonance

We’re inclined to sell our winners because

we are uncomfortable with the idea of
roundtripping profits. We resolve that
discomfort by selling our winners.
 Instead, we should be asking ourselves:

“The markets are up, should I BUY more?”

“The markets are down, should I SELL and move on?”

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What Losers Do, and What Winners Do

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“A losing trader is not going to put in the work and
actually transform himself. That is the sort of
thing only winning traders do.”

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 People We Know

How many people do you know say things

like, “Wow you’re so good at this, can you
teach me???”

Do you think these people actually try?

 “Taiki, can you teach me about crypto?”

In my experience, my friends just say things like

this but don’t care to actually learn. The 90% fit
under this category.

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Ed Seykota: “Everyone gets what they want out of
the markets.”

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 People We Know

How many people do you know say that

their goal is to become a profitable trader?

And how many of them are actually

gamblers hungry for dopamine?
 My Crypto Peers

I’m in many group chats (“trading pits”) and

I know many people that think they are
traders who’s actually in crypto to gamble.

Win or lose, they’re getting what they want.

 Shorts: “Insiders will sell, too much supply.”

Longs: “People are short, so I will long.”

Do you think these people actually have an edge?

No, they are trading their own opinion.

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Avoiding Pain

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 Avoiding Pain

The traits that regular people possess does

not translate well to being a successful
trader. That is why 90% of traders fail.
Whenever we feel uncomfortable, we are wired to
find a way to rid ourselves of discomfort.

The “Fight or Flight” response.

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By averaging down on losers (and not selling), we
avoid the pain of being wrong.

By taking profits on winners (and not buying

more), we avoid the pain of giving back profits.

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 If you enter a trade and it’s working, people
should be asking themselves, “How can I make
this position bigger?”

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 Avoiding Pain, Feeling Fear

The 90% thinks like a normal person. They

take profits on the way up (fear), and they
buy on the way down (hope).

The 10% are hopeful as prices go up and

fearful when they go down.
The basic premise is that the majority of people
who trade lose money.
1. They Don’t Add to Winners
2. They Add to Losers
3. They Don’t Use a Stop Loss
4. They Sell Half on a Double

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 Adding to Losers, Selling Winners

You invest in two people. One goes to a

great college and the other drops out of
high school.

If you had to reinvest, who would you

choose?
SUMMARY

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 90% Lose

90% of traders lose. This is not because

they’re dumb. In fact everyone’s trying the
best they can. The problem is that they all
think alike, and that’s how you end up being
in the 90%.
The human brain is wired to avoid pain and any
discomfort. This leads us to making decisions
that are not optimal in the financial markets.

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“Selling half on a double”

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“You can’t go broke taking profits”

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“Price is lower, time to buy more”

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 These are subject to hindsight analysis but in
general, this is how the 90% thinks. It sounds
logical because that’s how we grew up.

But the financial markets are not a supermarket.

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 The Key

The key is to understand that this is how our

brain is wired. We all feel these emotions,
but we need to have full confidence in our
abilities and do the uncomfortable thing.
 The best loser wins because they’re able to
accept that they were wrong and is willing to
move on to the next trade. A bad loser dwells on
their mistakes and becomes gun shy.

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 Each trade is independent from one another.

Just because you won yesterday doesn’t make it

more likely you win today. And vice-versa.

Separate money from the EV of each trade.

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