What's up everyone? Alright, time for another episode of driving with Ross we're in San Francisco We're gonna be going up and down these hills and talking about FOMO Buckle up. It's gonna be a bumpy ride all right everyone. So today we're gonna be talking about FOMO the fear of missing out. So many of you guys already know that we host FOMO Fridays every Friday at 3 p.m.

for our warrior pro students and this is hosted by our resident trading psychologist Ted who's been working with me for the last just about eight years on my emotional composure while trading. You know this is one of these things that we talk about a lot. the impact that emotions play on the way you trade. Now one of the things that I kind of realized I don't know maybe this was like two years or three years into trading.

I was having a hard time being consistent and I realized that it wasn't that I wasn't able to make money I was able to make money. My problem is I would make money and then I would give it back to the market I would just give it right back and so I'd either end the day red. Alright, end the day. you know up only a little bit and I just always be asking myself, you know why did I keep trading I had my two hundred dollar daily goal and I kept trading and I lost and it took me a really long time to realize that all of that that kind of trading behavior of overtraining, you know, just kind of revenge trading Getting back in was all emotionally fueled trading and what I realized was that you know probably fifty percent of success as a trader is the emotional part the psychological components.

Because I can teach you how to trade I can teach you how to trade in ninety days. It took me maybe a year to really learn how to trade and then the rest of my learning curve was learning to control my own emotional impulses. So I would start making good decisions instead of bad decisions when I was under pressure. and that's the thing that you have to remember.

the fight, flight, or freeze response. All right, those are the are kind of like deep deep deep like ancient kind of responses to to fear. And the problem is, they don't serve us very well and well. They don't always serve us very well in life today and they certainly don't serve us very well in the market.

Right when you get into a trade and you know whatever, something just goes wrong and it flashes down and you're suddenly down below your max loss. We had to stock a couple weeks ago. it was trading it I Want to say like ten dollars pre market and then oh, that's a cool VW Bug And then just before maybe like half an hour before the bell rang, the company came out with news of a secondary offering. So that's diluting the value of the stock.

And when that news came out, the stock dropped from $10 to $5 in about one minute. And the reality is, if you were holding it, you know what are you gonna do. You don't have a lot of time to react. So okay, cuz suddenly you know you got this quick drop and then as it starts to curl back up, you know that's your opportunity to get out.

But you know when it went, When you are suddenly faced with this fear of a huge loss, sometimes you freeze, right? It's the deer in the headlights. It's the chipmunk that just freezes in the middle of the road. You know from that ancient in that sort of ancient mind sometimes that you know that's gonna save you. But in the world today, and especially with trading, if you're just sitting there and holding the stock is it's going down more and more and more that doesn't work.

Your loss is obviously just gonna get bigger. And it's it's bad. So one of the things and that's just one of the responses to fear. Now in as a result of having a big loss.

Whether it was because you froze or you just had a bad loss, then you have what's your reaction. So how do you react to the big loss? So when I was a beginner trader, the way I was reacting to big losses is if I suddenly lost a thousand bucks. Even though my logical mind knows the right thing to do is just a walk away for the day. Just say you know what.

Ross today's not your day and that's that's alright. today's not your day so you know, just walk away instead. What I would do is I would look for trade number two, number three, and number four to try to make back the loss. and so if I saw something pop up on my scanners I would just I would just jump into it.

You know I wasn't even thinking about the quality. it was like it's on the scanner. That means it's sort of strong I'm jumping in 10,000 shares and I jump in it and if it popped up 10 cents I'd be back to break even or if it flush 20 cents I'd be down now three thousand dollars on the day and then trade number three I look for another stock moving up I see something that's you know moving a little bit I jump into it this time with 15,000 shares. If it goes up 20 cents I'll be breakeven on the day it drops another 20 cents plus I got 10 cents of slippage and now I'm down 7,000 on the day and I would look back on those types of days and I would say for us I would look back on it.

you know, a week later or whatever I'd be like what were you thinking I mean this was just like back-to-back loss after loss after loss. Why didn't you stop? And you know the reality is. My logical mind at that time was hijacked by the emotional mind. That primitive mind that is so caught up in fear and and that that primitive mind when your emotions can completely take over, it's kind of.

You know, any of you have had a panic attack. You know how you know you can say to yourself I'm not having a heart attack right now I'm not I'm not. You can say that, but the physical response is so overwhelming that you know you just you believe and your dear trapped and not that could happen. When you're training, you can actually get tracked.

So for me realizing that that was a problem, you know I clearly needed to address it. So what? I decided to do for myself. and just as a side side note, I don't know how many of you guys have seen the movie called Molly's Game. Pretty sure that's the name of Molly's game and it's a movie about a like former potential olympian athlete or something and she was running these poker games in Las Vegas or no, no, yeah, it was maybe in New York or Ed knows LA if he goes oh I don't know it was anyways I don't remember all the details but the most important detail is that she's running these poker games and she had one client.

they're like underground games. She had this one client who he's always been like. you know, really a good player, really really solid and you know great poker face, all that stuff and the here you know one one on one day he ends up making a big mistake and he takes a loss. You know, like a really kind of bad unexpected loss and he runs back to the table where you get more money, get more chips and he's like give me another heart the house I'm just like are you sure and he's like yes so she's like all right, here's another hundred K and he immediately loses it.

He goes back I want another 200 K goes back immediately loses at one another 300 K goes back, you know, immediately loose and he lost over a million dollars in in one night and that was a true story you know? And the reality is if you let yourself fall into that cycle, it can get really bad. I used to say like all right, you know So I have a four thousand dollar red day. You know once a month that you know that's not so bad. but then four thousand turned into eight thousand and then eight thousand would turn into sixteen thousand and on my worst losing day I lost $30,000 Now that is nothing compared to losing a million bucks.

And I know traders who have lost over a higher thousand in one day being super emotionally impulsive so you know? I I Certainly. I'm glad that I learned, learned when I did to maintain composure. I'm gonna give you a couple tips in this video today, but the reality is those losses. If I hadn't intervened, they would have just kept getting bigger and bigger and bigger.

You know, until eventually I have one that blows up my account and I'm done and I'm out of the game and you know that can happen to traitors. This isn't okay. One more. I'm gonna save this story for a few min.

I'm gonna talk in a second about a story of someone who lost 100 million dollars I Talked about that a second. All right. So the first tip for taking control of your emotions and trying to deal with FOMO All right so it for me, it was delegating the really difficult responsibility of stopping trading on a bad day to my broker and it's so easy. You can do it today.

Call your broker if you trade with Lightspeed I Use light speed as my broker right now but I trade with lights be you call it light speed call prob and say hey Rob I want you to put a max loss on my account if I am ever down if I'm ever didn't if I'm ever well I guess I'm going this way if I'm ever down more than x-amount thousand dollars lock my account. Don't let me take another trade for rest of the day And just like that, you have capped your losses. You will not have a day where you ever take a trade when you're down more than a thousand bucks. That is awesome That way.

you know if you have that trade where right out of the gates you get slammed. You know you take this. Dang, you know, fifteen hundred dollar loss or two thousand dollar loss or whatever it is? Yeah, it was more than your max loss. Yes, it's frustrating.

It's annoying and your instinct might be if you see that same stock. let's say that stock drops and then pops back up, you might feel like I got it. I'm gonna go for it again. I'm gonna take another stab at it.

All right? That's that's that instinct. Sometimes you get knocked down, you want to jump back up, and you know, get back. and that's where you go back in with even more sighs, even more aggressive. and what happens if it's a second loss? Now you're down 3,500 right? So the fact that you have that automatic shutoff on your account, you know, Boom, you're not going to be able to keep trading.

your you're literally blocked out. And it's about capital preservation. We're all gonna have red days. Something interesting I Looked at my statistics last night.

someone on Twitter was asking me what my accuracy is or she know She said how often are you right or how often are you green or something like that So I was like I wasn't sure what exactly what the question was. So my accuracy is 68% So out of 100 trades, I'm right on 68 of them and this is over the course of about 2,500 trades that I was looking at this. So that's a lot of trades. so 68% accuracy is a pretty as a number that I can feel pretty solid about.

So so I'm raised 68% of the time. But what's interesting is that I close the day green 76% of the time. So even on days where I might be only 68 percent right? or maybe on days where I'm only 55 percent right, the winners outweigh the losers and as a result, I have a 76 percent chance of closing today in the green. So red days will happen for me 24 percent of the day.

a quarter of the time you know when I've every four days is a red day. All right, So they're gonna happen a lot. I've got a hundred eighty days of trading so far this year. by the end of the year, I'll have you know, two hundred plus.

So that means I'm gonna have fifty red days and when I add up all of those red days, my job is to keep those losses as small as possible I don't want to have any single loss that is gonna risk me blowing up my account obviously and I don't want to put myself in a position where I've dug a really deep hole and now I've got to spend the next three or four weeks digging myself out of it. So the second tip and this is kind of an extension on the first one is learning. And it's not totally a tip. it's more of like something you need to learn how to do.

but learning how to throttle up when the markets hot and be aggressive. put the pedal to the metal, that's what I say and then also learn to ease off the throttle when the markets slow. So for instance, if I have a red day the next day, I don't set the expectation that I'm gonna make like $10,000 in that day. My only goal for the next day is that I close the day green.

That's my only goal I Just want to close the day green even if it's only by four hundred bucks or five hundred bucks because that allows me to just kind of like, you know, clean the slate between the red day and you know whatever. One of the things that a lot of traders will do is after a red day, they double down, right? They get more aggressive. There's a really nice VW van over there, but this way they double down, they get more aggressive and you know as a result, you end up having two big red days. Maybe three big red days.

Or maybe you have four or five big red days in a row. and when that happens now, what you've done is you've dug yourself a big hole. You know for me, with my max loss right now at $2,000 for one day. yeah, if I lose 2,000 in one day or even lose 2,500 because I get a little slippage on my exit I won't be able to take another trade so I'm locked out.

But that $2,500 loss or whatever the case may be I can bounce back from that realistically in like one good day of trading. you know, and that's important. So it it. I haven't dug myself this really deep hole so this last year in August we had August was really slow September ended up also being really slow.

market just wasn't high I wasn't doing very well and two years ago three years ago well probably would have happened is I would have finished both of those months deep in the red because I would have just kept pushing it kept getting frustrated, let any emotions take over. saying you know what? I'm sick of losing. all I need is to grab 10,000 shares and get 10 cents and I'm gonna be back on top. And then you know if the markets not hot you can't do that, trade the market you're in, not the market you want to be in.

So this year in contrast I'm proud of myself because even though I didn't make a lot of money in August and September I did make money. and and so basically once the market started to pick up here in October I was able I was basically at all-time highs at my account and all I had to do is just you know increase share size I'm going straight up so my equity curve was going up up, up, up up. instead of going down, it went sideways for two months. Sideways is always better than down and that's because I eased up on my share size I reduced my risk I stepped back a little bit I took fewer trades I Said this is a time to be more conservative right now.

Let's bring this back to the: Deadliest Catch You guys know I Love reality TV So The Deadliest Catch So if you're on hot fishing, it makes sense that you're gonna throw your pots back in the water. right? You're gonna lift them up. You're gonna pull out the crab, and you're gonna set them back in the same exact spot. and you're gonna throw down lots of bait.

Now, remember, every time you set the crab pot, there's cost involved. There's costs in terms of the amount of money you spent on bait. There's cost in terms of man-hours There's cost in terms of running the boat and the fuel and everything else. So it's you're taking money.

It costs you money to throw down those pots. Alright, now, if it's a hot market, or if it's a if it's a hot fishing spot, then you're gonna pick them back up and they're all gonna be full, right? But in contrast, if you just let you know, set a string and you went back and you picked them all up and they were all empty. Would you go back and try to hit that same spot Again, the logical mind says no, and of course you know something like fishing. The amount of time to prepare to set a new string is you guys spent some time thinking about it, talking with a crew, whatever, and all that time allows the logical mind to come in and say, hey, that's a bad idea.

Don't set back here, let's just go. You know, figure out where other people are fishing and whatever readjust. But with trading, it's so easy just to press that buy button. Boom, press that buy button and that's a nice car and then you're here.

back in the trade, You know you're You just press it and boom, you're back in your back, in your back in. you don't get that built in time to relax to step back and then slow down. Alright everyone. so the hundred million dollar story.

So I Had a conversation with a broker. Well, it's actually someone who owns a very large brokerage. I'm not going to say which one, but he told me this story about one of their clients during the 90s calm bubble. Alright so the story was this guy funds a trading account with made four thousand dollars or something.

There's a relatively small amount of money and he requests you know margin and wants to have options. the ability to trade options everything like that. and so they asked him what his experience level is. He says basically nothing they say well you know you should take a class or something.

we want to see you you know, put in. you know we want to know that you've got some experience before we give you this, you know these, these permissions or whatever. So anyways he goes and reads a couple books, takes a class, comes back says where I did they're like okay so they give him you know the margin the accounts set up so in his first month he he kills it. He turns whatever four thousand dollars into like fifty thousand bucks and they're like wow this guy like this is crazy.

He's like really good but at the same time it's a dot-com bubble and almost anything you buy in those days would go up So you know it wasn't super. Saying it was easy, but it was certainly easier than it is today and especially because you would see stocks IPO any.com type of stocks IPO and they would just ripped. I Mean they would just take off and so if you just bought it and hold it for a few days you would you would do really well. So anyways, this guy you know is doing that strategy except he's also using options and so the thing with options now I've got myself a No.

Jam All right. So the thing with options is that you get a lot more leverage. So when a stock moves up 10% the underlying, when the underlying stock moves up 10% the options contract. it's like a four point turn.

can move up anywhere from 50 percent, a hundred percent, three hundred percent, maybe even more depending on which strike price you buy a-- it's kind of complex stuff, but in any case, this guy's trading these options contracts and he starts by buying 10 contracts, 15 contracts. You know, 20 contracts, 30 contracts and so you know he's making money is doing pretty well. Anyways, by the end of that first year he made over a million dollars. I Mean he had taken a tiny account and turned it into over a million dollars and they're like this guy is.

He is on fire and it's kind of the beginning of the dot-com bubble so he's still got another like three years of Awesome trading to go. Wow. that guy looks legit. Like tough.

Whoa. Alright, so anyways he he just he continues. What he does with his strategy is he continues to trade bigger and bigger and bigger sighs. So he starts trading a hunter contracts and then he goes up to 200 and then for her than 500 contracts.

and that would be me trading with like 50,000 shares and then 60,000 and 100,000 and eventually he's trading with a thousand contracts. I Mean he is just going bigger and bigger and he turns the account into twenty five million dollars. and you know he's just growing and growing growing. He goes twenty-five to thirty-five to forty-five to sixty million.

Then he turns it into seventy million. 80 million Ninety million. He turns it into over a hundred million dollars which is insane in less than four years. And what's even crazier is he didn't take any money out of the account.

He was just growing and by the end of his run he was trading with five thousand contracts on some of these orders. I mean he was just going super super heavy and the danger was going super heavy. Like that is, if you you know you have a trade that goes the wrong way with options, you can lose your entire investment, You lose a hundred percent and so anyways he ended up taking one pretty big loss and the brokerage said you know what you need to take some money out of this account. You've been letting it grow and grow and grow.

This It's getting a little crazy. you need to take some money out. So they actually they told him to draw money out of the account and I think they told him to dry out like 40 million dollars help pay some taxes and whatever stuff like that. So 40 million comes out and so we still got.

you know, 50 million even after this big loss and he just keeps trading. with massive size, the dot-com bubble is bursting. Things are not working as well. He's still buying 5,000 contracts, he's losing a million here million there and he goes from 50 to 40 to 30 to 20 to 10 to 5 to 1 million dollars.

Today the account is less than a thousand bucks and the only money that this guy ever took out was the mind. It pays taxes. so you know I think the lesson there, at least for me, is that it doesn't matter how big or how small your account is. if you're If you have bad habits you know, like emotional trading, an inability to know when to walk away.

Ultimately, they're gonna come back and they're gonna bite you and it's gonna hurt. And you know, for me, as my account grew, those big red days were getting bigger and bigger and bigger. and I was asking myself at what point is enough enough? You know if a $4,000 day wasn't enough, you know? And then an $8,000 day was enough In a $16,000 day wasn't enough And a $30,000 day. you know the $30,000 day was the day where I was like that's it 30,000 cuz that blew all of my other red days by it does red day before that was around fifteen sixteen thousand.

So I just thirty thirty grand in one day I was like that's I mean I could've bought myself a Volvo station wagon with that kind of money. that's crazy. So that for me was my you know my turning point. but thank goodness I you know I had a I had a place of kind of Max Payne this guy you know did it.

so you know one of the things we talked about Warrior Training in the chat room and the classes during formal Fridays is you know, trade the markets you're in, not the market you want to be. Know that max lost point for yourself. delegate some of those difficult responsibilities of capping your losses. You know, locking up.

You know, finishing the day in the red and just walking away. Delegate that stuff to your broker, delegate to the computer. That's the hard stuff to do and you don't have to make that decision. You know, when you max out you max, it's kind of like having a breathalyzer on your car.

You know it's like if you've had a couple drinks and you know you have a history of making bad decisions. Maybe the thing is a good is a good tool your car won't start and maybe that's for the best. That's kind of what I put on my account. It was this like you know my max loss once I'm in at that point I'm I get a little emotionally fueled, emotionally clouded, my judgment is not clear and that's when I'm really.

you know I'm more apt to make mistakes and those mistakes can be costly. and in just a matter of moments of you know, lack of composure, you know a moment of just getting frustrated irritated. You can give up thousands of dollars. I Say it because I've done it.

It's not fun. So I hope that you guys will learn from some of my mistakes and maybe learn a little bit from that story of someone who lost 100 million dollars or the guy in Molly's game who lost whatever it was on that bad day of gambling. You know those are what I call snowball days and they can be really brutal. So we're here at on hate.

while the Haight-ashbury section of San Francisco if it smells like marijuana, it's because there are people smoking marijuana everywhere. I would say this area has this kind of cannabis infused with urine type of smell. It's truly magical. So anyways, another episode of Driving With Ross just about in the books here.

It's fun to do this. You're my, you're my co-pilot and no, you're not sitting here next to me but it feels like it so you know. hit me up in the comments, questions, Comments: have you gone through FOMO What's your worst day? What's your max loss? What's your max pain point? Let me hear it and I'll come through and answer them later on. Alright I'm gonna keep driving along and look out for pedestrians.

This guy barely knows how to walk so I better focus. Alright, see you guys later. Oh hey I didn't see you there well I Was just working on the dream board for my next home run trade. Hopefully it comes soon.

Until then, make sure you subscribe to get email alerts anytime! I Go live or upload new videos. Until then! Happy surfing.