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Best Loser Wins: Why Normal Thinking Never Wins the Trading Game – written by a high-stake day trader
Best Loser Wins is an intimate insight into one of the most prolific high-stake retail traders in the world. Tom Hougaard is the winner of multiple trading competitions and on one occasion traded £25,000 into more than £1 million over the course of a year.
While the average retail trader risks £10 per point in the underlying asset, Tom Hougaard frequently risks up to £3,500 per point. This risk exposure requires a mindset that is out of the ordinary.
Normal thinking leads to normal results. For exceptional results, traders must think differently.
This book will guide and inspire you in ways no other trading book has. It is not about strategies and money management. It is about mind management. Tom Hougaard provides a unique and refreshingly personal account of how an ordinary trader elevated his game to incredible heights by focusing as much on his mental approach as on his technical analysis.
Best Loser Wins explains how you, by thinking differently when you are trading, can elevate your game from mediocre and sporadic, to excellent and consistent. No amount of technical analysis will ever do that for you.
Tom Hougaard says, “People don’t fail because they don’t know enough about technical analysis. They fail because they don’t understand what the markets are doing to their minds.”
Best Loser Wins is an antidote to conventional and flawed thinking in trading, and a blueprint for a new belief system for traders who want to elevate their results to levels they never dreamed they could reach.
While the average retail trader risks £10 per point in the underlying asset, Tom Hougaard frequently risks up to £3,500 per point. This risk exposure requires a mindset that is out of the ordinary.
Normal thinking leads to normal results. For exceptional results, traders must think differently.
This book will guide and inspire you in ways no other trading book has. It is not about strategies and money management. It is about mind management. Tom Hougaard provides a unique and refreshingly personal account of how an ordinary trader elevated his game to incredible heights by focusing as much on his mental approach as on his technical analysis.
Best Loser Wins explains how you, by thinking differently when you are trading, can elevate your game from mediocre and sporadic, to excellent and consistent. No amount of technical analysis will ever do that for you.
Tom Hougaard says, “People don’t fail because they don’t know enough about technical analysis. They fail because they don’t understand what the markets are doing to their minds.”
Best Loser Wins is an antidote to conventional and flawed thinking in trading, and a blueprint for a new belief system for traders who want to elevate their results to levels they never dreamed they could reach.
265 pages, Kindle Edition
Published August 16, 2022
715 people are currently reading
3090 people want to read
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Displaying 1 - 30 of 198 reviews
October 19, 2022
What separates Tom Hougaard from the tens of thousands of other authors out there is that every day he trades live in front of thousands of people, and does so for free because he wants to help. Unlike the others, he tells the awful truth: 90% of traders lose money. He quotes studies that debunk large tracts of technical analysis - Fibonacci lines, obscure candle patterns, etc. In his role as a technical trading analyst and spokesperson for a big broker, he met many of the rogues who sell this junk and don't even trade themselves.
So what does work? Just about any strategy - including basic technical analysis - will give you a bit of an edge, and you need an edge to have any hope of making any money. Brokers give more data and sophisticated software to retail traders than probably most prop traders had 30 years ago. And yet they lose money. Why? It comes down to simple human psychology. Hougaard is brutally honest about his past (exactly the same as mine) and how he cured himself of the behaviour of the 90%. If you want to make money, you have to NOT be like the other 90% of traders. In this book, Hougaard gives you practical exercises to train your brain to trade profitablly and consistently.
So what does work? Just about any strategy - including basic technical analysis - will give you a bit of an edge, and you need an edge to have any hope of making any money. Brokers give more data and sophisticated software to retail traders than probably most prop traders had 30 years ago. And yet they lose money. Why? It comes down to simple human psychology. Hougaard is brutally honest about his past (exactly the same as mine) and how he cured himself of the behaviour of the 90%. If you want to make money, you have to NOT be like the other 90% of traders. In this book, Hougaard gives you practical exercises to train your brain to trade profitablly and consistently.
January 25, 2024
Great book on psychology of trading, amazing read
---
Below are my notes:
Anything in life worth doing is worth overdoing. Moderation is for cowards
What makes me different than the 90% of traders that do not make money?
If I do what everything is doing, I will not make it.
For 1 hour of technical analysis, set aside 15 minutes internal analysis.
What are my weaknesses?
What are my strengths?
What am I good at?
What am I not good at?
Winning traders are more trusting of trend
There is no cheap, there is no expensive, there is just the current price
Winning trader does not care if price is cheap or expensive
In this moment, market is trending and the winning trader trusts the trend
Common trait amongst traders - trying to catch the bottom or top
Our trades from yesterday have no bearing on the market today
Everything you ever wanted lives on the other side of fear
Trading big size is like preparing for a marathon. You need to train your body and mind. You need to learn to handle the mental anguish that comes from losing when the stakes are bigger.
How to destroy fear? Exaggerate and expect more.
Stop being afraid to make mistakes. It is always my fault. I'm good at making mistakes, so I can learn from them.
Visualizing the worst-case scenario can make us appreciate objectively what we are trying to achieve. Facing our fears removes their power over us.
Trading is great way to expose all of your flaws, highlights your strengths.
Ideal trading state = perform without fear of consequences or repercussions.
XYZ is worth $X = emotional, biased statement
Price = where buyers and sellers meet
Makes no sense to say a XYZ is "worth more"
Behavior modification = single most important concept in trading.
Ability to change mind withouth causing mental disequilibrium = single more important ability for a trader
Trends persists. Markets have inertia = whatever it's doing, the odds are above 50% it will continue
There are no bargains in the financial markets
When I am buying, someone is taking the opposite side of that trade and shorting or getting out of long position.
The perverseness of the financial markets is that it generally makes sense to buy something because it is more expensive today than it was yesterday.
Must change my relationship not with market but how I reacted to what the market did.
Trading is like surfing. You wait for waves and ride the waves. You don't paddle out when there are no waves. You wait patiently for the waves.
Aim should be to make money.
To maket money we must focus on what is happening right here, right now. Not focusing on what SHOULD happen.
Hope is high on the list of reasons for not taking a loss.
Hope dies last. Minds are ill equipped to engage in risk management. Minds sole objective is to protect us from perceived or real pain.
Ego is more fragile than the state of trading account.
With an open position that is producing a loss, subconscious mind tells conscious mind to keep it open to protect our ego.
As long as losing position is open, there is hope the position will turn positive. The moment you close position, the pain becomes real.
Avoiding pain is the number one reason to not close a losing trade.
Taking profits too early or closing a winning trade too early = your mind warning you against future pain.
Avoiding future pain is the number one reason closing winning trades early/reducing position size.
Opportunistic frame of mind or fear-based frame of mind?
When you are winninge, are you increasing or decreasing trading size?
The real subconscious reason for adding to a losing trade is attempt to get rid of pain. We are not trying to avoid pain, we are dealing with existing pain and trying to get back to a state of equilibrium where we are pain free.
Teach your brain:
- Be hopeful about profits when it is wrongly fearful about losing profits
- Be fearful about losses when it is mistakenly hopeful about the position turning positive.
People are more hopeful when they are losing money. They are fearful when they are making money.
Average trader:
Confronted with loss = hope it will turn around
Confronted with profit = afraid profit will disappear
Operative word is fear
These two scenarios should be flipped
In trading we tend to chase hope a lot further down the road of misery than we are prepared to follow the road of opportunity.
Good trader = holding a winning position and adding to it.
Adding to winning trades = key trait to be successful trader
- Reinforces corect behavior.
- Antidote to temptation of wanting to take profit.
When in a profitable trade, ask "how can I make my position bigger?"
Why is it easier to add to losing position than to a winning one?
When adding to losing position
- Dwell on potential for bigger profits
- We decide not to dwell on the fact we are wrong
When adding to winning position
- Dwell on the fact markets could take profits away
- We decide not to dwell on the fact the market is in agreement with us
Losing traders
1. Don't add to winners
2. Don't use a stop-loss - as long as position is open = hope.
3. Add to losing trades
4. Take half profits
- Market agrees with you - let it ride
Emotionally - loss felt harder than a win.
Human beings postpone decisions that will cause pain = why we let losing trades run.
There needs to be a regular time in your day where you remind yourself of your purpose, of who you are. The world is full of temptations that distort a healthy self image. The temptations take us away from who we are by telling us that who we are is not enough.
Good trader = fighting our humanness.
Have to learn to desensitise normal emotional response mechanism to fear, greed.
Everybody gets what they want from the markets.
Must stop the following behaviors:
- Overtrading from boredom
- Anger/revenge trading
- Impatient trading
- Fearful trading - cutting winners too early
- Adding to losing trades
Stop trading, start reviewing
Understand what it is you are doing that causes you to not make money trading.
Fund small account and start fresh
Mind will drift
You have to constantly reaffirm your purpose.
There needs to be some period in your day when you remember your purpose.
There must be time to remind yourself where you want to go, what you want to do.
Journey starts with technical knowledge acquisition
Continues indefintely with constant evolution of technical and mental training.
Use goalsetting and visualisations to align conscious and subconscious with making profits.
Use fear to achieve goals.
Imaging trading an enormous size that makes you uncomfortable
Imaging I am trading and market is moving against me
I see myself cut the loss
Imagine I bought XYZ and it's going my way
Feel the brain sending me signals to close position
See myself doing nothing as I continue to watch profit increase and decrease
I see big profit turn to small profit
I smile and accept it, move on telling myself it's okay
I place my brain under as much stress as I can.
I am long and market is going my way.
Suddenly it turns against me and fear shooting through the roof as PNL turns into a bloodbath
I see myself closing the position and going short
I see myself not getting unhinged because market moving against me.
Purpose is to focus on what I want to achieve and become while being mindful of the things that will sabotage my goals.
Be aware mind wants to do things that are not in my own best interest.
Exercise to change patterns that do not serve me.
First question to address in change process "what do you want to change"? "How would you like your life to be different?"
Making change = more than just positive imagery
Making change = portrait of dire hell I would reside if I didn't make the change.
A losing trader is not going to want to transform himself. That's what winning traders do.
Only through a dedicated approach to practice, with a specific attention to finding your mistakes, will you improve. Otherwise you just are just cementing your unprofitable behaviour.
* How you feel about failure will to a very large degree define your growth and the trajectory of virtually every aspect of your life.
Only feel hope when I am in a trade - Hope market will move in my favor
Hope tends to be reserved for the activity of being in the trade, while fear manifests itself both when I am in a trade and when I am not in a trade.
Deal with fear in a trade by having exit strategy - stop loss.
I have accepted this loss before I started trading - part of my trading plan
Deal with hope by accepting my stop loss will define my exit
Become exceptionally good at losing - best loser wins
Why do so many people lose? They are beating themselves.
Accepting pain = crucial to be successful trader
We experience loss 250% more intensely than a financial gain.
When trading = run towards pain, embrace it, hold onto it.
The road to consistency, success, and enlightenment in trading begins in the last place you’d ever think to look. Inside yourself.
90% fail because receive pain messages in brain without any modification
Learn to recode brain messages of pain - run towards the danger not away from it.
I assume I'm wrong until proven otherwise
I expect to be uncomfortable
I add when I am right
I never add when I am wrong
I will assume I will quickly have to get rid of a losing trade. If trade does not work out another one is coming.
The 90% will focus on what they want to avoid. I focus on what I want to achieve. The 90% give in to their fears. I expect my fears to come in abundance, and I have a plan for counteracting them.
My mind knows I want to be big when I am right, and I want to be small when I am wrong.
The ideal mindset may have no fear, but the ideal mindset is still acting in your best interest. The ideal mindset might be fearless, but it is not reckless.
Ideal trading mindset:
- Has no fear
- Is not reckless
- Perceive market information wihtout feeling threatened
- At peace with losing trades
- Perceive market information purely from an opportunistic point of view
- Sees opportunities, does not see threats
- Disassociate losses from feelings of failure
Every moment in the market is unique
Trading is like flipping a coin, it's about 50/50 most of the time
Law of averages - there is complete randomness in the outcome of one
How are you going to feel emotionally if you have 15 losing trades in a row or 15 winning trades in a row?
It's the same as flipping a coin 100 times and you get 15 heads in a row
You need to be able to trust the process regardless of win/lose
“Focus on the process. Focus on what you can control.”
Book of Truths:
- Review and analyze past trading results
- Split them up into categories - how long do you hold them, what time did you execute them, etc.
- Replicate what I'm good at
- Avoid what I'm bad at
Prime objective - NOT to make money, it's to follow the strategy you have deployed. Follow the process you have designed for yourself.
Follow process = outcome will take care of itself
Trust:
- You have all of the tools to make a living from trading
Inherent trading flaw in our thinking = idea that it is too late to join the trend, trying to find the low of day, go against the trend.
Patience:
- print out specific charts every day and review - instills faith that market will always provide opportunities
- calm mind by breathing exercise every morning - increase attention span
Elevate my pulse through imagery - imagine physically dangerous situations
Consciously focus on breath and accept the situation for what it is
Aim is to confront the imagery and remain calm
Once calm, I see myself trading the absolute biggest size
I see the market move against me - visualize PNL deeply negative
Feel pulse elevate - focus on calming it down
Repeat process over and over
See myself riding trend higher - PNL grow larger and larger
Wait for mind to tell me to take profits
Stop the tape and flip the switch
Calm my mind down - look at PNL dispassionately
Calm my breath until able to observe profit grow larger and larger
Goal is simply to be unemotional observer of the market
Goal is to act without fear, without hope - only objective assessment of price action
Ask for Help:
- Sit with blank piece of paper and pose a question
- "Why am I afraid to join down-trend after it already started?"
- Write down anything that appears in my mind
- Sit with eyes closed and observe my thoughts
- Write for 10-20 minds
- Subconscious mind - don't judge, just accept
- Process is complete when you can distill question into one short one sentence answer
- Difussed whatever belief I had that didn't serve me
- Old memory always there but context changed from negative to positive
If you say you want something, and then you do nothing about it, then you can be damn certain there is a misalignment between your conscious and your subconscious
When I am faced with a situation like that, I use the Ask for Help exercise, and I always get a brutally honest answer. The most common answer I get is: “Actually you say want it, but you don’t!”
Deciding what you want - can undo lifetime of negative energy surrounding beliefs
Power of making up your mind - will remove all negative energy
Discipline = oxymoron
Discipline implies use of force and will
My actions flow from love of what I do - do not have to apply force or will
I am not talented - I am hard working
I am not gifted - I am determined
I am not lucky - I am persistent
20 Trade Exercise:
- Execute 20 trades as signals appear
- Purpose = smoke out internal conflicts and unresolved emotions
- If you can execute 20 trades without any kind of confict - you are trading from carefree/fearless frame of mind
- Anything can happen - emotionally detached from outcome
- Every moment is unique - no assocation between this moment and another
- Random distribution of wins/losses - accept coin flip outcome
- No need to know what will happen next to make money - you trust your process, focus on controlling variables you can control
- How do you know you're successful? - Trading without anyt conflictiong or competing thoughts
- Results are unimportant - this is a process exercise
- May have to repeat over and over until firing off trades without fear/hesitation/past bias and are accepting outcome dispassionately
Mind loop:
- My trust in markets and myself supports my patience
- My patience that setup will materialise feeds my confidence
- My confidence that I will win dictates my inner dialogue (what I tell myself while trading)
- My inner dialogue supports my process-oriented mindset
- My process enables me to stay focused in this moment
- Support this loop with mental exercises - they feed, nourish, and sustain the loop
I am a process-oriented trader - do not believe in goal setting
There are no monetary or point goals - take what the market will give me/never trade with targets
By being process-oriented instead of outcome oriented - I am staying present
When you are present - you don't connect past moments with present/future
You are fully present
Being present = mindfullness = focus/concentration = knowing what I want
I want to win - overriding motive for trading = to win
At the same time don't mind losing
If I forget all about winning and focus on process - I will win
Conundrum = how can I win if I am not focused on the goal at all times?
Research underpins the trust
Trust supports the patience
Patience is underpinned by mental exercises which nourish my confidence
Internal dialogue driven by process-oriented mindset which is fuelled by my confidence
Focus on what I can control - mindset and risk approach
Let the market do what it wants to do
Whatever the market does - does not fuel my fearful side of my mind
I am not afraid of the market
I am only afraid that I do something stupid in the market - what I can control
I trust myself so this does not happen
I trust I have skills to make money
I trust market will provide opportunities
Trust has been nurtured by intense study of market charts
Trust further strenghtened by continuous dedication to learning
Patience flows from my trust in market and myself
I have built emotional connection between market and in myself
I trust setups will come if I am patient
If I am patient - I will will
If I am not patient - I will not win
I will do anything to win
Therefore, trust overrides emotional impatience that may arise
I trust if I miss this signal, another one will come
Confidence comes from continously working on my game
I learn technical analysis all the time
The markets are forever changing and I will change with them
Inner dialogue stems from trust/patience/confidence
Everyone has bad days - I just don't let them bother me
I am grounded in this moment
I focus on the process - it's all I can control
I must flow with the market like water - "just flow"
I never expect to be comfortable when I am trading
If I am comfortable - I am not pushing my capability boundaries
To be the best - I must be uncomfortable
Pain of seeing market give even more profit while not onboard > pain of seeing some of your unrealized profit disappear
Path to become profitable trader - not understanding the market but understanding your mind
Your mind and how you operate it will dictate the level of sucess you have as a trader
---
Below are my notes:
Anything in life worth doing is worth overdoing. Moderation is for cowards
What makes me different than the 90% of traders that do not make money?
If I do what everything is doing, I will not make it.
For 1 hour of technical analysis, set aside 15 minutes internal analysis.
What are my weaknesses?
What are my strengths?
What am I good at?
What am I not good at?
Winning traders are more trusting of trend
There is no cheap, there is no expensive, there is just the current price
Winning trader does not care if price is cheap or expensive
In this moment, market is trending and the winning trader trusts the trend
Common trait amongst traders - trying to catch the bottom or top
Our trades from yesterday have no bearing on the market today
Everything you ever wanted lives on the other side of fear
Trading big size is like preparing for a marathon. You need to train your body and mind. You need to learn to handle the mental anguish that comes from losing when the stakes are bigger.
How to destroy fear? Exaggerate and expect more.
Stop being afraid to make mistakes. It is always my fault. I'm good at making mistakes, so I can learn from them.
Visualizing the worst-case scenario can make us appreciate objectively what we are trying to achieve. Facing our fears removes their power over us.
Trading is great way to expose all of your flaws, highlights your strengths.
Ideal trading state = perform without fear of consequences or repercussions.
XYZ is worth $X = emotional, biased statement
Price = where buyers and sellers meet
Makes no sense to say a XYZ is "worth more"
Behavior modification = single most important concept in trading.
Ability to change mind withouth causing mental disequilibrium = single more important ability for a trader
Trends persists. Markets have inertia = whatever it's doing, the odds are above 50% it will continue
There are no bargains in the financial markets
When I am buying, someone is taking the opposite side of that trade and shorting or getting out of long position.
The perverseness of the financial markets is that it generally makes sense to buy something because it is more expensive today than it was yesterday.
Must change my relationship not with market but how I reacted to what the market did.
Trading is like surfing. You wait for waves and ride the waves. You don't paddle out when there are no waves. You wait patiently for the waves.
Aim should be to make money.
To maket money we must focus on what is happening right here, right now. Not focusing on what SHOULD happen.
Hope is high on the list of reasons for not taking a loss.
Hope dies last. Minds are ill equipped to engage in risk management. Minds sole objective is to protect us from perceived or real pain.
Ego is more fragile than the state of trading account.
With an open position that is producing a loss, subconscious mind tells conscious mind to keep it open to protect our ego.
As long as losing position is open, there is hope the position will turn positive. The moment you close position, the pain becomes real.
Avoiding pain is the number one reason to not close a losing trade.
Taking profits too early or closing a winning trade too early = your mind warning you against future pain.
Avoiding future pain is the number one reason closing winning trades early/reducing position size.
Opportunistic frame of mind or fear-based frame of mind?
When you are winninge, are you increasing or decreasing trading size?
The real subconscious reason for adding to a losing trade is attempt to get rid of pain. We are not trying to avoid pain, we are dealing with existing pain and trying to get back to a state of equilibrium where we are pain free.
Teach your brain:
- Be hopeful about profits when it is wrongly fearful about losing profits
- Be fearful about losses when it is mistakenly hopeful about the position turning positive.
People are more hopeful when they are losing money. They are fearful when they are making money.
Average trader:
Confronted with loss = hope it will turn around
Confronted with profit = afraid profit will disappear
Operative word is fear
These two scenarios should be flipped
In trading we tend to chase hope a lot further down the road of misery than we are prepared to follow the road of opportunity.
Good trader = holding a winning position and adding to it.
Adding to winning trades = key trait to be successful trader
- Reinforces corect behavior.
- Antidote to temptation of wanting to take profit.
When in a profitable trade, ask "how can I make my position bigger?"
Why is it easier to add to losing position than to a winning one?
When adding to losing position
- Dwell on potential for bigger profits
- We decide not to dwell on the fact we are wrong
When adding to winning position
- Dwell on the fact markets could take profits away
- We decide not to dwell on the fact the market is in agreement with us
Losing traders
1. Don't add to winners
2. Don't use a stop-loss - as long as position is open = hope.
3. Add to losing trades
4. Take half profits
- Market agrees with you - let it ride
Emotionally - loss felt harder than a win.
Human beings postpone decisions that will cause pain = why we let losing trades run.
There needs to be a regular time in your day where you remind yourself of your purpose, of who you are. The world is full of temptations that distort a healthy self image. The temptations take us away from who we are by telling us that who we are is not enough.
Good trader = fighting our humanness.
Have to learn to desensitise normal emotional response mechanism to fear, greed.
Everybody gets what they want from the markets.
Must stop the following behaviors:
- Overtrading from boredom
- Anger/revenge trading
- Impatient trading
- Fearful trading - cutting winners too early
- Adding to losing trades
Stop trading, start reviewing
Understand what it is you are doing that causes you to not make money trading.
Fund small account and start fresh
Mind will drift
You have to constantly reaffirm your purpose.
There needs to be some period in your day when you remember your purpose.
There must be time to remind yourself where you want to go, what you want to do.
Journey starts with technical knowledge acquisition
Continues indefintely with constant evolution of technical and mental training.
Use goalsetting and visualisations to align conscious and subconscious with making profits.
Use fear to achieve goals.
Imaging trading an enormous size that makes you uncomfortable
Imaging I am trading and market is moving against me
I see myself cut the loss
Imagine I bought XYZ and it's going my way
Feel the brain sending me signals to close position
See myself doing nothing as I continue to watch profit increase and decrease
I see big profit turn to small profit
I smile and accept it, move on telling myself it's okay
I place my brain under as much stress as I can.
I am long and market is going my way.
Suddenly it turns against me and fear shooting through the roof as PNL turns into a bloodbath
I see myself closing the position and going short
I see myself not getting unhinged because market moving against me.
Purpose is to focus on what I want to achieve and become while being mindful of the things that will sabotage my goals.
Be aware mind wants to do things that are not in my own best interest.
Exercise to change patterns that do not serve me.
First question to address in change process "what do you want to change"? "How would you like your life to be different?"
Making change = more than just positive imagery
Making change = portrait of dire hell I would reside if I didn't make the change.
A losing trader is not going to want to transform himself. That's what winning traders do.
Only through a dedicated approach to practice, with a specific attention to finding your mistakes, will you improve. Otherwise you just are just cementing your unprofitable behaviour.
* How you feel about failure will to a very large degree define your growth and the trajectory of virtually every aspect of your life.
Only feel hope when I am in a trade - Hope market will move in my favor
Hope tends to be reserved for the activity of being in the trade, while fear manifests itself both when I am in a trade and when I am not in a trade.
Deal with fear in a trade by having exit strategy - stop loss.
I have accepted this loss before I started trading - part of my trading plan
Deal with hope by accepting my stop loss will define my exit
Become exceptionally good at losing - best loser wins
Why do so many people lose? They are beating themselves.
Accepting pain = crucial to be successful trader
We experience loss 250% more intensely than a financial gain.
When trading = run towards pain, embrace it, hold onto it.
The road to consistency, success, and enlightenment in trading begins in the last place you’d ever think to look. Inside yourself.
90% fail because receive pain messages in brain without any modification
Learn to recode brain messages of pain - run towards the danger not away from it.
I assume I'm wrong until proven otherwise
I expect to be uncomfortable
I add when I am right
I never add when I am wrong
I will assume I will quickly have to get rid of a losing trade. If trade does not work out another one is coming.
The 90% will focus on what they want to avoid. I focus on what I want to achieve. The 90% give in to their fears. I expect my fears to come in abundance, and I have a plan for counteracting them.
My mind knows I want to be big when I am right, and I want to be small when I am wrong.
The ideal mindset may have no fear, but the ideal mindset is still acting in your best interest. The ideal mindset might be fearless, but it is not reckless.
Ideal trading mindset:
- Has no fear
- Is not reckless
- Perceive market information wihtout feeling threatened
- At peace with losing trades
- Perceive market information purely from an opportunistic point of view
- Sees opportunities, does not see threats
- Disassociate losses from feelings of failure
Every moment in the market is unique
Trading is like flipping a coin, it's about 50/50 most of the time
Law of averages - there is complete randomness in the outcome of one
How are you going to feel emotionally if you have 15 losing trades in a row or 15 winning trades in a row?
It's the same as flipping a coin 100 times and you get 15 heads in a row
You need to be able to trust the process regardless of win/lose
“Focus on the process. Focus on what you can control.”
Book of Truths:
- Review and analyze past trading results
- Split them up into categories - how long do you hold them, what time did you execute them, etc.
- Replicate what I'm good at
- Avoid what I'm bad at
Prime objective - NOT to make money, it's to follow the strategy you have deployed. Follow the process you have designed for yourself.
Follow process = outcome will take care of itself
Trust:
- You have all of the tools to make a living from trading
Inherent trading flaw in our thinking = idea that it is too late to join the trend, trying to find the low of day, go against the trend.
Patience:
- print out specific charts every day and review - instills faith that market will always provide opportunities
- calm mind by breathing exercise every morning - increase attention span
Elevate my pulse through imagery - imagine physically dangerous situations
Consciously focus on breath and accept the situation for what it is
Aim is to confront the imagery and remain calm
Once calm, I see myself trading the absolute biggest size
I see the market move against me - visualize PNL deeply negative
Feel pulse elevate - focus on calming it down
Repeat process over and over
See myself riding trend higher - PNL grow larger and larger
Wait for mind to tell me to take profits
Stop the tape and flip the switch
Calm my mind down - look at PNL dispassionately
Calm my breath until able to observe profit grow larger and larger
Goal is simply to be unemotional observer of the market
Goal is to act without fear, without hope - only objective assessment of price action
Ask for Help:
- Sit with blank piece of paper and pose a question
- "Why am I afraid to join down-trend after it already started?"
- Write down anything that appears in my mind
- Sit with eyes closed and observe my thoughts
- Write for 10-20 minds
- Subconscious mind - don't judge, just accept
- Process is complete when you can distill question into one short one sentence answer
- Difussed whatever belief I had that didn't serve me
- Old memory always there but context changed from negative to positive
If you say you want something, and then you do nothing about it, then you can be damn certain there is a misalignment between your conscious and your subconscious
When I am faced with a situation like that, I use the Ask for Help exercise, and I always get a brutally honest answer. The most common answer I get is: “Actually you say want it, but you don’t!”
Deciding what you want - can undo lifetime of negative energy surrounding beliefs
Power of making up your mind - will remove all negative energy
Discipline = oxymoron
Discipline implies use of force and will
My actions flow from love of what I do - do not have to apply force or will
I am not talented - I am hard working
I am not gifted - I am determined
I am not lucky - I am persistent
20 Trade Exercise:
- Execute 20 trades as signals appear
- Purpose = smoke out internal conflicts and unresolved emotions
- If you can execute 20 trades without any kind of confict - you are trading from carefree/fearless frame of mind
- Anything can happen - emotionally detached from outcome
- Every moment is unique - no assocation between this moment and another
- Random distribution of wins/losses - accept coin flip outcome
- No need to know what will happen next to make money - you trust your process, focus on controlling variables you can control
- How do you know you're successful? - Trading without anyt conflictiong or competing thoughts
- Results are unimportant - this is a process exercise
- May have to repeat over and over until firing off trades without fear/hesitation/past bias and are accepting outcome dispassionately
Mind loop:
- My trust in markets and myself supports my patience
- My patience that setup will materialise feeds my confidence
- My confidence that I will win dictates my inner dialogue (what I tell myself while trading)
- My inner dialogue supports my process-oriented mindset
- My process enables me to stay focused in this moment
- Support this loop with mental exercises - they feed, nourish, and sustain the loop
I am a process-oriented trader - do not believe in goal setting
There are no monetary or point goals - take what the market will give me/never trade with targets
By being process-oriented instead of outcome oriented - I am staying present
When you are present - you don't connect past moments with present/future
You are fully present
Being present = mindfullness = focus/concentration = knowing what I want
I want to win - overriding motive for trading = to win
At the same time don't mind losing
If I forget all about winning and focus on process - I will win
Conundrum = how can I win if I am not focused on the goal at all times?
Research underpins the trust
Trust supports the patience
Patience is underpinned by mental exercises which nourish my confidence
Internal dialogue driven by process-oriented mindset which is fuelled by my confidence
Focus on what I can control - mindset and risk approach
Let the market do what it wants to do
Whatever the market does - does not fuel my fearful side of my mind
I am not afraid of the market
I am only afraid that I do something stupid in the market - what I can control
I trust myself so this does not happen
I trust I have skills to make money
I trust market will provide opportunities
Trust has been nurtured by intense study of market charts
Trust further strenghtened by continuous dedication to learning
Patience flows from my trust in market and myself
I have built emotional connection between market and in myself
I trust setups will come if I am patient
If I am patient - I will will
If I am not patient - I will not win
I will do anything to win
Therefore, trust overrides emotional impatience that may arise
I trust if I miss this signal, another one will come
Confidence comes from continously working on my game
I learn technical analysis all the time
The markets are forever changing and I will change with them
Inner dialogue stems from trust/patience/confidence
Everyone has bad days - I just don't let them bother me
I am grounded in this moment
I focus on the process - it's all I can control
I must flow with the market like water - "just flow"
I never expect to be comfortable when I am trading
If I am comfortable - I am not pushing my capability boundaries
To be the best - I must be uncomfortable
Pain of seeing market give even more profit while not onboard > pain of seeing some of your unrealized profit disappear
Path to become profitable trader - not understanding the market but understanding your mind
Your mind and how you operate it will dictate the level of sucess you have as a trader
July 31, 2022
I was expecting a very difficult read but thanks to the author and the way of narration that it's actually fun to read this book.
Eleven short chapters on the most prolific retail traders, the book gives a good insight to the trading world.
The book explains well how to think differently when we think about trading and how we can elevate our gam.
Well, some things did went beyond my understanding as I am not well versed with the trading world but I am here to learn and listen.
Who will I recommend this book to?
Definitely to the budding youngsters as well as the adults who will definitely benefit from such books. The writing is easy and fun, not boring and not too complicated.
Thank you, Harriman House, for the advance reading copy.
Eleven short chapters on the most prolific retail traders, the book gives a good insight to the trading world.
The book explains well how to think differently when we think about trading and how we can elevate our gam.
Well, some things did went beyond my understanding as I am not well versed with the trading world but I am here to learn and listen.
Who will I recommend this book to?
Definitely to the budding youngsters as well as the adults who will definitely benefit from such books. The writing is easy and fun, not boring and not too complicated.
Thank you, Harriman House, for the advance reading copy.
September 25, 2022
Since the vast majority of trading books are either 1 or 2 stars this book does standout as well ahead of the pack by being 3 stars. Although there are definitely some good parts and it seems like it would be a worthwhile read for anyone who trades the markets, a good deal of the information is rather basic or there is not enough depth of discussion to understand how it is all supposed to work in practice.
First the good
Hougaard's central thesis is that to make money in trading you must act differently from the vast majority of everyone out there. He believes that nearly all traders, about 99%, are governed primarily through fear of pain which is something he thinks evolution has basically hard wired into us, but which can be overcome with great effort. One consequence is that traders will act fearfully when they should be hopeful by taking profits too early. This is out of the fear of seeing the market reverse course and take away all of their unrealized gains with it. Similarly they will be hopeful when they should be fearful: hopeful that trades that are clearly working against them will turn around and they will be able to avoid the pain of having to book a loss. This fundamental problem nearly all traders have is well known but Hougaard's discussion of it is particularly powerful, he presents statistics to back up his claims and he gets somewhat into the game theoretical aspects of why taking profits quickly while being slow to take losses does not work.
Another strength of the book is Hougaard's calling out how so many of the self styled experts in the trading world are charlatans who likely do not even do any trading themselves. I also learned alot from Hougaard's description of his routines to prepare for trading. This includes things like imagining the day turning from a winning day into a big loss, perhaps on a headline that works against your position, and how you would react. This is so that you are prepared ahead of time. Hougaard also emphasizes that mistakes will be inevitable and that they must be learned from. Hougaard also recommends having a visual deck ready to review your best and worst trades before each day.
The Not So Good
The book is slow getting started and covers rather basic ideas until about 40% of the way in. In general the writing style is very "popular": The sections are generally very short: maybe two pages each with many of them in each chapter. Some rather basic points are belabored: for example that you can be a winning trader even if you lose a majority of the time since the size of wins just has be sufficiently great to cover your losses. The diagrams in the book are very hard to read because they are not crisp images to the point of not really adding any value. Blissfully, even if you cannot make out any of them it likely does not detract from the book since the geist of what was going on is described adequately well.
I also had problems with how many of the statements just did not have great logic. For example since the market is basically a coin flip on any given trade how could 90% or so of traders consistently loss money? It is obviously possible if they are ultimately getting eaten up by commissions, fees and spreads. Is that necessarily the explanation? No, but it is a possibility that Hougaard should take time to discuss. In the same discussion, Hougaard also makes the illogical claim that since most traders win about 60% of their trades the problem is not that they are not able to identify winning setups but they just take profits too early and do not cut their losses early enough. The problem with the logic here is that maybe they are already squeezing all they can out of their trades and that finding ones able to gain more profits or with smaller potential losses would reduce how many opportunities they were able to identify in the first place.
Although I do agree with the notion that psychology plays a big role in trading, and his book does provide good, specific ways to improve it, the case for the central thesis is not well made. That is not to say that it is wrong: just not well made. For instance, if it was true that it is mainly the desire to avoid pain that causes most traders to lose money the solution would be very simple: have a computer that is immune from these things do the trading for you. Indeed, it seems that anyone who was then even decently competent at encoding their trading system would become a highly profitable trader. I think this is a big element that Hougaard is sort of on the right track with, hints at some of deeper theory regarding, but does not make completely explicit in this book.
As a practical matter, Hougaard says that traders should move in the direction of the pain. Practically, however, the decision associated with the direction of pain is often hard to identify. Am I fearful of losing my gains by taking profits now or would the fear be in keeping the position open because I want to avoid the pain of missing out on future gains?
First the good
Hougaard's central thesis is that to make money in trading you must act differently from the vast majority of everyone out there. He believes that nearly all traders, about 99%, are governed primarily through fear of pain which is something he thinks evolution has basically hard wired into us, but which can be overcome with great effort. One consequence is that traders will act fearfully when they should be hopeful by taking profits too early. This is out of the fear of seeing the market reverse course and take away all of their unrealized gains with it. Similarly they will be hopeful when they should be fearful: hopeful that trades that are clearly working against them will turn around and they will be able to avoid the pain of having to book a loss. This fundamental problem nearly all traders have is well known but Hougaard's discussion of it is particularly powerful, he presents statistics to back up his claims and he gets somewhat into the game theoretical aspects of why taking profits quickly while being slow to take losses does not work.
Another strength of the book is Hougaard's calling out how so many of the self styled experts in the trading world are charlatans who likely do not even do any trading themselves. I also learned alot from Hougaard's description of his routines to prepare for trading. This includes things like imagining the day turning from a winning day into a big loss, perhaps on a headline that works against your position, and how you would react. This is so that you are prepared ahead of time. Hougaard also emphasizes that mistakes will be inevitable and that they must be learned from. Hougaard also recommends having a visual deck ready to review your best and worst trades before each day.
The Not So Good
The book is slow getting started and covers rather basic ideas until about 40% of the way in. In general the writing style is very "popular": The sections are generally very short: maybe two pages each with many of them in each chapter. Some rather basic points are belabored: for example that you can be a winning trader even if you lose a majority of the time since the size of wins just has be sufficiently great to cover your losses. The diagrams in the book are very hard to read because they are not crisp images to the point of not really adding any value. Blissfully, even if you cannot make out any of them it likely does not detract from the book since the geist of what was going on is described adequately well.
I also had problems with how many of the statements just did not have great logic. For example since the market is basically a coin flip on any given trade how could 90% or so of traders consistently loss money? It is obviously possible if they are ultimately getting eaten up by commissions, fees and spreads. Is that necessarily the explanation? No, but it is a possibility that Hougaard should take time to discuss. In the same discussion, Hougaard also makes the illogical claim that since most traders win about 60% of their trades the problem is not that they are not able to identify winning setups but they just take profits too early and do not cut their losses early enough. The problem with the logic here is that maybe they are already squeezing all they can out of their trades and that finding ones able to gain more profits or with smaller potential losses would reduce how many opportunities they were able to identify in the first place.
Although I do agree with the notion that psychology plays a big role in trading, and his book does provide good, specific ways to improve it, the case for the central thesis is not well made. That is not to say that it is wrong: just not well made. For instance, if it was true that it is mainly the desire to avoid pain that causes most traders to lose money the solution would be very simple: have a computer that is immune from these things do the trading for you. Indeed, it seems that anyone who was then even decently competent at encoding their trading system would become a highly profitable trader. I think this is a big element that Hougaard is sort of on the right track with, hints at some of deeper theory regarding, but does not make completely explicit in this book.
As a practical matter, Hougaard says that traders should move in the direction of the pain. Practically, however, the decision associated with the direction of pain is often hard to identify. Am I fearful of losing my gains by taking profits now or would the fear be in keeping the position open because I want to avoid the pain of missing out on future gains?
November 16, 2025
Great book.
Best Loser Wins powerfully shows that mastering your mind is the key not only to trading but to life itself.
“Winning begins when you treat losses as information, not as personal failure”
Best Loser Wins powerfully shows that mastering your mind is the key not only to trading but to life itself.
“Winning begins when you treat losses as information, not as personal failure”
May 14, 2023
With trading brain this big, i will make ALL the money
January 21, 2024
A must-read for every trader
I’ve been trading since 2019 and it was with amazement that I could see myself reflect on this book. I have a good knowledge of technical analysis but I kept failing, because my losses are bigger than my wins. A few months ago I accepted that my problem was my losses and I needed to do something about it. I saw a recommendation for this book on X (Twitter) and two months later I started reading it. I regret that I didn’t before.
From the emotional aspects of trading it was the most practical book I read (and I read three more from different authors). It gave me a much better insight of the importance of the emotional side of trading, which, unfortunately, few people pay attention to it.
I’m now more committed to know myself better, improve myself (life and consequently, trading), and, more importantly, accept my losses better. Because definitely the best loser wins.
I’ve been trading since 2019 and it was with amazement that I could see myself reflect on this book. I have a good knowledge of technical analysis but I kept failing, because my losses are bigger than my wins. A few months ago I accepted that my problem was my losses and I needed to do something about it. I saw a recommendation for this book on X (Twitter) and two months later I started reading it. I regret that I didn’t before.
From the emotional aspects of trading it was the most practical book I read (and I read three more from different authors). It gave me a much better insight of the importance of the emotional side of trading, which, unfortunately, few people pay attention to it.
I’m now more committed to know myself better, improve myself (life and consequently, trading), and, more importantly, accept my losses better. Because definitely the best loser wins.
March 4, 2023
This was a bad trade for £20. Biggest mistake was setting my stop loss too wide at 30% in.
May 23, 2024
"I periodically suffer from verbal diarrhoea on the mental aspect of trading." Could have been a blog post
March 6, 2025
Unlike most of the other trading books I have read, I like the focus on emotional health. Very Mark Douglas-esque. Highly recommended book for traders who aren’t new to the game necessarily but also aren’t where they want to be in their trading career.
January 21, 2023
Арилжааны сэтгэлзүйн талаарх сайхан ном болжээ.
August 12, 2023
kben echte loser nu
February 26, 2025
"If you think like everyone else, is it so strange that you get results that everone else gets?"
Huge respect and Huge thanks to Tom for this book.
It changed my mindset. Haven't had a book to change my mindset in a long time.
Huge respect and Huge thanks to Tom for this book.
It changed my mindset. Haven't had a book to change my mindset in a long time.
January 25, 2025
This book should be just a long email. Same idea repeated x100 times
November 15, 2024
واقعا کتابی بود که از خوندنش لذت بردم
و بنظرم برای هر معامله گری در بازارهای مالی لازمه
و مشخص میکنه جرا 90 درصد معامله گران بازار های مالی در نهایت می بازند و از بازار به بیرون پرت میشن
نویسنده سفری که خودش طی کرده تا از معامله گر زیان ده به یک معامله گری که به سود مستمر رسیده رو شرح میده
ضرر کردن در معاملات مهم نیست مهم واکنشی هست که ما به معاملاتی که وارد ضرر شده اند نشون میدیم
خیلی از معامله گران با تصور اینکه الان بازار ارزان شده به معاملات توی ضرر شون اضافه می کنند
مثالی که خودش زده خیلی جالب هست
گرفتن چاقوی در حال سقوط
برخی نقل قولهای جالب کتاب رو مینویسم :
احساسی که نسبت به شکست دارید تا حد زیادی رشد و مسیر زندگی شما را تقریباً در هر جنبه ای از زندگی شما مشخص می کند.
زمانی که در گروه تلگرامی زنده خود معاملاتی را انجام می دهم، همیشه یک حد ضرر مشخص می کنم. همیشه! با این حال، اغلب از من می پرسند که آیا حد سود در ذهن دارم یا خیر. پاسخ اغلب کمی کنایه آمیز است: "نه، گوی کریستالی فالگیری من خراب شده و دادمش برای تعمیر بیرون، دوست عزیز، اما آیا من مانند یک فالگیر به نظر می رسم ؟
به این سوال ساده پاسخ دهید: وقتی برنده هستید، آیا اندازه معاملات خود را افزایش می دهید یا اندازه معاملات خود را کاهش می دهید؟"
«وقتی در موقعیت برنده هستید، به جای اینکه فکر کنید کجا باید بیرون بیایید،چرا به این فکر نمیکنید که کجا بیشتر وارد شوید؟»
و در ادامه با پاسخ به این سوال به پیش میره که
"چرا اضافه کردن به یک موقعیت بازنده آسان تر از یک موقعیت برنده است؟"
کتابی که به شدت پیشنهاد میشه
و با سپاس از آقای تام هوگارد بابت این کتاب فوق العاده
و بنظرم برای هر معامله گری در بازارهای مالی لازمه
و مشخص میکنه جرا 90 درصد معامله گران بازار های مالی در نهایت می بازند و از بازار به بیرون پرت میشن
نویسنده سفری که خودش طی کرده تا از معامله گر زیان ده به یک معامله گری که به سود مستمر رسیده رو شرح میده
ضرر کردن در معاملات مهم نیست مهم واکنشی هست که ما به معاملاتی که وارد ضرر شده اند نشون میدیم
خیلی از معامله گران با تصور اینکه الان بازار ارزان شده به معاملات توی ضرر شون اضافه می کنند
مثالی که خودش زده خیلی جالب هست
گرفتن چاقوی در حال سقوط
برخی نقل قولهای جالب کتاب رو مینویسم :
احساسی که نسبت به شکست دارید تا حد زیادی رشد و مسیر زندگی شما را تقریباً در هر جنبه ای از زندگی شما مشخص می کند.
زمانی که در گروه تلگرامی زنده خود معاملاتی را انجام می دهم، همیشه یک حد ضرر مشخص می کنم. همیشه! با این حال، اغلب از من می پرسند که آیا حد سود در ذهن دارم یا خیر. پاسخ اغلب کمی کنایه آمیز است: "نه، گوی کریستالی فالگیری من خراب شده و دادمش برای تعمیر بیرون، دوست عزیز، اما آیا من مانند یک فالگیر به نظر می رسم ؟
به این سوال ساده پاسخ دهید: وقتی برنده هستید، آیا اندازه معاملات خود را افزایش می دهید یا اندازه معاملات خود را کاهش می دهید؟"
«وقتی در موقعیت برنده هستید، به جای اینکه فکر کنید کجا باید بیرون بیایید،چرا به این فکر نمیکنید که کجا بیشتر وارد شوید؟»
و در ادامه با پاسخ به این سوال به پیش میره که
"چرا اضافه کردن به یک موقعیت بازنده آسان تر از یک موقعیت برنده است؟"
کتابی که به شدت پیشنهاد میشه
و با سپاس از آقای تام هوگارد بابت این کتاب فوق العاده
March 12, 2025
I find I learn something about investing psychology when reading books on trading.
The true measure of your growth as a human being is not what you know, but rather what you do with the things you know.
You don't need a 50% hit rate to be a successful trader. It's about how much you win when you win, and how much you lose when you lose. That is why it doesn't really matter what technical analysis tool you use. None are foolproof, but some have a passable hit rate. What stops people from being successful traders is their emotions. Primarily loss aversion: unwillingness to take losses, and being too quick to lock in gains ('cutting the flowers and watering the weeds'). To be successful trading, you need to do the opposite: take lots of small losses and let your winners run. In a study of 25,000 traders, they won more often than they lost (62% of all trades were winning trades), but they lost 66% more on their average loss than they gained on their average win. The problem is a human problem. People are hopefuly when they are losing money. They are fearful when they are making money. This is how the 90% think. They listen to hope and fear at the wrong time.
Not only that, you need to add to your winning trades. It is easy to say run your profits and cut your losses. Yes, but how do you deal with the fear of running your profits? When a solution is obvious, the problem is rarely the only problem. You might as well tell an alcoholic to just stop drinking. There is a reason he is drinking, and there is a reason he is struggle to stop. Fear of loss, resistance to taking a loss. All of us know what to do. All of us have the knowledge to do what needs to be done, but the path from knowledge to action, where we implement our knowledge, is elusive for many people in many areas of their lives. Your mind will drift. You need a priming statement. Remember your purpose. Has a powerpoint file containing old trades, mistakes, triumphs, inspirations, and warnings visually arranged to prepare him for the day ahead.
The normal human reactions make 90% of people fail at trading. If it is uncomfortable, then it is probably the right thing to do. Being a good trader really has little to do with tools and charts. It has a lot to do with fighting our humanness.
How you feel about failure will to a very large degree define your growth and your life trajectory, in virtually every aspect of your life. I have conditioned my mind to lose without anxiety, without loss of mental equilibrium, without emotional attachment, and without fostering feelings of resentment or desire to break even. My knowledge of technical analysis is average at best. My knowledge of myself is what sets me apart. Normal behaviour is to engage in a never-ending cycle of education, looking for the next new edge. 99% of people do not know how to lose. The emotions they experience when they lose cause them to act in a manner which is not in their own best interest. Do you want to know why I am so good at trading? I am exceptionally good at losing. When speculating in financial markets, the best loser wins. I win. Move on. I lose. Move on.
Cognitive dissonance: the mental discomfort experienced by an individual who simultaneously holds two contradictory beliefs or ideas in their head. I believe I am a good trader, but I have a loss.
Confirmation bias: our minds tend to seek out the information that confirms the bias that we have already decided upon. Therefore, to be completely objective in chart analysis is virtually impossible, As Anais Nin said: "We don't see things as they are, we see them as we are."
Our minds seem ill equipped to engage in risk management. Our minds have one primary objective: to protect us against perceived or real pain. Look at any number of actions traders take, letting losses run, taking profits, reducing size of additional investments in a winning trade, increasing stake in a losing trade: they are all about avoiding pain. As long as a losing position is open, there is hope tha the position will turn positive. The moment you close the position, and you crystallise the loss, the pain of the loss becomes real. They don't hold on to the position because they believed in the position. They held on to the position because they could not stand being wrong. If you are taking profits early under the excuse 'you can't go broke taking a profit', you are reacting to your mind warning you against future pain. If you are in doubt whether you are trading from an opportunistic frame of mind or a fear-based frame of mind, then answer the simple question: when you are winning, are you increasing your trading size, or decreasing? The vast majority of traders will decrease their trading size when things are going well, because they are afraid their winning streak will eventually run out. The flip side to that coin is that they might even increase their trading size during a trading slump, so they can win back the lost money.
It's much easier to add to a losing position than to a winning position. Adding to winning trades is an absolute key trait of the successful trader. It reinforces correct behaviour. It serves as an antidote to the temptation of wanting to take profit.
Do what you must do, even though it feels uncomfortable. Your mind is like a muscle. You need to strength that mind of yours through repitition. If you don't prepare your mind ahead of the game, and you experience adversity during the game, your mind will most likely work against your prime objective. Your prime objective is not to make money. Your prime objective is to follow the strategy you have developed. Process, not outcome.
You control risk when adding to winning trades by placing stop losses. There is no magic in it. It is a philosophy born out of the desire to not be normal. The normal thing to do is to close half your position and let the other half run. Why would you do that? Why would you have the market agree with you, but you only ride it with half a stake? I don't know what will happen over the course of one trade. Anything can happen. However i do know what will happen - statistically speaking - over the course of 100 trades. I am prepared to let a single trade turn into an insignificant trade (small profit trade) in the hope that it will turn into a significant trade.
The true measure of your growth as a human being is not what you know, but rather what you do with the things you know.
You don't need a 50% hit rate to be a successful trader. It's about how much you win when you win, and how much you lose when you lose. That is why it doesn't really matter what technical analysis tool you use. None are foolproof, but some have a passable hit rate. What stops people from being successful traders is their emotions. Primarily loss aversion: unwillingness to take losses, and being too quick to lock in gains ('cutting the flowers and watering the weeds'). To be successful trading, you need to do the opposite: take lots of small losses and let your winners run. In a study of 25,000 traders, they won more often than they lost (62% of all trades were winning trades), but they lost 66% more on their average loss than they gained on their average win. The problem is a human problem. People are hopefuly when they are losing money. They are fearful when they are making money. This is how the 90% think. They listen to hope and fear at the wrong time.
Not only that, you need to add to your winning trades. It is easy to say run your profits and cut your losses. Yes, but how do you deal with the fear of running your profits? When a solution is obvious, the problem is rarely the only problem. You might as well tell an alcoholic to just stop drinking. There is a reason he is drinking, and there is a reason he is struggle to stop. Fear of loss, resistance to taking a loss. All of us know what to do. All of us have the knowledge to do what needs to be done, but the path from knowledge to action, where we implement our knowledge, is elusive for many people in many areas of their lives. Your mind will drift. You need a priming statement. Remember your purpose. Has a powerpoint file containing old trades, mistakes, triumphs, inspirations, and warnings visually arranged to prepare him for the day ahead.
The normal human reactions make 90% of people fail at trading. If it is uncomfortable, then it is probably the right thing to do. Being a good trader really has little to do with tools and charts. It has a lot to do with fighting our humanness.
How you feel about failure will to a very large degree define your growth and your life trajectory, in virtually every aspect of your life. I have conditioned my mind to lose without anxiety, without loss of mental equilibrium, without emotional attachment, and without fostering feelings of resentment or desire to break even. My knowledge of technical analysis is average at best. My knowledge of myself is what sets me apart. Normal behaviour is to engage in a never-ending cycle of education, looking for the next new edge. 99% of people do not know how to lose. The emotions they experience when they lose cause them to act in a manner which is not in their own best interest. Do you want to know why I am so good at trading? I am exceptionally good at losing. When speculating in financial markets, the best loser wins. I win. Move on. I lose. Move on.
Cognitive dissonance: the mental discomfort experienced by an individual who simultaneously holds two contradictory beliefs or ideas in their head. I believe I am a good trader, but I have a loss.
Confirmation bias: our minds tend to seek out the information that confirms the bias that we have already decided upon. Therefore, to be completely objective in chart analysis is virtually impossible, As Anais Nin said: "We don't see things as they are, we see them as we are."
Our minds seem ill equipped to engage in risk management. Our minds have one primary objective: to protect us against perceived or real pain. Look at any number of actions traders take, letting losses run, taking profits, reducing size of additional investments in a winning trade, increasing stake in a losing trade: they are all about avoiding pain. As long as a losing position is open, there is hope tha the position will turn positive. The moment you close the position, and you crystallise the loss, the pain of the loss becomes real. They don't hold on to the position because they believed in the position. They held on to the position because they could not stand being wrong. If you are taking profits early under the excuse 'you can't go broke taking a profit', you are reacting to your mind warning you against future pain. If you are in doubt whether you are trading from an opportunistic frame of mind or a fear-based frame of mind, then answer the simple question: when you are winning, are you increasing your trading size, or decreasing? The vast majority of traders will decrease their trading size when things are going well, because they are afraid their winning streak will eventually run out. The flip side to that coin is that they might even increase their trading size during a trading slump, so they can win back the lost money.
It's much easier to add to a losing position than to a winning position. Adding to winning trades is an absolute key trait of the successful trader. It reinforces correct behaviour. It serves as an antidote to the temptation of wanting to take profit.
Do what you must do, even though it feels uncomfortable. Your mind is like a muscle. You need to strength that mind of yours through repitition. If you don't prepare your mind ahead of the game, and you experience adversity during the game, your mind will most likely work against your prime objective. Your prime objective is not to make money. Your prime objective is to follow the strategy you have developed. Process, not outcome.
You control risk when adding to winning trades by placing stop losses. There is no magic in it. It is a philosophy born out of the desire to not be normal. The normal thing to do is to close half your position and let the other half run. Why would you do that? Why would you have the market agree with you, but you only ride it with half a stake? I don't know what will happen over the course of one trade. Anything can happen. However i do know what will happen - statistically speaking - over the course of 100 trades. I am prepared to let a single trade turn into an insignificant trade (small profit trade) in the hope that it will turn into a significant trade.
January 1, 2025
This book, 'Best Loser Wins: Why Normal Thinking Never Wins the Trading Game,' struck a powerful chord with me from the very beginning. The opening chapter, 'Dear market,' captivated me with its creative and personal approach. It felt as though I was reading a book written by my future self, sent back in time to guide my younger self towards trading success. The author's writing style and references mirrored my own, creating an immediate connection.
Unlike other trading books that focus solely on setups, strategies, and technical analysis, this book delves into the psychological aspects of trading. It explores our shared vulnerabilities and the barriers that prevent us from becoming high-stake traders, regardless of our profitability. It emphasizes the need to shift our thinking and provides invaluable insights to facilitate this transformation. In my opinion, this is one of the most enlightening reads I've come across, deserving a perfect rating of 5 out of 5.
Of course, psychology alone is not the sole key to success. If it were, any programmer who created an automated trading system would be a billionaire. The book acknowledges this fact, highlighting that psychology is the crucial second step in the journey towards mastering the markets. The first step involves developing your trading setup, strategy, and style. The next involves refining these aspects through meticulous journaling, creating a personal 'book of truths.' Lastly, and most importantly, it requires constant self-awareness and distancing yourself from the 90% of traders who struggle. This book serves as a valuable guide to help you achieve these goals.
I was pleasantly surprised to discover that the author's YouTube channel featured trade analyses similar to one of my own strategies. Furthermore, his girlfriend's reference to Mozart versus Salieri resonated with me, as it reminded me of the exceptional film 'Amadeus,' which inspired my nickname. The synchronicity between this book and my own experiences was remarkable, leaving me with nothing but admiration and surprise.
In conclusion, 'Best Loser Wins' is a remarkable book that goes beyond the conventional trading literature. It connects with readers on a personal and psychological level, providing essential insights and eye-opening perspectives. Whether you choose to confront your emotions and psychological traits head-on or create a trading robot to handle these challenges, the decision is yours. This book is a beacon of light for any trader seeking to surpass the limitations of the market and achieve true success. I cannot recommend it enough.
These clippings capture the most significant and thought-provoking passages from the books I have read, allowing me to revisit and reflect on them later and you to assess the depth of the author's insights, the clarity of their writing, and the overall value of the book's content:
"But you made the lessons obscure. You designed it to look easy. But it was never easy. You made everyone believe that you could be danced with through models, through equations, through indicators, through conventional thinking and through logic. But often there is little logic to you. And I struggled to dance with you for years, until one day by chance you told me your secret. You told me to stop trying to understand you. You told me to understand myself."
"How you feel about failure will to a very large degree define your growth and your life trajectory, in virtually every aspect of your life."
"When I call out trades in my live TraderTom Telegram group, I will always announce a stop-loss. Always! However, I often get asked if I have a target in mind. The answer is quite often a little sarcastic: 'No, my crystal ball is out for repairs,' or if I am particularly grumpy and tired, I will be rude and say, 'Sorry amigo, but do I look like a fortune teller to you?'"
"Although I trade full time, I really don’t think I could add anything new to the world of charting. Charting didn’t make me money. Indicators never made me money. Ratios and bands never filled my bank account."
"He also told me that when they executed a trade, they expected it to work immediately. So, I grilled him a little bit on that point. 'What do you mean you expected it to work immediately?' I said. He said he meant exactly that: when they executed a trade, they expected the trade to begin to work immediately. If they had bought at 50, they would not want it to go to 48. If it went to 48, they would stop themselves out."
"Heraclitus, the pre-Socratic Greek philosopher, said: 'No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.' That is important to bear in mind as a speculator, because the market changes constantly."
"For example, we have all read the axiom of ‘buy low and sell high’. I changed that to ‘sell low and cover lower’ and ‘buy high and sell higher’."
"If you are in doubt whether you are trading from an opportunistic frame of mind or a fear-based frame of mind, then answer this simple question: when you are winning, are you increasing your trading size or decreasing your trading size?"
"99% still don’t get it – when they win, they start betting less. Bet more!"
"The time you know you’ve become a good trader is that first day you were able to win by holding and adding to a winning position. When I am in a profitable position, I have trained my mind to ask, 'How can I make my position bigger?'"
“When you are in a winning position, instead of thinking where to get out, why don’t you think about where to get in more?”
"Why is it easier to add to a losing position than to a winning position?"
"Not everyone is Mozart versus Salieri."
"I created a PowerPoint containing every trade to give me visual imagery of my performance. This is the Book of Truths."
Unlike other trading books that focus solely on setups, strategies, and technical analysis, this book delves into the psychological aspects of trading. It explores our shared vulnerabilities and the barriers that prevent us from becoming high-stake traders, regardless of our profitability. It emphasizes the need to shift our thinking and provides invaluable insights to facilitate this transformation. In my opinion, this is one of the most enlightening reads I've come across, deserving a perfect rating of 5 out of 5.
Of course, psychology alone is not the sole key to success. If it were, any programmer who created an automated trading system would be a billionaire. The book acknowledges this fact, highlighting that psychology is the crucial second step in the journey towards mastering the markets. The first step involves developing your trading setup, strategy, and style. The next involves refining these aspects through meticulous journaling, creating a personal 'book of truths.' Lastly, and most importantly, it requires constant self-awareness and distancing yourself from the 90% of traders who struggle. This book serves as a valuable guide to help you achieve these goals.
I was pleasantly surprised to discover that the author's YouTube channel featured trade analyses similar to one of my own strategies. Furthermore, his girlfriend's reference to Mozart versus Salieri resonated with me, as it reminded me of the exceptional film 'Amadeus,' which inspired my nickname. The synchronicity between this book and my own experiences was remarkable, leaving me with nothing but admiration and surprise.
In conclusion, 'Best Loser Wins' is a remarkable book that goes beyond the conventional trading literature. It connects with readers on a personal and psychological level, providing essential insights and eye-opening perspectives. Whether you choose to confront your emotions and psychological traits head-on or create a trading robot to handle these challenges, the decision is yours. This book is a beacon of light for any trader seeking to surpass the limitations of the market and achieve true success. I cannot recommend it enough.
These clippings capture the most significant and thought-provoking passages from the books I have read, allowing me to revisit and reflect on them later and you to assess the depth of the author's insights, the clarity of their writing, and the overall value of the book's content:
"But you made the lessons obscure. You designed it to look easy. But it was never easy. You made everyone believe that you could be danced with through models, through equations, through indicators, through conventional thinking and through logic. But often there is little logic to you. And I struggled to dance with you for years, until one day by chance you told me your secret. You told me to stop trying to understand you. You told me to understand myself."
"How you feel about failure will to a very large degree define your growth and your life trajectory, in virtually every aspect of your life."
"When I call out trades in my live TraderTom Telegram group, I will always announce a stop-loss. Always! However, I often get asked if I have a target in mind. The answer is quite often a little sarcastic: 'No, my crystal ball is out for repairs,' or if I am particularly grumpy and tired, I will be rude and say, 'Sorry amigo, but do I look like a fortune teller to you?'"
"Although I trade full time, I really don’t think I could add anything new to the world of charting. Charting didn’t make me money. Indicators never made me money. Ratios and bands never filled my bank account."
"He also told me that when they executed a trade, they expected it to work immediately. So, I grilled him a little bit on that point. 'What do you mean you expected it to work immediately?' I said. He said he meant exactly that: when they executed a trade, they expected the trade to begin to work immediately. If they had bought at 50, they would not want it to go to 48. If it went to 48, they would stop themselves out."
"Heraclitus, the pre-Socratic Greek philosopher, said: 'No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.' That is important to bear in mind as a speculator, because the market changes constantly."
"For example, we have all read the axiom of ‘buy low and sell high’. I changed that to ‘sell low and cover lower’ and ‘buy high and sell higher’."
"If you are in doubt whether you are trading from an opportunistic frame of mind or a fear-based frame of mind, then answer this simple question: when you are winning, are you increasing your trading size or decreasing your trading size?"
"99% still don’t get it – when they win, they start betting less. Bet more!"
"The time you know you’ve become a good trader is that first day you were able to win by holding and adding to a winning position. When I am in a profitable position, I have trained my mind to ask, 'How can I make my position bigger?'"
“When you are in a winning position, instead of thinking where to get out, why don’t you think about where to get in more?”
"Why is it easier to add to a losing position than to a winning position?"
"Not everyone is Mozart versus Salieri."
"I created a PowerPoint containing every trade to give me visual imagery of my performance. This is the Book of Truths."
December 24, 2022
After trading for a while, and reading more than 30 well known books, this is the book I needed. Perfect charts from always the same stocks in every book don't help much. You have to face yourself during the non perfect charts trading, and that is the hard part. This book will help you recognize your weaknesses and deal with your fears, in the moments when you want to repeat all the same mistakes that make you lose your money. Excellent book, exactly what I needed to move on with my trading. Thanks Tom!
December 10, 2024
Although I disagree with a few minor details of Tom's style, this was hands down the best trading book I have ever read.
There is no one size fits all trading style which he eludes to elegantly. This book has truly shaped and helped my trading for the years to come.
There is no one size fits all trading style which he eludes to elegantly. This book has truly shaped and helped my trading for the years to come.
November 19, 2024
It’s almost a recipe for meditation. Be process-orientated. Be free from emotions. Know your feel index. “My intention is to inspire you to take the mental side of trading almost as seriously as the technical side” ( p.241). Hausgaard states. It’s a story he has won the right to tell. He has the storied career of a London financial analyst, a JP Morgan trader who would regularly work 18 hours a day, a day trader who survived for 18 months before bankruptcy. He’s see the results of millions of Forex traders, and seen the rawest emotions move clients and charts. “Best Losers Win” reminds us that our strengths are our weaknesses. We prize speed, risk, and big returns, because we know there are the great stories of capital gains with firms like Nvidia, Amazon and Google. We also have to know the vagaries of the market, and how our psychology can work against us.
Holding the mirror to the reader, we are forced to consider if we are part of the 90% of individuals who lose in the market from active trading. A group of people with an admirable hit rate (61%), but who hold the losers and sell the winners. Exaggerating a bit, Haugaard states an ambitious learner could acquire the technical analysis needed in a weekend seminar, and then you would be one of the “normal” and unprofitable traders. Historically there have never been more tools for traders, narrower bid-ask spreads, and brokers willing to train..and still we have trouble exceeding the market indices reflective of passive investors. Could there be something to learn or unlearn here?
One of the most valuable insights Hausgaard shares is how winning affects the mind. Sure he doesn’t get into the behavior of dendrites or neurobiology, but anyone who has had a hot hand knows our perception overcomes our reality. Using analogies with great athletes like Kobe Bryant and Seerena Williams, Hausgaard gives instruction on building an emotionless response to gains and loses, and focusing on the process of trading. Technical analysis is ultimately using price and volume to visualize relative measures, and there is a good share of Hausgaard showing us the charts. Of course a good setup, a stop trigger, and awareness of trend are necessary; but it isn’t enough to be great. As he states late in the book “I win money, i move on. I lose money, i move on”. Hougaard asks the reader to consider getting out of losing positions quickly, and capitalizing on moving trends quickly. Simple ideas, but largely incongruent with the loss-aversion traders experience.
I know a lot of people revere this book. It does feel like an antidote or at least a different lens on the typical technical analysis approach. At times I wish the writing were a little more current. The trading culture of apps, youtube personalities and social media brigading have amplified the irresponsible aspects of trading. Consider the cryptocurrency mania or Gamestop short, it seems like the major cultural lessons were about speed and luck. It reminds me of Peter Lynch’s fundamental question, “why buy a stock in the first place”. I think there was an opportunity to hold the mirror to the wider world of trading, and wonder if there ought to be more incentives toward strategy and less toward unfounded speculation.
“Your relationship with fear and adversity will to a very high degree define your life “ (p.201) states Hougaard. I couldn’t agree more.The hard truth is that we are responsible for our financial wellness, and the markets are not risk-free. It seems the audience Hougaard addresses is the intelligent, ambitious trader who has has been upward and downward cycles for years. As a relatively new trader, I don’t fit that model. I didn’t feel overburdened by unrealized gains or excessive volume of trades. In a book that feasts on inspiration messages and psychological reframing, I felt the reader misses out Hougard’s transparent trade book. We do review a few trades as a post-mortem, but somehow it feels rather slight. Nevertheless, this is a book worth reading if only to see the dramatic way that markets embed themselves in our psyche, and leave their footprint across the many dimensions of our life.
Holding the mirror to the reader, we are forced to consider if we are part of the 90% of individuals who lose in the market from active trading. A group of people with an admirable hit rate (61%), but who hold the losers and sell the winners. Exaggerating a bit, Haugaard states an ambitious learner could acquire the technical analysis needed in a weekend seminar, and then you would be one of the “normal” and unprofitable traders. Historically there have never been more tools for traders, narrower bid-ask spreads, and brokers willing to train..and still we have trouble exceeding the market indices reflective of passive investors. Could there be something to learn or unlearn here?
One of the most valuable insights Hausgaard shares is how winning affects the mind. Sure he doesn’t get into the behavior of dendrites or neurobiology, but anyone who has had a hot hand knows our perception overcomes our reality. Using analogies with great athletes like Kobe Bryant and Seerena Williams, Hausgaard gives instruction on building an emotionless response to gains and loses, and focusing on the process of trading. Technical analysis is ultimately using price and volume to visualize relative measures, and there is a good share of Hausgaard showing us the charts. Of course a good setup, a stop trigger, and awareness of trend are necessary; but it isn’t enough to be great. As he states late in the book “I win money, i move on. I lose money, i move on”. Hougaard asks the reader to consider getting out of losing positions quickly, and capitalizing on moving trends quickly. Simple ideas, but largely incongruent with the loss-aversion traders experience.
I know a lot of people revere this book. It does feel like an antidote or at least a different lens on the typical technical analysis approach. At times I wish the writing were a little more current. The trading culture of apps, youtube personalities and social media brigading have amplified the irresponsible aspects of trading. Consider the cryptocurrency mania or Gamestop short, it seems like the major cultural lessons were about speed and luck. It reminds me of Peter Lynch’s fundamental question, “why buy a stock in the first place”. I think there was an opportunity to hold the mirror to the wider world of trading, and wonder if there ought to be more incentives toward strategy and less toward unfounded speculation.
“Your relationship with fear and adversity will to a very high degree define your life “ (p.201) states Hougaard. I couldn’t agree more.The hard truth is that we are responsible for our financial wellness, and the markets are not risk-free. It seems the audience Hougaard addresses is the intelligent, ambitious trader who has has been upward and downward cycles for years. As a relatively new trader, I don’t fit that model. I didn’t feel overburdened by unrealized gains or excessive volume of trades. In a book that feasts on inspiration messages and psychological reframing, I felt the reader misses out Hougard’s transparent trade book. We do review a few trades as a post-mortem, but somehow it feels rather slight. Nevertheless, this is a book worth reading if only to see the dramatic way that markets embed themselves in our psyche, and leave their footprint across the many dimensions of our life.
May 22, 2024
4.5/5
This book came to me at the perfect time, as if called to me by the Market Gods.
I had developed two trading strategies which historically had an edge, and I had ventured into the markets with them. $50,000 in the account, and the world to conquer, or so I thought. First month, I made a ton of mistakes, but I ended it with profit. "This is it," I said. "I'm doing it!"
Then Mr. Market smirked, slapped me on the head and said: "You still have much to learn."
The following month wiped out the prior month's profits and more. I was back to square one. This had happened to me before, and all the memories of the past experiences hung in my subconscious. Once again, I will have wasted months of my time researching strategies that have no edge. With that in mind, I hesitated on every trade, incurring execution errors, missing trades, trading with absolute fear.
I hit rock-bottom after I incurred several max loss days in a row. In full existential crisis mode, I spent the next 14 hours scouring my research, my eyes glued to the computer screen, veins proliferating, red and thick. 'How can this be happening? The data is right here!'
The truth is my emotions had completely destroyed whatever edge I thought I had. When I fixed my execution errors and stopped missing trades, my system entered a drawdown. Mr. Market was saying 'f*ck you, I'm not done with you yet.' And I was ill-equipped to deal with that. Once again, I descended into existential crisis mode. I honestly had to ask myself whether I was a masochist.
Then, I read this book.
I have always hated psychological trading books because I feel they're always dishonest to some degree. You need an edge before you need any psychological tools, I assure you. I feel the author could've shed a little more light on that, but other than that, I think this is the finest book on trading psychology out there.
In order to be successful at trading, the author says, you have to do what the 90% of traders don't do. Using a database of millions of Forex trades, the author shows that most traders are accurate - winning at least 60% - but have losses that far outweigh their gains, turning their expectancy negative.
From there, he outlines a few things that most unsuccessful traders tend to do:
- Let losers run;
- Cut winners short;
- Add to losers;
- Do not add to winners;
- Feel emotional after every trade;
- Ignore the mental aspect of trading;
I pulled out my own Book of Truths and realized I was suffering from some of these predicaments myself, despite thinking I am 'ahead of the curve.' I did not add to winners; I could not handle losses constructively; I cut my winners short. The Cardinal Sins were starting at me, and I couldn't look away. Tom was the one to bring them to my attention.
Since reading this book, I have gotten a lot better. My rock-bottom moment really desensitized me to loss. I have lost so often and so much that I know losses do not and cannot hurt me. In fact, I look forward to losses, as they are information I can use to improve my trading. I have completely surrendered to the fact that despite having two strategies with an edge, I have no idea what the next few trades are going to look like. All I know is the outcome in the long-run.
I am also working on my weakness: Figuring out how to get better exits has been an area of immediate interest to me. I am also constructing a pyramiding plan on my better setups - all the best traders get aggressive when the time is right, but there's a right way to do so.
I'm sure there are many lessons in here that I have missed - all I know is this book was a blessing on my trading journey, and it will sit on my desk for a long time. I will reread it, until I've internalized the concepts, and I promise, no matter how long it takes, I will get to where I want to be in this space.
Thank you Tom for this wonderful addition to the trading literature, and to the traders reading this, happy trading.
This book came to me at the perfect time, as if called to me by the Market Gods.
I had developed two trading strategies which historically had an edge, and I had ventured into the markets with them. $50,000 in the account, and the world to conquer, or so I thought. First month, I made a ton of mistakes, but I ended it with profit. "This is it," I said. "I'm doing it!"
Then Mr. Market smirked, slapped me on the head and said: "You still have much to learn."
The following month wiped out the prior month's profits and more. I was back to square one. This had happened to me before, and all the memories of the past experiences hung in my subconscious. Once again, I will have wasted months of my time researching strategies that have no edge. With that in mind, I hesitated on every trade, incurring execution errors, missing trades, trading with absolute fear.
I hit rock-bottom after I incurred several max loss days in a row. In full existential crisis mode, I spent the next 14 hours scouring my research, my eyes glued to the computer screen, veins proliferating, red and thick. 'How can this be happening? The data is right here!'
The truth is my emotions had completely destroyed whatever edge I thought I had. When I fixed my execution errors and stopped missing trades, my system entered a drawdown. Mr. Market was saying 'f*ck you, I'm not done with you yet.' And I was ill-equipped to deal with that. Once again, I descended into existential crisis mode. I honestly had to ask myself whether I was a masochist.
Then, I read this book.
I have always hated psychological trading books because I feel they're always dishonest to some degree. You need an edge before you need any psychological tools, I assure you. I feel the author could've shed a little more light on that, but other than that, I think this is the finest book on trading psychology out there.
In order to be successful at trading, the author says, you have to do what the 90% of traders don't do. Using a database of millions of Forex trades, the author shows that most traders are accurate - winning at least 60% - but have losses that far outweigh their gains, turning their expectancy negative.
From there, he outlines a few things that most unsuccessful traders tend to do:
- Let losers run;
- Cut winners short;
- Add to losers;
- Do not add to winners;
- Feel emotional after every trade;
- Ignore the mental aspect of trading;
I pulled out my own Book of Truths and realized I was suffering from some of these predicaments myself, despite thinking I am 'ahead of the curve.' I did not add to winners; I could not handle losses constructively; I cut my winners short. The Cardinal Sins were starting at me, and I couldn't look away. Tom was the one to bring them to my attention.
Since reading this book, I have gotten a lot better. My rock-bottom moment really desensitized me to loss. I have lost so often and so much that I know losses do not and cannot hurt me. In fact, I look forward to losses, as they are information I can use to improve my trading. I have completely surrendered to the fact that despite having two strategies with an edge, I have no idea what the next few trades are going to look like. All I know is the outcome in the long-run.
I am also working on my weakness: Figuring out how to get better exits has been an area of immediate interest to me. I am also constructing a pyramiding plan on my better setups - all the best traders get aggressive when the time is right, but there's a right way to do so.
I'm sure there are many lessons in here that I have missed - all I know is this book was a blessing on my trading journey, and it will sit on my desk for a long time. I will reread it, until I've internalized the concepts, and I promise, no matter how long it takes, I will get to where I want to be in this space.
Thank you Tom for this wonderful addition to the trading literature, and to the traders reading this, happy trading.
January 14, 2025
I enjoyed a lot reading the book. Tom's writing is very entertaining. The book takes you on an interesting journey that is fun to follow. The book is full of (also personal) stories that I think make it much more entertaining. The reason I think this book stands out compared to tons of other trading books is that Tom himself is a successful trader. To me, if someone has never made money out of trading cannot be a guide to you how to make money. He also tells you his own methodology which I think is very inspiring.
I am a researcher in the Finance academy, so I want to share my own perspective on positive and negative points of the book.
First let's get to positive ones:
- Tom is very honest about what he exactly does. In short, he says, no matter with what signal you trade. Anyways you will have some losing and some winning trades. The magic is, when you have winning trades just add to them, and when you have losing trades, cut them! That's all about it. It is hard to do, but because it seems hard, then perhaps it is the right thing to do. This gives you a great trading strategy that Tom has used and apparently has worked for him. He is very clear about the fact that, don't waste your time on technical analysis and those stuff (which I think is a very valid point).
- Tom also teaches very well that financial assets are not like stuff in the supermarket. You cannot say they are cheap or expensive really. So he is brave enough to buy even high (hoping to sell higher), and selling low to buy lower back. This is a very good point.
- Tom gives good advises how to visualize pain, and dispatch yourself from the losses. I found those exercise useful even outside of trading. So, I think I learned something new about psychology also. Another plus.
- Again, Tom's style of writing is entertaining and inspiring (at least it kept me reading all the way until the end).
How about negative points:
- As an academic person, I'm always suspicious whether an achievement has been due to skill or luck. (it is not trivial to distinguish between two). As trading is a zero-sum game, because 90% lose money (as Tom too highlights), then 10% should make a lot of money. This means that in any market those 10% always exist and are persistently successful in trading---it's mechanical (otherwise where the lost money of the 90% go to?). My point is, what if Tom is just one of them by chance and all of his advises has worked out because he has been one of the lucky guys in that 10%? The fact that his mentioned methods have worked for him so far, does not mean that it works for others (or even for himself) in the future. If you do not agree, look at many successful traders that have lost millions of dollars after making those money in the market. (Tom also mentions one example, his friend Adam who due to "bad luck" couldn't get out of his short position and lost significant amount of money).
If luck plays a roll, there's not much you can do. All your psychology techniques fail saving you if you are one of the unlucky 90% losers in the market.
This is my main suspicious.
- The book has a bit of repetition but I honestly do not mind it because it is well writing and joyful to read.
Overall, I give a 5 star to the book and I believe this is worth reading!
I am a researcher in the Finance academy, so I want to share my own perspective on positive and negative points of the book.
First let's get to positive ones:
- Tom is very honest about what he exactly does. In short, he says, no matter with what signal you trade. Anyways you will have some losing and some winning trades. The magic is, when you have winning trades just add to them, and when you have losing trades, cut them! That's all about it. It is hard to do, but because it seems hard, then perhaps it is the right thing to do. This gives you a great trading strategy that Tom has used and apparently has worked for him. He is very clear about the fact that, don't waste your time on technical analysis and those stuff (which I think is a very valid point).
- Tom also teaches very well that financial assets are not like stuff in the supermarket. You cannot say they are cheap or expensive really. So he is brave enough to buy even high (hoping to sell higher), and selling low to buy lower back. This is a very good point.
- Tom gives good advises how to visualize pain, and dispatch yourself from the losses. I found those exercise useful even outside of trading. So, I think I learned something new about psychology also. Another plus.
- Again, Tom's style of writing is entertaining and inspiring (at least it kept me reading all the way until the end).
How about negative points:
- As an academic person, I'm always suspicious whether an achievement has been due to skill or luck. (it is not trivial to distinguish between two). As trading is a zero-sum game, because 90% lose money (as Tom too highlights), then 10% should make a lot of money. This means that in any market those 10% always exist and are persistently successful in trading---it's mechanical (otherwise where the lost money of the 90% go to?). My point is, what if Tom is just one of them by chance and all of his advises has worked out because he has been one of the lucky guys in that 10%? The fact that his mentioned methods have worked for him so far, does not mean that it works for others (or even for himself) in the future. If you do not agree, look at many successful traders that have lost millions of dollars after making those money in the market. (Tom also mentions one example, his friend Adam who due to "bad luck" couldn't get out of his short position and lost significant amount of money).
If luck plays a roll, there's not much you can do. All your psychology techniques fail saving you if you are one of the unlucky 90% losers in the market.
This is my main suspicious.
- The book has a bit of repetition but I honestly do not mind it because it is well writing and joyful to read.
Overall, I give a 5 star to the book and I believe this is worth reading!
May 9, 2024
1. Embracing Losses: Hougaard emphasizes the importance of accepting losses as a natural part of trading. He argues that learning how to manage losses effectively is crucial for long-term success in the markets.
2. Risk Management: The book delves into various risk management techniques and strategies that traders can use to protect their capital and minimize losses. Hougaard advocates for disciplined risk management practices, such as setting stop-loss orders and position sizing.
3. Psychology of Trading: Hougaard explores the psychological aspects of trading, highlighting the impact of emotions such as fear, greed, and overconfidence on decision-making. He offers practical advice for developing a resilient mindset and maintaining emotional balance in the face of market fluctuations.
4. Technical Analysis: The book covers various technical analysis tools and indicators that traders can use to analyze price charts and identify potential trading opportunities. Hougaard explains how to interpret chart patterns, trend lines, and other technical signals effectively.
5. Trading Strategies: Hougaard shares several trading strategies and approaches that traders can implement in different market conditions. He discusses trend following, counter-trend trading, and other methods for capturing profit opportunities in the markets.
6. Continuous Learning: Throughout the book, Hougaard emphasizes the importance of continuous learning and self-improvement in trading. He encourages traders to stay informed about market developments, seek out new trading ideas, and adapt their strategies as needed.
7. Real-Life Examples: The book includes real-life trading examples and case studies to illustrate key concepts and principles in action. Hougaard draws from his own trading experiences to provide practical insights and demonstrate how his strategies work in practice.
Overall, "Best Loser Wins" offers a comprehensive guide to trading and investing in financial markets, with a focus on risk management, psychology, and practical strategies for success. It serves as a valuable resource for both novice and experienced traders looking to improve their trading skills and achieve better results in the markets.
2. Risk Management: The book delves into various risk management techniques and strategies that traders can use to protect their capital and minimize losses. Hougaard advocates for disciplined risk management practices, such as setting stop-loss orders and position sizing.
3. Psychology of Trading: Hougaard explores the psychological aspects of trading, highlighting the impact of emotions such as fear, greed, and overconfidence on decision-making. He offers practical advice for developing a resilient mindset and maintaining emotional balance in the face of market fluctuations.
4. Technical Analysis: The book covers various technical analysis tools and indicators that traders can use to analyze price charts and identify potential trading opportunities. Hougaard explains how to interpret chart patterns, trend lines, and other technical signals effectively.
5. Trading Strategies: Hougaard shares several trading strategies and approaches that traders can implement in different market conditions. He discusses trend following, counter-trend trading, and other methods for capturing profit opportunities in the markets.
6. Continuous Learning: Throughout the book, Hougaard emphasizes the importance of continuous learning and self-improvement in trading. He encourages traders to stay informed about market developments, seek out new trading ideas, and adapt their strategies as needed.
7. Real-Life Examples: The book includes real-life trading examples and case studies to illustrate key concepts and principles in action. Hougaard draws from his own trading experiences to provide practical insights and demonstrate how his strategies work in practice.
Overall, "Best Loser Wins" offers a comprehensive guide to trading and investing in financial markets, with a focus on risk management, psychology, and practical strategies for success. It serves as a valuable resource for both novice and experienced traders looking to improve their trading skills and achieve better results in the markets.
July 24, 2023
An Eye-Opening Journey to Trading Success
Best Loser Wins offers a refreshing and insightful perspective that challenges conventional trading wisdom and provides invaluable lessons for achieving consistent profitability.
Hougaard's emphasis on embracing losses and fear as integral components of trading is both enlightening and empowering. Instead of the usual focus on winning, he teaches suggests navigating the markets by learning from losses and maintaining discipline in the face of fear.
One of the book's strongest points is the emphasis on developing a process-oriented approach. By setting aside monetary goals and concentrating on the trading plan, Hougaard encourages traders to remain focused in the present moment.
The author's insights into managing emotions are truly eye-opening. He provides practical exercises and visualization techniques to control emotional responses, allowing traders to act rationally and confidently. I found his approach to handling discomfort and pain as a barometer for adding to positions particularly enlightening.
Hougaard's emphasis on self-analysis and the creation of a "Book of Truths" is a brilliant way to enhance self-awareness. By identifying strengths and weaknesses, traders can improve their strategies and decision-making.
Throughout the book, Hougaard's writing style is engaging, making complex concepts accessible to both beginners and experienced traders. His personal anecdotes and experiences add authenticity and credibility to his teachings, making it a relatable read.
Best Loser Wins offers a refreshing and insightful perspective that challenges conventional trading wisdom and provides invaluable lessons for achieving consistent profitability.
Hougaard's emphasis on embracing losses and fear as integral components of trading is both enlightening and empowering. Instead of the usual focus on winning, he teaches suggests navigating the markets by learning from losses and maintaining discipline in the face of fear.
One of the book's strongest points is the emphasis on developing a process-oriented approach. By setting aside monetary goals and concentrating on the trading plan, Hougaard encourages traders to remain focused in the present moment.
The author's insights into managing emotions are truly eye-opening. He provides practical exercises and visualization techniques to control emotional responses, allowing traders to act rationally and confidently. I found his approach to handling discomfort and pain as a barometer for adding to positions particularly enlightening.
Hougaard's emphasis on self-analysis and the creation of a "Book of Truths" is a brilliant way to enhance self-awareness. By identifying strengths and weaknesses, traders can improve their strategies and decision-making.
Throughout the book, Hougaard's writing style is engaging, making complex concepts accessible to both beginners and experienced traders. His personal anecdotes and experiences add authenticity and credibility to his teachings, making it a relatable read.
December 22, 2024
A great book on trading, rightfully emphasizing the mental aspect of it.
Derived from the behavior of millions of retail traders, author argues that "everyone who is normal will end up losing", i.e. people:
- with small account sizes
- trading all the markets all the time (not specializing)
- holding on their losers longer than winners
- adding to losing trades (average down) rather than to winners
- not using stop losses.
Therefore the crucial aspect is one's internal balance. As one pro golfer says it "I do not think Tiger is a better golfer than me..., but Tiger Woods does have an amazing ability to forget his mistakes and move on."
The winning traders do not try to guess where the market will go next, they rather "surf" the fluctuations, i.e. trade what is actually happening, get on a "wave" and surrender to it. This also involves buying high and selling even higher or selling low and covering even lower, which is emotionally hard to do.
This mindset strongly rhymes with Livermore's ideas in "Reminiscences of a stock operator", despite a hundred of year between these two books.
Paul Tudor Jones - legendary US hedge fund managers - is also quoted saying that "If it kept going down, I would sell it down to zero. If it kept going up, I'd buy it to infinity."
The last part of the book is about the mental game - an intangible but extremely important topic. Author describes how he uses visualizations, breadth exercises and imagery to keep himself centered.
Derived from the behavior of millions of retail traders, author argues that "everyone who is normal will end up losing", i.e. people:
- with small account sizes
- trading all the markets all the time (not specializing)
- holding on their losers longer than winners
- adding to losing trades (average down) rather than to winners
- not using stop losses.
Therefore the crucial aspect is one's internal balance. As one pro golfer says it "I do not think Tiger is a better golfer than me..., but Tiger Woods does have an amazing ability to forget his mistakes and move on."
The winning traders do not try to guess where the market will go next, they rather "surf" the fluctuations, i.e. trade what is actually happening, get on a "wave" and surrender to it. This also involves buying high and selling even higher or selling low and covering even lower, which is emotionally hard to do.
This mindset strongly rhymes with Livermore's ideas in "Reminiscences of a stock operator", despite a hundred of year between these two books.
Paul Tudor Jones - legendary US hedge fund managers - is also quoted saying that "If it kept going down, I would sell it down to zero. If it kept going up, I'd buy it to infinity."
The last part of the book is about the mental game - an intangible but extremely important topic. Author describes how he uses visualizations, breadth exercises and imagery to keep himself centered.
June 1, 2025
In Best Loser Wins, Tom Hougaard delivers a raw, unfiltered exploration of what truly separates elite traders from the rest—and it’s not technical analysis, risk models, or even strategy. It’s psychology.
At its core, the book argues a counterintuitive but powerful thesis: the best traders are those who learn how to lose better than anyone else. Drawing from his own rollercoaster career—from Citibank to high-stakes retail trading—Hougaard explains why the average trader fails not from a lack of skill, but from emotional fragility, denial of losses, and an inability to sit with discomfort. In short, Tom posits, correctly, that normal thinking amounts to losing.
To achieve profitability Hougaard argues requires a fundamental shift in how one thinks about failure and their belief system, both of which are important determinants of success and failure in trading. And the author, unlike many contemporaries, provides a road map on how to rework one's thinking models to operate in a winning fashion, including practical exercises like visualization mediative practices and exploratory journaling.
I believe critics will contend the book could have been more shorter, with anecdotal fluff serving as chunky filler between "practical instruction." I, on the other hand, found it charming and trading is such a journey and exploration of the self that many of Tom's anecdotes resonated with my personal journey from perpetual loser to best loser.
At its core, the book argues a counterintuitive but powerful thesis: the best traders are those who learn how to lose better than anyone else. Drawing from his own rollercoaster career—from Citibank to high-stakes retail trading—Hougaard explains why the average trader fails not from a lack of skill, but from emotional fragility, denial of losses, and an inability to sit with discomfort. In short, Tom posits, correctly, that normal thinking amounts to losing.
To achieve profitability Hougaard argues requires a fundamental shift in how one thinks about failure and their belief system, both of which are important determinants of success and failure in trading. And the author, unlike many contemporaries, provides a road map on how to rework one's thinking models to operate in a winning fashion, including practical exercises like visualization mediative practices and exploratory journaling.
I believe critics will contend the book could have been more shorter, with anecdotal fluff serving as chunky filler between "practical instruction." I, on the other hand, found it charming and trading is such a journey and exploration of the self that many of Tom's anecdotes resonated with my personal journey from perpetual loser to best loser.
November 11, 2025
This is definitely one of the best book I've ever read on human psychology while trading. This book is gonna change your whole perspective of looking at your trades! The author, Tom goes through each and every mistakes a trader makes while being in a trade. He teaches the ins and outs while taking a trade. He teaches about the mindset and thinking a trader should have in order to be a successful trader.
Key takeaways:
1) One of the most common mistake beginners do is they get out of the winning trade as soon as they can and hold the losers in the hope of its reversal while the successful ones do the exact opposite.
2) Analyze your wrong trades, keep a screenshot of the charts with the mistakes plotted on it saved on your dekstop and go through each and every one of them before starting your trading day in order to avoid the same mistakes.
3) He teaches how to define your risk before even entering in a trade.
4) Always keep your calm even when you are losing, it is a human nature to make aggressive decisions when in pain. The brain consider your losses as a pain and tries its best to avoid it and starts responding aggressively. He mentions a successful trader with a whopping experience of 10+ years going broke in 2-3 days just because he was not able to keep himself together in a short market.
This book is a must read for every trader struggling with their mindset. Just give it a try and you won't regret!
Key takeaways:
1) One of the most common mistake beginners do is they get out of the winning trade as soon as they can and hold the losers in the hope of its reversal while the successful ones do the exact opposite.
2) Analyze your wrong trades, keep a screenshot of the charts with the mistakes plotted on it saved on your dekstop and go through each and every one of them before starting your trading day in order to avoid the same mistakes.
3) He teaches how to define your risk before even entering in a trade.
4) Always keep your calm even when you are losing, it is a human nature to make aggressive decisions when in pain. The brain consider your losses as a pain and tries its best to avoid it and starts responding aggressively. He mentions a successful trader with a whopping experience of 10+ years going broke in 2-3 days just because he was not able to keep himself together in a short market.
This book is a must read for every trader struggling with their mindset. Just give it a try and you won't regret!
October 14, 2023
As a trader I'm thankful to have come across one of the author's presentations on YouTube that lead me to many of his resources and this book -- he shares a gold mine of material without cost and by his contributions has cemented himself as a giant of the industry.
I can only admire a trader who trades live almost every day with thousands listening in from around the world, at absolutely no cost, and shares some incredible resources (and a few jokes to boot). It is enlightening to see his book in action on a daily basis: especially how he rebounds from trades that to many may be a year's worth of earnings in a single session.
For the book content, it is very simple to read and has some powerful lessons. It will resonate with many many traders. From what Tom focuses on to his mental preparation and visualisations (especially on challenges) -- to *expecting* discomfort.
His 'Book of Truths' and charts he keeps to review are great ideas to adapt. Like the late Mark Douglas, he advocates some excellent training for traders and while I read less nowadays than I used to, I'm sure glad this was one useful and good trader's resource I happily (and easily) read from start to finish over a nice long weekend (and will do so again soon).
I can only admire a trader who trades live almost every day with thousands listening in from around the world, at absolutely no cost, and shares some incredible resources (and a few jokes to boot). It is enlightening to see his book in action on a daily basis: especially how he rebounds from trades that to many may be a year's worth of earnings in a single session.
For the book content, it is very simple to read and has some powerful lessons. It will resonate with many many traders. From what Tom focuses on to his mental preparation and visualisations (especially on challenges) -- to *expecting* discomfort.
His 'Book of Truths' and charts he keeps to review are great ideas to adapt. Like the late Mark Douglas, he advocates some excellent training for traders and while I read less nowadays than I used to, I'm sure glad this was one useful and good trader's resource I happily (and easily) read from start to finish over a nice long weekend (and will do so again soon).
March 16, 2025
It was very repetitive at times, but had great points on how to not let fear and hope take over your trading decisions.
Take aways -
“Be big when you’re right - be small when you’re wrong!” Have stop losses ready and let your winners ride. To not think like everyone else, you have to be at peace with the losses. Just as the title suggests, the best loser wins. Don’t average down on failing trades because you think the stock is now “cheap” and you are hopeful it will go back. There is no cheap and expensive stock, just the price it is now. Follow the trend. Know when to cut your losses. If you add to your loss, you are increasing your risk. You can always get back in when the time is right.
Add to your position in winning trades. It’s hard not to feel like the stock is too expensive after you just purchased it at a lower price. I think it’s more natural to consider selling than buying more when the stock goes up. You are fearful that you will miss out on the gains if you don’t sell and fearful it will go down cause it was too expensive. His point is that the market is actually agreeing with you now, so why would you close the position. Keep it open, but increase your stop loss.
Always assume you are wrong until the market proves you right.
Take aways -
“Be big when you’re right - be small when you’re wrong!” Have stop losses ready and let your winners ride. To not think like everyone else, you have to be at peace with the losses. Just as the title suggests, the best loser wins. Don’t average down on failing trades because you think the stock is now “cheap” and you are hopeful it will go back. There is no cheap and expensive stock, just the price it is now. Follow the trend. Know when to cut your losses. If you add to your loss, you are increasing your risk. You can always get back in when the time is right.
Add to your position in winning trades. It’s hard not to feel like the stock is too expensive after you just purchased it at a lower price. I think it’s more natural to consider selling than buying more when the stock goes up. You are fearful that you will miss out on the gains if you don’t sell and fearful it will go down cause it was too expensive. His point is that the market is actually agreeing with you now, so why would you close the position. Keep it open, but increase your stop loss.
Always assume you are wrong until the market proves you right.
December 2, 2024
This is a very interesting book on the trader mindset. I really like the philosophy that Tom Hougaard uses for his trading mindset. The acceptance that you are likely to end up losing when trading but maintaining your composure and following your plan, focusing on the process, going with the flow of the market in the moment and exerting intense control you can end up winning in the Trading game. Know the goal, trust the process, most importantly, know your mind! The trust supports the patience, as he says. Focus on what you can control mainly your risk approach. This trust in your self is built through a confidence in building your game. That involves a continual grind of continual improvement and an ability to flow with the market. There is a lot of wisdom in this not just in trading but in life. A lot of these lessons can be applied to many facets of life. I can see from this novel how really good traders are also really good poker players.
I listened to this book as an Audible book and I give it 5 stars. The narrator did an excellent job, the book was very engaging and easy to listen to. An excellent book to learn from. 5+ stars all around.
I listened to this book as an Audible book and I give it 5 stars. The narrator did an excellent job, the book was very engaging and easy to listen to. An excellent book to learn from. 5+ stars all around.
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