Unknown Market Wizards, chap 3-- Richard Bargh

Unknown
Market
Wizards
Terms, summary,
follow-up questions

Richard Bargh: The Importance of
Mindset

The Importance of Minset

In the chapter "Richard Bargh: The Importance of Mindset" of the
book "Unknown Market Wizards" by Jack Schwager, the author
interviews Richard Bargh, a successful trader and portfolio
manager who emphasizes the importance of mindset in trading.
Bargh argues that traders who focus on developing a strong
mental game are more likely to succeed in the markets.

Do you think about strengthening your mind to make you better
at dealing with future difficulties.

Which mode of developing personal strength would you prefer?

Poll

Do you think about strengthening your mind to make you better at dealing with future difficulties?

• Always

• Sometimes

• not really

• What is thinking about yourself?

Poll

Which mode of developing personal strength would you prefer?

• Exercise

• meditations

• Developing positive self talk

• using art

terminology

self-awareness ritual

This is the time he takes every day to reflect upon himself. He will focus on his energy, risk management, process, ego, fear of missing out, and happiness rating (either extreme—depression or euphoria—being adverse for trading).

terminology

weaknesses in his mindset

We all have certain weaknesses in our
mindset. This is just part of the human
condition. In order to become successful as a trade, and in life, we need to work on our weaknesses.

terminology

Trading Tribe Process (TTP) created by Ed Seykota

This is a system of journaling self
where the user focuses on their
emotional and unconscious process in trading.

Trading tribe website

terminology

Create harmony between the
subconscious and conscious minds.

It could be said that most people are
unaware of their subconscious and how this may be sabotaging our own well being and success.

terminology

Trading fundamentals

In short, this is analysing economic
factors.

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements; health; and competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management.

terminology

Trading technicals

Technical analysis is a trading discipline
employed to evaluate investments and
identify trading opportunities in price
trends and patterns seen on charts.

terminology

Clinical depression

The symptoms of depression can be
complex and vary widely between
people. If you're depressed, you may feel sad, and hopeless and lose interest in things you used to enjoy.

Terminology

Trend following

This is where a trader tries to buy when the market pulls back because the trader believes the market is trending. Bargh believed that markets have become too volatile for this kind of trading.

Trailing stops

This is where a trader loves up the price where s/he will exit the trade. Traders do this to try and catch as much profit as possible. Bargh also had problems using this strategy.

Terminology

Mental capital

Mental capital is recognizing that traders
can overstress themselves and this can lead to errors in trading. So, professional traders understand that they need to preserve a healthy mind and therefore should avoid overtrading and get the proper rest that their mind needs.

Multiple Choice

What is a self-awareness ritual?

• recording data on one's self and trying to change one's self for the better.

• Sleeping in during week days

• It is a special dance that people perform with a cult

• It is something that psychologists do to make money.

Multiple Choice

What is weakness of mindset?

• Having a weakness in one's inner though that is producing negative results.

• Have a serious metal ilness

• having weak body. One needs exercise

• Lack of care and concern for others

Multiple Choice

What is Trading Tribe Process (TTP) created by Ed Seykota?

• This is a system of trading self where the user focuses on their money and investing process in trading.

• This is a system of trading self where the user focuses on their emotional and unconscious process in trading.

• This is a system of journaling self where the user focuses on their emotional and unconscious process in trading.

• This is a system of journaling self where the user focuses on their money and investing process

Multiple Choice

What does "create harmony between the subconscious and conscious self" mean?

• To have a magic power over others

• To make yourself become crazy?

• To make the most money

• To create a more healthy and balanced mind.

Multiple Choice

What does "Trading fundamentals" mean?

• This means analysing technical factors

• this is analysing economic factors.

• This is winning like Trump

• This means knowing how everything really works in the markets

Multiple Choice

What does Trading technicals mean?

• Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts.

• It means you can fix the machine that runs the market

• this means you can understand all those big words traders use and better pretend that you know what you are doing

Multiple Choice

What is trend following?

• This is where a trader tries to buy when the market pulls back because the trader believes the market is trending. Bargh believed that markets have become too volatile for this kind of trading.

• This is where a trader loves up the price where s/he will exit the trade. Traders do this to try and catch as much profit as possible. Bargh also had problems using this strategy.

Multiple Choice

What is trailing stops?

• This is where a trader tries to buy when the market pulls back because the trader believes the market is trending. Bargh believed that markets have become too volatile for this kind of trading.

• This is where a trader loves up the price where s/he will exit the trade. Traders do this to try and catch as much profit as possible. Bargh also had problems using this strategy.

Summary

Bargh was raised on a farm. His father warned him
not to follow in his father’s footsteps. From an early
age, he realized that he wanted to become rich after visiting a rich family’s house. He became interested in the markets after watching a movie about Nick Leeson, The Rogue Trader

Poll

Did you want to become richer than you are now? Does it drive you?

• 100% Yes, very much!

• 70% Quite a lot

• 50% maybe

• 20~0% somewhat but, not really

Summary

He received a Master’s in math from the Imperial
College of London. While studying he got an
internship at pension company . He hated
working there due to the PC culture. He said “I
couldn't make a joke as it was too PC.” He also
confesses that he was quite arrogant as he was a
graduate of one of the best Universities and he
knew he was smart.

Eventually the pension company let him go. After
this he became quite depressed.

Poll

Do you think you will be a diligent worker at your first job? Do you think you might be a bit lazy and arrogant?

• Yes, lazy and arrogant

• Only a little lazy and arrogant

• No will work quite hard

• I am a diligent and hard working person. at all times!

Summary

Bargh realized that he loved trading and he was
especially interested in the money he could make.
After all, he was a competitive person who wanted
to become rich.

He applied for bank jobs and was rejected by them
all. Eventually he ended up applying for a job at a
proprietary firm (prop firm). He was desperate for
any job at this time. The was hired on account of his
enthusiasm and his obvious intelligence even
though he had no education or background in
trading.

Summary

The company trained Bargh to use technical analysis to
trade. He tried to use technical analysis and he was very
unsuccessful using this methodology. While he wasn't losing money for the prop firm, he wasn’t making
any profit and he had to survive on his savings and help
from his parents.

He also suffered from paranoia as he thought that management was going to fire him at any time. However, he gradually improved his trading skills by constantly learning and journaling all his trades in detail.

Multiple Choice

Why was Bragh not successful at the start of his career?

• He was too arrogant

• He was using the wrong system of trading.

• He had no girl friend and he needed love

• His parents gave up on him

Summary

Getting through depression

Bargh realises that the only way he can become a successful
trader is if he deals with his depression. He has suffered from
depression since he was 12, and he hadn’t dealt with his
condition.

He read Depressive Illness: The Curse if the Strong by Tim
Cantopher. This book offered him a system of overcoming his
depression. He started charting is daily emotions and he
worked to slowly lifting them. He also worked on forcing
himself to be happy. He found success doing this.

Poll

Does this school offer enough help for those students dealing will some kind of psychological pressure?

• Absolutely 100%

• Basically yes 70%

• There is some help 50%

• Nothing significant 30%~0%

Summary

Although he was improving as a trader, he wasn’t
making enough to support himself. His parents also felt
like they were just supporting his gambling addiction,
and were going to stop giving him money. He was
feeling like a failure, and he felt that everyone was
giving up on him.

Luckily, he decided to to ask the prop firm for help and
they decided to pay him a salary to keep him going.
Luckily, some of the firm’s successful traders
recognised that he was an extremely hard worker and
they knew that in time he would find success. These
traders recommended to management that they should
give Bragh a chance.

Summary

Bargh finds his trading style. He finds that through his
journaling that he is only successful at he is good at trading
fundamentals, and he is terrible at technical trading. He figures
out a strategy to only trade fundamentals. He also develops
better systems to manage his risk. For instance, when price
goes sideways and doesn’t go to his direction, he doesn’t wait
for price to hit his stop loss; rather, he gets out straight away to
limit his loss.

Final Summary

Bargh's approach to trading is grounded in a deep respect for the
markets and a willingness to learn from past mistakes. He argues
that traders who approach the markets with humility and a
willingness to learn are more likely to succeed in the long run. This
requires a certain level of self-awareness and a willingness to
reflect on one's own weaknesses and biases.

Overall, Bargh's approach to trading emphasizes the importance of
mindset and emotional control. By focusing on developing a solid
trading process and staying disciplined, traders can mitigate their
risk exposure and improve their chances of success in the markets.
While there are no guarantees in trading, Bargh's insights provide a
valuable framework for traders looking to improve their mental
game and achieve better results over time.

Open Ended

What are some ways you are trying to improve your mindset right now? And what are some more methods you could use. At least 1 to 2 sentences needed.

In groups answer the following essential question:

Task:

Please just choose 1 of the 2 questions below. Write at least 100 words for each of the questions
below. You should have a clear topic sentence, solid support sentences and a conclusion sentence.

What are some negative aspects of your personality (or psychology) do you think you might need
to work on? What are the negative effects of this and how could dealing with these negative
aspects improve your life?

Do you think you will push yourself to achieve significant milestones in your life? Do you think
you will be able to overcome complications on your path? Please share a possible goal and how
you might overcome difficulties on your path.