Hey everybody. Hope you’re doing well. Hope you enjoyed yesterday’s episode with Ganja. Now, a question came in from somebody who I’ve been texting with about things, and the question was, how can you help? How can I build my confidence around my trading? And I think the answer lies inconsistency. If you act consistently, you can build your confidence very hard to build confidence in trading by doing other things, you have to, you can’t shy away from taking the risk. You can’t build your confidence by avoiding the uncertainty around the outcome of a trade. We can’t build confidence if you’re, when you look at the hill or the mound, that makes up your confidence, which is at the top. It’s all the feelings at the bottom that you don’t want to feel. You have to step over those and learn how to be with them. When you come to understand that you can only control the controllables. That is, do I buy or sell or do I do nothing? At what price do I get in? And then what inventory do I have? That’s all you can control. Those are deliberate choices. You’re bullish or bearish on a certain name. You choose to own it. You can choose it in an option, or you can choose the underlying right. You can choose the timeframe, but at the beginning it’s like, where do I get in long or short? And then how much? Knowing that if you have too much, you might make money in the coin toss if it goes in your favor, but if you’re wrong, you got bad luck, you got bad timing, or you got bad analysis, you could lose a lot more than you had hoped, right? So what I would say is stick to your rules at the beginning. Try anything for a couple of weeks. Trade super small. Don’t risk a lot of money, but it’s in the consistency in your behavior that’s going to help you build confidence because you’re going to have winning and losing streaks no matter the asset class, the trading style, the holding period, every system, and we’re going to talk about this, has its own season. Now, just because it has a losing streak doesn’t mean the system’s not worth anything, right? And that’s hard to understand when you’re just starting out. You can liken it to sports. There are some people go on streaks, their on base percentages, very, very high. They get walked, they get hit by the pitch, they get base hits, extra base hits. Then there’s times when they can’t do anything, right? And so you have to take the thick with the thin, admittedly, when you’re starting out, that’s a little tricky. So you have to measure your own behavior. Can you execute what it is that you’re trying to do? So I feel when I look back at what I did when I was coming up, is that I did execute things Consistently. It took me a while, of course, to understand the marriage between entries and exits, especially with respect to position sizing. Because those prices, certainly the exit will be adjusted depending on how big you’re trading, right? Because you know what percent you’re going to lose in your portfolio. So if you’re risking one half of 1%, right, you know that there’s only so many contracts or shares that you can have before you have to get stopped out. Otherwise you’re going to risk losing more money. And there are people here who are like, well, I’m going to wing it. I’m just going to just wait and see. But that’s killed a lot of people, you see. So the point is, is that in my own experience, it’s through the consistent behavior and the consistent study that’s going to help you build the confidence that you need for putting those trades on. Because when you think about, even when you’re in a losing streak, the best you can do is control the controllables, which is, did you get in where you wanted to? Did you put on the size that made sense for you? Did you cut your losses where you had predetermined you were going to get out? That’s the best you can do. You’re powerless over the results. So even in losing money, in those instances, you can actually build your confidence because you’re doing what you intended to do. When you take flyers, you adjust your stops, your protective stops lower, you start negotiating with the market, you give yourself permission to do stupid things, and then you get stupid results. So I don’t know what more I could say about it. I was lucky in that I kind of understood that very, very early on, behavior predicts where you end up, and I also knew that I had limited funds, and if I lost that money, it was going to be very difficult in terms of how much time, right? Cause living in Manhattan was very expensive. So I had to preserve my capital. So I was always focused on playing defund defense. Yes, I wanted to make a lot of money, but I also knew that if I lost my trading grub stake, it was going to be very, very difficult for me to gather those funds in any short period of time. So that’s what I would like to do is leave it there today. If you have any questions about it or if you have any other experiences where you’ve developed confidence in your life, leave it in the comments for sure. I just think trading’s so different that I can see where I had success as a musician. I had picked it up. I worked very hard. I had success as an artist, but I put the work in. So I had the model for my personality type on how I got results, both as a student from academia, a student of the arts, student of music. I kind of knew who I Was, which is kind of why I advocate probably more than most other people, that if you don’t know who you are, it really doesn’t matter what I knew, what made me tick. I knew how to carve it out of stone. I knew how to put a plan together to attack an issue, edify myself, not overly edify myself, but edify myself enough to a point where I knew I could take action and capitalize it. The rest I’d figure out along the way. There’s a lot of you out there who are uncomfortable with that. You want to know everything first, and I think you’re missing out on a lot. I don’t think there is a point where you over prepare, and it doesn’t necessarily help. You only have to have basic understanding of things. You don’t need to have, be an expert. You need to be an expert in you because everything else then doesn’t matter, right? I could understand how butterflies and condors work, but I don’t trade ’em. So in some level, it’s, it’s interesting. It’s interesting to have a conversation with people who really know options, I suppose. But at the end of the day, it doesn’t help me make money. So all you need to do is know what it is that you do to be you. When you’re a trader, everything else doesn’t really matter. It’s just cocktail parties you see. Anyway, please liken subscribe. Let me know what you’re thinking. If you have any suggestions or comments, please leave them below. I read them all myself, and thank you very much for being here. I’ll see you tomorrow.
Hi everybody. Welcome back to the weekly segment that Mike and I do where we go over you guys comments and questions and give our 2 cents on that and see if we can add to it, maybe expanding upon it and give you guys some feedback. With that said, thank you guys so much for all the support recently on the videos. We really appreciate the comments, everything you guys do to give us some topics to speak about. We really appreciate that and everybody’s questions just keep ’em coming. We seeing them, it’s good for us. Direct connection to Mike and I and let’s get into today’s topic, which I wanted to say was really, wait, hold on. Close my window. I’ll cut it out. I’m going to do the other stuff too. My dad’s on my patio right now and before we get into today’s topic, make sure you guys like and subscribe. All comments, help the algorithm and if you haven’t already clicked a notification as well so you get notified every time Mike uploads a video. And with that said, we can get into today’s topic, which is the type of market going on right now. You and I were having this conversation privately and I thought it would be an interesting topic to bring up on the video and you were saying how the market is more kind of sporadic, it’s not really making any sense, there’s no follow through, and obviously we talk a lot about the different types of trading, day trading, swing trading and all that stuff. And you were saying this is more leaning towards the day traders market. So just give me your thoughts on that and I want to hear what you have to say. Yeah, it’s really eight names or so that are kind of driving the whole market. It’s not a broad based kind of rally market where there’s health across lots of names. Obviously interest rates have a lot to do with how that all plays out and the threat of not the physical threat, but with the threat of the government hiking rates, again, they talk about being dovish and hawkish. I don’t even know what half those terms mean to be honest. I don’t really pay attention to it. I just look at the direction. If it’s going up, I buy it, it’s going down, I stay out of it. But even in the commodity space, there’s been a lot of false starts. There’s been things that have broken out lots of V bottoms which are hard to trade, things that are turning on a diamond, then moving. So it’s a very weird market. What does, I know what weird mean, but in the trading world, they say it’s a make it and take it kind of market these days because can’t, there’s been so many breakouts that don’t have follow through. You find yourself getting into something and you know might not even be fully loaded in the position that you want. Goes up a little bit, not enough to add more, but also not enough to take profits and then it can come right back and hit your protective stop and knock you out of the trade. So you have to make an adjustment. And for me, I know would, if someone said on a wit, if I was on a witness stand and someone asked me, I would say my personality. I’m more geared to being a position trader. I like to build into something and then hold it. I’ve had commodity positions for three months. You see, I’m already looking at March of 24 sugar for example. I don’t want to be in and out and in and out or be in a winning trade and then have to roll the contract as we say to the next month. You’ll roll from Julys to October. October goes all the way to March. I like to get into a position and sit on it and let the market do the work for me. While I have hopefully a very levered position. I’ve been knocked around so much on things where, what was it? March? No, April I was down, I think it was down two thirds of 1% mostly because I couldn’t get into anything. Everything was going up. It was a few positions that went up, but then when I added more and then adjusted my stop, I got taken out. So didn’t really lose June. I had to make some adjustments and think more like a day trader, which is not how I’d like to act. I can do it, but I would much rather do less work for more money. You see what I mean? I don’t want to have to come and say like, okay, here’s my monitor and it’s my hot keys and all that kind of stuff and think about making money every day. I want to make money on average every day, but I’m not concerned with having a green day. That’s a mind fucking thing that people talk you into and then you think because the person’s important that which they’re not. Nobody’s really important except you have to make money on average. But I don’t take it personally if I’m down a particular day, but I do have to make adjustments for the type of market that we’re in because ultimately if you don’t get paid, so it’s been, I guess it’s not that I don’t like how it feels, I just prefer I’ve evolved to a point where I can take a very, very, very thick skin. I have a cast iron stomach and I like to think of commodities more as an investment, but the market hasn’t really shown us that recently. Yes, beans have had a sharp move, but who knows if it’s going to sustain. Same thing with sugar I suppose, but who knows if it’s going to sustain. Usually I like to see things move a little bit more, which I guess leads to the question, I don’t really want to become a day trader. I don’t want work, want to work as little as possible and make a lot of money from a Pareto efficiency standpoint. I suppose over the years I have learned to trade options. I have learned how to trade stocks, I know where my skillset is. But think about it, if you look at the game valoran, what you’re an expert on and you have a five person team in the game, you might have six or seven people on the overall team. Five are playing. Is there, you know, tell me at a level, are there people who play every position or do they tend to specialize? Yeah, usually you want a specialist. Yeah, I think I mentioned this about a pro player a little while ago. I sent you a video on him actually. He’s Arabic guy. No, he’s Brazilian. Oh yeah, yeah, yeah, Yeah. So that means quotations in Portuguese. But this guy’s an animal. He’s capable of switching roles because he’s just so gifted mechanically and his intelligence and positioning is just vastly superior to most people. But you usually want a specialist because the utility in that game is so complex. It’s not just press E and then you just blow up the bomb side or whatever. It’s not like that. There’s so much effort that goes into making sure they’re a line and you literally have to line up a cross hair that is different for every person because you make your own. You have to line it up with a specific pixel, throw it at a specific time, and then make sure that your teammate executes at the exact right moment so they don’t get flashed, but everybody else on the bomb site gets flashed. It’s ridiculously complex and so people at the high level do switch sometimes, but it’s only on a specific couple of maps. It’s not really like, Hey, this guy who plays controller all the time, let’s get him on dualist. Why not? It’s also because the mindset are totally different. I was talking to a player about this the other day and she was being asked to switch roles by her team and I was like, that’s a terrible idea. Because her mindset is not let me get in there and start fights. It’s not let me carve the map. She’s not super map aware that it’s more of let me help my teammates as best I can. And that’s like the best setup for the initiator role. You have each role with a specific psychological framework and they all have specific tendencies. Doist has to get in there, initiator sets up their teammates or gets information. There are two types of initiators. There’s flash and recon, initiators and then controller. You literally have to carve the map and be so spatially aware that it’s just, it’s ridiculous. It’s absurd. So it’s like saying, Mike, remember that guy in middle school who never spoke to anyone? You don’t even know the kid’s name. He sat in the back of the class. Well, let’s get him out in front of a full auditorium full of people and let’s get him dancing crazy to usher or something. It’s just not going to work. Yeah, you don’t want to do that. So Understood. Yeah, there’s just a specific framework that each person fits into and you can adapt it a little bit, but it’s like are you getting the best performance out of that person? Yeah, it’s map dependent. There are other factors around that in some situations maybe, but others it’s like, I don’t know. Yeah. So yeah, I can see that. I think in the trading world it’s true too. There are a handful of people of the millions who do this, most of whom fail. There are a handful who become really good at trading one style, one asset class, one timeframe. Then even among those folks you can practice, it all comes down to practice and repetition. If you have a good feel, you can develop more of a good feel for something else, but that takes so much time, it takes so much trial and error and I think what ends up happening is folks typically get comfortable with one style of trading and they stick to it as well. They should, but you also have to take into account that the markets are kind of morphing on any given day. They are living breathing mechanisms you see? And so as people’s tastes and preference change, as the world economy changes, as the value of the dollar ebbs and flows, as interest rates change, sectors rotate, there’s all of that. So you have to be very fast on your feet and very nimble to evolving. Now with day trading, you might be just looking for the theme of the day, what’s the catalyst that’s going to make something move with position trading similar, but what you’re looking for are fundamentals that are going to sustain and catch the beginning of the move and hold it for as long as possible. In trading speak, a lot of people talk about stage two breakouts. So then the key is once it gets through stage two and you see some consolidation is it’s stage three or really the beginning of another stage one where you’re going to see the thing ratchet up and continue to go f go further. I’ve had a pretty good knack and kind of figuring that out and not feeling so bad about sitting through some of that chop and that consolidation. Some people call it bases. It’s hard to do here without charts and I too, I don’t want to get into being a chart reading show cause it’s a fucking snooze. I know folks who are for that stuff, but I mean, come on. Anyway. Yeah, I think it makes sense to specialize and to focus on one thing and then to practice it over and over and over again. Also too, you have an in-game leader. That too is a whole other mindset that’s not, doesn’t seem like that would be a beginner’s role even if they have a sharp mind. You have to put in a lot of hours, lots and lots of hours And you have to be more aware than everybody else in the entire game and you’re calculating strategies ahead. It’s my introduction to people explaining the in in-game leader role is learning chess for the first time, how the pieces move around and then that’s how you play the game. You finally figured out what your role is, but if you want to be an in-game leader, you have to think openings, you have to think mid-game to think ending strategies and you have to memorize all of these positions and be able to pick up on each player’s tendencies. You, you’ll see other teams and they, they’ll have tendencies at the start of the round. I’m thinking, okay, what did they do last round? What did they do the round before? Yeah, what’s their economy look like? Where do I think they’re going to move on the map and let’s create a plan around that to punish them for their tendencies and see if we can move forward on one of those. Because sometimes you’ll have somebody lurking on the map, which basically means their team is either holding something or they’re trying to move on a specific bomb site and then they’re off basically on the other side of the map trying to see if they can find somebody in catch ’em off guard and I’ll say, okay, well this guy’s been going mid every round, so let’s form a pinch flash and let’s catch ’em off guard and just completely take out their alert because that denies them information just taken a player off basically for free. Those are the things you think about. It’s like how are we going to move forward? What’s the strategy for the next five rounds? Having set strategies, it gets really complicated as an in game leader And so you’re talking about nailing and killing one of their players, so now they’re shorthanded, right? They’re doing five on four and five, so they’re at a disadvantage because they can’t cover their flank. Exactly, yeah. And the guy who is, who’s usually lurking that is a sentinel and sentinels have abilities, a trip wire or some kind of stationary recon device. So if somebody walks by it, it’s going to let you know. You’ll get an alert saying, whoa, whoa, whoa. Some guy just walked over in a lobby. Now we know he is over there. He’s trying to advance on us. We could either take him out or we got to move quick. There’s so much utility and information that you have in the game and it’s really hard to devise a strategy around it sometimes unless you are ridiculously aware. I see. Now you said this girlfriend of yours was an initiator. I like when women initiate, it’s not typical. Yeah, she’s a flash. She’s really good at setting up other people. Really. Yeah. Yeah. She, it’s like her best strategy she gets, she’s in that sense, I understand that mentality because when you have that mentality of setting up other people, you really just haven’t found your own identity yet. Initiators, they have utility that can set other people up, but eventually they’re going to have to be mechanically comfortable on their own and she’s really good. She’s just, she gets caught up psychologically of like, oh, I don’t want to make my teammates upset by taking a fight and losing, so I’m just going to set up other people. It’s just a whole confidence thing. But eventually that’ll go away. It’s just about getting each player comfortable first and understanding their identity And she has to let go and just focus on what she can do. And there there’s a time and a place for setting up your team, but you have to be able to, and this is the hardest thing about play, is you have to be able to separate yourself from your team at certain points and be able to pick it back up. You have five people on your team and they’re all talking at the same time. They’re all relaying information and it’s fast, it’s loud and you have to be able to systematically pick apart what is important for you and what you need to make a plan going forward and follow the direction of your endgame leader. Cause if you disobey your endgame leader, the round is basically lost Cause that’s like the ringleader And then people just aren’t on the same page. I I always say to people who are trying to learn to play with an endgame leader, it’s better to listen to your endgame leader even if they’re wrong, because at least you’re all on the same page. You have to form that trust as a team. And if you don’t then there’s no way of winning high level tournaments. There’s just no way because everybody at the highest level, they have that trust with each other, they follow their endgame leader. There’s like a pecking order. It’s like I see in game leader God and then everything else below, you have to listen to your in-game leader above everyone. Wow, that’s wild. Yeah, Well in trading you really don’t have that. I mean, I know there’s people on desks and they talk through headsets that would distract me. I don’t want to work well in that type of environment where I had to listen to other people chatting even if they were sending out information that they think could benefit me. I like to do my own homework and I wouldn’t want to put on a trade because someone else saw it first and they brought it to my attention tried. I had such a bad experience with that when I was starting out. I know that it’s popular to talk about depending on what kind of firm you’re at, where people might be sharing those kinds of ideas. But I would find it too distracting to have to do anything else than just focusing on my own risk management. And I would be like, listen, it’s almost like the scene from the movie Wall Street where Marv kept coming in asking for tips and he’s like, look you, I’m tired of being your babysitter. Basically. You got to do your own homework. I would much rather live and die by my own sword than to have to do that because it’s exhausting. It’s exhausting. It’s just my personality type. It’s not better or worse than anybody. I’m just saying I need quiet when I get up in the morning, I do not put the TV on. I mean, I get up so early, the dog is still sleeping, you know what I’m saying? I like to just do my own thing and block out everything. I don’t have music on, I don’t have the TV on. I’m not looking to read stuff. I really just have come to a spot where I can trust the price and basically leave it at that and then I’ll have to make my decisions accordingly. Again, usually with stops, I move my stops around a lot. I adjust them during the day. This market, you’ve had to have been very quick to adjust your protective stops. Cause when the markets do reverse, they tend to move very sharply and oftentimes you wouldn’t. If you’re trying to do it like a video game, you don’t really have the time to do it on the fly. Two, I have found in myself even at this age now that I don’t want to have to make decisions on the fly that way. Very well studied and I know the night before where I know where my levels are and I know where I want to get in and then once I’m in, I know where I want to get out and I don’t really waiver on that so much. If you’re trailing stops, you can trail structure, you can trail with a percentage or an A t R based stop to protect your capital, protect your gains. But at that point, I don’t like having to make decisions on the fly that I can’t tell you the last time I found an idea during the day and then put the trade on. I almost always have it on my radar the night before. And then this is just a way that I exercise my own discipline in that it’s like going on a date versus going out and picking somebody up when you’re there. I kind of have the agenda set up long before, because again, think about my background. I knew when I started that I was in slightly impulsive, but that was from a standpoint that I knew coming out of a working class background, I had to make the attempts. So I was deliberately trying things as opposed to sitting around and waiting for the game to come to me, which of course was never going to happen. So I had to make up my mind and say, there’s part of me that has to be somewhat fearless to at least jump head first into the game because it’s not like I can take the game to Wall Street. That’s never going to happen because you’ll you try that, you’re going to get crushed, you’re going to get buried, but you have to jump into the game and then figure out, it’s like if you don’t know how to dance, you still have to walk out into the middle of the floor, try to get a feel for the music. You’re not going to learn standing on the sidelines. And so that little bit of impulsiveness help me get into the game very, very quickly. And that allowed me to fail fast. That allowed me within six to 12 months to know that I didn’t want to be in the foreign exchange market. Someone said, who’s a good enough guy makes a lot of comments that you know, don’t have to trade foreign exchange 24 hours, but that’s an incorrect statement. As long as the market’s open and you have a position on, you need to manage risk. And if the market’s moving up, then I continually have to adjust my stop higher it. You have to be hypervigilant and I just don’t want to have to be on, I didn’t want it then and I don’t want it now. And I’m not a date trader, so I don’t want to be in the market early in the morning, make my money and then be done because opportunity costs, I could be missing opportunity. So I like it when markets actually close and there’s no aftermarket trading cause then I get a break, right? Cause otherwise it’s very, very intense. You use a lot of energy, you have to be hypervigilant on all your positions and I don’t typically automate things. So that’s just for my taste and preference. Does it mean it’s the best? It just means it’s the best for me. So I’ve created an ecology that works for me in terms of managing the risk where I typically adjust my protective stops and then I don’t sit and watch or try to jump the gun. Sometimes I can say in retrospect, I was in some trades recently and I was adjusting my stops and I got knocked out. Then they came back up and this and that. So I, I looked at the things and the charts and I was like, well, could I have improved my exit? And not really, not for what it’s, it’s much clearer in after the fact, right? Because then you could see how things evolved. But before it happens, you have to trust your instincts. You know, have to trust your judgment, you have to trust your instincts and look at the science of it all. And I very, very rarely abandon the science of it all. I have really good instincts, but typically have come to appreciate putting in my stops, getting knocked out. The stocks that I was in this morning even are several dollars below where I got out. So I’m generally, I’m not clicking my heels. I made money, but again, this isn’t the right environment for me. I can still make money because I have 35 years of experience, but to be frank, I don’t like how I’m behaving even though I’m making money. Does that make sense? I’m winning the game, but I wish the markets were different because then I could make more money for doing less work. But you have to adapt, you have to, well adapt, I guess is the best word. You have to adapt to the market environment. And if you can’t do that, and I say this even to myself, then shut up and stay out of the market because you don’t get to complain. Market doesn’t give a shit what you think about anything. So you know, can sit and wait. I’ve done that too. I’ve sat on my hands and waited, but then I just figured it’d be better for me to evolve and to use some of those shorter term trading strategies. Again, it’s not what I want to be doing, but you have to do it in the shorter run to protect your capital and to make money. Otherwise you’re sitting there with goose eggs and I’m just looking at some of the charts here as we’re going through and it’s like I got out, it went down, it went back up, then it started going choppy and going sideways and I don’t want to be involved in that. I don’t really want to be long, something that enters a sideways market neither. I don’t want to be short something that goes sideways. I want it to pick a side and go. And I was lucky today in that I had good exits. I would much rather, like I said, I would much rather have preferred to be into the names and stayed in the names, but I don’t like the choppiness that we’re seeing right here. But like I said, it’s life on life’s terms. I could either not trade or I could adapt to the marketplace, adapt new tactics and make money with what they show me. So I don’t advocate that you doing that if you’re newer, as Brandon was saying, even when eSports, you have to really pick a skill that you’re good at and then stick with it over time. I think you can evolve, but it takes a lot of trial and error, takes a lot of practice and it’s no different in trading and that means you have to be willing to risk real money. So that’s really all I have to say on it. And just one quick thing, I mean there’s like a time to adapt your strategy for stuff. If you have the experience and you’re like a seasoned day trader and you’re like, oh, maybe I want to try swing trading or maybe I want to try holding a little bit longer and just see how far I can go. If the market’s a day trading market, that would be not an ideal time to do that. Or maybe it could be if you want to just try it out or whatever, and you’re okay with losing money maybe, but it’s like if it’s a day market and day trading is your specialty, why not just keep day trading and make your money that? That’s just how I see it. Yeah, harvest the cash and I tried sticking to my guns through April and May and I didn’t really make lose. So then I went back and I, because I always do a postmortem and just say, okay, did I handle this right? Largely things are systematic and that I have set rules. I’m not really sitting there holding the thing up going, okay, is this a bullish pattern or is that a bearish pattern? They very rarely work that way the way you would expect. So you can’t really trust them the way you think. The marketers and the people on Twitter would tell you they can. I was actually thinking that this morning there was a head and shoulders down that completely failed and didn’t play out the way you would think it would. But yeah, you have to make hay when the sun shines and see if that’s okay, particularly don’t like it. It’s not a good market from my style. And I’m certainly not going to go nuts and change and try to become something different, but it typically means I can’t add to my winners because the follow through is just not there. And I hope we can come back to it to that type of market. But right now we’re not there for the things that I look at. And so again, I could sit here and bitch and belly ache or I could just shut up and do what I know how to do. I think some of you out there who are just starting out, you have to pay attention to the market environment that we’re in because what you might have, you might be onto something like this is the saddest thing about trading is sometimes Wall Street eats their young, is that you might actually have a good strategy that works long term, but we might just not be in the right season. You know what I mean? And so that’s a tricky part. That happened to me too. That happened to me a couple times in the commodities markets when I was starting out. So I had to learn how to adjust. So much of this is about not, it’s not that you don’t want to deny yourself feeling your feelings. And if you feel fear, by all means feel your feelings, but don’t let them shut you down. Even s the best salespeople in the world will tell you when they’re asking a big prospect to buy a 10 million house, there’s always the feeling of, what about if they reject me? They say no, and I can’t overcome the objections. I’m going to feel fear, I’m going to feel all that. They certainly feel those feelings. They just don’t let the feelings stop them from taking the action. And so that’s kind of where I was even finding myself this past week and last week, especially come into Thursday and Friday of last week. So it’s not different for anybody. Doesn’t matter whether you have 35 days or 35 years. Like me, markets are always trying to change and I’m aware of what happens. I know July and August can be thin. I know there’s a lot of fear in the market, especially around equities. Commodities tend to be moving, but the alternative is to just stop. And that’s hard to make money when you’re not trading. But at the same time, if you’re throwing good money after bad, so that’s why this is so hard. It’s why most people don’t make it. Yeah, yeah, for sure. No, I think we had some really good points this episode and some really good takeaways. Just kind of pick your process and pick what you’re best at, get good at it, and then kind of branch out maybe. Yeah, Overall some cool stuff. I like how you’re adapting to the market even though you really don’t want to. It’s kind of cool. It’s not that you don’t want to, but it’s not where you’re comfortable, I guess is a better way of putting it maybe. But I think with that said, I think it’s a good time to close off the episode. Thank you guys so much for watching. We really appreciate it. Make sure you guys like and subscribe. All comments, help the algorithm. Click the notifications bell to get notified every time Mike uploads a video. And I’ll see you guys in the next one. Take care. Thanks for being here.
Hey folks, welcome back. So I want to pick up where we left off yesterday and talk about when do you know to bail and when do you know how to be persistent and determined and not quit? Because there’s a fine line there. I think if you’re trying to wing it and you’re not keeping track of your results, it might work against you. You might be quitting too soon. Case in point is I kept very detailed records of things that I was doing. I kept track of the hours that I was putting in on the days of the week, right? Cause I always thought that there might be a certain quality of my research and my preparation. I tend to do really great work on Sunday. Why is that? Well, I didn’t know what at the time, but I had the benefit of having the markets closed. There wasn’t electronic trading. So I had time to decompress my brain, go out and do fun things, come back to the markets with a fresh mind. So that worked wonderous for me. I still do that to this day, Sunday night before I chill and kind of relax. I do know exactly how things are going to unfold on Monday. I very rarely take a shot on the fly. It doesn’t matter if someone tries to reach out, call me, ping me this and that. If it’s not already on my radar, I don’t jump into that situation. It’s just how I’m built. I learned the hard way that for my sense of security, my sense of confidence and my sense of being able to execute period over period is I need to have a plan. I need to show up with an action plan and what it is that I’m actually going to execute on. So I know how much I’m going to have. I know where I want to. I know my levels. I know where I want to execute and then I have to follow through and actually enter the orders. Then if the orders get filled, I know where my protective stops are. I use protective stop. I don’t use stop loss cause I don’t like to repeat words that have to do with non-performance, right? So you might consider the same too. If you’re adjusting a protective stop up, you’re really taking profits. It’s not a loss, right? You might be giving back unrealized gains, but you could still get stopped and make a lot of money. So I try to be very careful on the language that I use with myself. Having said that, you might find that you do better work during the week. You might find that you do your best research and otherwise immediately after the close, what I tend to do, even still to this day, is do a little bit of a post-mortem and just look and say, okay, if I look and see the chart, for example, here’s what I did. I execute what I intended to do. Yes, that is the majority of the my score. Cause I have 35 years of experience. So there’s look at that again later this week with at an and involved in another topic. So I set out with goals of what I need to achieve that particular day. Most of them are taxed, are tasks in that the order entry is there to help me preserve my capital because the job, number one for a trader is to play superior defense. Don’t ever lose sight of that. Whatever you don’t lose, you don’t have to earn back. And did I execute what I intended to execute? Because even if I lost money, I know over time over hundreds and thousands of trades, I’m going to come out ahead very handsomely. So I don’t take it personally on one particular day, if I didn’t put my orders in at the levels where the market was more responsive, I have that pretty much down. But we’re powerless over where the market’s going to go once we put the orders in. So the best we can do is put the damned orders on the floor and leave it at that. You see, wherever the market goes afterwards, we can’t steer it. So that’s kind of how I’ve learned to grade myself and to think about did I execute the stuff that I wanted to execute? Again, I don’t have nine or 10 different trades. I have one style and that’s it. And that helps me also think very, very clearly. It also, I don’t have to wear headphones with the thing and listen to people all day. That would drive me berserk. I don’t want to hear people talking. I would actually tell them to please stop talking in my earpiece, which obviously wouldn’t go over. I don’t make for a good employee, as you can imagine. I like to do my own thing. As much as I like to help people. There’s probably a deep psychological reason why I’m doing this in a one way conversation. I had to find out through trial and error also, what were the best asked classes. I didn’t want to trade 24 7, which with foreign exchange, it’s always kind of open and if you have a position, you would constantly need to adjust your stops. So you can’t just say, well, I’m going to trade the open and then be done because there’s the whole rest of the week basically. There’s not really a window of time when the thing isn’t open. And to do it otherwise would’ve meant that I would have to change my trading style, which I didn’t want to do. Because once you have a style, what you come to understand is that it’s really who you are. Your trading style is who you are. It’s your personality. So it’s very difficult to change that. Now again, over time, we’re going to talk about that later in the week. There are ways to make some adjustments, but it only comes with a massive amount of trial and error and practice. Just like anything else. Just like Kobe showing up and doing several hours extra of practice several times a day to outperform the competition, bleed in practice so that you don’t have to during the games. You have to understand though, once you decide on a style, after lots of trial and error and being the judge and jury of your own behavior, every style is going to ebb and flow. It’s not going to work all the time. Periods of time when day traders go through losing streaks, there’s periods of time where position traders go through losing streaks. And it doesn’t matter what the asked class is, right? It’s very rare that you’re going to make money every day. And if you do count your blessings, nothing wrong with it. I accept it. There’s, I’ve been on some amazing winning streaks, but I don’t get too far ahead of myself and be like, well, this is how it’s going to be every day, because guess what? It’s not. So the trickier part, and what I want to get to is when do you know to try a different trading style or a different asset class? Or when are you actually just, you’re actually trading very, very well, but you’re losing money, right? Because most people who are starting out were like, well, I’m making money, therefore I conclude that I must be trading well. And that’s not the case. You could misplay everything. And I talked to Annie Duke about this a couple years ago when she was on for, I think it was how we decide, I can’t remember, but we talked about poker and how you can play a hand very, very well and still lose my randomness. You could also play the hand very poorly, stupidly and win. So you can infer because you’ve made money that you’re trading well, right? Because you have a process and then you have the outcome and you don’t want to be doing what we call resulting. So you have to study your process over hundreds and hundreds of trades. That might mean you’re putting a lot of capital at work that you might not be comfortable doing, but there’s really no other way to learn your craft. Yes. Again, you can back test to have an idea, but you’re not going to be able to calibrate your emotional constitution with what it is that you’re trying to do unless you’re risking real money and you can’t get that from a simulator. So that’s the tricky part, and I don’t really know if I have a great answer for that because so much of it is, do you have faith in yourself? Are honest with yourself when you hear the story about how I was actually doing too much when I got started because I just jumped in. Cause I knew I was excited to start to live a very different life than the one I had lived up until that point. So I was like, sure, I’ll trade anything. And there’s nothing really wrong with that. I kept really, really good records, but I found out that my success came from removing stuff. I removed foreign exchange, I removed options. Doesn’t say anything about those asset classes, but I needed to buy back my time, right? I’m going to talk to ganja about that tomorrow on a much deeper level with some questions that came in. And it wasn’t until I was able to absolutely focus on one thing and develop that and study my behavior concurrent with what the markets were doing. Was I in the trades that I should have been in? No. Why? Well, I was in a losing streak and I was reluctant to put my order in cause I was just tired of losing, right? Everyone goes through that right position sizing, very difficult to do. Why will? Cause we really don’t need any of the inventory. So we have to figure out what kind of inventory we’re going to have in our portfolio so that two things can happen at the same time. One, it’ll add up towards hitting our financial goal, but two, if things go against us, it won’t put us in such a spot that’s, it becomes destabilizing emotionally or crippling financially, right? Because both of those happen. Sometimes they happen at the same time. You have to go through those lessons. What you don’t want to do is fool yourself into needing more books, more discords, more paid premium services that you have to pay for because you can’t buy your way out of your discomfort. It’s not going to happen. I’ve already been there myself. We talked about emotional band-aids and the indicators. Sooner or later, if you want financial freedom, you’re going to have to go through this hazing and feel feelings that you don’t want to feel. There’s really no other way around it. I can’t solve those problems for you. You have to do it yourself. And the sooner you come to realize that you should be getting at it, because the sooner that you do it, the sooner you’re going to be able to draw some conclusions, right? And that sets you free. Remember the feelings that you don’t want, that you do want to feel are oftentimes on the other side of the ones that you don’t want to feel. Well, I got news for you. There’s no end around. You can’t take any shortcuts. You have to be in the game. You got to face it head on. So do a little bit at a time, but keep track of what it is that you’re doing. What are you thinking, right? Why did you put on certain trades? What made you think about that? Because that at the end of the day, becomes your playbook. It teaches you what not to do, but also what to do. So then you amplify the things where you show skill, but it’s only from the attempts that you’re making that you’ll be able to harvest that data and those realizations sitting around and thinking about it isn’t going to help you. You cannot intellectualize this. There is no way to intellectualize your emotional constitution. You have to feel it. You have to. It’s experiential. Again, that’s why I say the only thing that you can do to really, if you really want to learn the trading, is to start doing it. But Mike, I don’t know what I’m doing. Well, guess what? No one does. But if you don’t start doing it, you’re not going to harvest the data that’s going to affect your behavior the most because the how to trade part is 15, 20% of it. The rest is psychology and emotions. Now you think it’s intellectual because you’re unsure of yourself. You might not have confidence. I get that. But you only get the confidence from doing it. So you find yourself in this damn catch 22 where you’re trying to look for the intellectual or the academic solution to why you feel uncomfortable. And the answer is, you have to do it. You have to face and be with the discomfort. It isn’t going to kill you. So again, only risk what you can afford to lose. Realize that at the beginning, no one cares about your p and l, right? This is really for you to start taking some attempts to figure out what is the calculus that’s going to work for you longer term so that you can do this and go into where you want to live and the feelings that you want to feel for the rest of your life. Guess what? I got 35 years experience and I’m still morphing. I’ll talk about this with ganja tomorrow, but this has been a very make it and Take it kind of marketplace. So I’ve had to act more like a day trader. I don’t like doing it, but I also got to make money because the market right now is not amenable to my particular trading style. And guess what? I could either bitch and belly ache about it or I could put my head down and make money, right? So it’s life on life’s terms. We’ll see you tomorrow with Ganja. Thanks for being here.
Hey everybody, it’s Michael Martin. Hope you’re doing well. So I kind of can piece together some questions from lots of different angles. So this isn’t a specific question that came in, but it’s one that I kind of thought might make sense to talk about, and that is what is effectively the best trading strategy for me. So it’s very tricky at the beginning because you might see someone on the internet, you might know somebody that you went to school with. You might find it on social media, you might have read it in a book, this, that or the other thing. And you can really do anything. You can do any type of trading strategy that you want. You can look at options and everything that you could possibly do with options. Buying and selling puts and calls. You can do spreads and straddles and strangles, and then broken wing strategies. You can do butterflies and condors. So there’s a million ways to look at options. You can use synthetic positions with stocks. You can trade futures in commodities, you can create spreads there as well. You can do interbank currencies and create all different types of crosses, but ultimately you have to pick one. And I know that sounds tricky because when you’re just starting, you don’t know. You don’t have enough data. But what happens is when you start to experiment, which is really what you’re doing at the beginning, you’re going to hit on something. It’s kind of like an artist who’s trying to find his voice. When you do enough practicing, you’re going to discover something, maybe even by accident, you see. So I think a lot of folks kind of say, well, I want to do penny stocking, or I want to be an options swing trader your scalper. And I don’t think there’s anything wrong with that. I used to have much more bias when I was younger because you’re kind of proud of yourself. You’re kind of fully yourself too. I didn’t really have that problem, but I can say for sure that when you find out something that works for you, you can’t imagine doing it any other way. So you kind of have a relationship like you would with the significant other in your life. Thinking about another trading style would be cheating. So where I was lucky was that I had a small bit of impulsiveness, mostly because I knew where I came from. I knew I came from a working class background and that I wanted to change that. And in order to change that, it wasn’t necessarily about going to get education, which I got. It was more about my behavior. What was I going to do in and around that education to change my situation? I knew how to work hard by that. By the time I went to Wall Street, I’d been working half my Life and making my own way. So that wasn’t the problem. I had a tremendous work ethic, but I had to learn how to work smartly because what happens is you come from working class background to a white collar job. What’s the first thing that you do when you think about working hard? You got to put in the hours, and that might make a certain sense. But then you learn about the studies that show that if you do an eight hour day, you’re probably only getting four or five hours of quality work done. So you don’t want to just be in the office because you had to be. And in those days, there was no work from home. There was no zoom because there wasn’t an internet. So there wasn’t Microsoft teams. So basically when you’re starting out, you have to pick something, you have to pick a strategy, you have to pick an asset class. You have to pick a holding period and actually experiment with all of them and see which one fits. Now again, you might come in from a certain angle and be like, I want to do penny stocking, or I want to day trade stocks, or I want to do this and that. But at the beginning, in my humble opinion, you should be promiscuous. You should be someone who’s going to think about many different styles because until you actually do it, you really don’t know. Even though intellectually or emotionally you want to have this one particular goal, you don’t know until you’ve actually done it. You see. So I would say know what you can afford to risk, know, of course what you want to make in the beginning though, you are kind of like your own. You’re studying your own behavior at that point. So it’s not necessarily, you don’t grade yourself on how much you’re making or losing. Yes, you have to keep your losses smaller or else you blow up your trading grub steak and you can’t do it, but you want to experiment so that you can actually find out what is the best strategy you, you’d be surprised to know how many guys that I knew who thought they wanted to be day traders realized that they just didn’t want to put that much work into the day to only have to redo it the next day. There was too much work for too little money, and so they learned like I did, how to hold onto their winners longer, which is really just about adjusting stops at that point. It takes the click of a mouse back in the day to pick up the phone, cancel and replace, and this and that, which really wasn’t that much work to be honest with you nowadays. You could click on the mouse and say, cancel this order. I think on some of the trading platforms, you can just put in a stop, it’ll show up, and then you just move the damn line and that changes your order. So technology’s coming awfully long way. What I have come to understand myself was that the really, really strong moves can stay in effect for longer than you can imagine. And so I see too many people taking profits when they could let the thing run a little bit more. That was something I had to find out from myself though. It wasn’t an adage that you could get in the back of a fortune cookie. It wasn’t written in any book. All I knew was that in order to learn how to trade, I actually had to do the trading. And that’s why I Advocate actually doing it with real money because that’ll be the best teacher you can get. There’s really no other way to calibrate your trait of psychology, your emotional intelligence with how to do tactically than to actually do it with real money. You can back test at the beginning to have an idea, but like I said, it would be you’d want to make sure that it was a robust system and that you absolutely tested when there were difficult times in the market. You see, for example, right now we have about eight names that are driving the Nasdaq, for example, and the NASDAQ seems to be breaking away from the s and p at least from where we’re sitting here. Doesn’t mean it’s better or worse, it’s just the, it’s life on life’s terms. You don’t have to like it. So if you don’t any own any of those individual names, you might find yourself, who knows, plus or minus. But while I do agree that you can, like your mom said growing up, honey, you can be president when you find out who these people are. You don’t want to have anything to do with politicians. You know what I’m saying? So you’re like, okay, scrap that. Maybe Neil Armstrong was alive when I was a kid. I was actually alive when he stepped on the moon. So he was a big hero to many of us. So that requires a certain type of setup. You can do anything in trading that you want to put your mind to for sure. But keep track of your hours. Keep track of how much money you’re getting, keep track of what it is that you’re actually getting from the experience, because at the end of the day, we’re all pleasure seekers, and I think more people can succeed at this if they just be more mindful of their daily activities. Keep track of stuff, not just how much work you’re putting in during the day. What are you doing in preparation? How far did you look back? What was your start date, right? And if you’re not seeing those results that it might make time to pivot. When is the time to pivot? That’s awfully hard question to answer because there’s really, we’ll talk about this on another episode, but there’s a few things that you have to measure how much time you’re putting in and what kind of progress you’re making, what realizations are you coming to? And you can only do that with a journal. And I, I believe taking out pen and paper and actually writing it down, it’s a lot more insightful than typing it into the computer. But at any rate, I think it’s a good point, a good thing for you to study for homework and keep track of, because what gets measured can become improved upon. Thanks always for writing in all your comments and your questions. I appreciate it a lot. It’s very humbling and I’m glad I could be here to help you along your journal and along your way, your journey, please like and subscribe, and click the bell thingy as Ganja likes to say, and I’ll see you tomorrow.
Hey folks. Happy Friday, last show of the week. I hope you have had a good week and you have fun plans for the weekend and you don’t do anything related to the markets, and you go live your life and be happy. So as we speak about designing a system, when you’re just starting out, I think I should have highlighted yesterday, I really believe one of the most important things that you need to understand is how much you’re willing to lose on a per trade basis. Because a lot of people don’t want to lose money, and so what ends up happening is that they never find their way to put on any trades because they want to keep making sure and double checking, and it’s like ready, aim, aim, aim, aim, aim, amen. They don’t shit or get off the pot. Then the thing moves against them and then they have regrets because they didn’t get into the trade that they had seen happening unfold right before their eyes. So my whole take on these things is this, is that you need to have a clear vision of where you want to be and then understand that as you’re, you have an account that’s funded, do two things. Don’t take off a winning trade just because it’s at the end of the day, you don’t necessarily have to develop into a day trader. If that’s the way God wants it for you, then by all means do it. But I wouldn’t come to the market and say, that’s what I want to be, because until you’ve tested all those models, you really don’t know what one is best for you. You see what I’m saying? So let the nature of how the markets work, figure help you figure it out for yourself. Two, there is a lot of talk about the ever-changing amount of money that you risk on a per trade basis. Back in when I started, people were risking between two and 5% of their account balances on, and these were pros. Mind you, these weren’t people with 5K where you’re way underfunded where you have to, don’t have to, but you almost invariably have to take bigger bed sizes because you don’t have enough money and there aren’t enough instruments out there for you to trade. Now, you could trade micro contracts for sure, only if that’s appropriate for you. I’m, I’m not making any recommendations for that. But then as the markets maybe got more crowded, I’m not sure why it happened. Maybe it was the nature of what the investors or the clients wanted in terms of lower volatility on their account balances. Bet sizes like commissions have been compressed. So whereas back in the late eighties, early nineties, position sizes, like I said, were two to 500 basis points. Now they’re like one 10th of 1%. Right now they’re 10 basis points, 25 basis points, one fourth of 1%. So you want to understand that that number may be what you evolve To once that your system has positive expected value and you have what we call a trading edge because you can discover a trading edge and figure out that you can create alpha by risking $10. You could trade one share of Amazon, and you have to remember that’s your kind of scrimmage, right? It’s a game, but it’s a game that doesn’t count and be comfortable being in that spot early on because to me it’s better than paper trading. Paper trading is okay if you want to learn how to work a trading platform, right? Because they typically are tied into an actual live trading environment so you can learn how to enter particular orders, your stops, your limits, your market orders, how to set prices and do this and that. Good for the day, good to cancel. And that’s all important to learn because you learn the hard way. Oftentimes that errors cost you money, but you want to learn your craft with live ammo, right? Because mistakes will happen and you want to know what the burn feels like. You want to know what it’s like to be in a name and have a big earning surprise happen the next day. You want to experience all that because it’s the experience of that that’s going to help you better understand who you are as a person. And you can’t get that in a paper trading environment. You can’t get that if you are always offsetting your winning trades at the end of the day, right by the closing bell. So I would forget whatever that risk unit is that you hear everybody talking about, what do you risk portrayed? Oh, I risk a half a percent and I have a 50 50 win ratio and I have a three to one asymmetric reward to win to risk ratio. That’s all down the road for you. You’re not going to get that anytime soon. So give yourself, love yourself enough to know that you’re going to have to figure that part out through experimentation and then of your trading capital and your grubstake, determine how many trades can you get wrong? Losing whatever it is, 10 to 20 to 50 bucks a trade. It doesn’t matter to me what the number is in order for you to kind of learn your craft, right? Because it doesn’t speak anything to you as a human being. You’re not an idiot because you’re losing money. And if you’re a guy, women tend to be better. In my experience and the women that I’ve worked with than coach, they tend to be much more emotionally mature about that. They realize it’s part of the process and they’re much more willing to feel their feelings. Guys are built differently. They feel emasculated, which is that feeling of reluctance to fail and whatever has probably killed more people than anything because they weren’t really, they talk a good game about being David Goggins and being inspired by all that stuff, but they never really get around to doing it, right? That’s got to be a Vietnam your brain that I don’t even want any part of, right? Because it’s one thing to pontificate it and to retweet it and to like it on Instagram and be like, yeah, motherfucker. But at the end of the day, it’s a whole other practice to do it. So can you put yourself in Bud’s training? Because that’s effectively what this is going to be in, not necessarily physically, but emotionally. What are you willing to put up of your money to learn your craft, knowing that you’re going to make errors and you’re going to make mistakes? An error is when you put in the wrong trade, you want it to buy Ms f T, but you put in M Ms F T or whatever it is, you switched the letters M F S T, M S F T, right? I’ve seen that happen. I had a branch manager actually do that, and he was like, wow, did the stock split because he put in the wrong ticker, he put in, it was a trading error. Then there’s going to be mistakes and tactics. Tactics that you don’t know what you’re trying to do. If you want to have some context. I have friends from back home who run the New York City Marathon. They run the whole thing, but they don’t just put the shoes on that day and go run the damn thing. They’re training throughout the year and building up to it. So the goal is to complete, they’re not really trying to, they’re looking maybe to be the personal best cause they run it every year, but in trading, it’s a marathon. It’s not necessarily a sprint, and you have to prepare for that. You have to prepare your brain for the daily grind of it as well, right? That’s why I’m on a diet of the mind. I don’t let all this other bullshit come into my day because I know I need laser focus on what it is that I know how to do. So the phone doesn’t ring. I don’t let people call me. I don’t have the TV on. I’m not interested in any of that stuff. You see, there’s a time and a place for all of that, but my brain power is sacred and I don’t give it to anybody. When I’m working on the things that are most important to me, and that can be when I paint. It could be if I’m playing guitar or obviously I take time out for martial arts, but at the end of the day, I have very clear boundaries on whose time it is and it’s mine, you see? So you need to figure out if this is a marathon, how much time are you going to train? Are you going to give yourself three or six months to figure it out where you’re actually taking real risk, losing, like I said, risk, 10 bucks trade? I think there’s a firm out there that kind of starts people doing that too, because it gets them used to the fact that they’re going to lose money. You just want to make sure that your losses are contained and you’re not going to lose any bit of money that’s going to put you out of business or kill your dreams. But you have to remember, if you’re going to go swing for the fences, you’re also going to strike out a lot. And if you’re just starting out, don’t worry about those emotional wins. Worry About the rules that you’re compatible with that give you a trading edge. They, theyre help you create alpha. They have positive expected value and that on some days there might not be setups for you, so you have to wait and come back tomorrow. Guarantee you, there’s people out there who were three years or less and they’re putting on trades that they know they have no business being in, but they’re doing it because they want to be engaged. They want to feel like they’re traders, so they do trading things. Does it matter now? They’re not doing it to make money. You see? Then you mature even more and you’re like, okay, well there’s no setups for me today based on the criteria that you have, and so come back Monday, come back Tuesday. That’s just the way it is. So I would not worry about then in summary about what your optimal risk unit is right now, because what you’re trying to do is learn your craft and figure out can you actually make money with small bits, because then it’s easy to scale. That’s the easy part. So while you’re figuring it out, do it hyper small and then worry about graduating to what you think your optimal position size would be, because that’s where you’re going to make and lose the money that you want to make, is that it’s all in the position sizing, but at the beginning you’re just experimenting. So why would, you wouldn’t have to worry about optimal position sizing at that point. Anyway, it’s been a great week. I hope you’ve had a lot of success and you’ve learned a lot about yourself. I always appreciate you being here. Please like and subscribe and I’ll see you Monday.