So where can we find examples in our lives when we are inviting feelings in our lives that are trying to communicate with us, and sometimes we don’t listen to them? Well, in the trading space, if you’re forcing things and you’re not trading with your edge, which admittedly can be in the beginning because you’re trying to figure all that out. That’s why it’s important to take very rigorous notes on everything from the setup. And if you look back several months, I did this long episode on a Wednesday about all the feelings that you feel throughout the entire process. You know, have your preparedness where you’re doing your research and your preparation. There’s a feeling that goes with that. There’s a feeling that goes with, you’re going to bed at night with your game plan in your brain or not if you don’t have that game plan.

So there’s a different feeling for that, knowing that you have to do it in the morning. Maybe it’s excitement, maybe it’s anxiety. Then there’s the morning of the person who wakes up. Has their plan all set? What do they feel like in the morning as they’re looking to engage with the markets? What is the shorter term person who is looking for their edge the day of, or looking for scenarios where they can affect their age, their edge, the day of, the morning of, right? So then you put your orders in. There’s the feeling tone that goes with that. How does that reward you or make you feel emotionally? Then there’s the managing the trade part where you added risk to your portfolio, long or short. Now you’ve got to manage the risk. There’s a feeling that goes with that. Then there’s the after, right? You offset the trade for a gainer loss of say, in the day or the next few days.

Does it matter if you’re a day trader or a short-term swing trader? So there’s all those feelings and if you line those feelings up, you have your emotional model. So what’s one thing that you can do to tidy that up and to kind of listen to what your feelings are trying to teach you? Well, couple things. If you’re a short-term player, you might consider having ideas or at least a theme, right? They don’t have to be trade ideas, but what’s the theme? Have the theme going the night before so that as you watch whatever financial news, or if you’re look, you got a stream of a discord or something like this, you’re not becoming emotionally invested in the fact that you might not have a trade idea for that particular day. So then you hotwire your system and you put on a trade because somebody is speaking about it on television, and you need to put on a trade that typically doesn’t work out. So you have to listen to what your feelings are trying to talk to you about at that moment in time. You can basically say, Hey, I have to do more preparation, or I have to expand the names that I’m watching. I have to expand my screener to include different capitalization because I’m limited to the number of names that I

Have. I feel like I’m missing out on opportunities. There’s nothing wrong with missing opportunities. But what you don’t want to do is act out of emotion, because that typically might solve a need in the very, very short run, but it’s typically not a positive one from a financial standpoint. So at the end of the day, you need to make sure that you’re prepared for what you want out of the market, both financially and emotionally. Another area where you could find yourself having animosity towards the markets or anxiety or otherwise, any feeling really is, for example, when you don’t use protect, you don’t use stops. Pro traders will see what their levels are and they’ll try to execute around those levels oftentimes by putting in, say, a buy stop above the market within a certain spot where they want to acquire and add risk to their portfolio.

Other folks try to sit there and do it in real time and put in market orders, and oftentimes they’re pushed beyond where they want it to get in because there were there stock ahead. So you might consider using your stops because it’s a form of discipline, and ultimately discipline really pays off very, very well in trading because it stops you from taking flyers. So you could enter your buy stop to enter again, process your feelings around paranoia and people running stops and then trapping you in this and that for the handful of times that will ever happen, you will have made so much more money by being disciplined and putting in your buy stops to get into the market super fast and relying on the technology. It might also include a step before you put in your buy stop, and that is to put an alert on your marketmind, and that says, okay, if you’re looking for the stock to be at like say 102, for you to start adding risk, you put an alert on the market minder at say 1 0 1, 1 0 1 50, so that once the price trades added through that level and alert will go off and say, aha, we’re kind of in the neighborhood now of where we might want to add risk to the portfolio.

So then I can go in and add my stop protective stops. Kind of go without saying as well, you need to protect your capital. No one wants to lose money, but the best thing that you can do is learn how to manage a book of stops every day. You want to add risk long, those are by stops. Once you get filled, you automatically know where your protective sale stops are, and then you’ll have a rule that says, once I start making money at a certain level, then I’m going to adjust my protective stop to a minimum of break even. So this way, I can’t necessarily lose, I didn’t make enough money to take it off the table, but I still adjusted my stop to protect my capital, and that’s a pro move. So those are just a couple of examples of how you can listen to the market feedback and get closer and closer to being prepared, being able to trade and execute your edge. Please like and subscribe to the show, appreciate you being here. Leave a comment or you can reach out through Martin Chronicle you want. If you want to suggest a topic that I haven’t covered, I’m happy to help. Thanks very much for being here, folks. I’ll see you tomorrow.

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So how do people go on tilt? How do they freak out? How do they dig themselves into a ditch that they don’t want to be in? Well, you can figure it out. Today’s Wednesday. We talked about preparedness. We talked about creating your list. We talked about putting yourself in a spot where you’re only looking at tickers, be them equities or commodity futures where you can affect trades, where you know, have an edge. Obviously with that edge, there’s positive expected value where over longer periods of time when you put on those trades that you’ll make more money than you’ll lose. Now, how do you put yourself into a spot?

How do you put yourself into a spot where you can be in the zone and avoid frustration? Because you can see now that if you are trying to get prepared, but you’re focusing or you’re preparing on the wrong things, you can see where all these other emotional outbursts can come from. You can find yourself in a lot of frustration or anger. It doesn’t necessarily have to always come out negative, but if you force a trade or you force a situation, even in life, it doesn’t feel comfortable. So you need to think about if you’re doing your preparation right in Victoria’s War, Victoria’s Warrior’s first win and then seek battle. And then you’re trying to isolate those instances in the marketplace where you can affect your edge when you trade. Anything beyond that will help you harvest feelings that might be trying to communicate with you, but have really nothing to do with your trading successfully.

So in your need, for example, to feel as if you’ve made it as a trader, for example, which is a strong pull for everybody, myself included, because you need that feedback from the marketplace. You might find yourself putting on trades or doing things that don’t really fit with who you are because you want the result. And you’ll hear me say it, you’ll hear a million people say it, who are at the pro level that you want to focus on process. And then the fundamental I said price, moose first, fundamentals follows, but you focus on the process, not the results, which is very hard at the beginning because if anyone says, Hey, how are you doing? What’s the first thing you think about your p and l, how you did that day? And that’s a kind of short term way of looking at things, and I don’t advocate for that. What I totally support is you having a daily process that you can follow and that you can replicate because that’s where your success is going to come from, following that process period over. So for some of you who are very, very active in the marketplace, if you go back and look at what those losing trades were, for example, where in those trades

Were you able to affect your trading edge? You could also look at your winners and say that I got away with something here, or was this due to my trading edge, right? Because you can have a situation where you do everything wrong, but you put on a trade, you make money thinking like you’re onto something. But in fact, it’s really a process that you shouldn’t be following and getting rewarded for that can lead you down a path, not fortuitous say. So this is how you start to harvest emotions and feelings is when you go outside bit, you know, do behavior that’s not consistent with what your goals are, which is why when we do consulting, the first thing we think about are goals, and they’re not goals. I want to have this or I want to have that. It’s a whole unique way you’re looking at it that helps people organize their behavior and keeps their behavior congruent with what they want out of their life, at least professionally.

So think about that. Make sure that you’re only trading when you can affect your edge. And if you’re doing something beyond that, realize that you might be looking for some kind of emotional fulfillment for that particular moment in time, which you might be able to get doing something else in your life. You don’t necessarily have to put money to risk when you know don’t have an edge, because chances are that in and of itself is a game of negative expectation, right? So it’s hard to make money when the odds and the payoffs are against you. Anyway, please like and subscribe, leave a comment. Otherwise, if you want to reach out privately, you know where to reach me. I appreciate you being here, folks. I will see you tomorrow.

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So we talked yesterday about preparedness and setting yourself up for instances where you could express your edge, and it’s only in those instances that you actually want to affect a trade. Why is that? Well, if you think about how casinos work and how they have a mathematical edge on the majority of the games that are there, you have negative expected value yourself, even though you get a lot of economic utility, i e, pleasure, from perhaps playing craps or roulette or something like that. Whereas games of skill, like say blackjack or poker would give you a better opportunity to make bank, if you will. So we talked about a chart pattern yesterday. We could pick out anyone head and shoulders, up or down, doesn’t matter. Breakout trades. It’s what uniqueness you bring to the table in the execution of that order that helps you understand what your edge is, right?

Because if you look at it, think of it this way. Imagine a stock trade was almost like a car accident. There were 10 people on the street witnessing the car accident. Now my police friends tell me, if you ask 10 people what happened, if they watch the same damn thing, you’ll actually get 10 different answers. So they have to kind of come up with a consensus estimate. I hate that word because it shows too much group think. But for your situation, you need to witness the marketplace, see what’s unfolding, and then know how to, with a tactical and a fundamental understanding, know how to execute that particular trade. When you’re in the moment, you are in the zone and you know that you are not putting on the trade because of the emotional payback more than the financial one. And it’s a place, it’s a feeling tone where you can exist, where anytime an idea, a ticker or whatever comes into that unique scenario, you’re right there and you can nail that trade.

Now, they don’t always show up and be winning trades, but it’s that one spot where you know, see what you see and you know, can execute it. And it’s not forced. It’s an opportunity because there’s a million different answers as to like, if you ask somebody how to define their trading edge, most times it’s a feeling tone. It’s like I’m looking at the chart, I know it, I just know it and I feel it. And I believe a lot of the best traders work that way. They develop a strong sense of feel for the marketplace and they know how they engage with the marketplace, and they know when that’s a favorable opportunity to do so. And also when to sit on their hands. So as we talk about this, it might take you a while to define what your trading edge is, right? Maybe or what it was, and you lost it and you’re trying to get it back. For me, it took four and a half years for me to figure out that I knew what I was doing. And I’ve

Described that scenario enough. Not to bore you here, but ultimately you want to be prepared. You want to investigate those scenarios where you know can affect your edge, and that becomes your wishlist. Are these names that I’m watching in my watch list wishlist? Are these trades that I know I can execute, right? Because then when you have the patience to sit on your hands and wait for those opportunities, that to me is when you’re acting like a pro. You’re not trading just for the action, you’re trading for the overall experience of it, which of course, when you can exercise your discipline, that gives you feedback, of course from the marketplace. But ultimately, you got to make money right over the long haul. So do that study, those setups really fall in love with the idea of understanding and coming to terms with what your edge is.

That’s one of the things that we do here, is help people find what their unique skills are so that they can ratchet those up, scale and leverage them, because that’s when you know you’ve got momentum, you’ve got your edge, and then that’s when you’re basically unstoppable. Remember, everything that you do is as unique to you as your fingerprint. And although we might trade similarly, there’s always a nuance or so that would make it unique and different, and that’s a selling feature. It’s also what makes you use. So celebrate that. Anyway, please like and subscribe to the show. I appreciate you all very much being here. Any suggestions, you know where to reach me through Martin Chronicle, leave comment below. Appreciate you all very much. I’ll see you tomorrow.

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Hey everybody. Michael Martin here. Thanks for joining me today. Appreciate all the feedback too on the YouTube channel. Everyone’s comments, please like and subscribe to show. I’m going to be doing a lot of work here on YouTube. Got a lot of reader response too. Reader, viewer response, I suspect. So today I want to talk to you about preparedness and I moved the mic here from the side because apparently if I’m looking in the camera and the mic was over here, that gets a little bit of a echo thingy, so try to take out the ambient noise in the post-production. Anyway, if you remember art the inner voice of trading, there was a chapter where I wrote and I talked about preparedness. And the quote that I used was from Sun Sue’s book, the Art of War in the chapter around preparedness. And it said The victorious warrior first wins and then seeks battle.

And I think that’s one of the reasons why they say all wars are won before the battle’s fought. And it got me thinking about trading in that. I know in the different cultures of trading, say longer term folks versus shorter term folks, that when they do their preparation is key. The shorter term folks are looking the day of the morning of what are the key elements? What are the catalysts that could move security one way or another? What type of announcements might there be? There’s far too many just to lay out, whereas longer term folks who are looking for setups that conjugate with say the weeklys or the monthly charts, they can oftentimes do their preparation at night and come into the morning and know exactly what’s on their list, what their levels are. They can enter their orders on the screen. They could do it over the phone if they’re so inclined and work with executing brokers that way.

But the key is in all of that analysis, regardless of when you do it. So if you do it in the evening, I tend to do it in the evening because then I go to bed with a piece of mind saying, at least I have an idea of what I’m looking at for the next day. Again, I know shorter term folks are looking for those daily catalysts, so it’s kind of right up to the moment for them to actually find those that morning. That to me is doable, but it also kind of creates, or it can create stress for the folks who are just starting because it creates a sense of urgency. And if you have, say two hours until the opening bell and you don’t have anything on your screen, you might, not everybody, but you might feel compelled to just put on a trade or to pick something out because you feel like, Hey trading, it’s Monday through Friday, I need to have activity. That of course isn’t the case. And sitting on your hands is oftentimes the best course of action for any particular time period could be for the full day, might be for the week. Which brings me to the point of preparedness, and that is you should only put on a trade when you can express your edge.

Now, it might take you a while to figure out what that edge is. If you look at say, even a chart pattern that’s very popular, like a cup and handle, there’s still 10 different ways to enter trades. Just looking at that chart pattern. So it’s what you bring to that chart pattern or that setup for if you will, that is what is unique to you and how you create your alpha. So the preparation, if we take a step back to me, should be everything that you need to do to find those instances where you can express your edge. So we started with preparedness. What do you do to reduce your names? What’s your watch list? How do you screen this and that? How do you soon it will be for you to enter the order. Is the price action in the market right now close to where you are in your own your, is it in the neighborhood of where you would enter an order?

Right? Cons, considering that you probably don’t enter in the market, you’re probably entering with buy stops above the market. Sell stops below to either protect your capital, minimize your losses, or perhaps to enter the market short. Either way, the goal is to do whatever you need to do to prepare to get your mindset right as well as your setup, right? Because you should only be putting money at risk when you know can affect your edge. If you can’t, then you’re doing that trade for a different type of a payoff, and we’ve talked about that till we’re blue in the face. There’s always two payoffs to a trade. There’s the emotional and there’s the financial. So we’ll talk more about that. But remember, don’t put on any trades until you’re affecting your edge in the marketplace. And if not, then that’s when you need to sit on your hands or you need to develop another edge because otherwise you’re putting on a trade for a different feedback mechanism that might not necessarily be financial. Please like and subscribe. It helps to me grow the channel and leave a comment too. I don’t have all the answers, but I’m happy to learn from you all as well. I appreciate you being here. Thanks very much for being here. I’ll see you next episode.

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Hope you’re doing well. Hope you had a great week and you got fun plans set up for the weekend. Kind of chill. So while I was away, even though I wasn’t away, I guess I took a trip, but say December and January, I get a lot of a, if you just scroll through any of the social media stuff, now you see everyone’s got a funding account. Everyone wants to help you pass the challenge and this and that, as they call it. As far as how the business works, right? There were a few questions of how does it work? How can they guarantee you money? How can they give you your share of the profits? Do you trust the system, this and that? There’s probably a two hour episode on funding accounts. This is not going to be it but I think what happens is with these funding accounts is they do have a line of credit or capital somewhere, and what they do is they bring in cash and they promise you a share of the profits.

Now, the rules are oftentimes they’re very clear, they’re not convoluted, but the rules that they want you to go through in order to pass the hurdle of actually getting to the point where you can trade what they would consider real capital, even if it’s not real capital, real capital though, meaning you trade it, you make money, they’re going to give you a share of the profits. Maybe those profits are funded by everybody else who’s paying a monthly number to get approved. So to me, that wouldn’t be a Ponzi scheme. It would just be saying, here’s revenue from one area that’s going to pay off other people. And everybody knows the score. So everyone knows that coming into the situation. So that’s interesting as a business model because I don’t know if there’s actually any risk being taken in the markets. Everything is basically a form of paper trading and then people sign up for these monthly tiers.

You get a $100 K up to $500 K. Every company is different. Some of them are trading American markets, other are trading the binary options overseas or foreign exchange interbank. So there’s lots of different platforms. Do your due diligence and then realize whatever the rules are. If they lay out the rules very strictly, here’s what you need to do and the minute you breach one of those rules, you kind of have to start over. Which means for a small fee or maybe even a monthly renewal, you have to come back and pay that number again. 

I’m not saying that that’s what they’re betting on, but I can intuit because trading is so difficult that that’s likely what’s happening is that a lot of folks are saying, I could spend a $100 a month, get access to $250 K in a paper trading account, and if I do strike it and get lucky, I will go through an evaluation period and maybe they’ll actually give me real money to trade to make some money. So I add basically, I don’t know, a little bit more than a cable bill to my monthly expenses in my household in order to get access to these trading platforms. So I know a few people who are really good at it, and I’ll probably bring them on to help everybody out. They’re kind of tricky. As I mentioned in one of the shorts, is that for folks like myself who grew up trading around positions we would add and add and add and add and add as the thing was going up. And you might have a situation where 40, 50, 60% of your account is tied up in margin for one particular instrument, not on day one, but over time.

And so even though margin to equity ratio is not a great risk management tool when you have bigger positions on and larger unrealized gains and there’s a pullback, it might be greater than what these funding companies are looking for. So an example might be, say you have a $100 K account and by the grace of God you find yourself up $30 K on any one particular day. And the way the rules are written is to say you need to make, I’m making these numbers up, but they’re kind of like in relation from what I’ve read, you might need to make or show that you can make 9% or $9,000 but not have more than a $3,000 drawdown from any equity peak, right? So say you strike it and you do very, very well. You’re up $20, $30 K in the account. You have to always remember that whatever that peak was on your equity is starts where the drawdown is.

We talked about drawdown and going on tilt this week. Excuse me, by as far as the funding is concerned, you might have the emotional constitution that says, I’m up $30 K, I’m going to risk $5,000 of my $30 K in unrealized gains. I’ll stop myself out at, I’ll reinvest my gains into my stop and get taken. At plus $25 K, which is still a great trade, it becomes a question of how much of your capital are you willing, how much of your unrealized gains are you willing to risk in order to stay in that trade with the same position? The answer is different for everybody. For me, it’s typically the whole thing. Because I’m not trading for 10%. So the thing is, that type of model that I’m already comfortable with emotionally in my own body after 30 years or plus of experience, that wouldn’t work for funding these funding models because if I was up $9K, the $3,000 is one third of that. 

But as your account grows, you’re up $20, $30,000. That $3,000 pullback is now just 10%. So that to me is not as material. So you might say, I’m at, I started with a $100K, you’re at $130K, but now whether it’s intraday one day or several days, you have $3,000 to play with basically despite having hit your mark and made the $9,000 to pass that part of the test. Now comes the tricky part. If you read the fine print on a lot of these things, they want you to trade. Some of them I think want you to trade every day, or they want, and you look at the calendar month, they want you to trade a minimum of 10 days out of all the days that you could possibly trade over that rolling month, depending on when you started.

So now you’re at a spot where you’ve made money. You only have $3 K to play with, but now you got to be careful because if you have still seven days, six days left, that you have to actually trade and put on risk. You have to do, so knowing that you only have $3,000 to give. So then you’re like, okay, if I was trading the big, if I was trading like the ES or the NQ’s or the big natural gas, whatever it might be, now you have to think about trading smaller the minis or the micros, right? Because on some level you kind of have to play poker with your track record in order to pass the evaluation. You’ve made your $9K, you’ve eclipsed that, but now you can’t lose more than $3,000 and you still have six days where you have to trade. So if you trade the same contracts, that, excuse me, made you money.

So to me that’s the tricky part is that you might be more in your own emotional constitution, be willing to risk more dollars right out of those unrealized gains in order to stay in the winning trade. But because the trading rules are set up in such a way, you have to alter your behavior. So that to me is trickier to do for the folks who’ve been around longer and kind of have their system and their way of doing things all lined up. So that might be something to just be aware of is that you might have to act more conservatively so that you pass the evaluation period of time after which the rules change. Again, some of them have like you just need to stay a $100 profitable above a previous mark. The rules are all over the place, but nonetheless, I think they do generally give you, because they’re clear and the terms are written out in black and white that it’s a fair scenario.

I don’t necessarily know that that makes for good trading, but I do feel like there’s a way for you to kind of modify your own behavior in the short run just to get through the evaluation period of time so that you can get to trade the capital. But just remember that it seems to be three to one. If you look closely, you know, might have to make $9,000 on paper with no more than a $3,000 drawdown. And I think as you go up to higher levels of capital, you can trade more contracts for sure but then also the dollar profitability as well as whatever that drawdown is also increase. So I would start small. I would not trade the full, whatever they say, the maximum amount of contracts that you can trade, I wouldn’t go anywhere near that because even if you haven’t made any money, you have a drawdown from your starting capital.

So if you start with a $100 K, you hit $97K and you have to reset. If you go to $110K and you go to $107K, you have to reset. So you have to be super conscious of where that drawdown is and then how you’re going to break up that capital. So say you’re up $30 K and you still have six days to trade, so now you have $3,000 to risk and you have to break it up over X amount of days because there’s a day requirement, there’s a number of days that you trade requirement, I guess, in order for that model to work. So now you might not find in your own way of trading that those are barriers or constraints that you would put on yourself. So that’s what makes it a little bit of Jacqueline Hyde is that you might have to become a different person in order to pass these trading challenges, so to speak, in order to get funded to where you’re actually trading and making the money. 

I don’t think that the rules are unfair. Again, they’re written out, they’re clear, everyone knows what they are ahead of time and so that makes it fair because you have the right to not participate. I would like to learn more. I don’t have all the answers, but from what I can see from the outside looking in, it seems to be working. I know a few people who have gone through that process and I’ll share with you what they did to succeed, how they did it, and then maybe to some extent if I can get them to be here, I’ll get ’em on the show to walk through what steps they took in order to be profitable. Anyway, it’s been a good week. I hope you enjoy the new format. If you’re still on Spotify and Apple Podcasts will still be there.

We’re going to definitely beef out the YouTube channel going forward and as always, if you have any thoughts or concerns or things that you’d like me to chat about could reach out to me on MartinKronicle, I’ll do that. 

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