Absence of hard work. I think your self-talk probably sucks. You see, because what ends up happening is when you get into that spot where you are grinding and you know that you want to be a trader, you know that you want to trade better. It doesn’t matter where you are in your career. When you haven’t put the time in, you kind of know it. You see, and when that happens, you can fall into this thing of, see, this always happens to me, blah, blah, blah, blah, blah. And when I start thinking that way, I quickly stop and go and start saying things in the positive. Because if you focus on what you don’t have and you keep saying that to yourself, in my mind’s eye, you’re going to keep getting more of what you don’t have then. So if you don’t like a certain situation and you haven’t put the hard work, and then your emotional response is like, see, this always happens to me, or Why does this always happen to me?
It’s an endless loop question first of all, and there’s no real answer to those and you’re going to get more of the behavior that puts you in that spot because if you keep doing it, again, I’m not a psychologist, but there’s something that’s pleasing for you. I had mentioned one point in time where people can sabotage themselves by taking small gains and small losses and go on and on like that for years because it puts certainty to an uncertain situation or probabilistic outcomes. So the first thing that you can do if you want to get better is what are your intentions, right? Focus your work on your intentions and then act intentionally. If you are constantly pumping other people for their trading ideas, you’re going to go through a lot of people, right? I mean, because the pros don’t really talk about it. I don’t.
Anyway, maybe some do. I guess it depends where you work. Maybe if you’re on a trading desk, there’s that kind of environment. I always kind of kept my own business to myself and I always reciprocated by not asking other people either. I just generally don’t care. So if you’re having trouble finding trades, there’s a lot of services out there that can help you jumpstart. If you’re a chart reader and you want to just do it yourself, look for the things that are trending up. Call up a six month daily chart and look for something that’s the low is in the lower left corner and the high is in the top right corner and then back it out and see where we are in the greater scheme of things. Don’t get anchored and think like, okay, it was here, now it’s here. I’ve missed a trade. Sometimes those things are just getting starting. I mean, it’s only six months of data.
A lot of great things can happen. I mean, think about it. If you put on a trade right now, there is a possibility that you could still have it on coming through the holiday season at the end of the year. So you get what you think about in many ways. And so think intentionally. Think about, again, we talked about how to make more money. We talked about adjusting your stops and staying in the trades. You can make that an intention so that as you start looking for trades, look for the things that are already up quite a bit. What happens is people were like, oh, the things up 50%. I missed the trade. It can’t go up anymore. Well, if it’s going to go up 200%, it has to have gone up 50% ahead of time. Do you think the folks who had Nvidia at a hundred knew that it was going to trade up to whatever it traded up to 500 something?
Everyone likes to say that they could predict things after the fact, but in my experience, they’re usually just full of shit anyway. No one can really predict what’s going on out there. They can have a sense, but in order to call it exactly the way it unfolds is fantastically difficult. Now, look what happened with, well, actually, I don’t want to get into it. Focus your intentions on what you actually want and then use that as part of your self-talk. Even if you don’t have any evidence of it showing up, you start to condition your brain to see things in a much more abundant way. If all you think about is the frustration that you have because the market is stalled or your trading style is not amenable to what the market is giving you, you still have to be thinking like today is the day.
Remember a couple months ago I talked about every time I’m in this business every day, I know I’m going to win. I might not win today, but I know I’m going to win. I do winning things. That’s my nature, that’s who I am. I’m a winner. That’s what I do, I win. So you have to put yourself in that mindset, and that is going to require some mental growth. For those of you who are small traders or who are taking small gains, I think you can prove it mathematically that if you take small gains and small losses that you’re going to be that person for a long time unless you can find another way to endow your account. You have to focus your intentions on working hard but also working smartly. And if you’re not getting the results that you want, something has to change.
You can start with your research and how do you source ideas? Again, there’s plenty of places where you can go free online and they can help you figure out. If you’re just looking at charts, my goodness, you can go to bar chart, you can go to Yahoo Finance and just scroll through every possible name in the s and p 500. You can go through all the names in the nasdaq. I mean, there’s only five dozen commodities that trade with any kind of liquidity for the most part. So it doesn’t take too long to scroll through those and look for the things that are in uptrends and stop putting limiting beliefs that, well, the thing didn’t, I wonder if you did that and thought like, well, if you could correlate the performance of an instrument with your own performance, you might be holding yourself back on a few levels. In my experience, I know guys who don’t even look at things until they’ve made new 52 week highs and they make bank, you don’t have to worry about catching bottoms.
Cheaper prices don’t mean greater value. We understand that. That’s to me an absolute truth. But for some reason, people like to equate it with getting a baker’s dozen, and in my opinion, it doesn’t exist in the markets that way. You can think how you want to think. I’m not here to call your girlfriend ugly, but in my experience, when things are going on sale, so to speak, and they’re getting cheaper in price, I usually say, well, somebody knows something. I don’t know it, but I’m not going to come in here and try to prove all those people wrong. I know there’s short-term folks who like to fade rallies and stuff. That’s great if you want to collect nickels and dimes, but if you want to make bigger money, you have to be on the side where the power is. You know what I’m saying? Not terribly difficult to catch a 50 cent move on a retracement in an uptrend, right?
The reversals are pretty loud and clear. If you don’t have any idea, go get Victor’s Brando’s book, methods of a Wall Street Master, and you can look about it there. I have a relationship with Victor, but I don’t get anything on his book sales. So it’s a book you should probably have anyway, you don’t need me to tell you that. So look at reversals. You can see reversals at the bottom of the market. They could be pivot points, but usually you’d want to see something consolidate after that. Stage four, wait for it to sell off, then wait for it to consolidate. Sometimes it doesn’t do that, but ultimately you get what you think about, and so I want you to focus on the abundance, and in order to do that, you have to put in the work. If you’re reading charts, then what is it that you’re looking for? Are you looking for patterns? To me, it’s a lot easier to ascertain the trend. Now, if you don’t have a good eye for that, you could always look at a moving average. Like in commodities, it’s popular to use a 20 day exponential moving average. Look at the slope for where
You’re, this is a positive slope. If it’s this way to this way, that’s a positive slope. Obviously, horizontal markets have zero slope, so you don’t want to really trade where there’s consolidation, wait for it to break out on one side or the other. Obviously, if there’s a negative slope, you can be short, but you certainly don’t want to be long, and I would let go of trying to prove other people right or wrong, especially wrong. It doesn’t necessarily pay to try to be the smartest person on the desk. In my opinion. You want to make the most money and trying to be clever is kind of cute for a little bit, but I wouldn’t hire someone like that. Usually that’s tied to ego and people who have big egos can put themselves in positions to lose a lot of money because the goal isn’t necessarily about making money.
That’s the vehicle to get the more important emotional response, which is the public adornment and the likes and the thumbs up and all that other bullshit that you get in social media or what have you. I don’t particularly care for that because I just know pride’s a big banana peel and I’ve gotten blasted too many times over my career to want to make that ego stroke the goal. So that’s like when you start thinking about intentions, what is it that you really want from your trading? How do you want your trading to serve you? When you look at everything that you do over the course of the week, what was the feedback that you got on things? What were the highs and lows? For example, were you humiliated? Was your ego boosted? Did you make or lose money? And think about it in terms of percentages.
No one cares about dollar signs, and once you get to that spot, you’ll have more of a self realization and build your inner voice so that you can grow away from that. Because you have to remember, I always look at when people talk about the rich versus the middle class and they start talking about where the pay is or the compensation, and they use that as the breakpoint. To me, I always thought because I came from middle class, middle class is a form of behavior. It’s not about what you make. The middle class is the middle class because of how they behave and the things that they do with their money.
And I can speak from that where I am from. So if you’re struggling, you have to look at your behavior. What are you doing and what are you not doing? And look at how all of that serves you. How does not doing certain things like taking winners home overnight serve you emotionally? What emotions are you missing out on? What would it feel like if you had a 10 R trade? You really don’t know. You can imagine it, and then act intentionally to get that. You see what I’m saying? So that all kind of comes you, because then you can change your behavior because behavior predicts where you end up, but it all has to start in your mind, what is it that you want? When I ask people, I can tell you this and I’ll look you square in the eye, squarely in the eye.
I’ve had institutional clients who’ve confided in me because I’m in la. I’m not in any of the big cities where there’s traders, so they don’t have to worry about gossip and small talk and me showing up at a gin mill. I really don’t go to bars anyway. I don’t drink. But when you ask them after they’ve achieved a certain level of success, and I think this also ties into the one reason why business business leaders who are at presidents and c e o level start to fail and their colors start to fade, their careers go gray, if you will, is they stop having goals and they stop having personal growth. The single best thing that you can do for yourself, and yet there’s a bit of a conflict of interest, is to find yourself a coach and be accountable. All the biggest winners want to stay on top.
Tiger Woods had three coaches. You see what I’m saying? So you can do what you think is best, but they all act intentionally, acting intentionally and have a clear vision for what you want. And knowing what every action that you take means to you, both financially and emotionally, is a quick way to start figuring out how to pick that lock of success. You see, again, I was really lucky I was kind of born this way, but it doesn’t mean that I didn’t have to work. It doesn’t mean that I didn’t lose money because man, I’ve lost a lot of money trying to figure things out. Nowadays with the way the market is, I kind of pick my spots and I do as I have to do.
But at any rate, keep that in mind. Intentions, equal results, put that on a post-It note. You’re getting whatever you want at any particular situation, and you usually do it by design. And if you don’t know why you’re doing it, it’s likely because it’s tied up into your subconscious, which guess what is about a third of what we do on the consulting side is helping people actually figure out why do they do what they do when they can’t figure it out? Intellectually, the big hint is that it’s usually because on some level you’re just used to it and it’s probably emotionally appealing because it helps you seek pleasure and oftentimes avoid discomfort. People don’t like discomfort, so they avoid it, but as I’ve said before, sometimes the feelings that you think you want to feel at least intellectually are on the other side of feelings that you’re not willing to go to through your subconscious. Anyway, it’s been a good week. I hope you’re having a good week too. Thanks for being here. Please like and subscribe, click the bell thingy, and if you haven’t already gotten a copy of the Inner Voice Trading Audiobook, you can get that for free at Martin Chronicle. I’ll see you tomorrow. I.

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Hey everybody. Happy Tuesday. So this is just a general comment. It’s not based on any one particular video that I’ve done, but there’s probably a few of them out there, and that is when we speak about moving your protective stops, again, you’re dealing with uncertainty. You’re putting your stop in a spot where if you do get knocked out, you’re still making money. So if you’re used to say, well, I take my risk off at one R as my protective stop, you could say, okay, well if I was comfortable putting my protective stop at minus one R below my entry, I could start there and use one R as my trail. So when you get to three R, instead of selling, so say, what’s the example I always use? You buy a stock at 20, it doesn’t matter what the instrument is. You buy something at 20 and your stop is at 19, that’s your R one, and you’re going to, your price target is 23, so that’s three R from your basis, which would be 20.
When you get to 23, instead of offsetting the trade and going flat, there’s a whole bunch of stuff that you can do. You can all the while raise your protective stop, leave it at 22. Why? Well, because say you were going to enter the trade at 23, where would your protective stop be? It’d be one R, which is one. So your stop would be at 22. So you can just put yourself in the mindset like, okay, if I was entering the trade here and think about why people would be entering at 23, it’s probably because they think it’s going at 27 and if they’re right, why don’t you participate in that? Now of course, no one could predict anything, but you could still be mentally prepared to say, look, here’s a trade where if I entered at 23, I’d stop it at 22 and I’d be happy with that trade because that’s part of the probabilistic outcomes.
That’s one part of all the probabilistic outcomes for the trade. If I was going to enter at 23, because you don’t really know that 23 is the place where it’s going to stop, you just made up your mind ahead of time. That at 23 is where you’re going to offset the risk. It might not necessarily be a good exit. There might be more to go. Where does 23 relate? When you look left on the chart, where are their previous highs? You see? So put your protective stop at 22, for example, and then see where it goes. If you get knocked out, you could say, well, I was willing to risk one R on any one particular trade. That’s what you do. But in this case, you actually walked away with two R profit, right? So this is a way that you can develop mental toughness, which is kind of the point I’m getting at today is you can backdoor your way into that.
Now if it goes to 24, you can put your stop in at 23 and just cancel and replace and follow that process all the way up. Eventually it will turn around, maybe it does go to 27, in which case your stop would be at 26. See how that feels, because now if you got knocked out, you put your trade on at 20, you were willing to stop at 19, it got to 23, you held, it felt you were willing to feel new feelings. You still weren’t reckless with risk management because you only had a one R stop at 22. And as the move continued in your favor at 24, 25, 26, 27, whatever it might be, you can’t really tell.
And the thing does reverse in the near term and there’s a wave of profit taking, who knows what it could be, and you get stopped at 26. Now you have after the fact knowledge of what it was like to be in that trade, right? And again, you skew your average winner higher when you take multiple R winners and now you’ve experienced that you can calibrate your system. Most of the time you’re going to say something like that wasn’t that bad. It was a new feeling for sure, but you can get used to it just like you’d get used to eating chocolate ice cream. I mean, it ain’t that sophisticated. You just have to try it and you don’t have to trade it like a whale. Take the tiniest thing, take one share. Just learn to feel those feelings and then process them. Because you might find that your intellectual mind said, oh, only bad things happen overnight, and that isn’t the case when you’re in strongly trending markets and you let the winners won.
I can’t run. I can’t tell you how many times I’ve woken up to gold being up 10 or 15 bucks overnight to sugar being up 50 points to cocoa being up 80 ticks. So again, if you have to figure out if commodities are appropriate for you or not, I don’t know that. But the point is, when the markets are strong, the trends typically persist, and in that case, you can make money from just sitting on your hands, and that’s really a good feeling that if you haven’t experienced, I invite you to invite that feeling when you’re ready into your world. Again, it will backdoor your way into mental toughness and that can only help you. That can only help you. Why does it help you? Let me give you an example. There will be a day when you put on that trade at 20 and you get stopped at 17 point 50. Market opens lower or market trades quickly. You put a stop and remember, your stop order once it’s elected becomes a market order. So there can be significant slippage to me. I don’t care about slippage. I know people when you have a smaller account and you miss a full point on the ein, you fall to pieces. But because 50 bucks is 1% of five k, but that’s what you get when you have an underfunded account. Underfunded to me is less than 25 k.
And I applaud and I admire everyone who’s
Jumping into the game, but there’s certain disadvantages that you have when you just don’t have the capital. You’re the small banana, and that’s just the way it goes. I don’t like to see people develop bad habits because their accounts are underfunded, and so hence they trade many of these micro contracts as day traders. You just don’t have enough money to make any money. You see what I’m saying? So there is a little bit of truth to the fact that you need to start with more money, but at any rate, you will have those moments in time where your stops get hit and there’s slippage. Or if you are trading overnight, the market might open below where you were going to adjust and put your protective stop, and so you will have lost more than you had hoped for. And that will happen from time to time.
How frequently? I don’t know, less than once a month, but it all depends on your trading style. But when those instances happen, you can still look back and say, well, I was able to take that six R trade out of Wendy’s or whatever you might be trading. I’m just throwing a name out there. You know what I mean? And this kind of lessens the emotional blow to you when you have that happen to you on the losing side, it doesn’t feel that bad because you had opened yourself up to the abundance to just sit on your hands and let the market do the work for you. At least that’s what happened for me. Then I really became kind of addicted to that feeling like the world was abundant. There’s a lot of money out there. The money that I want to bring to my account in the form of net credits or credits are, or the money’s already in somebody else’s account.
The question is, who’s got stay in power? Who can play that game of chicken better? So again, position size to where you’re comfortable and adjust your stops, can’t reiterate it again, it’s the best way to start making more money is to let the forces of the market do the work for you. Otherwise you’re turning trading into a blue collar job. And the way I look at this whole business, and I always have again because I was lucky I was born with this type of insight, is I don’t want to be a business manager. I want to be a business owner. So the idea of sitting in front of the screen all day is a fucking snooze. I have no interest in doing that because then if I’m not there, I can’t make money. You see what I’m saying? Whereas the broker dealers and the fcms that you might be using to clear your business, they’re all incented to execute your trades for you how they get paid.
So I can trust that my stops will get hit if they’re elected. I don’t have to sit and watch it. Now, I know that there are people out there like two dozen who were able to take a thousand bucks and trade it up to 10 million and I applaud them. Everything lined up for them and they were willing to put in the time, the money, and the effort. But that is so atypical of how the world actually works. And so you have to have perspective of what the reality is for you. You see, you can’t deny anyone’s success. And again, I applaud them. It’s great work, but the probability of anybody doing that when their account is too small, so much of it has to do with timing. We also have to consider what happens when you do bleed and bleed and bleed and bleed. You have to refund your account.
Maybe that’s where you’re at. But I was never a guy who wanted to shovel sand against the tide. I wanted to make money. And so once I learned how to hold onto my winners and catch the moves, I knew I was smart enough to stay out of my own way. And that mental agreement that I made with myself was all about emotional intelligence. It was in the scales of my justice. Which feeling do I want to feel? Do I want to feel like I was in a trade where I want it, I won and I got the dopamine hit from the win? Or did I want to be in the trade to exact the most amount of money that I possibly could as a rate of returner on the risk that I was willing to put up to be in the trade in the first place?
And once I learned that and I could conjugate it in my brain, I went to the side of making the most money portrayed that I possibly could. It’s all nice and neat when you could think of that and you got your price targets and this and that and your precision and your sniper exits and stuff. That’s all bullshit to me. That’s all a mindset. Yet you talk yourself into, you can play a little bit loose and still have very solid and rigid protective stops. So it’s either you’re going to do the work or you’re going to let the market do the work, and do you want to be an ass who carries or do you want to be a man that loads them? You see what I’m saying? And so it’s really up to you. But anyway, I’m just answering the question of how do you make more money?
And the best way to do it is to stay in the trade. You don’t get paid if you don’t have risk. And if you have a good risk, which is to me, a good risk is when you have unrealized gains in a winner and then you let the market do the work for you. You’re already in the winning trade. You don’t need to do any more work. Now it’s just a game of chess. Where are you going to move? What piece? And there’s only one piece to move. It’s your protective stop, right? It’s not a stop loss. You’re making money. It’s just a protective stop. What are you willing to risk of your unrealized gains in order to stay in the trade? A good place to start is one, one r, because that’s what you were willing to risk in order to be in the trade in the first place. But at any rate, the mental toughness part is part of it because you have to have the inner fortitude to stay with your winners. One in a thousand trades, you will have a three R gain that will go back to zero. It’s just the way that it works, probabilistically. You can figure that’s going to happen, but who gives a crap? It’s one
Damn over 10,000 trades that you’re going to do. You cannot fault to pieces over that, what small minded traders do, in my opinion. Okay? Anyway, please like and subscribe and click the little bell thingy, whatever that is. I don’t even know where it is. It’s somewhere on the page. There’s a bell and you click it. Then you get alerts. Anyway, thanks for being here and I’ll be here. We have a really great episode. We already recorded it tomorrow with ganja, so I’ll see you there.

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Everybody, happy Monday. Hope you had a great weekend and you have great plans for this week. Remember, winning is a mindset. In case you didn’t see I was with my friend Alex Bustos over at Be The Trader, so it’s over on his channel on YouTube. He’s a great guy, he’s really smart. He’s doing really good things with his channel, so you should check it out. I think the interview is about 35 minutes. He’s a good buddy. We’re going to make plans to meet up in person sometime shortly. What else? Okay, I want to get right to it. Question came in from actually as a comment by Jonathan Strom on the video called How the Fear of Failure creeps into your Trading in your Life. Appreciate the content I’ve been trading for four years now. Haven’t really developed an edge, dah, dah, dah. Do you have any tips for holding winners longer for someone who has developed a habit of cutting them to quickly?
Should I automate 2023? I’ve tried trading smaller to overcome this habit, but still not there yet. Thank you in advance. Well, Jonathan, thank you for writing in. I appreciate it. I’m going to heart the thing right now. So look, there’s points of contention, right? Because of the timeframe. What’s your timeframe? If you’re trading 10 or 15 minute bars, your timeframe coming into the end of the trading day might seem like an eternity because that’s how you’ve calibrated your system. You have hair trigger responses and it’s a lot better. The more you make it last, it’s more better. So my advice, if you’re holding things overnight, you have to position size to take into account that there could be volatility overnight. Now, in my experience, everything that I ever feared never really came true, and you’re looking at a guy who I’ve been long futures and had limit moves against me.
It’s painful and it’s scary, but it’s not that bad. You survive it. That’s part of trading. It gives you thicker skin too, but you have to position size accordingly. You might trade larger during the day because you know you’re going to offset. You might be one of those people who puts on big size and only give it a few ticks against you before you offset it. So that’s a different trading style. When you’re taking things overnight or you’re a swing trader, you have to position size. One way to do that is to look at the average true range or a standard deviation, something like that, to give you an idea of what the instrument’s personality is. And the A t R can tell you that a popular one is
20 days, but you can use whatever you want. I would tend to pick one and be consistent and use it over and over and over. That makes your discretionary rules lean at least more to the systematic side. If you stick to one number and have that discipline, you got to start somewhere. So be kind to yourself. Pick one number and stick with it. Personally for the shorter term things, I know folks will say, well, I trade 65 minute bars, so I’m just going to look at the 65 minute a t r. To me. You lose the integrity of the a T R when you go lower than a day or a 20 day 20 period. You see, because the shorter timeframe that you’re looking at, the more random the data is. Now, randomness is everywhere. You can’t really escape it, and there’s a good book on randomness if you want to really study it and kind of get to see how it’s really prevalent in many things in life.
You could of course go check out Nasem Taleb’s book, fooled by Randomness, but all of that, not withstanding the way the prose do it, the way the million dollar traders go on to make bigger money is by putting in protective stops. They let the market tell them where the move is over. Typically by looking for a reversal at the top of the near term top right, it doesn’t have to be an absolute top, but it could be multi period, could be weekly, monthly. You could see where does the market stall at previous levels of resistance, for example. So it’s not necessarily a price target, but you could look and watch the behavior when the instrument gets to those levels. So if you’re looking at say, cocoa or sugar right now, for example, just as a study, you can go back in time and kind of see where has the march.
March right now is trading like circa 27. You can look back in the history of sugar and see how many times it did that and how it behaved. So as we come up to those higher timeframe prices, you can watch the behavior around there. If the market reverses down, which it kind of did last week, it kind of put in a new high and then came back all the way back and I think closed down on the day. That was a reversal. We’ll see how it really behaves this week. But for all the bullish fundamentals that are out there right now, the chart was incongruent with what the fundamentals are, or at least what we know them to be. There might be others that we don’t know that’s welcome to trading. And so some of the biggest money that I’ve ever made on trades when I didn’t anticipate making big money in those trades, you never know, is simply to kind of ratchet your trailing stop, which is a little time intensive in that you have to do it manually without being hypervigilant.
You don’t want to get spooked into like, wow, look how much money I’m making. I better take it. I’ve never been at this level. You can kind of condition yourself to learn how to be with the uncertainty. The more you kind of keep your hands off the keyboard and your hotkeys and the mouse, or in my case the phone because I’m still a little old school, but I would just say, okay, for every half a t r or one a t r, once I was fully loaded, mind you, I would move my protective stop up so that this way if it did have a move against me, and it doesn’t have to be a sharp move, yes, sharp moves can happen, but in my experience, things kind of, they’re like tides. They ebb up and they ebb down, and that’s the nature of markets, right?
But yes, you do want to have a circuit breaker on there where you have a protective stop where if the market does move against you quickly, you can get knocked out of your position and you could figure out what the hell happened after. You don’t want to have to sit there and think about things on the fly. So the importance of protective stops can’t be overstated, but I would just adjust them usually at least once a day. If the market’s moving in my favor, I would take the risk home the next morning I would say, okay, where’s my likely how much of my unrealized gains that I have right now in the trade, am I willing to risk in order to stay in the trade? You see, because once the markets start to groove and they start to trend, which you can’t really predict, you can only anticipate.
You want to try to have your optimal position size on and then stay out of the way. Let the other folks do the work for you. That’s the great part about trading is that you can make a lot of money by just anticipating what the move is and putting a damn trade on. It doesn’t matter if you add to your winners, if you have risk on and a big wave of buying comes in behind you, it could put push prices higher, which is exactly what you’re hoping for. Now, I can share with you after 35 years that the market has, when the wind is at your back, that way you can make a lot of money for not a whole lot of hard work, just being in the right place at the right time. And when you are there, you want to milk that for everything that you possibly can because you’re willing to take the risk on in the first place when you really never knew what was going to happen because why? Well, the outcomes of trades are probabilistic and you’re going to have to take your losers with your winners. But what happens is is that if you’re looking at stopping your equity at one R here and taking your winners off at three R here, what you can do if you let your winners run, what you can actually do is to skew
Average win much higher by just taking several outlier winners over the course of the year. So even though you might have a cluster of three R winners, if you let a couple of them say 10 once a month, you let something run if you can between five and 10, that skews the average winner higher. So that changes your expected value of a trade, and all you have to do is learn the tactic of adjusting your trailing stop, whether it’s one a t r off the close, whether it’s two ATRs off, the higher, the close, whatever it might be. You can do that that way. You might also do a study, I can’t do it here in where you look at say a 20 period exponential moving average and measure the distance in ATRs that the security is closing in futures. We call it settlement above that and see how long over time that’s been sustained, you can kind of create your own overbought and oversold indicator that way. Hint. So it’s very simple. I wish there was a PhD level answer for it that would make it sound much more sophisticated, and you read it in market Wizards, especially the first two books, I think Jack made all the points he had to make with the first one. The second one is certainly interesting. I think my interest in them has waned after the first one myself, but they’re all valuable in their own way.
So again, I would get your position size down, Jonathan, because that’s really where we make and lose our money is you have to be able to sleep at night. So as I’ve advocated, if you’re not there yet, you can always try one share or one micro contract to that extent to try to get used to that feeling because once you get used to that feeling, you thicken your skin, which is a good thing, and you also develop a sense of confidence, you’re also a step closer to developing your trading edge, right? Because your edge now is going to come from emotional feedback from the market, which you’ll translate into trading tactics all the while having a really good attitude, you see? So you want to push yourself into areas where you’re slightly uncomfortable just to learn. It’s not really about your p and l at that point.
You’re really trying to get new experiences, and the best way to do that is to be live. So it’s kind of like having an interest squad football game, and then you go out and you scrimmage against another team who has other ideas, other defenses, other offenses, and the game doesn’t necessarily count, but you get to see yourself in action. So that’s kind of what you’re doing here is a scrimmage, and you’re really learning how to calibrate your emotional constitution with your behavior. You don’t want to categorize your winners. It’s the easiest way to make more money is to let your winners run. And I can’t tell you it’s the single most important thing I can share with people who are struggling is that even if you’re just stupid lucky or you find yourself that you’re in the right place at the right time, you can still take advantage of that.
There’s no thing that has less integrity, or let me say it this way, it doesn’t mean that you don’t have any integrity just in the right place at the right time. That’s part of life too, because you’re certainly going to be in the wrong place at the wrong time, in which case you’re going to start to smell smoke and you better believe you got to get out because it could be five alarm fire. It all starts somewhere. So you have to take the thick with the thin, so you might as well celebrate the dumb luck that’s going to fall in your lap because you’re going to have it and there’s nothing wrong with it. You put the trade on. As long as you have the risk, you’re entitled to the rewards. So that’s my 2 cents on it is to learn how to use a trailing stop.
You can trail structure or you can trail by a t r. Trailing structure would be like, what’s a swing low if you’re on the shorter term side of things, if you’re longer term and you do it Allah Commodities Corporation, you’re really looking at support and resistance in many ways. And so this way you’d at least know if you’re getting stopped below support if you’re long. It’s not random at that point, right? If you have a strong you base of support and you get taken out, you’re doing, I guess, best practices. Anyway, thanks very much for being here. Please like and subscribe and go check out the interview that Alex Bustos did with me over at Be The Trader. I look forward to seeing you tomorrow.

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Hey everybody, it’s Michael Martin. Thanks for being here. Please take a minute and like and subscribe and click the little bell thingy. As Ganja likes to say, today, I want to talk about the caustic aspect of you taking flyers. I spoke with someone who had done it. We kind of unearthed why they were doing it, and there’s some general truths to it. Your approach to taking a flyer in a trade can come from many, many sources, but one of the main truths to the whole process is just that originating trading ideas is hard. It takes a lot of time, it takes a lot of work, and when the outcome is uncertain to even all of that work, folks are always looking for a shortcut or some kind of a hack. In my experience, they don’t exist despite marketers being able to kind of come up with a new hook that would increase your curiosity to want to take a chance.
But ultimately what they’re looking for, as I’ve mentioned before, is subscription income. They want to get a hundred thousand. Who cares what the number is? Subscribers paying a number every month, that’s pretty much guaranteed within say plus or minus five to 10% because there is churn. People drop off, new people sign up. That’s considered churn. And so what ends up happening for you is you’re trying to hijack the system to avoid doing harder work. And instead of maybe admitting to yourself that for this particular moment in time, and it could be just for a day, all the charts that you normally look at aren’t showing you anything that you would trade either. There’s no chart pattern that you recognize, or hopefully the one chart pattern that you’re using or the one setup and it doesn’t exist. And so instead of saying to yourself, my job is to play superior defense, and if there is no trade on this particular date, then there’s no trade.
I sit on my hands, I don’t do any trades. I’ll come back tomorrow or Monday to see how it would look. That would be the mature thing to do, but instead, folks are like, man, this other trade over here is up and down 15 bucks a day, but it’s not my trade. I feel like I’m missing out on something and I have the strong emotional need to participate because after all, executions buying and selling means trading. Obviously that’s not the case, but that’s the mindset. So you put yourself in a spot where someone mentioned a trade idea to you, the upside potential probably, and then you find yourself in a trade, and what are you supposed to do at that point? Take the flyer and manage it as if it came on your wishlist somehow. What criteria do you use to enter? How do you manage the trade? Most of the times folks don’t even know. And then you’re sitting there saying, why am I even in this
Trade? Especially if it goes against you, especially if it goes against you. And I ask you before you try to take a flyer, ask yourself, what’s your edge? Because again, if you’re going to get professional style results and act consistently, you have to know what your edge is and then know how you can perform on that edge tactically for each and every trade that you want to put on. So much so that if you can’t define your edge, then there’s no trade. But sometimes people let their emotions get the best of them and they put on the trade because they’re desperate for a good idea. Maybe whatever they’ve been working on hasn’t been working, and so they want to delegate the decision-making process or all the hard work that goes with that, coming up with and originating a trade idea to somebody else, thereby hijacking the system.
The problem is is that as you have been trying to create alpha, right, your trading system is a function of who you are as a person. It’s not just a bunch of math. Yes, there’s math involved, but you are the alpha, I guess is what I’m saying, your makeup, your understanding of risk, right? Or lack thereof. There’s varying degrees of risk. How do you add to your winners, which is something I think everyone should look to do, or at least understand how it could impact their trading and better define what the trading edge is. You can almost do that weekly, certainly monthly, review your trades and see does your edge still exist? It can be modified, the markets will change, and so we don’t want to end up taking flyers for excitement or because we feel bad that our own hard work hasn’t yielded the results.
Don’t wave the flag now and surrender. Stick to your discipline because again, playing superior defense is the name of the game. You don’t want to find yourself where you’re trying to harvest ideas from newsletters or discords. You hear what goes on in those. I mean, you got to pay a monthly fee for people telling you that you know, got to let your winners run. It’s like, I can’t believe people were even paying for that kind of sophomoric wisdom at that point. If you need to be in a discord to kind of hear that, you might look to see like, are you being codependent? Again, I’m not a psychologist, but you can’t really trade somebody else’s rules. You have no emotional connection to them. Even if you’re a purely systematic trend follower, you have an emotional attachment to your rules, right? No one escapes. This is par for the course. This is a matter of how things work in the trading world. So make sure you understand why you’re in the
Trade in the first place and understand why it’s important to not put on stupid trades like flyers and risk your capital because you could be acting out. You could be also saying that you just don’t even care about the quality of the money in your account. One of the things you can do to help improve your own outlook, maybe even improve your performance, is to put a different quality on the money. Some of you approach trading and you’re like, well, okay, this is MyFu money. I don’t care what happens to it. And that’s why you get the results that you get if you don’t make it prominent and very, very important to yourself. In my humble opinions, be very, very hard to grow that money to a significant level. If you just think of it as cash, you’re throwing around for the sake of doing it to see what hits like for fun or entertainment.
So one thing you can do is decide that the money is going to be more a supplement to your kids’ Section 5 29 college savings plan, or maybe you’re going to be, even though it’s taxable, most likely I’m going to enhance my retirement with this money, or maybe I’m going to grow it and then buy myself a gigantic insurance endowment policy so that I can give money away upon my death, or maybe I’m just going to grow it so that I could both live off it and put it in a trust in a charitable remainder trust. Let some folks live off the money and then when that person dies, it’ll go to the remainder men. So there’s a million things you can do if you just open your mind, but trading for excitement and winging it tells me that you don’t care about the money, and if you did that with my money, you’d get fired.
So then you have to say to yourself, what kind of standards are you holding yourself to? Because then what happens? The big pink elephant, when you start doing that enough and then that doesn’t work. So when your own research and trading stuff doesn’t work, your chart books and what have you or your discords are failing you, which they tend to do, and then the flyers don’t work, now you’re pissed. And then what happens? You got it revenge trading because now it’s just a fuck all at this point, you just don’t even care. You don’t care about what you’re doing. You don’t care about what the outcomes are. And then you have to say to yourself, would you trade like that if I was sitting next to you, for example?
And what do you get out of it by going on tilt and why isn’t it okay if you take a couple of days off because whatever it is that you’re looking for in the market isn’t showing up. So if that’s the case, why don’t you try to pivot and say, maybe I need to try some new securities. Maybe I need to try a new trading style. Maybe I need to learn to hold overnight and trade smaller and expand my universe and get out of whatever it is that you’re trading. For example, it might be the universe trying to communicate
You and push you along and give you big hints along the way. It gets deep. You can certainly think about it and come up and be bold. Be very creative with what you think the solutions might be, because when you get to that creative solution, and I’ve heard various coaches say this, write out 20 different ways that you think you can make money in the marketplace as opposed to being emotionally invested in one thing that’s just not working for you. Because if it’s not working after three or six months, to me it either means the strategy’s not working or you don’t have a good feel for what that strategy is, and it doesn’t say anything about you as a person. Did you ever know somebody who was really, really good playing baseball, but they sucked at football or basketball? Did you ever know somebody who was really good at golf but couldn’t play a team sport?
So it doesn’t mean anything. Everyone has their skill. Everyone has their way to create the alpha, and your job is to figure out what that is, because then once you do that, it’s not going to seem like work. It’s going to seem effortless. And then once you get to that spot and you know what your tactics are and what setup it is, what single setup it is that you’re looking for, the modifications become small. They become very, very small from period over period. Now, if you’re trading equities, you could look at international stuff, even if you’re trading futures, you can look at, get out of trading coffee, sugar, cocoa cotton, and look at metals. And if you’re doing metals and they’re not working, look at currencies that expand your horizon. But I would do that before I would start taking flyers on other people’s rules because you don’t have any emotional connection to the why.
Again, if you’re watching TV and someone says they like United Healthcare, who the hell cares? What are you supposed to do? How do you position size? Where do you get in? When do you know you’re wrong? You have to be able to answer all those questions by yourself. No one can tell you that. And if you’re in a discord saying, is this a good time to get into the einy? You’re in the wrong group, or You’re satisfying a need that has nothing to do with trading. You see what I’m saying? So I want to leave you with that. It’s been a good week. I hope you have fun plans for the weekend. Again, please like and subscribe, go to Martin Chronicle, get your free copy of the audio book version of The Inner Voice of Trading. Have a great weekend, folks, and I’ll see you Monday.

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