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Hey everybody, happy Tuesday. Thanks for being here. I’ll have ganja on tomorrow. We have a really good episode planned and he’s really great. He’s making great strides in his own endeavors and we have big plans for the show here. I appreciate everyone and their feedback. I it’s really quite remarkable to build a community here and give back to the community I wanted to address. Alexander left a message or comment on how I embraced the uncertainty around trading earlier in my career, and he said something that I can identify with. He said, I learned from my trading that if I watch trading psychology videos more than once a week, I needed to cut my trading size in half. And that’s kind of the truth, right? In the minute that you start to feel like you have those feeling tones in your body about maybe you’re position sizing or you’re feeling a little bit antsy, that you want to cut your risk a little bit and deal with it that way.
I think the world in the universe can give you a little feedback mechanism that way as it relates to your trading too, in that you can develop a sixth sense on and a feel for the market. I know I have that market feel that for me at least, came with lots of iteration, a lot of practice, a lot of making mistakes, a lot of going through the trades. That way over time you can develop a feel for things again, just from experience, right? So when you look at NVIDIA’s earnings last week, they had all time numbers. I’m not going to go over the specifics here. You can go read ’em for yourself, but if you watched the technicals didn’t necessarily align with how good the fundamentals were and something was awry. If you watched the previous earnings announcement in May, I think it caught a lot of folks off guard.
I can only say that in retrospect. And the stop jumped what? 26% overnight and into that following day, and I think folks might’ve been hoping for something similar. They in fact reported really, really good numbers, but the response was kind of muted when you think about the price move itself. And so when the thing starts to move like that and it’s muted, even though dollar wise, it might mean a lot to all of you from a percentage standpoint, it wasn’t that big of a percent move, at least the way I think you might feel differently, which of course makes for good horse racing and the markets seem to weaken almost right away. And so that’s why you have to be careful when you’re trying to trade these events. You need to keep in mind, okay, well where’s my uncle point? And I don’t mean uncles where someone has you in a financial or emotional headlock and you have to throw in the towel.
It just means where does it make sense for you to remove the risk for the risk that you were willing to take to be in the trade in the first place you see? And so when you don’t again see the follow through, which is something that seems to be somewhat of a theme in this type of market environment, even the darlings that put up all time great numbers from an earnings standpoint and increased the forward-looking numbers as well, you still see the thing sell off. What it went from over 500 to four 50, so it had a 10% pullback on record numbers, which doesn’t make sense when you think about it. Why would that happen? How could that happen? Sometimes that’s the way the world works as far as trading is concerned, and I remember more than one of the guys that I know who are like you would consider market wizards because they either have that ability or they were in the book itself, would say you’re looking for a spot if you’re trading stocks anyway, because a lot harder to get fundamental information on futures.
For most of you, where the fundamentals and the technicals are aligned, they do matter. Fundamentals matter. It’s harder to learn. So if most folks don’t do it like, Hey, I’m just going to be a chart reader, which okay, it’s a good way to start, but that’s a lazy man’s way of doing it. So I think after a while you have to understand some basic fundamentals because to be frank, if you don’t, you’re at a disadvantage. You’re at a disadvantage. And so sooner or later you want to fill in whatever you would consider your weakest link is, do some work towards that. It’s not going to get solved overnight, and I don’t think you need to go get the C F A because none of it really helps you with prediction. It just helps you understand the world as we are in the ever evolving moment of right now, and that could help you make better decisions.
I don’t think it helps you make any prediction, right? Seven out of eight managers, mutual fund managers don’t outperform the benchmark s and p, and they absolutely all have CFAs. That’s kind of part of having the job. They might have MBAs as well. So none of that is really necessarily a benefit until you know how to turn it into a benefit, and that’s the rub. And that to me is experience. That’s why I’ve said the best coach for you, I think in learning how to trade isn’t buying somebody else’s course. It’s you actually putting on the trades and learning how to become you as a trader.
That’s the quickest way to do it. It’s also the cheapest. And so you could consider all the money that you would pay in tuition, and I know this, I’m talking on deaf, I’m speaking to deaf ears because many of you just want to buy your way out of it, or maybe you want to get a headstart. And for as far as I’m concerned, there’s lots of videos that are available for free on YouTube that can give you a heads up on how to approach certain things, but buying somebody else’s system or buying somebody else’s work to me is precarious because there’s no guarantee that just because those rules worked for other people that they’re going to work for you just the same way. You might’ve gone on a date with somebody who was really good looking and successful, but the date was a dud. Why?
Well, there’s no chemistry, and I’ve mentioned that before. I think. So ultimately, just like your trading rules, you need to have chemistry with them. They could be really good rules and other people can be smashing it and creating outsized gains as the marketers like to say. But that doesn’t mean that it’s going to be that way for you, and you don’t want to have to find that the hard way after spending hundreds to maybe thousands of dollars to buy somebody’s technical trading rules. Again, I know people are going to do it anyway because curious, and I know from studying the marketing language on these pages, they’ll jack ’em up with trading results of other professional managers who have resources that you’ll never have. They’ll have educations that you’ll never have. Then the sites will also load up the testimonials, which may or may not be valuable, but it’s one of the reasons why we don’t really get into the how to or sell the trading setups because it’s like I have your money, and even if I could teach you 12 trading setups that I’ve used in the past six to 12 months, I could teach it off the top of my head, but you’d have to tell me in writing that you’re sending me this money with the full understanding that none of these rules might work for you because ultimately, if you don’t have it in your emotional constitution to pull them off, they could have positive expected value, but you might not have it in you to pull them off.
It requires a certain emotional constitution that either you don’t have now or you’re never going to be able to kind of grow into because it doesn’t feel good for you. And there’s no dollar amount that we can exchange between the two of us or value coming from my side and dollar value coming from your side that is going to allay any of those fears until you go and you do it. So you might not like it when I say, just go trade. And you’re like, Michael, how? And it’s like, I don’t care how, have an opinion about something. Be decisive. That’s what the best traders are doing. And if you can’t look in the world and see what other people are doing or what companies are successful, just by observation yourself, this might not be the right profession for you because ultimately there has to be a catalyst that’s going to make the stock move.
People need to want to buy it and own it and hold it, creating imbalances in the short run that lead to higher prices. But at any rate, I feel like we’re talking about trader psychology, so it’s all kind of related because I do get comments about does the online program have any actionable trading setups? One guy wrote and he said, do you have any actionable trading setups in the online program? And I said, no, I don’t because I’m not going to get into selling that stuff. I don’t want to develop that type of reputation where people send you a lot of money, and I am sure I could make millions, but to me, it doesn’t feel right if I know that the majority of the people who go buy that stuff, one might not even have the courage to try, which is funny, right? They spend hundreds of thousands of dollars on something, but they’re afraid to engage. I can’t coach that person.
I think Richard Dennis or someone along those lines had said that they could publish the rules of their trading in the Wall Street Journal and no one would follow ’em. And that’s right. I believe that. And so where we do talk about trade setups would be more in the group coaching or the mastermind because we’re there and we’re able to talk about the feelings of, okay, why wouldn’t you be able to pull this off? People would say like, oh, this doesn’t make sense. And what they’re really saying is they might understand it intellectually, but they do not have the inner strength to trade this type of style. So then we can investigate that. But I’m there to help conjugate the verbs, so to speak. If you sell someone a box of crap or just do it online, the only thing that I can do with any integrity is help you become a better version of yourself because I know how to ask those questions.
And then if you don’t do the homework, well then it’s on you, but at least there’s integrity in the system, you see. So of course those are higher price point services in the mastermind or in the group coaching, but those folks have already passed the interview, so to speak. I like to speak with everyone beforehand just to make sure we’re on the right page and just to make sure that they understand what the heck it is they’re getting into because they say you have to manage expectations. Expectations have built in disappointments, and I do not want to, I don’t need the money. I don’t need the heartache, and I don’t need people asking me for stuff where like, Hey, can we just go over this ticker symbol because I don’t, that means they’re looking to already trade it. You know what I’m saying? When someone asks you a question like, Hey, I got a quick question on Dallas Semiconductor doesn’t exist anymore, don’t bother looking it up,
Can you just go do a little review on that one? And I’m like, just buy it. Don’t wait for me to try to talk you into it. You see what I’m saying? So no one’s ever going to ask you a question about a stock that they want to avoid. You know what I’m saying? They never send in those emails. Hey, I was wondering what you think of Nvidia or that new SPAC that came out from, what was it, better.com, that was off 95%. It’s a dollar 15. And I’m not saying buy it or short it, but people don’t write in emails when they’re not of stocks that they’re not interested in. And since most people are biased long, it’s like, what’s the point of writing in the email? You’re just going to listen for what you want to hear anyway. So that’s why if you’ve written in and I didn’t get back to those emails, it’s because I know human nature and I know you’re just looking for more evidence of the four or the pro argument of why you should get into it. All that notwithstanding, this is like the psychology behind what it is that I do and what I can’t afford to give back to the community given the time that I have. Most of it’s here for free on the show, and I definitely make time to do that in a Think and grow rich kind of way, and to help people learn how to stay accountable. One guy wrote in about accountability. It’s important.
Some people allow themselves to just make bad decisions and without any, there’s no punitive damages because in the end, they really don’t care. But at the end of the day, I feel like I’m not going to develop that kind of reputation for someone who’s selling a newsletter or a watch list or do market breakdown videos because I just don’t find that they’re all that valuable. And all you get are comments and questions and more follow-up stuff that just take up more time, and no one’s really taking any action on it because they’re in their will and they’re going to do what they want to do anyway. So I would much rather create more of a premium community like we have in both the Mastermind or the groups, which really is what, two hours a week or so of my week, maybe a little bit more.
I don’t really watch the clock, but at least I know I’m with like-minded people who are out there facing the failure. They’re embracing the uncertainty, and that’s a big difference. That means the world of difference, in fact, because when I went to Wall Street, you got to remember, I tried to do a lot of different trading. I tried all the different asset classes and all the different timeframes, and it was a disaster, right? None of it worked well, some of it worked, some of it gave me evidence that there was some success, and then I still had to pan for the gold and figure that all out. But at the end of the day, you need to engage, and that’s really on you. There’s nothing that I can do to help you hold your hand with all of that. I don’t want to start down that path and develop a group of people who pay me a lot of money for handholding. Accountability is one thing, but handholding is a different ball of wax, and I really don’t want to get into all of that. But at any rate, appreciate everyone commenting and writing in and subscribing to the show. And that’s all I have for you today. I’ll be here tomorrow with Ganja, will have a good show and I’ll see you then. Take care.

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Everybody. Happy Monday. Hope you’re doing well. Heck of a week, right? You’re watching Nvidia. I’m sure everyone in the world’s been watching. I wanted to, I’ll talk about that at some part. This week I want to talk about, I’m a little bit behind in viewer comments on the YouTube channel, so I want to address a few of those. This one comes from name 3 1 3 9. That’s not someone’s real name. There’s no reason to use an alias. Folks, you can just use your real name. No one really caress. It says Sometimes I get small losses and I’m waiting for the big wins, but when I get a big win, I already got a lot of small losses, so then I’m breakeven account doesn’t get bigger, only treading water. So I mean, this is kind of how the market is for everybody, even the pros right now. So I don’t find that that’s terribly dissimilar from what other folks are experiencing.
It’s certainly very frustrating for me and my own sake. I tend to trade super small on my initial entries, so when there’s no follow through in this style of make it and take it market that we’re in, yeah, your p and l looks, it’s just kind of humming along there. But the key is, as you remember, is to play superior defense. And so as far as that’s concerned, if you’re not losing big chunks of cash, to me that’s a good thing because treading water in choppy markets, again, if you don’t have professional training, is really, really good. If you’re kind of a retail trader, do it yourselfer trade from home, that kind of thing. Give yourself a pat on the back because the goal here is to kind of sit and wait for the bigger moves and endure those market environments that aren’t really amenable to your trading, where your current trading is, right?
Because we’ll all evolve, but if you’re not losing a lot of money, that’s a good thing. I would also think about what your goal might be because there could be, the psychological side of it is that you might be taking your winners too quickly, and that is something that’s the dirty secret that no one likes to talk about because everyone wants to make it and take it when they can, but one day the markets will definitely change, and I saw it even in Nvidia too. A couple of folks reached out and they said they had made money coming into the report, but then they missed the whole next day, and that’s tough to miss those types of opportunities when you’re in the winning trade itself, of course, you don’t know what’s going to happen, so you have to live and embrace the uncertainty when you’re in the trade, which I think comes with experience. I don’t really listen to anybody or accept anyone else’s wisdom blindly because I’ve kind of had to learn the hard
Way that the best way to learn how to trade is to just do it yourself and then figure out what if it feels good for you, what can you get used to over time? What can you practice emotionally, right? That’s a big part of trading too, is the emotional practice that goes with it. If discipline equals freedom, that’s not going to come typically overnight. For newer traders, you may have extreme amounts of discipline in your life that you can borrow from, but just remember that in the beginning. If you’re struggling and you’re like, man, I’ve been doing this for six months, you really don’t have enough time, and I know that’s like you want immediate results. There might be other things if you’re on a diet or if you quit drinking or if you go to the gym in those types of endeavors, you can see results maybe perhaps much more quickly than you can if you were just trying to trade.
That’s the way it goes. Unfortunately, there might not be the types of results that you want within the timeframe that you hope to get them, so you have to kind of say it’s life on life’s terms. All you have to do is persist even in the face of not knowing what’s coming forward. But going back to the original question, it’s good to have small losses. The big wins will come. I’ve been in all different types of markets over 35 years, and we’re just in that type of market right now. There’s a lot of noise coming from the Fed, and people are afraid, and when they’re afraid, they typically don’t act in their own best interest. They make themselves feel good, and sometimes doing the right financial decision doesn’t actually feel good. Now, it is true. I know some traders who are on the shorter term, who are naturally kind of make it and take it type of people, and they’re thriving in this type of environment if you can catch the right events.
But in my experience, the right events are kind of all over the place, and those are like short squeezes earnings announcements, fading, opening reactions. It’s very difficult for a newer trader who doesn’t have any experience to come in and think they’re going to be a Swiss Army knife of trading skills. It takes months, if not years to develop sometimes just one skill. So you can’t compare yourself to the people who have five or 10 years of experience and who are making money in this market or the folks who just have a lot of natural ability. There are those people here too, and you need to support them and applaud them, and they’ll have their day in the sun and you’ll have yours. It might not come for a while, but you’re still entitled to it. As long as you do the work, those opportunities will come for you. So you just have to be persistent and determined. What I wouldn’t do is to try to trade bigger,
Because you want to let the move make the win, not your position size. And what I mean by that is I feel like as traders, we live and die by our position sizing. That’s where we make and lose our money, and so we don’t want to be in a position where I need to make more, therefore I need to trade up or scale up. The scaling up part should be very gradual, almost like one contract or 50 shares at a time or something like that. It should not be something that you do where you go from ones to fives and then or fives to twenties. It doesn’t work that way. Those are, it’s much too large of a jump in position sizing to try to trade that way. I’ll talk more about that perhaps in another episode, but at any rate, I appreciate everybody writing in and leaving comments. I’m going to catch up on a lot of these ganja, and I’ve been working on a few things, and so there’s just a lot happening behind the scenes.
There was another comment on, so that comment came in, if you want to go read it on Michael Martin show, episode 24, everything is going to change. And then there was a comment that just came in today from Stephen Morgan, 9, 5, 4 9 on your evolution as a trader. Take time episode. Do you have a Twitter handle? That way your listeners can repost you there. People can benefit from your page. Thank you, Steven. Appreciate it. I’m not a big Twitter guy and it might be surprising to hear, I don’t really want to engage with people on Twitter. I don’t like it really as an environment.
I’m mostly on listen only mode, and even then I have about 7,500 words that are blocked. I just don’t want to see other people’s bullshit, especially about politics come through my feed. So if there’s a member of the house or the Senate or in the White House, they’re blocked and their names are blocked. I just don’t want to hear anything about politics and people’s opinions about anything for the most part. And two, the YouTube channel is a community unto itself here that we’re kind of building. Obviously, it’s going to take time, but if there are comments or concerns or questions or this and that, I’d prefer it to happen here on the channel. This way we can all engage naturally here in the YouTube environment. I don’t really want to develop a Twitter following. I use it as I’ve mentioned, maybe on the even going as far back as the audio only version of the show, that it’s really there to help syndicate the episodes so that the folks who are more active on Twitter maybe can pick it up, but I’m not really there engaged in conversations on Reddit or Twitter or anything like that for a simple reason.
One, well, there’s two that are very closely related. One, I just don’t like the environment. I didn’t like it when, what’s his name with the funny looking beard ran it, and I don’t care for what Elon’s
Evolution is either. I just don’t like Twitter, and two, I don’t have the time. I don’t to sit around and have conversations with folks anytime I want to respond to something, I kind of do it for everyone’s benefit looking you all kind of in the eye on the camera and saying what I have to say and then leaving it that way. So for the time being, at least that’s going to be my ethos as it relates to responding to comments in this and that. I’d prefer to just do it and keep it within the environment where we all are and develop this as opposed to Twitter’s platform. But at any rate, folks, keep the comments coming. I appreciate your feedback on everything. I hope you’re all doing well. If you have any questions, you can reach out through the blog or you could leave something here. It’s better if you use your real name and I’ll see you all tomorrow. I.

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Hey everybody. Michael Martin here. Thanks for joining the show today. As always, I hope you’ve gotten a lot out of it this week. I know I’ve gotten a lot of comments and emails from folks. Appreciate it. Always trying to be of service to you because it’s good for me too. I also want to say love yourself enough in and around all this work to understand that you’re not necessarily going to get the answers that you want overnight, right? Evolution takes a bit of time, especially since when you think of the things that have been from your environment that have been imprinted in your subconscious where maybe years and years in the undertaking, and those things don’t unwind overnight. They don’t unwind. In the coaching program, we spend 12 weeks where we’re not looking at the subconscious each and every week, but we kind of are because a lot of behavior comes from that.
And so you have to love yourself to understand that your own evolution in and of itself is a biological process that you’re kind of powerless over. Yes, you can have a good diet, you can have supplements. You can not drink alcohol or have sugar, this and that, but ultimately, I always look at this in my default response is life on life’s terms. I can basically be as self-aware as it can possibly be. I can look at the work, but then the wisdom that comes to me doesn’t always come to me from when I’m sitting down here at the desk or painting or in jiujitsu or something. I’d be washing my hair, like washing my hair. I could be in the shower, and that’s when the light bulb goes off. The self-awareness game is really an ongoing process that you start, but you never really stop. There is no destination. It’s evolution.
Now, I want to also encourage you to not sit back and wait. This comes also straight from the coaching. We never sit and worry about creating the full plan start to finish. Here’s step A, here’s step Z, here’s A, here’s Z. Don’t start until you can fill everything again, because that deals with security. You want to embrace the uncertainty. If there’s something that you want to endeavor to do, just start it. Don’t worry about what step number two is. You’ll figure it out along the way because in the end, your intentions will carry the day. If your intention is to be a better trader, you’re going to figure out a way to become a better trader. Obviously, you have to have a strong goal. We spent a lot of time on goal setting, but ultimately your intentions will carry the day. That was my kind of sixth sense that I used. That is my personal alpha. It helps me achieve all my goals, both in and around the markets, but also in my personal life.
You see it in real life. Look at the new production place where we’re at. It’s nowhere near being done, but we started. We’ll figure out the rest along the way. I don’t care what it looks like. I mean from a cosmetic standpoint, it does matter. If we’re going to scale the show and have guests and this and that, it has to have a professional look because it’s not just the mom and pop. But at the end of the day, if I’m honest and I’m on a witness stand, the cosmetic thing for me is more of a concern for you. I don’t really care. I’m not that fussy because again, in my mind’s eye, if you’re there because of the cosmetics, you’re missing the point of the show, but your intentions will carry the day. So spend a lot of time thinking about what it is that you want from your trading. How do you want it to serve you financially and emotionally? Because you get both whether you like it or not. And I was just, again, I was very, very lucky to know and to understand that that was the way that it worked
Because of the environment that I was in. I couldn’t afford the commissions, but I could not afford them. So I had to find a way to make the whole process work for me, knowing that if I overt traded, it was super punitive. Think about it, you start with 10 k round turn commissions, 125 bucks. If you did less than one junk trade a month, say you did 10 of those the year you’re already down. Well, yeah, if you did 10 trades, your account is down 10%. So
You have to look at that and say, well, what is my real goal? Here is my goal here is to worry about commission so much so that I don’t trade. I have to be mindful of it, but I also have to make it work and find something that works for me. So I had to think about really, I never have really used price targets, but in the futures we talked about I needed two or 3 cents to kind of pay for the trade. I was never interested in anything that didn’t have the propensity to move 20 cents plus as far as the grains were concerned, because I didn’t want to just make money. If you focus on putting on trades for the purpose of covering costs in the way my mind works, that’s what you’re going to get. You’re going to find trades that cover your costs.
And if you think like a small trader, you’ll always be a small trader. That’s something that I also believe. So I didn’t know where the world of trading was going to take me, but I knew I needed to be open to possibilities that I hadn’t experienced, and I had to be open to feeling feelings that I hadn’t felt before because you got to remember, all the money I had ever accumulated at that point had come from blue collar despair. I was working right, and it was either tips or gratuities from weight and tables. It was something similar in caddying. It was a flat rate for a particular size of your lawn, whether or not you wanted other types of cosmetic work done on your property, and then what did you want us to do for each visit?
What did they want us to do for the fall? So all those things were negotiated, but the point is is that I was willing to look at all of that. Why? Well, because I wanted to become a different person. Most parents who come from, who are immigrants, who are coming out of the working class and then wanted to leave the city and move upstate, the mantra was, I want my kids to do better than I’ve done. I heard that a million times growing up from my friends, from my friends’ parents, from my own parents. And so when you hear that and you try to put it into work, you really have to come up with a game plan. Like, well, if that’s what they think, and that’s what they mean for a lot of people, that meant just going to school and getting a college degree again, because coming out of that environment from 19 30, 19 40 or so, those people had jobs.
They were working class and they had jobs. They were happy to have jobs because there was a great sense of security. You could have the American dream, which have your own house and start a family, raise the family and all this and that. When your parents said they wanted you to do better, that brought in a lot of unanswered questions. What do you mean better? Have a better job, have a profession, get a terminal degree, make more money, live in a better neighborhood. So what do you mean by that? You have to operationally define, we want my kids to do better. A lot of times they just meant make more money. Inflation tends to cost of living tends to take care of that whether you like it or not. So then you have to figure if you put all that to work, where’s that going to take you and what are your own dreams for yourself? Do you want to do better than your parents? Do you even care about that?
That’s why I don’t judge people and their trading style because likely a function of the environment. But I do try to be very, very pluralistic here and think and speak to a lot of strategies, a lot of asset classes and a lot of different holding periods because there isn’t one best way. You can’t fall in love with the marketing language just because that’s what you want to hear. You have to challenge everything just for yourself, not to call somebody out and throw shade at them. When have you ever seen me do that? I don’t really do that. I make some jokes here and there, but ultimately there’s the best way for you. But the best way for you has a lot to do with how you’ve already been programmed, and that comes from your environment. So my job here as far as I concern, is just share with you all my failures and my successes. Where did I have strength? Where did I have good luck? Where do I have to persist? And then where are you likely to see that in your own life, given what your endeavors are and where you want to be? But you constantly have to ask yourself good, open-ended questions. If you don’t, you’re not going to get the good answers. And if you’re afraid to get those answers, you’re holding yourself back.
You see, which again, nothing with it. It doesn’t make you a bad person, but don’t walk around thinking like, well, my goal is to do this in my trading world, but yet I’m afraid to go look over here. Because in my mind’s eye, the folks that I know who were super successful in this were very, very inquisitive. They had fear, but they didn’t let the fear stunt their growth. And sometimes it would take ’em a day or two, maybe a week to process certain things, but they were always willing to go to that place to talk about the things that people don’t like to talk about, especially guys, because not typically sitting around talking about their feelings. Women are much better at that, this and that. So embrace the uncertainty is the theme of the week. And don’t be afraid to ask yourself good questions.
If you have trouble doing that and you don’t know where to start, well reach out to me. If I listen to you, I’m a good listener. I can help you understand that. Maybe put a few questions, not to fire shots over your bow, but just to get you in that mindset, and then you can kind of take it over and go, and that’s that. So look, I hope you had a great week. Please keep the comments coming. I appreciate everybody and it’s good to give back to the community and help everybody with the stuff that I really think matters in terms of your becoming a pro trader and behaving better because your behavior predicts your profitability or not. So have a great weekend, folks, and I’ll see you Monday.

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So you can tell now from the conversation we’ve been having this week, the level of uncertainty that any of us have to feel at any given time is really all relative to our environment. Like the environment that I was raised in as a trader, very different from the one that you all might be being raised in as we speak, but everyone has to deal with there that uncertainty, if you will, and their own environment for the time that they’re there. No one’s immune from it. I certainly wasn’t. But I remember going home thinking like, wow, I’m in a losing streak. My equity’s down and I have to put on a trade and I’m going to have to deal with the commission. So the first two or 3 cents that I would make, so think about it this way, for some of you who are trading short term, if I put on a wheat trade and wheat, corn and soybeans are priced in bushels, each contract is uniform lee at 5,000 bushels, which is a measure of volume.
And so each full point, or each full point in that regard is five K, and they move with fractions of a cents. So each full penny would be $50. But between fees and commissions, I had to do 3 cents just to break even. So I didn’t have the luxury of thinking of trading corn, soybeans, or wheat for a 10 cent move because 30% of that move would just go to cover the cost. Do you see where I’m going with it? So that’s how I got shaped into thinking the way that I’m thinking. It wasn’t that I had a bias to say, and I learned how to read the tape actually pretty well as far as stock trading was concerned back when you could kind of do it. Now it’s all high frequency trading and this and that, but if you had a level two and you had ticker tape and you could learn that as a skill, and I definitely did.
That was a big part of why I kind of added the equities back in to my trading after having, I don’t want to say mastery A, who knows what the hell that means, but once I knew I could make money with futures, that’s when I kind of went back to where I had struggled and failed and tried to show more promise in my work. So it’s easy to understand that the bias is not a bias that I have. It was the environment that I was in, and I know that there are other traders who talked about having to pay a minimum, trying to trade size for their clients at the time, and the best that they could do as a negotiated rate was paid 25 cents a share, which might seem like mafiaa loan to you all today. So the environment that you’re in really shapes us, just like the environment that you were raised in around your household and how did those people feel about taking risk? What did they feel about other people who were risk takers, right? Because you hear lots of snarky stuff from people who are really, really ignorant and have
A fundamental misunderstanding of how markets work. We talked about a few of them, like the trading part is legalized gambling. Well, certainly it can be as long as they understand and concede to the fact that if you have a model that has positive expected value that you are the casino, you’re not the gambler, right? Gamblers are people who typically as a group, whether they’re in Vegas, Atlantic City, or any other place where gambling is legalized, whether it’s sports betting or whatever, they don’t know the odds and they don’t really care about the odds. They’re kind of in it for the entertainment value. There’s nothing wrong with it, it’s their money. But when you act like a pro trader, even if you don’t register or set up a fund or this and that, you should incorporate, but you’re a person who knows what the odds are, and odds are probabilities.
So you can calculate probabilities from the odds and vice versa. If you know your bed size, you can calculate expected value. If you know the expected value and what you make on a trade, you can use Kelly criteria to figure out how many trades you would need to put on to hit a certain level. You can calculate portfolio heat. So there’s really nothing random about your behavior at that point. There’s an awful lot of science for the people who talk about commodities having no real value. Well, that’s a truism. Everybody knows that, right? My dead grandmother knows that the commodities don’t have value the way a stock would, but that’s because it’s not a capital market. It’s not a stock or a bond. Futures deal with risk transference, right? So it’s more like it’s an insurance market, right? You’re underwriting the risk of someone who’s on the other side of the trade.
So of course not the same. But if you took a damn finance class instead of studying some bullshit major in school, you might know that, right? So you have really ignorant people showing up with a microphone in their face saying stuff that’s completely asinine. So at any rate, I don’t begrudge them studying what they want to study. But it’s interesting how the media has an uncanny ability to always put a microphone in the person who’s the biggest jackass in the crowd. And it’s usually along political lines. They don’t really ask me. I wonder why. So we are all shaped by our environments. And so your behavior in the trading as well as your behavior around what your understanding is about risk really comes down to what other people taught you about taking chances. Did they become victims? Did they say, Hey, you win some and you lose some? Now it’s onto the next challenge. The environment I grew up in is like,
If you don’t take chances, you’re not going to get anywhere. You had to be super bold. And that was from my parents who were born in the depression. They weren’t reckless, but they knew in order to escape them, a you, which growing up in the depression in the aftermath of my stock market crash in 1929 had huge psychological impact on people. I can remember hearing relatives mind you, B, hold your T, do your W, then your D, mind your business, hold your tongue, do your work, and then you’re done, which is, it’s an anthem for working class people. Why was that? Because coming out of 29 into the early thirties, you were on your knees at night thanking the Lord Jesus Christ that you had a job because so many people were out of work and they had to beg, borrow, and steal to get through the day. So having a job was like manna from heaven. Things have changed right now. People are very, very comfortable. They’re spending 10 bucks a morning for some kind of coffee drink, and they complain that they don’t have any money. So you look at that type of behavior and it shapes people. It’s very difficult to unwind them from that because it’s almost traumatizing. And so your upbringing might not be traumatizing, but you might’ve been exposed to a certain type of mindset or a collective type of mindset that conditioned your behavior in and around taking risks.
Now, I’m looking into this, and I can’t make any broad generalizations, but if you have highly educated parents who have master’s degrees or one’s a doctor, one’s an attorney, they love the educational route because it’s entirely predictable. We talk about the uncertainty. Ask them how they feel about uncertainty. When did it ever show up in their lives? Was there uncertainty about having to pass the bar? Big deal. You could take test again, right? What’s uncertainty, right? Those are really good questions to ask. When did you face an uncertainty and how did you react? Where did you learn that from? Because now if they learned it from their parents, you’re dealing with something that’s generational. And if they don’t want to embrace the uncertainty or you don’t, I find that it’s going to be challenging for you to become a very, very successful trader because that’s where the money’s made. Remember, there’s two payoffs. There’s the financial and then there’s the psychological. And in the psychological aspect of it, you need to have an enormous amount of personal strength, self-awareness, emotional intelligence, in and around how you’re going to behave when the outcome of something that you’re involved in is uncertain and probabilistic. Most people don’t like that because it goes against our primal thing of about fight or flee type of a deal.
We don’t typically invite ourselves to put ourselves in directly into harm’s way, police and firemen do, but they’re a different breed, right? Different type of person. So when I think about what it is that you are doing, where most people have struggled with trading, a lot of the answers to the questions can come from if they would just address how do they feel about dealing with the uncertainty and really map that out. Think about all the different parts of the trading from your research. When do you know you’re done doing your research? Is it a time constraint? Well, I put two hours in every night. Okay, well, let’s talk about the quality of it then. Are you looking in all the asset classes outside of the darlings of the media, right? We had the four horsemen right now. We had fangs. Now we’ve got eight or nine names that have led Nasdaq that have certainly retraced quite a bit recently.
So those themes are certainly something to talk about, but it’s not necessarily professional just because it’s on tv. So if you’re really concerned about making money, are you looking in international markets in other equities? Are you looking at currencies? Are you looking at the etms or the ETFs in and around those structures? Have you learned to short sell? Have you learned to trade the micros and the minis of those instruments just to get a feel for it? Have you learned to look at options trades to the extent that if you have a debit or a net debit balance, you typically have a known max loss as soon as you put the trade on. So how willing are you to investigate your feelings around uncertainty? Because your willingness on a scale of one to 10 has obviously a lot is relative strength, right? It’s R s I. And so it’s not that you should be fearless, but you can still look at your behavior around that. You can learn a lot about yourself. Some of the reasons why you might fold under pressure isn’t necessarily because you want to. It’s because that’s what you were taught to do because you saw other people fall to pieces.
I’m lucky, like Lady Gaga said, I’m born this way. I had a temperament that I was born with that allows me to not freak out when things work against me. So if I didn’t happen to get into managing risk in the markets, I had the same temperament. That would’ve been well for nine 11 operator 9 1 1, what’s your emergency? Because there’s nothing to freak out about or an emergency room nurse or doctor. I’m actually good under pressure. There’s a thing that comes over me that I can trigger that’s part of my personality where I kind of go into an overdrive. I’m actually the perfect person to have in that type of situation. And I’ve been in a few of them where I was able to make the difference,
But that’s just God, and maybe it’s some of it’s environment too. But that internal inner voice of being inquisitive, really sit and studying human behavior, my own behavior, certainly, and think about it, think about what we talk about on this show, and I’m just a pro trader. I’m not a psychologist, and material that we cover here is utterly remarkable, and it’s really helpful to the community. So as Yogi Berro said, you can observe a lot by watching. So that’s what you do. Just study your own behavior. Ask yourself open-ended questions. Why do I feel this way? Open-ended questions are ones where the answers are not yes or no, right? So open-ended questions you could start with where, why, and how did you learn that? And don’t judge yourself. I mean, if you want beat the shit out of yourself, go ahead. But that doesn’t really help you come up with a solution because again, normally we’re products of our environment.
So think about what your environment is. Now, do you have a community? I’ll tell you this. Half the folks that are in the Mastermind or any of the coaching stuff, I mean I didn’t ask them specifically, but I know a lot of them have said are intimated through phone conversations or some of the Zoom calls and the emails, not necessarily as one specific group, but as odd lots over the years. They wanted to be involved in a professional community where they could both be accountable but also understand what their blind spots are because we’re limited to those blind spots. Those are not necessarily limiting beliefs. But there’s information and there are data out there that we don’t have access to because we don’t know how to ask the best questions, not just of ourselves, but of our peer group. And so that’s where that comes in, and we all are better for it.
I benefit from it too because I get posed with questions that I might not have thought about for 20 years, and I get to grow. Look at that in your own behavior because that in and around that solution might be more, excuse me, in and around that study could be more of a solution that can help you unlock skills that you might already have that could lead you to better trading that might help you in those moments of uncertainty that might not even be necessarily any more uncertain than what you’re already willing to take, but can help you lead to more profits, or they can help you understand how to get out of losing trades much more quickly than you’re currently doing. And that can improve your equity curve. And as I’ve said before, we should always be trading our equity curve. Anyway, that’s all I have for you today. Appreciate y’all being here. I hope you’re planning on having a great weekend. I’ll be back again tomorrow. Take care.

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This is an automated transcript