Hey everybody, it’s Michael Martin. Hope you’re doing well. So I kind of can piece together some questions from lots of different angles. So this isn’t a specific question that came in, but it’s one that I kind of thought might make sense to talk about, and that is what is effectively the best trading strategy for me. So it’s very tricky at the beginning because you might see someone on the internet, you might know somebody that you went to school with. You might find it on social media, you might have read it in a book, this, that or the other thing. And you can really do anything. You can do any type of trading strategy that you want. You can look at options and everything that you could possibly do with options. Buying and selling puts and calls. You can do spreads and straddles and strangles, and then broken wing strategies.
You can do butterflies and condors. So there’s a million ways to look at options. You can use synthetic positions with stocks. You can trade futures in commodities, you can create spreads there as well. You can do interbank currencies and create all different types of crosses, but ultimately you have to pick one. And I know that sounds tricky because when you’re just starting, you don’t know. You don’t have enough data. But what happens is when you start to experiment, which is really what you’re doing at the beginning, you’re going to hit on something. It’s kind of like an artist who’s trying to find his voice.
When you do enough practicing, you’re going to discover something, maybe even by accident, you see. So I think a lot of folks kind of say, well, I want to do penny stocking, or I want to be an options swing trader your scalper. And I don’t think there’s anything wrong with that. I used to have much more bias when I was younger because you’re kind of proud of yourself. You’re kind of fully yourself too. I didn’t really have that problem, but I can say for sure that when you find out something that works for you, you can’t imagine doing it any other way. So you kind of have a relationship like you would with the significant other in your life. Thinking about another trading style would be cheating. So where I was lucky was that I had a small bit of impulsiveness, mostly because I knew where I came from. I knew I came from a working class background and that I wanted to change that. And in order to change that, it wasn’t necessarily about going to get education, which I got. It was more about my behavior. What was I going to do in and around that education to change my situation? I knew how to work hard by that. By the time I went to Wall Street, I’d been working half my
Life and making my own way. So that wasn’t the problem. I had a tremendous work ethic, but I had to learn how to work smartly because what happens is you come from working class background to a white collar job. What’s the first thing that you do when you think about working hard? You got to put in the hours, and that might make a certain sense. But then you learn about the studies that show that if you do an eight hour day, you’re probably only getting four or five hours of quality work done. So you don’t want to just be in the office because you had to be. And in those days, there was no work from home. There was no zoom because there wasn’t an internet. So there wasn’t Microsoft teams. So basically when you’re starting out, you have to pick something, you have to pick a strategy, you have to pick an asset class.
You have to pick a holding period and actually experiment with all of them and see which one fits. Now again, you might come in from a certain angle and be like, I want to do penny stocking, or I want to day trade stocks, or I want to do this and that. But at the beginning, in my humble opinion, you should be promiscuous. You should be someone who’s going to think about many different styles because until you actually do it, you really don’t know. Even though intellectually or emotionally you want to have this one particular goal, you don’t know until you’ve actually done it. You see. So I would say know what you can afford to risk, know, of course what you want to make in the beginning though, you are kind of like your own. You’re studying your own behavior at that point. So it’s not necessarily, you don’t grade yourself on how much you’re making or losing.
Yes, you have to keep your losses smaller or else you blow up your trading grub steak and you can’t do it, but you want to experiment so that you can actually find out what is the best strategy you, you’d be surprised to know how many guys that I knew who thought they wanted to be day traders realized that they just didn’t want to put that much work into the day to only have to redo it the next day. There was too much work for too little money, and so they learned like I did, how to hold onto their winners longer, which is really just about adjusting stops at that point. It takes the click of a mouse back in the day to pick up the phone, cancel and replace, and this and that, which really wasn’t that much work to be honest with you nowadays.
You could click on the mouse and say, cancel this order. I think on some of the trading platforms, you can just put in a stop, it’ll show up, and then you just move the damn line and that changes your order. So technology’s coming awfully long way. What I have come to understand myself was that the really, really strong moves can stay in effect for longer than you can imagine. And so I see too many people taking profits when they could let the thing run a little bit more. That was something I had to find out from myself though. It wasn’t an adage that you could get in the back of a fortune cookie. It wasn’t written in any book. All I knew was that in order to learn how to trade, I actually had to do the trading. And that’s why I
Advocate actually doing it with real money because that’ll be the best teacher you can get. There’s really no other way to calibrate your trait of psychology, your emotional intelligence with how to do tactically than to actually do it with real money. You can back test at the beginning to have an idea, but like I said, it would be you’d want to make sure that it was a robust system and that you absolutely tested when there were difficult times in the market. You see, for example, right now we have about eight names that are driving the Nasdaq, for example, and the NASDAQ seems to be breaking away from the s and p at least from where we’re sitting here. Doesn’t mean it’s better or worse, it’s just the, it’s life on life’s terms. You don’t have to like it. So if you don’t any own any of those individual names, you might find yourself, who knows, plus or minus.
But while I do agree that you can, like your mom said growing up, honey, you can be president when you find out who these people are. You don’t want to have anything to do with politicians. You know what I’m saying? So you’re like, okay, scrap that. Maybe Neil Armstrong was alive when I was a kid. I was actually alive when he stepped on the moon. So he was a big hero to many of us. So that requires a certain type of setup. You can do anything in trading that you want to put your mind to for sure. But keep track of your hours. Keep track of how much money you’re getting, keep track of what it is that you’re actually getting from the experience, because at the end of the day, we’re all pleasure seekers, and I think more people can succeed at this if they just be more mindful of their daily activities.
Keep track of stuff, not just how much work you’re putting in during the day. What are you doing in preparation? How far did you look back? What was your start date, right? And if you’re not seeing those results that it might make time to pivot. When is the time to pivot? That’s awfully hard question to answer because there’s really, we’ll talk about this on another episode, but there’s a few things that you have to measure how much time you’re putting in and what kind of progress you’re making, what realizations are you coming to? And you can only do that with a journal. And I, I believe taking out pen and paper and actually writing it down, it’s a lot more insightful than typing it into the computer. But at any rate, I think it’s a good point, a good thing for you to study for homework and keep track of, because what gets measured can become improved upon. Thanks always for writing in all your comments and your questions. I appreciate it a lot. It’s very humbling and I’m glad I could be here to help you along your journal and along your way, your journey, please like and subscribe, and click the bell thingy as Ganja likes to say, and I’ll see you tomorrow.

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Hey folks. Happy Friday, last show of the week. I hope you have had a good week and you have fun plans for the weekend and you don’t do anything related to the markets, and you go live your life and be happy. So as we speak about designing a system, when you’re just starting out, I think I should have highlighted yesterday, I really believe one of the most important things that you need to understand is how much you’re willing to lose on a per trade basis. Because a lot of people don’t want to lose money, and so what ends up happening is that they never find their way to put on any trades because they want to keep making sure and double checking, and it’s like ready, aim, aim, aim, aim, aim, amen. They don’t shit or get off the pot. Then the thing moves against them and then they have regrets because they didn’t get into the trade that they had seen happening unfold right before their eyes.
So my whole take on these things is this, is that you need to have a clear vision of where you want to be and then understand that as you’re, you have an account that’s funded, do two things. Don’t take off a winning trade just because it’s at the end of the day, you don’t necessarily have to develop into a day trader. If that’s the way God wants it for you, then by all means do it. But I wouldn’t come to the market and say, that’s what I want to be, because until you’ve tested all those models, you really don’t know what one is best for you. You see what I’m saying? So let the nature of how the markets work, figure help you figure it out for yourself. Two, there is a lot of talk about the ever-changing amount of money that you risk on a per trade basis. Back in when I started, people were risking between two and 5% of their account balances on, and these were pros. Mind you, these weren’t people with 5K where you’re way underfunded where you have to, don’t have to, but you almost invariably have to take bigger bed sizes because you don’t have enough money and there aren’t enough instruments out there for you to trade. Now, you could trade micro contracts for sure, only if that’s appropriate for you. I’m, I’m not making any recommendations for that.
But then as the markets maybe got more crowded, I’m not sure why it happened. Maybe it was the nature of what the investors or the clients wanted in terms of lower volatility on their account balances. Bet sizes like commissions have been compressed. So whereas back in the late eighties, early nineties, position sizes, like I said, were two to 500 basis points. Now they’re like one 10th of 1%. Right now they’re 10 basis points, 25 basis points, one fourth of 1%. So you want to understand that that number may be what you evolve
To once that your system has positive expected value and you have what we call a trading edge because you can discover a trading edge and figure out that you can create alpha by risking $10. You could trade one share of Amazon, and you have to remember that’s your kind of scrimmage, right? It’s a game, but it’s a game that doesn’t count and be comfortable being in that spot early on because to me it’s better than paper trading. Paper trading is okay if you want to learn how to work a trading platform, right? Because they typically are tied into an actual live trading environment so you can learn how to enter particular orders, your stops, your limits, your market orders, how to set prices and do this and that. Good for the day, good to cancel. And that’s all important to learn because you learn the hard way.
Oftentimes that errors cost you money, but you want to learn your craft with live ammo, right? Because mistakes will happen and you want to know what the burn feels like. You want to know what it’s like to be in a name and have a big earning surprise happen the next day. You want to experience all that because it’s the experience of that that’s going to help you better understand who you are as a person. And you can’t get that in a paper trading environment. You can’t get that if you are always offsetting your winning trades at the end of the day, right by the closing bell. So I would forget whatever that risk unit is that you hear everybody talking about, what do you risk portrayed? Oh, I risk a half a percent and I have a 50 50 win ratio and I have a three to one asymmetric reward to win to risk ratio.
That’s all down the road for you. You’re not going to get that anytime soon. So give yourself, love yourself enough to know that you’re going to have to figure that part out through experimentation and then of your trading capital and your grubstake, determine how many trades can you get wrong? Losing whatever it is, 10 to 20 to 50 bucks a trade. It doesn’t matter to me what the number is in order for you to kind of learn your craft, right? Because it doesn’t speak anything to you as a human being. You’re not an idiot because you’re losing money. And if you’re a guy, women tend to be better. In my experience and the women that I’ve worked with than coach, they tend to be much more emotionally mature about that. They realize it’s part of the process and they’re much more willing to feel their feelings. Guys are built differently. They feel emasculated, which is that feeling of reluctance to fail and whatever has probably killed more people than anything because they weren’t really, they talk a good game about being David Goggins and being inspired by all that stuff, but they never really get around to doing it, right? That’s got to be a
Vietnam your brain that I don’t even want any part of, right? Because it’s one thing to pontificate it and to retweet it and to like it on Instagram and be like, yeah, motherfucker. But at the end of the day, it’s a whole other practice to do it. So can you put yourself in Bud’s training? Because that’s effectively what this is going to be in, not necessarily physically, but emotionally. What are you willing to put up of your money to learn your craft, knowing that you’re going to make errors and you’re going to make mistakes? An error is when you put in the wrong trade, you want it to buy Ms f T, but you put in M Ms F T or whatever it is, you switched the letters M F S T, M S F T, right? I’ve seen that happen. I had a branch manager actually do that, and he was like, wow, did the stock split because he put in the wrong ticker, he put in, it was a trading error.
Then there’s going to be mistakes and tactics. Tactics that you don’t know what you’re trying to do. If you want to have some context. I have friends from back home who run the New York City Marathon. They run the whole thing, but they don’t just put the shoes on that day and go run the damn thing. They’re training throughout the year and building up to it. So the goal is to complete, they’re not really trying to, they’re looking maybe to be the personal best cause they run it every year, but in trading, it’s a marathon. It’s not necessarily a sprint, and you have to prepare for that. You have to prepare your brain for the daily grind of it as well, right? That’s why I’m on a diet of the mind. I don’t let all this other bullshit come into my day because I know I need laser focus on what it is that I know how to do.
So the phone doesn’t ring. I don’t let people call me. I don’t have the TV on. I’m not interested in any of that stuff. You see, there’s a time and a place for all of that, but my brain power is sacred and I don’t give it to anybody. When I’m working on the things that are most important to me, and that can be when I paint. It could be if I’m playing guitar or obviously I take time out for martial arts, but at the end of the day, I have very clear boundaries on whose time it is and it’s mine, you see? So you need to figure out if this is a marathon, how much time are you going to train? Are you going to give yourself three or six months to figure it out where you’re actually taking real risk, losing, like I said, risk, 10 bucks trade? I think there’s a firm out there that kind of starts people doing that too, because it gets them used to the fact that they’re going to lose money. You just want to make sure that your losses are contained and you’re not going to lose any bit of money that’s going to put you out of business or kill your dreams. But you have to remember, if you’re going to go swing for the fences, you’re also going to strike out a lot. And if you’re just starting out, don’t worry about those emotional wins. Worry
About the rules that you’re compatible with that give you a trading edge. They, theyre help you create alpha. They have positive expected value and that on some days there might not be setups for you, so you have to wait and come back tomorrow. Guarantee you, there’s people out there who were three years or less and they’re putting on trades that they know they have no business being in, but they’re doing it because they want to be engaged. They want to feel like they’re traders, so they do trading things. Does it matter now? They’re not doing it to make money. You see? Then you mature even more and you’re like, okay, well there’s no setups for me today based on the criteria that you have, and so come back Monday, come back Tuesday. That’s just the way it is.
So I would not worry about then in summary about what your optimal risk unit is right now, because what you’re trying to do is learn your craft and figure out can you actually make money with small bits, because then it’s easy to scale. That’s the easy part. So while you’re figuring it out, do it hyper small and then worry about graduating to what you think your optimal position size would be, because that’s where you’re going to make and lose the money that you want to make, is that it’s all in the position sizing, but at the beginning you’re just experimenting. So why would, you wouldn’t have to worry about optimal position sizing at that point. Anyway, it’s been a great week. I hope you’ve had a lot of success and you’ve learned a lot about yourself. I always appreciate you being here. Please like and subscribe and I’ll see you Monday.

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Everybody, it’s Michael Martin. So I got a comment from Rock in the comment section. That’s where comments go. Typically, not all the time, sometimes they’re spray painted on the wall about how do you go about designing a process that’s good for you.
So I think of it like shopping for a suit. There are some folks who like to get custom made shirts and suits, and then there are folks who, because of how they’re built, are actually able to go to the store and buy something that kind of feels pretty good, but then has to have it tailored a little bit, whether it’s the waist or the inseam length, get the jacket, get the sleeves. So that might be cheaper ultimately than getting something made from scratch. So it depends on your budget and likewise with trading. So you can go to any of the big department stores and buy a brand named suit and then have it kind of tailored so that it fits you better than it would off the rack. But also that I in implies like is it, what’s the color right? Is it worst at wool? Is it een, right? Is it, what’s the thread count? What’s the color? Is it two button? Is it three button, right? Is it for casual wear, like as a blazer or is it meant to be worn with a shirt and tie? Is it double breasted? Because if you’re shorter,
Double breasted suits make you look shorter, right? If you’re bigger, they also don’t look really good on big guys. So having said that, do you want the pants cuffed also at the bottom, for example. So when I look at trading, it’s very, very similar. What asset class are you going to look at, right? Because there’s four or five, right? There’s bonds, you could trade bonds, not bond futures, but you could actually trade bonds, you could trade equities, you could trade options, you could trade interbank, foreign exchange. Then you could trade futures and you within futures you could actually trade foreign exchange or currencies in futures that have standardized sizes. Which of those is it going to be, right? How do you make that decision? Then what’s your holding period’s going to be? What is your holding period going to be?
Are you going to hold things in the short term or are you going to hold them a little bit longer? Are you going to use leverage or not? In addition to, for example, like in futures, there’s already embedded leverage holding period. What’s your risk unit going to be? How much money are you going to fund the account? So there’s a lot of those things that have to get done first. Then as I’ve said before on the show, I think a lot of it actually comes to trial and error now, whereas you might be able to see a discord or a tweet or you can go to StockTwits and see certain types of styles. My guess is if you’re in equity or interested in equities, you might have a certain interest in a certain sector of the economy.
The good and bad of it is that you might look at, say for example the media putting a lot of attention on AI right now, you might be attracted to that sector of the economy because you think there are big gains to be had there. Well, where there are big gains to be had, there are also big losses to be had. So you have to be objective and smart enough to realize that if it was really easy, everybody would be doing it. You see there are lots of factors that go into the marketplace. There’s lots of politics too. For example, in the oil market, depending on what political persuasion you are, there are people who like to think that speculators can push around markets, especially the oil, especially the oil market. My belief is that is not the case because anyone who’s in futures knows that it’s the cash market that drives futures, not the other way around.
Opec for example, right now you’ve got crude around $70 a barrel, Saudi Arabia to meet needs oil to be above 80 to kind of meet its growth numbers and what it wants to do in its economy and some of the projects that they’re working on. So they’re advocating to cut production. If you cut supply, prices are going to go up. Yes, speculators will stop being short and they perhaps can add to the long side of things. But so you have to kind of deal with all that nonsense. Never, nevermind the fact that futures trading and equities trading are completely, they’re similar. If you’re on the outside and you study gender studies or something, you never took a finance class in your life, it all just looks like, hey, whatever these people buy, they’re speculators. There’s no math and science. You just put trades on and you make money and it’s always at a cost to the hum to everybody else.
And that is not the case. The future’s markets are really an insurance market where the equities market is secondary trading of hot potatoes on some level. So we can talk more about that in another episode. But risk transference is one of the main aspects of futures trading and that’s that really has nothing to do with equities trading. So you have the philo, the philosophy and the understanding of how markets work that are is going to also be part of your education. So again, no one said this was going to be easy. I can’t say go read this book. There are books that I like. Most of them deal with history though not how to trade. You’ve heard me say on the show that I think the best teacher of trading is you actually doing it. So whatever asset class you’re interested in and whatever names you are doing it with, think about how much money you’re willing to lose to learn your craft.
Because there is a form of tuition, there’s an emotional tuition and there’s a financial tuition. The financial one’s easy to understand. How much of money can you put into a grubstake to fund a trading account? And then how much of that are you willing to lose? And I say willing because that needs to be a number you’re comfortable with. Then you’ve got the emotional payoffs. How frustrated are you going to be if it takes several years for you to figure it out? Because that’s a reality for many people. For me, it was over four years. I had other funding sources and other income streams, so I didn’t have to trade with scared money. I didn’t blow up, but I didn’t figure it out as fast as I would’ve liked. But the journey made all the difference on some level. Cause I really got to learn what I liked.
I got to learn what I didn’t like, and through lots of trial and error, enormous amounts of trial and error, I got to really figure out with cold, hard cash and bonafide numbers where I had skill and where I didn’t go to Wall Street and think that I was going to have spend the majority of my time being a commodity trader. That’s just the way things fell into place for me. But I wouldn’t have known if I didn’t try, if I went in saying I’m just going to trade the Dow components long and short. Maybe I could have made money eventually doing it, but I was willing to try everything and I was willing to invite a lot of failure because that’s where you really learn about things. You have to learn about yourself in the process and what are you willing to tolerate as you go through this learning process.
For example, if you’re watching the show, chances are you were a freshman at high school at one time. It didn’t matter how much you went to bed at night and wished you could wake up and be a senior. It was just a matter of staying the course. One day it’s going to happen, but man, there’s a lot that’s going to happen in between there that you might miss out on if you were so stuck in not being happy where you were. So you have to find a way to enjoy the process of learning and just say, every day you learn one new skill. Every day you find that there’s one thing that you know how to do, but it’s not compatible with who you are as a person. Because so much of this is about compatibility. Not only what are you interested in, but what can you actually pull off tactically.
Because again, as I’ve said, I’ve kind of coined the phrase, we don’t get paid to know stuff. The biggest mistake you can do is try to learn a million things and not trade any of ’em. You want to trade ’em as you learn and see if they make a good fit. There’s always new stuff to learn. There’s always an evolution that’s going to occur even in the asset cla. Once you gain some skill and you know that you can create alpha, there’s still going to be learning to do. But what you don’t want to do, again, if you don’t, you have to figure out with your financial advisors what you can afford to lose and if trading even makes sense for you. So that’s a decision that you’d have to make long before you even listen to this show. But then at that point you have to put yourself in a spot to say, okay, I’m embarking on something, sir Edmund Hillary with my Sherpa, and we’re going to be the first two people to make our way up Mount Everest in the early to mid 1950s where there’s no rope ropes, there is no base camp set up.
You’re going to do it all by yourself and you can talk to other people and yes, you can be involved with discords, but in the end it’s not going to help you. You’re on your own no matter what. And to me, that would be a big first step is to understand the philosophy of what it is that you’re trying to do and what’s the nature of the markets that you’re trying to trade. Because it’s like going to another country where they don’t speak English. That’s what in effect you’re trying to do here. You don’t know. You don’t have any fluency in what it is that you want to do just yet. Now you can develop it, but it’s going to take time, right? It’s going to take time and you have to practice. So I would get used to that and be comfortable with that emotionally, because if you don’t, you’re going to hijack your own system and stunt your growth.
Worst case, you could trade too big and lose your money and then you’ve set yourself back even further, you see? So that’s it. Otherwise we’ll get too specific and I don’t want to get into that right now, but I appreciate y’all being here. Trading’s not easy. There are difficult times for everybody, even if you’re a pro. And the question then becomes how do you keep your emotions and your psychology in check so you don’t force things. You have to go with the flow and just ride the waves when you can. And if there aren’t any waves and it’s low tide, well then you just got to sit on your hands and wait for the tide to change. So that’s a huge part of it too. There’s so many different parts that going into finding are designing a set of rules that you’re compatible with. A huge part of it is knowing yourself, right?
That’s why we have in the coaching, in the online coaching, there’s like 10 lessons that speak to you, getting to know yourself in addition to the how-to part, because it’s that important. And no one’s talk, no one talks about it cause they can’t sell it, right? That makes a lot of sense, duh. Right. So at any, that’s my 2 cents. I always appreciate the comments and the questions. If there’s more, you know, can reach out via email and if you want to just ask the question, I don’t need the backstory, please. There’s too much, too much to read and I’m too busy. But if you write in a simple question, I’ll try to get to answering it as soon as I can. Appreciate y’all being here and I’ll see you tomorrow.

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Hi guys. Welcome back to the weekly segment that Mike and I do where we talk about your guys comments and questions and give our 2 cents and just talk a little bit more about it in depth. Today we had a really interesting topic and I’m excited to get into it. But before we do that, I wanted to say make sure you guys like and subscribe all comments out the algorithm. And yeah, we really appreciate the feedback. It gives us some indication on what you guys want to see and where we can kind of take the next episodes of this. It’s also a really good way of engaging with you guys just to see what you prefer. So yeah, just make sure you guys do that and click the notifications bell as well so you get notified every time we upload a video. YouTube is not the best at telling you in your subscriptions box sometimes they’ve had issues with that in the past, so make sure you don’t miss a video. Click the notifications bell. For today’s topic though, I wanted to talk about a comment that we got on one of the videos, Mike and I thought you had an interesting comment follow up, but the comment is from investor today. Oh,
That means trouble when go just says it’s interesting. It means it’s, he’s talking in code
Always. I always speak in code. It’s the Italian in me, but the comment is from investor today and it says, interesting. Although I’d have to work on being a strict boss to report to for people with only five or six figure accounts or less even. Do you think it would be worthwhile doing a video or two about small to mid-cap trading for people that really want to up their account, want to size up their account? What strategies do you think can work? Is the risk worth it? I have yet to build up the courage to trade these because of fear, of lack of liquidity and major volatility. Thanks. And your comment to that was
Go forth and procreate with yourself. No, what was my comment? No,
It was interesting and I thought we should talk about it a little more because you said this channel is more about human behavior than trading strategies too. It’s not my place to give that type of advice to someone while I’m in the dark about their situation. We do that in the coaching, but I have a great deal more of information at that point and it’s private. So tell me what you thought about the original comment and your response. I was a little curious.
Every instrument on planet earth is illiquid when you need to get out. Doesn’t matter if it’s Nvidia, doesn’t matter if it’s whatever the darling is of the day, right? Cause you got to remember, most people are lazy. They kind of see what they can see and they trade too big and they get in something. But if you’re talking with someone who has five or six figures in their account, say they even have 800 K, that’s not enough money to trade a certain situation. So large that liquidity is a problem. And I get questions like that, oh, I can’t trade these things like cocoa or lumber. But if you’re trading ones and twos and the volume, volume doesn’t equal liquidity, but people overthink this, they say, oh yeah, stuff it’s not, it’s kind of thinly traded. Well, yeah, compared to Adobe or the names that have tens of millions of shares trade every day.
But if you’re trading ones and twos my comment, if we were in New York sitting at a cafe, I, I’d be like, Brandon, what do you care? You’re trading ones and twos, there’s 2,500 contracts trading every day. You can easily move in and out. You know what I mean? Yeah. Every market brings with it an issue. Options. The spreads can be wider. So if people have a smaller account, that is a cost to your account. You see? So you have all these trade offs. I did a study once where I looked at the big commodities and I looked at the biggest stocks and I found the share price movement, even on Nvidia, is more volatile than gold futures. So the thing is, it really comes down to how are you paying for things? Because a small bit of volatility can really swing your account. So you have to adjust everything by position size.
I don’t know why someone would come and think that there’s opportunity in one asset class over the other, I guess is why. So that’s where I would do the deeper dive. Why pick smaller mid-caps? Like why? What makes you think the opportunity is there? Because they’re smaller priced. That’s not necessarily true. It’s not absolutely true for sure. So I just kind of figure what, there’s not enough information known to that I don’t know enough about the person asking the question as to why they’d even bring up small or mid-caps. And with five figure account and you trade 10 shares, you don’t have a problem with liquidity. I think that’s a wive’s tale or there’s a boogeyman,
Right?
Yeah. So the bigger question is why does that person think that smaller mid-caps are suitable as an entry point? What would make them to think about that and then to worry, because people mind fuck themselves over things all the time. And I think is case of that
Interesting to me. I thought you had an interesting response because we talk about how your coaching is really in depth and tailored to each person and stuff. And I really value that overall as any kind of coach. I’ve been coached by a lot of different guys and I get to see their styles of teaching and I think to me that was the best answer you could have ever given is, look, bro, I don’t know anything about your situation. So yeah, it’s really not smart of me. It’s ignorant of me to leave a comment and say, oh, here’s exactly what you should do because it might not fit that person’s needs and maybe you misinterpreted their question or their comment. So I just thought that was a really, really good response is you know, want to know more about the picture basically. I think it takes a lot to do that.
Sometimes I think, I’m sure some people just like to talk and they’re like, oh, here’s exactly what you should do. You should follow my five steps and should next thing you’ll have a huge account and you’ll be worth a hundred billion. I thought it was interesting how, you know, see that a lot on YouTube, especially with people who are into finance and all that stuff. They really talk about follow my five steps. And if they leave a comment like that, there would’ve been this elaborate document available on Google Doc somewhere detailing, but it might not have fit that person’s needs. And I thought that was a really cool answer that you gave.
So when I was coming up and I’d ask people questions about what do you think about this? Most of them were dream killers because in reality I was looking for emotional support. That’s what I was really looking, cause I was going to do what I wanted to do anyway. That’s how I’m built. I don’t need anyone’s permission, it’s fucking my world. But I was younger and I’d lack the confidence. So I would ask these folks questions kind of looking for encouragement more than actual data coming from the answer. So I always remember that when people ask me questions like that, and I don’t want to crush anyone’s dreams because for all I know the person wants to be the best small cap trader on planet earth because that would kind of be my goal if I was going to do that first, be the first version of me and then set a new standard in doing it.
You see what I’m saying? Always have a goal, keep moving forward. But I find that people don’t understand the nature of markets. So they come up with questions and it’s not their fault because like you said, why do say here, follow these five steps if you want to make it, if you want an Instagram post to go viral, and those guys are marketers and especially the trading community, the guy, you have guys who are doing this for one or two years, you know what I mean? And they kind of got lucky because two years is not really enough time to allocate anybody money. And now they’re selling their system on the internet. And so people have recency bias. You know what I’m saying? Who’s better? Who’s best basketball player ever? It’s Michael Jordan. You could say it was Bill Russell for sure, if you’re looking at rings, if you count points, LeBron.
But if you wanted excitement, if you wanted to see a dominant player who raised the level of play of everybody around him who went six for six, don’t give me any other answer, but Michael Jordan, and fuck off if you don’t like my answer because I watched it. But the younger generation who your age, you didn’t see Michael play, you didn’t see him play a couple years ago. They took a poll in England and they said, what’s the best band ever to come out of the uk? You know what the answer was? I’m going to say fuck again, Oasis, Oasis, give me a rope and a fucking tree.
But recency bias, right? So you have to be careful, you have to know your history. And that’s one thing that I study, what’s my favorite book on trading? Extraordinary popular delusions in the madness of crowds because it tells you how people behave. What did Michael Marcus beat into my head? It wasn’t. And we both had copies of Weimar’s PhD thesis on the dynamics of the global cocoa market. But that’s that knowing that stuff doesn’t help you trade it better because trading is a whole other skill. Just knowing something really well and then being able to teach it like you and I are a lot alike, a lot of information, but you also know how to convey it in a very usable manner so that people can kind of decide, should I take action or should I not take action? You see what I’m saying? And so for the poor guy who asked the question on smaller mid-caps, who am I to say whether you should trade it or not?
My encouragement would be whatever it is that you want to trade, just go forward without fear. Because what you’re usually afraid of something that doesn’t exist. And I’ve traded things that are very thinly traded, but that’s kind of the risk of being in the market. And if you’re afraid to me it’s like you’re afraid of losing money because when I look at super liquid names or illiquid names, yes, there are certain things we can’t trade because it’s not like they’re so thin. It’s just that in order for us to get a position where if it moved 10, 15% in our favor, it wouldn’t move the needle on our equity to be worth the risk of being in the position in the first place. You see? So that’s a bigger institutional issue. Most smaller traders or newer folks don’t have that issue. You know what I mean? They will probably if they keep working at it for 35 years. But to this person and to everyone else, first of all, thank you again for commenting. It’s always nice to have people leave comments because we get to learn a lot. But at the end of the day, every instrument that you trade sector, every asset class, they all have their various trade offs that can cause you risk options. I would say the spreads are wider. So you have to pay that bid esque spread to get in, right?
Smaller penny stocks, the markets are full of rumor and conjecture. There’s no real research. They’re usually cheap for a reason, which because they’re hunks of shit. That’s the way it works. Really. Yes, there are fallen angels, but I would say unless you’re some type of deep core value investor or you have experience as an executive, you’re 40, 45 years old and you yourself are a turnaround specialist so you can understand what’s going on. A good example of that was ge, right? It was the darling when Jack Welsh was alive, rest his soul and he was the guy, and then Jeff and Melt got involved and the thing basically fall fell apart on his watch. I don’t know either of those guys personally. I have good friends that I’ve known from when I was a grade school that were presidents of certain divisions there and who are very smart guys are good people, but if you’re dealing with fallen angels, those aren’t really trades as much as they are investments.
And I think GE went to nine bucks a share, not adjusting for splits. So when I hear small cap, do you want to buy a small cap and watch it evolve into a mega cap because that’s an investment. That’s not a trade. I can’t help you with that. You see? Right. Foreign exchange, I stopped trading it because it was 24 7 and I needed to take a timeout. I don’t want the markets open constantly. You see, I want to rest my brain. But when you trade, and especially with the trade with leveraged instruments, I do, you have to treat those positions like a newborn child, which means you cannot take your eyes off them. You see what I’m saying? That’s the type of temperament you have to have, be kind of hyper-vigilant in a way, not watching the screen, but you need to have your stops in place, you need to have the traders on the desk ready to call you.
But the way I take care of it is I normally have a stop in place. I kind of know where my levels are and I act accordingly. So I don’t want to get into recommending asset classes because then what happens is I get more questions like that. Well, where in small caps do you like what I’m saying? And international, whatever. And then sooner or later someone’s going to ask about a specific name. And that’s stuff I don’t want to get into. It’s too easy to do an interview show because of vanity. I got a million friends and I did that going back to oh five. And I realized why am I inviting these folks on the show when I feel I’ve got more, I’m smarter than they are. I got more to say. I’m sure I’m helping my friends talk about books, but it wasn’t allowing me to showcase the kind of stuff I want to speak about.
So when I got into the podcast again, I just, I’m like, I’m going to do monologues of things that I wish I knew when I started and I didn’t. When I did become aware of ’em, I didn’t have the resources of the people to go get. And when I did find somebody, they were usually, I talked about intellectual greed. So it, it’s a question, what do you think of smaller? Like what do you think about veta fish it? I don’t have an answer for that. I don’t have an answer for it. That’s the real answer is I don’t know. And then how do I know it’s appropriate for you? Because when you start talking about investing in certain, or trading and certain styles and techniques and then specific within asset classes, or God forbid you mentioned a name, now you have compliance issues, which I don’t want to get into either.
I don’t want to get into making recommendations to people because I don’t know what’s appropriate for them. I’d have to know the situation much more, have to know a lot more information about that individual to help them understand what’s appropriate or not. That’s why, and I admit it sounds funny in the times that I do talk about things and I say, speak to your financial advisor about what’s appropriate for your situation. I know no one’s going to do that because they want to be running the money. They don’t have financial advisors. But I have to from a compliance standpoint because it says you are doing this on your own. If you decide this is appropriate for you, go do it. I can’t give you a red light, green light. All I can say is know what it is that you’re willing to risk. What are you going to be comfortable losing? Because I can’t give you any type of, any more than an indicator. There are emotional. And I wouldn’t want someone taking a recommendation and then going out and doing something because I encourage them to do it. I would just say, go do it, because the doing of it is going to teach you more than ever I can ever convey on a stupid YouTube show.
Yeah, definitely. And I wanted to say too, you said something really important. You were talking about fear and how it’s a really bad thing and you talk about it a lot on the channel too. We’ve talked about it before. Have you ever read Dune like the Dune books?
Frank Herbert? Yeah. And I like the original movie by David Lynch. I thought it was great. I mean, you have to get David Lynch, but that movie is excellent. Everyone like, oh, it’s the worst movie ever. I didn’t like the newer one, which I own. Wow. And I’m looking forward to see, I’m going to see the remake, the one that’s going to actually feature Fade raha. But yes, I’ve read the books. I know the movie kind of varied as they can.
So I bring that up because one of my favorite things out of that entire book series is when they talk about fear, and he has this fear is the mind killer. I will not fear. Fear is the mind killer. That’s like a saying that I actually had to adopt in racing and competing because it’s, it’s a really good reset. And I found a lot of times that fear does stop you from doing a lot of stuff. And fear definitely runs out of control. You can’t reel it back in if you’re super afraid or it’s really hard to sometimes. So yeah, if I could offer any advice, it would be learn to control fear. Don’t fear. Fear is the mind killer if that’s how you want to put it. But I can give you a good example from personally. I had a tournament yesterday that I played in, and it was really, really funny because I was the last person alive on my team.
It was like one of the last rounds, it was a one V five, so it was me, everyone else had died. I was against the five other people on the other team. And the whole time, when you’re in these situations, they’re called clutch situations. You’re thinking about where to move forward. But a lot of people, what they do is they’re like, oh my God, the odds are stacked against me. It’s a one V five. And they get really afraid and then they just stop making decisions. The fear kind of takes over. But one of the things that I’ve worked really hard on is not being afraid is to think very calm and very calculated. And to get out of those situations by using your mind. And if fear is going to stop you from using your mind, then don’t fear. So it was funny because I was in a terrible position.
I had no supportive utility, but I still won that one V five because I didn’t fear and I just brought every piece together. I put every step by step and I moved forward with a plan that I was creating in my mind. And that’s just a good thing in general about fear, is once you have that little bit of fear, it’s going to stop you from making decisions correctly. So take a step back, have a reset, and then work your way forward step by step, develop your plan, and you know, really have no reason to fear otherwise. You shouldn’t be afraid of failing, especially if you’ve put all of your stuff in the right place, especially if you’ve calculated every decision.
Yeah, I think people, when they look at these types of situations though, there’s a lot more going on because when someone says, I hear there’s their liquidity and this and that, I’m going to guess a person is afraid to lose money. They’re not comfortable feeling all of their feelings. And that puts the trader at a huge disadvantage and really kind of stunts your growth from having a trading edge. Because to me, there’s always going to be something, whether you think it’s small price, small capitalization, or wider spreads, you can develop an edge in any asset class, in any trading style. The question is, do you want to, because I look at the human being as the answer to the question. Most people come in and say, the market’s omnipotent and all this and that. And on some level it is, it’s always right. In other words, I can only trade the price today.
I can’t trade where I think it’s going to go tomorrow. If I’m losing money today, I have to get out. That’s why I don’t negotiate with my stop. I’m like, okay, well right here, right now, the thing is hitting my stop. I got knocked out. You know what I mean? And I would talk about a specific trade. Cause I do have a few in mind. The problem is I don’t want the follow up, right? Cause it’s not that type of show. Well, I was in this thing and I was short, then it spiked and I got stopped. Then the question is, well, how’d you get in? Why’d you get in? How much did you have? And I just don’t want have that kind of show. There’s a million other places where you can go do that, and if that aggravates you turn off the screen and start trading because that’s the best education that you’re going to get.
You’re not going to get it from binge watching YouTube videos on how to trade. That to me shows a lot of insecurity, and I wouldn’t hire that person. Don’t mean to sound like a D I C K, but that’s the way it works. Traders trade, people who binge watch how to videos are people who binge watch how to videos. Yeah. There’s no book anywhere that has definition that says an aspiring trader is someone who spends five hours a day watching how to videos. We’re subscribing to learn their craft. That’s right. That’s something that you’ve given yourself permission to believe, but don’t bring that bullshit to my front door. Yeah, no, for sure. I you can bullshit yourself, but don’t try to do it with me. Okay? Yeah. And I’m consistent, right? If you want to trade, then trade one share, because even if it goes against you, a hundred bucks not going to hurt and you could still earn your craft that way.
You hundred hundred percent. One contract, one micro, just do it. And I followed this advice myself. Like this morning I was painting and I was like, I didn’t have any source material. I didn’t know what I want to do. So I just took piece of charcoal and I started marking up the canvas just to get into the groove. I had no idea it was improvising on guitar. You just have to engage, you have to do it. You have to put some color on the canvas. Then I did something that was really hard. I have a good friend of mine who sold several million dollars worth of art. It’s hanging on the biggest museums. He and his wife went with, we went to see the Keith Harring installment at the Broad a week ago Sunday, and I sent him some of the stuff that I was working on knowing that he’s got a really keen eye. He’s a professional artist. So it wasn’t scary, but it’s like it can be intimidating. Right now you’re sending your stuff to someone who’s in the business of creating something from scratch, selling it and doing very, very well. And someone who I respect, I haven’t gotten the feedback at this time that we’re recording, but all the feedback is good.
So I practice what I preach, and it’s in the doing where you’re going to learn the most. I can’t give you peace of mind on any trading style or any asset class. That’s why I say, if you don’t know who you are, it doesn’t matter what. If you want a day trade, well you have to get ready to sit in front of the screen all day. That’s not who I am. I don’t want to do that. You see, I don’t want to have to watch everything tick by tick. That’s a young person’s type of deal. I don’t know a 60 year old guy who’s doing that because they outgrow it. They realize they can make as much money sitting on their hands. You see what I’m saying? So that’s why I try to be honest with everybody and say, if that’s what you want to do, you’re going to do it anyway. You don’t need my validation because I know human behavior, people are going to do what they want to do. And so, you know, can study everything until you’re blue in the face and you’re still going to have risks that you can’t quantify.
Yeah, yeah. No, well said. I think I had another question for you, and this is a bit of departure from our previous topic. I think you said a lot of really good stuff on investor today’s comment. So thank you again, investor today for your comment. We really appreciate it and I hope we were able to give some valuable input there. But I wanted to ask you, why did you choose Jiujitsu over any other martial art? I also chose jujitsu, so I’ll get into my reasoning, but I wanted to hear what made you choose jujitsu, because I know you have another background in martial arts as well.
So I’m just going to go with it because the question’s coming out of left field, I chose Jiujitsu because a few reasons on the emotional level, I wanted to exercise the discipline muscle. One that I already had that was very mature and very developed from just who I was, who I am, how I was born, how I was able to cultivate that through other life experiences, go into a good school. And then having 35 years of trading experience, I was thinking, is there another way I can exercise or sharpen that skillset by doing something extra trading? So I picked the martial art that way as to why it was because as I was reading about all the other types of martial arts, Elio Gracie and his brother designed jiujitsu to beat everyone, every other type of martial art. It’s the hardest one. So as a personal challenge to myself, I chose that because it was more arduous.
Yeah, that’s why. Yeah, no, I think that’s a really good reasoning too. I mean, when I got back into jiu-jitsu, it was because I quit cycling. I was done racing and I wanted another sport to get into. And I always, as a kid, my mom had me in martial arts, but it was only because of my very Italian grandfather who was very self-defense focused. You got to get that kid in martial arts. He’s got to be able to defend himself someday when people start trying to fight him. And I really thanked him for that because that inspired me a lot as a young kid to want to learn to defend myself and be well educated on that saved me out of a lot of really bad situations, to be perfectly honest with you in high school and middle school. But when I was done with cycling and trying to find another sport, I was like, all right, what do I want to do?
I want to do mma, but I didn’t want to go into MMA and get my head bashed around a ton and be one of those guys who gets in for a month and then quits. That’s not what I wanted to do at all. So I was like, okay, what’s the next best thing that’s based that can be interesting for me? I’m a really intellectual guy. I really like the cerebral aspect of martial arts and how you can get into it and form and technique. And so I said, okay, the next best thing seems like it’s because, you know, would see street bites where guys would be doing jiujitsu and they would win really easily. And even just in the ufc, I would see guys that he would be using jiu-jitsu and just absolutely manhandling people. And his technique with jujitsu, to be perfectly honest, wasn’t the best in the ufc, but it was just the strength of jujitsu that I saw in these fights were a lot of different martial arts were involved where I was like, okay, that’s something I want to try.
And I did it. And I very, very quickly realized, yeah, this is not easy. This is very hard. And I didn’t get educated about the history until you started mentioning stuff about the Gracie’s and he started mentioning stuff about the Gracie’s as well, and he was like, these guys founded it. He kind of taught us about the history while he was teaching and I got really interested in that later on. But it also, like you said, it is probably one of the most disciplined martial arts out there period. I think all martial arts are really good for teaching discipline, but jujitsu has a particular affinity to just mold savages. And that’s what I love about it. I know why
I, you asked, I know why you asked the question now why is that? I said something about a keto. Yeah. And every time I think about keto, I think about the Bushido guy where he waves his finger like Yoda and the guy goes flying and I get it and then Steven Sigal who’s kind of like, I don’t know what’s up with that guy.
Nobody does.
So I thought all of that stuff was cool, but I also know because I was older when I started the Jiujitsu, it wasn’t, I don’t want to get into striking, here’s why. Say you throw a punch at me and you hit me, I throw a counter and hit you back, hit you in the jaw, you go down, you hit your head on the concrete, guess what’s going to happen if I don’t get arrested, I’m definitely going to get sued.
Even if you’re a fucking idiot, I’m going to, and you deserved it, right? Because most of the time when you see someone get cracked like that, they deserved it, right? Don’t throw punches if you don’t want to get hit. And so I’m not really in that business of getting sued. Jujitsu doesn’t really have striking the way you would think moai, kickboxing or boxing would like that. It’s more about, for those of you that don’t know, taking you to the ground, putting my weight into you so you can’t rotate your hips. Any type of sport that deals with swinging a club or a racket, kicking a ball or throwing a ball, it all starts with planting your feet and rotating your hips. That’s where your power comes from. So if I can take you to the ground and stop you from rotating your hips, you can try Hammer punching me on top, but when I put my weight into you, things just got bad for you. And it’s just the beginning because I’m going to smash you. And so what am I going to do? Get sued for hugging you when you were trying to attack me, judge going to laugh your ass right out the court. You see what I’m saying? Yeah. Now I live in a neighborhood where I don’t have to necessarily worried about somebody talking smack or doing that. So again, it’s more the mental game of going six days a week. It’s the mental game of and now teaching it and helping out that way.
So that was my mindset. Everyone wants to be a striker. Everyone wants to be Mike Tyson. But that’s a young immature way of looking at things, right? Because you might think for five minutes that you’ve got a big ego if you’re able to clock somebody, but they’re going to come back and sue you and they’re probably going to win. Whether it’s fair or not, it’s not the question. Now if you do more damage and there’s brain injury or you start knocking out teeth, you’re going to be a judgment against you.
Yeah.
Now you’re working for that guy,
Colby Covington and Jorge, that’s a fantastic example right there for people who don’t know. Yeah, Colby was talking some smack about Jorge. These guys are both in the ufc, they have a whole history. But anyway, Jorge showed up and just clocked Colby Covington on the street, just sucker punched them and he lost a tooth and there was a big lawsuit and realistically it was a stupid thing to do no matter what, but it shouldn’t have been as bad as it was. And now Jorge’s paying a lot of money. I think he went to jail, but there was a lot of stuff that came out of it. And now Jorge can’t fight or something. He’s just got a lot of issues from it. Now
I think his contract is up or he retired. He think he’s going to get into promoting. If I read it, I don’t think he’s fighting anymore. I know Usman knocked him out in his house in Florida and the guy was asleep, like rigor mortis, he was out.
Yeah.
Colby has the kind of mouth on him where you want to see him get punched in the face, you know what I’m saying? Because to me, he’s a peacock. I don’t typically like those types of folks cause they don’t ever suffer. They’re not normal. Everything has to look golden.
Yep.
Right.
Yeah. I just thought it was an interesting point you brought up. And by the
Way, what in the name of Christ the king is Mayweather fighting? John Gotti the third for what is he thinking? Because you hear the stories about him being broke and then he makes these decisions. So it’s rumor in conjecture, but it’s embarrassing for him. It’s embarrassing that he’s doing these things.
I mean, it is embarrassing. I just don’t even want to pay attention to that stuff, honestly. Because it’s like why on earth would you do that? There’s something else going on. He’s got to be broke. For sure. I mean, and there’s the thing where he stole the money from Logan Paul after their fight and stuff. I don’t know if you know about that.
And when you put all your gambling tickets on and you only show your winners, it starts to make you wonder, personally, I don’t give a shit if he’s worth a hundred K or a hundred million, but I don’t, whoever his advisors are, these are bad decisions. There’s a bad look for, there’s a bad look for him.
They, it’s really bad. It’s not. I mean, look, talk about tarnishing a career, but that’s just, people look at it and they’ll be like, whatever. He just wants to fight for money and sure all go ahead man. Do what you got to do, I guess. But well give the
Money to charity, do it to create the attention and then sign a bunch of autographs, sign some, you know, sell that memorabilia up for auction and donate it to kids’ cancer or something like that. But yeah,
That’s what Tyson did. That’s what Tyson did. His last couple fights and he, they’re just exhibition matches, right? But still, it’s funny, you’re fighting these guys who are, nobody’s in, you’re just doing it for money. It’s like, yeah, sure, get your money. But you had the chance to do that was he was undefeated or something, right? He had a crazy record in boxing.
No, there’s no doubt in terms of when he was doing it, he was, he’s the real deal.
He could have made his money then, and it’s just like, it’s clearly there’s something else going on obviously. Yeah,
I don’t know what it is, but it can’t be good unless if he wants attention, he can start a YouTube show. He could start a promotion company like Oscar de Lahoya. There’s a lot of things he can do. He’s well connected, he’s a big draw. He can do things like, look what Conor McGregor did with proper 12 Look with George Clooney and Randy, am I going to say his name? Gerber, right? That they did the, what’s that?
I think that’s right. Yeah.
Cindy Crawford’s husband. I don’t mean to mess up his name, just don’t know him that well. They created the tequila company and sold it. So there’s got to be those types of opportunities for Floyd.
I think as a brand though, his reputation’s kind of tarnished because of all the abuse and the allegations. I think it’s actually, I think he was convicted as far as I’m aware. But yeah, I think his brand would be more of a tough sell for sure. And now Connor’s brand is a tough sell. I thank God he did it when he did, but man, if he went and did proper 12 now, I don’t think it would be that good. He had good timing with his proper 12 business for sure.
Well this is America. People can do, so many people tend to look the other way. And you think about it, look at the mafia guys now who have YouTube channels and shows these, the murderers.
Yeah, that’s pretty like Sammy the bull, I think
Sammy the bull. Interesting. Sammy the bull killed one guy. He makes you think, yeah, he had conspiracy to commit murder, but John Elite was the guy who pulled the trigger. I got used to you. I’m from New York City, I know who was actually the button and who’s, who was calling the shots. So Sammy likes to make you think that he’s responsible for all of that. But he killed one guy in 1976, which in and of itself obviously is a cardinal sin, but John was the guy who did the work.
Of course. Yeah. Yeah, I know that stuff too. It’s just interesting people, I think all that stuff, like you mentioned, it’s really funny how mafia guys now are on YouTube and stuff and people are just like, eh, it’s cool. I mean it’s crazy my, that’s what
I’m saying, those guys can do it. Floyd can have his own show. Yeah,
He probably could. Probably could. People forgave Chris Brown, so I don’t, yeah, maybe it’s not that big of a stretch. But no, it’s interesting. I come from an Italian family, so I hear a lot about that stuff and I know quite a bit. But yeah, that’s funny. It’s really funny.
And you mentioned him, that guy, not his jiujitsu might not have been terribly clean, but he has black belts in judo, Sambo in wrestling. So you don’t want to be on the ground with that guy. God, that
No, I mean he brings the deep water
That
He brings you to the deep water. I mean he says it himself. He makes people suffer just from the sheer pressure. And you can see it too, if you go back and watch khabib’s fights, all you have to look at is not him punching the dude, not him kicking the dude, not even wrestling, don’t even look at the wrestling. Just look at when the guy’s up on the cage, how happy he looks being up. He’s not smiling, he is in pain and miserable and he’s not even getting hit. He’s just getting pressure on him and he doesn’t know what to do. He feels afraid. That level of grappling is just, it’s insane.
So in class we teach you that it’s me and the mat against you and that’s how I’m going to smash you. But Khabib would bring the guy up to the edge of the cage and so you had no place to go. It wasn’t just the mat or the floor of the cage, it was up against the side of the wall. And when he is putting that kind of pressure on you, it’s awfully hard.
It’s a game over. I see
It. I see it in even the amateur stuff when I go see some of our friends go fight, they all come out trying to throw and kick. They all want that ego boost, but when they get taken down, they look like kids who can’t swim and their moms are holding them by their bellies.
Yeah.
You know what I mean?
Yeah, definitely. No, I’ve been to a few amateur fights myself and I noticed the same thing when the grappling comes out. It’s like even a blue belt can take down some of these amateur guys without really that much difficulty. Especially if he’s like a nogi guy. But I don’t know. Yeah, I’ve noticed the same thing. It’s kind of funny you said you got
To have a ground game anymore and if you don’t go back to the early UFC stuff, hos Gracie just took care of everybody. Didn’t matter whether they kung fu, karate, kickboxing, whatever, he just got, sooner or later they’d get in a punch or two. But once it got down to the ground, these people didn’t know what to do. They didn’t even know how to get up correctly.
For sure.
So I feel like, just to wrap it up, it doesn’t matter what asset class or trading style you have, there’s always going to be new and improved waves for the market to morph and try to take your money because it’s going to test you in how much discipline you have. And if you don’t have confidence in what you’re doing, you’re going to lose money more than you should. Cause you’re going to always be second guessing yourself. Well, oh well Mike, you just said if I don’t know what I’m doing, I have to learn my skill. I did, but I did say also that the way you learn the skill is by doing it in paper trading, you don’t have any risks. So it’s interesting to learn how to use the platform, how to enter orders and make sure that you all do all that because errors typically cost you money, but nothing’s going to teach you as much as you are just doing it. You see? And so that’s what I advocate, just go do it. You’re going to find out more. Okay, about the asset class, again, what I think the question was about small caps, this and that, I don’t know. But the point being is like you’re going to learn more about that by actually engaging with the market and seeing for yourself, which brings up a whole other point in that you, there’s no one to trust really when you think about it.
Yeah. You know,
Can only do it and exercise your best judgment and try it and then go from there. And what you find out is going to be really eye-opening because it’s going to be an education that no one else can give you. And I don’t know why for the life of me, see I was kind of impulsive when I was starting out. I knew that just doing it was going to be the closest way to get to success. So imagine if I said, yeah, I’m going to put my first trade on in December of 2023 and here we are, this is the middle of June. How much education am I missing out? If I just said, listen, I don’t know my ass from a hole in the ground, but I’m going to put on a trade tomorrow, I’m going to go on a hunch and I’m, I’m going to risk 10 bucks. What does that say about me if I lose the 10 bucks that I’m an idiot? How many people go on to get, there’s a great question for the audience. How many people who start jiujitsu as a white belt go to change their belt? Meaning they get first promotion to blue. What do you think the percentage is?
It’s 15%. 85% of the people start and stock, they quit 85%. Now our gym’s a little different because we kind of nurture the talent. We don’t let them spar for several months so they don’t get into that spot where they could feel bullied if they’re a little thin-skinned and they’re trying to get their feet underneath them so to speak. And so we have a different program, our numbers are much better. But if you look industry wide, 85% of the people who walk in the door with aspirations are learning. Jiujitsu never go to change their belt.
And I’m sure trading is the same thing. All you see are the success stories. But guys being guys you never see on someone’s dating pro profile where he’s got his shirt undone and no t-shirt and got the chest hair and the gold necklaces like failed day trader. I blew through my 100, I blew 140 K in my 401k. That’s why my life went, that’s why I’m on this dating site. My wife left me. I blew out retirement thinking I could be a so’s bandit bitch. It’s like I didn’t even have to try. You need tax loss carry forwards. I got you covered.
And the world is littered with those folks. But if you look at the marketing, you’d think everyone’s students that’s just like, here, take my money please. And if you flip a thousand coins, you’ll have 20 of ’em that come up heads several times in a row, right? So again, you’ll believe what you want to believe at the end of the day. Yeah, no that’s a thanks. I appreciate everyone asking the question and whoever it was that asked the question of small caps, please don’t take the answer the wrong way. It’s just that when you think about being a risk manager like I am, it’s between you and your higher power. And I’m just being frank with you. There’s nothing I can indu to, I do to infuse confidence in you through a YouTube channel. We’d have to work and I’d have to learn about your situation and better understand what’s your orientation to everything. Because then I could better understand the actions that you are taking, the ones that you want to take and the feelings and the actions that you are avoiding. Because that’s really what it all comes down to. If you’re willing to feel all your feelings, then you’ll have a chance the minute you stop, not, you don’t want to start feeling feelings to me and that person’s not going to succeed long term as a trader.
Most definitely. Yeah. And with that said, thank you again for the comments guys. We really appreciate it. Make sure you guys like and subscribe, click the notifications bell, all comments help the algorithm. And with that, we will see you guys in the next episode.
Thanks everyone.

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So I’ve seen a few of, when I scroll through the Instagram, there are people who have probably no experience in trading talking about how you can use AI to create for yourself a trading model. And I would just like to show you, if I had an ima, I know everyone’s in love with this blank space right here, which isn’t going to change anytime soon, but there’s an imaginary red flashing light when people don’t have an understanding of markets. There’s a lot of blind spots that they have when they’re trying to put these models down. It’s no doubt, and it probably doesn’t surprise you, that these people are more marketers than they are actual traders. And so what ends up happening is there’s a lot of things that they don’t get from having a posterior, a knowledge like all of the mistakes that I’ve made. So it’s very doubtful for me that they’re going to step in and all of a sudden find a cure for cancer as it relates to trading.
But it got me thinking that you can probably program a bot to go scouring the markets to help you with research, and that can effectively save you time. Because I don’t like the idea of having people sit in front of the screen for 12 to 15 hours a day. I don’t think that’s healthy. Two studies have shown, and you can look at Andy Huberman for this on hi, the Humer Huberman Lab podcast that he has, which is excellent, where he talks about if everything that you do is 12 to 18 inches acro or in front of your face, you can become myopic or nearsighted. So you want to make sure that you’re spending a lot of time outside. He says two hours a day looking out into the distance. It strengthens your eyes and the muscles in your eyes as well. So what I can say about back testing is whatever you do with ai, if you go in that direction, or whether you’re using the premium testing engines like Mechanica or Trading Locks, or if you’re using it something like, I know Trend Spider has one, but I think it only allows you to test one idea at a time, and it only goes back two years.
That’s not enough data. You want to make sure, especially if we’re coming into a time of higher interest rates and the talk of recession, that you can test other periods of time that had similar circumstances. You can’t go back test something from 95 to March of 2000 and think that that’s a surrogate for what we’re going through Now. There’s eight names that are driving the market for the love of God. And now that you have Nino hitting the futures markets, reversing trends or what have you, fear of the boogeyman. So what you want to try to do is test when there were other difficult periods of time, how did your ideas go? Because you don’t want to get into data mining or curve fitting. Cause again, it gives you a fault. It could give you a false sense of security. You see, and I like the idea of confidence, but not under the guise of a false sense of security because then just as soon as you go
Try to put the thing to work, you’re going to get very, very different results in real time that you got when you were in the safety of a practice lab, so to speak. Two, you have to remember that if you can see it on the screen, it’s a survivor. What do I mean by that? Well, if you were going to trade a model and put yourself through the difficult times of like oh 7, 0 8, for example, you’d want to see all the names that traded in and around that period of time from say, I don’t know, 2000 to 2020 and see what happened before oh 7 0 8, what happened during that window of time, and then what was the aftermath? Because if your model would’ve had, you’ve gotten long on pullbacks with names like Lehman or Bear Stearns, for example. What happened with those names? Unless you were short, and I didn’t even know. I think the government stepped in and said, you can’t borrow and sell short bank stocks anymore. So it screwed up everyone’s models, which kind of goes against the nature to me of the US Constitution, but let’s not let that get in the way of good trading, I suppose.
Make sure that you add back all the things that blew up because otherwise the data universe that you’re looking at right now are just survivors. And if you’re going to run a system, you want a minimum of 10 years of time, preferably 20, and you hope that 20 year window of time is going to be robust enough to have included periods that were very, very difficult for stocks. Because that to me would be you’re onto something, right? So I look at it this way, if you ran a back test and came up with a hypothetical model and you were looking for funding, obviously what we’re looking for is the integrity in the model. Is it robust? Is this just you trading Google since it’s I P O? That to me doesn’t really count, you see? So I’d want to look and see how did it do during the more difficult times?
You have to remember Victor Sp Brando’s first two years of trading were a bear market where the s and p got cut by 50% over a two year period of time. So you kind of had to know how to short sell or had to learn how to do it pretty damn quickly because that’s where people were and that that’s how people were making money. Also, names that got taken over like First Tennessee, F T E n or Bkb Bank Boston merged with fleet so they don’t have to blow up. But you would like to see the Enrons, the Bear Stearns as well as the takeover candidates. How did they behave before they got taken over? Maybe there’s something that you can find out. I myself don’t know. They’re usually surpri surprise attacks in black swans in that regard. Just like Carvana coming out and catching all the short sellers, why they’re still short after the thing is down, 99% is beyond me. That’s kind of stupid trading, stupid risk management on their part.
So look at that and you can get that data. You’ll probably have to pay for it, but it gives you a better sense of confidence by the time that you’re done. Because if you had a model, like I said, that was buying things on a pullback and those names eventually went broke, you’d want to know that. But nothing, it’s not bad if you’re only risking 1% of your capital. You see, not a big deal. But what happens when those names start to trade and then they get halted? Then you can’t get out of the position. You see, because at that point, it doesn’t matter if you have puts or calls or if you are trading the equity outright. So to me, you want to be as thorough as possible. And if you cut corners, I understand it, time is of the essence. You feel the great sense of urgency, but you also want to be very, very thorough.
Thorough in your actions, right? Because then if nothing else, it’ll give you a truer number in a robust system that can work across all different types of seasons. And when you see those results and you start to practice, you see that your results come in within model. That also can build your confidence. And it’s hard to really be good at anything in life or get trading if you don’t have any confidence in what you’re doing. You don’t really have any confidence in yourself. So the point of the message today is to make sure that you don’t cut corners. In this case, you might not think to add those names back into the data set, even though they go off the board, you can’t trade pork bellies anymore. That doesn’t, doesn’t mean that you shouldn’t back test pork bellies, right? You’d want to find that data, add that data in and see how your model would would’ve done with that, right?
Maybe there would’ve been a time where many of us stopped trading pork bellies for a few years before they were delisted because there wasn’t enough volume. And then volume and liquidity of course are two different things, but you can only go by what you can see for the most part. So you have to position size accordingly. So that’s a pro move as far as I’m concerned. If you really want to know your craft, you see what I’m saying? You can cut corners and maybe even for the majority of you, what does that mean? I don’t know, 60 to a hundred percent of you can kind of get away with it, but all you need is one or two of these names to really shit the bed, so to speak, to give you a bad drawdown number. And maybe you don’t even lose money. But what you had made during the year gets taken out by a name that you otherwise wouldn’t have been in had you looked and seen at this other data, right? From the names that were delisted, either because they went out of business or they merged with other companies. You see what I’m saying? And that can mean all the difference. So the market, yes, is full of certain type of, I don’t want to call it quality, but you can say from a statistic standpoint, if you can type in the ticker and get
Numbers, those are survivors. And you don’t want your universe of names to just be survivors because I know someone’s out there right now looking at the Russell two K, the s and p 500 and some version of the nq, whether it’s the Micros or the minis, doesn’t matter to me. And I know that there’s another group of stock traders who are just trading in and around the eight names that are really driving the markets right now. The markets are not broad based. The rallies are not terribly broad based right now. So you want to be super careful and know what does that look like? What does that look like when you have an unhealthy marketplace where only a few names, because all it takes is one piece of bad news and what happens when those eight names don’t work anymore? You see what I’m saying?
What are you going to start selling options then? This is what I’m talking about. So you want to know this before you start putting risk on, and don’t worry about missing a couple of days. Don’t worry about missing the rest of the summer to do your testing. You’re not missing anything. Markets are going secondary. Trading’s going to be around long after we’re all gone. So to me, it’s better to have a sense of who you are and what it is that you’re trying to do and have an honest look at the numbers if you’re going to do that type of testing. If you’re discretionary chart reader, good luck, right? Because that’s all to me. It’s appreciating art or poetry for some reason. Anyway, I appreciate the comments. Keep sending them in. I will address them as I can if I have something to say about it.
I usually like to speak on topics where I not only know what I’m talking about, but it comes from having started on my own with no help and having made lots of mistakes in and around that space so that I can point those out for you and show you how I had to evolve. So you kind of witnessed like an open spoken diary of the things that I’ve had to learn over time and I’m still learning, right? I’m still learning. You still learn about yourself. Then you have to conjugate that with your tolerance for risk, right? If there’s always a K Y C, know your customer. When you trade for yourself, you are the C. You’re the customer. And so you really need to know who that person is. Anyway, appreciate you being here. Please consider to like and subscribe. I’ll have ganja here tomorrow, and then I’ll be back Thursday and Friday by myself. Okay, see you tomorrow with Brandon.

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