Hey everybody. Michael Martin here. Thanks for joining me today. Appreciate all the feedback too on the YouTube channel. Everyone’s comments, please like and subscribe to show. I’m going to be doing a lot of work here on YouTube. Got a lot of reader response too. Reader, viewer response, I suspect. So today I want to talk to you about preparedness and I moved the mic here from the side because apparently if I’m looking in the camera and the mic was over here, that gets a little bit of a echo thingy, so try to take out the ambient noise in the post-production. Anyway, if you remember art the inner voice of trading, there was a chapter where I wrote and I talked about preparedness. And the quote that I used was from Sun Sue’s book, the Art of War in the chapter around preparedness. And it said The victorious warrior first wins and then seeks battle.
And I think that’s one of the reasons why they say all wars are won before the battle’s fought. And it got me thinking about trading in that. I know in the different cultures of trading, say longer term folks versus shorter term folks, that when they do their preparation is key. The shorter term folks are looking the day of the morning of what are the key elements? What are the catalysts that could move security one way or another? What type of announcements might there be? There’s far too many just to lay out, whereas longer term folks who are looking for setups that conjugate with say the weeklys or the monthly charts, they can oftentimes do their preparation at night and come into the morning and know exactly what’s on their list, what their levels are. They can enter their orders on the screen. They could do it over the phone if they’re so inclined and work with executing brokers that way.
But the key is in all of that analysis, regardless of when you do it. So if you do it in the evening, I tend to do it in the evening because then I go to bed with a piece of mind saying, at least I have an idea of what I’m looking at for the next day. Again, I know shorter term folks are looking for those daily catalysts, so it’s kind of right up to the moment for them to actually find those that morning. That to me is doable, but it also kind of creates, or it can create stress for the folks who are just starting because it creates a sense of urgency. And if you have, say two hours until the opening bell and you don’t have anything on your screen, you might, not everybody, but you might feel compelled to just put on a trade or to pick something out because you feel like, Hey trading, it’s Monday through Friday, I need to have activity. That of course isn’t the case. And sitting on your hands is oftentimes the best course of action for any particular time period could be for the full day, might be for the week. Which brings me to the point of preparedness, and that is you should only put on a trade when you can express your edge.
Now, it might take you a while to figure out what that edge is. If you look at say, even a chart pattern that’s very popular, like a cup and handle, there’s still 10 different ways to enter trades. Just looking at that chart pattern. So it’s what you bring to that chart pattern or that setup for if you will, that is what is unique to you and how you create your alpha. So the preparation, if we take a step back to me, should be everything that you need to do to find those instances where you can express your edge. So we started with preparedness. What do you do to reduce your names? What’s your watch list? How do you screen this and that? How do you soon it will be for you to enter the order. Is the price action in the market right now close to where you are in your own your, is it in the neighborhood of where you would enter an order?
Right? Cons, considering that you probably don’t enter in the market, you’re probably entering with buy stops above the market. Sell stops below to either protect your capital, minimize your losses, or perhaps to enter the market short. Either way, the goal is to do whatever you need to do to prepare to get your mindset right as well as your setup, right? Because you should only be putting money at risk when you know can affect your edge. If you can’t, then you’re doing that trade for a different type of a payoff, and we’ve talked about that till we’re blue in the face. There’s always two payoffs to a trade. There’s the emotional and there’s the financial. So we’ll talk more about that. But remember, don’t put on any trades until you’re affecting your edge in the marketplace. And if not, then that’s when you need to sit on your hands or you need to develop another edge because otherwise you’re putting on a trade for a different feedback mechanism that might not necessarily be financial. Please like and subscribe. It helps to me grow the channel and leave a comment too. I don’t have all the answers, but I’m happy to learn from you all as well. I appreciate you being here. Thanks very much for being here. I’ll see you next episode.
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